On April 28, 2022, the German telecommunications regulator Bundesnetzagentur (BNetzA) banned the zero-rating programs of two of the country’s largest mobile phone providers. A statement released by BNetzA called Deutsche Telekom’s “StreamOn” and Vodafone’s “Vodafone Pass” for violating net neutrality principles enshrined in European Union law. These principles, a decades-old global point of contention, establish that Internet service providers must treat all Internet traffic equally, regardless of origin and target.
A logical consequence of the case law of the CJEU
The Deutsche Telekom and Vodafone programs have both implemented a so-called “zero rate” regime. These regimes have been applied to mobile phone plans with a capped broadband data volume. In this context, customers subscribing to tax-free programs could use certain predefined online services (for example, video or music streaming services) without consuming any part of their data volume.
In its statement on the ban, BNetzA referenced a series of European Court of Justice (ECJ) rulings from 2021 that already concerned the programs at issue. In three almost word for word identical judgments (C-854/19, C-5/20, C-34/20), the CJEU had already established not only the incompatibility of these specific programs with the principles of net neutrality in the European Open Internet Regulation (Regulation 2015/2021 of 25 November 2015), but also that the whole concept of zero-rating violates the equal treatment of data traffic as provided for in Article 3, paragraph 3, of said regulation.
These decisions surprised some, probably including the BNetzA itself. In its 2017 and 2018 rulings on the two programs, the BNetzA itself found that “StreamOn” and “Vodafone Pass” generally complied with the Open Internet Regulation and only ordered Deutsche Telekom and Vodafone to remedy certain aspects of these programs that the BNetzA had found to be non-compliant. This was also based on the Guidelines on the Implementation of Open Internet Regulation by the Body of European Regulators in Electronic Communications (BEREC). Although these guidelines are currently being revised following the CJEU judgments mentioned above, the current version (in recital 42 et seq.) generally allows zero rating subject to a case-by-case assessment of factors such as transparency, non-discrimination or fairness. by national regulators. Nonetheless, last week’s BNetzA rulings are an expected response to the CJEU’s findings.
For both the carriers concerned and their subscribers, the BNetzA ordered a fairly lenient approach to the implementation of its decision. The marketing of zero rate programs can continue until July 1, 2022 and all existing contracts (as well as those to be concluded) can continue to use them until March 31, 2023. BNetzA justifies this by the large number of customers who will be affected by the change. “We are ending the unequal treatment of data traffic associated with zero-rating options,” said Klaus Müller, president of BNetzA, adding that he expected providers, in response to the regulator’s decision, to offer tariffs with higher data volumes or cheaper mobile packages and thus benefit consumers.
Finally, the BNetzA rulings will also have an effect on online service providers participating in Deutsche Telekom and Vodafone zero-rating programs, as content partners. For many of them, partnering with carriers offering zero-rating programs has become a necessity if they want to ensure that their services benefit from zero-rated traffic just as much as those of their competitors. While the programs were generally open to all content partners, they had certain technical and organizational requirements that could be difficult to manage, especially for smaller content partners.
Finally, the BNetzA decisions can also be seen as the prelude to a more global application change concerning the zero rate in the whole of the EU. In its consultation to modify its guidelines on the Open Internet Regulation, BEREC now explicitly recommends that regulators prohibit zero rate tariffs (in recital 55). It can therefore be expected that other EU telecom regulators will follow suit with regard to the tax-free offers still available in their markets.
The authors thank research assistant Peter Jan Ritsema for his valuable contributions to this client alert.