Should an internet service provider (ISP) be allowed to block, prioritise or degrade network traffic?

This issue, otherwise known as network neutrality, is a fundamental to the establishment of a competitive European market in telecommunications. Such a market is the aim the EU Telecoms Package, which contains the new rules for the telecoms industry. It is currently being discussed in Brussels. Once in place, the new rules will define the continental telecoms market for the next few years.

The review aimed to deal with uncompetitive practices in some European countries and to open up market access for new network operators. This would make it easier for BT, for example, to set up a competing service to Deutsche Telekom in Germany.

However, the insertion of provisions to support internet restrictions as part of copyright anti-piracy measures has proved controversial.

As it stands, the package will allow network operators to restrict access to certain internet services and applications. It will support "three strikes" measures for copyright enforcement against peer-to-peer (P2P) users. Its sharpest critics say that it will limit competition and create a fragmented market for internet services across Europe.

The Telecoms Package text says that restrictions on access to internet services and applications are "neither mandated nor prohibited". The legal meaning of this phrase is unclear. Some say it means that ISPs are permitted to restrict traffic flows; others say it means there is nothing to stop them.

Either way, the effect is that network operators and/or ISPs will be licensed to interfere with internet traffic on their systems. They will have the right to block, slow or degrade specific services, or any other services that do not suit them, provided they note it in the users' contract.

The law would appear to allow them to prioritise services too, or least, it would not prevent them from doing so. This means they could segment the market by providing different network speeds for different prices, or slowing iPlayer downloads by giving preference to voice traffic or Google searches service, or even how many people can share the network simultaneously.

The rules have been discussed in the context of home users. However, under EU law the "user" is defined as a business or a consumer. Business users who use voice over IP or peer-to-peer services will be affected, although the full implications are not yet clear.

The most immediate candidate for blocking is Skype, which is already blocked by T-Mobile in Germany and slowed down by others.

Malte Behrmann of the European Games Developer Federation (EGDF) says that online computer gaming services could also be hit. "We are affected by the Telecoms Package," he said. "What happens when they misuse filtering technology in order to prioritise their own content?"

The EU is positioning the remedies as part of its "transparency" rule; operators must tell users precisely what services and applications they block. But Brussels telecoms lobbyist Caroline de Cock says transparency in the Package is a one-way communication.

She says users will be told what is being blocked, but the proposed law does not establish a reciprocal right to complain against unfair blocks, nor does it create a way for regulators such as Ofcom to monitor the operators and act against those who block unfairly.

The Package raises the network neutrality debate at a political level for the first time in Europe. According to the French internet activist organisation La Quadrature du Net, the Telecoms Package challenges the principle of net neutrality.

La Quadrature has called for the removal of the provisions that relate to restrictions, and for the principle of net neutrality to be enshrined in EU law. This would bring Europe into line with moves at the Federal Communications Commission, the US telecoms regulator, to preserve net neutrality, and in passing to enhance users' online privacy.

The alternative could be a patchwork of networks and a myriad of different rules across the 27 EU countries, which will raise costs and hinder economic development.

Copyright

The sticking point for the Telecoms Package is copyright.

Strictly speaking, copyright does not belong in telecoms law. It got there because of attempts by content industry lobbyists to create a legal basis in European law for the French government's "three strikes" measures. A counter-amendment by the French MEP Guy Bono, who was concerned about users' rights to freedom of expression, is the reason why the Package was held up.

"Three strikes" or "notice and take down" entails a series of warnings sent to users by their ISP, followed by suspension of their internet. In France, it will be a complete suspension of their internet account. In the UK "technical measures" are proposed, meaning users could be temporarily suspended, throttled, or blocked.

Under current EU law (the E-Commerce Directive) ISPs are not liable for the content they transmit. They are "mere conduits". According to Innocenzo Genna, of EuroISPA, if they take any action in respect of the content they carry, for example, to enforce copyright, they would be breaking the law.

The Telecoms Package provides a legal workaround for the E-Commerce Directive. It cannot mandate ISPs to filter or police their networks. Instead, national regulators such as Ofcom will be able to ask ISPs to "co-operate" with rights-holders on copyright enforcement. ISPs will have to ensure that their contracts include information on any service restrictions. This means they could use the contract to suspend service access or impose any other restriction for copyright enforcement purposes. The relevant clauses in the Package are Articles 33.3, 20.1b, and 21.3 in the Universal Services.

The Telecoms Package is symptomatic of a more general trend to get ISPs to police copyright infringers. The Belgian ISP Scarlet is being sued by the music royalties collecting society Sabam, and has been fighting a court order to filter Sabam's content on peer-to-peer networks. In Ireland, Eircom was taken to court by the Irish music industry, and reached a private, out-of-court settlement to apply "three strikes" measures.

The counter-amendment in the Telecoms Package is known as Amendment 138. The text means that sanctions against internet users may not be made without a court order. Some think it also means that access to services may not be blocked without a court ruling.

The principle it enshrines is to guarantee rights of access to content and services on the internet, says Andriani Ferti, a lawyer with Clifford Chance. "Conditional access to the internet should not be imposed on European citizens," she says, adding that the Article also protects the freedom to conduct business.

National governments are blocking Amendment 138. They want to force through the Telecoms Package without it. If they get their way, the barriers to "three strikes" and other copyright enforcement measures will be lowered, and net neutrality irretrievably compromised for the foreseeable future.

Who has a political interest in the Package?

Why would an amendment that protects users rights of access to internet services cause such controversy?

Amendment 138 has acquired political weight well beyond its plain text. It has prevented the European Commission from drawing up EU-wide proposals for "three strikes" or "notice and take-down". It has delayed the French government's law and could put bar certain aspects of the British government's plans to police the net, which could explain why the British and French governments are leading the charge against it.

However, it is not just government. Effectively, the Telecoms Package brings together two industry agendas which collide over copyright. The content industry or publishing sector seeks to prevent all downloading of copyrighted content without the rights-owners' express permission. The telecoms industry wants to be able to charge users for priority delivery of content.

The content industry agenda was driven by music and film industry bodies such as the IFPI and the Motion Picture Association. In 2006 IFPI wrote in response to a European Commission consultation, "If ISPs continue to be unwilling to improve their cooperation, this could require a revision of current legislation such as the E-commerce directive or the Telecoms Package..."

The telecoms agenda is spearheaded by ETNO, the large telecoms operators' club. ETNO has sided with US telecoms multi-national AT&T, which put forward amendments to the European Parliament to restrict users' access under certain conditions. In a lobbying document, AT&T argued that "mandating non-discriminatory treatment of network traffic in the directives would reduce innovation and ultimately consumer choice." AT&T's wording is remarkably close to the final text in the Telecoms Package.

The telcos argue that if they are to invest in new infrastructure, they should be able to do what they like with their networks. Ilsa Godlovitch, director of regulatory affairs at the European Competitive Telecommunications Association (ECTA) refutes this argument. She argues that it is better for overall economic growth to address the problems that prevent new competitors from entering the market. "If you address the infrastructure bottlenecks, the content will take care of itself," she says.

In Brussels, the pundits admit that the Telecoms Package is unlikely to meets its original goal of opening up competition. Joe McNamee, lobbyist for European Digital Rights (EDRi), says that it enables the operators and regulators "to extend the excuses available to limit competition", and that it does not address, still less remove, barriers to entry for new entrants.

There are very powerful industrial interests pushing for the Telecoms Package to go through. Amendment 138 is the only thing stopping it and creating breathing space for a wider policy debate.

Unless the European Parliament stands firm and endorses Amendment 138, Europe risks a return to the days of national networks run by dominant or monopoly operators, with fragmented service offerings.

The full text of Amendment 138

The national regulatory authorities shall promote the

interests of the citizens of the European Union by inter alia

(h) applying the principle that no restriction may be imposed on the fundamental rights and freedoms of end-users, without a prior ruling by the judicial authorities, notably in accordance with Article 11 of the Charter of Fundamental Rights of the European Union on freedom of expression and information, save when public security is threatened

Further reading

La Quadrature du Net's dossier on net neutrality >>

The Harbour report on universal services directive, personal data and the protection of privacy >>

The Trautmann report on framework, access and authorisation directives >>