Zero Ratings and the Public Interest: Pushing Regulatory Limits for the Common Good

2 Pages Posted: 4 Apr 2016

See all articles by Nicol Turner-Lee

Nicol Turner-Lee

Multicultural Media, Telecom and Internet Council

Date Written: March 31, 2016

Abstract

Nearly two-thirds of Americans use smartphones to access the Internet. Among these users, 10 percent of Americans who own a smartphone do not have any other form of high-speed Internet access at home beyond their basic data plan, while others have no data plan at all. According to recent data from Pew Research Center, vulnerable populations that include low-income and less literate populations are more likely to be smartphone-dependent when compared to others that are less reliant on their mobile devices. Further, these same populations also tend to be unbanked, uninsured, transient, or those living with other family members and friends.

Given these life circumstances and how certain populations are accessing the Internet, it is imperative that regulatory policies encourage consumer access to critical information that include employment, education, health-related resources, and government services. While reforms to make the cost of broadband affordable are significant in supporting vulnerable groups, programs that offer free or low-cost online content to these groups should be equally encouraged.

In 2015, the Federal Communications Commission’s (FCC) Open Internet, or net neutrality rules, prescribed standards around consumers’ accessibility to online content. In particular, these rules, primarily directed to certain network operators or Information Service Providers (ISPs), prohibit the blocking of online content, services, applications, and devices; and discouraged the unreasonable degradation of certain online traffic. The Open Internet rules also ban the throttling and prioritizing of traffic, and institute “common carriage,” or a Title II framework that applies to both wireline and wireless services.

While many scholars concluded that the 2015 Open Internet rules delivered the essential elements requested by the net neutrality advocates, the FCC also permitted under the net neutrality framework zero-rated services that, if viewed as pernicious, could be subjected to the “general conduct standard” that prohibits unreasonable conduct by ISPs, particularly when there are perceived consumer harms or anti-competitive behaviors. By definition, zero rating is the practice of offering online content at no cost, or free, to consumers. The content can direct consumers to certain online content, or a series of web sites, again for free, in a manner that doesn’t count against consumers’ data caps or, in some cases, can be accessed without an existing data plan. In some business arrangements between network operators and content providers, zero-rated services do not have an exchange of funds between the distributor and the content creator, while in other instances, the foregone costs are reimbursed to operators through a practice referred to as “sponsored data.”

Given this definition, this paper will argue that zero rating, online content has a direct public and consumer benefit in buffering the economic vulnerabilities associated with unmanaged online data use that usually results in fees and surcharges due to consumer overages. This paper will also discuss that this practice also provides the incentive to consumers and carriers to access the more socially beneficial aspects of the Internet, simply because they have the data. This paper will dive into the arguments that present these practices as net neutrality violations and share case studies on companies that are deploying zero-rated services. Finally, this paper will assert that any blanket ban of this practice by the FCC runs counter to the agency’s Open Internet bright line rules and has the potential to choke the experimentation of services that could potentially accelerate broadband access.

Keywords: zero ratings, consumers, broadband access

Suggested Citation

Turner-Lee, Nicol, Zero Ratings and the Public Interest: Pushing Regulatory Limits for the Common Good (March 31, 2016). Available at SSRN: https://ssrn.com/abstract=2757525 or http://dx.doi.org/10.2139/ssrn.2757525

Nicol Turner-Lee (Contact Author)

Multicultural Media, Telecom and Internet Council ( email )

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