Blocking the blockers: EU prohibits network-wide ad-blocking

12 September 2016. Published by Oliver Bray, Senior Partner

Mobile phone operators' plans to introduce network-wide ad-blocking technology are in jeopardy following new guidance from EU telecoms regulators, a move which highlights the divide between content providers and telecoms companies in their attitude towards ad-free content.

Ad-blocking technology has seen a steady rise since it first appeared several years ago, particularly on smartphones. A recent report by PageFair suggests that over 419 million people are using ad-blocking apps on their smartphones, representing 22% of the world's 1.9 billion smartphone users. Recently, this technology has evolved beyond standalone ad-blocking apps, and mobile phone operators have shown increasing interest in introducing network-wide ad-blocking technology.

However, these plans have been dealt a blow following publication of net neutrality guidance from an EU telecoms agency in recent weeks. The Body of European Regulators for Electronic Communications (Berec) published guidelines which state that telecoms companies "should not block, slow down, alter, restrict, interfere with, degrade or discriminate advertising when providing an IAS (internet access service)". Net neutrality is the principle that all data should be treated equally, and according to Berec this means that ISPs should enable access to all content (ads or otherwise), regardless of its source.

This does not prevent consumers from installing ad-blocking apps, but the Berec guidelines do make it clear that network-level blocking should be prohibited. It will be up to Ofcom to apply the guidelines within the UK.

Back in January, Three announced its intention to become the first European mobile operator to block advertisements across its network. Three has been trialling the technology in the UK and Italy, and has since announced plans to roll out the scheme internationally.  Whether or not Three presses ahead with these plans following the Berec guidelines will be interesting to see; they had previously said that they were confident their plans would not breach EU net neutrality regulations, as consumers would be required to opt-in to the ad-blocking service.  It is also yet to be seen how (if at all) other major telecoms companies will respond to the guidelines.

While the Berec guidance has been met with criticism from telecoms companies, publishers and media companies will see this as a hugely positive step. Many such companies rely almost exclusively on advertising revenue, and argue that ad-blocking technology undermines their entire business models, resulting in consumers having to pay for content that they currently get for free. In March, visitors to the New York Times website who were running ad-blocking software were met with the message "The best things in life aren't free", and were asked to either pay for a subscription or disable their ad-blocker.

Ad-blocking technology is seen by many companies as a blunt tool which offers an "all or nothing" scenario. Certain companies, most notably Facebook, are taking a stand against ad-blocking by introducing technology of its own which makes it more difficult for users to avoid ads. Facebook is also encouraging users to provide feedback on ads so that they can provide a more tailored (and in theory less irritating) selection of ads for each individual user. In doing so, Facebook are hoping to find some middle ground where consumers are not bombarded with unwanted ads, while maintaining the ability to provide free content and generate revenue from advertising.

In any event, the Berec guidelines will be an unwelcome development for mobile operators who want to be able to block ads on a network level.  However these operators respond, this is a clear sign that the ad blocking debate is gathering speed, which will throw yet more focus onto the already contentious topic of native advertising.  How this all plays out will have a massive impact on content generation, and in turn will really begin to test out consumer appetite for free vs ad-free content.

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