Net Neutrality: From Network Management to Zero-Rating

The concept of Net Neutrality sits at the heart of the internet. It has a huge impact on economy and communications and influences some fundamental rights as well.

Net Neutrality began to gain prominence in the United States, where Comcast, one of the major internet service providers, was accused of delaying internet traffic to prevent access to BitTorrent, a peer-to-peer site in 2007. In addition, mobile network operators such as Vodafone, Orange and now T-Mobile, have acted in a similar manner, blocking Skype from their network for using it to offer a cheaper calling option to their subscribers.

The role of regulators

In applying Net Neutrality rules, regulators should not censor or restrict any given content, services and applications but try to prevent discrimination between them and ensure their availability. An increasing number of people are becoming aware of the importance of Net Neutrality rules, but debates about how to accomplish indiscriminate access to online content, service and applications are far from consensual.

Regulators might be in consensus that the final purpose of regulation is to ensure a free internet and the wellbeing of its users and service providers. But the ultimate question is how to achieve this goal. Three principles are at stake when regulating the internet: free speech, competition and innovation/investment. Regulators have to balance between them to achieve the best result.

In their attempt to ensure indiscriminate use of the internet, regulators have to consider several key questions:

• Does potential discrimination between online traffic infringe free speech?
• Is the competition on the content market able to counterbalance the potential harm of discrimination?
• Is innovation possible in a strict regulatory environment that forbids discrimination between types of content and applications?
• Who should cover the costs of network development: should that be solely the network owner or those who use the network should share the costs?

The overall question related to the introduction of a robust Net Neutrality related set of rules is: should the regulator get involved in ensuring the neutrality of the network and, if yes, to what extent?

Regulation trends

Although there is growing literature about the Net Neutrality concept, it is relevant in very few countries including the United States, some of the EU nations and a cluster of other developed countries. In countries where official censorship is dominant, Net Neutrality is not a hot topic simply because internet users are not so sensitive about the potential for censorship by private companies as they have to face government censorship in the first place.

There are two emerging trends in Net Neutrality regulation. The first regulatory approach focuses on service providers and prohibits discrimination. Open Internet Order of 2011 by the Federal Communications Commission (FCC) in the US, and also EU Regulation follows this direction.

The second approach focuses on subscribers and see the Net Neutrality concept as a consumer right. FCC took this approach in its 2005 Internet Policy Statement, and the EU Regulation also has similar provisions.

The Internet Policy Statement also puts forward the concept of the ‘open internet’ as a main goal of the consumer rights protection.

Regulatory practice

There are three types of regulatory practices related to Net Neutrality: traffic management, paid prioritization and zero rating.

Traffic management is defined as the manner in which the traffic is forwarded within networks. That may include both regular first-come-first-served traffic management and more advanced ways of shuffling traffic through the networks. Blocking and throttling are the most common measures of traffic management.

Paid prioritization is a commercial arrangement in which a content owner or a service provider pays an ISP for favoring its content or service over other content or services. This practice is also known as ‘fast-lane’ arrangement.

Zero-rating, also known as ‘sponsored connectivity or price discrimination’, is a commercial practice used by some ISPs, especially mobile operators, not to count the volume of data of particular applications or services against the user’s monthly data volume allowance.

While blocking and throttling are negative discrimination, fast lane and zero rating are sorts of positive discrimination.

A look at the future

Net Neutrality is getting huge public attention, as it can be seen in the number of comments submitted during public consultations on the issues and the amount of newspaper articles and protests. At the same time, Net Neutrality-related regulations also achieved some results. The focus has shifted from network management, which is usually explicitly regulated (in line with fast lanes), to zero-rating where the intent of the legislator is usually not so clear and lack of clarity in the legal provisions leads to uncertainty in enforcement.

In developing countries where internet connection is still very expensive, the question of zero-rating is more important because not just the competition is at stake but also freedom of speech and information might be influenced if users can only access selected information from zero-rated applications and fake news can spread without the possibility of control.

With the improvement of the networks, the spread of flat-rated internet subscriptions and the increase of competition, the question of Net Neutrality might be less relevant in the future, especially in developed countries. But in developing markets where connectivity is still a problem and many people cannot afford internet, Net Neutrality rules should be in place and properly enforced.

This post is based on the article ’Net Neutrality: The State of Affairs’ written by Zsuzsa Detrekői, Fellow at the Center for Media, Data and Society. The article was published in Communications Law, a peer reviewed, quarterly journal covering the broad spectrum of legal issues arising in the telecoms, IT and media industries, published by Bloomsbury Professional. The original article offers a detailed overview of the status of Net Neutrality regulation in different countries, as well as a description of the current situation of practices.