Body of European Regulators for Electronic Communications (BEREC) By mail to: Berlin, 18 July 2016

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1 BoR PC 01 (16) 071 Body of European Regulators for Electronic Communications (BEREC) By mail to: Berlin, 18 July 2016 VPRT Comments on the draft BEREC Guidelines on Net Neutrality Dear Sir, dear Madam, as part of the consultations on the BEREC Guidelines on Net Neutrality, we would like to take advantage of the opportunity provided to submit written comments. We should like to express our thanks for the direct involvement in the process of preparing the BEREC Guidelines. VPRT appreciates that BEREC is pursuing a differentiated approach and, notably in the case of zero-rating, refers to numerous critical points such as the zero-rating for certain /individual services. This course should continue to be systematically pursued. Furthermore, the draft should be even more precisely worded, particularly with regard to legal certainty and the existing room for interpretation, for which binding definitions should be provided at BEREC level. In this context, VPRT takes the view that special consideration should be given to content providers as end-users (CAPs), since they offer a large number of innovative services and the principles of net neutrality are important in order to maintain diversity in terms of offerings and providers. Re. Consideration of Media Diversity Higher priority must be given to the potential implications for media diversity. Its brief mention does not go far enough (see paragraph 43). In particular, the present brief reference to Recital 13 should be enlarged upon at this point.

2 The aspect of co-operation among several national regulatory authorities also still remains open. VPRT calls for a clarification within the BEREC Guidelines that authorities responsible for regulating the media and for ensuring media pluralism shall be involved at national level. This could, for instance, be achieved by expressly stipulating under paragraph 164 ff. that, for the purpose of the Guidelines, "other competent authorities" are also to be understood to include national media regulators. Background and general aspects / Terminology (Page 3): NRA For the purpose of these Guidelines, NRAs and other competent authorities include National Media Regulators (NMRs) to ensure media pluralism. Exceptions and inconsistent interpretation of the Guidelines could undermine net neutrality In view of the Regulation being implemented by national regulatory authorities with the aid of the Guidelines, there is a danger that this will not result in a consistent, i.e. coherent application of the law in all EU/EEA states. Therefore the Guidelines should not only consist merely of recommendations, but should be deemed to constitute clear and strict standards. To this end, we suggest the following necessary additions to paragraphs 101 and 103 (and ff.): Paragraph 101 NRAs should have to verify whether the application could be provided over IAS at the agreed and committed level of quality, and whether the requirements are plausible in relation to the application, or whether they are instead set up in order to circumvent the provisions regarding traffic management measures applicable to IAS, which would not be allowed. Paragraph 103 (as well as ff.) 2/8

3 When assessing whether the practices used to provide specialised services comply with Article 3(5) first subparagraph, NRAs should have to apply the approach set out in paragraphs ). Furthermore, fewer exceptions should be used in relation to traffic management (see paragraph 74 with Article 3(3) letter (b)), so that internet access services are not allowed to block or slow down internet traffic. Although the exceptions relating to traffic management are limited to complying with a legal requirement, preserving the integrity and security of the network and also managing network congestion, such possibilities must however be very specifically and narrowly defined and not left to definition by the national regulatory authorities. Especially in the case of network congestion, providers of internet access services should, based on timely expansion of the networks and capacity allocation, be able to resort to this exception only in an extreme emergency. A too lenient interpretation of this exception could result in expansion being slowed down, thereby undermining the objectives of the Guidelines on Net Neutrality. Re. Zero-rating VPRT takes the view that, based on the Regulation, non-discrimination also includes content providers as end-users. In the case of agreements on data volumes, this presupposes that these can, if necessary, be formulated in a service-agnostic or provider-agnostic way (see paragraph 39). The nondiscrimination of end-users is therefore prejudiced by models which subject only one service to zero-rating or, in the event of vertical integration, give rise to disadvantages for third parties (both CAPs and IASs). Paragraph 39 should therefore be clearly formulated as being pro-service-agnostic or proprovider-agnostic and paragraph 40 should make provision for involvement of the responsible media regulators: Paragraph 39 The ISP could either apply or offer zero-rating to an entire category of applications (e.g. all video or all music streaming applications) or only to certain applications thereof (e.g. its own services, one specific social media application, the most popular video or music applications). In the latter case, an end-user is not prevented from using other music applications. However, the zero price applied to 3/8

4 the data traffic of the zero-rated music application (and the fact that the data traffic of the zero-rated music application does not count towards any data cap in place on the IAS) creates an economic incentive to use that music application instead of competing ones. The effects of such a practice applied to a specific application are more most likely to undermine the essence of the end-users rights or lead to circumstances where end-users choice is materially reduced in practice (Recital 7) than when it is applied to an entire category of applications. Paragraph 40 When assessing such agreements or commercial practices like zerorating in relation to Article 3(2), NRAs and other competent authorities such as NMRs should take into account the aim of the Regulation to safeguard equal and non-discriminatory treatment of traffic (Article 1) and to guarantee the continued functioning of the internet ecosystem as an engine of innovation (Recital 1) as well as Recital 7, which directs NRAs and other competent authorities such as NMRs to intervene against agreements or commercial practices which, by reason of their scale, lead to situations where end-users choice is materially reduced in practice, or which would result in the undermining of the essence of the end-users rights In the case of zero-rating, it is also left to the national regulatory authorities to determine whether this is permissible (see paragraphs 40-42). Although reference is made to certain criteria under Article 3 para. 2, it will however not become evident how zero-rating is to be dealt with in future until these criteria are assessed by the national regulatory authorities. In this case, only little scope should be allowed under the relevant paragraphs of the Guidelines (see paragraph 45) in order to ensure that consistent application is realised throughout Europe. In this regard, the Guidelines should once again expressly stipulate that the responsible media regulators are to be involved. Paragraph 45 In applying such a comprehensive assessment, NRAs and other competent authorities such as NMRs may also take into account the following considerations: Any agreements or practices which have an effect similar to technical blocking of access (see paragraph 52) are likely to in- 4/8

5 fringe Articles 3(1) and 3(2), given their strong impact on enduser rights. Commercial practices which apply a higher price to the data associated with a specific application or class of applications are most likely to limit the exercise of end-users rights because of the potentially strong disincentive created to the use of the application(s) affected, and consequent restriction of choice. Also, the possibility that higher prices may be applied to an application or category of application may discourage the development of new applications. End-users of an IAS whose conditions include a lower (or zero) price for the data associated with a specific application or class of applications will be incentivised to use the zero-rated application or category of applications and not others. Furthermore, the lower the data cap, the stronger such influence is likely to be. Price differentiation between individual applications within a category has an a high impact on competition between providers in that class. It may therefore be more likely to impact the continued functioning of the internet ecosystem as an engine of innovation and thereby undermine the goals of the Regulation than would price differentiation between classes of application. Re. Traffic Management The Guidelines envisage that traffic management will take place irrespective of applications and end-users, thereby guaranteeing equal treatment in the form of "reasonable traffic management" (see paragraphs 55-58), as well as differentiating between traffic categories. Not until providers of internet access services have responded on whether the relevant type of traffic management meets the requirements of the Regulation, are the national regulatory authorities to be able to assess the use of traffic categories (see paragraphs / 68-69). This would (in addition to highly varied interpretations by individual national regulatory authorities) also lead to an establishment of traffic categories through market players as initially setting precedents ahead of any categorisation by national authorities will be rather difficult to correct. We do however expressly welcome the fact that applications having equivalent requirements are to be allocated to one category of traffic. The 5/8

6 seven traffic management practices described under paragraph 74 (no blocking, no slowing down, no alteration, no restriction, no interference with, no degradation, no discrimination) should, in the opinion of VPRT, be applied without exception by each individual national regulator. To specify this more precisely, we suggest that the following necessary amendments should be made to paragraph 74: Paragraph 74 In order to safeguard the open Internet, Article 3(3) third subparagraph describes traffic management practices that are prohibited, unless under specific exception. These are practices that, inter alia, are banned in that regard, and can be described by these seven basic principles which should have to be used without any exception by NRAs when assessing ISPs practices: no blocking, no slowing down, no alteration, no restriction, no interference with, no degradation and no discrimination between specific content, applications or services, or specific categories thereof. This is a non-exhaustive list of traffic management measures that are prohibited, and any other measure going beyond reasonable traffic management is also prohibited. Practices not complying with the seven basic principles, or that otherwise go beyond reasonable traffic management, may be used by ISPs only based on the three specific exceptions elaborated below under Article 3(3) letters (a), (b) and (c). Deviations from these seven traffic management practices should, from VPRT s standpoint, be disallowed. This applies particularly in the case of measures undertaken in the event of network congestion, since (as already outlined above) a too lenient interpretation of this exception would lead to delayed or slower expansion of the network capacity, consequently undermining the objectives of the Guidelines on Net Neutrality (see suggestions for paragraph 83 on page 4). 6/8

7 Re. Specialised Services Linear (live) IPTV broadcasting services are cited by BEREC as examples of specialised services with specific quality requirements and are considered permissible (see paragraph 109). Citation of this example may not be deemed to constitute a definition, general classification or prejudice. Classification as a specialised service must depend on the individual QoS requirements which a service offers. As a result, VPRT takes the view that in the course of ongoing network development, not every video streaming service or even every linear (live) broadcasting service will automatically be a specialised service. Determining whether or not an offering constitutes a specialised service will have to be based on mutual agreement between the content provider (CAP) and the IAS. We would therefore plead in favour of an amendment to paragraph 102: Paragraph 102 Initially, the requirement of an application is set by the provider of the specialised service together with the CAP, although requirements may also be inherent to the application itself. For example, a video application could use standard definition with a low bitrate or ultra-high definition with high bitrate, and these will obviously have different QoS requirements, which are set by the CAP. A typical example of inherent requirements is low latency for real-time applications. Apart from specialised services, sufficient network capacity must be available so that internet access services are not degraded (see paragraphs ). BEREC s recommendation that national regulatory authorities should question providers of internet access services on how they ensure sufficient capacity, does not go far enough (see paragraph 101 ff. / ). Sufficient capacity must be provided as an basis for offering unrestricted besteffort access. Otherwise without sufficient additional capacity, specialised services would restrict best-effort access. An interpretation that has been advocated in individual cases by telecommunications companies is that there is freedom to choose business models and this may be exercised in the case of either traffic management or specialised services. This cannot be accepted since a narrow interpretation of traffic management is required, otherwise the precept of "not on commercial grounds" would be undermined. This should be clarified even more explicitly under paragraph 65. 7/8

8 Paragraph 65 In the event that traffic management measures are based on commercial grounds, the traffic management measure is not reasonable and therefore not an option for a commercial service by providers of IAS. An obvious example of this could be where an ISP charges for usage of different traffic categories. However, NRAs do not need to prove that a traffic management measure is based on commercial grounds; it is sufficient to establish that the traffic management measure is not based on objectively different technical QoS requirements. With regard to the criteria of specialised services being "objectively necessary" (Recital 16), it should be clarified that this may not be inferred merely from bilateral agreements between providers. This would reverse the effect of any kind of objectivity. Paragraph 107 NRAs should verify whether, and to what extent, optimised delivery is objectively necessary to ensure one or more specific and key features of the applications, and to enable a corresponding quality assurance to be given to end-users. A single contractual agreement on the part of an IAS does not constitute an objective necessity. To do this, the NRA should assess whether an electronic communication service, other than IAS, requires a level of quality that cannot be assured over an IAS. If not, these electronic communication services are likely to circumvent the provisions of the Regulation and are therefore not allowed. We would ask you to take these points into consideration in the course of your further consultations. Please do not hesitate to contact us if you have any queries, or regarding the ongoing process. With kind regards, Claus Grewenig Managing Director 8/8