Consumers continue to stream for free

On October 10, 2016, telecommunications service provider T-Mobile launched a new service: ‘Datavrije Muziek’ (Datafree Music). This service allows customers to stream music from selected streaming services such as Spotify and Tidal for free.

In light of this, on December 9, 2016, ACM issued a decision ordering T-Mobile to cease offering the Datavrije Muziek service on penalty of paying € 50.000 per day. According to ACM, this service violated both Dutch and European laws on net neutrality.

On April 20, 2017, the Rotterdam District Court annulled the decision of ACM: T-Mobile may continue to offer its Datavrije Muziek service.

Net neutrality
Net neutrality means that an internet service provider may not distinguish between the different services that use its network. Distinction is being made by, for example, excluding certain content or by calculating different rates for different services. In principle, making distinction between different services is not permitted under European and Dutch rules.

Dutch legislation
Under Article 7.4a of the Dutch Telecommunications Act, any price differentiation is prohibited. This article thus prohibits internet access providers from making internet access rates dependent on the services and applications offered or used by these services. Consequently, the use of a zero rating for a service such as ‘Datavrije Muziek’ in the Netherlands is banned.

European perspective
At a European level, the applicable rules are laid down in the Net Neutrality Regulation (EU 2015/2120). Article 3 of this Regulation stipulates that all internet traffic must be treated equally by an internet access provider. However, the regulation does not provide for an explicit prohibition of price discrimination, as is included in the Dutch Telecommunications Act.

Article 5 of the Net Neutrality Regulation obliges BEREC – the Body of European Regulators for Electronic Communications – to issue guidelines for consistent application of the Regulation. These guidelines are intended to provide guidance for the relevant national regulatory authorities (i.e., ACM in the Netherlands).

In its guidelines, BEREC provides a framework to assess whether zero rating is contrary to the Net Neutrality Regulation. As a result, zero rating is not always prohibited. A service like Datavrije Muziek must be assessed, inter alia, in light of the aims and rights safeguarded by the Net Neutrality Regulation. This assessment should also include the market position of the respective internet and services providers.

The Rotterdam District Court has now ruled that art. 7.4a of the Dutch Telecommunications Act violates European law. The District Court pointed out that European Regulations are directly applicable. Therefore, the legislator is not free to regulate or clarify by national law what the Net Neutrality Regulation already regulates. According to the District Court, ACM fails to appreciate this. Because the Net Neutrality Regulation does not contain a ban on zero-rating, the court annuls the decision of ACM.

Good news for the consumer: streaming of music for free remains possible!