4 questions regulators should ask on zero rating and free data

[Commentary] The Federal Communications Commission’s open Internet rules address free data and zero rating on a case-by-case basis. The Body of European Regulators of Electronic Communications’ (BEREC) non-binding guidelines for implementing network neutrality in the European Union also support this approach. While case-by-case assessment may be a workable solution for zero rating, it is not unproblematic. Allocating scarce regulatory resources and selecting the forum in which the analysis takes place is not straightforward. Given the dearth of academic literature on the topic, here are four questions to help regulators assess the economic merits of specific zero rated offers and to prioritize whether a given zero-rated offer warrants scrutiny.

1. What perfect or very close substitutes would the zero rating offer foreclose?
2. Is the zero-rated offer intended to increase the number of individuals using the Internet?
3. Which party makes the zero rating complaint?
4. Is free data being used to lower consumers’ search costs, thereby boosting competition?

[Roslyn Layton is a PhD Fellow at the Center for Communication, Media, and Information Technologies (CMI) at Aalborg University in Copenhagen, Denmark. Bronwyn Howell is a faculty member at the School of Management, Victoria University of Wellington, New Zealand.]