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Is toll-free data illegal, unethical or none of the previous?

June 21, 2017

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Whether you know it as toll-free data or as zero-rating system, the concept that has raised quite a few discussions lately in the telecom world translates into a specially tailored carrier service that facilitates the users’ access to certain internet services without any costs on the bill.

Such services are directly billed to the companies that sponsor these data plans (Verizon’s FreeBee or AT&T sponsored data plans), or are simply accessible without any costs for the subscribers since their quality is lower or their content is pre-selected by the carriers (T-Mobile’s Binge On or Facebook’s Free Basics).

Let’s meet the entities affected by Zero-Rating

The main two groups that have voiced their opinions on this matter are the advocates of net neutrality and the advocates of universally available internet access.

While the advocates of net neutrality argue that zero-rating is a real threat, offering privileged access for certain companies (“big content providers”) to their targeted customers, the opposite side underlines that the developing world’s chance of accessing internet services depends on this type of sponsored access (the same argument also goes for impoverished communities belonging to developed states).

The arbiter in this dispute is the Federal Communications Commission (FCC), whose intervention is not and will not be easy at all. Accused by the zero-rating partisans that it ultimately inhibits innovation while being overzealous in defending net neutrality, the FCC did not explicitly ban these schemes/data caps so far via its 2015 Open Internet Rules.

Nevertheless civil rights organizations, the startup community, and public interest groups claim that these programs affect and distort the specific competitive markets and raise the costs of innovation in the field – turning to the FCC with requests to firmly ban these schemes. This type of choice over data caps and traffic categories would empower carriers over consumers in an unhealthy manner. Unselected services tend to become scarcer and more expensive when pre-selected options are free and “biased” – say the adversaries of zero-rating. In fact, certain countries have explicitly banned such practices; among them: Norway, Netherlands, Chile or Japan.

Therefore we may count as directly concerned parts the carrier companies, the net neutrality supporters, the FCC, the internet users (be they wealthy or impoverished) and the Internet itself, the way we know it.

The user take: how does toll-free data look like?

Let’s consider that a carrier’s customer is also the beneficiary of such a specially tailored program. Whenever such a user accesses one of the sponsored (or simply freely provided) pieces of content, the information he or she gets would be free of cost.

If a certain webpage offers for example a sponsored news feed, the user would get a daily selection via that page, credits to whomever supported the costs, instead of billing that data to the user himself/herself. When needing to get a second opinion or to counter-verify a piece of news, the user would have to leave this special regimen “data bay” and browse on the Internet at whatever the regular cost is. The users that cannot afford this (for example the impoverished, disadvantaged users) would have to take the information as it is presented in the toll-free selection.

On the other side, the same users might not have any kind of access to the online information if it wasn’t for the zero-rating option. Having the sponsored data toll-free data plans subsidized by partners of the carrier companies allows the access to some information instead of none. Or does it? Here’s a summary of related headlines coming from FierceWireless.

The carriers employ an “aggressive” campaign in favor of zero-rating, while Electronic Frontier Foundation calls for an explicit ban from the FCC. Is this about the net neutrality or is it about new market dynamics? Is this “zero-rating” a strategy that risks hurting the audiences, or is it a threat only for the most traditionalist providers, for whom data caps are crucial? The advocates of toll-free data throw in dramatic terms such as “consumer welfare”, while their opponents clearly state that such practices are illegal and should be marked as such.

Maybe the answer lays with that consumer market segment that will migrate towards such programs, leaving their previous provider schemes just because they are attracted by the idea of saving some money. People who afford paying for a completely net neutrality compliant streaming service, but who would trade this neutrality guarantee for a better offer that comes pre-packaged with preferential content.

Which situation would better encourage a fair competition? By gaining direct access to zero-rating customers, the sponsor companies have an effective marketing funnel. This road would probably be free of ad blockers (and other similar obstacles), and yes, endowed with the huge advantage of letting them reach out to their potential clients way before their non-participant competitors would. More marketers will join this emerging opportunity. The result: a major change, if not a disruption (yet another one) in online marketing.

The commercial take: how does toll-free data look like?

The sponsor companies would support the data that gets to be free for Internet users. This type of investment benefits large companies and puts the tech giants in the leader position, while the smaller or emerging companies would be left out.

Instead of competing in customer-targeted services and data plans, the carriers/providers that market this new type of plan would compete in offering the most attractive scheme to the desired sponsors – maybe in a similar manner televisions moved from focusing on program quality to focusing on attracting the best publicity contracts. Nevertheless, some of the best TV programs are quality pieces because of the publicity-infused money: once established, this system led to a loop. A well ranking program (TV service) brings in more money from advertisers, and these funds in turn motivate better quality.  Maybe the question of who has the power in such a loop is a bit redundant: the viewers, the providers, the advertisers…?  What if it is an equation comprising all three factors instead of just one of them.

The smaller or emerging companies have their means of reaching their target audience now. Maybe the internet neutrality has seen better days, but with the currents vastness of available channels, websites and applications, a simple user doesn’t have the time to test this neutrality. Its existence in standby mode is nevertheless important, but in most instances users form habits. Caught in their mini-loops, the non-professional (marketing, journalism and other related fields –wise) Internet users receive their daily information via various hubs (social media networks, press agencies’ webpages, famous sites, online communities). Is the user aware of the degree of distortion supported by the information he accesses?

However, it is logical that, regardless of the answer to such questions, the possibility for the Internet users to counter-check at will any information they reach remains an important guarantee for the concept of net neutrality. A guarantee that, as in other matters of principle, might not be the users’ to forsake. That is why a controlling entity, the FCC, is summoned to take a stand in this problem.

Therefore the toll-free/zero-rating system might indeed be unethical, even if it is not illegal.