July is a hot month for zero rating

July is a hot month for zero rating


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The month of July is normally dead in Europe as everyone is on vacation, but this year is an exception. On July 12 the Slovenian court released a bombshell.  After 18 months of deliberation, the court ruled against the telecom regulator Akos on four lawsuits which charged that its decisions on zero rating were arbitrary and capricious. The Court declared that the Slovenian net neutrality law cannot be understood a per se prohibition on zero rating. The court also noted that the regulator ignored the economic analysis of the national competition authority. I have followed this case closely and describe it here and here.

The Body of European Regulators for Electronic Communications (BEREC) concluded a consultation on its guidelines for net neutrality on 18 July.  As I describe in my comments, the EU law for open internet access never mentions the terms net neutrality, zero rating, or specialised services, but BEREC has developed 43 pages of de facto rules based upon these introduced terms.  Moreover amendments related to these items were unanimously rejected by the European Parliament last year however, provisions that would bring about the desired effect of the rejected amendments  suspiciously found their way into the BEREC guidelines. A number of observers (Strand ConsultMartin GeddesAndrew Orlowski, etc) have noticed the link between US-funded advocacy efforts of Barbara van Schewick, SavetheInternet, eDRI, and Access to promote draconian provisions both the Parliament and to BEREC.

I have submitted detailed comments to BEREC on zero rating based on my research. There is no evidence that zero rating harms consumers or competition.  To the contrary, my research shows that permitting zero rating is beneficial to both consumers and competition.  Accordingly, it is important that BEREC maintains a permissive, flexible approach to zero rating. We all agree on the value of the internet and that it would be a terrible thing if startups could not get online. However, the question is whether hardening even further the EU’s already strong net neutrality law is necessary.  Based on the evidence, clearly it is not.

Zero rating programs have been around for more than a decade, and none of these advocates complained.  There are hundreds, if not thousands, of zero-rated offers in the EU today, but all together, they represent less than 1 percent of the offers in the marketplace. Given that there’s no concrete evidence that zero rating harms consumers or competition, it’s interesting that zero rating is only in the last two years or so has become an issue. This is because the emergence of mobile broadband brings the potential for a new set of actors to emerge, challenging established players which incidentally are often the ones funding the activists now calling for bans on zero rating.

On its website, BEREC boasts that it received more than half a million responses. But upon closer examination, it can be seen that the vast majority of responses come from a network of professional activist organisations that specialise in net neutrality advocacy generated from the USA and funded by American Internet companies and foundations. Based on analysis of the emails collected with access provided by freedom of information laws, each email is forwarded the 28 national regulators. It is likely that the purported 510,370 responses are actually closer to 20,000. Moreover, over one-third of the responses come from the USA and Canada.  Advocates also included a group of 126 “leading” academics who claim that unless BEREC adopts even tougher rules, these professors will be deterred from their “ability to research, collaborate, and educate.”  Notably, there are only 8 peer-reviewed papers on net neutrality among the academics and a large percentage receive funding from Google. Net neutrality advocacy has become a numbers game in which groups overwhelm what are supposed to be expert, independent regulators into submission.

The EU is also wallowing in the aftermath of the BREXIT, and it appears that the UK will take the opportunity to reboot its telecom policy and abandon the heavy-handed approach from Brussels. This likely means that it can return to the rational, evidence-based framework which it used successfully for years to manage net neutrality, unlike the new EU law on net neutrality which mixes communications and human rights law and puts telecom regulators in the dangerous position of adjudicating human rights, an area where they have neither experience nor jurisdiction.

My research suggests that BEREC’s current proposal to review zero rating on a case by case basis with a number of criteria is already heavy-handed, particularly for small and entrant firms which do not have the resources to participate in expensive regulatory and bureaucratic investigations. As such BEREC should limit its review to the relevant economic factors which can be supported by evidence and only intervene where harm has been demonstrated. Given the European’s deep dissatisfaction with Brussels, BEREC would be wise not to add more fuel to the angst by contravening the will of the people through Parliament.

Let’s hope that by the end of summer BEREC will have come to its senses with revised guidelines that embrace a process for gathering real-world evidence.

 

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