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‘Zero Rating’: The Pros and Cons of Free Online Access

Rob Pegoraro
Tech Columnist
Yahoo Tech
August 26, 2014

‘Zero Rating’: The Pros and Cons of Free Online Access

Rob Pegoraro
Tech Columnist
Yahoo Tech
August 26, 2014
Facebook logo over a map of Africa
Facebook logo over a map of Africa

(Rob Pegoraro/Yahoo Tech)

“Free Internet access.” Sounds attractive, doesn’t it? But those three words can become a battleground once you ask the people behind no-charge bandwidth what they want in return.

The idea of giving people free access to specific parts of the Internet goes by the name “zero rating,” and it’s fueling a new chapter of the endless net-neutrality debate.

A zero-rated site is a site or service that a wireless carrier has exempted from its fee structure or data cap. A site can get zero rated when the company behind it pays for the privilege, or because the carrier saw some other reason to deliver it to you on the house.

Neither corporate motivation may match your own interests.

Facebook for free
Zero rating has become a popular marketing tactic in countries with thin Internet use. Facebook in particular has made “Facebook Zero” not just a sales pitch in developing markets but also part of an Internet.org initiative to expand access “to the two thirds of the world’s population that doesn’t have it.”

In July, Facebook and Internet.org announced an app for Airtel wireless users in Zambia that would include free access to not just Facebook, but also Wikipedia and Google search; Airtel’s own site; and a variety of country-specific work, health, and local-search sites.

But everything other than those 13 whitelisted destinations would come at Airtel’s usual rates.

Loss leaders, for a cause
In this case, there is an intersection between charitable and capitalist impulses, said Jackdaw Research analyst Jan Dawson.

“Solving the Internet access problem in a broad-based way is hugely expensive and time consuming and doesn’t merely benefit the sponsoring companies,” he wrote. “Zero rating is a shortcut to some of the same objectives that’s much cheaper, quicker and more focused.”

And it may, indeed, lead people to decide that this Internet thing is worth the price. In an email forwarded by a publicist, Ovum analyst Neha Dharia said zero-rated services often provide only “a very basic form” of a site, leading most users to pay for better access in the long run.

Other sites have taken notice. Wikipedia’s parent organization, the Wikimedia Foundation, has been lobbying carriers to grant free access to the online encyclopedia. Enough have signed onto its “Wikipedia Zero” initiative since 2012 to cover some 350 million people across 29 countries, Wikimedia deputy director Erik Möller noted in an Aug. 1 blog post.

Smartphones showing free services on Internet.org
Smartphones showing free services on Internet.org

(Facebook)

Staying neutral
Not everyone thinks that providing free access to specific sites is a good idea. The tech-policy group Access blasted the Wikipedia Zero initiative as a “myopic” deal that would treat inadequate Internet access as effectively as “putting a Band-Aid on a bullet wound,” wrote European policy manager Raegan MacDonald.

Yet some of the more steadfast defenders of net-neutrality regulation in the U.S. aren’t ready to condemn the zero-rating concept.

“I haven’t made up my mind, because I think you need to really understand a particular market before deciding,” Public Knowledge senior staff attorney John Bergmayer emailed. “If wireless service is truly unaffordable to a large segment and those countries don’t have the capability to have something like Lifeline [an FCC program for subsidized phone service], maybe it would at least be less objectionable.”

Free Press policy director Matt Wood allowed that “whether a policy works to encourage mobile adoption in the developing world or not” was a separate issue from trying the same thing in the United States.

Consider the alternative: In May, Chile banned zero-rating deals — after wireless carriers had been signing up customers under them. (Facebook PR didn’t say how many people had gone online and then abandoned the Internet as a result.)

It’s already happening here
Wireless broadband is widely available in the U.S., but so is the desire to pay less for it. And wireless carriers have been catering to that desire with zero-rating deals for longer than you might have realized.

Back in December, T-Mobile’s prepaid brand, GoSmart Mobile, began offering free Facebook access even to customers without any data on their plans. In January, AT&T announced a “Sponsored Data” plan under which companies could pay to exempt their sites from its data cap. And in June, T-Mobile made several popular music-streaming services free for its own subscribers.

Bergmayer, Wood, and many others don’t like that trend one bit. Venture capitalist Fred Wilson warned in July that “a startup will have to negotiate a zero rating plan before launching because mobile app customers will be trained to only use apps that are zero rated.”

I’m not sure we’re there yet, because of a difference between wired and wireless broadband unmentioned in Wilson’s post: competition. With the threat of a Sprint/T-Mobile merger now gone, we have four carriers and far more resellers battling for customers — often while cutting prices or raising data caps.

After so many years of saying that competition in wired broadband would make net-neutrality rules unimportant, I’m not ready to rule out experiments with zero rating in wireless. But I’m also not interested in any Facebook-first version of the wireless Internet: The biggest data drain on my phone remains my Web browser, and that’s as it should be.

Read more: A Recent History of Free ‘Zero Rated’ Online Access in the U.S. 

Email Rob at rob@robpegoraro.com; follow him on Twitter at @robpegoraro.