Zero rating: Who bears the cost of bans?

[Commentary] Critics of zero rating claim the practice violates network neutrality and harms consumers and competition. Is it true that giving consumers free access to important sources of information and entertainment is a bad idea? In a new paper, Silvia Elaluf Calderwood of the London School of Economics and I explore the real-world effects of zero rating on consumers and markets.

As our case studies reveal, in Chile and Slovenia zero rating has been banned not because of consumer complaints, but advocacy from net neutrality proponents. In Chile, Pedro Huichalaf left his job at the net neutrality advocacy organization to head the nation’s telecommunications regulator. A month later, zero rating was pronounced illegal. Huichalaf declared that though zero rating is attractive to consumers, ultimately, the regulator should decide whether it should be allowed. The war against zero rating has an end game: to force operators to move toward universal flat rate pricing. To be sure, flat rate, unlimited plans have certain benefits. However, they also force low volume users, whether by choice or budget constraint, to pay more for Internet access, while heavy users pay less. In a world where being connected to the Internet comes with great benefit, we should not punish the poor by making them pay more for Internet access.

[Roslyn Layton studies Internet economics at the Center for Communication, Media, and Information Technologies (CMI) at Aalborg University in Copenhagen, Denmark]