Internet service providers may be fond of zero-rated services (i.e. their traffic doesn’t count towards data caps), but they might want to think twice about this practice in Europe. As Fortune reports, the Court of Justice of the EU ruled that zero rate options (aka “zero tariff”) violate net neutrality and are “incompatible with EU law”. These benefits do not meet EU regulations requiring providers to treat traffic equally, the court said.
The decision came after two German courts questioned the Court of Justice on the legality of zero-rate options from operators Telekom Deutschland (with a significant stake in T-Mobile in the US) and Vodafone. The former offers a “Stream On” option that does not count music or video streaming from partner services in your cap. Vodafone, meanwhile, offers passes (such as “Video Pass” and “Music Pass”) that waive data usage for partners in different app categories, but only in Germany on your phone – travel or use the access point connection and this advantage disappears.
Critics have attacked the zero rate as an attempt to stifle competition or arbitrarily increase revenue through partnership deals and more expensive service packages. Suppliers can use these exclusions to promote their own media services to the detriment of competitors, for example, or forcing competing services to sign special agreements to avoid being hampered. You might also be asked to pay more – an operator might ask you to subscribe to a pass just so you can watch TV shows without worrying about overage fees or the limitation.
Although the ruling concerns German ISPs, it sets a precedent that effectively bans zero-rate services in the EU. Local courts would only have to refer to the EU case. The question, of course, is whether non-EU countries will take this as an example. The United States has a pseudo-zero-tax ban thanks to a California law, but the federal government has yet to follow suit after the Pai-era FCC close surveys.
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