Yes, Telefonica, Forcing Apps to Pay ISPs Violates Net Neutrality

The European Commission is evaluating a proposal by Europe’s largest telecoms to force websites and apps to pay broadband companies like Telefonica, Orange, and Deutsche Telekom. This dangerous proposal would require companies like Twitch, YouTube, Netflix and more to pay every broadband provider in Europe, ostensibly to help fund the build out of faster networks in the EU.

ISPs want to get paid twice, once by people paying to get online and second by websites and apps these people use. This is just a rehashed version of a 2012 proposal that was thoroughly rejected by the European Commission, European governments, the International Telecommunication Union, and Europe’s group of top telecom regulators known as BEREC.[1]

But, now, more than 10 years later, the ISPs are back, trying again to force apps to pay network fees. 

These unnecessary fees would reverse decades of successful internet economics, reduce the quality of popular online services, increase costs for European consumers and businesses, and are unlikely to foster broadband deployment

Since Internal Market Commissioner Thierry Breton endorsed the proposal in May 2022, a broad group of stakeholders have warned that forcing websites to pay ISPs violates Europe’s net neutrality law. They include civil society organizations, consumer groups, members of the European Parliament, member states, academics (including me) and Europe’s top telecom regulator BEREC.

But this week, Telefonica, one of Europe’s largest telecom companies, wrote a blog post seemingly intended to convince journalists and European officials that the proposal doesn’t violate net neutrality.

The blog post is a marvelous specimen of deceitful lobbying.

The blog post:

  1. ignores the fact that the EU’s top telecom regulatory body, BEREC, filed official comments explaining exactly how the telecoms’ get-paid-twice proposal violates net neutrality, hoping readers don’t know that happened;
  2. claims without proof that the entire European Commission agrees with Telefonica that the proposal doesn’t violate net neutrality and that former France Telecom CEO and current Commissioner Breton “has dismissed these fears” multiple times, as if saying so makes it so;
  3. pretends that the only opposition to their proposal comes from the big online platforms;
  4. pretends that no one has explained how network fees violate Europe’s net neutrality law or how they would hamper innovation; and
  5. ignores BEREC’s key arguments and relevant decisions by the European Court of Justice.

1. Telefonica hides the fact that Europe’s top telecom regulators say the proposal violates net neutrality.

Reading the blog post, a reader would have no idea that anyone other than the big online platforms thinks that the network fee proposal violates net neutrality. 

In fact, Europe’s top telecom regulator says the proposal violates net neutrality, but Telefonica’s blog post intentionally hides that fact. 

BEREC isn’t some random website or some obscure office. They are the regulators in charge of interpreting Europe’s net neutrality law – the ones that create the guidelines for member states on how to implement net neutrality.

BEREC filed an official response to the European Commission’s consultation this spring and said, as clear as can be, that Telefonica’s get-paid-twice proposal violates the Open Internet Regulation:

“If a mandatory payment was limited only to certain players (such as [large online platforms]), it would go against the principle of net neutrality as set out in recital 1 of the [Open Internet Regulation]. This is because it involves treating traffic unequally, contradicting the principles of equal treatment and nondiscrimination enshrined in Article 3(3) of the [Open Internet Regulation].”[2]

There’s zero chance Telefonica isn’t aware of this.

So Telefonica writes a blog post about how their proposal doesn’t violate net neutrality and HIDES the fact that Europe’s most important telecom regulatory body says the opposite?

That’s disqualifying.

No one should take counsel from someone who is trying to deceive them.

2. The European Commission has not taken a position on network fees, let alone explained why they would not violate net neutrality.

The blog post states that the European Commission (27 commissioners!) agrees that the get-paid-twice proposal doesn’t violate net neutrality.

It’s unclear how Telefonica gets to that sweeping statement: All the Commission has done is release a consultation asking for comments, which closed in mid-May. The Commission has yet to publish the comments, let alone come out with an evaluation or proposal.

Despite what Telefonica asserts, no one at the Commission has explained why the proposal doesn’t violate net neutrality. Commissioner Breton likes to repeat that it won’t violate net neutrality, but has never explained how it wouldn’t. 

Repetition does not make truth.

3. Almost everybody, not just big platforms, hates the proposal.

Telefonica tries to pretend that only the largest online platforms oppose their get-paid-twice proposal.

That’s absurd.

Europe’s top telecom regulator BEREC and the majority of EU member states have rejected the proposal. 

More than fifty members of the European Parliament from every group slammed the “radical proposal”, saying “requiring the providers of websites and applications to pay fees to ISPs that have never existed before … would abolish key net neutrality guarantees that Europeans fought hard for.”

Additionally, a wide range of industry groups and civil society organizations oppose the proposal. They include the Motion Picture Association of America (MPAA), owners of sports television rights, digital rights organizations like Epicenter.Works and European Digital Rights (EDri), Mozilla, Creative Commons, the Internet Architecture Board, European librarians, the Internet Society, the European Consumer’s Association (BEUC), and small ISPs – all of whom argued that the telecom proposal is a terrible idea that violates net neutrality.

Copyright owners and digital rights organizations almost never agree on anything.

4. Telefonica’s arguments why forcing popular websites to pay ISPs doesn’t violate net neutrality are wrong.

BEREC explained in detail to the European Commission why network fees violate net neutrality. My submission did the same. 

The argument is simple: Europe’s Open Internet Regulation requires ISPs to treat all data equally, without discriminating among apps and sites. Europe’s largest telecoms want to charge some apps, but not others, for the traffic associated with their apps. That treats apps that have to pay network fees differently from those that don’t. This kind of unequal treatment violates the heart of the Regulation, Art. 3(3). 

Telefonica argues that network fees do not violate net neutrality because ISPs will not technically discriminate between apps that pay network fees and those that don’t. In other words, Telefonica says ISPs would not block apps that refuse to pay network fees, or speed up apps that pay. 

But that is irrelevant. 

In four landmark rulings in 2020 and 2021, the European Court of Justice held that treating some traffic differently economically (e.g. charging only some apps) violates the EU’s net neutrality law just as much as treating some traffic differently technically (e.g. slowing down or blocking only some apps).[3] In fact, the 2021 decisions explicitly held so in cases that included only economic discrimination, but no technical discrimination.

Thus, it does not matter whether ISPs would block apps that refuse to pay, speed up apps that pay, slow down apps that don’t pay, or treat paying apps and non-paying apps the same. 

Charging some apps, but not others directly violates the Open Internet Regulation. 

Telefonica also claims that the Open Internet Regulation actually encourages apps to pay ISPs, citing some language from the Regulation’s explanatory text (so-called recitals). 

That language is taken out of context: it simply explains that consumers may buy internet access service with different data caps or different speeds. Offering mobile plans with 1GB and 5GB data caps or home internet plans with speeds of 20 Mbps, 50 Mbps, or even 1 Gbps does not violate the Open Internet Regulation. This has nothing to do with network fees. 

Whom would you trust?

Most policy makers and observers don’t have time to study laws and cases in detail to evaluate legal arguments. 

In the end, it comes down to this:

BEREC is the EU’s top telecom regulator. The Open Internet Regulation tasks BEREC with drafting the guidelines that define how to enforce the Regulation, so they are intimately familiar with the law. 

BEREC worked through two rounds of stakeholder input to determine the impact of the 2020 and 2021 European Court of Justice’s decisions on Europe’s net neutrality protections. 

BEREC released reports on this kind of get-paid-twice proposal back in 2012, and again in fall 2022 after listening to stakeholders and experts in multiple workshops. It rejected the idea both times.

It then filed official comments in the consultation, explaining exactly how the telecoms’ proposal violates net neutrality. And while Telefonica’s blog post claims no one has explained how their proposal would harm innovation, BEREC’s official comments have two pages explaining just that.

Telefonica is a profitable giant telecom that stands to make billions of dollars if its proposal becomes a reality.

Telefonica and other large European telecom have a long history of attacking and trying to undermine Europe’s net neutrality law – including threatening to not invest in 5G if BEREC didn’t water down net neutrality.

So it is not surprising that Telefonica’s blog post says its proposal to force popular websites to pay ISPs doesn’t violate net neutrality, while deceitfully failing to mention, let alone address, BEREC’s arguments to the contrary.

Whom would you trust?

Barbara van Schewick is one of the world's leading experts on net neutrality, a professor at Stanford Law School, and the director of Stanford Law School's Center for Internet and Society.

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[1] BEREC thought this proposal was a bad idea in 2012, too, when ETNO, the lobbying arm of the biggest EU telecoms pushed it:

“Ultimately, it is the success of the [content and application providers] (from whom ETNO wishes to extract additional revenues) which lies at the heart of the recent increases in demand for broadband access (i.e. for the ISPs’ very own access services).

Indeed, both sides of the market – [content and application providers] on the one hand and users of these applications on the other hand – already contribute to paying for Internet connectivity. There is no evidence that operators’ network costs are already not fully covered and paid for in the Internet value chain (from [content and application providers] at one end, to the end users, at the other).

This model has enabled a high level of innovation, growth in Internet connectivity, and the development of a vast array of content and applications, to the ultimate benefit of the end user. Attempts to undermine it could put these benefits at risk.“ (pp. 3-4)

Telefonica admits it’s the same proposal, but thinks this time will be different because the European Commission is now protectionist.


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