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Two Dutch telcos fined for net neutrality violations

In December 2014, the Dutch consumer authority (ACM) issued two decisions based on the Dutch net neutrality provision, against KPN and Vodafone, that were released to the general public in January of this year.

In January 2013, the net neutrality provisions in the Dutch  Telecommunications act took effect. Article 7.4a guarantees net neutrality, and in principle prohibits providers of public electronic communication networks which deliver Internet access services and providers of internet access services from hindering or slowing down applications and services on the Internet. They are also prohibited from making the price of the rates for Internet access services dependent on the services and applications which are offered or used via these services. The ACM fined both KPN and Vodafone (in Dutch) for violations of this provision.

KPN and Wi-Fi hotspots

The Dutch telecommunications company KPN offered Internet access through Wi-Fi hotspots in different locations, like at the airport. Through those hotspots, users had access to the “Free Basic Internet” service. This service excluded certain data traffic, like BitTorrent, FTP, SSHA, Telnet, and Voice over IP (VoIP). If users wanted to allow that traffic, they had to pay for a premium service, or to be a customer of KPN. A company that offered VoIP services filed a complaint with the Dutch consumer authority (ACM). The ACM decided that this was a discriminatory practice that could not be justified. KPN itself conceded they had made a mistake and accepted the fine of 250 000 Euro.

Vodafone and HBO

Vodafone had launced a campaign that allowed customers with a Vodafone subscription three months access to the “HBO go” app for free. This app allowed users to watch programs broadcast by the HBO cable and satellite television network. The offer violated net neutrality, because it was positive discrimination. It steered users towards a certain service, which was bad for freedom of choice and innovation. Vodafone had to pay a 200 000 Euro fine.

Both KPN and Vodafone claimed that the law on which the rulings were based was unclear. The Dutch ministry of Economic Affairs has been working since 2014 on policy guidelines that aim to provide clarity on some aspects of the Dutch net neutrality law. One thing those guidelines aim to explain is the concept of “Internet access service”.

Facing the allegations by the consumer authority, KPN and Vodafone initially claimed they had not adjusted their policies because they were waiting for those guidelines. They claimed they didn’t know whether they actually offered Internet access services, which is a surprising statement, because during the debates in the Houses of Parliament, it was made clear that the concept “Internet access service” should be interpreted as broadly as possible. This means it would include Wi-Fi hotspots.

It’s particularly bizarre that Vodafone claims they were waiting for clarification, because they had already faced similar consequences for offering another app for free in the past; the “Sizz” app, which allowed access to programs from a Dutch TV channel RTL. Vodafone claimed that this was a different situation, because the “Sizz” app was only for Vodafone customers, while the “HBO go” app was also freely available on the market. According to Vodafone this meant the service was not offered only combined with a subscription, which seems illogical, considering they were offering “HBO go” only combined with their subscription.

Positive effects of net neutrality

The two rulings immediately generated a positive effect on the Dutch telecoms market. Banning positive discrimination forces telecommunications providers to compete on general price and data volumes. KPN recently announced that it would increase data volumes and lower its prices for Internet use to “encourage carefree usage”.

We are now waiting for the policy guidelines by the ministry of Economic Affairs and on the legislative developments in the EU. The current EU proposals that aim to safeguard net neutrality do not actively ban positive discrimination. This would put pressure on the Dutch provisions, although there are is a growing number of countries who see the value of prohibiting price discrimination and it appears likely that the option will remain possible under EU rules.

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