Last month, the Agency for Communication Networks and Services of the Republic of Slovenia (hereafter Akos), which regulates and oversees the electronic communications market, issued a press release in which they revealed the results of supervision[i] of two Slovenia’s largest players in communication service market. Results of the supervision showed that both companies, Telekom Slovenije and Si.mobil, were through their online services “Deezer” (Telekom Slovenije) and “Hangar Mapa” (Si.mobil) in breach of article 203 of the Slovenian Electronic communications Act (“Zakon o elektronskih komunikacijah“[ii]). Under this provision, the Internet service providers (hereafter ISPs) are prevented from restricting, delaying or slowing internet traffic except in the event they have to solve congestions, preserve security or address spam. Differentiation of quality of Internet traffic as an instrument to discriminate internet services for purely commercial reasons is prohibited. Both of the above companies were given 60 days to stop prioritizing the data in connection with their applications. The decision is the first one in Slovenia of this kind and will therefore serve as a precedence in future cases. Furthermore, the decision confirms that Slovenia is one of the few countries in Europe that adheres to the principle of net neutrality.
The expression of net neutrality originates, as internet itself, from the US. It was coined by Tim Wu in the ground-braking article titled Network neutrality Broadband discrimination[iii], where he explained the importance of the internet regulation. According to basic economic theory, though ISPs’ long term interests coincide with the interests of the society at large, ISPs may pay more attention to their short term interest.[iv] On that basis he argues that the government regulation of net neutrality is necessary to achieve a competitive and innovation-driven environment in the context of internet. This argument assumes that, if left unregulated, large ISPs will create a two-tier system that will funnel internet traffic into fast and slow lanes. Only the richest companies will be able to pay the extra tolls to ensure their online content is accessible though these fast lanes. This would present a great advantage for these companies as it would introduce a higher market entry barrier for small but innovative companies, hindering competition. In addition to the positive effects of net neutrality on competition, it is also suggested that since no discrimination regarding data traffic is allowed, the principle upholds freedom of expression, which includes the freedom to seek, receive and impart information and ideas of all kinds.[v]
On the other hand, arguments can also be found against net neutrality. Some suggest that many concerns expressed by net neutrality advocates are misplaced and proposed regulation is likely to actually harm consumer welfare.[vi] One of the drawbacks of the principle is the fact that big online service providers might lose the incentive to invest in infrastructure projects and expand internet coverage. It is also suggested by some that regulation needed for net neutrality could result in a bureaucratically overregulated internet, which would be very different from an innovative, fast-moving, internet we know and strive for.[vii]
By enacting the principle of net neutrality in 2013,[viii] Slovenia became one of the first countries in the world, following Netherlands and Chile, to implement the principle in its law system and remains one of the few countries in the EU that did so. Internet neutrality has not yet been enacted in European Law because the discussion about the principle was opened relatively late, around 2010.[ix] However, the things began to turn in early 2014, when EU parliament adopted net neutrality as a part of a larger Commission’s proposal to create a single telecommunications market for the entire EU.[x] By amending the original proposal it strengthened net neutrality by giving it a stronger definition.[xi] However, European Union legislative procedure also involves The Council, which did not seem so univocal on that matter. A leaked draft of amendments to the proposal of EU Parliament and Commission revealed that the Italian presidency was pushing to remove the definition of net neutrality because the views of the governments strongly differed.[xii] While some countries like Finland, Slovenia and the Netherlands are pro net neutrality, the UK, for example, stands on the other side and is also supported in its position by Angela Merkel who has already voiced her opinion against net neutrality. One of the reasons why UK is opposing net neutrality so strongly is that it relies heavily on ISPs to filter internet data. The latest and widely debated issue was the so-called “porn filter” where users have to actively opt out of “child friendly” mode in order to access pornographic content.[xiii] The latest proposals made by Latvian presidency of the Council of the European Union, seen by Financial Times would establish the principle of net neutrality, but would still allow telecom groups to manage the flow of internet traffic to ensure the optimal efficiency of the network. It is suggested that the proposed regulation would allow making deals with corporate and individual customers to provide faster internet services although such deals would not be allowed to impair the wider working of the internet in any “material manner”.[xiv]
The topic of net neutrality has been widely discussed in the US as well, where the principle of neutrality of communications was actually introduced much earlier than in the EU. Telecommunication services such as telegrams or phone networks are considered to be “common carriers”, which means they are akin to public utilities and expressly forbidden to give preferential treatment to any of their customers. Common carriers in the US are regulated by the Federal Communications Commission (hereafter FCC) in order to ensure fair pricing and access. The internet, however, was not until recently categorized as a telecommunication service but as an information service and thus the regulation for common carriers did not apply.
In the early 2000s, FCC presented the non-discrimination principles and in 2010 the Open Internet Order.[xv] However, in one of the most prominent cases, where the FCC tried to sanction Verizon for breaching The Order in 2014, the DC Circuit Court ruled[xvi] that FCC has no authority to enforce network neutrality rules. In early 2014, FCC consequently made their proposal on a new set of rules on net neutrality. The original proposal would leave the door open for content creators to pay for a faster service. This would hinder net neutrality although high level of transparency would still be maintained and the “No blocking rule”[xvii] would be implemented. In the process of shaping the proposal, the FCC was accepting comments from the general public and by 10th of September 2014, received almost 4 million submissions, which makes the proposal by far the most commented proposal in agency’s history. The fact that the issue of net neutrality is indeed very important for the market-players and the consumers can be confirmed by following the public discussion involving some prominent figures. President Obama, for example, has already made a statement pushing for net neutrality.[xviii] This position is also strongly supported by influential scholars such as Lawrence Lessig[xix] or activists such as Aaron Swartz and some of the software companies like Microsoft and Google. On the other side, telecommunication companies like Verizon, Comcast, AT&T are doing some heavy lobbying against net neutrality.
Very recently, on 26 February 2015, FCC has reached a 3-2 decision[xx] to implement the proposal of its chairman to regulate the internet under Title II of The Communications Act, which regulates “common carriers”.[xxi] This decision brings internet service under the same type of regulatory regime faced by wireline telephone service, applying the principle of net neutrality. It seems, however, the decision is by no means the end of the story, as AT&T has already suggested it will sue and it is likely that other broadband providers will also join.[xxii]
The recent decision of Akos shows that, while in the rest of the world the academic discussions and lobbying wars are still ongoing, Slovenia has already taken a strong stance in favour of net neutrality. It remains to be seen, however, if this approach will stand against future pressures from the interested stakeholders and whether net neutrality will indeed foster more innovation and competition in the cyberspace.
[i] Decisions of Akos No. 06101-747/2014-4 and No. 06101-813/2014/4 <http://www.akos-rs.si/files/Telekomunikacije/Medoperaterski_spori_in_nadzor/Postopki_inspekcijskega_nadzora/06101-747-2014-Odlocba-Telekom-Slovenije.pdf>, <http://www.akos-rs.si/files/Telekomunikacije/Medoperaterski_spori_in_nadzor/Postopki_inspekcijskega_nadzora/06101-813-2014-4-odlocba.pdf> accessed 25 February 2015.
[ii] Zakon o elektronskih komunikacijah – ZEKom-1; (Official Gazette, no. 109/12, 31 December 2012 as amended).
[iii] Tim Wu “Network neutrality Broadband discrimination”  2 Journal on Telecommunications & High Technology Law 141.
[iv] 2002 survey of operator practices conducted for this paper suggests a tendency to favour short-term results; see appendix; Tim Wu “Network neutrality Broadband discrimination”  2 Journal on Telecommunications & High Technology Law.
[v] Article 19.2. of the United Nations’ International Covenant on Civil and Political Rights 1966 (ICPR); The ERDi papers issue 08, available at: <https://edri.org/files/paper08_netneutrality.pdf> accessed 27 January 2015.
[vi] Gary S. Becker et al. “Net neutrality and Consumer Welfare”  Journal of Competition Law & Economics, 6(3), 497.
[vii] Open forum Academy “Net Neutrality in the EU – Country factsheets” (September 2013), <http://www.openforumacademy.org/library/ofa-research/OFA%20Net%20Neutrality%20in%20the%20EU%20-%20Country%20Factsheets%2020130905.pdf > accessed 27 January 2015.
[viii] It was enacted in article 203 of Electronic Communications Act that has been in force from 4 January 2013.
[ix] BEREC response to the European Commission’s consultation on the open Internet and net neutrality in Europe, (30 September 2010) <http://berec.europa.eu/doc/berec/bor_10_42.pdf> accessed 26 January 2015.
[x] European Parliament legislative Resolution of 3 April 2014 on the proposal for a regulation of the European Parliament and of the Council laying down measures concerning the European single market for electronic communications and to achieve a Connected Continent, and amending Directives 2002/20/EC, 2002/21/EC, 2002/22/EC, and Regulations (EC) No 1211/2009 and (EU) No 531/2012 <http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P7-TA-2014-0281+0+DOC+XML+V0//EN> accessed 26 January 2015.
[xi] Amendment 234 and 241 Proposal for a regulation, Article 2, para 2, point 12a, ‘net neutrality’ means the principle according to which all internet traffic is treated equally, without discrimination, restriction or interference, independently of its sender, recipient, type, content, device, service or application. <http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P7-TA-2014-0281+0+DOC+XML+V0//EN> accessed 2 February 2015.
[xii] “Italian EU presidency puts net neutrality on hold” (25 November 2014). <http://blogs.wsj.com/brussels/2014/11/25/italian-eu-presidency-puts-net-neutrality-on-hold/> accessed 26 January 2015.
[xiii] “Sky to Block pornography by default to protect children” accessed 20 January 2015. <http://www.bbc.com/news/technology-30896813> accessed 27 January 2015.
[xiv] Proposals on European net neutrality open ‘two-speed’ internet, accessed 3 March 2015.<http://www.ft.com/cms/s/0/5688747c-c192-11e4-bd24-00144feab7de.html#axzz3Tc7lgtVM> accessed 4 March 2015.
[xv] Federal Communications Comission Report and Order [FCC 10-201], (21 December 2010), <https://apps.fcc.gov/edocs_public/attachmatch/FCC-10-201A1_Rcd.pdf> accessed 29 January 2015.
[xvi] Verizon v. FCC, No. 11-1355 (D.C. Cir.).
[xvii] The rule prohibits any Internet service company from outright blocking lawful content for any reason. This would prevent an Internet service provider from, for example, blocking the sites of their competitors.
[xviii] Obama’s speech regarding Net neutrality, <http://www.whitehouse.gov/net-neutrality> accessed 25 January 2015.
[xix] Lawrence Lessig “Neutral Networks Work” (17 April 2008), <https://www.youtube.com/watch?v=_mYbYG-nXVA> accessed 26 January 2015.
[xx] Press release available here: <http://www.fcc.gov/document/fcc-adopts-strong-sustainable-rules-protect-open-internet> accessed 2 March 2015.
[xxi] The Communications Act of 1934, [47 U.S.C. § 151 et seq].
[xxii] Net neutrality a reality: FCC votes to bring Internet under utility-style rules (26 February 2015) <http://www.cnet.com/news/net-neutrality-a-reality-fcc-votes-to-bring-internet-under-utility-style-rules/> accessed 2 February 2015.