Banning zero rating: Reducing consumer choice in the name of preserving consumer choice

[Commentary] Promotions are ubiquitous, and most consumers appreciate them. Imagine, however, that a shopping center – Walmart for instance – was fined $200,000 for allowing consumers to taste its store-brand olives. Seems unreasonable, right? It is hard to understand why Walmart should be banned from letting us test their olives. However, this is exactly what has happened in the Netherlands with Vodafone, in the world of the Internet.

Vodafone offered customers in that country the chance to watch HBO without deducting the data traffic consumed for this service from their monthly data allowance, a practice commonly referred to as zero rating. The ACM, which regulates telecommunications in that country, fined Vodafone on the grounds that this promotion reduces consumer choice, as incredible as this reasoning may seem. Unfortunately, the case of the Netherlands is not the exception anymore, as this trend has already spread to other countries.

[Fernando Herrera-González is Regulatory Economic Manager at Telefónica]