Net Neutrality and the Draft Digital Communications Law(Taiwan)

Sean Liu

Principle of net neutrality
The principle of net neutrality means that an internet service provider is required to treat all network packet data fairly and cannot discriminate or provide any priority based on agreements, contents, applications, sources, platforms or other factors. Since the advent of the Internet in the 1990s in the 20th century, the Internet has brought fundamental changes to the entire world. Since the Internet was originated from free and open communication protocols, advocates of net neutrality believe that the government should exercise government authority to ensure the freedom and openness of the Internet to secure its continued success. Therefore, as the control under the Fair Trade Law seeks to maintain the competitive order of free markets, the control over net neutrality also aims at preventing the freedom and openness of the Internet from being distorted by the strong market power of internet service providers.

To give an example, if an internet access service provider can freely discriminate against internet traffic, it will be able to prioritize its own video streaming service and compel internet users to give up the services of competitors which are slower or less stable. In addition, if an internet access service provider can charge fees from internet gaming operators so that their online games are faster and more stable than other online games, the online games of a start-up which cannot afford such fees are at a competitive disadvantage.

World legislation trends and the fightback of the Trump administration
Issues as to whether net neutrality should be controlled and the scope of such control have been debated for a long time in the US, European Union and most countries in the world. With relevant control laws enacted in an increasing number of countries in recent times, it seems that the pro-control camp is gaining the upper hand. For example, Regulation 2015/2120, a new regulation adopted in the EU in 2015, and the Open Internet rules promulgated in the US both prohibit internet access service operators from violating the net neutrality principle through administrative control. Violators will be subject to sanctions such as administrative penalties.

However, US President Donald Trump is opposed to bind broadband service providers through administrative control over net neutrality. Therefore, he appointed Mr. Ajit Pai, who is always opposed to net neutrality control, as the new Chairman of the Federal Communications Commission (FCC) of the US. Chairman Pai believes that internet traffic management should be handled through autonomous negotiations between internet access service providers and internet users or self-discipline of operators. Therefore, he announced that net neutrality control would be gradually abolished shortly after he was inaugurated in an attempt to shift administrative control of net neutrality issues to market mechanisms. However, his proposal has also stirred significant controversy and incessant opposition.

Similarity between NCC’s position in net neutrality and that of the Trump administration
It is interesting that the National Communications Commission (hereinafter, the “NCC”) of Taiwan has adopted a position very close to that of the Trump administration since 2015 but this has not attracted much attention from local media yet.

Our current Telecommunications Law actually contains legal requirements sufficient to exercise administrative control over net neutrality. Articles 21 and 28 of the Telecommunications Law provide: “A telecommunications enterprise shall provide services in a fair and non-discriminatory manner unless otherwise provided for herein,” and “if the operation of a telecommunications enterprise fails to ensure the secrecy of communications, or violate the provision of Article 21, the Directorate-general of Telecommunications may order the enterprise to make improvements within a prescribed time frame.” If the above provisions are violated, a fine of NT$60,000 to NT$300,000 may be imposed continuously until rectification is made (Article 66 of the Telecommunications Law). According to the textual meaning of the legal provisions, it seems that the NCC may formulate specific administrative regulations on net neutrality and exercise administrative control over net neutrality pursuant to such provisions. However, since the NCC has never penalized any operator for violation of such net neutrality provisions, this calls into question whether the NCC believes that such provisions of the Telecommunications Law serve as the basis of net neutrality control.

If the draft Electronic Communications Law (subsequently renamed as the Digital Communications Law) released by the NCC at the end of 2015 is also considered, this suggests that the NCC’s position is similar to that of the Trump administration.

Article 6 of the draft Digital Communications Law provides: “Digital communications service providers shall basically promote the optimization of network transmission and reception with respect to any control of any network protocol or traffic of any digital communications network, and, except as otherwise stipulated by law, shall not attach any obviously unfair restriction.” The above draft provision concerning the requirement that restrictions on any network protocol or traffic shall not be obviously unfair has partially touched upon the essence of net neutrality. However, since there is no penal provision for violation of Article 6 of the draft Digital Communications Law, such provision is not administrative control. Moreover, although the draft was proposed by the NCC, still the NCC has no intention of serving as the competent authority of the draft. Therefore, the Digital Communications Law is a law whose provision cannot be interpreted by any government agency.

To wit, if the draft clears through three legislative readings, no one knows for sure what kind of traffic control will be “obviously unfair.” In case of any dispute, there is no competent authority to take any control measure. Internet users will have to bring civil action against a digital communications service provider and assert that the provisions of a contract are invalid for violating the prohibitive provisions of Article 6 of the Digital Communications Law (if the court also concurs that such article is of prohibitive nature rather than a simply admonitory provision) by citing Article 71 of the Civil Code. Under the doctrine of distribution of the burden of proof of the Civil Code, an internet user is required to prove, as the plaintiff, how a relevant contract is “obviously unfair.” However, since traffic control measures are controlled by service providers, to assume such burden of proof is in fact very difficult. In addition, the nature of a civil matter involves dispute resolution between private parties. Based on different facts involved in individual cases, the results of a case handled by a court can hardly bind another case, not to mention that in fact only a few selected Supreme Court decision carries the binding effect of a law.

In consideration of the NCC’s enforcement attitude about Article 21 of the Telecommunications law and the provisions of the above draft prepared by the NCC in and after 2015, the NCC’s obvious position on net neutrality is total reliance on contractual arrangements on relevant restrictions between internet service providers and internet users in the hope that such issues can be dealt with by market mechanisms and self-disciple of operators, and that any dispute will be resolved by a civil court on a case-by-case basis. Therefore, the NCC’s position is obviously different from the current mainstream practice of administrative control in the European Union, the US and most countries in the world and is tilted closer towards the position of the Trump administration to resolve this issue via market mechanisms.

Potential implications of Article 6 of the draft Digital Communications Law: formal announcement that there will be no net neutrality control in Taiwan

In comparison with the strong reactions and mounting criticism among all members of the US society against such proposition of the Trump administration, public opinion and civil society in Taiwan seem unware that the legislation of Article 6 of the draft Digital Communications Law is nothing like any control but is more like a formal announcement that net neutrality control is lifted. Originally Article 21 of the Telecommunications Law can serve as the basis of administrative control over net neutrality. However, if Article 6 of the draft Digital Communications Law is adopted as proposed, the issue of net neutrality may be defined as a civil liability in nature. As a matter of legal system interpretation, there may be a tendency to interpret Article 21 of the Telecommunications in a constrained manner and exclude restrictions on network protocols and traffic from the scope of “discriminatory” acts within the meaning of Article 21 of the Telecommunications Law.

However, since the application priority of the Digital Communications Law is lower than that of the Telecommunications Law, the NCC may still exercise administrative control over violation of net neutrality by telecommunications enterprises in accordance with Article 21 or other provisions of the Telecommunications Law, if necessary. However, the NCC merely stressed during the public hearing on the draft Digital Communications Law in the beginning of 2017 that the application scope of Article 6 of the draft Digital Communications Law is narrower and different from a typical scope of net neutrality handling (not including fast lanes, for example), and that such provision is private contract by nature where relevant parties may impose restrictions through contract terms which are not obviously unfair. Further, the NCC never mentioned the control measures for net neutrality under the Telecommunications Law or other laws or regulations. Therefore, it seems that the NCC’s position is set.

Whether the issue of net neutrality should be dealt with by administrative regulation or market mechanisms is a public issue that merits in-depth discussions. However, the public do not seem to have enough knowledge about the legislative implications of Article 6 of the draft Digital Communications Law. Some even mistakenly believe that this is a law beneficial to net neutrality regulation. Since maintaining net neutrality has far-reaching and significant impact on both the internet environment and digital economy of Taiwan, it is necessary for the NCC to further clarify the legislative impact of this article and the NCC’s position on the control of net neutrality so that further exchanges of opinions may be conducted by communications operators and the public when they are clearly aware of the implications of the above provisions.