Thomas Fetzer, Net Neutrality in Europe after the Net Neutrality Regulation 2015/2120 in:

Günter Knieps, Volker Stocker (ed.)

The Future of the Internet, page 59 - 76

Innovation, Integration and Sustainability

1. Edition 2019, ISBN print: 978-3-8487-6080-0, ISBN online: 978-3-7489-0209-6, https://doi.org/10.5771/9783748902096-59

Series: Freiburger Studien zur Netzökonomie, vol. 21

Bibliographic information
59 Net Neutrality in Europe after the Net Neutrality Regulation 2015/2120 Thomas Fetzer1 Abstract The need for net neutrality regulations has been discussed in Europe as well as in the U.S. for many years. In Europe the EU has enacted a Regulation on Net Neutrality, which aims to strike a balance between net neutrality on the one hand and allowing for innovative services, that require a guaranteed quality of service. However, the Regulation has not brought the net neutrality debate to an end in Europe. Rather this discussion now goes on at the level of the application of the Regulation. This article will assess the permissibility of two common practices by Internet Service Providers based on the new Regulation: zero rating and traffic shaping. It will also deal with a first decision by the German Regulatory Agency on the application of the European Net Neutrality Regulation.2 Keywords: network neutrality, zero rating, BEREC, regulation 1. Introduction The net neutrality debate has taken many twists in Europe. The debate has been heavily influenced by parallel discussions in the United States even though the regulatory environment as well as the level and kind of competition for broadband Internet access is very different in the U.S. and in Europe.3 Nevertheless, there was pressure on the European Parliament to enact some kind of net neutrality regulation in Europe after it seemed that the at that time rather strict net neutrality regulation would be eased in the 1 University of Mannheim School of Law and Economics and Mannheim Centre for Competition and Innovation (MaCCI); fetzer@jura.uni-mannheim.de 2 The article is based on legal opinion that the author has written for a telecommunications provider. A less comprehensive German version of the article is available at MMR 2017, 579. 3 Fetzer et al., Wirtschaftsdienst 2013, 695; Peitz et al., Wirtschaftsdienst 2012, 777; see for the U.S. Yoo, 2008 U. Chi. Leg F. 179. T. Fetzer 60 U.S. in 2014.4 After controversial discussions, the European Parliament enacted the “Regulation 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”5 (Regulation 2015/2120) on November 25th 2015 which went into force on April 30th 2016 as far as the net neutrality provisions are concerned. With the enactment of Regulation 2015/2120 the net neutrality debate has reached a new stage in Europe. The Regulation has brought the discussion whether there is a need for legislative net neutrality measures to a tentative end. However, that discussion has been followed by an equally intense and controversial discussion about the application and the interpretation of Regulation 2015/2120. This does not come as a surprise since the Regulation ultimately is a compromise, which tries to ensure the openness of the Internet by prohibiting certain practices by Internet Service Providers (ISPs) that harm the open Internet on the one hand. On the other hand, the Regulation aims at allowing innovative new services that require a specific (guaranteed) quality of service. Moreover, the Regulation acknowledges that certain traffic management practices are useful and, therefore, should also be permissible. Since the Regulation offers some ambiguity regarding what should be permissible, the Body of Regulators for Electronic Communications (BEREC) received a mandate to issue guidelines in order to ensure the uniform application of the Regulation in Europe.6 Troublesome ambiguity exists especially regarding the permissibility of zero rating practices under which the use of specific services or categories of services do not count against the in an Internet access contract included data allowance. Accordingly, BEREC published such guidelines that inter alia deal with zero rating and other potential practices by 4 Wyatt, New York Times, April 23, 2014, “F.C.C., in a Shift, Backs Fast Lanes for Web Traffic”, https://www.nytimes.com/2014/04/24/technology/fcc-newnet-neutrality-rules.html (accessed June 4, 2018). 5 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, OJ L 310, 26.11.2015, p. 1-18. 6 Art. 5 par. 3 Regulation 2015/2120. Net Neutrality in Europe after the Net Neutrality Regulation 2015/2120 61 ISPs in August 2016.7 Even though from a legal point of view these guidelines are not binding but just a mere interpretation aid to the Regulation their practical importance cannot be overstated.8 Regulation 2015/2120 takes a two-tier approach: It distinguishes between Internet Access Services (IAS) and other services. According to Art. 2 par. 1 No. 2 Regulation 2015/2120 IAS are such services, that enable users to access all content and/or services that are generally available on the Internet. For IAS Art. 3 par. 3 Regulation 2015/2120 states a general obligation to treat all traffic the same. However, the Regulation provides for exceptions to this strict net neutrality approach. According to Art. 3 par. 3 and par. 4 Regulation 2015/2120 ISPs can under further specified conditions apply certain traffic management techniques to the IAS. Art. 3 par. 2 Regulation 2015/2120 gives ISPs and end-users the right to enter agreements that eventually include certain deviations from strict net neutrality. “Other services” are addressed by Art. 3 par. 5 Regulation 2015/2120. Accordingly, ISPs are allowed to offer other electronic communication services which do offer a certain quality of service by prioritizing selected content. Traditionally, such services are called “managed services” or “specialized services”. However, according to Art. 3 par. 5 subpar. 2 Regulation 2015/2120 ISPs must offer such “other services” only if a minimum quality of the IAS is actually required for specific uses, if the “other service” does not use the capacity of an ISP but additional network capacity, and if such “other services” do not harm the IAS, e.g. by degrading the IAS so much that all customers will want to switch to an “other service” (at an extra fee). Moreover, ISPs need to be transparent on the conditions of an “other service” and must not market it as “Internet Access”. It did not take long before the first cases mainly concerning zero rating came up, that required national regulatory agencies to assess, which practices should be permissible under the new Regulation. The two most prominent examples in Germany concern an offer by Vodafone (“Vodafone Pass”) and Deutsche Telekom (“StreamOn”). Vodafone Pass offers different tariff arrangements, which customers can choose from and which 7 BEREC, Guidelines on the implementation by National Regulators of European Net Neutrality Rules, BoR 2016 (16) 127. 8 For a critical assessment whether this kind of delegating interpretative authority to BEREC see Klement, EuR 2017, 532. T. Fetzer 62 give customers effectively unlimited data for specific uses.9 For example, the Social-Pass enables customers to use selected social network sites without the usage being counted against an included data volume of their tariff. StreamOn on the other hand allows customers to use certain streaming-services of streaming providers that have an arrangement with Deutsche Telekom.10 Moreover, under certain conditions Deutsche Telekom will shape video streams in a way that the bandwidth, that is available for video streaming, will be limited so that customers can only watch SD-video quality. StreamOn is free of charge for customers as well as for streaming providers. The first Vodafone Pass is free of charge; for additional passes customers have to pay between 5 and 10 Euros per pass. The German Regulatory Agency “Bundesnetzagentur” (BNetzA) launched an investigation against Vodafone as well as against Deutsche Telekom. The investigation against Deutsche Telekom ended with an order by BNetzA generally allowing the zero rating of streaming services and banning the traffic shaping of video streams.11 The agency considered the zero rating aspect of StreamOn to be in accordance with the Net Neutrality Regulation. However, the traffic shaping aspect was considered a violation of the regulation’s rules on traffic management. Moreover, BNetzA ordered Deutsche Telekom to enable StreamOn customers to benefit from the zero rating not only in Germany but also while being abroad based on the European Roaming Regulation.12 This article will focus on the two questions related to the European Net Neutrality Regulation but not deal with the roaming issues. Hence, this article will ask which limits Regulation 2015/2120 puts on zero rating and traffic shaping. It will argue that BNetzA was correct in finding that the zero rating component as offered by Deutsche Telekom is legal but that the Regulation 9 https://www.vodafone.de/privat/service/vodafone-pass.html (accessed June 4, 2018). 10 https://www.telekom.de/unterwegs/tarife-und-optionen/streamon (accessed June 4, 2018). 11 Bundesnetzagentur, December 15, 2017, Bundesnetzagentur sichert Netzneutralität – Teilaspekte von “StreamOn” werden untersagt [Press release], https://www.bundesnetzagentur.de/SharedDocs/Downloads/DE/Allgemeines/P resse/Pressemitteilungen/2017/15122017_StreamOn.pdf?__blob=publicationFi le&v=2 (accessed June 4, 2018). 12 Regulation (EU) No 531/2012 of the European Parliament and of the Council of 13 June 2012 on roaming on public mobile communications networks within the Union (recast), OJ L 172, 30.06.2012, p. 10-35. Net Neutrality in Europe after the Net Neutrality Regulation 2015/2120 63 would also allow for traffic shaping measures as implemented by Deutsche Telekom but banned by BNetzA. 2. Zero rating and the European Net Neutrality Regulation Zero rating usually requires two contractual arrangements: One arrangement between an ISP and its customers, which determines that the consumption of certain Internet (content) services does not count against a data allowance included in the Internet access contract between the ISP and its customers. This is mainly relevant for contracts, which do not offer truly unlimited data. Mostly this concerns contracts for mobile data usage whereas fixed IAS usually offer unlimited data anyway. Usually a second contractual arrangement exists between the ISP and content providers (CP), whose services should benefit from the zero rating. Both contracts can be free of charge but also can include a payment that the customer and/or a CP must make to the ISP in order to benefit from the zero rating. The European Net Neutrality Regulation contains no provision dealing explicitly with zero rating. Since the above-mentioned zero rating schemes are offered through an IAS, the question whether such zero rating offers are permissible must be answered based on the general rule for contracts with ISPs as laid down in Art. 3 par. 2 Regulation 2015/2120.13 According to Art. 3 par. 2 Regulation 2015/2120: “2. Agreements between providers of internet access services and end-users on commercial and technical conditions and the characteristics of internet access services such as price, data volumes or speed, and any commercial practices conducted by providers of internet access services, shall not limit the exercise of the rights of end-users laid down in paragraph 1.“ This provision confirms the – also constitutionally protected – freedom to contract of ISPs and their customers.14 Accordingly, ISPs and their customers do have the right to conclude a contract tailor-made to the demand of the customer. In order to decide whether zero rating is permissible based on a contractual basis, the first question is whether a zero rating ar- 13 Since the available zero rating schemes are offered as part of the IAS their legality is not determined on the basis of Art. 3 par. 5 Regulation 2015/2120. 14 Jarass, in: Jarass, Charta der Grundrechte der Europäischen Union 2016, Art. 16 Recital 2 with further references; Bernsdorff, in: Meyer, Charta der Grundrechte der Europäischen Union 2014, Art. 16 Recital 10 ff. on the freedom to contract in EU law. T. Fetzer 64 rangement is an “agreement” within the meaning of Art. 3 par. 2 Regulation 2015/2010. Clearly the contract on an IAS is an “agreement” in that sense. However, is this a contract on “commercial and technical conditions of internet access services”? The Regulation does not explicitly mention zero rating as being covered by Art. 3 par. 2 Regulation 2015/2120 but refers only generally to “commercial and technical conditions and the characteristics of internet access services”. It also gives examples for such conditions and characteristics by listing “price, data volumes or speed”. Zero rating effectively is a kind of a pricing mechanism: ISP and customer agree that the ISP will not charge the customer for certain uses of her IAS. Hence, zero rating agreements fall under the scope of Art. 3 par. 2 Regulation 2015/2120. This view is confirmed by the guidelines that BEREC has issued on the implementation of the Regulation 2015/2120. According to Art. 5 par. 3 Regulation 2015/2120 BEREC had to issue such guidelines on the implementation of the Regulation in order to ensure a uniform application of the Regulation in the Member States.15 According to recital 40 of those guidelines zero rating shall not be prohibited per se but needs to be assessed based on a case-by-case approach by the national regulatory agencies. Neither the constitutionally protected nor the by the Regulation 2015/2120 defined freedom to contract of ISPs and their customers is guaranteed without limitations. Rather, the Regulation determines that contracts between ISPs and customers are only permissible if they do not limit the exercise of the rights of end-users laid down in Art. 3 par. 1 Regulation 2015/2120. According to this provision: „1. 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 provider’s location or the location, origin or destination of the information, content, application or service, via their internet access service.“ Neither Art. 3 par. 2 nor par. 1 Regulation 2015/2120 explicitly address the question whether zero rating is limiting any end-user’s rights and therefore should be prohibited. Hence, one must apply the tools of statutory interpretation in order to assess whether the Regulation bans zero rating. Those tools are the legislative text, legislative history, the context of the relevant provisions and the purpose of a provision. 15 BEREC, Guidelines on the implementation by National Regulators of European Net Neutrality Rules, BoR (16) 127. Net Neutrality in Europe after the Net Neutrality Regulation 2015/2120 65 The text of Art. 3 Regulation 2015/2120 does not give any guidance for the assessment of zero rating practices since it does not mention zero rating explicitly. However, a first argument in favor of the permissibility of zero rating can be derived from the legislative history of the regulation. Even though the European legislator was aware of the existence of zero rating practices16 – and the fact that some commentators considered such practices to be a serious threat to net neutrality during the legislative procedure – it did not explicitly ban those practices. If the legislator is aware of the possibility that a certain conduct occurs in the future but does not ban or even regulate this conduct, this is a clear indicator that the respective conduct should not be generally banned. The context of Art. 3 Regulation 2015/2120 does not really give any clear indication whether zero rating should be permissible or banned. This means that the purpose of the provision is going to be important for the assessment whether zero rating is legal or not: The regulation aims at protecting the end-user’s right as laid down in Art. 3 par. 1 Regulation 2015/2120. If zero rating should endanger those rights, contracts on zero rating would not be permissible under Art. 3 par. 2 Regulation 2015/2120. It is important to note that not any limitation of end-users’ rights laid down in Art. 3 par. 1 Regulation 2015/2120 is relevant in this context. According to recital 7 of the Regulation only materially reductions are relevant. Such a material reduction requires an “undermining of the essence of the end-users’ rights.” The question whether such a significant reduction of end-users’ rights is caused by a zero rating offer requires a differentiated answer: It is necessary to distinguish between different end-user groups: customers of an ISP using zero rating offers, all end-users and CPs. Generally speaking, customers using zero rating offers are not harmed by such offers but benefit from them since they can use more services than they actually could based on their general data allowance: First, the zero rated content does not count towards the included data allowance and, therefore, the customer can consume this content unlimitedly. Second, as a consequence of the zero rating of some content more included data is also available for the consumption of content, which is not zero rated. Of course, it is possible that specific zero rating offers are not beneficial to customers, e.g. if ISPs block all content except for the zero rated and 16 European Parliament, October 22, 2015, Was bedeutet Netzneutralität?, http://www.europarl.europa.eu/news/de/news-room/20151022STO98701/wasbedeutet-netzneutralit%C3%A4t (accessed June 4, 2018). T. Fetzer 66 thereby create walled-gardens. Also, zero rating that enables the customer to use zero rated content even after an included data allowance has been used might have a negative impact.17 However, if this is not the case, the individual customer’s rights laid down in Art. 3 par. 1 Regulation 2015/2120 are generally not harmed by zero rating offers. The European Regulation does not only aim at protecting individual customers but also at the protection of all customers as a group and their ability to access a wide variety of content on the Internet. Net neutrality proponents generally have voiced three potential dangers resulting from zero rating offers for the variety and plurality of content that is available on the Internet: (1) Zero rating practices give those services benefiting from zero rating a competitive advantage over such services, which are not zero rated. This potentially leads to a reduction of the overall number of available services if customers prefer zero rated content over non-zero rated content, which then eventually will disappear. (2) If ISPs charge CPs for the participation in a zero rating offer, this favors established and financially strong CPs over non-commercial and new start-up CPs. CPs with deep pockets have a competitive advantage over financially weaker CPs and can drive them out of business. (3) Vertically integrated ISPs have an incentive to favor affiliated CPs over unaffiliated CPs, which potentially results in an overall reduction of CPs. However, it has been demonstrated that all three threats are only plausible under certain market conditions:18 First of all, much depends on the level of competition on the Internet access market. The more competition on this market exists the less likely is it that the described threats actually materialize. If end-customers and CPs can choose from different ISPs, this makes it much harder for a single ISP to charge either the end-customer or the CP a fee for the participation in the zero rating scheme. Secondly, regarding the effects of zero rating on the variety of available content much depends on the specific conditions of zero rating offers. The assessment whether zero rating offers endanger the variety and plurality of content mainly depends on two factors: (1) Do CPs get non-discriminatory access to the zero rating offer? If any CP can benefit from such offers on equal terms, such offers do not distort competition between different ISPs, including the competition between independent CPs and CPs affiliated with 17 BEREC, Guidelines on the implementation by National Regulators of European Net Neutrality Rules, BoR (16) 127, Guideline No. 40. 18 Fetzer et al., Wirtschaftsdienst 2013, 695; Peitz et al., Wirtschaftsdienst 2012, 777. Net Neutrality in Europe after the Net Neutrality Regulation 2015/2120 67 an ISP. (2) Does an ISP charge an extra fee from CPs? If the participation in a zero rating scheme is free of charge for CPs, it is not plausible that popular (mainstream) content of financially strong CPs gets a competitive advantage over non-commercial content or start-up CPs, which lack the ability to pay for the participation in a zero rating scheme. In sum, zero rating schemes, which are open to any CP and are free of charge, are not threatening the variety and plurality of content and, hence, do not limit the rights of all end-users as laid down in Art. 3 par. 1 Regulation 2015/2120. Hence, a zero rating arrangement between an ISP and its customers does not violate Art. 3 par. 2 Regulation 2015/2120 due to a violation of the rights of all end-users laid down in Art. 3 par. 1 Regulation 2015/2120. Lastly, the European Regulation does also protect the right of CPs to distribute their content to any end-user. As just mentioned zero rating can potentially distort competition between different CPs if it is not offered on a non-discriminatory basis at no charge. If any ISP can benefit from a zero rating scheme without having to pay for it an extra fee, it is not plausible that zero rating causes distortions of competition between different CPs. Overall, it can be stated that the European Regulation does not generally ban zero rating. The permissibility must be evaluated based on a caseby-case approach. The legal basis for this evaluation is Art. 3 par. 2 Regulation 2015/2120, which protects the freedom to contract of ISPs as well as end-consumers. Only zero rating offers that materially limit the rights of end-users laid down in Art. 3 par. 1 Regulation 2015/2120 are prohibited. Zero rating schemes, which are open to all CPs on a nondiscriminatory basis and which are free of charge are clearly permissible. To all other offers strict scrutiny applies. Consistent with these findings BNetzA found the zero rating component of StreamOn to be generally permissible under Regulation 2015/2120.19 19 Bundesnetzagentur, December 15, 2017, Bundesnetzagentur sichert Netzneutralität – Teilaspekte von “StreamOn” werden untersagt [Press release], https://www.bundesnetzagentur.de/SharedDocs/Downloads/DE/Allgemeines/P resse/Pressemitteilungen/2017/15122017_StreamOn.pdf?__blob=publicationFi le&v=2 (accessed June 4, 2018). T. Fetzer 68 3. Traffic shaping and the European Net Neutrality Regulation Traffic shaping refers to traffic management techniques, which reduce the amount of data used for a service. Such techniques can be based on data compression technologies or on a reduction of the available bandwidth for a specific service. Traffic shaping oftentimes is combined with zero rating schemes by ISPs. The reason for that combination is that customers with a zero rating tariff tend to consume more data and thereby to use more network capacity. In order to avoid congestion on the network caused by this effect ISPs might want to shape the zero rated content in order to reduce the overall amount of data flowing through the network. From an economic point of view ISPs want to reduce the cost of providing zero rating. One of the first cases raising the question whether traffic shaping violates net neutrality involved the U.S. based mobile network operator MetroPCS.20 MetroPCS only had limited spectrum resources that would have made it hard to offer streaming services to its customers. Hence, MetroPCS reduced the quality of videos by shaping the traffic. That way MetroPCS was able to offer a service to its customers that it otherwise could not have offered to them. The current StreamOn case also involves a traffic shaping component. The ISP shapes video streams of StreamOn customers in a way that customers will experience only SD-quality instead of HDquality. From a technical point of view this is achieved by limiting the bandwidth that is available for video streams. However, from a customer experience point of view normally customers with a smartphone or tablet will not be able to tell a difference between SD and HD due to the relatively small screen of mobile devices. The traffic shaping will be applied to all video streams once a customer has opted for StreamOn no matter whether it concerns CPs that are StreamOn partners or not. According to the ISP it would be hard to distinguish video streams coming from different sources without engaging in too intrusive deep packet inspection (DPI). 20 Singel, Wired, January 7, 2011, MetroPCS 4G Data-Blocking Plans May Violate Net Neutrality, https://www.wired.com/2011/01/metropcs-net-neutrality (accessed June 4, 2018). Net Neutrality in Europe after the Net Neutrality Regulation 2015/2120 69 BNetzA ruled that the traffic shaping component of StreamOn violates Art. 3 par. 3 Regulation 2015/2120 due to the application of an impermissible traffic management technique.21 It is questionable, however, whether the agency was correct in applying Art. 3 par. 3 Regulation 2015/2120 in addition to Art. 3 par. 2 Regulation 2015/2120 in that case. Arguably Art. 3 par. 3 (and 4) Regulation 2015/2120 only applies to unilateral traffic management measures by ISPs whereas Art. 3 par. 2 Regulation 2015/2120 governs traffic management measures which are based on a contractual agreement between an ISP and its customers. Since the European Net Neutrality Regulation does not explicitly state whether traffic shaping should be allowed, Art. 3 Regulation 2015/2120 needs to be interpreted based on the above-mentioned tools of interpretation. The text of the provision is silent regarding traffic shaping. One could make the argument that traffic shaping should be generally permissible since the legislator did not explicitly ban it. However, the argument is weaker in this context than in the context of zero rating since the discussion on traffic shaping during the legislative process was much less prominent than the discussion on zero rating. Since the context of Art. 3 Regulation 2015/2120 does also not provide for any conclusive arguments in favor or against the legality of traffic shaping measures, eventually the purpose of the Net Neutrality Regulation will play an important role in the assessment of the legality of traffic shaping measures. According to the internal norm hierarchy of Art. 3 Regulation 2015/2120 the first step is to examine whether traffic shaping can be summarized under Art. 3 par. 2 Regulation 2015/2120 before moving on to the par. 3 of that provision. Art. 3 par. 2 Regulation 2015/2120 requires an agreement between an ISP and its customers. In the case of StreamOn the traffic shaping component has been based on such an agreement. Customers can only benefit from the zero rating of video streams if they also accept the traffic shaping of these streams. Art. 3 par. 2 Regulation 2015/2120 does not explicitly mention traffic shaping as a permissible content for an agreement between ISP and its customers. However, the provision explicitly states that agreements on technical conditions of an IAS are allowed. Traffic shaping 21 Bundesnetzagentur, December 15, 2017, Bundesnetzagentur sichert Netzneutralität – Teilaspekte von “StreamOn” werden untersagt [Press release], https://www.bundesnetzagentur.de/SharedDocs/Downloads/DE/Allgemeines/P resse/Pressemitteilungen/2017/15122017_StreamOn.pdf?__blob=publicationFi le&v=2 (accessed June 4, 2018). T. Fetzer 70 can be interpreted as a specific kind of technical condition of the IAS. Specific traffic will be treated on a technical level in a specific way so that the data packages, that are required to consume video streams, are reduced. This is achieved by limiting the available bandwidth for these services. Since Art. 3 par. 2 Regulation 2015/2120 explicitly mentions speed as one permissible condition that ISPs and their customers can agree on, it seems convincing to subsume agreements on traffic shaping measures under Art. 3 par. 2 Regulation 2015/2120. As mentioned in the context of zero rating such agreements are only permissible under Art. 3 par. 2 Regulation 2015/2120 if they do not limit the end-users’ rights as laid down in Art. 3 par. 1 Regulation 2015/2120. In order to assess whether traffic shaping measures cause such an interference with those rights one has to distinguish again between different groups of end-users: The customer of the ISP, all end-users and the CPs. As mentioned earlier not any interference with the rights of these groups will lead to a violation of the Regulation but only material ones.22 Regarding the customers of an ISP much depends on the concrete design of a traffic shaping measure. If the traffic shaping does not degrade the customer experience by reducing the (sensible) quality of the IAS but instead effectively gives the customer more data allowance since less of her allowance is used for the zero rated content, the customer benefits from such a measure. For a conclusive assessment it is also important whether the customer can deactivate the traffic shaping (and the zero rating) easily provided she desires to get the best available quality for any content. If this is ensured and the customer gets full autonomy whether she wants the traffic shaping to be applied, such traffic shaping measures should not be considered to be diminishing the rights of the ISP’s customers. Regarding all end-consumers a threat to their rights laid down in Art. 3 par. 1 Regulation 2015/2120 is not clearly identifiable. The only thinkable negative impact on all end-users would be that CPs do no longer offer any HD content since they know that their content will be treated in a way that consumers will not be able to receive it in HD but only in SD anyway. However, as long as there is sufficient competition on the ISP as well as on the CP market such a danger seems to be rather hypothetical. Remains the group of the CPs that might be negatively affected by traffic shaping measures. Here a further distinction is necessary: Such CPs 22 Regulation 2015/2120, OJ L 310, 26.11.2015, p. 1-18, Recital 7. Net Neutrality in Europe after the Net Neutrality Regulation 2015/2120 71 which have a contract with an ISP on zero rating and traffic shaping are not negatively affected by the traffic shaping of their content since they at the same time benefit from the zero rating of their offers. However, the current offers, namely StreamOn, do not only shape the traffic of partners of the ISP applying zero rating and traffic shaping but of any video stream provider. At first glance, this clearly seems to violate rights of such CPs which do not participate in StreamOn: They are affected by the shaping of their traffic but do not benefit from the zero rating of their content. In the case of StreamOn one could argue that the potential harm to CPs is limited since every streaming provider could become a partner of Deutsche Telekom free of charge and, hence, there is no reason to complain. However, such a view effectively would lead to an obligation to become a StreamOn partner which would be problematic from a freedom to contract point of view. However, the decisive question is whether Art. 3 par. 1 Regulation 2015/2120 actually includes a right for CPs to be received by any end-user with the best possible quality rather than just a right for the CP towards its ISP to get any content distributed over the network of that specific ISP. The first understanding would be a too extensive interpretation of the Regulation 2015/2120. Art. 3 par. 2 Regulation 2015/2120 gives end-users the right to agree with their ISP on commercial and technical conditions of “their” IAS. In other words: End-users have a contract with their ISP and CPs have a similar contract with their ISP. Accordingly, end-users have a right towards their ISP to get access to any available content on the Internet. CPs have a comparable right towards their ISP that it makes the content of the CP available to everybody. However, if an end-user refuses to access the content by a CP or to receive this content only with a specific quality, this does not infringe the right of that CP. Art. 3 par. 1 Regulation 2015/2120 does not give CPs a right towards any ISP to get their content delivered with maximum quality to any end-user if the end-user does not want that. This view is supported by the fact that Art. 3 par. 2 Regulation 2015/2120 explicitly allows contracts on the speed of an IAS. However, any contract on the speed (meaning bandwidth) of the IAS will have a positive or negative impact on the ability of CPs to distribute their content to consumers. If an end-user decides to book a 1 Mbit/s IAS, that will inevitably make it impossible for video streaming providers to provide their service to this customer. However, Regulation 2015/2120 gives end-users the right to reduce the quality of their IAS for any CP this should include the end-user’s right to reduce the quality only for selected services. If the end-user decided autonomously that she only wants a certain quality for her IAS, this decision must be respected by CPs. Eventually that expresses T. Fetzer 72 ideally the concept of the entire Regulation 2015/2120: End-users should have full control over their IAS rather than ISPs or CPs. Arguably traffic shaping that is based on an agreement between an ISP and its customers only needs to be complying with Art. 3 par. 2 Regulation 2015/2120 in order to be legal. However, BNetzA argued that traffic shaping also needs to comply with Art. 3 par. 3 Regulation 2015/2120 since traffic shaping is a specific kind of traffic management, which is governed by Art. 3 par. 3 and par. 4 Regulation 2015/2120.23 BNetzA relied heavily on the BEREC guidelines when pursuing this road. According to those guidelines National Regulatory Agencies (NRA) need to consider always Art. 3 par. 3 Regulation 2015/2120 when deciding on the legality of traffic management measures that are based on a contract between ISP and its customers.24 However, the structure of Art. 3 Regulation 2015/2120 makes it also possible to argue that traffic management measures, that are based on an agreement between an ISP and a customer, only must be assessed based on Art. 3 par. 2 Regulation 2015/2120 whereas Art. 3 par. 3 and 4 Regulation 2015/2120 only apply to such traffic management measures, which an ISP wants to apply unilaterally: Firstly, Art. 3 par. 2 Regulation 2015/2120 only refers to par. 1 of that provision and not to par. 3 and 4 when limiting the rights of ISPs and end-users to enter agreements on the conditions of an IAS. If the legislator would have wanted that right to be limited also by the limitations laid down in Art. 3 par. 3 and 4 Regulation 2015/2120, it would have been easy to mention that in Art. 3 par. 2 Regulation 2015/2120 explicitly. Besides this textual argument a contextual consideration also speaks for an interpretation according to which contractually-based traffic management measures only have to satisfy the requirements of Art. 3 par. 2 Regulation 2015/2120 but not the requirements of par. 3 of that provision: Art. 3 par. 2 Regulation 2015/2120 explicitly permits agreements on commercial conditions of an IAS. Art. 3 par. 3 subpar. 2 Regulation 2015/2120, however, prohibits any traffic management measure to be based on commercial considerations. If one interprets 23 Bundesnetzagentur, December 15, 2017, Bundesnetzagentur sichert Netzneutralität – Teilaspekte von “StreamOn” werden untersagt [Press release], https://www.bundesnetzagentur.de/SharedDocs/Downloads/DE/Allgemeines/P resse/Pressemitteilungen/2017/15122017_StreamOn.pdf?__blob=publicationFi le&v=2 (accessed June 4, 2018). 24 BEREC, Guidelines on the implementation by National Regulators of European Net Neutrality Rules, BoR (16) 127, Guideline No. 17. Net Neutrality in Europe after the Net Neutrality Regulation 2015/2120 73 Art. 3 par. 3 Regulation 2015/2120 to be an implicit part of Art. 3 par. 2 Regulation 2015/2120, it is hard to explain how one provision allows for commercial agreements whereas the second provision prohibits traffic management measures that would be required to execute the (permissible) commercial agreement. To exemplify that argument: Art. 3 par. 2 Regulation 2015/2120 allows clearly for agreements on data caps for the IAS. Such data caps require traffic management measures: If the included data allowance has been exhausted by the customer, the traffic needs to be throttled or blocked. However, such throttling or blocking would not be permissible under Art. 3 par. 3 Regulation 2015/2120 – provided it was actually applicable to this case. Since such a result would be contradictory this is a further argument that Art. 3 par. 3 and par. 4 Regulation 2015/2120 are not applicable to cases that fall within the scope of Art. 3 par. 2 Regulation 2015/2120 at all. Such an interpretation of Art. 3 Regulation 2015/2120 is also most consistent with the general idea of the European Net Neutrality Regulation to give the end-user full discretion to decide on the performance of her IAS as long as the rights of others are not negatively affected. As shown above such a relevant negative effect is not caused by traffic shaping measures. Hence, they should be permissible under Regulation 2015/2120. 4. Summary The European Net Neutrality Regulation only has put a tentative end to the net neutrality debate in Europe. The discussion on the need for legislative actions regarding net neutrality has been succeeded by an intense debate on the interpretation of Regulation 2015/2120. This is no surprise, since the Regulation tries to strike a balance between strict net neutrality and the ability of ISPs to offer innovative new services. This is no easy balance to strike in general. This is even more true for specific deviations from strict net neutrality like zero rating and traffic shaping. Since the Regulation does not mention zero rating or traffic shaping explicitly, the question whether those two business models are permissible must be assessed based on Art. 3 Regulation 2015/2120. Much depends here on the concrete design of zero rating and traffic shaping offers. However, if they are offered in a way that end-users and CPs can fully decide whether they want to be included in a zero rating scheme or not, at least zero rating should be permissible. This is especially true if zero rating is offered free of charge to end-users as well as to CPs. T. Fetzer 74 Regarding traffic shaping the relevant question is whether an end-user can decide autonomously whether to participate or not. If this is the case, also traffic shaping – depending on the concrete design – is not generally prohibited by the Regulation 2015/2120. First cases show, however, that there is a high level of legal uncertainty existing. Eventually, this will have to be resolved by the courts. Based on past experiences with court procedures a final decision might not be issued within years. Based on past experience with the net neutrality debate in the U.S. even a final court decision might not be able to settle the net neutrality anytime soon. References BEREC. (2016, August 30). BEREC Guidelines on the Implementation by National Regulators of European Net Neutrality Rules. BoR (16) 127. Bundesnetzagentur. (2017, December 15). Bundesnetzagentur sichert Netzneutralität – Teilaspekte von “StreamOn” werden untersagt [Press release]. Retrieved from https://www.bundesnetzagentur.de/SharedDocs/Downloads/DE/Allgemeines/Presse /Pressemitteilungen/2017/15122017_StreamOn.pdf?__blob=publicationFile&v=2 [Accessed June 4, 2018]. European Parliament. (2015, October 22). Was bedeutet Netzneutralität?. Retrieved from http://www.europarl.europa.eu/news/de/headlines/society/20151022STO9870 1/was-bedeutet-netzneutralitat [Accessed June 4, 2018]. Fetzer, T., Peitz, M., & Schweitzer, H. (2013). Flexible Geschäftsmodelle in der Telekommunikation und die Netzneutralitätsdebatte. Wirtschaftsdienst, 93(10), 695-701. Jarass, H. D. (2016). Charta der Grundrechte der Europäischen Union. Munich: C.H.Beck. Klement, J. H. (2017). Netzneutralität: der Europäische Verwaltungsbund als Legislative. Europarecht, 2017(4), 532-561. Meyer, J. (2014). Charta der Grundrechte der Europäischen Union. Baden-Baden: Nomos. Peitz, M., Fetzer, T., & Schweitzer, H. (2012). Die Netzneutralitätsdebatte aus ökonomischer Sicht. Wirtschaftsdienst, 92(11), 777-783. 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. (2015). Official Journal of the European Union, L 310, 1-18. Regulation (EU) No 531/2012 of the European Parliament and of the Council of 13 June 2012 on roaming on public mobile communications networks within the Union. (2012). Official Journal of the European Union, L 172, 10-35. Net Neutrality in Europe after the Net Neutrality Regulation 2015/2120 75 Singel, R. (2011, January 7). MetroPCS 4G Data-Blocking Plans May Violate Net Neutrality. Wired. Retrieved from https://www.wired.com/2011/01/metropcs-netneutrality [Accessed June 4, 2018]. Wyatt, E. (2014, April 23). F.C.C., in a Shift, Backs Fast Lanes for Web Traffic. The New York Times. Retrieved from https://www.nytimes.com/2014/04/24/technology/fcc-new-net-neutrality-rules.html [Accessed June 4, 2018]. Yoo, C. S. (2008). Network Neutrality, Consumers, and Innovation. University of Chicago Legal Forum, Volume 2008(1), 179-262. T. Fetzer 76

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Abstract

Strong dynamics and multifaceted innovations characterise the Internet. In this rapidly evolving ecosystem, challenges but also questions concerning innovation, integration and sustainability arise. The Internet of things brings disruptive innovations which are no longer limited to communication applications, but rather spur the transition of traditional network industries into intelligent (smart) networks. Critical requirements are QoS differentiated All-IP bandwidth capacities combined with sensor networks, geopositioning services and big data. In this volume, leading international researchers present their latest findings on the dynamics of the Internet in the future, covering a variety of current and highly relevant issues related to the Internet of things, 5G, interconnection, Internet ecosystem innovation and network neutrality. With contributions by Günter Knieps; Volker Stocker; Bert Sadowski; Onder Nomaler; Jason Whalley; Thomas Fetzer; Johannes M. Bauer; William Lehr; Iris Henseler-Unger; Falk von Bornstaedt; Marlies Van der Wee; Frederic Vannieuwenborg; Sofie Verbrugge; Christopher S. Yoo; Jesse Lambert

Zusammenfassung

Das Internet zeichnet sich durch eine starke Dynamik und vielfältige Innovationen aus. Das Internet der Dinge verändert die traditionellen Netzsektoren sowie die ganze App-Ökonomie grundlegend. Disruptive Innovationen beschränken sich nicht mehr auf Kommunikationsanwendungen, sondern treiben den Übergang zu intelligenten (smarten) Netzindustrien voran. Kritische Anforderungen sind dabei QoS-differenzierte All-IP-Bandbreitenkapazitäten in Kombination mit Sensornetzen, Geopositioning-Diensten und Big Data. In diesem Band präsentieren führende internationale Experten ihre neuesten Ergebnisse zur Dynamik des zukünftigen Internets zu einer Vielzahl aktueller und hochrelevanter Themen rund um das Internet der Dinge, 5G, Zusammenschaltungsvereinbarungen, Innovationen im Internet-Ökosystem und Netzneutralität. Mit Beiträgen von Günter Knieps; Volker Stocker; Bert Sadowski; Onder Nomaler; Jason Whalley; Thomas Fetzer; Johannes M. Bauer; William Lehr; Iris Henseler-Unger; Falk von Bornstaedt; Marlies Van der Wee; Frederic Vannieuwenborg; Sofie Verbrugge; Christopher S. Yoo; Jesse Lambert