EU telecom regulators see free Internet services as next battle

By Julia Fioretti

BRUSSELS (Reuters) – Exempting some online applications, such as Facebook, from consumers’ monthly data caps and treating them as free is seen as the next front in a battle over how telecoms operators can manage the traffic on their networks as regulators prepare to enforce Europe’s first-ever “net neutrality” rules.

BEREC, the body comprising the European Union’s 28 telecoms regulators, on Monday produced a set of draft guidelines on implementing the net neutrality rules which require operators such as Orange <ORAN.PA>, Deutsche Telekom <DTEGn.DE> and Telefonica <TEF.MC> to treat all Internet traffic equally.

Deciding whether operators should be allowed to devote part of their network to certain services, such as remote healthcare, will be much simpler than deciding whether offering content for free, such as Facebook and Spotify, breaches the principle of net neutrality, Sebastien Soriano, head of France’s telecoms regulator ARCEP, told Reuters.

“This is really in the grey area of the regulation,” Soriano, who will preside over BEREC next year, said.

The EU’s net neutrality rules, agreed last year, neither explicitly allow the practice of zero-rating – exempting certain applications from a customer’s data allowance – nor forbid it, leaving regulators in a bind.

Some countries, such as the Netherlands, Slovenia and India, have banned zero-rating on the grounds that it violates the principle of net neutrality and gives some applications an unfair competitive advantage.

“Zero-­rating allows ISPs (Internet service providers) to make certain applications more attractive than others, thereby picking winners and losers online,” the European Digital Rights association said.

Telecoms operators argue that zero-rating is beneficial for consumers and can be used to give low-income customers improved Internet access, much like Facebook Inc’s <FB.O> attempt to offer its own social network and messaging service for free in India.

BEREC’s guidelines say that regulators should decide whether zero-rating is allowed depending on the market share of both the operator and the company providing the free content.

Soriano said that as a result, the issue will have to be treated on a case-by-case basis.

“Maybe in one country, one practice of zero-rating will be OK considering the market shares of the operators or the partners … and in other countries it will raise many problems.”

For example, treating a music service such as Spotify as free and therefore exempting it from a customer’s data allowance “creates an economic incentive to use that music application instead of competing ones,” the guidelines say.

BEREC said that blocking access to all content except that which is treated as free once a customer hits his data cap will be forbidden.

But sponsored data, whereby content providers such as Spotify or Netflix <NFLX.O> pay operators to deliver their services for free, raises more difficult issues because no content is actually being blocked.

“Technically all the traffic is treated in the same way, but at the tariff level, some services are untariffed and others are,” Soriano said. “This question is open. This is at the heart of the grey area of what is allowed or not.”

(Reporting by Julia Fioretti, editing by G Crosse)

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