The Progressive
Policy Institute released a March 2015 policy memo by Diana Carew entitled “Zero-Rating:
Kick–Starting Internet Ecosystems in Developing Countries.” “Zero-rating”
is when a consumer can access specific websites or applications for “free” (or
without the data accessed counting towards the consumer’s data cap) because of
an agreement between a content provider and mobile broadband provider. In her
policy memo, Ms. Carew argues that zero-rating plans could play a huge role
towards increasing connectivity in developing countries.
Ninety percent
of the world’s unconnected individuals live in developing countries. Thus, there
is little incentive for these individuals to spend the small amount of money
that they have on an Internet connection if very few people around them are
connected. Mobile data plans in the Philippines, for example, cost almost 10
percent of the per capita monthly national income, according to the ITU.
Less than 30
percent of Africa’s 1.1 billion people were connected to the Internet in 2014.
Ms. Carew says that zero-rating plans could be the key towards transitioning a
community from low-connectivity to high-connectivity:
The power of zero-rating to nourish an Internet
ecosystem in poor and developing countries comes from its potential to increase
connectivity by both people and businesses quickly and at low-cost. First, free
access to popular sites like Google, Twitter, Wikipedia, and Facebook
encourages more people to sign up for data plans, and enables greater data
freedom to explore local content. Second, the increase in demand for local
content spurs local businesses and entrepreneurs to create new online products
and services—for example, information on Ebola outbreaks, typhoon warnings, or
even wait times at local stores and government offices. Moreover, the higher
share of population online justifies efforts of government agencies to go
digital, which in turn encourages more business and individuals to join the
internet ecosystem. Taken together, zero-rating can effectively jump start a
virtuous feedback loop that moves the local economy into a high-connectivity
equilibrium.
The economics is
simple. If ISPs subsidize data for consumers in developing countries in order
to increase the number of subscribers, this will increase the demand for more
content. In other words, if an ISP provides “free” access to Google, Facebook,
or Wikipedia, it may incentivize individuals to connect. Then, as individuals
increasingly want to access more applications, they may be willing to switch to
broader data plans which offer access to the entire Internet. This is not a new
idea either. ISPs have often subsidized broadband plans in order to attract
low-income consumers.
Granted, connecting
the developing world will not be an overnight process. However, 45 percent of the
world’s mobile providers already offer some form of zero-rating. If these
providers (and additional providers) can find a way to market these plans to
individuals in developing countries and/or develop more attractive plans, we
may be on our way.
Although
zero-rating plans have been criticized by Title II advocates, Ms. Carew argues
that it is bad policy to simply prohibit them. In the United States, some
consumers may not find zero-rating plans attractive, but many low-income consumers
who only use mobile data to access a handful of applications could benefit from
existing and/or emerging zero-rating plans.
Read
more about zero-rating plans with relation to Net Neutrality in Randolph May’s Perspectives from FSF Scholars entitled
“Net Neutrality v. Consumers.” Also, check out our blogs. (See here, here and here.)
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