Net Neutrality And Free Choice Of Routers And Modems In Europe

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Net neutrality represents the latest phase of a debate over control of communications media in the broader context of the digital transformation of social life through the Internet [7]. The Internet evolved from a limited state-controlled project to the largest computer network in the world, encompassing not only information exchange alone, but also a sophisticated multidisciplinary network for human interaction, communication, data processing and storage, and control of digital infrastructure. In this sense, access to the Internet has become a central prerequisite for individuals exercising rights and freedoms in the information society [8]. Net neutrality is intended to protect the basic rights of internet users against opaque and invidious practices by their IAPs. That means, in general terms, no throttling, no blocking of rival content and no discrimination of users, content, platform, application, type of equipment, source address, destination address or method of communication, except under narrowly defined conditions [9].

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When accessing the Internet, end-users should be free to choose between various types of equipment. IAPs should not impose restrictions on the use of terminal equipment connecting to the network in addition to those imposed by manufacturers or distributors of terminal equipment. These principles are condensed in art. 3(1) of the Net Neutrality Regulation, comprising measures intended to safeguard net neutrality, covering end-users’ rights and IAPs’ obligations: “End-users shall have the right to access and distribute information and content, use and provide applications and services, and use terminal equipment of their choice, irrespective of the end-user’s or provider’s location or the location, origin or destination of the information, content, application or service, via their internet access service”. As an EU Regulation, it requires no transposition into national law and enjoys primacy in application over national laws. It applies equally in all EU member states and three additional states of the European Economic Area (EEA) (Norway, Iceland and Liechtenstein).

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For the terms of the Net Neutrality Regulation, “end-users” encompass individuals and businesses, including consumers [10]. “Terminal equipment” [11] relates to devices that directly or indirectly connect to the interface of a public network. This interface, the NTP, is defined as the physical point at which a subscriber is provided with access to a public communications network [12]. The location of the NTP has an impact on whether the router and modem are part of the IAPs’ network or end-users can use their own equipment to access the Internet, as seen in Image 1. If the NTP is located at point A, both modem and router are part of the domain of the end-user. At point B the end-user can have only the router and has to use the modem of the network operator. At point C modem and router belong to the network operator. As an element of net neutrality, this article considers that only having the NTP be at point A is compliant to art. 3(1) of the Net Neutrality Regulation. The NTP can be mobile rather than fixed, as when smartphones are used for internet connection [13].

Image 1: The three possible locations of the fixed NTP according to BEREC [14].

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Normally, all internet-based communication passes through routers [15]. While the modem brings the information in, the router distributes (or “routes”) it to different devices. Routers share information between computers and connect to the internet through a modem. Since routers can handle other functions too, for instance WiFi, Voice over IP (VoIP) and TV streaming, and also technical details such as port forwarding, dynamic DNS or VPN tunnelling, routers and modems are quite often offered by IAPs in the same device. All major consumer IAPs are vertically integrated to some extent with content (video, streaming, audio, etc.) services, in such a way that routers and modems represent important elements in their business models [16]. End-users connect to the Internet mainly through the IAPs’ networks [17]. Therefore, IAPs hold a position of power for providing unique public service, demand special treatment from governments and impose their own equipment on consumers with relative flexibility [18].

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Freedom of terminal equipment is considered a fundamental element of net neutrality. This is based on principles of freedom of choice, privacy, compatibility, fair competition, security and data protection. Although a combined router/modem unit provided by an IAP can be a simpler option for most end-users, some of them may wish for features not provided by the IAP to meet security and privacy requirements  ^[19] . Besides, end-users regularly change their IAPs. Only if they can continue using their own devices, can they port their existing settings and devices to the new provider  ^[20] . If the devices are owned by the IAPs, compatibility to other providers and their specific requirements might be limited  ^[21] . End-users should also profit from the free and fair competition that guarantees free choice and steady improvement of products. The lack of competition can come at the expense of the user because security features would be continually reduced and the user-friendliness would drop  ^[22] .

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Freedom of terminal equipment encompasses the physical aspect of internet connections. This freedom requires setting standards for IAPs’ practices towards end-users in order to safeguard open, neutral and secure access to the Internet. The next section addresses the harmonisation process of this right across Europe.

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Since 2015, the European Union has formally implemented net neutrality rules encompassing free choice of routers and modems. The regulatory framework is intended to protect end-users and guarantee the continued functioning of the internet ecosystem as an engine for innovation. However, the effectiveness of this framework will depend on how NRAs deal with the harmonised concepts proposed by BEREC in its guidelines and reports on the NTP. BEREC is commissioned by EU laws in two respects to provide guidance on the implementation of the obligations of NRAs [23]. While NRAs “must take utmost account” of BEREC decisions [24], they are not legally required to follow BEREC guidelines [25]. Particularly for the choice of terminal equipment, the following set of documents can serve as basis for calibrating the future regulatory behaviour of NRAs:

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By art. 5(3) of the Net Neutrality Regulation, BEREC was commissioned to provide guidance on the implementation of the net neutrality obligations of NRAs. These Guidelines represent the first document on interpretation of net neutrality rules issued by BEREC.  Following the principles contained in the Regulation, the Guidelines set up the first regulatory environment for NRAs. Notwithstanding that it recognises the prohibition against limiting the choice of terminal equipment, BEREC only mentions that NRAs should consider whether there is an “objective technological necessity for the obligatory equipment to be considered as part of the IAP network”. If there is no objective technological necessity, an IAP's subjective desire to limit router freedom would be in conflict with the Net Neutrality Regulation (paragraphs 26 and 27) [29].

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As will be discussed below, limiting the NRAs’ discretionary power to determine a vague and unproved necessity will be the major challenge for end-users to meet in their effort to be able to choose routers and modems during the national implementations.

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The BEREC Report on the Location of the Network Termination Point (the Report) is, in its turn, much more dense and detailed. The Report aims to foster knowledge transfer between NRAs and to give a deeper insight into the rules applicable to NRAs regarding mobile and fixed NTPs. The Report provides a view of the complex panorama in Europe regarding terminal equipment. While the BEREC Guidelines on the NTP tells how to harmonise the rules on the NTP, the Report presents a description of what has been done by the NRAs in specifying the location of the NTP or solving disputes between end-users and IAPs.

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The Report clarifies that some NRAs (Cyprus, Germany, Italy, Latvia and the Netherlands) have specified or are about to identify the location of the NTP. In the other 22 EU countries the situation is mixed. In 13 of them, the NRA has the legal power to identify the NTP but has not done so because, according to the information provided by the NRAs, there have been no (or only minor) complaints by end-users that they cannot use their own routers or modems. The report mentions but does not clarify the situation for eight of these 13 countries, where the location of the fixed NTP has been chosen by the IAP at a point which allows end-users to use their own modems or routers (point A or B, as seen in Image 1; if the NTP is at point B, users will have to use the IAPs' modems to connect to the Internet). Besides, the location of the fixed NTP can be diverse. While in Germany and Italy routers and modems are part of the domain of the end-user, in Latvia the location of the fixed NTP depends on the ownership of equipment and cables, which means that the modem and the router could still be part of the public network.

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Most importantly, the Report explains that the efforts to specify the location of the NTP were not a response to complaints from end-users or other market players, but were necessary to clarify the existence of an objective technological necessity for routers to be considered as part of the public network. This necessity would have been determined by factors including the interoperability of the networks, the simplicity of the equipment used, security of the equipment and data protection. Some of the criteria employed by NRAs were used later by BEREC in the NTP Guidelines to orientate the future harmonisation on the NTP location.

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As the most recent and important BEREC document regarding the free choice of terminal equipment, the NTP Guidelines are designed in accordance with Article 61(7) of the EECC to provide guidance to NRAs when they specify the location of the NTP.  The NRAs should “take utmost account” of the Guidelines during the implementation in their jurisdictions. The Guidelines are intended to harmonise defining the location of the NTPs in the EU by providing the criteria NRAs should follow when specifying the location of the NTP, including conformity of the definition of the fixed NTP location with the EU legal provisions, the impact on the market for router/modems, and whether there is any technological necessity for equipment to be part of the public network.

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Differently from its approach in the earlier documents, BEREC recognises that the immediate context of the Guidelines in the EECC is “regulation of internet access and interconnection”. Competition issues, especially bottleneck conditions in access to networks, affect the methods to be used when identifying the NTP location and interpreting the EU legal provisions that refer to the NTP. Therefore, to consider terminal equipment like the modem, router and media box part of the accessed infrastructure, the NRA should prove the existence of an objective technological necessity. The assessment criteria are [30]:

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On the other hand, the BEREC Guidelines on the NTP fail to set very narrow and restrictive standards for setting the NTP at points B or C (see Image 1), which can deny the rights of end-users, reflecting a lax approach which prioritises IAPs’ commercial interests over end-users' liberties [31]. The allowance of NRAs’ discretionary power to set the NTP at three different positions can impose significant barriers to end-users effectively using their equipment. As the next part of this article will show, most NRAs in Europe have been careless with end-users' interests when they do not prioritise the enforcement of net neutrality principles.

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BEREC was given the task to define the aspects related to the position of the NTPs and to prepare guidelines to orientate the NRAs for defining the NTP in their jurisdictions. However, a fair assessment of positioning must take into consideration the real characteristics of the market, the overall technical infrastructure of the national networks and the commercial practices to which end-users are subjected. The NRAs’ annual reports to the Commission on net neutrality would demonstrate the regulators’ degree of readiness to engage with stakeholders in a democratic process to determine the rules regarding the hardware for internet access [33].

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As an obligation imposed by art. 5(1) of the Net Neutrality Regulation, the NRAs should annually inform the Commission about their activities in monitoring and enforcing the net neutrality rules [34]. The reports would serve as summaries for the Commission on the state of affairs in national jurisdictions and would serve to provide a minimum level of transparency and comparability of the implementations across Europe. Among the things expected to this end from the reports are the overall description of the national situation regarding net neutrality, the description of the NRAs’ monitoring activities, the number and types of complaints, IAPs’ infringements related to the Regulation and results of surveys, evaluations, and technical measurements implemented by the NRAs [35].

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Below, this research assesses the documents produced by the NRAs from the first reporting period until the last to date (2017-2020) [36] on topics concerning terminal equipment. More precisely, which kind of efforts the NRAs employed to build a structured source of information on the experience of the first years of net neutrality monitoring. The analysis searched for topics concerning terminal equipment, including:

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To ensure comparability, only the English-language reports were evaluated. From a total of 112 reports, only 42 had an English version. The findings are summarised in Table 1.

Table 1. NRA Annual Reports on Net Neutrality – References to Free Choice of Terminal Equipment and Related Topics.

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From 2017 to 2020, not all NRAs submitted the required reports. Although some of these reports offer valuable insights into the enforcement activities carried out by the regulator, others demonstrate complete inactivity, with almost no information regarding free choice of equipment in the year being reported on.

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The majority of the NRAs have been silent and have provided no data on concrete issues involving violation of or compliance with art. 3(1) of the Net Neutrality Regulation. Some of the reports provided superficial information on complaints but failed to provide details on the numbers of violations, the different forms of remedy and the solutions provided. Very few reports offer concrete numbers on the disputes between end-users and IAPs regarding terminal equipment. The vast majority of the reports contain no data on commercial practices restricting use of private terminal equipment or the reasoning behind them. With the exception of a few reports, no results of surveys or technical measurements were provided, nor were any such efforts mentioned. Some reports state, however, that some IAPs consider terminal equipment to be part of their network. Almost all reports contain no information on research or surveys regarding the consequences of application of art. 3(1) to contracts and other commercial practices. In the last four years, the majority of NRAs did not provide information about the status of the NTP in their jurisdictions or the plans to determine its location in the different network topologies. In general, the reports confirm the lack of coordination among the NRAs on identifying interests of stakeholders in public debates on the NTP. Some reports have manifested the IAPs’ position on terminal equipment location, but fail to express the position of other stakeholders, mainly end-users and civil society organisations.

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These summaries show the opacity of the NRAs' reporting involving terminal equipment. The data are too sparse to justify more analysis than just these samplings.

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On the other hand, some NRAs presented overviews of their practices relating to end-users’ free choice of terminal equipment with surveys with stakeholders, market analysis or inspection of contracts. Some provided insights on the number and nature of complaints and infractions involving routers or modems and indicated the status of the NTP in their jurisdictions. Other regulators provided substantial information on the circumstances of the market, the IAPs’ commercial practices, the process of specification of the location of the NTP, and the end-users’ complaints related to free choice of terminal equipment. Below is a short summary of the reports which provided more detailed information regarding the status of free choice of terminal equipment [37].

Croatia

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In the one evaluated report (2019), the regulator reported a survey regarding the choice and use of terminal equipment. The majority of IAPs consider the modem and router as part of the electronic communications network but only the modem is an integral part of the network [38]. In its turn, the Croatian regulator finds reasonable the imposition of obligatory equipment by the IAP for managing and monitoring network security (through PPPoE authentication), providing quality of bundle services (voice, internet, IPTV), and supporting equipment and service through remote access. However, it would be possible for end-users to have their own router/modem. No further information on complaints, infractions and measures adopted for conflict resolution was provided, however.

Cyprus

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In the only report analysed (2019), the regulator states that in a formal survey IAPs have reported that they impose their terminal equipment on consumers to ensure configuration and support of the devices and of commercial purposes (bundle services - internet, voice, TV). Authentication credentials are not provided to customers but are built into the terminal equipment (PPPoE authentication). The regulator has not provided further information on complaints, infractions, and enforcement measures adopted.

Czech Republic

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The Czech regulator, in the two analysed reports (2018 and 2019), provided an overview on the commercial practices that could lead to restrictions on end-user rights to use terminal equipment. Inspection of contractual practices found that: (i) Some IAPs enforced contracts with clauses for acquisition (usually purchase) of terminal equipment offered by the provider; (ii) Other contract terms could lead customers to a wrong conclusion about the connection between the service and the terminal equipment; (iii) The use of private terminal equipment was often tied to the service provider’s prior approval. The regulator also reported the number and status of proceedings involving terminal equipment.

France

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In the three analysed reports (2018, 2019 and 2020), the French regulator broached several aspects of net neutrality in detail and proposed the widening of the debate on freedom of terminal equipment to embrace “device neutrality” [39]. The regulator proposes a holistic view of internet policy and the multiple factors that influence user choice and innovation, arguing how restrictions regarding end-users’ devices and software (browsers, search engines and OS) could affect the free choice of access equipment.

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Device neutrality issues fall outside the scope of the current net neutrality framework in Europe. The Regulation is directed at the behaviour of IAPs on the premise that they are uniquely situated to act as gatekeepers of internet access. However, the French regulator proposes a course of action that could be taken as methodological reference for other NRAs to approach issues regarding terminal equipment and the definition of the NTP. Although the regulator reported surveys, meetings and discussions with a wide range of stakeholders, no concrete information on limitation of end-users’ rights and other practices involving terminal equipment was provided.

Germany

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The German regulator published three reports (2017, 2018 and 2019) in English which provided superficial information on the number and type of end-users’ complaints regarding terminal equipment. As in France, the NRA mentioned the increasing importance of device and data neutrality issues and made references to complaints submitted by end-users but excluded the applicability of the Net Neutrality Regulation to settle the disputes. Regarding the location of the NTP, although Germany has a law for locating the NTP on point A (see Image 1), the regulator has provided no information about plans to update the national legislation according to BEREC Guidelines on the NTP [40].

Hungary

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In the two analysed reports (2018, 2019), the regulator disclosed the results of market research among end-users and a survey to understand the general public’s opinion on net neutrality. The market research revealed that three IAPs indicated that the point of delivery of the service is understood as the ethernet port of the modem [41]. The market research also ascertained that some modems or routers contain proprietary software of the service provider, and therefore free choice of equipment can be limited.

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Regarding the central element for the right of choosing terminal equipment, the NTP represents the boundary between the end-user private network and the IAP’s domain. Leaving the specification of the location of the NTP for the NRAs opened a broad space for their discretionary action. In the absence of case law [42] of the Court of Justice of the European Union on an enforceable rule on the freedom of terminal equipment, the NTP Guidelines is the authoritative document on router freedom in Europe. The enforcement can be harmonised to the extent that the Guidelines offer clear rules, but there are topics open for further interpretation (e.g., technological necessity issues), leading to uncertainties.

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The EECC entered into force on 11 December 2018 and the transposition into national law by each of the member states has a deadline of 21 December 2020. By then all NRAs should have specified the location of the NTP in their jurisdictions according to the three possible locations identified by BEREC (points A, B or C, as seen in Image 1). The EECC marks not the end of the discussion of the right to choose terminal equipment, but the start of a new chapter in the history of this right in national jurisdictions. Specifying the location of the NTP is important not only in relation to the free choice of terminal equipment, but also in relation to traffic management, transparency, enforcement and monitoring mechanisms. Diverging interpretations of the location of the NTP create uncertainties as to the rights of end-users. There are 23 EU countries in which the location of the NTP has not been specified, in which the respective NRAs have not decided to use this legal power for lack of complaints of end-users. The end-users' interests, therefore, can be negatively impacted by the passive approach of the NRAs.

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As the results in Section 3.1 Reem Ahmed RA above have shown, IAPs have an interest in considering routers and modems to be part of their networks in order to monitor network security and to guarantee quality of service [43]. All major consumer IAPs are vertically integrated to some extent with digital video, voice and web services. Incorporating the router and modem into their infrastructure allows them to discriminate against private equipment with negative consequences for end-users. The NRAs have been flexible in their enforcement of art. 3(1), allowing IAPs to consider at least the modem to be their equipment, as the annual reports demonstrate. Therefore, NRAs could interpret the technological necessity criteria of the NTP Guidelines to be aligned with commercial interests of IAPs. This might be done in specifying the management of the network, granting a dominant position to bundle services (voice, IPTV) and commercial practices, such as price levels and providing extra support for the equipment.

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Net neutrality from the perspective of internet access hardware does not lack regulatory tools on the European level per se. However, the potentially complex implementation by the NRAs endangers end-users' interests. The end-users face the IAPs’ unreasonable discrimination in commercial practices involving terminal equipment. No matter how clearly art. 3(1) of the Net Neutrality Regulation asserts the neutrality of devices, in practice national regulators can completely prevent the possibility of end-users having their own devices.

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In countries where laws relating to end-users' choice of terminal equipment have been passed [44], the specifications of the location of the NTP can vary from those already implemented – definitions that have served as bases for end-users' rights. In Germany, for instance, the current NTP is located at point A (see Image 1) and customers can demand from their IAP that they be permitted to use their own equipment – backed up by national courts [45]. However, with the new elements provided by the BEREC Guidelines, the German NRA has new opportunities to consider the relocation of the NTP, which might lead to the restriction of end-users’ rights [46]. Customers can only be formally secure in the ability to be able to choose their router freely. In practice, IAPs’ commercial strategies can hinder the formally free choice even when the IAPs are acting legally. IAPs may fail to inform end-users about the right to choose other devices and may engage in legal but manipulative advertising practices [47].

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Powerful methods of inferior decision-making lead to solutions detrimental to end-users’ rights, impairing not only internet access but also their privacy, security, and data protection [48]. Assuring freedom of choice, therefore, requires end-user focused policies in the NRAs’ decision-making processes. Decisions concerning the NTP, for instance, impact directly upon what is increasingly declared a human right: access to the Internet. Following the good example of the French regulator, ARCEP, the NRAs’ decision-making should take into consideration a balance among the interests of stakeholders, but an emphasis should be given to the needs of the end-users. Therefore, the implementation of the EECC in national jurisdictions should involve proposals to accommodate the interests of operators and other market players, but at the same time maintain the ability of end-users to freely choose their equipment. For this purpose, the NRAs should at least:

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Employing such a methodology, the NRAs could improve their communication to stakeholders on the subjects impacting their rights, increasing the quality of the public debate. The current lack of transparency inhibits a fair and well-balanced judgement of the state of interests in their jurisdictions. Better understanding of the free choice of terminal equipment in the context of net neutrality in Europe depends on the European Commission exercising closer supervision over the NRAs’ monitoring and enforcement by taking swift action against their ineffective reporting on their activities and by imposing higher standards on the annual reports, since the reports represent an important information channel for end-users as well.