This week, Engine joined a coalition of 59 startups and organizations in submitting a letter to the Federal Communications Commission asking for an open process as the agency considers whether various zero-rating programs violate the Commission’s net neutrality rules issued last year. Zero-rating—sometimes called data discounting or sponsored data—is an arrangement whereby an Internet Service Provider exempts data from a particular source from its customer’s data caps, oftentimes in exchange for payment. Though the FCC’s Open Internet Order was hailed by tech companies, public interest groups, and internet users alike for establishing strong net neutrality protections, the Commission’s decision to evaluate zero-rating programs on a case-by-case basis rather than through a bright-line rule concerned many net neutrality proponents who feared that the FCC’s inaction would embolden carriers to use such programs to curb competition. Not surprisingly, shortly after the Order was released, carriers launched a variety of zero-rating programs that the FCC will now have to evaluate for consistency with the goals of the Open Internet Order.
Because zero-rating programs implicate many core net neutrality concerns (e.g. ISPs leveraging their gatekeeper power to benefit some applications over others), the decisions the FCC makes regarding the validity of these programs may have a significant impact on the future development of the internet ecosystem. If ISPs are permitted to exempt data charges attributed to their own vertically-integrated offerings (like Verizon’s “Go90” program, which allows Verizon subscribers to watch content from Verizon without incurring data charges), startups will find it difficult to compete. Meanwhile, other zero-rating programs like T-Mobile’s Music Freedom, which theoretically allows any music service to obtain a data exemption without any associated payment, do not appear likely to distort competition in quite the same way.
Whatever you believe about the likelihood that these programs will benefit or hurt consumers and startups, the potential impact they will have on the future of the internet militates a robust and public process for determining whether they violate the Open Internet Order. To date, the decisionmaking process at the FCC regarding zero-rating programs has mostly happened in closed-door meetings between FCC officials and ISPs. Given the massive public participation in the FCC’s broader net neutrality rulemaking, it stands to reason that there is similar public interest in the FCC’s consideration of zero-rating programs. Creating a public process to make these important decisions will help ensure the outcome is consistent with the goals and interests of the broader internet community.
Meanwhile, the debate over zero-rating has been playing out even more intensely overseas. This past week, India’s telecom regulator, the Telecom Regulatory Authority of India (TRAI) issued a further public consultation regarding its previous ruling on “differential pricing” (aka zero-rating) to help refine just what sorts of data discount schemes—if any—will be permitted under India’s net neutrality rules. Unlike the FCC’s evaluation of zero-rating programs, the TRAI’s zero-rating policymaking process has been driven by a public process to help refine the definition of “differential pricing.” This thorough examination of zero-rating programs is particularly important in the developing world, where there is less internet penetration, and cost remains a major barrier for internet adoption. The perceived tension between zero-rating’s ability to allow new users to join the internet community and its potential to limit the breadth of the internet by distorting competition at the edge has made the debate over zero-rating in the developing world a hot-button topic in technology policy.
This week, Engine convened a panel discussion with representatives from Wikpedia Zero, Mavin (a data discounts platform), Mozilla, and the Open Technology Institute to discuss whether zero-rating programs are compatible with promoting an open internet and what types of programs might best help achieve the twin goals of encouraging internet adoption and promoting startup competition. We believe that more such debates—in government and in broader society—are necessary to ensure that these important decisions about zero-rating get made in a thoughtful, transparent way. Ultimately, the question of whether certain types of zero-rating could promote the healthy growth of the internet or whether zero-rating represents a dangerous threat to the openness of the internet is one best resolved through thorough public debate, not closed-door meetings.
