Wednesday

20th Sep 2017

Investigation

Fines on open internet vary greatly in EU

  • Internet activists show up at the EU's telecoms body in Riga in 2016 to demand strict application of the net neutrality rules (Photo: Arbeitskreis Vorratsdaten)

Estonia is known as a digital pioneer, but it is much cheaper for a company to violate open internet rules there than in some other EU countries.

The fine for violating the EU principle of net neutrality is €9,600 in Estonia, a mere fraction of the penalty enshrined in law in countries such as Spain, where companies could face sanctions of up to €2 million.

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  • Wifi is ubiquitous in Tallinn, but companies throttling content may face a much smaller fine in Estonia than in many other EU nations (Photo: patrina_io)

An EU regulation adopted in 2015 says that internet service providers cannot discriminate between content - something called net neutrality.

It means that the provider cannot, for example, give faster access to video streaming site YouTube than to its competitor, Dailymotion. One can imagine an internet provider doing that in exchange for money from YouTube's parent company, Google.

The EU rules say that each country should have penalties to punish providers that violate the net neutrality principle, and that those penalties should be “effective, proportionate and dissuasive”.

Estonian spokeswoman Annikky Lamp told EUobserver that Estonia is “confident that [its] legal framework is proportional, effective and fit for purpose”, and that it “never had serious issues with net neutrality”.

She noted that the penalty can be applied multiple times, until the breach of the law has been eliminated.

“This means that the cumulative impact could be significantly bigger than €9,600,” said Lamp.

Nevertheless, it shows there can be different interpretations of the purpose of penalties. To Estonia, it is a means to end the net neutrality practice, whereas other countries seem to see it as a way to punish bad behaviour.

An investigation by EUobserver reveals that there are big differences between the fines EU countries have laid down, raising doubts about the level playing field.

For example, while an internet provider in Estonia can be fined €9,600, for the same offence in Latvia it can receive a fine of up to €14,000, whereas in Lithuania it may be forced to pay 3 percent of its overall “revenue from electronic activities”, or up to €86,886.

Several countries have these two options - a percentage or a maximum fine - but it is unclear which one prevails.

The Baltics' large neighbour, Poland, also fines up to 3 percent of the provider's annual revenue. And it can slap an extra penalty on the company's boss, who would have to hand over three month's worth of salary.

Other countries also take the percentage approach, with Belgium, Malta, and Slovakia being able to demand up to 5 percent of a company's total annual revenue. Belgium also has the option of fining up to €1 million.

The Czech Republic can demand 10 million koruna, or €380,000, but is changing the law so that it can also fine up to 5 percent, or up to 15 million kroner. The Netherlands can slap on a fine of 10 percent of total annual revenue, or €900,000, whichever is higher. The UK also has the capability to fine up to 10 percent of revenue.

Freedom of information

The fines are in documents sent by the member states to the European Commission, which were made public after a freedom of information request by this website.

Some countries do not specify an amount.

Hungary said its relevant authority may impose a fine, which will be based on the gravity of the offence. It said the maximum fine was 0.25 percent of the company's annual revenue.

Denmark and Finland can impose conditional penalties that are meant to force a change in behaviour.

“The exact amount of the administrative fines is not defined, but they should be large enough to enforce compliance with the imposed injunction,” said Peter Hjoernager Pedersen, of the Danish ministry of energy, utilities and climate.

“The administrative fines can be imposed daily until compliance is in place and the amount of the administrative fines can be increased if necessary to enforce compliance,” he added.

The responsible authority in Finland has recently used figures between €50,000 and €100,000 to ensure compliance, but for decisions unrelated to net neutrality.

The relatively low fine in some countries cannot be entirely explained by their comparative purchasing power. In Bulgaria for example, one of the EU's poorest nations, the potential fine is between €200,000 and €1 million, far higher than Estonia's €9,600.

Luxembourg can impose a fine of up to €1 million, while in Germany the maximum is €500,000.

Austria takes an opposite approach, saying a fine should be at least €10,000, without providing for a maximum level.

Missed deadline

Member states were required to tell the European Commission what fines they have implemented by 30 April 2016.

More than a year later, Austria, Croatia, Czech Republic, France, Germany, Greece, Italy, and Ireland still had not done so.

Of those, only Austria, the Czech Republic, and Germany responded to EUobserver's questions about what fines they have implemented.

Although an EU regulation is directly applicable in member states, allowing national governments to determine the level of fines is a common feature in EU law.

The phrase “effective, proportionate and dissuasive” penalties is often used, without defining how to judge if those criteria are met.

Last year, it emerged that several member states had laid down penalties for using illegal emissions cheating software in cars that could hardly be called effective, proportionate, or dissuasive, with some countries having penalty provisions as low as €80-€318.

Centre-right Latvian member of the European Parliament Krisjanis Karins told EUobserver that the study showed "clearly ... that the legislation is not specific enough".

"A good way of making legislation is to set clear minimum limits of fines, such as percentage of turnover. Of course, legislation is adopted only when the member states and the European Parliament agree. Reaching consensus even on fines can be difficult," said Karins.

The damage of non-neutrality

The general data protection regulation, another EU regulation that deals with digital affairs, does introduce EU-wide administrative fines calculated through a percentage of a company's turnover.

Joe McNamee, who leads the Brussels-based European Digital Rights organisation, said that approach was a “better option”.

Referring to the results of EUobserver's research, McNamee said “some of the fines appear very low, particularly bearing in mind the damage that non-neutrality can cause both to freedom of expression and online competition”.

“It shouldn't be necessary to explain to a member state what a "dissuasive" penalty might be. However ... it does appear that some member states seem to be unable to grasp that concept.”

A spokesman for the Body of European Regulators for Electronic Communications (BEREC) said "this question is a national matter" and that BEREC "does not have a specific view on it".

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