September 28, 2020

The Hungarian internet service provider, Telenor Magyarország Zrt, offered its customers two packages with preferential access (known as “zero tariff”), whose main feature was that the data traffic generated by certain applications and services did not count towards the data volume purchased. In addition, once the data had been used up, those customers could continue to use those specific applications and services without restriction, while measures blocking or slowing down data traffic were applied to the other applications and services.

The Hungarian National Media and Communications Office adopted two decisions finding that Telenor’s packages did not comply with the general obligation of equal and non-discriminatory treatment of traffic set out in Article 3(3) of the Open Internet Access Regulation and that Telenor should withdraw the service offer.

Telenor challenged the regulator’s decisions in the Hungarian High Court, which has asked the CJEU for a preliminary ruling on the interpretation and application of Articles 3(1), (2) and (3) of the Regulation. Articles 3(1) and (2) essentially safeguard a number of rights for end users of internet access services and prohibit providers from putting in place agreements or commercial practices limiting the exercise of those rights. Article 3(3) provides for a general obligation of equal and non-discriminatory treatment of traffic.

The CJEU observed that Articles 3(2) and (1) provide that the consumer rights they safeguard are intended to be exercised “via their internet access service”. Article 3(2) requires that such service does not limit the exercise of those rights. An internet provider’s service must therefore be assessed in the light of that requirement, taking into account both the agreements between the provider and end users, and the commercial practices of the provider.

The CJEU found that agreements under which customers subscribe to a package combining a “zero tariff” and measures that block or slow down the traffic of “non-zero tariff” services and applications is a limitation on the exercise of the end user’s rights under Article 3(2) in a significant part of the market. The CJEU said that such packages are liable to increase the use of the favoured applications and services, and accordingly reduce the use of the other applications and services, as the measures employed by the provider make that use technically more difficult, if not impossible. Further, the greater the number of customers entering into such agreements, the more likely it is that, given its scale, the cumulative effect will result in a significant limitation of the exercise of end users’ rights, or undermine the very essence of those rights.

As for Article 3(3), the CJEU found that it is not necessary to assess the effect of measures that block or slow down traffic on the exercise of end users’ rights in order to make a finding of incompatibility. In addition, the CJEU held that, where blocking or slowing down measures are not based on objectively different technical quality of service requirements for specific categories of traffic, but on commercial considerations, those measures must in themselves be taken as incompatible with Article 3(3). Consequently, packages such as those offered by Telenor are, generally, liable to infringe both Articles 3(2) and (3), it being clear that national authorities and the courts can examine such packages at the outset in the light of Article 3(3).

The CJEU concluded that the requirements to protect internet users’ rights and to treat traffic in a non-discriminatory manner preclude an internet service provider from favouring certain applications and services by means of packages enabling them to benefit from a “zero tariff” and making the use of the other applications and services subject to measures blocking or slowing down traffic. (Joined Cases C-807/18 and C-39/19 Telenor Magyarország Zrt v Nemzeti Média- és Hírközlési Hatóság Elnöke EU:C:2020:708 (15 September 2020) — to read the judgment in full, click here).