Net Neutrality: Current State of Affairs and Main Players
by Zsuzsa Detrekoi
How is net neutrality defined in national legislation and policies?
Although the concept of net neutrality is well known today, its exact meaning remains obscure. Regulators do not usually use the terms “neutral net” or “net neutrality” and do not define them. Tim Wu, a law professor at Columbia University, coined the term and defined the concept in his 2002 paper “A Proposal for Network Neutrality”, where he wrote:
“The growth of home broadband has created a new and difficult regulatory problem. Few dispute that broadband operators need the freedom to manage their networks to ensure maximum efficiency. Yet there is growing evidence that carriers can restrict the use of their broadband networks in ways that distort the market for internet applications, home networking equipment and other markets of public value.
The regulator is faced with a challenge: What principle can balance the legitimate interests of broadband carriers in administering their networks with the danger of harm to new application markets? And how can such a concept be translated into both clear legal guidelines and the practice of network design?
This proposal introduces the concept of network neutrality or nondiscrimination as a tentative answer to these questions. As a general description, the proposal would strike a balance: it would forbid broadband operators, absent a showing of harm, from restricting what users do with their internet connection, while giving the operator general freedom to manage bandwidth consumption and other matters of local concern. The concept achieves this by developing “forbidden” and “permissible” grounds for discriminating among packets on its network. Generally speaking, the forbidden grounds are inter-network indicia, such as IP address or application type. Conversely, the allowable grounds for restriction are local indicia—particularly, bandwidth.”
When the U.S. Congress amended the Communication Act (which was first adopted in 1934) in 1996, it did not refer to net neutrality simply because the concept did not exist. In section 230(b) of the Communications Act, it is stated that it is the policy of the United States “to preserve the vibrant and competitive free market that presently exists for the Internet” and “to promote the continued development of the Internet.” The Federal Communications Commission (FCC), America’s broadcast and telecom regulator was tasked with encouraging “the deployment on a reasonable and timely basis of advanced telecommunications capability” (what in technological lingo means “broadband”) to all Americans.
Although the concept of net neutrality was already publicly circulated, FCC in its attempts to regulate the Internet in 2005 and 2011 did not use the term “net neutrality”. FCC instead highlighted the need for an “open internet” as an ultimate purpose to preserve and promote.
In its first draft regulation on open internet access dated 2013, the European Union (EU) used and defined the term “net neutrality” as “the obligation on providers to provide unhindered connection to all content, applications or services being accessed by end-users – also referred to as Net Neutrality - while regulating the use of traffic management measures by operators in respect of general internet access.” But in the final form of the regulation, adopted in 2015, the EU followed the US example and used “open internet” as the final goal. EU basically treats the term “open internet” as a synonym of “net neutrality” and defines it as follows: “[…] no blocking or throttling or discrimination of online content, applications and services.” While the EU refers to net neutrality as a concept in various papers, it never does so in official regulatory acts.
According to the EU, “every European must be able to have access to the open internet and all content and service providers must be able to provide their services via a high-quality open internet. Under these rules, blocking, throttling and discrimination of internet traffic by Internet Service Providers (ISPs) is not allowed in the EU, save for three exhaustive exceptions (compliance with legal obligations; integrity of the network; congestion management in exceptional and temporary situations) and users are free to use their favorite apps and services no matter the offer they subscribe to.”
The EU regulation also requires all traffic “to be treated equally.” That means, for example, that “there can be no prioritization of traffic in the internet access service. At the same time, equal treatment allows reasonable day-to-day traffic management according to objectively justified technical requirements, and which must be independent of the origin or destination of the traffic and of any commercial considerations. Common rules on net neutrality mean that internet access providers cannot pick winners or losers on the internet, or decide which content and services are available.”
EU thus seems to use Net Neutrality and Open Internet as interchangeable concepts. However, an analysis from the European Commission published in 2009 states that the Internet is “open” when it allows “end users in general to access and distribute information or run applications of their choice.” In its take on internet freedom, the Commission distinguishes between “neutrality” (which implies non-discrimination) and “openness” (which refers to “net freedoms” enjoyed by citizens). In the Commission’s view, the “openness” has to do with end users while “neutrality” is related to operators. However, it is important to note that discrimination between operators eventually affects end users, namely their ability to access the Internet.
Chile was the first country outside Europe to adopt a net neutrality law in 2010. However, although it uses the term “net neutrality”, the law does not make an attempt to define the concept: it only regulates the rights and obligations related to net neutrality.
The Netherlands was the first European country to enact the concept of net neutrality when it amended its Telecommunication Act in 2012. Adopted three years before the 2015 EU Regulation, the Dutch law does not accept any exceptions on net neutrality, which is a much stricter take than the EU regulation. The Dutch law does not define the net neutrality concept either.
Very few other countries have passed some kind of regulation on net neutrality. They include Singapore and Slovenia.
In conclusion, the term of “open internet” has so far been more frequently used in regulation than “net neutrality”. Neither of these terms, which are treated as synonyms, is properly defined in legal provisions.
How is net neutrality regulated?
A comparative analysis of existing laws and regulations reveals two emerging trends in net neutrality regulation.
One approach is to see the net neutrality concept as a consumer right. FCC took this approach in its 2005 Internet Policy Statement. It states that “to encourage broadband deployment and preserve and promote the open and interconnected nature of the public Internet”, consumers are entitled to: “access the lawful Internet content of their choice”; “run applications and use services of their choice, subject to the needs of law enforcement”; “connect their choice of legal devices that do not harm the network”; “competition among network providers, application and service providers, and content providers.”
The Internet Policy Statement also puts forward the concept of the “open internet” as a main goal of the consumer rights protection.
EU regulation also refers to consumers rights in its regulation: “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.”
The second approach is to prohibit discrimination. FCC’s Open Internet Order of 2011 follows this direction: “Fixed broadband providers may not block lawful content, applications, services, or non-harmful devices; mobile broadband providers may not block lawful Web sites, or block applications that compete with their voice or video telephony services”; “Fixed broadband providers may not unreasonably discriminate in transmitting lawful network traffic.”
EU regulation also forbids discrimination: “Providers of internet access services shall treat all traffic equally, when providing internet access services, without discrimination, restriction or interference, and irrespective of the sender and receiver, the content accessed or distributed, the applications or services used or provided, or the terminal equipment used.”
Regulators sometimes combine the two approaches. The EU regulation is such a case.
Bodies in charge of implementation
National Regulatory Authorities (NRA) are generally in charge of monitoring and enforcing compliance with the open internet rules and checking whether consumer rights are violated or discrimination between Internet traffics exists. In the U.S., this authority is the FCC, which was also responsible to adopt regulation on net neutrality (Open Internet Order, Internet Statement Policy).
In the EU, each member state has its own NRA whose decisions could be reviewed by national courts. Given the judicial system of the European Union and the direct effect of EU regulation on net neutrality, national courts can request the European Court of Justice (ECJ) to interpret the EU provisions in a so called “preliminary ruling”. However, the final decision in such a case, based on the preliminary ruling, is made by national courts.
In the U.S., not only a specific decision can be appealed in court. The whole body of FCC regulations (Open Internet Order, Internet Statement Policy) has been challenged so far in court (basically the authorization of the FCC was questioned by the service providers).
However, in spite of existing regulations, major developments in net neutrality regulation are yet to come. In the EU, NRAs make contradictory decisions although they are based on the same legal provisions. In the U.S., with the appointment of the Trump administration and the new chairman of the FCC, Ajit Pai, the future of net neutrality legislation is unclear. Several American states are moving in the direction to write their own net neutrality regulation after an FCC vote in December 2017.
How is net neutrality legislation implemented?
The focus of net neutrality regulations has shifted to three types of practice: 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.
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. It is also known as a “fast lane” arrangement.
Zero rating, also known as “sponsored connectivity”, 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.
Although the scope of the regulations is usually very broad, covering all kinds of internet traffic and online content or applications and services, the definition of discrimination is not clear. Some definitions consider as “unfair” any type of discrimination that is not chosen by the end users. Some others definitions are less restrictive, stating that neutrality can exist at different levels of service as long as two users who pay equally receive the same service and get the same resources.
The first net neutrality cases in the EU are focused on zero rating. NRAs in several countries including Hungary and Sweden found zero rating practices to be in contradiction with the EU regulation. However, there are examples of NRAs that approved zero rating practices of ISPs, Belgium being such an example. In a separate case, the decision of the Dutch NRA forbidding the zero rating practice of the telco T-Mobile Netherlands was overruled by a Rotterdam court. The Dutch court found that while the zero rating offer did indeed violate the Netherlands’ Telecommunications Law, the ban on price discrimination in the Dutch law did not apply in this case since the EU’s net neutrality regulation framework took precedence. In yet a separate case, FCC chairman Ajit Pai called net neutrality, 14 years after Tim Wu coined the term, a “mistake” and gave up the FCC investigation into whether or not the “zero-rated” plans of telcos AT&T Mobility, Verizon Wireless and T-Mobile US were anti-competitive. According to Pai, “the truth is, 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.”
Some type of discrimination might be justified, but how that is allowed varies from country to country. For example, in the EU companies are allowed to offer so-called “specialized services”. Specialized services are services different from, and provided in addition to, the open Internet access services that meet specific quality requirements related to content, applications or services. They include Internet Protocol Television (IPTV), high-definition videoconferencing or healthcare services such as telesurgery.
Singapore allows fast lanes to content providers, something that is strictly forbidden in the EU. The Singaporean NRA requires ISPs to ensure that user access to legitimate websites does not slow down to the point where online services become “unusable”. However, it does not ban throttling outright, which means ISPs have the option of slowing access to some websites, without rendering them unusable.
In conclusion, not only the implementation of net neutrality rules varies depending on specific regulations, but even the same provisions can be interpreted differently as it is the case of the EU member states. In the EU, decisions of NRAs are challenged in courts today. We can expect several years of litigations in Europe. A preliminary ruling of the ECJ could solve the differences between various implementation approaches. Implementation of rules pushed through by court settlements could lead to a better understanding of net neutrality regulations and its limits.
What do people know?
In those countries where net neutrality regulation is debated or implemented, public awareness is high. That is probably the consequence of two things.
On the one hand, news about blocked websites and Internet services throttling attract people’s attention and, consequently, make them aware of what net neutrality means for them. On the other hand, national and supranational government institutions often invite direct participation of civil society in public consultations on these issues. To influence the result of public consultations, various organizations including NGOs organize campaigns to attract public support. Such campaigns sometimes use public figures, as was the case of John Oliver in the U.S., to explain the importance of the topic. Probably the most popular campaign on this issue to date was Save the Internet that reached out to people in the U.S., Europe and India.
The level of participation in public consultations is the best indicator of the public awareness on net neutrality related issues we have so far.
The Body of European Regulators for Electronic Communications (BEREC), EU’s telecom regulator, drafted in June 2016 a set of guidelines on how NRAs should implement the 2015 EU Regulation. A Save the Internet campaign at the time received over half a million comments on this document. That was a high record number of comments in an internet-related consultation in the EU. The campaign received significant media attention when its initiators personally delivered the first 100,000 comments (submitted via the initiative’s European website) to BEREC’s head offices in Riga. Following a similar Save the Internet campaign in India, the local NRA (TRAI) received close to one million comments on its first net neutrality consultation.
In the U.S., the FCC turned to the public in 2015 to consult with them before the decision to reclassify the broadband Internet access service. A total of four million comments came in before the rule was adopted. In summer 2017, FCC launched a new public consultation on the new chairman, Ajit Pai’s plan to repeal the broadband Internet access service classification. A record number of comments (21 million) came in as part of the consultation. The overwhelming majority of the comments wanted FCC to maintain the current net neutrality rules and the classification of ISPs as common carriers. However, in spite of this huge public interest, the FCC failed to publish the 13,000 pages of net neutrality related complaints filed by consumers against their ISPs. They released the complaints just one day before the official end of the public consultation. The complaints were related, among other things, to blocking, throttling, data caps, inconsistent speeds, privacy, inaccurate disclosures and billing. The targets of the complaints included the companies Comcast, Charter, AT&T, Verizon, T-Mobile and Sprint, according to information published by the National Hispanic Media Coalition (NHMC), an NGO working on protecting Latinos’ rights in the U.S. Nonetheless, FCC’s Pai argued that he proposed to overturn the net neutrality rules because there were only “isolated examples” of harm to consumers that would justify the FCC’s prohibitions on blocking, throttling, and paid prioritization.
Which companies are affected?
The main companies affected by net neutrality rules are broadband service providers such as Deutsche Telekom, Vodafone or Telefonica in Europe, and Comcast, Charter, AT&T, Verizon, T-Mobile and Sprint in the U.S; application, service and content providers such as Facebook, Google and Netflix globally; and technology companies such as Cisco and Nokia.
The Internet Association, a Washington, D.C.-based lobby representing the world’s leading internet companies such as Google, Facebook, Netflix, Amazon, e-bay, Dropbox, Microsoft and PayPal wants the 2015 Open Internet Order prohibiting blocking, throttling and prioritizing to be enforced. According to a statement from the Association, “the laws must prohibit [Internet] providers from charging for prioritized access.” Such provisions should apply to both wired and wireless Internet providers, according to the association, which also argues that “interconnection should not be used as a choke point to artificially slow traffic or extract unreasonable tolls from over-the-top providers.”
In contrast, the country’s largest ISPs, AT&T, Verizon and Comcast support FCC’s effort to reverse the 2015 regulation, but at the same time they called on Congress to pass legislation on net neutrality. In principle, although ISPs endorse net neutrality rules, they argue that current regulations are heavy-handed and outdated.
The concept of net neutrality is generally respected but its meaning varies broadly, not only from country to country, but even in the same country. In the coming years, we expect to see various approaches to regulation of net neutrality, particularly provisions related to fast lanes and zero rating. The term discrimination in tackling net neutrality breaches also has many different interpretations and exceptions to discrimination bans change frequently.
Regulation of net neutrality is new all over the world: the oldest regulatory provisions still in effect are seven year old. Public awareness is high in the countries that adopted regulations or plan to introduce laws on net neutrality. Debates around plans to regulate net neutrality are usually very heated. Moreover, implementation raises numerous questions. It varies from country to country and sometimes, almost contradictory decisions are made by different NRAs based on the exact same EU regulation.
Zsuzsa Detrekoi is a TMT lawyer, and the former general counsel of one of the biggest Hungarian online content providers. She is legal counsel of a major ISP in Hungary. She also provides legal support for the Association of Hungarian Content Providers. She wrote her PhD on “Online content and other internet related regulations”, in which she also focused on the topic of Network Neutrality.