Mobile Zero Rating: The Economics and Innovation Behind Free Data

Zero-rating programs, which allow consumers to access certain Internet content and services without it counting against their monthly data plans, have proven polarizing, being met with reactions ranging from derision to praise. The crux of the controversy is whether the practice of zero rating violates the spirit of network neutrality principles.

Strictly speaking, zero-rated data is treated differently than other data in a way that influences consumer behavior. But adhering to such a strict interpretation of net neutrality would be misguided. Zero-rating products are unlikely to harm the open Internet; instead they are a sign of healthy product differentiation that more efficiently allocates scarce resources in a competitive market, ultimately improving consumer value. The Federal Communications Commission—along with other regulators around the world—is examining zero rating, and while its case-by-case approach to overseeing these programs is sound, telecom regulators should make it clear that they believe nonexclusive zero-rating programs are in the public interest.