Thursday, October 31, 2013

The Slovak Court Orders an ISP to Stop Breaching the Net Neutrality

The first instance court - District Court in Bratislava I., last Thursday issued a preliminary injunction prohibiting continuance of net neutrality breach by one of the Internet access providers. The injunction was granted in a ongoing unfair competition law case between two ISPs, Slovak Antik and Dutch UPC.

The case already started in March this year, when UPC blocked Internet Protocol television (IPTV) service provided by Antik via infrastructure of UPC by blocking its public IP address. This meant that customers who used Internet access from UPC, were technically precluded from using IPTV service of Antik (set-top boxes wouldn't work for them). UPC did this apparently in order to block competition on its infrastructure, trying "to help" its own cable TV retransmission service. The case is therefore about two vertically integrated competitors, who both compete not only on the market of Internet access,  but also on the market of TV retransmission.

After this became public, I personally and EISi feared that this bad example of UPC blockage might be followed by other ISPs pursuing their commercial interests, thus leading it to totally balkanized Internet access in Slovakia. For this reason, I authored a short opinion on behalf of Slovak based think-thank European Information Society Institute (EISi) outlining applicable existing laws to net neutrality in Slovakia. The opinion stresses that despite non-existence of explicit net neutrality principle in Slovak telecommunication laws, many, but not all, instances of net neutrality breach can actionable even under existing antitrust, unfair competition and consumer laws. The case of Antik v. UPC was found to very likely breach both unfair competition and consumer laws (as with lot of cases, UPC is not dominant here and even "plays" alone).

The argument was that in B2B relationship, blocking a competitor´s service (IPTV) on its own infrastructure that is provided as a service on a different market (market for Internet access), leads to acquiring of unfair commercial benefit, because it cuts all consumers of Internet access, also of access to competing TV retransmission (cutting part of the market for itself by default). Otherwise, any vertically integrated ISP (as he has strong business incentives) could block out any competitor that provides its services using Internet.

Moreover, another argument was that consumer´s rights might be infringed upon in two ways: 
  • by misleadingly labeling and selling the service as "flat rate" Internet access, when the service in fact does not provide general access to Internet (transparency argument), and 
  • by materially distorting the economic behaviour of the consumer, because the consumer base of UPC is technically cut from different competing services on unrelated market, thus leading it artificially to decide for UPC TV retransmission (discrimination argument).
Last but not least, it was highlighted that even if Antik would provide its retransmission service without appropriate license (i.e. conduct unfair competition himself), UPC can only self-protect itself from this allegedly unfair conduct if there is no collateral damage on consumers. Otherwise, a self defense, does not apply, because wrongful behavior is also directed against those, who are not acting wrongfully. Thus consumer can not become a hostage of two rivalry ISPs.

After several PR battles of both companies, Antik hired a technical expert to document the blockage and decided to sue UPC claiming that such blockage or degradation of its service amounts to unfair competition. The action of Antik puts forward our B2B arguments, namely that blockage or degradation within this competitive relationship contradicts general clause of unfair competition set in Section 44(1) of the Commercial Code.

§ 44
Fundamental Provisions
(1) Unfair competition shall be such competitive conduct that is contrary to the standard practices of competition and that may be detrimental to other competitors or consumers. Unfair competition is prohibited.

The District Court in Bratislava I. now granted an injunction (8 Ncb/90/2013-321) against UPC prohibiting it from blocking or degrading the IPTV service on its infrastructure for its consumers of Internet access. Preliminarily, the court found arguments of plaintiff convincing in ex parte proceedings. UPC in the meantime removed the block, but announced to continue to fight the legal battle, as it considers it to be of a great importance for the industry. The preliminary injunction can be still appealed. Antik now has to file within a month the lawsuit itself.

I and UPC apparently agree at least on this last point. The case is of a great importance. But for consumers. For exactly this reason EISi, which also acts as (digital) consumer association, is currently considering to intervene in the case, to add so much needed consumer perspective to it. As both of the above consumer arguments we make (transparency & discrimination) have its basis in the Union law, namely the Unfair Commercial Practices Directive (2005/29/EC), I would welcome all your feedback and experience you might have from other jurisdictions.


Thomas Lohninger said...

Thanks for this blog post, really interesting to hear what's going on in Slovakia!

I am working on net neutrality in Austria with the campaign, maybe it's time for some more networking under us neighbours. What do you think?

Huťko said...

Hi Thomas,

that's a great idea. I went through your website and it looks just great. I see the debate in Austria is quite advanced.

If the code is open, I could ask some volunteers whether they want to help build something similar for Slovakia.

And sure, I and EISi will be only glad to cooperate.