Mark Goldberg


www.mhgoldberg.com





#CTS20

A matter of choice

My brother tells me that in law school, his litigation professor told the class that when a client says “it isn’t about the money; it’s about the principle,” that client is lying. It’s about the money.

That is important to keep in mind when so-called consumer groups like Open Media say that “zero-rating” is “unfair, and bad for innovation and free expression online.” Open Media claims the practice “makes websites they don’t like slower”.

No. That simply is not true.

Yet this false information was used to induce signatures on Open Media’s petition, which should raise questions about the validity of its statement that “approximately 39,371” people (of whom we have no idea how many are Canadians) “call upon the Commission to protect their interests through … banning zero-rating”

Zero-rating is a billing option. Nothing more.

Do certain bits of traffic get metered or not?

It has nothing to do with traffic management; it has nothing to do with blocking websites; it has nothing to do with restricting consumer access to internet content.

Yet all of these red flags are falsely being waved by Open Media in its comments to the CRTC regarding the practice:

…seemingly pro-consumer arguments that zero-rating proponents make are wrong, for a number of reasons. Some arguments involve conflating Internet access itself with the content that consumers choose to engage with after obtaining access. This then removes consumers’ freedom of choice and places that choice inappropriately with the ISP at the access level.

and

Zero rate data must not be acceptable in our country as it gives big telecom power to make websites they don’t like slower and more expensive to access.

Zero-rating isn’t about traffic management or slowing down traffic. It’s all about the money.

Should service providers have the flexibility to offer consumers pricing that differentiates their products?

There is a long history of mobile data services offering zero-rate plans, as I described in a blog post in February:

  • In 2011, WIND Mobile bundled its WINDworld service into many of its dataplans, giving users access to Facebook Zero, news, weather updates & free ringtones;
  • In 2013, Eastlink offered a Social add-on that offered unlimited Facebook, Twitter and BBM for a flat $10 monthly fee;
  • In 2014, in the US, Sprint offered a $12 add-on to provide unlimited access to a customer’s choice of Facebook, Twitter, Instagram or Pinterest, or for $22, the customer could have all 4;
  • The Mobilicity website still shows a $5 Light Data plan, giving unlimited access to Facebook, Twitter, MySpace, Google+, and LinkedIn, Google Talk, Yahoo Messenger, ICQ. Includes: Gmail, Hotmail and MS Exchange.

The logic behind Open Media’s position seems to be that the desire to offer zero-rating emanates from data caps; if the CRTC gets rid of data caps, then zero-rating has no meaningful purpose. Open Media actually says “both data caps and zero-rating appear to be symptoms of larger structural problems resulting from the highly concentrated nature of Canada’s telecommunications market, which may need more fundamental policies such as improved wholesale market rules and, ultimately, structural separation to resolve”, but those actions are clearly beyond the scope of the CRTC’s current process.

The CRTC proceeding, Examination of differential pricing practices related to Internet data plans, is being argued under the guise of lofty principles (net neutrality, consumer access to the content of their choice, ISP gatekeepers), but it really comes down to money. We already have regulatory safeguards in place to deal with any interference in all users having open access to the content of their choice.

So we can see the argument is about money. How much do we pay for mobile internet?

Removing data caps is a form of price regulation that limits consumer choice. Some service providers have plans available with unlimited data, others choose to monetize their networks through plans that charge different amounts of use. If all service providers are mandated to eliminate pricing of services based on tiers of usage, it eliminates options for consumers and results in increased prices being paid by people who are on lower tiers. Logically, some will find that the benefit of unlimited data just isn’t worth the increased price, and having no other option, will cancel their data plan altogether.

Flat rating access to certain applications by some service providers gives people additional choices in the market. Removing that choice results in no subscribers benefiting while others pay more or receive less.

Phrased positively, zero-rating delivers benefits to some consumers while it does not harm any others. Why would we want to reduce consumer choice?

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