Zero-tariff packages are incompatible with the EU rules on net neutrality, CJEU rules

Thanks to Luca Russo for collaborating on this article

On September 15, 2020, the Court of Justice of the European Union (CJEU) rendered an important judgement on the interpretation of EU regulation 2015/2120 concerning open internet access (commonly known as the Regulation on Net Neutrality).[1] The matters referred to the CJEU by the Budapest High Court (Hungary) concerned services covered by what are commonly known as “zero-tariff” packages and, in particular, whether these zero-tariff packages were incompatible with Article 3 of the Regulation on Net Neutrality.

Factual Background of the Case

The preliminary question was raised by the Budapest High Court during a legal proceeding between a major telco company, Telenor Magyarország Zrt. (Telenor), and the Hungarian National Media and Communications Office relating to the lawfulness of zero-tariff packages marketed by Telenor. Specifically, Telenor offered its users two data-packages (MyChat and MyMusic) under which the use of certain apps was excluded from the data limit. Customers subscribing to these packages could use certain mobile apps without limits, even after their data limits had been exceeded.

The Hungarian National Media and Communications Office found that those packages introduced traffic-management measures that did not comply with the obligation to provide equal and non-discriminatory treatment in Article 3 of Regulation on Net Neutrality and ordered Telenor to stop marketing them.

Telenor brought the matter before the Budapest High Court, essentially arguing that those packages formed part of its agreement with customers, while the Regulation on Net Neutrality only prohibited traffic-management measures unilaterally imposed by the provider. The Budapest High Court requested a preliminary ruling from the CJEU on the interpretation of Article 3 of the Regulation on Net Neutrality.

The CJEU Judgement

Firstly, the CJEU determined that the existence of discrimination should be evaluated by taking into account not only the effects on those who use or request internet access services to access content, applications, and services, but also those who rely on internet access to provide content, applications, and services. In fact, the term “end user” should be interpreted as including both consumers and professional entities, such as businesses and nonprofits (as per the definition under Directive 2002/21[2]).

Therefore, courts should assess whether the agreements and the commercial practices of an internet service provider lead to a material reduction of end users’ choices, taking into account “the respective market positions of the providers of internet access services and of the providers of content, applications, and services that are involved.” In this context, zero-tariff package agreements introduce limitations to the exercise of users’ rights prohibited under Article 3(1). In fact, their effect is both to increase the use of the apps and services that can be used without restrictions and to reduce the use of the other apps and services.

The CJEU also noted that Article 3(3) expressly allows traffic-management measures, provided that such measures are based on “objectively different technical quality of service requirements of specific categories of traffic,” and not on “commercial considerations.” According to the CJEU, such measures should be interpreted (in light of Article 3(2)) as encompassing both commercial practices and agreements with users and should in any case be adopted for a fixed period. However, since zero-traffic package agreements are based purely on commercial considerations, it results that such agreements are incompatible with Article 3 of the Regulation on Net Neutrality.

This judgement is a landmark decision because it is the first one on the subject since the entry into force of the Regulation on Net Neutrality. The full decision is available here.

[1] Regulation (EU) 2015/2120 of the European Parliament and of the Council of 25 November 2015 laying down measures concerning open internet access and amending Directive 2002/22/EC on universal service and users’ rights relating to electronic communications networks and services and Regulation (EU) No 531/2012 on roaming on public mobile communications networks within the Union.

[2] Directive 2002/21/EC of the European Parliament and of the Council of 7 March 2002 on a common regulatory framework for electronic communications networks and services (Framework Directive).

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