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Summary

Following a vote of the EU Parliament on October 27, 2015, the long-awaited Connected Continent package is now approved and ready to come into force. The package enshrines the principle of net neutrality and ensures the gradual phasing out of international roaming surcharges. However, the provisions on net neutrality still require more detailed definition, because they leave important details in the hands of the Body of European Regulators (BEREC) and of national regulators. The provisions also leave questions open as to their actual impact on the market, given that they leave room for preferential treatment of certain services and applications.

The new regulation could lead to 28 different sets of rules

Observers may be left wondering at the point of passing the text of the Connected Continent package, particularly in relation to its provisions on net neutrality. Lengthy negotiations had seen the EU Parliament advocating stronger rules than those in the EC’s initial proposal, yet the Parliament ended up largely accepting the position of the EU Council. This leaves BEREC and individual national regulators with the task of approving and enforcing more detailed guidelines.

As things stand, the approved text fails to define in a clear way which “specialized services” could enjoy some form of prioritization and under which criteria. Critics have argued that this lack of clarity leaves room for a two-tiered Internet, where fast lanes are created at the expense of a best-effort Internet. It will be the regulators’ job to make sure this does not happen in practice. The text is also silent on zero-rating offers – those that allow the use of a given service outside a user’s data allowance, facilitating partnerships between telcos and OTTs. There remains doubt as to whether national bans on zero-rating (such as those in place in the Netherlands and Slovenia) are invalid under the new rules. This could leave room for further inconsistencies and may hamper the flexibility legislators sought to achieve.

The broader question is whether there was any need to pass rules that forbid blocking and discrimination, while at the same time making room for exceptions and leaving regulators to define essential detail. Experience shows that markets with a healthy level of competition have not needed net neutrality rules, because there is little or no incentive for operators to block services. At the same time, it remains a material risk to have 28 different takes on zero-rating and on other key aspects (one for each EU member state). This is not exactly what should be expected from legislators continuously making a point of seeking a “single market.”

Appendix

Further reading

Facebook’s Internet.org initiative could clash with net neutrality rules, TE0007-000935 (August 2015)

“The fight for net neutrality in the US and Europe intensifies,” TE0007-000798 (May 2014)

Author

Luca Schiavoni, Senior Analyst, Regulation

luca.schiavoni@ovum.com

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