Telekom Deutschland GmbH v Bundesrepublik Deutschland (C-34/20)

Contents

Judgment of the Court (Eighth Chamber)2 September 2021^note(Reference for a preliminary ruling — Electronic communications — Regulation (EU) 2015/2120 — Article 3 — Open internet access — Article 3(1) — End users’ rights — Article 3(2) — Prohibition of agreements and commercial practices limiting the exercise of end users’ rights — Article 3(3) — Obligation of equal and non-discriminatory treatment of traffic — Possibility of implementing reasonable traffic management measures — Additional zero tariff option — Limitation on bandwidth)In Case C‑34/20,REQUEST for a preliminary ruling under Article 267 TFEU from the Verwaltungsgericht Köln (Administrative Court, Cologne, Germany), made by decision of 20 January 2020, received at the Court on 24 January 2020, in the proceedingsTelekom Deutschland GmbHvBundesrepublik Deutschland, represented by the Bundesnetzagentur für Elektrizität, Gas, Telekommunikation, Post und Eisenbahnen,THE COURT (Eighth Chamber),composed of N. Wahl (Rapporteur), President of the Chamber, F. Biltgen and J. Passer, Judges,Advocate General: E. Tanchev,Registrar: A. Calot Escobar,having regard to the written procedure,after considering the observations submitted on behalf of:– Telekom Deutschland GmbH, by T. Bosch, Rechtsanwalt, and C. Koenig, Universitätsprofessor,– the Bundesnetzagentur für Elektrizität, Gas, Telekommunikation, Post und Eisenbahnen, by C. Mögelin and F. Groß, acting as Agents,– the German Government, by J. Möller and D. Klebs, acting as Agents,– the Czech Government, by M. Smolek, J. Vláčil and A. Pagáčová, acting as Agents,– the Greek Government, by M. Tassopoulou, O. Patsopoulou and D. Tsangaraki, acting as Agents,– the Netherlands Government, by M.K. Bulterman and J. Langer, acting as Agents,– the Austrian Government, by A. Posch, G. Kunnert and J. Schmoll, acting as Agents,– the Finnish Government, by M. Pere, acting as Agent,– the European Commission, by G. Braun, L. Nicolae and D. Schaffrin, acting as Agents,having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,gives the following

Judgment

1This request for a preliminary ruling concerns the interpretation of Article 3(1) to (3) of Regulation (EU) 2015/2120 of the European Parliament and of the Council of 25 November 2015 laying down measures concerning open internet access and amending Directive 2002/22/EC on universal service and users’ rights relating to electronic communications networks and services and Regulation (EU) No 531/2012 on roaming on public mobile communications networks within the Union (OJ 2015 L 310, p. 1).

2The request has been made in proceedings between Telekom Deutschland GmbH (‘Telekom’) and the Bundesrepublik Deutschland (Federal Republic of Germany), represented by the Bundesnetzagentur für Elektrizität, Gas, Telekommunikation, Post und Eisenbahnen (Federal Agency for Electricity, Gas, Telecommunications, Post and Rail Networks, Germany) (‘the Bundesnetzagentur’) concerning a decision by which the latter found that a tariff option is in breach of the obligations arising from EU law and prohibited the maintenance or introduction of terms seeking to limit bandwidth.

Legal context

3Recitals 6, 8 and 9 of Regulation 2015/2120 state:(6) End-users should have the right to access and distribute information and content, and to use and provide applications and services without discrimination, via their internet access service. ……(8) When providing internet access services, providers of those services should treat all traffic equally, without discrimination, restriction or interference, independently of its sender or receiver, content, application or service, or terminal equipment. According to general principles of Union law and settled case-law, comparable situations should not be treated differently and different situations should not be treated in the same way unless such treatment is objectively justified.(9) The objective of reasonable traffic management is to contribute to an efficient use of network resources and to an optimisation of overall transmission quality responding to the objectively different technical quality of service requirements of specific categories of traffic, and thus of the content, applications and services transmitted. Reasonable traffic management measures applied by providers of internet access services should be transparent, non-discriminatory and proportionate, and should not be based on commercial considerations. The requirement for traffic management measures to be non-discriminatory does not preclude providers of internet access services from implementing, in order to optimise the overall transmission quality, traffic management measures which differentiate between objectively different categories of traffic. Any such differentiation should, in order to optimise overall quality and user experience, be permitted only on the basis of objectively different technical quality of service requirements (for example, in terms of latency, jitter, packet loss, and bandwidth) of the specific categories of traffic, and not on the basis of commercial considerations. Such differentiating measures should be proportionate in relation to the purpose of overall quality optimisation and should treat equivalent traffic equally. Such measures should not be maintained for longer than necessary.’

4Article 1 of that regulation, entitled ‘Subject matter and scope’, provides, in paragraph 1 thereof:‘This Regulation establishes common rules to safeguard equal and non-discriminatory treatment of traffic in the provision of internet access services and related end-users’ rights.’

5Article 3 of that regulation, entitled ‘Safeguarding of open internet access’, states, in paragraphs 1 to 3 thereof:1. 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.…2. Agreements between providers of internet access services and end-users on commercial and technical conditions and the characteristics of internet access services such as price, data volumes or speed, and any commercial practices conducted by providers of internet access services, shall not limit the exercise of the rights of end-users laid down in paragraph 1.3.Providers of internet access services shall treat all traffic equally, when providing internet access services, without discrimination, restriction or interference, and irrespective of the sender and receiver, the content accessed or distributed, the applications or services used or provided, or the terminal equipment used.The first subparagraph shall not prevent providers of internet access services from implementing reasonable traffic management measures. In order to be deemed to be reasonable, such measures shall be transparent, non-discriminatory and proportionate, and shall not be based on commercial considerations but on objectively different technical quality of service requirements of specific categories of traffic. Such measures shall not monitor the specific content and shall not be maintained for longer than necessary.Providers of internet access services shall not engage in traffic management measures going beyond those set out in the second subparagraph, and in particular shall not block, slow down, alter, restrict, interfere with, degrade or discriminate between specific content, applications or services, or specific categories thereof, except as necessary, and only for as long as necessary, in order to:(a) comply with Union legislative acts, or national legislation that complies with Union law, to which the provider of internet access services is subject, or with measures that comply with Union law giving effect to such Union legislative acts or national legislation, including with orders by courts or public authorities vested with relevant powers;(b) preserve the integrity and security of the network, of services provided via that network, and of the terminal equipment of end-users;(c) prevent impending network congestion and mitigate the effects of exceptional or temporary network congestion, provided that equivalent categories of traffic are treated equally.’

The dispute in the main proceedings and the questions referred for a preliminary ruling

6Telekom is an undertaking which operates in the information and communications technology sector. Since 19 April 2017, it has been offering its end customers, for some of its packages, an additional option (also referred to as ‘add-on option’) in the form of a free ‘zero tariff’ option called ‘Stream On’ (which existed initially in the versions ‘StreamOn Music’, ‘StreamOn Music&Video’, ‘MagentaEINS StreamOn Music’ and ‘MagentaEINS StreamOn Music&Video’). Activation of that option allows the data volume consumed by audio and video streamed by Telekom’s content partners not to be counted towards the data volume included in the basic package; once that data volume is used up, that generally leads to a reduction in transmission speed.

7By activating the ‘StreamOn’ tariff option, the end customer accepts bandwidth being limited to a maximum of 1.7 Mbit/s for video streaming, irrespective of whether the videos are streamed by content partners or other providers.

8The end user can deactivate and reactivate that tariff option at any time. If he or she does not reactivate that option within 24 hours, its default settings, namely the lack of offsetting against the data volume included in the basic package and the limitation on bandwidth, are automatically reinstated.

9Telekom does not require any remuneration from the content partners, but partnership with them is subject to both compliance with technical conditions individually defined by Telekom and the conclusion of a contract.

10In order to implement the tariff option concerned, Telekom carries out a twofold identification of the content consumed by the end customer, in order to ascertain, first, whether videos are streamed and, second, whether the content made available to that customer falls within the scope of that tariff option. That identification is made on the basis of IP (Internet Protocol) addresses and URL (Uniform Resource Locator) protocols, SNI (Server Name Indication) and by means of filtering by pattern (also known as ‘pattern matching’).

11By decision of 15 December 2017, the Bundesnetzagentur found that the tariff option concerned does not comply with the obligations arising from Article 3(3) of Regulation 2015/2120, since it is accompanied by a reduction in the data transmission speed for video streaming to a maximum of 1.7 Mbit/s. Moreover, in its view, the conditions attached to the implementation of traffic management measures, provided for in the second subparagraph of Article 3(3) or points (a) to (c) of the third subparagraph of Article 3(3) of Regulation 2015/2120, are not met in the present case.

12The Bundesnetzagentur prohibited Telekom, first, from limiting bandwidth for video streaming covered by that tariff option and, second, from using terms providing for a reduction in bandwidth, in both contracts concluded with content providers and contracts concluded with end customers.

13By decision of 8 June 2018, the Bundesnetzagentur rejected the complaint lodged by Telekom as unfounded. The latter subsequently brought an action for annulment before the referring court, the Verwaltungsgericht Köln (Administrative Court, Cologne, Germany).

14That court has doubts as to the compatibility of the terms of use of the tariff option offered by Telekom with Article 3 of Regulation 2015/2120.

15In those circumstances, the Verwaltungsgericht Köln (Administrative Court, Cologne), taking the view that an interpretation of EU law is necessary in order to resolve the dispute in the main proceedings, decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:(1)(a) In the case where a mobile communications tariff including a monthly data allowance and providing for reduced transmission speed once that data volume has been used can be extended by a free option which allows certain services provided by content partners of the telecommunications company to be used without offsetting the data volume used for those services against the monthly data allowance included in the mobile communications tariff, and the end user agrees to limitation of the bandwidth to a maximum of 1.7 Mbit/s for video-streaming, irrespective of whether the video-streaming service is provided by content partners or other providers, is Article 3(2) of Regulation (EU) 2015/2120 to be understood as meaning that agreements on the characteristics of internet access services within the meaning of Article 3(2) of that regulation must fulfil the requirements of Article 3(3) thereof?(b) If the answer to Question 1(a) is in the affirmative: Is Article 3(3), third subparagraph, of Regulation (EU) 2015/2120 to be understood as meaning that, in a situation such as that at issue in the present case, bandwidth limitation qualifies as the slowing down of one category of service?(c) If the answer to Question 1(b) is in the affirmative: Is the term “impending network congestion” within the meaning of Article 3(3), third subparagraph, point (c), of Regulation (EU) 2015/2120 to be understood as meaning that it covers only (impending) exceptional or temporary network congestion?(d) If the answer to Question 1(b) is in the affirmative: Is Article 3(3), third subparagraph, point (c), of Regulation (EU) 2015/2120 to be understood as meaning that, in a situation such as that at issue in these proceedings, the need for equal treatment of equivalent categories of traffic precludes bandwidth limitation that applies in the case of one optional add-on only, but not in the case of other mobile communication tariffs, and applies, moreover, to video-streaming alone?(e) If the answer to Question 1(b) is in the affirmative: Is Article 3(3), third subparagraph, of Regulation (EU) 2015/2120 to be understood as meaning that, in a situation such as that at issue in these proceedings, bandwidth limitation that depends on the addition of the optional add-on and that the end user can, moreover, deactivate at any time for up to 24 hours fulfils the requirement that one category of service may be slowed down only for as long as is necessary to achieve the objectives of Article 3(3), third subparagraph, points (a) to (c), of Regulation (EU) 2015/2120?(2)(a) If the answer to Question 1(b) is in the negative: Is Article 3(3), second subparagraph, second sentence, of Regulation (EU) 2015/2120 to be understood as meaning that, in a situation such as that at issue in these proceedings, bandwidth limitation for video-streaming alone is based on objectively different technical quality of service requirements of specific categories of traffic?(b) If the answer to Question 2(a) is in the affirmative: Is Article 3(3), second subparagraph, third sentence, of Regulation (EU) 2015/2120 to be understood as meaning that identification of the traffic generated from video-streaming from IP addresses, protocols, URLs and SNIs and using pattern matching, during which certain header information is compared with typical video-streaming values, constitutes monitoring of the specific content of the traffic?(3) If the answer to Question 1(a) is in the negative: Is Article 3(1) of Regulation (EU) 2015/2120 to be understood as meaning that, in a situation such as that at issue in these proceedings, bandwidth limitation for video-streaming alone limits end users’ rights for the purposes of Article 3(1) of Regulation (EU) 2015/2120?’

Consideration of the questions referred

16By its questions, which it is appropriate to examine together, the referring court asks, in essence, whether Article 3 of Regulation 2015/2120 must be interpreted as meaning that a limitation on bandwidth on account of the activation of a ‘zero tariff’ option, applied to video streaming, irrespective of whether it is streamed by partner operators or other content providers, is incompatible with the obligations arising from Article 3(3).

17As a preliminary point, it must be noted that a ‘zero tariff’ option is a commercial practice whereby an internet access provider applies a ‘zero tariff’, or a tariff that is more advantageous, to all or part of the data traffic associated with an application or category of specific applications, offered by partners of that access provider. Those data are therefore not counted towards the data volume purchased as part of the basic package. Such an option, offered in the context of limited packages, thus allows internet access providers to increase the attractiveness of their offer.

18Thus, the questions referred to the Court, which seek to enable the referring court to rule on the legality of the terms of use attached to a ‘zero tariff’ option, are based on the premiss that such a tariff option would itself be compatible with EU law, in particular Article 3 of Regulation 2015/2120, by which the legislature intended to enshrine the principles of an open internet and internet neutrality.

19Article 3(1) of Regulation 2015/2120, read in conjunction with recital 6 of that regulation, sets out the right of end users not only to access information and content, use applications and services, and distribute information and content, but also to provide applications and services.

20In accordance with Article 3(2) of Regulation 2015/2120, first, agreements concluded between providers of internet access services and end users and, second, commercial practices conducted by those providers must not limit the exercise of end users’ rights as laid down in Article 3(1) of that regulation.

21Article 3(3) of Regulation 2015/2120 provides, first of all, in the first subparagraph thereof, that providers of internet access services are to treat all traffic equally, without discrimination, restriction or interference, and irrespective, inter alia, of the applications or services used.

22Article 3(3) states, next, in the second subparagraph thereof, that the first subparagraph thereof is not to prevent providers of internet access services from implementing reasonable traffic management measures, and clarifies that, in order to be deemed to be reasonable, such measures, first, must be transparent, non-discriminatory and proportionate, second, must not be based on commercial considerations but on objectively different technical requirements of certain categories of traffic and, third, must not monitor content or be maintained for longer than necessary.

23Lastly, the third subparagraph of Article 3(3) states that providers of internet access services must not engage in traffic management measures going beyond those set out in the second subparagraph thereof, and must not in particular block, slow down, alter, restrict, interfere with, degrade or discriminate between applications or services, or specific categories thereof, except as necessary, for a fixed period, in order (i) to comply with Union legislative acts, national legislation that complies with Union law or measures giving effect to such Union legislative acts or national legislation, (ii) to preserve the integrity and security of the network, of services provided via that network, and of the terminal equipment of end users or (iii) to prevent network congestion and mitigate the effects thereof.

24As is apparent from Article 1 of Regulation 2015/2120, those various provisions seek to safeguard equal and non-discriminatory treatment of traffic in the provision of internet access services and related end users’ rights (see, to that effect, judgment of 15 September 2020, Telenor Magyarország, C‑807/18 and C‑39/19, EU:C:2020:708, paragraphs 23 to 27).

25In the first place, it is important to recall that the Court has had occasion to state that, where the conduct of a provider of internet access services is incompatible with Article 3(3) of Regulation 2015/2120, it is possible to refrain from determining whether that conduct complies with the obligations arising from Article 3(2) of that regulation (see, to that effect, judgment of 15 September 2020, Telenor Magyarország, C‑807/18 and C‑39/19, EU:C:2020:708, paragraph 28).

26Consequently, a failure to fulfil the obligation of equal treatment of all traffic cannot be justified under the principle of freedom of contract, recognised in Article 3(2) of that regulation.

27In the second place, the Court has also pointed out that Article 3(3) of Regulation 2015/2120 precludes any measure which runs counter to the obligation of equal treatment of traffic where such a measure is based on commercial considerations.

28First of all, it must be noted that, as is apparent from paragraph 21 of the present judgment, the first subparagraph of Article 3(3) of Regulation 2015/2120, read in the light of recital 8 of that regulation, imposes on providers of internet access services a general obligation of equal treatment, without discrimination, restriction or interference with traffic, from which derogation is not possible in any circumstances by means of commercial practices conducted by those providers or by agreements concluded by them with end users (judgment of 15 September 2020, Telenor Magyarország, C‑807/18 and C‑39/19, EU:C:2020:708, paragraph 47).

29Next, it is apparent from the second subparagraph of Article 3(3) of Regulation 2015/2120, and from recital 9 of that regulation, in the light of which that subparagraph must be read, that, while being required to comply with that general obligation, providers of internet access services are still able to adopt reasonable traffic management measures. However, that possibility is subject to the condition, inter alia, that such measures are based on ‘objectively different technical quality of service requirements of specific categories of traffic’, and not on ‘commercial considerations’. In particular, any measure of a provider of internet access services in respect of an end user which, without being based on such objective differences, results in the content, applications or services offered by the various content, applications or services providers not being treated equally and without discrimination, must be regarded as being based on such ‘commercial considerations’ (judgment of 15 September 2020, Telenor Magyarország, C‑807/18 and C‑39/19, EU:C:2020:708, paragraph 48).

30A ‘zero tariff’ option, such as that at issue in the main proceedings, draws a distinction within internet traffic, on the basis of commercial considerations, by not counting towards the basic package traffic to partner applications. Consequently, such a commercial practice does not satisfy the general obligation of equal treatment of traffic, without discrimination or interference, laid down in the first subparagraph of Article 3(3) of Regulation 2015/2120.

31It should be pointed out that that failure, which results from the very nature of such a tariff option on account of the incentive arising from it, persists irrespective of whether or not it is possible to continue freely to access the content provided by the partners of the internet access provider after the basic package has been used up.

32Moreover, it matters little that such an option falls within the scope of an agreement, within the meaning of Article 3(2) of Regulation 2015/2120, as recalled in paragraph 26 of the present judgment, or that it is intended to meet actual demand on the part of the customer or content provider.

33Lastly, the exceptions provided for management measures cannot be taken into consideration since, in accordance with the second subparagraph of Article 3(3) of Regulation 2015/2120, such measures cannot be based on commercial strategies pursued by the internet access provider.

34It is apparent from the information provided by the referring court that the limitation on bandwidth, to which all the questions put by that court relate, applies solely on account of the activation of the ‘zero tariff’ option.

35Since such a tariff option is contrary to the obligations arising from Article 3(3) of Regulation 2015/2120, that incompatibility remains, irrespective of the form or nature of the terms of use attached to the tariff options on offer, such as the limitation on bandwidth in the dispute in the main proceedings.

36In the light of all the foregoing considerations, the answer to the questions referred is that Article 3 of Regulation 2015/2120 must be interpreted as meaning that a limitation on bandwidth, on account of the activation of a ‘zero tariff’ option, applied to video streaming, irrespective of whether it is streamed by partner operators or other content providers, is incompatible with the obligations arising from Article 3(3).

Costs

37Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

Operative part

On those grounds, the Court (Eighth Chamber) hereby rules: Article 3 of Regulation (EU) 2015/2120 of the European Parliament and of the Council of 25 November 2015 laying down measures concerning open internet access and amending Directive 2002/22/EC on universal service and users’ rights relating to electronic communications networks and services and Regulation (EU) No 531/2012 on roaming on public mobile communications networks within the Union must be interpreted as meaning that a limitation on bandwidth, on account of the activation of a ‘zero tariff’ option, applied to video streaming, irrespective of whether it is streamed by partner operators or other content providers, is incompatible with the obligations arising from Article 3(3).