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The FCC Should Have Zero Tolerance for Zero Rating

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It is hard to understand how zero rating plans do not violate net neutrality laws that are on the books.

Under these plans, wireless carriers can carry certain content without it counting against a subscriber’s data charges. Thus, content provider X – in which the provider may have an ownership stake or other interest – reaches customers for free. Data charges apply to subscribers who want content from provider Y.

Of course, it will take teams of highly trained, and just as highly paid, attorneys to determine if these plans break the letter of the net neutrality laws. It doesn’t take a degree from Harvard Law to understand that they undermine the spirit of the rules, however. The net neutrality laws are meant to create an even playing field. Allowing one provider to have a marketplace advantage over another is precisely what the laws were created to avoid.

Computerworld’s Grant Gross reports that a coalition of more than 50 groups has sent a letter today to the Federal Communications Commission (FCC) decrying the approach. The letter says that the approach is unfair. In fact, it seems insidious:

In some cases, ISPs are favoring their own Web content in zero-rating plans, and in other cases, they are charging application providers a fee to be zero-rated, the letter said. While the FCC's net neutrality rules say ISPs cannot charge websites and apps for ‘access to a fast lane,’ some mobile ISPs have created a new toll by charging them to be exempted from data caps, the letter said.

The letter to the FCC provides detail on what the coalition claims each carrier is doing. It says that Comcast’s plan favors its own content – the very thing that net neutrality was intended to fight. AT&T and Verizon charge providers to be zero-rated. T-Mobile ‘zero-­rates select video providers but only those that meet its substantial and sometimes burdensome technical requirements’ and blocks entire classes of content. ‘All of these plans violate net neutrality in specific ways,’ the letter concludes.

Net Neutrality

Economy Watch used game theory to look into whether zero rating actually is unfair. The site found that consumers and smaller content providers “both stand to lose.” Those controlling the content, however, are winners:

Our research’s overarching finding is that the ISP always stands to gain when the content providers are subsidizing data usage fees – that is, it will always make more money as a result. The ISP, which knows the game’s results before it even starts, can therefore decide on a pricing strategy that forces both of them to pay.

The FCC needs to address this issue. Zero-rating appears to be a dodge and a loophole of mammoth proportions that enable carriers to work around hard fought net neutrality laws.

Carl Weinschenk covers telecom for IT Business Edge. He writes about wireless technology, disaster recovery/business continuity, cellular services, the Internet of Things, machine-to-machine communications and other emerging technologies and platforms. He also covers net neutrality and related regulatory issues. Weinschenk has written about the phone companies, cable operators and related companies for decades and is senior editor of Broadband Technology Report. He can be reached at cweinsch@optonline.net and via twitter at @DailyMusicBrk.

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