“Zero rating” is when your mobile data provider doesn’t count the data used in accessing a certain type of application against your monthly data plan. Let’s imagine a simple example. Imagine that Netflix is zero rated by AT&T Wireless. Some users would clearly benefit from the zero rating. But there is a dark underside. If Netflix were to be zero rated by AT&T Wireless, competing video offerings would be harmed.
Why would something be zero rated? There are three main possibilities. Using our example above, first, because AT&T wants to give you Netflix for free to help AT&T compete against other mobile carriers who would charge you for the data used to access Netflix. Second, because Netflix is paying AT&T for the data you use. Or third, because AT&T owns Netflix and wants to harm competing applications.
Free is good, and therefore up to a point, you as a consumer are unlikely to object to zero rating. This is particularly true of two of the most recent cases: Virgin Mobile’s prepaid data plan that gives customers unlimited access to Facebook, Instagram, Pinterest or Twitter for US$12 a month (or US$22 for all four), and T-Mobile’s plan that allows you to stream a lot of Internet radio apps on a zero-rated basis. Likely these seem uncontroversial because they are offered by small players and because markets experiment with innovative pricing models as a regular course.
But what if Apple entered into an agreement with AT&T and Verizon to zero rate only iTunes Radio? Would that bother you as a consumer? What if you preferred Pandora? After all, theoretically you would be free to transition to anther wireless carrier, although of course you would have to pay for a new phone and a new plan, plus you might still owe AT&T for a while if your data plan term has not ended.
Do you think markets should be constrained such that the arrangement between Apple and AT&T and Verizon is subject to scrutiny? If you do, then you may be in favor of some sort of net neutrality principles or rules.