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Zero rating: a boon to consumers, or a net neutrality nightmare?

Nick McClellan and Darrell M. West

On March 17, T-Mobile announced that YouTube has joined its  Binge On program, which allows video content on the mobile carrier’s network to be “zero rated”, or not counted against data caps.

Although the concept of zero rating appeals to consumers who routinely max out their data plans watching Internet video, the program has drawn some criticism from activists that see the well-meaning program potentially undermining the principles of net neutrality, which aspires to enable equal access to all content and services transmitted on the Internet.

To review alternative perspectives on this topic, we have compiled the arguments on various sides of this issue:

Zero rating: An asset for the developing world and a wireless innovation

Aside from first-world consumers maxing out their data plans watching Netflix, zero rating is a useful tool in the developing world.

According to a panel discussion at Internet Governance Forum in 2014 (IGF2014), zero rating has the potential to “bring down the cost of access to information in less developed countries.”

Both Wikipedia and Facebook have launched zero-rated versions of their sites for developing countries to give individuals access to their services without paying for the data. They argue that zero rating drastically lowers the cost of Internet, which can account for 10 percent of a monthly income in developing countries.

Additionally, Verizon and AT&T have launched sponsored data plans that essentially promise that “data used by the app or service is essentially free to customers.” Comcast argues that its Stream TV zero-rated service is also exempt from the Federal Communication Commission’s (FCC) net neutrality rules since it “delivers content over Comcast’s cable, rather than Internet.”

For many companies, the roll out of zero rating has gained the attention of regulators like the FCC. At an Open Technology Institute event this year, T-Mobile’s Senior Vice President of Government Affairs Kathleen Ham said the FCC should “tread lightly” as companies explore the potential zero rating has for innovation and consumers.

Zero rating: A Trojan horse intended to weaken net neutrality

Despite the rush for some companies to embrace zero rating, some activists have questioned whether the benefits outweigh the potential erosion of net neutrality.

John Legere, T-Mobile’s “vocal, animated, and sometimes foul-mouthed CEO,” got himself into trouble last year when answering concerns from the Electronic Frontier Foundation (EFF), a group that has been skeptical of zero rating.

After investigating Binge On, EFF found that “T-Mobile is throttling video streams, plain and simple.” In attempting to deliver streaming video content across its network, T-Mobile’s Binge On service actually throttles video streams that haven’t opted in to the service. EFF and other say this infraction is a clear violation of the FCC’s open Internet rules enacted last year.

Barbara van Schewick, a professor and researcher from Stanford, published a study directly challenging T-Mobile’s zero-rated program, causing it of “harming competition, innovation, user choice, and free speech on the Internet.”

Authors

Even the positive effects of zero rating in the developing world are challenged. Despite offering lower-cost Internet, critics say these programs simply offer “poor Internet for poor people”—an inherently unequal system that should not be supported. As Mahesh Murthy writes for Quartz India: “The only way the second world and the third world can grow is to behave like they’re first world nations, and demand to be treated on par with every other netizen in the world.”

While the U.S. and many developing counties have adopted a wait and see approach to zero rating, some countries have found the activity to be discriminatory. As a result,  Chile, Norway, Netherlands, Finland, Iceland, Estonia, Latvia, Lithuania, Malta, and Japan have all restricted zero rating within their borders.

As discussed at IGF2014, “It may be practically and politically difficult to introduce neutrality requirements after carriers have normalized the process of providing preferential access to certain online content and service providers.”

Despite these reactions, zero rating is marching on.

Reflecting on T-Mobile’s addition of YouTube to it’s zero-rated program, Tony Bradley writes that program is “a poignant example of how ineffective net neutrality is in practice, and how easy it is for providers to circumvent it.”

As many predicted last year, the FCC’s open Internet rule will not be the final word on net neutrality as policymakers will have to clarify what they think about zero rating programs.

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