The EU Makes It Clear That 'Zero Rating' Violates Net Neutrality

from the tilting-the-playing-field dept

For years now we've discussed how large ISPs have (ab)used the lack of competition in the broadband market by imposing completely arbitrary and unnecessary monthly usage caps and overage fees. ISPs have also taken to exempting their own content from these arbitrary limits while still penalizing competitors -- allowing them to use these restrictions to tilt the playing field in their favor (or the favor of partners with the deepest pockets). For example an AT&T broadband customer who uses AT&T's own streaming service faces no penalties. If that same customer uses Netflix or a competitor they're socked with surcharges.

The anti-competitive impact of this "zero rating," as it's called, should have been obvious. But here in the States, large ISPs have muddied the water by claiming that zero rating is the bits and bytes equivalent of a 1-800 number for data or free shipping. Customers who don't understand that usage caps are arbitrary nonsense from the get go often buy into this idea that they're getting something for free. And Ajit Pai's FCC has helped confuse the public as well by trying to claim that this model is somehow of immense benefit to low income communities (it's not, and in fact data has shown zero rating drives up consumer costs).

Muddled by lobbying influence here in the States, even the previous pro net neutrality Tom Wheeler FCC steered clear of banning zero rating with its initial net neutrality rules for fear of "hindering innovation." Wheeler's FCC was just starting to figure out this was a problem when Trump's election happened, resulting in the Ajit Pai FCC gutting the consumer protections completely (you know, for "internet freedom").

In contrast, a few years ago the European Union passed some fairly decent net neutrality rules that went notably further than the FCC. They not only prohibited ISPs from unjustly blocking, throttling, or restricting access to services the ISP may compete with, they imposed some basic protections governing zero rating -- a practice ISPs here in the US have increasingly been using anti-competitively. Despite the rules, enforcement has thus far been inconsistent and patchy, resulting in some EU wireless carriers continuing to embrace zero rating.

That may soon come to an end however, as Europe's top court this month ruled that yes, zero rating violates net neutrality. In its ruling, the court made it clear that zero rating distorts the entire concept of level playing fields and fair competition:

"Such packages are liable to increase the use of the favoured applications and services and, accordingly, to reduce the use of the other applications and services available, having regard to the measures by which the provider of the internet access services makes that use technically more difficult, if not impossible. Furthermore, the greater the number of customers concluding such agreements, the more likely it is that, given its scale, the cumulative effect of those agreements will result in a significant limitation of the exercise of end users’ rights, or even undermine the very essence of those rights."

Opponents of net neutrality here in the States like to frequently trot out the claim that net neutrality was repealed here in the States and the internet didn't immediately implode, therefore the rules must not have mattered. But that ignores (usually quite intentionally) the fact that companies like AT&T are already clearly using zero rating to try and disadvantage competitors like Netflix. More importantly that logic ignores the fact that when the federal government gave up on consumer protection many states passed their own rules.

With a goal of zero oversight for U.S. monopolies, ISPs, with the Trump FCC and DOJ's help, have tried to ban states from protecting consumers whatsoever. But so far the courts haven't looked kindly on those efforts. In short, the "internet hasn't exploded" in the wake of net neutrality's repeal in the States because ISPs don't want to run afoul of state regulators. They also aren't likely keen on getting too aggressive on this front when it's very possible that a Biden administration passes new net neutrality rules.

Whatever future net neutrality rules look like, zero rating needs to be taken seriously as a real threat to fair online competition free of malicious gatekeepers. It's abundantly clear giants like AT&T want to abuse the idea to inject themselves into business relationships they should have no part of, something groups like Mozilla have long made clear. Big ISPs want to abuse the lack of competition by erecting arbitrary barriers, then charging competitors and consumers extra should they choose a competitor's service. That this was portrayed as a good thing speaks to the effectiveness of U.S. telecom's PR vilification of even the most basic of oversight.

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Filed Under: broadband, eu, net neutrality, zero rating