Zero-Rating Issues Rankle Despite EU Net Neutrality Accord

Zero-rating concerns haven't gone away, despite EU agreement on net neutrality rules, said industry and public interest commentators in interviews. That split also was clear during a Nov. 11 European Parliament plenary debate. While many lawmakers said zero rating is good for consumers, subject to monitoring by national telecom regulators to ensure net neutrality, others criticized colleagues, governments and the European Commission for failing to take explicit action against it. That prompted an angry retort from Digital Economy & Society Commissioner Günther Oettinger.

"The underlying motive of zero-rating is not rocket science," emailed Antonios Drossos, managing partner of Finnish pro-competitive telecom strategy consultancy Rewheel. Companies wouldn't give away the most valuable commodity they control for free unless it brought them an additional source of revenue, he said. The situation is akin to Russia giving away its gas for free, said Drossos. That could happen only "if that deal is conditional to a weapons deal which would lead to higher total profits compared to a gas only deal," he said.

European policymakers have made a "conscious and explicit choice not to regulate" zero rating in the telecom single market (TSM) regulation, said Maël Brunet, director-European policy and government relations at OpenForum Europe, which advocates for "open, competitive choices for IT users." No other policy proposals are on the table at EU level to address the issue, "so clearly the ball is in the court of the national regulatory authorities and [the Body of European Regulators of Electronic Communications]," he emailed. BEREC will draft guidelines to implement the net neutrality provisions of the TSM, he said.

The debate uncovered no real examples of harm from zero rating, said Roslyn Layton, of the Aalborg University (Copenhagen) Center for Communication Media and Information Technologies, who co-authored an August report on whether hard rules in Chile, Netherlands and Slovenia on zero rating protect or harm consumers and competition. Members of the European Parliament (MEPs) raised only hypothetical concerns, a situation the EU could address with empirical data, she said Monday. The reality is that at least half of the world's mobile operators use zero rating and have done so for well over a decade, Layton said. The debate also made clear that net neutrality isn't going away but keeps being redefined, she said. The EU "could start litigating, like the US," she emailed. Slovenian operators are suing their telecom regulator, which banned zero rating, for violating the country's communications law and the constitution which enshrines free enterprise, she added.

Parliament overwhelmingly approved net neutrality rules Oct. 27 in line with its negotiated compromise with EU governments (see 1510270001). During their discussions, governments in the European Council (EC) extensively analyzed zero rating, examining the experiences of countries that banned or restricted it, said Labor, Employment and the Social and Solidarity Economy Minister Nicolas Schmit of the Luxembourg EU Presidency at the plenary debate. Instead of regulating zero rating, governments decided to put in place a secure system based on monitoring by national regulators which must ensure users' rights aren't violated, he said. Regulators can intervene and impose penalties if necessary, he said. The more competition, the less prevalent zero rating will be, he told lawmakers.

The TSM regulation makes clear that zero rating is permissible only if it's compatible with net neutrality rules, Oettinger said at the debate. There can be no negative business deals because end-users' rights to access and disseminate information via their platforms of choice will be the key pillar of the legislation, he said. The pros and cons of zero rating can be studied in detail, but ultimately end-users' rights must be in the forefront, he said. The new regulation also bars discrimination of data traffic, so ISPs won't be able to divert traffic to honor special commercial arrangements, he said. National authorities will have to act against abusive practices including zero rating, he said. "We are watching the markets" and will take action against unacceptable practices, Oettinger said.

Members of Parliament disagree about whether zero rating is good or bad for consumers. Prohibiting it without proof that it hurts competition would be intervention in the market, said MEP Pilar del Castillo Vera of the European People's Party and Spain, who authored the parliamentary response to the EC's TSM proposal. But Evelyne Gebhardt, of the Group of the Progressive Alliance of Socialists and Democrats and Germany, called zero rating a "pseudo-consumer-friendly business" practice because it's "a means of infiltration of net neutrality." Others agreed zero rating is contrary to an open Internet and could be a Trojan horse.

Zero rating is "not the end of the digital world," Oettinger told MEPs at the end of the debate. Lawmakers must accept what they decided, he said, saying not doing so "makes me indignant." The EC will be in touch with regulators who don't do their job, he said: "Why don't you trust me?"