Wireless Industry Survey: Everybody Really Loves Zero Rating

from the hidden-hidden-costs dept

With the FCC glacially pondering whether or not zero rating (exempting some content from usage caps) is a bad idea, the wireless industry has decided to try and settle the argument. According to a new study by the wireless industry, 94% of Millennials are more likely to try a new online service if it's part of a free data offering, 98% are more likely to stay with a carrier that offers such services, and 94% of Millennials are likely to use more data if it doesn't count against their data plan. As intended, the survey resulted in a lot of varied news headlines insisting that "consumers actually like ISPs to play favorites on mobile data caps."

The study is, the CTIA proceeds to claim, proof positive that zero rating is a great thing for everybody, from companies to consumers. Just ask Meredith Attwell Baker, former FCC Commissioner, former Comcast lobbyist, and now the top lobbyist for the nation's biggest wireless operators:
"It is no surprise that Americans embrace free data services that offer wireless consumers more data, more competitive choices and more flexibility to try new mobile applications and content. Free data services empower consumers with the freedom to choose what works for their mobile life, and that’s an outcome that everyone should support,” said CTIA President and CEO Meredith Attwell Baker."
If a revolving-door telecom lobbyist saying it's true doesn't convince you, here's an accompanying graphic of stock photo Millennials thrilled at the very idea of zero rating:
So, yeah, some problems. I requested and received the methodology (pdf) used in the commissioned Harris poll, and you'll be shocked to learn that the questions asked weren't particularly nuanced. After asking survey participants whether they were familiar with such terms as zero rating or sponsored data (the results of that inquiry weren't shared), the survey basically just consists of asking consumers whether or not they like "free stuff." If somebody's unaware of the current zero rating net neutrality debate and is asked if they like "free stuff," it seems pretty clear what kind of answer they're going to give.

And therein sits the problem with zero rating. The majority of consumers still don't really understand what zero rating is, much less that there's some obvious hidden costs involved. As such, when approached with "free" services, they're thrilled.

They generally don't understand that the usage caps selected by their ISP are an arbitrary, artificial construct to begin with, untethered to financial or network congestion reality. Or that the very practice of giving wealthier, bigger companies cap-exempt status puts other smaller companies (and non-profits and educational efforts) at a very real disadvantage in the market. Or that over the years, data has shown that caps aren't an effective way to target network congestion, can hinder innovation, hurt competitors (especially if an ISP's exempting only its own services), and confuse consumers, many of whom aren't even sure what a gigabyte is. So yes, it's complicated, and requires some education.

Sure, even after being informed there's surely many people who simply adore the idea of getting anything for "free." But had the CTIA made the slightest effort to inform survey participants or explore zero rating more deeply, the survey's results would have been dramatically different.
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Filed Under: misleading polls, net neutrality, surveys, wireless, zero rating
Companies: ctia, harris

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  1. identicon
    Anonymous Coward, 14 Apr 2016 @ 9:50pm

    Re: Re: Re: Toll Free / Zero Rated Data Apps = Likely 1st Amendment Free Speech

    > Bottom line, I think the markets, law makers, regulators, and end-users will decide that they want unregulated "freeness" in as many software and technology enablement areas as possible -- so long as that freeness is offered in a transparent, non-discriminatory fashion, and where the end-user is the ultimate decider as to whether they accept the freeness offered or not.

    You should realize the anticompetitive incentives you're creating.

    ISPs don't normally have the incentive to charge for bandwidth because it only loses them money. The highest using customers stay on the unlimited plan and only customers that save a significant amount of money by switching to a metered plan will do it, which is money the ISP is then losing.

    Now let the app developers pay the bandwidth fees, what happens? Then the ISP has the incentive to make the per-byte bandwidth cost higher rather than lower, because the higher it is the more advantage an app developer who pays them has over one who doesn't, which will get more app developers to do it.

    The more app developers pay them the higher they can raise the price of bandwidth without their end customers canceling their service, and the higher they raise the price the more app developers have to either pay them or go out of business.

    The app developers have no alternatives to reach those customers. You can't play Verizon and AT&T off each other because Verizon can't provide you access to AT&T's customers. So it creates an unrestricted monopoly and monopoly prices. The price of bandwidth becomes divorced from the cost of providing it or even whether the ISPs have any competition on the customer side, what matters is the maximum amount of money each wireless provider can extract out of the app developers who actually have competition and therefore need to pay the monopoly price to not have a large competitive disadvantage.

    The cost of bandwidth gets high enough that customers are unwilling to use an app that doesn't pay, most apps cease to exist because they can't afford to pay, and the remaining apps are much less profitable which means they have less resources to put into improvements. Because that's what monopolies do.

    Which is why we have regulations to prevent the exercise of that monopoly power.

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