No Free Internet Lunch

Are Zero Rated Internet Services a Bane or Boom for Caribbean Consumers ?

By Bevil Wooding

Internet development can be considered as a system of levers controlling infrastructure, access, affordability and content development that need to work in tandem in order to achieve the objective of sustainable growth. However, manipulating these levers to get users online and to get economic and social benefit from that connectivity can be a challenge, particularly in developing regions.

Offering select Internet services for free is emerging as one popular option for service providers. However, with any free service someone has to pay. The question to be answered in the case of so-called “zero-rated” services is what is the real cost of free?

Connecting the Unconnected

According to the International Telecommunication Union (ITU), there are more than seven billion mobile subscriptions worldwide, compared to only 738 million in 2000. However, ITU estimates that four billion people in the developing world still remain unconnected to the Internet, despite the advances being made in expanding Internet access globally.

Zero-rating Internet services has emerged as one strategy for providing access to internet services to underserved or unconnected groups. Zero-rating is the practice of offering free access to certain popular online services for customers of particular mobile or fixed networks.

Over the past few years, major service providers in several countries have entered into arrangements with network operators to deliver low-data-usage, “zero-rated” versions of their services. In some cases, this means that using those services, such as Facebook, Instagram or WhatsApp, will not count against a subscriber’s data charges, while in other cases, users can access the service even if they do not have a data plan.

There were at least 92 zero-rated mobile services in developed countries in 2014, according to Finland-based Digital Fuel Monitor. The rise of zero-rated offerings comes as policymakers are still trying to figure out if zero-rating is good or bad for consumers, competition and the Internet in general.

Who Pays for Free?

There are those who embrace zero-rating as an important intervention in improving Internet access and uptake, particularly to underserved, economically challenged groups. One of the main arguments in favor of zero-rating is that it brings down the cost of access to information in less developed countries. A user of Wikipedia Zero, for example, has unlimited, no-cost access to everything in the popular online encyclopedia, Wikipedia.

Providing free access to popular content and services is also preferable from an access-to-information perspective versus no access at all. Such free access, it is argued, may drive demand for general purpose mobile Internet access that can help encourage and fund investment in infrastructure. However, the hypothesis that zero-rating will lead to widespread access to the Internet is unproven.

Others see zero-rating as a discriminatory tactic by Internet Service Providers (ISPs) and mobile operators, requiring discrimination among online content and service providers. The argument against zero-rating is that select services may create skewed incentives for subscribers to access the “free” services of identified partners instead of competing services. Such preferential treatment challenges fundamental principles of net neutrality, and may present particular development concerns by giving dominant web services an advantage over nascent local competition.

Regulators in several countries including Netherlands, Slovenia and Chile have already moved to prohibit zero-rating. Other countries have adopted a wait-and-see position.

Real Caribbean Concerns

Zero-rating was the subject of much debate at the United Nations’ 10^th Internet Governance Forum (IGF). The IGF is an open forum for dialogue on public policy issues related to key elements of Internet governance.

The divergent views on the subject were the highlight of a Caribbean-led workshop at the IGF titled “Free Internet—Bane or Boom.” The Caribbean contingent, led by Tracy Hackshaw, Patrick Hosein, Rhea Yaw Ching and Carlton Samuel, was joined by Vinton Cerf, whom many regard as the father of the Internet, for the discussion. Several important viewpoints emerged concerning zero-rating that deserve wider debate in the Caribbean, including:

• Though the promise of “free Internet” services is an attractive proposition to consumers, the practice is not without potentially dangerous consequences to the overall development of the Internet;
• By unfairly discriminating mobile operators’ or their partners’ content, zero-rating places locally produced and locally relevant online content at a disadvantage;
• By prioritizing access to selected content, zero-rated programs do not offer full access to the open Internet and have therefore been viewed as an infringement on network neutrality;
• ISPs’ tactics, if unchecked, could ultimately harm market development and consumer interests;
• Zero-rated mobile traffic is anti-competitive, price discrimination designed to favor telcos’ or their partners’ apps while placing competing apps at a disadvantage;
• A zero-rated app is an offer consumers cannot refuse. This creates a disincentive for creating new local app and services.

From the discussion one thing is clear—there is a need for governments, regulatory authorities and consumers to carefully monitor emerging zero-rated practices in the Caribbean. The Internet is simply too important to national and regional development to leave to chance. Ultimately, it is the responsibility of regulators to ensure that market forces operate in interest of consumers and in the interest of wider development. However, their task is best served with the input of experts and end-users alike.

For the Caribbean, such input will need new investment in collaboration between the private sector, government, regulator, academia and civil society. Only through a structured, well-coordinated collaboration approach can we manipulate the levers of Internet governance to achieved the desired economic and social benefits for all.