It was only a matter of time before Deutsche Telekom fell into the same trap as its US arm T-Mobile after launching a zero-rated video streaming service, as German regulators have clamped down and claimed that the six-month old StreamOn offering partially violates net neutrality regulations. German consumer group VZBV overreacted following the news and called for the immediate closure of StreamOn, but the Federal Network Agency concluded that the service must make a couple of changes.
While T-Mobile US’ Binge On service has come under repeated fire from US rivals and regulators for breaching net neutrality laws in the realm of delivering lower quality video than the 480p minimum resolution promised, Deutsche Telekom has been accused of infringing roaming regulations this week by not making StreamOn available in EU countries outside of Germany – despite EU roaming charges being scrapped this summer.
Presumably Deutsche Telekom has attempted to negotiate with MNOs in markets outside of Germany but has so far failed to win any partners, and no doubt the operator will be looking to expand StreamOn across its European footprint once the fledgling service has passed in-house tests and conquered any rigorous regulatory hurdles. Data free streaming while roaming also doesn’t apply to Binge On in the US, which will default to the highest available video resolution based on the roaming network, incurring regular charges, but US regulators have seen no issue with this. Either way, Deutsche Telekom will now be forced to make StreamOn available in other EU countries.
Regulators on both sides of the Atlantic are clearly disgruntled by the launch of services inciting streaming free-for-alls, although neither are abundantly clear as to why, aside from apparently squeezing out competition despite the likes of Binge On welcoming any video or audio streaming provider with open arms. From the consumer point of view these services are a breath of fresh air for their data allowance concerns, while from the MNO perspective, zero-rated offerings benefit them in more ways than just boosting subscriber figures. For example, Binge On actually triggers any WiFi service which the user has credentials for, in preference to cellular – going some way to reducing the video burden on mobile networks. In time, however, focusing on this type of business model will cause problems for MNOs as ARPU continues to slide, but that’s a story for another day.
StreamOn has also been accused of not adhering to net neutrality rules which state that video and audio services must be valued equally when throttling data, but unfortunately no solid examples of this alleged malpractice being carried out have been provided.
Almost exactly one year ago, EU telecoms regulator Berec (Body of European Regulators for Electronic Communications) published its finalized guidelines on how NRAs (National Regulatory Authorities) should go about implementing new net neutrality rules, after a lengthy process of juggling more than 480,000 industry contributions.
The guidelines state that an ISP can offer zero rating for an entire category of applications, such as all music streaming services, but cannot apply this same rule to specific applications, such as its own streaming service, due to this practice creating an economic incentive to use one service over another.
Berec therefore says the practice of applying zero rating to specific applications is more likely to “undermine the essence of an end users’ rights” or lead to circumstances where “an end users’ choice is materially reduced in practice.”
On the other hand, once you close a market, and advantage existing players by allowing zero rating, it makes it tough to undo the damage at a later date when all video wants to travel OTT. This will be evident in the US in coming years as services such as DirecTV Now and Xfinity Instant TV become unbundled and sold through rival broadband lines.
The EU’s revised guidelines came out after the European Parliament was blasted in 2015 for adopting net neutrality regulations which were far more lenient than those in the US. EU regulations today are considered to be some of the world’s strictest, but potentially not for much longer amid the FCC’s plans to unravel regulations on ISPs, as the US always sets the example.
Deutsche Telekom is yet to issue an official response to the VZBV, which has demanded that StreamOn be pulled after two weeks if its “faults” are not addressed. The regulator’s Chairman, Klaus Müller, said, “The decision for the Federal Network Agency not to prohibit StreamOn and other zero-rating offers in principle is at the expense of the free internet. This will not only reduce the freedom of choice for consumers, but also competition between service providers.”
A spokesman for the German operator told Broadband TV News, “We have received a letter from the authority. However, we do not share the authority’s legal position. It only applies its own very narrow interpretation of EU law in this case. But we are pleased to note the Federal Network Agency confirms our position that zero-rating is generally possible. The important factor at StreamOn is every provider of music or video streaming can easily become a partner with us and the partners do not have to pay us. There is no discrimination.”
Rival operator Vodafone Deutschland will likely face similar accusations soon once the Federal Network Agency finishes digging into its own zero-rating service, Vodafone Pass, which is due to launch at the end of this month.
T-Mobile has also come up against regulators in the Netherlands, as the country’s Minister of Economic Affairs, Henk Kamp, proposed plans in June to put an end to the Netherlands’ stringent laws on net neutrality, after a Rotterdam court found it invalid in a trial between T-Mobile and Dutch regulator ACM. The case relates to the Data Free Music service launched by T-Mobile late last year, much like Binge On, which the ACM accused of price discrimination. The court concluded that the EU’s net neutrality regulations overruled the Netherlands’s own laws, allowing T-Mobile to continue offering the service.
In the UK, Hutchison’s Three unveiled its copycat service Go Binge in July this year, bringing the practice of zero-rating certain types of content to the UK for the first time. The first services available on the new plans are Netflix, TVPlayer, SoundCloud and Deezer. The option is available to users with advanced plans with a data allowance of 4GB or more.
Disruptive Indian operator Reliance Jio also jumped on the binge bandwagon, adopting an uncarrier model so when Jio customers have hit their 4G data caps, data used after this is throttled down to 128Kbps so subscribers aren’t hit with hefty overage charges.
StreamOn is therefore being told to change its spots to cohere with regulations, meaning some video content will no longer be reduced to “DVD quality” on certain tariffs, but the essence of the service remains intact.