Big AT&T Deal Proves It’s Time to Stop ‘Zero-Rating’

Facebook and several other Western companies tried to give away free Internet in India, but regulators wouldn’t allow it. The trouble is that the service provided free access to some online apps—including Facebook—but not others. This is called zero-rating, and regulators believe it harms online competition, giving certain companies an unfair advantage over others. So far, despite complaints from various public advocates, US regulators have just let zero rating happen. But the issue may soon come to a head, now that AT&T, one of the world’s biggest Internet service providers, has signed an $85.4 billion agreement to acquire Time Warner, one of the world’s biggest media companies.

The overarching problem here is that widespread zero-rating harms innovation. It prevents newer and smaller players from challenging the established companies, and that’s particularly true when those established companies start consolidating and getting even bigger. And companies of a certain size can have an influence on the rest of the playing field—as the Justice Department seeks to show with a new lawsuit against none other than DirecTV, accusing the company of colluding with other pay-TV companies to block content (before its merger with AT&T). Among public advocates, the hope is that regulators will bar a combined AT&T-Time Warner from practicing zero-rating, but that’s not enough. The bigger hope is that the AT&T deal leads to stiffer rules for the entire industry—a firm declaration that zero-rating harms competition wherever it’s practiced.