Luca Belli Editor Net Neutrality Reloaded: Net Neutrality Reloaded: Zero Rating, Specialised Service, Ad Blocking and Traffic Management Zero Rating, Specialised Service, Annual Report of the UN IGF Dynamic Coalition on Net Neutrality Ad Blocking and Traffic Management Luca Belli Editor Annual Report of the UN IGF This Report is the 2016 outcome of the IGF Dynamic Coalition on Network Neutrality (DCNN). The Report gathers a series of case studies on a variety Dynamic Coalition of net neutrality issues from the perspective of different stakeholders. The double purpose of this report is to trigger meaningful discussion on net on Net Neutrality neutrality trends, while providing informative material that may be used by researchers, policy-makers and civil society alike. Researchers, practitioners and policy-makers regularly contribute to the DCNN report, providing a wide range of heterogeneous views. Preface by Tim Wu In 2016, Zero Rating was by large the most debated net neutrality issue, as reflected by the considerable number of contributions focusing on the topic within this report. Such high number of analyses on zero rating seems particularly useful to meet the increasing demand of research exploring the pros and cons of price discrimination practices. Furthermore, the report examines other very relevant and discussed topics, such as specialised services, ad blocking and reasonable traffic management, providing useful insight on some of the most recent policy evolutions in a variety of countries. Net Neutrality Reloaded: Zero Rating, Specialised Net Neutrality Management Blocking and Traffic Service, Ad Capa_FECHADA_orelha.indd 1 11/29/16 11:20 AM Net Neutrality Reloaded: Zero Rating, Specialised Service, Ad Blocking and Traffic Management Annual Report of the UN IGF Dynamic Coalition on Net Neutrality Edition produced by FGV Direito Rio Praia de Botafogo, 190 | 13th floor Rio de Janeiro | RJ | Brasil | Zip code: 22250-900 55 (21) 3799-5445 www.fgv.br/direitorio Net Neutrality Reloaded: Zero Rating, Specialised Service, Ad Blocking and Traffic Management Annual Report of the UN IGF Dynamic Coalition on Net Neutrality Edited by Luca Belli Preface by Tim Wu FGV Direito Rio Edition Licensed in Creative Commons Attribution — NonCommercial — NoDerivs Printed in Brazil 1st edition finalized in 2016, December This book was approved by the Editorial Board of FGV Direito Rio, and is in the Legal Deposit Division of the National Library. The opinions expressed in this work are the responsibility of the authors. Coordination: Rodrigo Vianna, Sérgio França e Thaís Mesquita Book cover: Andreza Moreira Layout: Andreza Moreira Reviewer: Luca Belli Ficha catalográfica elaborada pela Biblioteca Mario Henrique Simonsen/FGV Net Neutrality reloaded : Zero Rating, specialised service, ad blocking and traffic management. Annaul report of the UN IGF Dynamic Coalition on Net Neutrality / Edited by Luca Belli ; preface by Tim Wu. – Rio de Janeiro : FGV Direito Rio, 2016. 227 p. Includes bilbliography. ISBN: 9788563265760 1. Net Neutrality. 2. Internet - Public Policy. 3. Internet - Regulation. I. Belli, Luca. II. Internet Governance Forum. III. Dynamic Coalition on Network Neutrality. IV. Escola de Direito do Rio de Janeiro da Fundação Getulio Vargas. V. Title: Net Neutrality reloaded : Zero Rating, specialised service, ad blocking and traffic management. Annual report of the UN IGF Dynamic Coalition on Net Neutrality. CDD – 384.3 The Dynamic Coalition on Network Neutrality (DCNN) is a component of the United Nations Internet Governance Forum and all interested individuals can submit papers to be included in the annual Report of the DCNN. For further information: www.networkneutrality.info CONTENT PREFACE: by Tim Wu ....................................................................................................................... 6 INTRODUCTION: The Evolutions of the Net Neutrality Debate 15 PART I: Zero Rating Policy......................................................................................................... 22 Zero Rating: From Generative Internet to Mobile Minitel? Luca Belli ..................................................................................................................................................................................................... 23 Better Regulation of Net Neutrality: A Critical Analysis of Zero Rating Implementation in India, the United States and the European Union Christopher T. Marsden ................................................................................................................................................... 52 Zero Rating and the Holy Grail: Universal Standards for Net Neutrality Arturo J. Carrillo ............................................................................................................................................................................ 86 PART II: Zero Rating Pros and Cons .............................................................................. 105 Zero Rating: a Global Threat to the Open Internet Gustaf Björksten, Raman Jit Singh Chima and Estelle Massé ............... 106 The Economics of Zero Rating Jeffrey Eisenach ............................................................................................................................................................................ 117 Mobile Zero Rating: The Economics and Innovation Behind Free Data Doug Brake ............................................................................................................................................................................................. 132 The Politics of Algorithms and Net Neutrality in the Zero Rating Debate Tomiwa Ilori ........................................................................................................................................................................................... 155 PART III: Net Neutrality Exceptions and Violations .................................. 164 European Net Neutrality at the Beginning of a New Era Frode Sørensen .............................................................................................................................................................................. 165 Users’ Rights, Ad Blocking and Net Neutrality Roslyn Layton ........................................................................................................................ 183 Mexican ISP Practices Contrary to the Network Neutrality principle under the New Telecommunications Legislation Carlos Brito ............................................................................................................................................................................................. 214 6 PREFACE by Tim Wu The philosophy of Net Neutrality (NN) — that an open Internet is a necessary condition for innovation and for consumer welfare — has become intuitive to many. Yet, adoption of NN as a working policy was delayed as parties debated what NN should look like in practice. In 2016, we witnessed several countries adopt a hard stance and prohibit certain behaviors now widely recognized as blatantly abusive. As such, NN became the legal rule in several nations worldwide. The very fact that NN was confirmed as law of the land in the U.S. — the place where the Internet was born — is testament to the advancement of Internet policy. For years, the Federal Communications Commission (FCC) acknowledged that the profit-seeking behavior of broadband services, when left unchecked, could impose a cost on web users, as well as diminish the innovative character of the internet. The FCC accordingly proposed a set of legal rules — otherwise known as the Open Internet Order — that would presumptively outlaw practices inconsistent with NN: degradation schemes (such as blocking and throttling access to content) and paid “fast lane” prioritization. As might be expected, broadband providers challenged these regulations as interfering with efforts to recapture network costs and warned that it would have an inhibiting effect on future investments in internet infrastructure. In due course, the FCC invoked its full authority and reclassified broadband services as a public utility — a move that would give the FCC ancillary jurisdiction to compel ISPs to adhere to the Open Internet Order. Indeed, FCC’s rationale was simple: the internet, like the telephone, had become an essential communications platform for its users and thus subject to government scrutiny. The U.S. Court of Appeals for the D.C. Circuit agreed with this line of reasoning and granted the FCC with requisite authority to design bright line rules for outlawing practices wholly inconsistent with NN — namely network degradation and paid prioritization. Indeed, the U.S. was not the only democratic nation that adopted a hardline stance in instituting NN as a working principle. The Body of European Regulators for Electronic Communications issued final guidelines, which effectively closed several loopholes that would have, for example, allowed for “fast” lane arrangements in the E.U. 7 India similarly sided with NN and banned ISPs from offering pricing differentials for web services. In short, democratic institutions worldwide were outlawing behaviors clearly in contravention of an open Internet — an acceptance of NN as the norm. That we see democratic nations tending towards NN should come as a surprise to few. First, NN should be understood as form of non- discrimination: it “gives users the right to use non-harmful