Wireless Industry Survey: Everybody Really Loves Zero Rating
from the hidden-hidden-costs dept
With the FCC glacially pondering whether or not zero rating (exempting some content from usage caps) is a bad idea, the wireless industry has decided to try and settle the argument. According to a new study by the wireless industry, 94% of Millennials are more likely to try a new online service if it's part of a free data offering, 98% are more likely to stay with a carrier that offers such services, and 94% of Millennials are likely to use more data if it doesn't count against their data plan. As intended, the survey resulted in a lot of varied news headlines insisting that "consumers actually like ISPs to play favorites on mobile data caps."The study is, the CTIA proceeds to claim, proof positive that zero rating is a great thing for everybody, from companies to consumers. Just ask Meredith Attwell Baker, former FCC Commissioner, former Comcast lobbyist, and now the top lobbyist for the nation's biggest wireless operators:
"It is no surprise that Americans embrace free data services that offer wireless consumers more data, more competitive choices and more flexibility to try new mobile applications and content. Free data services empower consumers with the freedom to choose what works for their mobile life, and that’s an outcome that everyone should support,” said CTIA President and CEO Meredith Attwell Baker."If a revolving-door telecom lobbyist saying it's true doesn't convince you, here's an accompanying graphic of stock photo Millennials thrilled at the very idea of zero rating:
And therein sits the problem with zero rating. The majority of consumers still don't really understand what zero rating is, much less that there's some obvious hidden costs involved. As such, when approached with "free" services, they're thrilled.
They generally don't understand that the usage caps selected by their ISP are an arbitrary, artificial construct to begin with, untethered to financial or network congestion reality. Or that the very practice of giving wealthier, bigger companies cap-exempt status puts other smaller companies (and non-profits and educational efforts) at a very real disadvantage in the market. Or that over the years, data has shown that caps aren't an effective way to target network congestion, can hinder innovation, hurt competitors (especially if an ISP's exempting only its own services), and confuse consumers, many of whom aren't even sure what a gigabyte is. So yes, it's complicated, and requires some education.
Sure, even after being informed there's surely many people who simply adore the idea of getting anything for "free." But had the CTIA made the slightest effort to inform survey participants or explore zero rating more deeply, the survey's results would have been dramatically different.
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Filed Under: misleading polls, net neutrality, surveys, wireless, zero rating
Companies: ctia, harris
Reader Comments
The First Word
“Yes?
See! They said we should raise prices on the other websites!
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Aware slave: but sir, we are still slaves.
Owner: Do you guys support having that extra free space?
Slaves: YES!
Owner: See? They disagree with you.
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Yes free data isn't directly bad for consumers, it’s a problem for enterprises that now have to also pay the share that should already be payed by the consumer. But in the end always consumer pays one way or another.
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Re:
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Bizarre questions
But each of these questions take the existence of data caps as a given. I bet you'd get even higher percentages if you asked how many users would like there to be no data caps at all.
And I wonder how many users would agree that "It is up to the provider to choose which online services are exempt from data caps and thus 'interesting' for all users"?
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Better survey
1. Do you like your ISP or Phone service provider charging you more money for going to websites that you want.
2. Survey complete.
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"94% more likely to try new service offering free data"
That makes the mobile companies the gatekeepers. You would *have* to pay them for zero rating to have a chance.
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Toll Free / Zero Rated Data Apps = Likely 1st Amendment Free Speech
However, on the issue of mobile toll-free / zero-rating generally, there is another "middle" path that could avoid the conflict altogether. Mobile carriers could embrace simple, "network independent" toll-free / zero-rated apps and achieve the same benefits for themselves and their customers. This is because "autonomous" toll-free app technology is specifically designed to prevent perceived forms of network induced prioritization / favoritism / price discrimination (whether intentional or accidental), and if implemented properly would not violate net neutrality principles. With a network independent app, the mobile carrier literally can’t see whether the app requesting data from the network is subsidized or not by the app creator (the app acts to make the carrier “blind” as to which apps are subsidized and which are not — ergo no discrimination / app favoritism is possible).
Also, as a practical matter, the FCC’s regulatory remit likely ends at the edge of the core network – not extending to the billions of network independent apps (third party software, whether toll-free apps or otherwise) that already reside on phones after being installed at the sole discretion of the phone owner / retail consumer. On this basis, I think few would argue that independent software providers should be restricted in creating and publishing their own apps that might also have commercial subsidy features (e.g., reward points, free data, free content) built-in for consumers who choose to take advantage of such subsidy. One could suppose there will be a few parties that think the software development community should forfeit their First Amendment free speech rights (see "Bernstein v. Department of Justice" where the Ninth Circuit ruled that computer code is speech, and is protected by the Constitution) and fall under FCC jurisdiction when it comes to writing and publishing their software apps, but I think the majority of industry participants (e.g., coders, Software Developers Association, Mozilla, Google, etc.) and even the FCC itself would prefer to maintain the developer community’s First Amendment freedoms from inadvertent regulatory censorship. Thanks for listening.
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Hey Guys...
The problem is not going to be fixed. Americans are firmly entrenched with the party system. Even if the Republican Party falls it will just be replaced with another party that follow the old adage, "Meet the new masters, same as the old masters" and will remain just as corrupt as they are now. We already know that we cannot possibly fall back on the Democrats which have extensively fooled their ignorant base that they are somehow against the Oligarchy by promising welfare and seeking to import more poor people to expand their ranks and screw their current poor over by having the new poor take more jobs from the existing poor. I seriously need to get a hold of the cool-aid they are making and form my own rat bastard party!
Those that applauded the new Net Neutrality rules are the sheeple. The FCC is just the story of "The Emperor's New Clothes" all the fuck over again.
I said it till I am blue in the face, the new rules are even worse than the OLD rules because it gives the FCC too much power to "Arbitrarily" define penalties, which is why Congress has a fucking excuse to fight it, and the FCC and the rest of your idiots supporting these new rules only helps add fuel to the fire.
We only need to support well defined rules that clearly mark what is and what is not. The FCC did not do that, the FCC needs to fail and the rest of you need to start bitching to the FCC that his is NOT "Net Neutrality" but instead of fucking end run around the system making the FCC more powerful than it needs to be!
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Yes?
See! They said we should raise prices on the other websites!
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Re: Toll Free / Zero Rated Data Apps = Likely 1st Amendment Free Speech
But that is favoritism. Just because it isn't the carriers directly deciding who is going to be granted privileged access doesn't mean there isn't a serious issue with the idea.
As an aside,, there's no way that the carriers wouldn't have a say about it. We can fully expect that they'll continue to be underhanded and deceptive just as they always have been.
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"... and for a limited time you can get what you're already paying for for only an extra $19.99 per month!"
Step 2: Introduce completely unnecessary limit on service, claim that you have no other choice due to technical/hardware issues.
Step 3: Create way for certain groups to bypass the unnecessary limit by paying you for the 'privilege', making it clear to anyone paying attention that your justifications for the limits were empty.
Step 4: Direct customer attention to the 'limit-free' portion of their service, re-direct any questions regarding the non-'limit free' parts by claiming 'Look, free stuff!', while raking in the cash from both those paying you to bypass the restrictions you implemented, and those who use non-'free' services and end up paying extra as a result.
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zero
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Re: Re: Toll Free / Zero Rated Data Apps = Likely 1st Amendment Free Speech
Nevertheless, due to the First Amendment of the U.S. Constitution (our "operating manual" for how our free society operates) the carriers would almost certainly not have the right to legally block / impede my own personal use of apps (Google, Facebook, .gov, Amazon, etc.) running on my own device. And in all likelihood neither does the FCC (absent a very compelling state interest like national security, obscenity, etc. - which would not apply to something like subsidized data imo).
Now if Congress chose (a big if), they could regulate the types of interstate subsidies that an app offered if the Congress enacted specific laws to do so (this being the govt's prerogative under Article 1, Section 8, Clause 3 of the Constitution - the "Commerce Clause"). But without a compelling rationale it is highly unlikely to happen since it would more likely than not be deemed to stifle open and free competition (a vitally important consideration in terms of delivering value to citizens and society). To use a very simple app market analogy, it would be like the Congress creating a new law telling the FCC to restrict app developers from offering their mobile apps for free, and instead mandating that the developer had to charge a purchase fee for their software. In my opinion, this pricing decision (a dynamic exclusively between the app develop and the app end-user) absolutely should reside with the app developers -- not the govt.
Bottom line, I think the markets, law makers, regulators, and end-users will decide that they want unregulated "freeness" in as many software and technology enablement areas as possible -- so long as that freeness is offered in a transparent, non-discriminatory fashion, and where the end-user is the ultimate decider as to whether they accept the freeness offered or not.
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I hear the same complaint about zero rating
I'm a bit of a hermit, so my sample set is minuscule.
How long until some ISP (or wireless provider acting as one) starts offering a Zero Rate any app/site for an extra $ or bundle more for additional $aving$.
"Tru$t me, we're here to provide the be$t $ervice at the be$t price (for our $hareholder$)"
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Re: Toll Free / Zero Rated Data Apps = Likely 1st Amendment Free Speech
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Re: Re: Re: Toll Free / Zero Rated Data Apps = Likely 1st Amendment Free Speech
This isn't in any way a free speech issue. This is an issue of whether or not what amounts to an oligarchy will be able to act as gatekeepers.
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Toll Free / Zero Rated Data Apps = Likely 1st Amendment Free Speech
As for the free speech point, if I choose to install a free app (freemium app) with free data features voluntarily that is a form of free expression. If an app provider writes app code and gives it to me for free that is also a form of free expression. If someone decides to subsidize the whole process that is freedom of commerce. These are all very well established Constitutional and economic principals in our country (e.g., not just seen in the Electronic Frontier Foundation's seminal case of Bernstein vs. DOJ), and if structured thoughtfully the carriers' intentions (good or bad) really should not figure into it.
For instance, I am currently using this Google provided Chrome browser to communicate with you on this particular issue and my carrier has no influence over my use of this piece of free Google software. They also don't know whether my bandwidth consumption activities are being paid (full or partial subsidy) by my employer, business, parent, school, spouse, or otherwise (btw - one of these parties is actually reimbursing me for the bandwidth I am consuming right now).
The problem of zero-rating flows not from the freeness it gives those who voluntarily choose it, but instead from the role the carriers might play in determining who gets the freeness (and on what terms). The simple solution of a toll-free / zero-rated app encourages the valuable data freeness for those who need it (e.g., unconnected, under-connected, low income) and simultaneously removes even the hint of carrier influence, and in the process avoids throwing the baby out with the bath water. Thanks for listening.
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Re: Toll Free / Zero Rated Data Apps = Likely 1st Amendment Free Speech
We paid for the bandwidth, we should be able to use what we paid for. If traffic is congested during peak hours, then use network traffic management to balance the load or improve your infrastructure. That's what your customers pay you to do.
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Toll Free / Zero Rated Data Apps = Likely 1st Amendment Free Speech
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Re: Re: Re: Toll Free / Zero Rated Data Apps = Likely 1st Amendment Free Speech
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Re: Toll Free / Zero Rated Data Apps = Likely 1st Amendment Free Speech
I just figured out that this guy is running or otherwise associated with a company that does this. That doesn't make him wrong of course, but he has a dog in this fight.
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Re: Re: Toll Free / Zero Rated Data Apps = Likely 1st Amendment Free Speech
I am a small software developer / entrepreneur and do indeed have a dog in this fight (been working on this for 6 years now) which is why I have much to share with regard to carrier models, consumer needs, and legal requirements pertaining to zero-rating. But always open to other points of view and I believe the markets will find a way forward that enables and protects the best interests of the consumer.
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Re: Re: Re: Toll Free / Zero Rated Data Apps = Likely 1st Amendment Free Speech
They would if there were strong competition in the wireless industry. As it is, the FCC is the only one keeping them from totally screwing over their customers.
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Re: Toll Free / Zero Rated Data Apps = Likely 1st Amendment Free Speech
I think you are underestimating them.
"The problem of zero-rating flows not from the freeness it gives those who voluntarily choose it, but instead from the role the carriers might play in determining who gets the freeness (and on what terms)."
Fair enough, but I very much disagree with this assessment.
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Toll Free / Zero Rated Data Apps = Likely 1st Amendment Free Speech
The FCC is great, but it's better if you can create a open and competitive dynamic where large players seeking to engage with end-users (Hulu, Netflix, Amazon, etc) compete with each other to give as much free bandwidth as possible - in perpetuity - to end-users in consideration for their valuable engagement (upward spiral of value creation for end-users). If done well I can envision a system where free and unlimited bandwidth is a reality for all those in need (no exaggeration). The key is to directly empower the end-user vis-a-vis a relationship with the sponsor (making the carrier far less relevant in the process). Thanks again / signing off for now - gotta run to a meeting. :-)
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Re: Toll Free / Zero Rated Data Apps = Likely 1st Amendment Free Speech
And that's the fundamental problem that your scheme doesn't address: it tilts the entire playing field severely in favor of the large players. The result will be the further entrenchment of these companies. Even if you don't personally mind that, the effects on the industry would be pretty bad, because the large players is not where innovation comes from. Disenfranchising smaller players harms everyone.
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Re: Toll Free / Zero Rated Data Apps = Likely 1st Amendment Free Speech
Absolutely not. It's better if the carriers have no choice but to offer great performance and lots of data for low prices because that's what their dozens of competitors are doing so they'll go out of business if they don't. Then there's no need for zero rating at all.
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Toll Free / Zero Rated Data Apps = Likely 1st Amendment Free Speech
That is a very important point you make and one that the big guys actually argue heavily in favor of (not surprisingly since they don't want to be in the competitive data subsidy business - it eats into their margins a bit).
But our analysis strongly suggests the opposite. If you bring more users online with no / low fees (of course, subsidized by the big guys or Govt sponsors) then you get more free bandwidth pumped into the ecosystem overall (upward spiral of freeness) which is used by consumers in more experimental ways / trying new services (especially the small innovative ones that don't / can't subsidize data). Which means the small guy / apps may actually get more exposure than they would currently with data caps (here in the US somewhat, but very much a fixture in emerging markets with pre-pay models). In economic terms we can therefore create market "lift" across the whole ecosystem - not merely "shift" (which leads to entrenchment. Thanks again.
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Re: Toll Free / Zero Rated Data Apps = Likely 1st Amendment Free Speech
That is not how the internet works. This is not the old analog long distance phone company from last century with per minute charges and toll-free numbers. This is not AOL. This is the modern digital world.
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Re: Re: Toll Free / Zero Rated Data Apps = Likely 1st Amendment Free Speech
Not sure where your getting that particular scenario. With our toll-free app technology the end-user can theoretically start using mobile data for $0 on day one (ideally no need to even pay a deposit to a carrier for use of the sim) and conceivably never pay a cent for access to any site located anywhere (or use any app from any app provider). This is only possible if the process is monitored solely within the "four walls" of the app (as opposed to in-network deep packet inspection / DPI). It's a longer discussion though on the mechanics, but very doable.
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Re: Toll Free / Zero Rated Data Apps = Likely 1st Amendment Free Speech
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Re: Re: Re: Toll Free / Zero Rated Data Apps = Likely 1st Amendment Free Speech
You should realize the anticompetitive incentives you're creating.
ISPs don't normally have the incentive to charge for bandwidth because it only loses them money. The highest using customers stay on the unlimited plan and only customers that save a significant amount of money by switching to a metered plan will do it, which is money the ISP is then losing.
Now let the app developers pay the bandwidth fees, what happens? Then the ISP has the incentive to make the per-byte bandwidth cost higher rather than lower, because the higher it is the more advantage an app developer who pays them has over one who doesn't, which will get more app developers to do it.
The more app developers pay them the higher they can raise the price of bandwidth without their end customers canceling their service, and the higher they raise the price the more app developers have to either pay them or go out of business.
The app developers have no alternatives to reach those customers. You can't play Verizon and AT&T off each other because Verizon can't provide you access to AT&T's customers. So it creates an unrestricted monopoly and monopoly prices. The price of bandwidth becomes divorced from the cost of providing it or even whether the ISPs have any competition on the customer side, what matters is the maximum amount of money each wireless provider can extract out of the app developers who actually have competition and therefore need to pay the monopoly price to not have a large competitive disadvantage.
The cost of bandwidth gets high enough that customers are unwilling to use an app that doesn't pay, most apps cease to exist because they can't afford to pay, and the remaining apps are much less profitable which means they have less resources to put into improvements. Because that's what monopolies do.
Which is why we have regulations to prevent the exercise of that monopoly power.
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Re: Re: Toll Free / Zero Rated Data Apps = Likely 1st Amendment Free Speech
For example, you can say that only specific people are allowed to speak and no others, regardless of what they have to say. Zero rating is discriminating based on who is doing the speaking.
But cell phones are a weird space. The First Amendment only relates to government activities, not private entities. Cell companies use the public airwaves and are licensed by the government, so you could argue that the First Amendment is in full force. But it's also undeniable that there are private entities in the mix as well, where the First Amendment is not.
The whole thing seems very murky to me.
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Re: Re: Re: Toll Free / Zero Rated Data Apps = Likely 1st Amendment Free Speech
But the FCC isn't requiring the discrimination, they're prohibiting it.
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Toll Free / Zero Rated Data Apps = Likely 1st Amendment Free Speech
On the monopoly point, in a world where toll-free / zero-rated apps are merely available (not mandatory) and sit side-by-side with other app models and carrier bandwidth offerings (all you can eat vs. capped / faster pipes vs. slower / wireless vs. wireline / etc), there is by definition no degradation of competition between the carriers - but quite the opposite as diversity of choice abounds. Customers will gravitate to the highest and best value mix of free and paid services and both the carriers and app providers will need to respond in a more compelling fashion in terms of delivering value to their customers.
In sum, fostering the option of toll-free / zero-rated apps shifts a great deal of bargaining power back to the consumer, and this is the kind of "bottom up" democratization, empowerment, and disruption that technology innovation delivers (often replacing decades old "top down" centralized planning models). This is why I would like to see this tech at least made available to consumers for them to experiment with and/or embrace long term if they so choose. Let the consumers choose for themselves and let the law makers respect and support those choices. Thanks.
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Re: Toll Free / Zero Rated Data Apps = Likely 1st Amendment Free Speech
It's the exact opposite of that. Zero rating gives the power to those with resources, and banning zero rating would ensure that others are able to compete with the wealthy and powerful movers in the market.
In sum, fostering the option of toll-free / zero-rated apps shifts a great deal of bargaining power back to the consumer
It biases consumers in favor of those who can afford to get zero rated. I can't see how it gives them bargaining power though. What would give them bargaining power is if they had a whole bunch of wireless providers to choose from. Currently I have two, because only Verizon and AT&T service my area. How much bargaining power do you suppose I have, and how would zero rating give me more?
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Toll Free / Zero Rated Data Apps = Likely 1st Amendment Free Speech
Anyway, signing off now. Have a good weekend all. :-)
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Re: Re: Re: Toll Free / Zero Rated Data Apps = Likely 1st Amendment Free Speech
In the context of your offering, what market are you talking about opening up? What barriers are you knocking down? Perhaps I am misunderstanding, but the whole idea looks like it's a method of gaming the system and imposing barriers.
The argument that I'm hearing in favor of it is that the entity doing the gaming shouldn't be the carrier. As far as that goes, yes, if the system is to be gamed then I'd rather that it not be the major telecoms doing it.
But really, I'd much prefer that the system be fair, instead.
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