EU says internet providers' zero-rating violates net neutrality

It could force European ISPs to treat traffic differently.

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Logos of 5G technology and telecommunications company Vodafone are pictured at the 5G Mobility Lab of Vodafone in Aldenhoven, Germany, November 27, 2018. Picture taken November 27, 2018. REUTERS/Thilo Schmuelgen
Thilo Schmuelgen / reuters

Internet providers may be fond of zero-rating services (that is, their traffic doesn't count toward data caps), but they might want to think twice about that practice in Europe. As Fortune reports, the EU's Court of Justice has ruled that zero-rating (aka "zero tariff") options violate net neutrality and are "incompatible with EU law." These perks don't honor EU regulations demanding that providers treat traffic equally, the court said.

The decision came after two German courts asked the Court of Justice about the legality of zero-rated options from carriers Telekom Deutschland (with a large stake in T-Mobile in the US) and Vodafone. The former offers a "Stream On" option that doesn't count music or video streaming from partner services toward your cap. Vodafone, meanwhile, offers passes (such as "Video Pass" and "Music Pass") that waives data use for partners in different app categories, but only in Germany on your phone — travel or use hotspot tethering and that benefit disappears.

Critics have attacked zero-rating as an attempt to stifle competition or arbitrarily boost revenue through partner deals and pricier service bundles. Providers can use these exclusions to promote their own media services at the expense of rivals, for example, or force competing services to sign special agreements to avoid being hobbled. You might also be asked to pay more — a carrier could ask you to subscribe to a pass just so you can watch TV shows without worrying about overage fees or throttling.

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While the ruling touches on German ISPs, it sets a precedent that effectively bars zero-rating services across the EU. Local courts would only have to refer to the EU case. The question, of course, is whether non-EU countries will look to this as an example. The US has a pseudo-ban on zero-rating thanks to a California law, but the federal government hasn't yet followed suit after the Pai-era FCC shut down investigations.

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EU says internet providers' zero-rating violates net neutrality