Last week the Slovenian court ruled (0) that zero rating is not a violation of the country’s net neutrality law (1). This largely unknown case may have major implications for neutrality rulemaking around the world.
Net neutrality and zero rating in Slovenia
As I detailed in a research paper (2), zero rating has been used in various forms by Slovenian telecom operators since 2007. For seven years, zero-rating was viewed simply as another form of competition, and did not receive much attention from policy makers. Then, in July 2014, Slovenia’s leading telecom consumer advocate complained that mobile prices were too low and that zero rating violated the country’s net neutrality law. The complaint was submitted both to AKOS, Slovenia’s telecom regulator (analogous to our FCC), and Slovenia’s competition authority (analogous to our FTC). The latter noted (3) that zero rating is the outcome of the country’s competitive mobile market, considered per se prohibitions of zero rated services as detrimental, and held that the assessment of the legality of the mobile operators’ offers should be based on the effects of such services.
The telecom regulator did not respond until some months later, after experiencing what appeared to be pressure by activists and the country’s leading telecom journalists in a series of articles. In January 2015, AKOS issued a series of rulings on zero rating, arguing that net neutrality prohibits price discrimination and that zero rating therefore is illegal. The agency decided to ban the zero rating of certain Slovenian content, mobile customer service applications, a Slovenia-based cloud service, and the music streaming site Deezer, but – ostensibly in contrast to their own argument – decided to approve zero rating of the incumbent network provider’s proprietary cloud service, HBO Go, and the European soccer championship, for which the state-owned incumbent purchased the broadcasting rights. Slovenia’s telecom operators sued AKOS, claiming that the various bans on zero rating were arbitrary, and thus themselves a breach of the new neutrality rules.
What the court decided
Back in 2012, when Slovenia created their net neutrality rules, lawmakers rejected a provision that outlawed price discrimination. Last week’s ruling against AKOS (which is forthcoming here (4), but that I learned about from participants at an AKOS-hosted conference (5)) reiterated the Slovenian net neutrality law, saying that “network operators and Internet service providers must preserve the open and neutral nature of the internet. Thus they must not restrict, delay or slow down Internet traffic at the level of individual services or applications.” But it ruled that the definition does not constitute a prescription for the financial treatment of traffic. The court explained, “The non-charging of transfer of certain data does not constitute a breach… nor can it be regarded as a restriction, restraint, or slowing down Internet traffic at the level of individual services or applications. Nor can it be equated with the prohibition of equal treatment and positive price discrimination cannot be extracted by any interpretative method.”
In other words, the court ruled that price discrimination is allowed under net neutrality law, accepted the competition authority’s explanation of the practice, and confirmed the petitioners’ arguments.
Implications for net neutrality in EU and around the world
The ruling comes just as BEREC closed its consultation (6) for guidelines (7) to implement the new EU net neutrality rules. The EU law (8), which supersedes national law, does not discuss zero rating. However BEREC has devoted a number of pages in its guidelines to the topic, as well as five detailed criteria for how zero rating should be assessed by national regulatory authorities. A ban on zero rating and other extreme provisions were unanimously rejected by the EU Parliament, but restrictive provisions still made their way into the guidelines, arguably on the advice of Barbara van Schewick and other net neutrality activists (9).
It appears that BEREC is setting up member states for inevitable litigation that has taken Slovenia 18 months to resolve. It is fitting that Slovenia, a former communist country, pushed back against government takeover of the Internet and regulatory indifference to empirical assessment to uphold the rule of law. It should inspire the US and EU to do the same.