Virgin Media O2 and the National Market Traders Federation have called on the UK government to reform net neutrality rules, saying market traders lose an estimated £10 million a year in sales because card payments fail when mobile networks become congested at busy events. The operator says the decade-old rules stop it offering products that prioritise business-critical traffic, such as payment services, during periods of exceptionally high network demand.

Net neutrality rules require providers to treat almost all internet traffic equally, rather than favouring specific services by blocking or slowing rivals. Virgin Media O2, known as VMO2, argues the framework now prevents it launching services for which there is clear demand, and has raised the issue as part of the government’s ongoing Mobile Market Review.

Traders “left out of pocket” by failed payments

Jeanie York, chief technology officer at Virgin Media O2, said market traders sit at the heart of local economies but too many are being left out of pocket by failed card payments and missed sales. “At Virgin Media O2, we’re investing £700 million in our mobile network this year to improve capacity. Yet during periods of congestion, it makes no sense that rules created a decade ago hinder us from prioritising this business-critical traffic,” she said. “If the Government is serious about delivering good growth in every postcode, the Government must remove the barriers holding small businesses back.”

Joe Harrison, chief executive of the National Market Traders Federation, backed the call and urged ministers to act swiftly, saying the lack of signal at busy events is hindering members’ businesses. Research carried out by the federation and Virgin Media O2 puts the annual cost of failed payments at £10 million.

What the rules already allow

The picture is more nuanced than a simple ban on prioritisation. Ofcom softened its net neutrality guidance in 2023, clarifying areas such as zero-rated data, allowing providers to offer premium-quality retail packages with lower latency, and supporting “specialised services” so providers can deliver specific content that needs to be optimised, including a limited allowance for network slicing on 5G mobile. Vodafone Business has already launched a 5G+ Local Slicing service offering guaranteed mobile network performance across a defined site, and EE has launched a consumer implementation of network slicing through its Fast Lane feature.

In theory, that means the regulator may already allow much of what VMO2 is asking for. The difficulty is in the detail of how a product is designed. Prioritising traffic because it has particular technical requirements and needs to be delivered reliably is one thing; prioritising it because it belongs to a particular business or payment provider, potentially giving that business an advantage over competitors, is another.

Ofcom points to the government

Ofcom responded on 11 November that any changes to the rules would be a matter for the government’s Department for Culture, Media and Sport, which is considering targeted changes to the net neutrality rules as part of its Mobile Market Review. The regulator also said that prioritising network traffic to payment systems could already fall under “specialised service” within the current regime, depending on how it was designed and implemented.

An Ofcom spokesperson said: “Our role is to ensure compliance with the net neutrality rules and any reforms would be a matter for the Department for Culture, Media and Sport. While mobile networks may already prioritise the delivery of specialised services – which could include card machines if they meet the relevant criteria – targeted changes to the framework are under consideration by Government.”

Ofcom also highlighted that its regulation is “ex post”, meaning it monitors operators’ compliance rather than approving particular products in advance, which is why operators sometimes test the waters with a customer trial or limited launch. For now, the decision rests with ministers: whether to change rules designed to protect consumers and keep the internet open, in order to let operators prioritise payment traffic for small businesses, without opening the door to a two-tier internet in which paying more buys a faster lane. Sources: ISPreview and Telecompaper.

Frequently asked questions

What is net neutrality? Net neutrality rules require internet providers to treat almost all traffic equally, rather than blocking, slowing or favouring particular services, with exceptions for traffic management, parental controls, court-ordered blocks and security measures.

Why does Virgin Media O2 want the rules changed? The operator says the rules stop it prioritising business-critical traffic such as card payments during network congestion, and it cites research showing market traders lose about £10 million a year in sales when payments fail at busy events.

Who decides whether the rules change? Ofcom enforces the current rules, but any reform is a matter for the government’s Department for Culture, Media and Sport, which is considering targeted changes as part of its Mobile Market Review.