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An Open Internet? The Court of Justice of the European Union between Network Neutrality and Zero Rating

ECJ (Grand Chamber) 15 September 2020, Joined Cases C-807/18 and C-39/19, Telenor Magyarország Zrt v Nemzeti Média- és Hírközlési Hatóság Elnöke

Published online by Cambridge University Press:  29 October 2021

Marta Maroni
Marta Maroni*
Affiliation:
Research Fellow at the Erik Castrén Institute of International Law and Human Rights, and member of the Legal Tech Lab, Faculty of Law, University of Helsinki.
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Abstract

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Case Notes
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European Constitutional Law Review , Volume 17 , Issue 3 , September 2021, pp. 517 - 537
Copyright
© The Author(s), 2021. Published by Cambridge University Press on behalf of European Constitutional Law Review

Introduction

Internet Service Providers (ISPs) provide access to the Internet. Their role is central to the future development of the Internet, fundamental rights, and the information society as a whole. ISPs could block, slow down or favour applications or services. These practices are harmful because they can be deployed to alter the way in which content is transmitted on the Internet, which has repercussions on competition, diversity and pluralism. The EU has laid down measures concerning open internet access and reformed the roaming system within the Union by adopting the ‘Open Internet’ Regulation 2015/2120.Footnote 1

In the case under consideration, the Court of Justice of the European Union has ruled on the Regulation for the first time.Footnote 2 The Court was called on to interpret whether the commercial practices of a Hungarian ISP, which zero-rated, slowed down and blocked applications and services, were allowed under the Regulation.Footnote 3

The principle of network neutrality is an important concept for shaping power relations within the Internet as it attempts to protect the way the Internet works by limiting the opportunity for a few actors to take control of its use. Traditionally, network neutrality provisions attempt to ‘positivise’ a technical principle, namely the end-to-end principle, which, with other features of the network in its early years, has fostered the idea of an open Internet. Technically, the end-to-end principle dictates that the communication network does not perform any function beyond transmitting the content, and the intelligence of the network is located at the end-points.Footnote 4 Beyond the end-to-end principle, the other constitutive qualities of the early network were that the network had no knowledge of what was transmitted (applications-blind), was a general-purpose network (every application could join) with low access barriersFootnote 5 and worked on a best-effort basis. The last of these ensured that data packets enjoyed the same best effort of the router to deliver the content. These elements have become central tenets of an open Internet, in which open symbolically stands for ‘the absence of centralized points of control’.Footnote 6 The debate on network neutrality embodies both these architectural principles and the symbolism associated with it. At the core of network neutrality provisions lies both the protection of the internet infrastructure and the protection of equal access to the Internet. At the practical level, network neutrality stipulates that ISPs should not block, throttle or prioritise content.Footnote 7

Today it would be anachronistic to reproduce the early internet design features in their pure forms. This is because the internet ecosystem has changed following the processes of privatisation of network services (‘transaction of ownership in the network infrastructure’Footnote 8 ) and its commercialisation, which entails that myriad new applications and services require different technical treatments (different services have different needs). ISPs can control what they are transmitting through new technological development (e.g., Deep Packet Inspections) and they have actively engaged with the transmission of the data packets. This happens either because ISPs need to guarantee efficient delivery to ensure good quality of service or, more problematically, because ISPs seek new venues to increase their profits by favouring or disfavouring services and applications. These commercial and technical practices discriminate between applications and services and interfere ‘with users’ choices regarding the use of the network’.Footnote 9 We should also consider that the actors operating within the Internet ecosystem strive for monopolisation: the economic model intertwined with the Internet works on network effect, data advantage, economies of scale and high switching costs from one service to another.Footnote 10

In light of the abovementioned risks, EU Regulation 2015/2120 on the open internetFootnote 11 has adopted non-discriminatory principles stating that when providing internet access, service providers should treat all traffic equally. Nonetheless, a few unclear points in the final text of the Regulation and some loopholes concerning commercial practices such as zero-rating might undermine the Regulation’s scope. Zero-rating is considered to be a practice against an open and neutral Internet, as it distorts fair competition and threatens innovation.Footnote 12 Zero-rating refers to the practice of not counting the users’ consumption of data of a specific applicationFootnote 13 and, as such, it is a preferential treatment reserved to data coming from specific digital actors, and is deployed to influence consumers’ behaviour.Footnote 14 Even if the Regulation prohibits traffic management techniques based on commercial considerations,Footnote 15 at the same time there is no explicit and categorical ban of zero-rating practices.Footnote 16 Likewise, in line with regulation, the Body of European Regulators for Electronic Communication (BEREC) Guidelines,Footnote 17 which contain a list of criteria to assess zero-rating schemes, also present some degree of ambiguity and do not exhaustively address all the violations which could occur.

In light of this, the Telenor judgmentFootnote 18 discussed in this case note intersects with these problematic facets and offers much needed conceptual clarification. Furthermore, it focuses on the importance of network neutrality for equal access to the Internet. This case can be considered to be a ‘definitional case’. According to Lindroos-Hovinheimo, in this category of cases the Court explains meanings, concepts and the correct interpretation of the legal instrument at stake.Footnote 19 The judgment resonated as a victory for network neutrality and, to some extent, reinforces its underlying principles. However, some cause for criticism remains, as the Court did not address all the facets of zero-rating practices and failed to engage with two fundamental rights that are primarily subsuming the scope of the regulation, namely freedom to conduct a business and freedom of expression.Footnote 20

Specifically, the Court was required to interpret whether the commercial practices of Hungarian ISPs, which zero-rated, slowed down and blocked applications and services, were compatible with the Regulation.Footnote 21 The Court was asked to clarify whether the foregoing practices should be interpreted under Article 3(2) on agreements or Article 3(3) on equal treatment of the traffic. The difference mattered because Article 3(2) entails an assessment of the violation of end users’ rights which is not required by Article 3(3). In practice, the question is whether such practices are considered to fall under Article 3(2) and might be allowed, or whether they are considered to be practices prohibited by Article 3(3) of the Open Internet Regulation.

This commentary offers a constitutional law reading of the case. The first part introduces the factual background, the Advocate General’s opinion and the final judgment. The second part discusses the judgment in light of the Open Internet Regulation and network neutrality principles. It further focuses on the significance of the case for settling the importance of openness as a normative concept of the Internet. This analysis highlights the choices that the Court makes in assessing the practices in violation of network neutrality (i.e. technical interference with the cap on consumption of data). This commentary concludes by asking why the Court did not juxtapose users’ rights with fundamental rights, given that today the latter are greatly dependent on the openness of the Internet and are constitutional principles for the EU.

Factual background

The preliminary reference concerned the practices of Telenor, one of the main internet service providers in Hungary. Telenor offered two service packages to its consumers that zero-rated data consumption for a few applications. The first package, ‘MyChat’, offered the option to purchase 1GB of data and use it without restriction to the subscribing consumer. The package included the free use of six popular applications, such as Facebook, Viber and Twitter as the data used on these applications did not count against the data quota of the package. Moreover, once the monthly data limit had been reached, it was still possible to use those six applications without restriction, whereas other applications and services would have been slowed down. Similarly, the ‘MyMusic’ package offered a zero-tariff plan for streaming music through Apple Music, Deezer, Spotify Tidal applications and six radio services. Again, the zero-rating plan applied to these applications whether the data volume of the package was available or not, while other data use would have been blocked.Footnote 22

The Hungarian National Media and Communications Office found that the Telenor packages did not comply with the provisions of equal and non-discriminatory treatment contained in Article 3(3) of the Regulation. Article 3 grants end users the right ‘to access and distribute information and content, use and provide applications and services, and use terminal equipment of their choice’.Footnote 23 The case concerned the application and the interpretation of Article 3(2) and 3(3), which respectively state

2. Agreements between providers of internet access services and end-users on commercial and technical conditions and the characteristics of internet access services such as price, data volumes or speed, and any commercial practices conducted by providers of internet access services, shall not limit the exercise of the rights of end-users laid down in paragraph 1.

3. Providers of internet access services shall treat all traffic equally, when providing internet access services, 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.

Telenor challenged the decision of the Hungarian National Media and Communications Office before the Budapest High Court. Telenor submitted that the case should be decided by applying solely Article 3(2) of Regulation 2015/2120 to it. According to Telenor, Article 3(3) was not applicable because the two packages were parts of agreements concluded with its customers, whilst Article 3.3 concerned ‘Traffic-management measures implemented unilaterally by providers of internet access services’.Footnote 24 Telenor also claimed that because the case fell within the scope of Article 3(2), an assessment of how packages influenced the exercise of end users’ rights was needed.Footnote 25

The Budapest High Court considered that because of the wording of Article 3, it was not possible to assess explicitly whether packages made available by the ISP to its customers fall within the scope of Article 3(2) and 3(3). Being unclear which methodology should be applied to assess the compatibility of Telenor’s practices with the network neutrality regulation, the Budapest High Court decided to stay proceedings and refer the following questions to the European Court of Justice:Footnote 26

Should a commercial agreement between an ISP and an end user, under which the ISP engages in discrimination, be interpreted in the light of article 3(2)? If not, must article 3(3) be interpreted as meaning that an assessment of whether there is an infringement requires an impact and market-based evaluation which determines whether and to what extent the ISP measures limit the rights of the end user under article 3(1)?

Moreover, additional questions concern the scope of the prohibition under article 3(3). Should this prohibition cover any traffic management measure, regardless of whether the ISP distinguishes between forms of internet content on the basis of an agreement, a commercial practice or some other form of conduct? And if so, is the existence of a discrimination sufficient to identify a violation of article 3(3) without the need for a market and impact evaluation? Footnote 27

The Advocate General’s Opinion

Advocate General Campos Sánchez-Bordona began his Opinion by focusing on the main objective of the Regulation, which he argues to be the openness of the Internet.Footnote 28 The Advocate General understood that even if there are two main aims in the Regulation, namely ensuring open internet access and protecting end users, the first bears more weight. According to the Advocate General, the title of the Regulation is indicative of this priority, as it starts with the wording ‘open internet access’ rather than end users rights.Footnote 29 He built his interpretation on the consideration that the Regulation is primarily about open Internet because an equal treatment of the traffic is the precondition for the availability of the services and applications and thus for end users’ rights.

The Advocate General pointed out that the guarantee of open Internet access goes hand-in-hand with the opportunity that ‘end-users can access all content, applications and services, as well as supply and distribute the like without restrictions…’.Footnote 30 Moreover, the Advocate General posited that

Ensuring that internet traffic management is fair and non-discriminatory is a condition that must be fulfilled in order for the network to be genuinely open to end-users. That openness presupposes that available content, applications and services can be accessed, supplied and distributed without restrictions based on any of the factors mentioned in Article 3(1): ‘the end-user’s or provider’s location [and] the location, origin or destination of the information, content, application or service’ accessible via the internet.Footnote 31

In addressing the effect on end users’ rights, the Advocate General reasoned that Article 3(2) protects the openness of the Internet and that internet access providers cannot limit the exercise of users´ rights, whereas Article 3(3) requires fair non-discriminatory treatment of Internet traffic. Telenor practices, directly and indirectly, infringe end users’ rights. The direct infringement concerns users who provide content and do not belong to the group of selected applications (i.e., the delivery of their content is affected by unfavourable treatment). The indirect infringement affects subscribers, who have limited opportunities to access wider variety online content, and also suffer from the indirect consequences of slowing downFootnote 32 and the discriminatory treatment afforded to content providers who are not zero-rated.Footnote 33

The Advocate General noted that Telenor’s management practices slowed down content which was not generated from selected applications; and speed reduction is one form of traffic management that in principle is prohibited by Article 3(3) of the Regulation.Footnote 34 In particular, this commercial arrangement is contained in the agreement between Telenor and its subscribers and Article 3(2) prohibits agreements ‘on commercial and technical conditions’.Footnote 35 In addressing the uncertainty of the referring court as to which framework should apply, the Advocate General noted that the relevant aspect to consider was that there was an infringement of users’ rights as well as discriminatory traffic management measures in place (and the latter is definitely a violation of Article 3(3) of the Regulation).Footnote 36 Consequently, it was unnecessary to assess whether Article 3(2) had also been infringed,Footnote 37 as the Hungarian package practice was already incompatible with the Regulation.

The judgment

Following the Opinion of the Advocate General, in its judgmentFootnote 38 the Court agreed on the incompatibility of Telenor’s packages with the obligations of equal treatment of all Internet traffic enshrined in Article 3 of the Regulation. The Court clarified important terms and concepts, dividing its ruling into four parts. It first introduced the underlying principles of the open Internet as enshrined in Article 3.Footnote 39 Second, it highlighted the relationship between ‘agreements’ and ‘commercial practices’.Footnote 40 Then it defined the term ‘end users’Footnote 41 and, last, illustrated the impact commercial practices have on users’ rights and the Internet.Footnote 42

On the open Internet

In addressing the referred questions, the Court placed much importance on Article 3 ‘Safeguarding of open internet access’, and discussed it at length. The Court first referred to the passages from the Advocate General’s Opinion that it considered important, in which emphasis was placed on the openness of the Internet as a primarily principle of the Regulation.Footnote 43 It then continued by remarking that the purpose of the Regulation is to safeguard equal and non-discriminatory internet access.

The Court decided that any interpretation of Article 3(2) and 3(3) needs to be considered in the light of Article 3(1) and its principal aim, which is to protect end users’ rights to access and distribute information and content, as well as to provide applications and services. The Court also held that Article 3(2) requires that agreements do not limit end users’ rights.Footnote 44

The Court moved on to analysing Article 3(3) in detail. The article prohibits discrimination,Footnote 45 restriction and interference irrespective of the application or service used. If it is true that the Regulation allows for traffic management measures (e.g., in case of network congestion), these need to be ‘reasonable’, which in this context means they need to consider a range of technical requirements of categories of traffic and must be based on the principles of transparency, proportionality and non-discrimination.Footnote 46

Most importantly, the Court observed that commercial considerations are excluded as a reason that could justify interfering with the use of applications and services. Overall, Telenor packages do not qualify for the exceptions to the general principles of network neutrality provisions.

On ‘agreements’ and ‘commercial practices’

Next, the Court interpreted the meaning of ‘agreements’ as challenged by the Hungarian ISP. The Court pointed out that regardless of whether designed packages were part of contractual agreements with subscribers, Article 3(2) still requires that there be no limitation in the exercise of users’ rightsFootnote 47 . Furthermore, the contractual terms of those agreements – as stated in Article 3(2) – are limited to technical characteristics such as price, data volumes or speed. As to commercial practices, the Court stated that these refer to the conduct of an internet access service and they are aimed at adapting the services to meet potential subscribers’ preferences. However, commercial practices ‘[…] are not supposed to reflect a concordance of wills between such a provider and an end user…’Footnote 48

Simply put, the contractual agreements were based on the access to service providers’ commercial practices and neither the agreements nor commercial practices can limit end users’ rights and circumvent the safeguards of open internet access. The Court also elaborated on the role of National Regulatory Authorities, which is to assess the compliance of ISPs with the provisions enshrined in the Regulation on a case-by-case basis and by considering the characteristics of the ISP. Whenever the National Regulatory Authority finds a violation of the whole of Article 3(3) by an ISP, it does not need to find a violation of Article 3(2). Importantly, the assessment by the National Regulatory Authorities should be performed in light of the clarifications provided by the Court and their assessment may be scrutinised by the national courts.

Who is an end user?

The Court complemented the abovementioned considerations by discussing who end users are, a critical point which is key to understanding the openness of the Internet. The Court remarked that the concept of the end user is not limited to the subscribers to the packages offered by ISPs. Rather, end users comprise a broader category which includes: ‘both natural and legal persons who use or request internet access services in order to access content, applications and services, as well as those who rely on internet access to provide content, applications and services’.Footnote 49 As such, the term ‘end users’ also refers to those ‘who distribute information and content and provide application and services’.Footnote 50 Consequently, when assessing agreements/commercial practices, the rights of those who provide content must be taken into account.

What is the impact of commercial practices?

Importantly, the Court recalled that, according to recital 7 of the Regulation (zero-rating), the market position of the ISP should be considered because its scale could materially affect end users’ right of choice.

Subscriber packages which include zero-tariff agreements lead to a limitation of rights. Specifically, the cumulative effects of these agreements are liable to increase the use of zero-tariff applications and services, and at the same time, they are liable to reduce the use of other applications and services, the access to which is restricted when the data are used.Footnote 51 These packages make it technically impossible to access applications and services that are not zero-rated. The Court noted that the greater the number of subscribers, the more the cumulative effects of those agreements will limit the exercise of users’ rights.Footnote 52 In light of the foregoing, the Court found there was no compatibility with the obligation of equal-treatment of the traffic for which no derogation is envisaged for commercial practices. The last paragraph of Article 3(3) details the cases where derogations are permitted, such as the need to comply with Union legislative acts, including national legislation and court orders included ‘to preserve the integrity and security of the network’ or services or applications; and to prevent or mitigate the effect of temporary network congestion.Footnote 53

Concerning the question of whether an assessment of the effects of commercial practices on users’ rights is necessary, the Court pointed out that there is no such requirement when it comes to assessing the general obligations prescribed by the Regulation.

Analysis

Telenor Magyarország Zrt v Nemzeti Média- és Hírközlési Hatóság Elnöke is a straightforward case, which nonetheless was decided by the Grand Chamber to emphasise the importance of the topic. The European Court of Justice took a strong stand against the commercial practices of Telenor and, as a general observation, the ruling offers much-needed clarification on the meaning of the Regulation and establishes the importance of openness for the Internet. However, the Court also refrained from directly evaluating zero-rating as a form of discrimination and avoided engaging with a fundamental rights debate.

Network neutrality is a central regulatory tool in the field of internet governance, as it attempts to prevent ISPs from becoming the gatekeepers of what circulates online. Specifically, the provisions on zero-rating prohibit corporate schemes which would steer consumers’ choices towards which apps or services to use, thus distorting the level playing field, and effectively reducing innovation, diversity and pluralism.Footnote 54 Importantly, the Court highlighted these aspects, and this merits attention because the final text of the Regulation is a notoriously weakened version of the original Commission proposal and of the main features constituting network neutrality provisions (no blocking, no throttling, no paid prioritisation).Footnote 55

Problematically, the expressions ‘network neutrality’ and ‘zero-rating’ are missing from the text of the Regulation. If the meaning of the first can be identified in Article 3, and recital 7 is its closest articulation of zero-rating, the Regulation remains vague on these important aspects.Footnote 56 As reported by Horten after the adoption of the Regulation, views remained divided on which business models were permitted and the telecom industry believed that the Regulation allowed zero-rating practices.Footnote 57

Given the vagueness on these points, the BEREC Guidelines have played an important role in interpreting the Regulation on these matters. Noteworthy for the present case, the BEREC Guidelines state that ‘a zero-rating offer where all applications are blocked (or slowed down) once the data cap is reached except for the zero-rated application(s) would infringe Article 3(3) first (and third) subparagraph’.Footnote 58 The Guidelines do not ban zero-rating practices as such,Footnote 59 but they differentiate between the various types of zero-rating based on their effect on users’ rights. For example, the Guidelines allow zero-rating practices that are not considered to limit end users’ rights, but only influence their choices. These are practices which apply price-differentiation or zero-rating to all of the same category of applications (e.g., all music streaming applications). According to BEREC, these commercial practices are less dangerous. It is noteworthy that zero-rating all apps (thus placing all apps into the same category) is still considered harmful because it influences what consumers do with their apps, e.g., encouraging the use of social networks rather than reading newspapers.Footnote 60 Because of the importance the Court places on the idea of an open Internet, questions can (again) be raised as to whether zero-rating practices (and consequently the BEREC Guidelines) are in line with the scope of the Regulation.Footnote 61

As to the judgement, the Court seems not to distinguish between two practices of Telenor´s MyChat and MyMusic services, namely: (1) the fact that the data did not count against the data cap; and (2) once the data cap is reached, the other applications were either blocked or slowed down. The Court directly addressed the second aspect,Footnote 62 which represents a differential technical treatment, but failed to address the most common practice of zero-rating, that is, the opportunity to use a few apps which do not count against the data volume.Footnote 63 If the Court repeatedly points out that ISPs should not discriminate between specific applications and services, it also fails to stress that not counting the data of selected applications amounts to discrimination (as also stated in the BEREC Guidelines). By displaying zero-rating as a form of network neutrality breach, the Court would have provided an authoritative voice against this type of discriminatory practice. This would have had consequences for the BEREC Guidelines, by reminding everyone that zero-rating all applications in a class is also a form of discrimination. Zero-rating should be avoided regardless of the material effect on users’ rights.Footnote 64 The practice of zero-rating, even when it is not followed by different technical treatment (e.g., slowing down or blocking), is a ‘powerful tool to favour some applications over others and causes the same problems as technical forms of differential treatments’.Footnote 65 In addition, by commenting on zero-rating practices, the Court would have offered further guidance to National Regulatory Authorities which are responsible for monitoring and intervening on a case-by-case basis against commercial practices which undermine end users’ rights.Footnote 66

That said, it is worth noting that the ruling discerns the difference between the ‘commercial’ and ‘technical’/traffic management. Technical interferences (e.g., slowing down, blocking services, degrading) are ambiguously deployed to meet commercial purposes,Footnote 67 and it is not easy to distinguish between technical management and commercial management. Importantly, the Court stated that what differentiates the two is the purpose. In other words, it is essential that traffic-management measures be necessary for the functioning of the network (e.g., preventing network congestion) and limited in time.Footnote 68

On the openness of the Internet

A significant point of debate is the one on the open Internet. Openness is a normative feature of the Internet, which today needs much protection against the ongoing attempts to centralise it.Footnote 69 The term ‘centralise’ here roughly refers to the trend which sees actors (e.g., ISPs, major platforms) increasingly exerting control over the way the Internet develops and what circulates online.

If ISPs underlie the functioning of the network and are the primary actors to look at, issues of openness require broader structural power problems within the Internet ecosystem to be included in the Regulation. If the object of the Regulation is an open Internet rather than simply network neutrality, a general observation is that the Regulation fails to incorporate problems beyond the functioning of the ISPs (such as control over data, for example). Reducing the problem of Internet openness to just the area of ISPs’ practices risks obscuring further aspects that affect the decentralised nature of the Internet. Be that as it may, ‘open Internet’ has importantly guided the interpretation of the Court in this current case. By emphasising this concept, the Advocate General and European Court of Justice have established the importance of ‘openness’ as a value to be protected for the Internet, and one on which further rulings will be built. This is especially true given that the case was decided by the Grand Chamber, which usually addresses new complex or important issues; this makes the ruling likely to become a precedent.Footnote 70 Although it is beyond the scope of this commentary to provide more detail on the concept of openness, at a ‘practical’ level, one might note that commercial practices such as zero-rating contribute to the accumulation of power by a few actors, which conversely reduces the distributed nature and diversity of the Internet ecosystem. The debate on network neutrality began because ISPs were intervening in the traffic flow of competitive services (e.g., ‘Voice over Internet Protocol’), and were trying to profit from digital platforms with many users by charging them to deliver their content.Footnote 71 However, rather than competing with digital actors, ISPs now partner up with them to increase their positions of power. It is well known that zero-rating promotes the use of a few well-established digital platforms and amplifies their network effect. This means that those applications which are already the most used and which exert control over the majority of data flow will grow even further. Likewise, ISPs deploy zero-rating offers to attract more subscribers, thus growing in the market.

The Court somehow touched on these aspects when it discussed the relation between the ‘scale’ on which the ISPs operate and how this materially reduces user choice.Footnote 72 However, in the Court’s analysis, the popularisation effect that zero-rating has on the ISPs and how this contributes to reducing online diversity remains unexplored. It is worth questioning how the dominance of a few ISPs may hinder constitutional values such as competition, pluralism and diversity. For example, let us consider the scenario in which in a country there is high concentration of the market by few ISPs,Footnote 73 which already manage most of the Internet traffic. In cases of commercial agreements between a few ISPs and popular digital platforms, small and less competitive applications would materially be denied the opportunity to reach users, as ISPs would favour well-established platforms in order to be more attractive to their subscribers (as opposed to those ISPs which do not use zero-rating practices). To understand how reduction of the availability and diversity of content may take place, the way platforms operate also deserves consideration because platforms actively determine how individuals consume content. This happens by collecting users’ behavioural data and selling advertisement space.Footnote 74 In other words, platforms optimise the match between users, services, and applications by using profiling techniques. This means that users’ possibility of access is hampered dramatically. In the case of corporate practices such as zero-rating, the availability of content is restricted through a double passage: first, through the selection by the ISPs (whenever network neutrality is absent) of which services get better performance and are accessible, and second, through the optimisation applied by the platforms.Footnote 75

On the neutrality of ‘network neutrality’

Although this is the first case on network neutrality, it is not the first ruling in which the Court has encountered the concept of neutrality. Neutrality here should not be confused with the principle of technology neutrality, which refers to a regulatory framework that should ‘neither impose nor discriminate in favour of the use of a particular type of technology’.Footnote 76 Rather, neutrality is a construction that conceptualises the regulation of internet intermediaries; beneath its use, among other things, lies a struggle to delimit the power of internet communication technologies. Network neutrality is not the only regulatory framework for the ISPs; these also belong to the broader category of internet intermediaries. The E-commerce Directive establishes that ISPs should not be liable for illegal third-party content when they do not initiate it or have actual knowledge of the illegal activity or information and are unaware of the facts or circumstances from which the illegal activity or information is apparent. Under the E-commerce Directive, ISPs fall within the category of mere conduit, which means that the provider ‘does not initiate the transmission; does not select the receiver of the transmission; and does not select or modify the information contained in the transmission’.Footnote 77 The Court elaborated that the idea of neutrality by limiting its concept to an actor who has ‘confined itself to a merely technical and automatic processing of data’.Footnote 78 This builds on the idea that a ‘… society service provider has neither knowledge of nor control over the information which is transmitted or stored’ (emphasis added).Footnote 79 A possible way of reading the E-commerce Directive is that internet intermediaries should not have decided on the circulation of the content. In these two contexts, intermediaries’ liability and network neutrality, neutrality as a legal constructionFootnote 80 hints that there should not be control over content, or – as DeNardis put it – neutrality is generally understood as meaning that network operators should not take action.Footnote 81

Within the network neutrality framework, reducing the possibility of control implies the ‘right to use content, applications and services’. Ultimately, this means that the relationship between users’ rights to access and users’ rights to provide content should not be mediated by the ISPs. At the moment, it remains an open question whether this construction can be further elaborated and applied to other actors and layers of the Internet.Footnote 82

The missing dots: users’ rights are fundamental rights

Unfortunately, the Court has not spelled out which user rights correspond to fundamental rights and how the latter are intertwined with the openness of the Internet. One reason is that none of the preliminary questions mentioned provisions of the EU Charter of Fundamental Rights.

However, placing network neutrality considerations alongside fundamental rights helps in recognising how rights are inseparable from their organisational and material settings and, conversely, how technological arrangements can be shaped to either promote or hinder rights.

A well-designed network neutrality regime narrows disparities between the actors who want to participate in the digital realm, and is important for equality of access. Overall, ISPs (and internet communication technologies in general) can create new types of discrimination and new forms of exclusion from society (in addition to the one belonging to digital divide concernsFootnote 83 ) based on commercial interests. In this context, network neutrality primarily helps to protect freedom of expression and freedom to conduct a business.Footnote 84 If ISPs discriminate among actors wanting to deliver content and services, they interfere with the chance to seek and impart information and ideas as well as the freedom to exercise an economic or commercial activities. Recital 33 acknowledges the importance of respecting fundamental rights and observing the principle recognised by EU Charter of Fundamental Rights such as ‘the protection of personal data, the freedom of expression and information, the freedom to conduct a business, non-discrimination and consumer protection’.Footnote 85

A network neutrality regime primarily protects an ecosystem (the Internet) in which these freedoms have a chance to materialise. For this reason, it is somehow odd that the Court has not juxtaposed fundamental rights considerations and network neutrality provisions.

The freedom to conduct a business, protected by Article 16 of the Charter, explicitly recognises one’s personal right to ‘exercise an economic or commercial activity’Footnote 86 ‘without undue interference from the state’.Footnote 87 If Article 16 is canonically interpreted as a subjective right, this also counts as an organisational principle. According to Everson and Rui Correia Gonçalves, the freedom to conduct a business indicates a ‘specific form of social-economic organization’,Footnote 88 that is, a commitment to a ‘highly competitive social market economy, aiming at full employment and social progress’Footnote 89 as recognised in Article 3(3) TFEU. Everson and Rui Correia Gonçalves attribute a ‘performative character’Footnote 90 to the freedom to conduct a business, which aims to value the entrepreneurial initiative and shows the EU commitment ‘to the maintenance of a specified form of political economy, or a distinct form of economic and social organization’.Footnote 91 Briefly, the freedom to conduct a business is associated with the idea of an open market economy with free and fair competition. In today’s highly digitalised economy, regulating the playing field online – that is network neutrality – also protects important values for the EU associated with the economic initiatives.

In light of the foregoing considerations, the Court could have clarified that ISPs should not create differential access, which would establish barriers to participation in the economy online as much as offline.

A standard criticism of network neutrality would claim that ISPs have their own freedom to conduct a business. However, the freedom to conduct a business is not just an absolute right (hence subjected to limitation); it has a recognised social function, which theoretically aims to ensure that a broader societal need is met.Footnote 92 In fact, the Court itself has remarked about the limits of private freedom to pursue the general interest:Footnote 93 the contractual freedom of these actors is restricted (volume, speed etc.) in order to guarantee the two aims of the Regulation: users’ rights and an open Internet. For these reasons, the Regulation makes it possible to provide an overall assessment of the provider’s commercial practices (and not to limit the possibility of such an assessment). If ISPs do not curtail the variety of services and goods which circulate online, this translates into the users having the option of choosing what better serves their needs, interests and personal characteristics. This is especially important because a competitive market could also lead to a more diversified and tailored production and distribution of goods and services (consumers’ protection or consumer welfare).

The same line of reasoning can be applied to freedom of expression, which is also dependent on a diversified and competitive market which protects pluralism. Pluralism broadly refers to ‘… diversity of ownership, variety of the sources of information and in range of contents available…’.Footnote 94 Any consideration on network neutrality cannot avoid the importance it plays in the context of freedom of expression. In fact, the diversity of the contents and their accessibility and circulation are the bases for a democratic society. As extensively addressed by the Court, if Regulation 2015/2120 grants rights to end users to access and distribute information or run applications and services of their choice, restricting ISPs’ economic freedom is functional to supporting the promotion of content diversity and media pluralism. The lack of network neutrality would lead to the risk of letting ISPs choose which content and whose voice would reach a wider audience or who would benefit from better network performance.

In the case of commercial agreements between ISPs and popular digital platforms, small and independent applications which carry no mainstream information would be denied the opportunity to reach users and this limits the plurality of views, without which freedom of expression would cease to work.

Bringing fundamental rights considerations into the discussion would have helped to emphasise the importance that internet technologies have for current society, especially when there are pressing issues concerning their regulation and development.

Conclusions

ISPs can implement discriminatory practices driven by commercial interests. Specifically, ISPs can interfere with the transmission of content either through technical means, such as degrading the transmission of the comments or by influencing consumers’ behaviour. The Regulation to a greater extent forbids these practices except for a few, critical loopholes. The Telenor judgment concerns straightforward practices violating the network neutrality provisions. The case is noteworthy because it was the first time that the European Court of Justice had ruled on the Regulation. This commentary has noted, first, that the Court offered important clarifications on the meaning of the provisions contained in the Regulation and engaged with and defined the following concepts: open Internet; the relationship between ‘agreements’ and ‘commercial practices’; and ‘end users’. Second, this case note has pointed out the importance of the ruling for crystallising the concept of Open Internet, regardless of the fact the Court avoided engaging with the thorny issue of zero-rating practices as listed in the BEREC Guidelines. The commentary has also stressed how the Court refrained from aligning the ruling with a fundamental rights reasoning, which would have helped to emphasise the constitutional relevance that ISPs have within contemporary society.

Footnotes

I am particularly endebted to Dennis Brouwer who has commented on the paper and generously discussed the case with me. I would also like to thank Suvi Sankari and Tuomas Ojanen for their comments on an early draft of this paper and the University of Helsinki Legal Tech Lab for engaging with me on the topic of network neutrality. Also, this note has benefited from the constructive comments of the anonymous reviewer and the editors of the journal. This research has received financial support from Niilo Helanderin säätiö and these Academy of Finland projects: AlgoT -Potential and Boundaries of Algorithmic Transparency (decision n 324116) and POP - Is this Public or Private? (decision n 321995). The usual disclaimers apply.

1 Regulation (EU) 2015/2120 of the European Parliament and of the Council of 25 November 2015 laying down measures concerning open internet access and amending Directive 2002/22/EC on universal service and users’ rights relating to electronic communications networks and services and Regulation (EU) No 531/2012 on roaming on public mobile communications networks within the Union. More properly, what the EU introduced is a network neutrality regulation, not an open Internet one. Although network neutrality is essential for maintaining the openness of the Internet, ensuring openness requires looking at the practices of the various actors behind the functioning of the Internet.

2 ECJ 15 September 2020, Joined Cases C-807/18 and C-39/19, Telenor Magyarország Zrt v Nemzeti Média- és Hírközlési Hatóság Elnöke ECLI:EU:C:2020:708.

3 The case deals with a particular zero-rating practice, the one which zero-rates applications which offer different services (e.g. Facebook, WhatsApp), as opposed to zero-rating which does not count data consumption of the same category of applications (e.g. all social media applications): see BEREC, Guidelines on the Implementation of the Open Internet Regulation (BoR (20) 112, 11 June 2020) (the one from 2020), paras 40-43; and D. Brouwer, ‘Zero-rating and net neutrality in the European Union: What legal approach should the EU legislator adopt with respect to zero-rating offers where applications do not count towards the data cap of the consumer?’ (Master’s Thesis, Tilburg University, 2015).

4 M. Ziewitz and I. Brown, ‘A prehistory of internet governance’, in I. Brown (ed.), Research Handbook on Governance of the Internet (Edward Elgar 2013) p. 19.

5 See also the seminal work on network neutrality by Barbara van Schewick, Internet Architecture and Innovation (MIT Press 2010).

6 Ziewitz and Brown, supra n. 4, p. 15.

7 This paper uses the term ‘ISP’ because this is the term that is generally deployed when discussing network neutrality. Also, the BEREC Guidelines uses the term ‘ISP’ to refer to providers of internet access services: BEREC Guidelines, supra n. 3. Nonetheless the Regulation uses the term ‘providers of internet access services’. To be sure, para. 4 of the Regulation states that ‘an internet access service provides access to the internet, and in principle to all the end-points thereof, irrespective of the network technology and terminal equipment used by end-users’. Technically speaking, Internet service providers are ones which ‘can offer both an electronic communications service, such as access to the internet, and services not covered by this Directive, such as the provision of web-based and not communications-related content’: see Council Directive 2018/1972 establishing the European Electronic Communications Code [2018] OJ L321/36, para. 10.

8 See M. Carr, US Power and the Internet in International Relations: The Irony of the Information Age (Palgrave 2016) p. 57.

9 B. van Schewick, ‘Network Neutrality and Zero rating’ Report filed with the Federal Communications Commission (FCC) along with an ex parte letter 19 February 2015, p. 1.

10 Digital markets Subcommittee on Antitrust, Commercial and Administrative Law, ‘Investigation of Competition in Digital Market’ (US 2020) ⟨https://judiciary.house.gov/uploadedfiles/competition_in_digital_markets.pdf?utm_campaign=4493-519⟩, visited 9 October 2021.

11 Regulation (EU) 2015/2120, supra n. 1.

12 L.C. Audibert and A.D. Murray, ‘A Principled Approach to Network Neutrality’, 13(2) SCRIPTed (2016) p. 118.

13 ‘Zero-rating’ is when an ISP applies a price of zero to the data traffic associated with a particular application or class of applications: see ⟨www.berec.europa.eu/eng/netneutrality/zero_rating/⟩, visited 9 October 2021.

14 See B. van Schewick, ‘B.T-Mobile’s Binge on Violates Key Net Neutrality Principles’ (2016) ⟨https://cyberlaw.stanford.edu/downloads/vanSchewick-2016-Binge-On-Report.pdf⟩, visited 9 October 2021 The BEREC Guidelines also acknowledge that commercial conditions or practices influence end users’ choice: see BEREC Guidelines, supra n. 3, paras. 39 and 48. Marc Peeters discusses how in the Netherlands, Bits of Freedom challenged the Court’s decision in Autoriteit Consument en Markt, in which it refused to take action against two mobile companies’ zero-rating practices. In the words of Peeters, one of Bits of Freedom’s arguments was that zero-rating provides ‘an artificial incentive to choose only or mostly for services that are zero-rated, to the determent of other services’. However, the Dutch court has not upheld a categorical ban on zero-rating because it would have stood against the EU Regulation: M. Peeters, ‘EU Net Neutrality: Harmonised Enforcement and Judicial Review’, 2 Tijdschrift voor Internetrecht (2019) p. 62 at p. 65.

15 See Art. 3(3).

16 The Dutch approach initially regarded zero-rating as being in contrast to the scope of the Network Neutrality Regulation itself: see Peeters, supra n. 14; Brouwer, supra n. 3.

17 BEREC Guidelines, supra n. 3.

18 Joined Cases C-807/18 and C-39/19, supra n. 2.

19 Lindroos-Hovinheimo distinguishes between two types of cases, definitional cases and balancing cases, in which the Court recognises the need to balance fundamental rights: see S. Lindroos-Hovinheimo, ‘Who Controls Our Data? The Legal Reasoning of the European Court Of Justice In Wirtschaftsakademie Schleswig-Holstein And Tietosuojavaltuutettu V Jehovan Todistajat’, 28(2) Information & Communications Technology Law (2019) p. 225 and Private Selves: Legal Personhood in European Privacy Protection (Cambridge University Press 2021) p. 14.

20 See van Schewick, supra n. 9. Several scholars have provided an analysis of the relationship between fundamental rights and network neutrality: see L. Belli and M. van Bergen, Protecting Human Rights through Network Neutrality (Council of Europe, Steering Committee on Media and Information Society 2013); Audibert and Murray supra n. 12.

21 Joined Cases C-807/18 and C-39/19, supra n. 2, paras. 10-11, 20.

22 Joined Cases C-807/18 and C-39/19, supra n. 2, paras. 9-11.

23 Art. 3, Regulation (EU) 2015/2120, supra n. 1.

24 Joined Cases C-807/18 and C-39/19, supra n. 2, para. 15.

25 Footnote Ibid.

26 Footnote Ibid., para. 20.

27 Footnote Ibid., paras. 20-21.

28 Opinion of Advocate General Campos Sánchez-Bordona, 4 March 2020, Joined Cases C-807/18 and C-39/19 Telenor Magyarország Zrt v Nemzeti Média- és Hírközlési Hatóság Elnöke ECLI:EU:C:2020:154

29 Footnote Ibid., paras. 27-30.

30 Footnote Ibid., para. 37.

31 Footnote Ibid., para. 49.

32 The practice of slowing down negatively affects the experience of using the application.

33 Footnote Ibid., para. 55.

34 Footnote Ibid., para. 56.

35 Art. 3(2) of Regulation 2015/2120, supra n. 1, quoted in Footnote ibid., para. 57.

36 Opinion, supra n. 28, para. 64.

37 Footnote Ibid., para. 68.

38 Joined Cases C-807/18 and C-39/19, supra n. 2, para. 27.

39 Footnote Ibid., paras. 22-27.

40 Footnote Ibid., paras. 32-36.

41 Footnote Ibid., paras. 36-43.

42 Footnote Ibid., paras. 43-46.

43 Footnote Ibid., para. 27.

44 Footnote Ibid., para. 24.

45 Footnote Ibid., para. 25.

46 Footnote Ibid., para. 25.

47 Footnote Ibid., para. 33.

48 Footnote Ibid., para. 34.

49 Footnote Ibid., para. 37 (italics added).

50 Footnote Ibid., para. 38 (italics added).

51 Footnote Ibid., para. 44.

52 Footnote Ibid., para. 45.

53 Footnote Ibid., para. 49.

54 K. Maniadaki, ‘Net Neutrality Regulation in the EU: Competition And Beyond’, 10(7) Journal of European Competition Law & Practice (2019) p. 479 at p. 485.

55 On these and the following points see C.T. Marsden, Network Neutrality (Manchester University Press 2017) p. 116.

56 Footnote Ibid.

57 M. Horten, The Closing of the Net (Polity 2016) p. 86.

58 BEREC Guidelines, supra n. 3, para. 41.

59 See, for example, the Access Now submission to the public consultation on draft BEREC Guidelines on the implementation of Open Internet Regulation (BoR PC10 (19) 27, 28 November 2019).

60 Barbara van Schewick comprehensively details how this type of zero-rating still harms innovation and freedom of expression. Zero-rating of all applications in a class allows ISPs to become the gatekeepers of the Internet as they select and allow applications in the program. Preventing ISPs from acting as gatekeepers is amongst the goal of the Regulation which aims to maintain an open Internet. Further, this kind of program requires applications to actively seek to be zero-rated, which can be particularly burdensome for start-ups: see B van Schewick, ‘Comments on BEREC Guidelines on the Implementation by National Regulators of European Net Neutrality Rules, BoR (16) 94’ (BoR PC 01 (16) 106, 18 July 2016).

61 The Dutch legislation initially considered zero-rating to be contrary to Art. 3(3) of Regulation (EU) 2015/2120: see Brouwer, supra n. 3; N. Van Eijk, ‘Does net neutrality work? The Dutch case’(27th European Regional Conference of the International Telecommunications Society (ITS): ‘The Evolution of the North-South Telecommunications Divide: The Role for Europe’, Cambridge, UK, September 2016) ⟨https://www.econstor.eu/bitstream/10419/148715/1/van-Eijk.pdf⟩, visited 9 October 2021.

62 My thanks to Dennis Brouwer for this point.

63 van Schewick supra n. 9.

64 See Maniadaki, supra n. 54.

65 van Schewick, supra n. 9, p. 2.

66 See recital 7 of Regulation (EU) 2015/2120, supra n. 1.

67 For example, Maniadaki highlights that discrimination in the context of Network neutrality ‘may refer to the differentiated technical treatment of online traffic…’: Maniadaki, supra n. 54. p 1

68 Joined Cases C-807/18 and C-39/19, supra n. 2, para. 2.

69 L. Belli, ‘End-to-End, Net Neutrality and Human Rights’, in L. Belli and P. De Filippi (eds), Net Neutrality Compendium (Springer 2016); L. Belli, ‘Net Neutrality, Zero Rating and the Minitelisation of The Internet’, 2 Journal of Cyber Policy (2016) p. 96.

70 T. Ojanen, ‘Privacy Is More Than Just a Seven-Letter Word: The Court of Justice of the European Union Sets Constitutional Limits on Mass Surveillance: Court of Justice of the European Union, Decision of 8 April 2014 in Joined Cases C-293/12 and C-594/12, Digital Rights Ireland and Seitlinger and Others’, 10(3) EuConst (2014) p. 528 at p. 529.

71 L. DeNardis, The Global War for Internet Governance (Yale University Press 2014).

72 Judgment, supra n. 2, paras. 41 and 46.

73 E. Brogi et al., Monitoring media pluralism in the digital era : application of the Media Pluralism Monitor 2020 in the European Union, Albania and Turkey in the years 2018-2019 (Centre for Media Pluralism and Media Freedom (CMPF) Policy Report 2020) p. 48.

74 N. Srnicek, Platform Capitalism (Polity 2016).

75 There are two main effects, known as echo-chamber and filter bubble.

76 Regulation (EU) 2015/2120, supra n. 1, para. 2.

77 Directive 2000/31/EC ‘Directive on electronic commerce’, Art. 12.

78 ECJ 12 July 2011, Case C-324/09, L’Oréal SA and Others v eBay International AG and Others ECLI:EU:C:2011:474, para. 119.

79 Directive 2000/31/EC ‘Directive on electronic commerce’, recital 42.

80 By ‘construction’ I mean that technology is never neutral as such, and it has its own normativity and politics: see DeNardis, supra n. 71; L. Winner, ‘Do Artifacts Have Politics?’ (1980) 109(1) Daedalus 121; and S. Larsson, Conceptions in the Code: How Metaphors Explain Legal Challenges in Digital Times (Oxford University Press 2017).

81 DeNardis, supra n. 71, p. 149. For a critical analysis of the concept of neutrality, see M. Maroni and E. Brogi, ‘Freedom of Expression and the Rule of Law: the Debate in the Context of Online Platform Regulation’, in L. Parcu and E. Brogi (eds.), Research Handbook on EU Media Law and Policy (Edward Elgar 2021).

82 An application of this can be found in D. Brouwer, ‘A Non-Discrimination Principle For Rankings In App Stores’, 9(4) Internet Policy Review (2020) p. 1.

83 M. Ragnedda, The Third Digital Divide: A Weberian Approach to Digital Inequalities (Routledge 2017).

84 van Schewick, supra n. 9.

85 Regulation (EU) 2015/2120, supra n. 1, recital 33.

86 See Art. 16 of the Charter.

87 N. Wahl, ‘The Freedom to Conduct a Business: a Right of Fundamental Importance for the Future of the European Union’, in F. Amtenbrink (ed.), The Internal Market and the Future of European Integration (Cambridge University Press 2019).

88 M. Everson and R. Correia Gonçalves, ‘Freedom to Conduct a Business’, in S. Peers et al. (eds.), The EU Charter of Fundamental Rights: A Commentary (Hart Publishing 2014) p. 437.

89 Consolidated version of the Treaty on the Functioning of the European Union [2012] OJ C326, Art. 3(3).

90 Everson and Correia Gonçalves, supra n. 88.

91 Footnote Ibid.

92 U. Andrea, The Freedom to Conduct a Business in the EU, Its Limitations and Its Role in the European Legal Order: A New Engine for Deeper and Stronger Economic, Social, and Political Integration. (Cambridge University Press 2019) (the Italian constitution also remarks that the economic activities do not persue only their own interests).

93 Joined Cases C-807/18 and C-39/19, supra n. 2, para. 26.

94 Commission of the European Communities, Commission staff working document media pluralism in the member states of the European union (sec(2007) 32).

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