Perspectives of the European debate on Net Neutrality and Zero-Rating – can BEREC square the circle?

This note aims to highlight some aspects of the European Net Neutrality debate and its future perspectives after BEREC has released its “Draft Guidelines on the implementation by National Regulators of European Net Neutrality rules”. Consultation of these draft Guidelines closed recently and BEREC is set to present the final version of its Guidelines by August 30, following an extraordinary Plenary Meeting on 25. August 2016.
Similar to other jurisdictions, the European debate on Net Neutrality was highly contested from the outset and it was interesting to observe, that the conflicting lines of arguing on the European macro-level (Parliament and Council) have been translated to the expert-level BEREC. The decision about the TSMR in the European Parliament in October 2015 was only achievable with an ambiguous language and for example Zero Rating has not been forbidden or the contested term “Specialized Services” has been circumvented.
On this basis, BEREC was called to come up with “Guidelines” for the National Regulators, how to operationalize the TSMR and to provide hands-on interpretation of the text of the TSMR. At this very point, BEREC is at crossroads, to either provide flexible guidance which invites market participants to launch innovative products and services and to test market acceptance of the innovations, or to build a backward looking, micro-managed regulatory straitjacket driven by the intent to protect the “open internet”. Unfortunately, with this draft Guidelines BEREC has obviously chosen the latter route.
In the remaining few weeks, we will see how BEREC will take into account the criticism raised by operators, equipment suppliers, industry observers and many others.
Here are some areas of criticism, illustrating the concerns raised:
• Legal experts are concerned, that BEREC went beyond the remit of its mandate, by formulating a new set of legislation and not just interpreting the law provided by the European lawmaker. BEREC obviously chose a “teleological approach” to find a justification for its ambition to restrict or ban Zero Rating, although this practice is not forbidden by the TSMR. Some industry observers think, that challenging BEREC’s Guidelines before the European Court of Justice could be a promising route.
• Technology experts are arguing, that in BEREC’s thinking, the way on how “Specialised Services” are delivered are based on today’s technologies and is not taking into account that this sector moves with the pace of Moore’s Law (which predicts doubling of processing speed and storage capacity of electronic circuits every 18–24 month). As we are facing a fundamental shift in network architecture and design, this static thinking puts European businesses and citizens at risk to not benefit from new technologies being developed. For example, any regulation based on such Guidelines could inhibit the growth and development of services such as home health care or home security surveillance and prevent them from being delivered with the most efficient and best available technology. For good reason, the TSMR is based on a technology neutral thinking and therefore the Guidelines should support flexibility and open up new routes to future digital innovation.
• Regulatory and policy experts are equally concerned, that BEREC’s claim to protect the “Open Internet” with a static, backward looking approach, will not only stifle innovation, it will ultimately be counterproductive for the ambition of the European Commission to create a “Digital Single Market” (DSM), because with such an approach as described in the draft Guidelines, market players will either be reluctant to launch innovative services based on newly available technologies, or new services could be challenged before court in each Member State with the likely outcome, that the same service will be judged differently from Member State to Member State which would be a slap in the face for a single market concept and for consumers alike.
• Consumers will rather suffer from the approach BEREC has chosen with this draft Guidelines; what consumers appreciate is a rich pipeline of innovations coming from market players encouraged by a set of flexible, forward looking rules and not a straightjacket approach. Consumers need transparency provided by suitable tools (like “NetTest”) to identify on what is going on in the network. Transparency is the basis for empowering consumers to “vote with their feet”.

But maybe, there is light at the end of the tunnel, as recently the Slovenian court ruled that Zero Rating is not a violation of the country’s Net Neutrality law. This decision may have major implications and should be a bearing for BEREC to reconsider its guidelines seriously. Once again, it has to be emphasized, that any attempt to force the internet ecosystem in a straitjacket based on a backward looking approach is toxic for innovation; what this ecosystem needs, is a flexible framework, courage for constantly trying out new services, trust in functioning markets and effective ex-post oversight.