Dutch market regulator bans T-Mobile's 'free' streaming music service

The logo of T-Mobile Austria is seen outside of one of its shops in Vienna, Austria, February 25, 2016. REUTERS/Leonhard Foeger/File Photo

AMSTERDAM (Reuters) - The Dutch Consumer and Markets regulator (AFM) on Friday ordered T-Mobile to stop offering a streaming music product which did not count toward customers’ data usage.

The AFM said the practice, often called “zero rating” is a violation of Dutch net neutrality rules, because it puts rival services such as Spotify at a competitive disadvantage.

Deutsche Telekom subsidiary T-Mobile Netherlands, which had introduced the product on Oct. 10, must stop offering it or face penalty of 50,000 euros ($52,000) per day, the AFM said.

Zero rating is shaping up as one of the major battlegrounds for European telecommunications companies as they seek ways to attract customers. The Dutch net neutrality law unambiguously forbids the practice, but European Union rules are less clear.

T-Mobile could not immediately be reached for a reaction. The AFM said it expects the company may launch a legal challenge to the decision.

($1 = 0.9578 euros)

Reporting by Toby Sterling; Editing by Keith Weir