Tech

ECJ: Zero rating from Telekom and Vodafone violates network neutrality

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Tariff options for mobile phone tariffs, in which the data consumption of certain applications or services is not deducted from the data volume included in the tariff, violate the principle of net neutrality anchored in EU law. The European Court of Justice (ECJ) decided on Thursday on questions submitted by the Düsseldorf Higher Regional Court and the Cologne Administrative Court. With the judgments, the ECJ is following the recommendations of the Advocate General and is sticking to its previous line (Az. C ‑ 854/19, C ‑ 5/20, C ‑ 34/20).

In the three judgments, the ECJ points out that “free-of-charge options” such as Stream On or Vodafone Pass represent a “distinction within Internet traffic” based on “commercial considerations”. This violates “the general obligation set out in the regulation on access to the open Internet to treat traffic equally without discrimination or interference”, announced the court. This means that all measures that only take effect in connection with the tariff options are “incompatible with Union law”.

The underlying procedures deal with the so-called “Zero Rating” tariff options of the mobile phone providers Deutsche Telekom (“Stream On”) and Vodafone (“Vodafone Pass”). With these options, the data requirements of certain applications such as messengers, music streaming or video apps are not counted towards the data volume included in the respective mobile phone tariff. O2 does not currently offer comparable options.

One of the complaints was the Federation of German Consumer Organizations (vzbv), which considers the practice of zero rating to be a violation of net neutrality. The Düsseldorf Higher Regional Court asked the ECJ for clarification (Az I-20 U 59/19). Two other proceedings concern the lawsuits brought by Vodafone and Deutsche Telekom against the Federal Network Agency, which forced the network operators to change their tariffs. The Cologne Administrative Court consulted the ECJ here.

Consumer advocates consider the zero rating to be fundamentally illegal: Such an unequal treatment of data traffic violates the principle of network neutrality, which has been in force for network operators in the EU since 2015. The vzbv also sees disadvantages for smaller network operators, for example, which may not be attractive enough for streaming providers due to their limited range. This gives the major network operators an advantage.

The Federal Network Agency had also taken action against the tariffs of Telekom and Vodafone, but had not prohibited them in principle, only corrected details. For example, Telekom Stream On was not allowed to restrict its use in Germany because, according to European roaming regulations, tariffs in other EU countries must basically apply as at home. Telekom was also not allowed to artificially limit the bandwidth of the video streaming with Stream On. Vodafone also deals with the question of whether use via tethering can be excluded.

The ECJ has not limited itself to the detailed questions of the German courts. A tariff option at the so-called “zero tariff” makes a distinction within the Internet traffic, it says in the judgment. This violates EU law and cannot be justified with permitted management measures because it is purely commercial. This means that the individual measures at issue in the proceedings are not compatible with EU law, the court follows, referring to an earlier judgment against a Hungarian network operator.

It will now be interesting to see how the German courts deal with the clear hint of the Luxembourg judge. The judgments in the local proceedings are still pending, but the ECJ judgments give the network operators cause for nervousness. Initially, however, the companies concerned do not show this. They point out that the tariff details that are at stake in the proceedings no longer exist.

“The ECJ today declared the bandwidth adjustment for video streams to be inadmissible,” says a Telekom spokesman opposite heise online. “This is no longer included in the current StreamOn offer from Telekom, so nothing will change in StreamOn.” However, Telekom recognizes that the ECJ ruling goes further: “If the judgment also contains statements on zero rating in general, these initially have nothing to do with the subject of the proceedings. The legislature must clarify what follows from this.”