The Court of Justice confirms the “internet neutrality” principle by precluding internet access providers from favouring certain services

Written on 29 Oct 2020

The Court of Justice of the European Union has interpreted for the first time Regulation 2015/2020, which contains the "internet neutrality" principle, and has determined that internet access providers may not favour certain applications and services in the use of data in detriment of others.

Although the principle of net neutrality is a concept that already existed, prior to the adoption of Regulation 2015/2020, laying down measures concerning open internet access (the "Regulation"), said Regulation sets a series of rules aimed at ensuring equal and non-discriminatory treatment of traffic, as well as safeguarding the rights of end-users. More specifically, the net neutrality principle sets out that all providers of internet access services shall treat all traffic equally without discrimination, restriction or interference, and irrespective of the sender and receiver, the content accessed or distributed, the applications or services used or provided, or the terminal equipment used.

The Court of Justice of the European Union (the "Court of Justice"), in its judgment of 15 September 2020 (C-807/18: Telenor Magyarország) has interpreted, for the first time, the "net neutrality" principle and has determined that the requirements for protecting the rights of internet users, as well as the non-discriminatory treatment of traffic, prevent internet providers from giving preference to specific applications and services through promotions, known as "zero tariff", in detriment of other applications and services that are blocked or slowed down. In other words, those tariffs that allow the use of applications such as Instagram, Facebook or Whatsapp without consuming data, do not meet the principle of net neutrality and, therefore, cannot be offered to users since they do not comply with the Regulation.

The main proceeding that gives place to the decision of the Court of Justice started in Hungary. Telenor, an internet service provider, offered two internet access packages (called "zero tariff"), their attractiveness was that the data usage derived from the use of certain services and applications was not deducted from the total volume of data bought by clients. The significance of this offer is that once the data tariff is used, clients could continue to make use without limitation of certain applications or services in that tariff (among them, the referred social networks). In contrast, all the other applications and services were blocked or slowed down with measures resulting from the consumption of their tariff data.

Given such scenario, Hungary's Media and Communications Office, adopted two decisions ordering Telenor to end the commercialisation of those promotions on the ground that they were contrary to the general obligation of equal and non-discriminatory treatment laid down in article 3, section 3 of the Regulation.

Telenor objected to both resolutions and filed two claims before the Fövárosi Törvényszék (Budapest High Court, Hungary). The Hungarian court decided to stay the proceeding and let the Court of Justice determine how to interpret and apply article 3 of the Regulation, and more specifically sections 1 and 2. Articles 3(1) and (2) safeguard a number of rights for end users of internet access services and prohibit providers of such services from putting in place agreements or commercial practices limiting the exercise of those rights, while Article 3(3) lays down a general obligation of equal and non-discriminatory treatment of traffic.

Looking into the matter, the Court of Justice rules out that the conclusion of agreements with clients that acquire "zero tariff" promotions, which implies blocking and slowing down the traffic of other services and applications not included in the tariffs, may result in a limitation of the exercise of end users' rights. Additionally, the court of Luxembourg stated that these tariffs could increase the use of the applications included in such offers, in detriment of other applications and services not included.

Within this context and taking into account paragraph 2 of article 3, the court also states that the higher the number of clients using a type of tariff, the higher the probability that it will result in a "significant limitation of the exercise of end users' rights". Besides, the Court of Justice understands that there is no need to asses to what extent the service provider limits or slows down traffic. It states that "no assessment of the impact of those measures (referring to traffic blocking or slowing down measures) on the exercise of end users’ rights is required" because said measures "appear to be based not on objectively different technical quality of service requirements for specific categories of traffic but on commercial considerations".

In conclusion, as a result of this judgement, internet service providers must find, in a highly competitive market, new options to offer data tariffs that are attractive to users and which, at the same time, comply with the principle of net neutrality enshrined by the Court of Justice with this new ruling.