Zero rating: The FCC’s war on affordable broadband

[Commentary] In the world of broadband, the Federal Communications Commission would prohibit an entire classification of popular sales known as zero rating. Zero rating is best understood as a category of business practices that try to tempt consumer purchases by providing more of what consumers want at lower prices. Under zero rating, a broadband carrier may lower consumer prices in one of two ways: it can decide not to count certain data against a consumer’s monthly data cap, or it can facilitate content providers “sponsoring” their own data (i.e. paying the broadband carrier a fee so that the sponsored data do not count against the consumer’s monthly data cap). The result of either business model is that consumers are able to enjoy more data for no additional charge -- it’s a data sale!

Because the immediate benefits of zero rating are so clear, it is difficult to understand why it has become the target of such vehement opposition at the FCC and in the blogosphere. Zero-rated plans are a form of marketing, and marketing is simply one of many options competitors use to compete. Competitors often don’t like price competition – it cuts into their profits – but consumers and ultimately society benefits from it. Some companies spend money on marketing and some don’t, but it is a grand American tradition that the government stays out of that corporate decision.

[Babette Boliek is an associate professor of law at Pepperdine University School of Law]