Zero-rating is the practice of providers of radio-based Internet access for moving telecommunication devices of excluding traffic generated by specific online applications from usage counted towards capped allowances or strictly metered tariffs of their end customers. Worldwide and particularly in the European Union (EU), current regulatory frameworks for zero-rating arrangements (ZRA) imply that regulators have to examine on a case-by-case basis whether they prohibit a concrete ZRA or impose restrictions. Such conditions are set because regulators believe that a ZRA runs counter to the interests of end customers or application providers or impedes effective competition between application and Internet service providers. Thus, it is necessary to clarify which case features ought to be inspected in such zero-rating assessments and which feature levels speak against or in favor of regulatory measures linked to ZRA. The present article identifies nine design features of ZRA, three characteristics of customer groups targeted by such offers and three background characteristics of the markets for Internet access services and applications which are of special importance in decisions concerning the need to regulate (to abstain from regulating) zero-rating practices of mobile network operators. The analysis shows that in many instances interests of end customers, application providers as well as of politicians seeking to promote the competitive dynamics on mobile Internet access service and application markets are best served if regulatory authorities tolerate ZRA and control for potential harmful effects after their market launch. Moreover, the study reveals that empirical research on customer reactions to ZRA is urgently required.
Analyzes zero-rating arrangements (ZRA) of Internet access service providers.•
ZRA exempt specific applications from the data allowance of their subscribers.•
Suggests 15 case features to be considered in regulator assessments of the necessity to prohibit or modify ZRA.•
Describes situations in which regulators serve the interests of end-customers and application providers by tolerating ZRA.
Author: Torsten J. Gerpott
Featured on Telecommunications Policy (Vol 42, Issue 6)
Font: Science Direct (originally published on July 2018)