All zero rating is not created equal.
There’s a good chance your wireless data plan has a data cap. If you like to stream videos, listen to podcasts, or view lots of images, it pays to be mindful of this limit — unless you can afford the extra fees.
Zero rating is when a provider exempts some Internet traffic from data caps, so that the exempted data doesn’t count toward a customer’s monthly budget. The idea has some upsides, especially for subscribers with limited financial means (many of whom rely heavily on mobile devices to access the Internet). However, zero rating chafes against the vision of net neutrality: that all Internet traffic should be treated equally.
Should wireless carriers be able to alter users’ Internet access in exchange for making some data “free”? Should websites and apps be able to pay wireless carriers to spare their users from data charges?
Zero rating schemes should be judged on their merits: especially the risks and benefits they create for the neediest Internet users. After reviewing leading U.S. wireless companies’ policies, it’s clear that all zero rating schemes are not created equal. T-Mobile is offering a promising (but still imperfect) zero rating plan, while Verizon’s approach could distort Internet access in ways that net neutrality advocates have spent years trying to prevent.
U.S. wireless companies have rushed to implement zero rating.
Many early zero rating efforts for mobile data focused on emerging markets like India, Brazil, and Mexico. Big tech players like Google, Wikipedia, and Facebook struck deals with carriers in these countries to deliver their content free of charge.
But recently, zero rating has made a big debut in the United States. Major wireless carriers have begun experimenting with offering different categories of of data to consumers for “free.” For example:
- In 2014, AT&T announced Sponsored Data, which lets websites and apps pay so that when an AT&T subscriber uses that app or site, the data won’t count toward the subscriber’s monthly budget.
- In 2015, T-Mobile announced Binge On, which delivers lower-quality video from participating services (including HBO and Netflix) while exempting that video from subscribers’ data caps. For non-participating services, T-Mobile simply limits video bandwidth (while still counting the data against subscribers’ budgets), a practice it describes as helping its subscribers watch “more video” with their data plans. Subscribers can choose to turn Binge On off.
- Earlier this week, Verizon announced FreeBee Data 360, which, like AT&T’s policy, allows websites and apps to pay to exempt their data from subscribers’ data caps. In addition, zero-rated data sources will be highlighted to subscribers: the “bee” icon will appear next to sponsored content “to let Verizon subscribers know that, when they click on that content they’ll be able to enjoy it with no data charges.”
The FCC will judge zero rating on case-by-case basis.
All of these policies deviate from a strict understanding of net neutrality, under which all Internet traffic should be treated equally. However, when the Federal Communications Commission (FCC) adopted its order on net neutrality, it chose to consider the legality of zero rating on a case-by-case basis. The test is complicated, and its outcome hard to predict: the FCC will decide whether or not zero rating is permissible by deciding whether or not the scheme unreasonably interferes with or disadvantages:
(i) end users’ ability to select, access, and use broadband Internet access service or the lawful Internet content, applications, services, or devices of their choice, or (ii) edge providers’ [online content companies’] ability to make lawful content, applications, services, or devices available to end users.
In other words: does the zero rating policy hurt consumers and/or services offering content on the Internet? That’s a good question, but a hard one to answer.
The FCC has begun meeting with wireless carriers about zero rating, but has not yet taken action. “Direct dialogue with companies is an important way in which the Commission can watch and learn,” said FCC spokesperson Kim Hart.
T-Mobile and Verizon are taking very different approaches.
The FCC is likely to discover that different approaches create different benefits and risks for those most affected by data caps.
T-Mobile’s Binge On scheme has some promising features: It is optional for subscribers. It is theoretically open to all video providers without charge, so many different websites and apps can participate. The downgraded video still looks pretty good on a small screen. And the result is that T-Mobile customers can watch more video — potentially a lot more video — of many different kinds without hitting their data caps.
Unfortunately, T-Mobile’s implementation isn’t perfect.
The Electronic Frontier Foundation (EFF) has emphasized the fact that the company downgrades a wide swath of video streams, even those that are not zero rated. As a result, T-Mobile customers may be forced to accept subpar video quality without being compensated with free data. In some cases, they may struggle to watch high-quality video at all. Today, Binge On is turned on by default, so subscribers might not be aware of these tradeoffs.
Still, Binge On is close to being a great option. Because it’s not a pay-to-play system, it’s possible that no content provider — big or small — would be edged out because they couldn’t afford to participate in the program. And wireless subscribers would gain the clear benefit of increased access to a diverse array of video content.
Verizon’s approach is more troubling. Verizon is beginning to allow content companies to pay to sponsor their content and also mark that content as “free” to its subscribers. As a result, websites and apps that can afford to pay Verizon might appear more attractive to users, while those that can’t pay — especially those that don’t rely on advertising — could appear less attractive. Customers with limited data plans could feel undue pressure to stick to “free areas,” dampening their ability to access all that the Internet has to offer.
“The value of free access to information … must be weighed against the risk that users with access to zero-rated content and applications will not choose — or be able — to venture beyond it,” argues the Center for Democracy and Technology. This summarizes the crux of the issue well.
In the years ahead, zero rating should simply fade away. The whole idea is based on data being a scarce resource. This premise is already contested when it comes to wireline networks, and should be regularly called into question on wireless networks, especially as communications technologies improve.
In the interim, the FCC should be tough but fair. It’s easy to imagine that schemes like T-Mobile’s Binge On could provide an unrivaled benefit to most customers, especially those who can’t afford large data allowances. However, the potential distortions of Verizon’s approach might be exactly those that open Internet advocates have spent years trying to prevent.
