Net neutrality: are ‘zero-rated’ bundles prohibited traffic management measures under regulation 2015/2120?

Regulation 2015/2120 laying down measures concerning open internet access (the Regulation), that entered into force in April 2016, states that providers of internet access services shall treat all online traffic equally without discrimination or restriction. This Regulation, that aims for open internet access for everyone (net neutrality), sets out that providers of internet access may not limit this open access, unless certain specific conditions are met. The Advocate General has now in the context of the joined cases C‑807/18 and C‑39/19 rendered an opinion that interprets those conditions. 

Facts of the case

A Hungarian telecom operator, Telenor, offered two different ‘zero-rated’ data bundles. These ‘zero-rated’ bundles provide that data of certain applications, such as social media or music streaming applications, is not taken into account in the monthly data limit of the bundle and can be used in an unlimited manner. When a client uses up its data, the up- and download speed slows down or is blocked, except for the up- and download speed of the aforementioned applications.

Article 3 – Safeguarding of open internet access

The Regulation states in its Article 3 (1) that end-users shall have the right to access and distribute information and content, use and provide applications and services, and use terminal equipment of their choice, irrespective of the end-user’s or the provider’s location or the location, origin or destination of the information, content, application or service, via their internet access service. 

Article 3 (2) states further that agreements between providers of internet access services and end-users shall not limit the exercise of these rights of end-users.

Finally, Article 3 (3) states that providers of internet access services shall treat all traffic equally without discrimination, restriction or interference. However the previous shall not prevent providers of internet access services from implementing reasonable traffic management measures. For these measures to be reasonable, they must be transparent, non-discriminatory and proportionate, and must not be based on commercial considerations. In particular internet access service providers may not block, slow down, or discriminate between specific content, applications or services, or specific categories thereof, except as necessary, in some conditions.

Questions referred to the CJEU

Based on the provisions above, the Hungarian media authority ruled that Telenor’s ‘zero-rated’ bundles constitute prohibited traffic management measures under the Regulation. The telecom operator in question appealed this decision and the court treating the appeal referred the following questions to the CJEU.

• To which paragraph (2 or 3) of Article 3 of the Regulation are the packages to be assessed (first and second questions referred for a preliminary ruling)?
• If Article 3 (3) of the Regulation is applicable, does that provision impose a general, objective and unconditional prohibition (third question referred for a preliminary ruling) and, if so, must an assessment of the circumstances still be carried out in order to establish whether the rights of end-users have been infringed (second and fourth questions referred for a preliminary ruling)?

These questions are relevant, since the assessment and, as a consequence, the burden of proof under paragraphs 2 and 3 of Article 3 are not the same. Paragraph 2 requires competent authorities to take into account the market positions of providers of internet access services that are involved in order to establish that the essence of the end-users’ rights are being undermined. Under paragraph 3 such an assessment of the circumstances is not required.

Reply of the Advocate General and conclusion

The Advocate General replied to the referred questions that a commercial agreement between a provider of internet access services and an end-user which provides for a ‘zero rating’ for certain applications and decreases the speed of access of other applications once the agreed data volume has been consumed, constitutes a traffic management measure contrary to the obligation of equal and non-discriminatory treatment laid down in Article 3 (3) of the Regulation, unless that measure is covered by the exceptions laid down in that paragraph, which is a matter for the national court to determine.

The Advocate General further states that once an infringement has been established under Article 3 (3) of the Regulation, it is no longer necessary to ascertain whether Article 3 (2) of the Regulation has also been infringed or to carry out a detailed assessment of the market and the effects of the measure.

This opinion of the Advocate General is not binding for the CJEU. We will have to await the decision of the CJEU that will appear in a couple of months to know whether these ‘zero-rated’ bundles constitute prohibited traffic management measures. To be continued…