What is zero-rating (differentiated pricing)?

‘Zero-rating’ is when an ISP does not count the data traffic associated with a particular application or class of applications towards the general data cap in place on the internet access service. For example, if an internet access service does not charge a user for the data used to access a specific music streaming application or all music streaming applications, then the ISPs is zero-rating those applications. In implementing the Open Internet Regulation, the BEREC Guidelines consider zero-rating as one of the commercial practices mentioned in Article 3(2) of the Open Internet Regulation. Zero-rating is only one practice of differentiated pricing. Also other pricing practices fall under these rules, such as for example sponsored data or offers that include a limited amount of data that may be used by certain applications.

Is zero-rating (differentiated pricing) allowed under the Open Internet Regulation?

It depends. There are different types of zero-rating (differentiated pricing) practices, some of which are more problematic than others. The BEREC Guidelines look at different examples and provide guidance on the extent to which they could be considered permissible under the Open Internet Regulation.

The BEREC Guidelines explain that some practices are clearly prohibited – those where all applications are blocked or slowed down once the data cap is reached except for the zero-rated application(s). Others are less clear-cut and will need to be assessed by NRAs against a number of criteria set out in the BEREC Guidelines.

In the BEREC Guidelines, a zero-rating programme which is open to all CAPs of a particular category is referred as an “open programme”. BEREC considers that open zero-rating programmes are less likely to restrict end-user choice or undermine innovation on the internet than the zero-rating of a single application or programmes that are not open. The more ‘open’ a programme is, the less likely it is to give rise to concerns.

How will regulators assess whether cases of zero-rating (differentiated pricing) are permitted?

Criteria that NRAs should take into account when assessing zero-rating and other commercial practices include:

  • whether the practices circumvent the general aims of the Open Internet Regulation (to “safeguard equal and non-discriminatory treatment of traffic” and to “guarantee the continued functioning of the internet ecosystem as an engine of innovation”);
  • the market positions of the ISPs and CAPs involved;
  • any effects on end-user rights of consumer and business end-users, e.g. reductions in the range of applications available, incentives for end-users to use certain applications, or whether there is a material reduction in end-user choice;
  • any effects on end-user rights of Content and Application Providers (CAP), e.g. whether there is an effect on the range of content and applications which CAPs can provide, or whether they are materially discouraged from entering the market;
  • the scale of the practice (e.g. the number of end-users subscribing to such an offer) and the extent to which end-users have access to alternative offers and / or other ISPs.

In the Annex of the BEREC Guidelines a methodology is provided. This assessment methodology serves as a guideline for the assessment of zero-rating cases and similar offers. Individual cases should always be analysed on a case-by-case basis, addressing the specific circumstances of the case.