Abstract
The much-awaited EU Net Neutrality rules contained in the TSM Regulation entered into force on 30 April 2016.
These rules have the overarching aim of safeguarding the open Internet and, in doing so, seek to strike a balance
between the interests of consumers and Internet Service Providers (“ISPs”). However, the natural consequence of
seeking such a compromise is legislative uncertainty. Given the fact that the various Articles of the TSM Regulation
offer very little by way of unambiguous guidance, there is a serious risk that many broadly formulated provisions of
that Regulation are amenable to a restrictive interpretation, resulting in the over-regulation of ISPs. If that scenario
were to materialise, the author believes that there would be a risk of consumer welfare benefits being unwittingly
sacrificed on the otherwise laudable altar of the open Internet. Given the breadth of the language used in the TSM
Regulation, the risk of over-enforcement is tangible, especially given the constantly evolving Internet value chain, the
multi-sided nature of Internet-related markets and the disruptive nature of new Internet business models.
Although BEREC (the body representing EU telecommunications sector regulators at national level) has been
assigned the unenviable task of providing, by August 2016, the guidance required to give effect to the broad principles
of the TSM Regulation, it is the author’s contention that BEREC’s work need not be under “scorched earth”
conditions, but should be driven by the standards developed over the years under EU competition rules, insofar as: (i)
their application in a regulatory setting should inform regulators of how the concept of non-discrimination is to be
interpreted; and (ii) the development of ‘objective standards’ under EU competition rules is the best means of
prescribing: (a) the types of “commercial practices” which have a material impact on consumer choice; and (b) the
legitimate scope of necessary traffic management techniques.
In applying such competition law standards, it is contended that regulators applying the Net Neutrality rules within the
TSM Regulation should attach due weight to four key principles of interpretation:
1. The importance of relying on key Recitals in the in the TSM Regulation to provide clear guidance, both
insofar as these Recitals establish ex post standards of analysis (under Articles 101 and 102 TFEU) with
which to assess the effects of certain “agreements” and “commercial practices” (i.e., zero-rating and
specialised services), as well as the application of the non-discrimination obligation.
2. An understanding of the range of technical and regulatory constraints faced by mobile operators which have
a material impact on the management of traffic over their networks, and hence on the ‘objective justification’
of their actions.
3. A more balanced economic view of the efficiencies flowing from certain commercial practices and a broader
view of the welfare benefits that flow from differential treatment, consistent the approaches that have
developed under competition policy in relation to a range of different industrial sectors.
4. An understanding that the perceived market failures flowing from the breach of Net Neutrality principles can
be best addressed by the application of competition law principles, which are well adapted to deal with such
concerns, irrespective of whether the institutions ultimately responsible for the implementation and
interpretation of the TSM Regulation might be National Regulatory Authorities.
Those who advocate that the Net Neutrality non-discrimination principle constitutes a blanket rule which must be
applied without discretion, are in effect ignoring the consumer welfare considerations which would be better served
by the inherent flexibility of EU competition rules, especially in terms of their ability to balance consumer welfare and
efficiency benefits against losses to competition. ‘Smart’ Net Neutrality regulation should enable competent
authorities to ensure a customer’s freedom to choose the services they desire, while at the same time addressing the
fast-moving and competitive dynamics of the Internet ecosystem.
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