Network neutrality is a hot topic in the United States that is generally viewed to apply to Internet services and IP networks. Although this topic arose in the United States and is being debated at the U.S. Federal Communications Commission (FCC), Europe already has adopted rules that provide for neutrality. The scope of these rules may be broader than anticipated, however, and both satellite network operators and service providers need to watch out for how the rules may be applied in the European Union market.

Europe’s telecoms rules received a major overhaul in late 2009, when amendments to the regulatory framework were adopted. Among the hundreds of edits and revisions to the framework are several broadly worded provisions on network neutrality plus a declaration by the European Commission that it will be studying this issue and reporting back in 2010.

The changes that concern us are mainly made in the Universal Service Directive. This directive contains provisions on consumer contracts, information transparency and quality of service that apply network neutrality concepts. The provisions apply to all providers of communications networks or services, so they may well apply to satellite operators and providers.

For instance, provisions in Universal Service Directive Article 20 on “contracts” require member states to ensure that providers of publicly available communications services give consumer information on any limitations of their service. Earlier in 2009, the then European Commissioner for this sector, Viviane Reding, told the European Parliament that this provision would address network neutrality concerns.

Universal Service Directive Article 21 on “transparency and publication of information” echoes the contract provisions of Article 20 in several respects. It permits national regulatory authorities to require operators and service providers to inform subscribers of any changes in the conditions or procedures already set out in the contracts requirements. Subscribers have the right to withdraw from their contracts without penalty under this rule if the conditions are modified.

Finally, the directive also contains quality of service provisions in Article 22 that permits the authorities to set standards and require providers to publish information on their service quality. Again, the Commission said this provision could be applied to ensure proper network neutrality.

Contrasted with the Commission’s view that these tools can be used to combat threats to network neutrality, open access lobbyists have insisted the provisions do the opposite. They argue that the contract provisions permit limits on network services so long as the provider merely informs consumers. Whether or not this fear is correct will only be learned from experience.

Tied to these provisions of the Universal Service Directive is a general obligation that the European Union added to its amended Regulatory Framework Directive. A new Article 8(4) adds a regulatory objective that requires national authorities to promote “the ability of end users to access and distribute information or run applications and services of their choice.” This provision, tied to the contract, transparency and quality of service provisions, appears to create a strong platform for insisting upon network neutrality in the future.

During the final stages of the debate over the amendments, Reding stated that the Commission will be “Europe’s first line of defense whenever it comes to real threats to net neutrality.” To that end, and in addition to the provisions in the Universal Service Directive articles noted above, the Commission issued a declaration on network neutrality. This declaration was published in late December along with the other changes to the regulatory framework. It calls for a review of issues related to net neutrality that the Commission is supposed to complete by the end of 2010. The introduction to the declaration expresses the Commission’s intent to preserve the open and neutral character of the Internet.

The declaration seems to limit network neutrality to Internet networks and services, but the authority given in the new framework, as we have noted, applies to all providers of publicly available networks and services. As such, there can be spill over from the original concept of network neutrality into satellite regulation. Of course, to the extent satellite networks and service providers are involved with IP-related activities, they are in the heart of the network neutrality debate.

Pardon the pun, but the satellite sector in Europe cannot remain neutral on this topic. Industry must understand the new rules and assess how they might apply to satellite operations.

Gerry Oberst is a partner in the Hogan & Hartson Brussels office.