The Case of Net Neutrality in the US and in the EU
What would you say if your favorite streaming site was slowed down or blocked by your Internet Service Provider (ISP)? The idea that this should not happen is called Net Neutrality.
The story of Net Neutrality began in the U.S. where Comcast, one of the major ISPs, was accused of delaying Internet traffic in order to prevent access to Pirate Bay, a peer-to-peer site and a competitor of Comcast’s own movie download service, in 2007. In addition, mobile network operators such as Vodafone, Orange and now T-Mobile, have also acted in a similar manner, blocking Skype from their network because Skype used it to provide a cheaper option to the subscribers of the mobile network operators for making phone calls. Tim Wu, the father of Net Neutrality, first used the phrase in 2003 for the principle that internet service providers and governments regulating the Internet should treat all data on the Internet in the same way, not discriminating or charging differently by content, website, application, type of attached equipment or user. A year earlier, the Federal Communications Commission (FCC) classified cable modem services, such as Comcast, as information services, and thereby exempted that sector from the strict obligations of Title II of Telecommunication Act, which is mandatory to common carriers. It was several years before the case of Comcast, which was the first test of the lighter regulation occurred. In 2005, FCC classified DSL service and in 2007 mobile service as an information service as well.
The concept behind the FCC classification is based on the idea that lighter regulation would help the development of cable services. However, the result of classification led to the termination of two major obligations that regulated other common carriers: non-discrimination and open access.
No longer required to provide open access, network operators chose not to allow other ISPs to use their network, which usually led to a given territory being left with two service providers: a cable one and a DSL one. This duopolistic system, where only two contestants’ services were available in a territory, decreased competition. Regarding the Comcast case, it meant that, when the company delayed access to Pirate Bay, Comcast’s subscribers might only choose one alternative ISP.
The end of the non-discrimination regulation permitted ISPs to discriminate the speed of data traffic based on content. This led to the phenomenon of ISPs using content-based discriminatory measures to hinder their competitors. They called it network management, but critics said they were misusing the lighter regulation. This is what happened with Comcast and Pirate Bay.
FCC tried to balance the termination of common carriers requirements by issuing its own regulations for internet services: firstly with the so-called Internet Policy Statement, then with the Open Internet Order. Both of them have been challenged by ISPs on the grounds that the FCC lacks the authority to regulate the issue, and as a result, ISPs have not respected them, so the US remained without any obligation prohibiting discrimination of content. After a very popular public consultation, the FCC decided to reclassify broadband access as common carrier service in 2015.
Meanwhile, in the European Union a platform-neutral regulation package has controlled the European market since 2002, and with more than two service providers, the competition remained strong. With reference to the European Commission’s consultation on the open Internet and net neutrality in Europe in 2010, BEREC (Body of European Regulators for Electronic Communications) said it assumed that any intervention with respect to net neutrality on an EU level would have been premature — and that the regulatory framework in 2010 provided National Regulatory Authorities (NRA) with enough powers and tools to address market failures and to ensure sufficient competition and protection of consumers. Despite the opinion expressed by BEREC, in 2013 Neelie Kroes proposed a draft regulation and after a long dispute the regulation was eventually accepted in November 2015. Without using the phrase “Net Neutrality”, the regulation prohibits the discrimination, restriction or interference of content and applications or services.
What we can see now in 2017 is that cases related to net neutrality appear to be narrowing to the question of zero rating: a common practice of ISPs, zero rating means that they don’t charge their subscribers for data used for certain content services or by specific applications through their network. Many examples appeared all over the U.S. and Europe when ISPs provided zero rated offers for their customers if they used social network sites or video on demand services.
While different European NRAs and courts issue opposing decisions based on exactly the same provision of the EU regulation, the US seems ready to reconsider the idea of net neutrality after the election of president Donald Trump. Even though the Belgian regulator found a zero rating practice of a Belgian ISP compatible with the regulation, Swedish, Hungarian and Italian authorities prohibited similar practices. However, the Dutch court has recently overruled the decision of the NRA prohibiting a Dutch ISP to offer zero rated music streaming.
At the same time, Ajit Pai, the newly appointed chairman of FCC called net neutrality –14 years after Tim Wu first used it — a “mistake” and put an end to the FCC’s investigation into whether or not the “zero-rated” plans of AT&T Mobility, Verizon Wireless and T-Mobile US were anti-competitive. “The truth is”, Pai said, “customers love getting something for free and want service providers to compete. Our decision to stop the investigation was done out of respect for those preferences.”
The article was written by Zsuzsa Detrekői, who is an expert on Internet regulation. She is the former general counsel of origo.hu, one of the biggest Hungarian content providers, and she is a counsel of Magyar Telekom and lawyer of Association of Hungarian Content Providers.
