Since December 2016, T-Mobile Netherlands has been forced by the regulator ACM to stop offering its data-free music service to customers because it violated the country's net neutrality laws, which ban zero-rating. T-Mobile took this case to court, which ruled on April 20, 2017 that while the operator was breaching Dutch law, it was abiding by European rules, which supersede those at the national level. Zero-rating is a topic of much debate, particularly in the EU where countries are navigating the best way to interpret the EU net neutrality rules, while also trying to take note of national circumstances.
Despite strict national laws on zero-rating, prevailing EU law ensures that Dutch operators can price discriminate services
Back in 2012, the Netherlands was the first European country to adopt a law related to net neutrality, and in May 2016, the Dutch parliament voted to make additional amendments to the Telecommunications Law to adopt the EU net neutrality regulations. However, in contrast to regulations outlined by the EC, the Dutch government voted to take a much stricter stance by totally banning zero-rated services and prohibiting price discrimination. Despite this, the court in Rotterdam decided in a landmark ruling in April 2017 that the EU's rule should prevail over any national law. Now the ACM is likely to review T-Mobile's zero-rated music service again but this time against the EU framework instead.
Net neutrality has gained considerable prominence within the telecoms industry, but up until now governments and regulators have not found a consistent approach to the matter. The ruling to allow T-Mobile to continue to offer its zero-rated music service in the Netherlands could serve as an example to other member states on how to apply the EU regulation on open internet access. The ruling reduces any uncertainty that arises from contrasting EU and national regulations and demonstrates how, ultimately, EU legislation prevails.
In addition, non-binding guidelines from the Body of European Regulators for Electronic Communications (BEREC), which allow zero-rating except in certain situations, can act as a more solid reference point for regulators. The guidelines state that zero-rating does not breach net neutrality rules unless non-zero-rated services are blocked once a customer's data allowance is exhausted, leaving them to access only zero-rated services. It recommends that all other types of zero-rating offers will have to be assessed on a case-by-case basis. This would be the best approach for member states to adopt too, to protect customers from competition problems while allowing operators to identify new revenue streams and areas of investment. This greater clarity on zero-rating should give telcos and OTTs in the EU more freedom to experiment with their offerings to customers.
Ovum expects the Dutch ruling to now act as a precedent, with significant consequences for those member states looking to prohibit zero-rating or that have already prohibited the practice, such as Finland, Estonia, Latvia, Lithuania, and Malta. Previous bans on zero-rating in these countries are likely to be overturned in future.
Internet Openness Indicator, TE0007-001112 (February 2017)
"A wave of bans on zero-rating is pushing telcos to become dumb pipes," E0007-000996 (February 2016)
"BEREC finalizes guidelines for net neutrality in Europe," TE0007-001056 (September 2016)
Sarah McBride, Analyst, Regulation