Canada: EU Parliament Adopts New Net Neutrality Rules Allowing Content Optimized Services

European Union member states have a new net neutrality framework that will allow service providers to offer specialized services – such as improved internet quality for IPTV – where the upgrades do not impact general Internet quality for other end-users.

On October 27 the European Parliament passed a new electronic communications Regulation, with a view to protecting net neutrality. Broadly speaking, net neutrality is the principle that all Internet traffic should be treated equally regardless of content or volume. The European Parliament adopted a Regulation laying down measures concerning open access. The new Regulation also amends 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. Article 1 of the new Regulation states that it aims to "safeguard equal and non-discriminatory treatment of traffic in the provision of internet access services and related end-users' rights."

The new rules set out in the Regulation include exceptions that allow for internet traffic management practices as well as the ability to offer faster specialty services.

Reasonable traffic management measures – Article 3(3)

Under Article 3(3) of the new Regulation, European service providers are allowed to implement "reasonable traffic management measures." The built-in reasonableness requirement indicates that such measures must be transparent, non-discriminatory, proportionate and not based on commercial considerations. Moreover, the measures should not monitor specific content or be maintained for longer than necessary. However, the article does not restrict monitoring of types of content or volume of traffic. The exception also permits blocking, restricting, interfering with and discriminating between content, applications or services "as necessary" to (a) comply with local laws; (b) preserve network integrity and security; or (c) prevent/mitigate network congestion.

Content optimized services – Article 3(5)

Article 3(5) of the regulation permits service providers to offer services "other than Internet services which are optimised for specific content, applications or services, where the optimisation is necessary in order to meet requirements of the content, applications or services for a specific level of quality" if they have sufficient network capacity. But these cannot be a replacement for internet access or cause a detriment to the general quality of Internet services.

These services may include improved quality IPTV, high-definition videoconferencing or healthcare services, according to a press release by the EU. The move to allow specialized services is intended to boost online innovation. These specialized services cannot be sold as a replacement for Internet access, rather as a supplemental or additional service.

Some critics have said the new rules create a "two-speed" Internet and that the rules create "fast lanes" for streaming. However, the EU clarified that paid prioritization is not allowed.

Transparency measures – Article 4

Service providers will be required to explain in their contracts with consumers how traffic management measures may impact Internet access and the privacy of users. In addition, the contracts must include a description of how any throttling (volume or speed limitations) may impact access and use of content, how any content optimized services might affect access of the end-users and their download speeds, and how significant deviations from advertised speeds could impact users' ability to access or distribute the content of their choice. Finally, the contracts must spell out remedies available to consumers. Service providers will also have to implement "transparent, simple and efficient procedures" to address user complaints related to Regulation.

Compliance, Enforcement and Penalties

Additionally, national regulatory authorities are tasked with monitoring and ensuring compliance with Articles 3 and 4 under the new Regulation. Member states must also create and enforce penalties for breaching Articles 3, 4 and 5 by April 2016.

Amendments rejected

Prior to the vote, critics were calling for amendments to the Regulation to remove the specialty services clause and add a prohibition on zero-rating, which would have put the EU more in line with the approach of the United States. Prominent tech firms – such as Etsy, Inc., Kickstarter, Vimeo and Netflix – voiced their concerns in an open letter to the European Parliament ahead of the vote. However, the Regulation passed unaltered.

Zero-rating is a practice that essentially allows users to access certain content for free, as the access does not count towards data usage by the service provider. Some European countries have national laws regarding the practice. Regulators in the Netherlands and Slovenia have fined mobile service providers for zero-rating practices, while Belgium reportedly allows mobile companies to permit free, unlimited access to certain platforms, such as Facebook and Twitter.

While not banned in the United States, the U.S. regime allows for regulatory oversight of zero-rating practices since the Federal Communications Commission revised the U.S. net neutrality rules earlier this year.

Zero-rating in Canada was the subject of a CRTC decision this year, which found that charging consumers lower prices to access certain content was an undue and unreasonable preference, in violation of section 27(2) of the Telecommunications Act. However, this decision is being appealed.

Regulated Retail Roaming Services (Article 6)

In a consumer friendly move, the Regulation passed include a prohibition on mobile roaming charges across Europe as of June 2017. Article 6 of the Regulation sets out the prohibition, with protections to dissuade customers from taking advantage of another member state's wireless prices under the new rule, i.e. "permanent roaming."

For mobile users in Europe, this means that calls, text messages and data usage in any EU country will be billed as if the user is within his or her country.

Wireless services providers can also seek authorization to apply a surcharge to recover costs of providing regulated retail roaming services.

Since European Parliament approved the legislation, the Body of European Regulators (BEREC) has nine months to create guidelines for member states.

Canadian net neutrality framework

Canada's net neutrality rules stem from the CRTC's Telecom Regulatory Policy CRTC 2009-657, which sets out acceptable internet traffic management practices (ITMPs). The framework distinguishes between economic ITMPs, such as monthly usage caps, and technical ITMPs that manage network traffic.

The ITMP framework mandates that internet service providers (ISPs) detail the purpose and effect of any practice and whether it results in discrimination or preference. If discrimination occurs, the ISP must demonstrate that the ITMP addresses the need and achieves the purpose and effect; that the resulting discrimination is as little as reasonably possible; and that any secondary harm is as little as reasonably possible. Then the service provider must justify the use of any technical ITMP over economic practices.

The framework is applied when ISPs seek prior approval from the CRTC to deploy an ITMP, which is required in some circumstances but not others, as well as when an ISP faces a specific consumer complaint, which is always possible.

The policy also includes a transparency measure that requires ISPs to disclose pricing information related to economic ITMPs to consumers, such as real-time tools indicating customer usage. Regarding technical ITMPs, the disclosure requirements are more stringent and must describe why the ITMP is being introduced, who is affected, when the Internet management will occur, what type of traffic is affected, and how the ITMP will impact the user's overall Internet experience.

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