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Countries With Zero Rating Have More Expensive Wireless

255 points by J253 8y ago

wyldfire 8y ago
"What is zero rating?" you might ask. (I did). This is the process of ISPs offering free carriage of exclusively particular traffic. e.g. T-Mobile's "unlimited [downsampled] youtube" offering, Facebook's free internet (offered in India IIRC), Amazon's whispernet for Kindle.
- shmerl 8y ago
  It's an ugly anti-competitive symptom of the actual disease - data caps. Curing the symptom helps marginally. What needs fixing is the disease.
  - chillydawg 8y ago
    I'm not sure data caps are a disease, as such. It costs money to move data around. Caps on "unlimited" deals are obviously a dodgy sales technique, but I don't think that's what's being discussed.
    - crankylinuxuser 8y ago
      The natural data cap is the actual line speed of the connection. That would mean a 10Mbit connection == 3.24TB/month That's definitely a cap that is directly related to line speed. But these 150GB caps are purely because the internet companies are also content companies - and their content channels are zero rated. And with a 10Mbit connection, it only takes 33 hours to exceed their arbitrary cap over the whole month.
      - woah 8y ago
        That would only make sense if everyone used a totally consistent amount of bandwidth 24/7. The reality is that most bandwidth is used between 5-10pm. Bandwidth caps cause people to use bandwidth sparingly and ease congestion. To allay your complaints about unfairness, you could structure it so that the caps are looser in off hours like 3am, but then again, that wouldn’t benefit most people because they don’t use the internet at 3am. The best system would be to charge based on bandwidth usage, and raise and lower prices based on congestion per tower. But most ISPs don’t have the billing capability to support that, and bandwidth caps sort of approximate it.
        ryukafalz 8y ago
        >To allay your complaints about unfairness, you could structure it so that the caps are looser in off hours like 3am, but then again, that wouldn’t benefit most people because they don’t use the internet at 3am. On the other hand, something like this might incentivize developers to take advantage of lower pricing during periods of lower congestion. Mobile OSes tend to provide the user a choice between downloading updates anytime or only when on WiFi, but if the pricing structure made this useful, there’s no reason they couldn’t download updates overnight too.
        icebraining 8y ago
        Back in the early 2000s, before most plans move to "unlimited", some ISPs in Portugal did exactly that: they had rather small caps, but then unlimited between 1am and 7am. And we did have developers take advantage of that; for example, there was a popular fork of eMule that had extra scheduling features, so it could automatically run just in that period.
        gcb0 8y ago
        then they realized they could get away without even that modicum of respect to the clients, because, well they run a legal monopoly. Either you only have one option (fiber, or even cable in some markets) or the 3 to 4 offerings have the same "deals" across the board. I try very hard to be civil on HN, but everyone defending artifical data caps are a bunch of idiots (in the true sense of the greek work: a person that can't live in society and should be voted to be ostracized).
        hueving 8y ago
        >I try very hard to be civil on HN, but everyone defending artifical data caps are a bunch of idiots Not that hard I guess. Data caps are the only reason you have affordable consumer internet because they allow a significant amount of oversubscription which matches the mostly-idle bursty behavior of consumers. You can get leased lines from ISPs with no caps easily. You just won't like the real price that comes with guaranteeing a customer that kind of bandwidth.
      - SpaceManiac 8y ago
        > purely because the internet companies are also content companies I have no doubt this is a reason, but most ISPs also oversell their bandwidth. If every customer with a 10Mbit line is only using it 10% of the time, your upstream lines only 'need' to be 10% of 10Mbit * the number of customers (plus whatever margin for spikes).
        woah 8y ago
        A 100mbit connection that is not oversold can easily run a few hundred to a thousand dollars a month.
        AnthonyMouse 8y ago
        Maybe a decade ago. It's down below $50/month now from a major exchange point. Even less if you deal in larger quantities as ISPs would.
        jdietrich 8y ago
        It's called contention. Typical ratios are about 20:1 - for every 20Mbits of throughput they sell to customers, they have about 1Mbit of throughput to the internet. Leased lines are uncontended, but they're also vastly more expensive than conventional broadband services.
        crankylinuxuser 8y ago
        I don't care how they do contention. That's a business plan. What I do care about is fraudulent business practices. I expect a minimum speed alongside a maximum speed. And if their contention ratio is 10:1 then I expect 1Mbit-10Mbit for that connection. But no, the content/internet media companies play insane games, zero rating their stuff, enforcing arbitrary 'kill netflix' limits, and evil layer 7 filtering. They need broken up into lines owned by the state, service over lines sold to whomever provides service (like an ISP or a content company), and customers leasing the lines like how power works. These megagiant media corps should have never owned the physical connections. At all.
      - Ajedi32 8y ago
        The problem is there's simply not enough capacity for _everyone_ to use their 10 Mbit connection at the same time. That's a necessary property of efficient packet-switched networks. As a result of this, people who use more total data generally incur higher infrastructure costs to the provider than those who use less; even if those two groups of people have the exact same link speed.
      - hueving 8y ago
        The natural data cap is the line speed of the ISP's peering links to upstream providers divided by the number of customers. Traffic out to the internet involves way more than your last mile connection.
        AnthonyMouse 8y ago
        > The natural data cap is the line speed of the ISP's peering links to upstream providers divided by the number of customers. The natural data cap is the line speed of the ISP's peering links to upstream providers divided by the number of active customers. But you don't need monthly limits for that, it's true all the time inherently. It's also kind of a scam on the ISP side because content providers are generally happy to peer with ISPs at no cost to the ISP, so it's not as if there's a non-artificial bottleneck there.
    - dkfndodbxob 8y ago
      It doesn't really cost money to move data around. The biggest cost by far is building the infrastructure. If the capacity is available, the cost of using it is minimal.
      - munk-a 8y ago
        I'd assume ISPs are taking infrastructure into their cost calculations, even in a case where the initial build out was government subsidized... things break, there are ongoing costs. And my totally uninformed understanding is that the ongoing maintenance costs, and the costs of expanded service are both pretty minimal.
        rayiner 8y ago
        Both are incorrect. Almost no ISP infrastructure is “government subsidized.” Almost all the subsidies are urban ISPs subsidizing rural ones. There was a tiny bit of actual government subsidy under Obama as part of the post-recession stimulus. And ongoing maintenance and support costs are very high. Even if you don’t trust Verizon’s SEC disclosures (showing 5% or less in operating profit for wireline) look at the financial statements for something like Chattanooga’s EBP. The vast majority of revenue goes to ongoing costs, before you even get to paying down the initial build out.
        shmerl 8y ago
        Given severe lack of competition among ISPs in US, I don't buy the bogus argument that current prices are fair. Simple market logic suggests, that they overcharge, because they can. Therefore they do have more than enough money for their upgrades. And on top of that, most simply prefer to pocket them instead of investing into the network, with "no one needs it" excuse. Something they would never have done with healthy competition.
      - Ma8ee 8y ago
        It does cost money to move data around, even if it is an upfront cost when you build the infrastructure. When your users move enough data that you are getting close to the capacity of your infrastructure you need to invest more money to extend your infrastructure. Or to express it slightly differently: if there weren’t any data to move you wouldn’t have to build any infrastructure and you wouldn’t have any costs. If you want to move data you have to build the infrastructure which cost money, which means that it costs money to move data.
    - scarejunba 8y ago
      Fi's data is just "pay more get more", which makes sense to me. I don't think unlimited deals make sense since there's a true marginal cost here.
      - plussed_reader 8y ago
        Up to $100/6GB of mobile data. The next 9GB of mobile data are at normal up/down rates, then everything over 15GB is metered for the rest of the billing cycle. 'Bill Protection'.
        xur17 8y ago
        It's $20 for a plan + $10/GB of mobile data. Not sure where $100/6GB comes from.
        kkarakk 8y ago
        Who is keeping multiple plans? You use one phone and one data plan and get fleeced when you blow past your data plan.
        xur17 8y ago
        I'm not sure I follow what you are saying here. I presented pricing for a single user on a single plan.
        deleted 8y ago
        [deleted]
  - chewbacha 8y ago
    Not really, data limits are a necessary evil of infrastructure. It's more the trust-building that's going on between the giants of industry. It's the 1920s all over again, just with different tech.
    - shmerl 8y ago
      Bandwidth limit is the natural limit. Not monthly data limit - that's simply a method to fleece users. Nothing to do with infrastructure.
      - chewbacha 8y ago
        By that logic, api rate limits are a method to fleece api users... which is not true at all. Rate limits are put in place to protect infrastructure for overloading, that's been the main reason I have implemented circuit breakers and rate limiting.
        shmerl 8y ago
        Except it's a fallacious logic. ISP networks can perfectly handle the load already. There is no "data flood apocalypse" or anything the like. ISP execs said so much explicitly. They point blank admitted, data caps are not driven by technical needs but simply by greed.
    - jusssi 8y ago
      For some reason, there are places where this necessary evil doesn't seem to be, well, necessary. Neither my wired not my 4g connection have a data cap. Taking "necessary" out of necessary evil, leaves just evil.
  - rayiner 8y ago
    What exactly is “anti-competitive” about data caps? They’re just a form of congestion pricing. Congestion pricing is now widely considered desirable for things like roads. Now, ideally, we would have fine grained congestion pricing with fees kicking in based on tower occupancy level. But customers would probably find that too unpredictable. Moreover, congestion isn’t the only cost to account for. Take the total number of dollars of capital and maintenance costs of the network over it’s useful life and divide by the total number of bits sent during that useful life. That produces a cost per bit that seems quite reasonable to apply to customers based on how many bits they send.
    - bb88 8y ago
      If an ISP is the only game in town, and they zero rate their streaming service but put a cap on Netflix it is anti competitive. The problem with your roads analogy is that there's more than one road to take. Not all roads are tolled. And the cure isn't getting rid of data caps, the cure is increasing competition on a local level.
      - toomuchtodo 8y ago
        The physical RF spectrum is the local road. There are no more roads to take. No amount of economic policy supporting competition is going to bend the laws of physics, unless you're willing to shovel herculean amounts of resources into microcells (even smaller than 5G cell sites) to reduce contention (essentially replacing fiber and wifi).
        dzhiurgis 8y ago
        National network + eSIM. Retailers compete on providing better internwtional traffic (pretty much as it is now with broadband in many countries).
        toomuchtodo 8y ago
        Your suggested solution does not address the local cell network contention issue zero rating attempts to mitigate.
  - kazinator 8y ago
    Not specifically a symptom of caps! Even in a billing structure that has a fixed cost per unit of data transferred, regardless of usage (thus no cliff-like data caps), a zero rating exemption can still influence user behavior in anti-competitive ways. It's analogous to product dumping. (Did you want to say that it's a symptom of the disease of any price structure under which users get charged extra on top of their subscription fee, according to some function of their data use?)
    - shmerl 8y ago
      Good thing IPSs don't charge per unit of data transferred. That would be even worse. So in practice, zero rating in the context of ISPs is very much related to data caps. When there are no caps, zero rating has no meaning.
      - munk-a 8y ago
        It wouldn't be terrible if they charged per unit of data transferred _at a sane level_, we're just all aware that if they switched to this model (which exists in some places like South Africa) then they'd gouge us over prices... it'd also introduce an interesting social dynamic since sites that push megs of ads on you would literally be taking money from your pocket, instead of just wasting your time. It'd actually be kind of neat if bloatware were discouraged this way, since currently there is no cost to bloatware as long as whatever it is remains within the acceptably performant range.
      - kccqzy 8y ago
        Doesn't Google Fi do exactly this? They charge $10/GB for data.
        AnthonyMouse 8y ago
        $10/GB is high. Purposely high, because the point of Google Fi is to use WiFi as much as possible and avoid cellular. So it's there if you need it but you don't want to need it much. This hardly works for the connection which is actually providing your WiFi, or if you want to try to use cellular exclusively.
  - morpheuskafka 8y ago
    I totally agree that data caps are insane with today's technology and need to die for good. However, at least some zero-rating programs are "category-wide" and will enroll any streaming provider on request.
- devindotcom 8y ago
  Unfortunately it's not always represented accurately! This is a self link but if anyone else is curious about some of the specifics of zero rating, its justifications and issues, I wrote a piece on it a little while back: https://techcrunch.com/2017/04/16/wtf-is-zero-rating/ https://techcrunch.com/2017/04/16/wtf-is-zero-rating/
- vinay427 8y ago
  I believe the Facebook offering in India was rejected after a series of PR missteps by Facebook and some increased public awareness around net neutrality: https://www.cnet.com/news/why-india-doesnt-want-free-basics https://www.cnet.com/news/why-india-doesnt-want-free-basics
  - drewmol 8y ago
    I may be overly cynical here but my understanding is: Facebook tried to build a walled garden development platform on top of TCP/IP, bundle it with free low-bandwidth internet necessities (consisting of Facebook and several other deliberately non-Google properties) and ram it dowm the throats of a billion impoverished and technologicly unfamiliar new internet users of India. At that time in 2013[0], FB market cap was $100B, GOOG was $282B. FB had 1.1B users with ARPU of $1.63, GOOG had 1.3B users with ARPU of $10.09. Looking avoid a market correction, FB aimed to add 1B new users from India and simultaneously prevent them from becoming new Google users and disguised the scheme as philanthropy. It didn't work. FB was then forced to moved fast and break: data access control policies, respect for their users, expectation of privacy, and lots of pesky regulations. By distributing user data for free as an investment in the future, then buying the competition to control the demand, FB cemented their position as a gatekeeper of the online commons and dictator of social media. Insights gained from this freely available, or loosely guarded user data helped explode demand for the user manipulation as a service offering FB had newly monopolized. Gloves now off, FB leveraged this position and acheived hockey stick profit growth after just one US congressional election season, a midterm year at that. FB's Q42018 ARPU ~ $7.37, MAU 2.23B[1]. [0] https://www.forbes.com/sites/tristanlouis/2013/08/31/how-much-is-a-user-worth/#4e8d01a01c51 https://www.forbes.com/sites/tristanlouis/2013/08/31/how-muc... [1] https://www.statista.com/statistics/264810/number-of-monthly-active-facebook-users-worldwide/ https://www.statista.com/statistics/264810/number-of-monthly...
- blackoil 8y ago
  India does not have Facebook free internet. We do have a billion people and most competetive mobile service companies. For 200₹(3$) a month you can have unlimited calls SMS and 1GB of daily data.
  - lesdeuxmagots 8y ago
    This is a relatively recent development! Pretty remarkable the pace of competition within the wireless market, which was relatively stagnant only a few years ago.
- scarface74 8y ago
  In all fairness, T-mobile’s zero rating is not anti-competitive. Any video carrier can sign up for it and no money changes hands. There were some porn sites that signed up for it - ie T-Mobile didn’t discriminate.
  - consp 8y ago
    It usually is "free-as-in-beer" since they are allowed to sell user statistics that way (the Dutch T-Mobile zero rated music being an exception due to law). There is no way to opt out of that practice as it is included in most contracts by default. Setting up these methods are also not trivial for companies. The selection process is hidden (there is no information available), looking at the participating services most probably don't bother either due to cost, restrictions or administrative reasons. Streaming your own library is excluded in the contract, so it is not music, only what T-Mobile says is music. I call that censorship.
    - scarface74 8y ago
      It usually is "free-as-in-beer" since they are allowed to sell user statistics that way (the Dutch T-Mobile zero rated music being an exception due to law). Why would the providers need to buy statistics on their customers? They already know who is listening to and watching what content. There is no way to opt out of that practice as it is included in most contracts by default. T-mobile has a setting where you can turn it off and on Setting up these methods are also not trivial for companies. Setting up adaptive streaming based on bandwidth available has been a solved problem since RealVideo in the late 90s. All providers do it now. Anyone can set this up with WireCast. The selection process is hidden (there is no information available), looking at the participating services most probably don't bother either due to cost, restrictions or administrative reasons. Every streaming provider in the US took advantage of it. Streaming your own library is excluded in the contract, so it is not music, only what T-Mobile says is music. I call that censorship. You can stream your own audio through Apple Music through the Music Match (?) Service. This is all really a moot point now that T-mobile only sells unlimited plans now and if you really want to opt out of compressed video you can pay $10 more.
  - 8y ago
- Slartie 8y ago
  It's a neat psychological trick to get people accustomed to non-content-neutral pricing strategies by mobile network operators. Basically it is a counter-strategy to the net neutrality people. While net neutrality is usually argued as being a proven way to get the best possible outcome for the entire market as a whole, zero rating counters this by appealing to individual greed of the small-minded ("But I like free YouTube now more than your lofty it's-gonna-be-better-for-all-in-the-end future utopia!"). While I strongly detest it, using this strategy in this context is a stroke of genius. The base strategy already is generally proven to work great in all target demographics, but applied in a way in in which the modern, urban, don't-need-to-own-stuff-cause-sharing-economy-and-streaming-exists metropolitans which are traditionally rather opposed to old-school big-corp power grabs, actually get something immediately valuable to them out of the deal additionally boosts its effectiveness. A big fraction of the people that would otherwise possibly take part in the movement to advance the net neutrality cause are now placated by endless Spotify and Netflix on their phones.
- woadwarrior01 8y ago
  Zero rating is the antonym of net-neutrality.
exabrial 8y ago
I have my doubts whether or not this an apples-apples comparison. EU tends to have extreme regulation and also lofty subsidies. Nevertheless, I agree with the assertion that zero-rating is an anticompetitive practice. Actually rating in general just kind of stinks. Billing this way has lead to the current situation.
illumin8 8y ago
Does anyone know who regulates Comcast/Xfinity in California? I'm a cord cutter and with 4K video becoming more popular, I've almost hit my 1TB data cap twice in the last year. Comcast/Xfinity is illegally promoting their video services by delivering it over the same network, but zero rating their content, while charging customers overage fees for using 3rd party video services like Netflix, Hulu, and Amazon Prime Video. I filed a complaint with the California PUC and they told me they don't regulate Comcast/Xfinity because they are not a landline telephone service. It seems horrible that there might not be any regulator that is keeping Comcast/Xfinity from harming consumers like myself.
- dragonwriter 8y ago
  > Comcast/Xfinity is illegally promoting their video services by delivering it over the same network, but zero rating their content, while charging customers overage fees for using 3rd party video services like Netflix, Hulu, and Amazon Prime Video. Given the repeal of federal net neutrality regs and California putting it's net neutrality rules on hold pending the result of a federal lawsuit, under what active law is the illegal?
  - illumin8 8y ago
    It may not be illegal, but they're using their monopoly provider position (they are the only broadband provider in my city) to harm consumers, so it needs to stop.
    - dragonwriter 8y ago
      If it's an abuse of monopoly issue, the FTC is the venue you want.
- cbuq 8y ago
  The unfortunate reality is that this is perfectly legal. I feel you are out of the loop with the whole net neutrality fiasco (https://www.eff.org/issues/net-neutrality https://www.eff.org/issues/net-neutrality)
nroets 8y ago
IMHO net neutrality and zero rating are just the tip of the regulatory iceberg. The really hard work of the regulator is to ensure that telcos don't abuse their access to spectrum and other resources. IMHO the best way to do this is to force telcos to give each other access to their infrastructure at a reasonable price. For example, when margins* are high enough, new virtual telcos must be able to start up with minimal infrastructure. The consumer side does not need a lot of regulation. If there is enough competition, consumers will vote with their money. Edit: Changed "prices" to "margins".
- rayiner 8y ago
  That is not the best way. Defining “reasonable price” is extremely difficult and that’s one thing the market does much better than the government. The history of regulation in the 20th century, not just in the US but all over the world, is a pattern of governments ditching the idea that they can calculate the “reasonable price” and impose price controls, and moving to more market-oriented mechanisms for regulation. In the case of wireless, where there is no natural monopoly, the best approach is to simply open up lots of spectrum and ensure there are a sufficient number of competing carriers. There is a ton of spectrum being wasted for things like television that could be used for broadband instead.
  - nroets 8y ago
    It just seems to me quite wasteful that there are so much telco infrastructure is duplicated (redundant): For example digging along the same street more than once to lay fiber. Or have cellular towers from different companies next to each other. On my last visit to the US, I used both "Straight Talk" and "Trac Phone". These are virtual telcos that use Verizon/AT&T and T Mobile infrastructure. New customers can choose a SIM card before activating the service. Surely the prices paid by these virtual telcos are set by the regulator. Here is South Africa, the third and fourth mobile operators roam on the first and second mobile networks. AFAIK, the regulator force these roaming agreements apon the operators. (Here I can get 50 GB of prepaid data for only R500 = $38. Much cheaper than the US!) So there are ways to set prices.
LarryDarrell 8y ago
Step 1: Convince everyone that the goals of anti-trust are low prices, not breaking up the consolidation of corporate power. Step 2: Cripple the regulatory powers of the government by convincing everyone that government is the problem. Step 3: Soak your now captive customers in a regulatory friendly / competion-free environment.
- shittyadmin 8y ago
  You missed step 0: Regulate RF spectrum such that setting up a new provider is almost impossible but spectrum is extremely valuable so big providers will have incentives to buy smaller ones to stop competition.
  - bhhaskin 8y ago
    Here is the deal with that though. Spectrum is finite. There is only so much to go around. There absolutely needs to be regulation, as it cannot be a free for all. Just look at wifi in large hotels or apparment/office complex to see what happens if there are too many devices talking over the air at once.
    - johannes1234321 8y ago
      However there is good and there is bad regulation. During the UMTS frequency auction the German finance minister joked about UMTS meaning "Unerwartete Mehreinnahmen zur Tilgung von Schulden" (unexpected additional income to repay debt) and tried to maximize financial gain. A good regulation would be one which ensures competition, for instance by ensuring infrastructure in rural areas can be used by multiple companies isntead of making entry into the market expensive.
    - bdamm 8y ago
      The ITU bands (e.g. 900MHz, 2.4 GHz) are way too small. If we had larger, national or global, unregulated bands, it would drive wireless innovation to even greater heights. As it is now we have "innovators" who have access to private bands, and should know better (the cellular telecoms) threatening to trash the ITU bands with 5G coverage. It's a travesty since the result will be cellular Big Co basically squashing your Wi-Fi and the smaller players who can't afford private spectrum.
HillaryBriss 8y ago
after reading this article, i have come to view zero-rating as a form of branding. basically, the internet providers are trying to take a step away from the forces of commoditization. once i viewed it that way, it's pretty predictable that the price for the same exact service will be higher than if zero-rating were disallowed.
tzs 8y ago
How much of this is due to in places with cheap wireless offering zero rating won't be as effective at attracting customers as it would be in a place with expensive wireless, hence you are more likely to see it offered in places with expensive wireless? For instance, T-Mobile's "Music Freedom" zero-rates a whole bunch of music streaming services. In the US, where data is expensive, that could easily cause someone to pick T-Mobile over one of the other providers, if they listen to a lot of music. With "Music Choice" I can get by on the smallest data plan. Without it, I'd have to step up, maybe even to unlimited. In a country where data is cheap, something like "Music Freedom" wouldn't make much difference, and so I could see less ISPs bothering with the technical and administrative overhead of having such a program.
- proofofconcept 8y ago
  This is putting the cart before the horse. Competition is what drives down prices. When companies aren't allowed to zero rate content then they're all offering more or less the same product so they have to compete with each other on price. Also keep in mind that zero rating is itself an explicit admission that network capacity and overhead aren't factors in the price. The whole deal is that the wireless company lets customers on those plans use unlimited data at no extra charge as long as it's for zero rated content. Allowing customers at that same price point to use that same unlimited data without arbitrary restrictions would ultimately be just as profitable.
  - hueving 8y ago
    >Also keep in mind that zero rating is itself an explicit admission that network capacity and overhead aren't factors in the price. No, that's not what that means. You can easily take special means to get direct peering to zero rated partners or install CDNs so that zero rated traffic does have any impact on peering links. Congestion at the last mile is only a small part of what an ISP deals with.
    - proofofconcept 8y ago
      If zero rating wasn't allowed then the ISP would still be doing that sort of thing with popular content providers anyway, just the ones that their users prefer instead of the ones their users are being railroaded onto by the ISP itself, so as far as I'm concerned it's a wash.
ikeboy 8y ago
Be cautious of getting causality claims from studies like this that don't try to control for anything
julienfr112 8y ago
What about country with more expensive wireless have zero rating ? If wireless is cheap, you can afford to pay it so zero rating would have no 'client'.
buboard 8y ago
This report is particularly suspect. First of all zero-rating is not banned in the EU, and it's not clear which countries are included in the "has zero-rating" basket. The more likely interpretation of their data is that "in countries with shitty internet, providers tend to offer a lot of zero-rating offers". E.g the internet is vastly better in romania than in greece yet they both have a lot of "differentially rated" offers Then they only show two years , 2015 vs 2016, where there is a slight increase of 2% in prices , without error bars. Then there is this: > we repeated our analysis for zero-rating oﬀers introduced in 2016 or 2017. However, initially this did not produce statistically signifcant results in any category. Closer examination of the data however revealed Finland to be an outlier market, in which the replacement of a single oﬀer signifcantly changed the prices in almost all data volume aaskets. This is likely due to the fact that unlimited data plans, which do not sensibly admit a price per gigaayte calculation, are prevalent in Finland. We therefore repeated the analysis but excluded Finland from our dataset. In this case, we found a statistically signifcant result (p=0.04) for markets in which zero-rating was introduced between 2015 and 2016. These markets showed a 1% price increase between 2016 and 2017, whereas markets without zero-rating in both cases showed a 10% price decrease. I think they are stretching it with p=0.04 on a cherrypicked sample of n=30, and present a rather peculiar conclusion about their data. Zero rating is obviously marketing garbage, but i am very unconvinced that it is the reason why ISPs are not investing in their networks. (It also took 10 minutes to download their 5MB pdf - talk about bad internet ;) )
- Reason077 8y ago
  > The more likely interpretation of their data is that "in countries with shitty internet, providers tend to offer a lot of zero-rating offers". I agree. They even seem to admit it's a pretty suspect analysis: "However, since zero-rating offers are now prevalent in almost all EU countries this analysis cannot be extended into the future."
  - tapland 8y ago
    It's been slow but Telia (first proper zero rating court case in the EU afaik) lost in the national courts in September, with the courts referring to EU regulation from 2015.
makomk 8y ago
I get the feeling that the authors of this report are not entirely honest. For example, part-way through they make this claim about Portuguese operator MEO's plans: "Using applications participating in the DPP is two up to 77-fold cheaper compared to using applications via general data volume. This strong incentive for customers to use participating applications infringes on the rights of consumers to use applications of their choice and the rights of CAPs to provide services independent of the origin of their users." Up to 77 times more for neutral data than data to their partners - sounds scary, but how do they get that figure? Well, they take MEO's smallest month-to-month contract which offers 250 minutes + SMS + 500 MB of data + free in-network calls, divide the amount of data by the total cost, and compare this with the nominally 10 GB Smart Net addon which only offers data to the included services. That is, they're treating the phone and SMS part of the all-internet plan as though it costs nothing when it definitely does not. I think the two-fold cheaper figure on the lower end is wrong too - on paper the non-neutral Smart Net is more like three times cheaper than comparable prepaid data, at least for people who make good use of the Smart Net data limit. Bear in mind that as I understand it each Smart Net plan is for access to one of Messaging, Social, Video, or Music, which includes a handful of the main sites in that category. I imagine most people will have usage that is relatively low and spread across multiple categories plus some outside-of-package usage, in which case a general internet access plan will work out cheaper.
resters 8y ago
While it is interesting to read this, there are a lot of confounding variables. Chances are countries which would allow zero ratings in the first place would also be more tolerant of other incarnations of excessive market power. Note, that in spite of my opposition to net neutrality, I strongly support using traditional antitrust mechanisms to prevent firms' excessive market power and last mile monopolies from leading to unfair prices.
- gnicholas 8y ago
  I had the same thought. The first paragraph concludes: And the evidence is in that it conclusively makes broadband more expensive, but this seems a bit much given the confounding variables you mention.
- qotgalaxy 8y ago
  Note, that in spite of my opposition to chemotherapy, I strongly support curing cancer.
k__ 8y ago
I pay 35€ a month for 16GB LTE. Is this expensive?
- miguelrochefort 8y ago
  Not really. I pay $50 for 1GB in Canada.
- gsich 8y ago
  Yes.
- friendly_chap 8y ago
  I have just got 50gigs of 4g for £27 in London.
- Strom 8y ago
  It can certainly be much cheaper. I pay 17€/month for "unlimited" LTE (includes 9GB EU roaming) and this at ~75 Mbit/s up/down speeds in most cases. Now it's hard to say what "unlimited" actually means in numbers, as it's just defined as reasonable usage in the terms of service. However as another data point, the next cheapest plan is 100GB LTE for 15€/month, so I assume unlimited is at the very least above 100GB.
ummonk 8y ago
Obviously in countries with poorer wireless infrastructure there is more reason to use zero rating to expand coverage...
olivil 8y ago
Highly anecdotal but while visiting Lithuania I had a prepaid SIM card with 200 local call minutes and 6GB of (quite fast) LTE data + unlimited Facebook (including Messenger) and Spotify for 3 Euros for 30 days, SIM card included.
luka-birsa 8y ago
Reading the comments bellow its really funny to hear all this bull about caps being there to protect the providers and their lack of capacity. I have 300 mbit link for 50 USD and no caps. I have full lte and 2TB downlink cap for 25 USD. But we do have strong competition and it seems it was never about capacity. Its about who offers more. Its obvious that they can afford this since nobody is loosing money, and all of this on a very small and marginal market where isps purchsing power is small. You are being bullshited to, dear Americans.

255 points by J253 8y ago

"What is zero rating?" you might ask. (I did). This is the process of ISPs offering free carriage of exclusively particular traffic. e.g. T-Mobile's "unlimited [downsampled] youtube" offering, Facebook's free internet (offered in India IIRC), Amazon's whispernet for Kindle.

shmerl 8y ago
It's an ugly anti-competitive symptom of the actual disease - data caps. Curing the symptom helps marginally. What needs fixing is the disease.
- chillydawg 8y ago
  I'm not sure data caps are a disease, as such. It costs money to move data around. Caps on "unlimited" deals are obviously a dodgy sales technique, but I don't think that's what's being discussed.
  - crankylinuxuser 8y ago
    The natural data cap is the actual line speed of the connection. That would mean a 10Mbit connection == 3.24TB/month That's definitely a cap that is directly related to line speed. But these 150GB caps are purely because the internet companies are also content companies - and their content channels are zero rated. And with a 10Mbit connection, it only takes 33 hours to exceed their arbitrary cap over the whole month.
    - woah 8y ago
      That would only make sense if everyone used a totally consistent amount of bandwidth 24/7. The reality is that most bandwidth is used between 5-10pm. Bandwidth caps cause people to use bandwidth sparingly and ease congestion. To allay your complaints about unfairness, you could structure it so that the caps are looser in off hours like 3am, but then again, that wouldn’t benefit most people because they don’t use the internet at 3am. The best system would be to charge based on bandwidth usage, and raise and lower prices based on congestion per tower. But most ISPs don’t have the billing capability to support that, and bandwidth caps sort of approximate it.
      - ryukafalz 8y ago
        >To allay your complaints about unfairness, you could structure it so that the caps are looser in off hours like 3am, but then again, that wouldn’t benefit most people because they don’t use the internet at 3am. On the other hand, something like this might incentivize developers to take advantage of lower pricing during periods of lower congestion. Mobile OSes tend to provide the user a choice between downloading updates anytime or only when on WiFi, but if the pricing structure made this useful, there’s no reason they couldn’t download updates overnight too.
        icebraining 8y ago
        Back in the early 2000s, before most plans move to "unlimited", some ISPs in Portugal did exactly that: they had rather small caps, but then unlimited between 1am and 7am. And we did have developers take advantage of that; for example, there was a popular fork of eMule that had extra scheduling features, so it could automatically run just in that period.
        gcb0 8y ago
        then they realized they could get away without even that modicum of respect to the clients, because, well they run a legal monopoly. Either you only have one option (fiber, or even cable in some markets) or the 3 to 4 offerings have the same "deals" across the board. I try very hard to be civil on HN, but everyone defending artifical data caps are a bunch of idiots (in the true sense of the greek work: a person that can't live in society and should be voted to be ostracized).
        hueving 8y ago
        >I try very hard to be civil on HN, but everyone defending artifical data caps are a bunch of idiots Not that hard I guess. Data caps are the only reason you have affordable consumer internet because they allow a significant amount of oversubscription which matches the mostly-idle bursty behavior of consumers. You can get leased lines from ISPs with no caps easily. You just won't like the real price that comes with guaranteeing a customer that kind of bandwidth.
    - SpaceManiac 8y ago
      > purely because the internet companies are also content companies I have no doubt this is a reason, but most ISPs also oversell their bandwidth. If every customer with a 10Mbit line is only using it 10% of the time, your upstream lines only 'need' to be 10% of 10Mbit * the number of customers (plus whatever margin for spikes).
      - woah 8y ago
        A 100mbit connection that is not oversold can easily run a few hundred to a thousand dollars a month.
        AnthonyMouse 8y ago
        Maybe a decade ago. It's down below $50/month now from a major exchange point. Even less if you deal in larger quantities as ISPs would.
      - jdietrich 8y ago
        It's called contention. Typical ratios are about 20:1 - for every 20Mbits of throughput they sell to customers, they have about 1Mbit of throughput to the internet. Leased lines are uncontended, but they're also vastly more expensive than conventional broadband services.
        crankylinuxuser 8y ago
        I don't care how they do contention. That's a business plan. What I do care about is fraudulent business practices. I expect a minimum speed alongside a maximum speed. And if their contention ratio is 10:1 then I expect 1Mbit-10Mbit for that connection. But no, the content/internet media companies play insane games, zero rating their stuff, enforcing arbitrary 'kill netflix' limits, and evil layer 7 filtering. They need broken up into lines owned by the state, service over lines sold to whomever provides service (like an ISP or a content company), and customers leasing the lines like how power works. These megagiant media corps should have never owned the physical connections. At all.
    - Ajedi32 8y ago
      The problem is there's simply not enough capacity for _everyone_ to use their 10 Mbit connection at the same time. That's a necessary property of efficient packet-switched networks. As a result of this, people who use more total data generally incur higher infrastructure costs to the provider than those who use less; even if those two groups of people have the exact same link speed.
    - hueving 8y ago
      The natural data cap is the line speed of the ISP's peering links to upstream providers divided by the number of customers. Traffic out to the internet involves way more than your last mile connection.
      - AnthonyMouse 8y ago
        > The natural data cap is the line speed of the ISP's peering links to upstream providers divided by the number of customers. The natural data cap is the line speed of the ISP's peering links to upstream providers divided by the number of active customers. But you don't need monthly limits for that, it's true all the time inherently. It's also kind of a scam on the ISP side because content providers are generally happy to peer with ISPs at no cost to the ISP, so it's not as if there's a non-artificial bottleneck there.
  - dkfndodbxob 8y ago
    It doesn't really cost money to move data around. The biggest cost by far is building the infrastructure. If the capacity is available, the cost of using it is minimal.
    - munk-a 8y ago
      I'd assume ISPs are taking infrastructure into their cost calculations, even in a case where the initial build out was government subsidized... things break, there are ongoing costs. And my totally uninformed understanding is that the ongoing maintenance costs, and the costs of expanded service are both pretty minimal.
      - rayiner 8y ago
        Both are incorrect. Almost no ISP infrastructure is “government subsidized.” Almost all the subsidies are urban ISPs subsidizing rural ones. There was a tiny bit of actual government subsidy under Obama as part of the post-recession stimulus. And ongoing maintenance and support costs are very high. Even if you don’t trust Verizon’s SEC disclosures (showing 5% or less in operating profit for wireline) look at the financial statements for something like Chattanooga’s EBP. The vast majority of revenue goes to ongoing costs, before you even get to paying down the initial build out.
        shmerl 8y ago
        Given severe lack of competition among ISPs in US, I don't buy the bogus argument that current prices are fair. Simple market logic suggests, that they overcharge, because they can. Therefore they do have more than enough money for their upgrades. And on top of that, most simply prefer to pocket them instead of investing into the network, with "no one needs it" excuse. Something they would never have done with healthy competition.
    - Ma8ee 8y ago
      It does cost money to move data around, even if it is an upfront cost when you build the infrastructure. When your users move enough data that you are getting close to the capacity of your infrastructure you need to invest more money to extend your infrastructure. Or to express it slightly differently: if there weren’t any data to move you wouldn’t have to build any infrastructure and you wouldn’t have any costs. If you want to move data you have to build the infrastructure which cost money, which means that it costs money to move data.
  - scarejunba 8y ago
    Fi's data is just "pay more get more", which makes sense to me. I don't think unlimited deals make sense since there's a true marginal cost here.
    - plussed_reader 8y ago
      Up to $100/6GB of mobile data. The next 9GB of mobile data are at normal up/down rates, then everything over 15GB is metered for the rest of the billing cycle. 'Bill Protection'.
      - xur17 8y ago
        It's $20 for a plan + $10/GB of mobile data. Not sure where $100/6GB comes from.
        kkarakk 8y ago
        Who is keeping multiple plans? You use one phone and one data plan and get fleeced when you blow past your data plan.
        xur17 8y ago
        I'm not sure I follow what you are saying here. I presented pricing for a single user on a single plan.
      - deleted 8y ago
        [deleted]
- chewbacha 8y ago
  Not really, data limits are a necessary evil of infrastructure. It's more the trust-building that's going on between the giants of industry. It's the 1920s all over again, just with different tech.
  - shmerl 8y ago
    Bandwidth limit is the natural limit. Not monthly data limit - that's simply a method to fleece users. Nothing to do with infrastructure.
    - chewbacha 8y ago
      By that logic, api rate limits are a method to fleece api users... which is not true at all. Rate limits are put in place to protect infrastructure for overloading, that's been the main reason I have implemented circuit breakers and rate limiting.
      - shmerl 8y ago
        Except it's a fallacious logic. ISP networks can perfectly handle the load already. There is no "data flood apocalypse" or anything the like. ISP execs said so much explicitly. They point blank admitted, data caps are not driven by technical needs but simply by greed.
  - jusssi 8y ago
    For some reason, there are places where this necessary evil doesn't seem to be, well, necessary. Neither my wired not my 4g connection have a data cap. Taking "necessary" out of necessary evil, leaves just evil.
- rayiner 8y ago
  What exactly is “anti-competitive” about data caps? They’re just a form of congestion pricing. Congestion pricing is now widely considered desirable for things like roads. Now, ideally, we would have fine grained congestion pricing with fees kicking in based on tower occupancy level. But customers would probably find that too unpredictable. Moreover, congestion isn’t the only cost to account for. Take the total number of dollars of capital and maintenance costs of the network over it’s useful life and divide by the total number of bits sent during that useful life. That produces a cost per bit that seems quite reasonable to apply to customers based on how many bits they send.
  - bb88 8y ago
    If an ISP is the only game in town, and they zero rate their streaming service but put a cap on Netflix it is anti competitive. The problem with your roads analogy is that there's more than one road to take. Not all roads are tolled. And the cure isn't getting rid of data caps, the cure is increasing competition on a local level.
    - toomuchtodo 8y ago
      The physical RF spectrum is the local road. There are no more roads to take. No amount of economic policy supporting competition is going to bend the laws of physics, unless you're willing to shovel herculean amounts of resources into microcells (even smaller than 5G cell sites) to reduce contention (essentially replacing fiber and wifi).
      - dzhiurgis 8y ago
        National network + eSIM. Retailers compete on providing better internwtional traffic (pretty much as it is now with broadband in many countries).
        toomuchtodo 8y ago
        Your suggested solution does not address the local cell network contention issue zero rating attempts to mitigate.
- kazinator 8y ago
  Not specifically a symptom of caps! Even in a billing structure that has a fixed cost per unit of data transferred, regardless of usage (thus no cliff-like data caps), a zero rating exemption can still influence user behavior in anti-competitive ways. It's analogous to product dumping. (Did you want to say that it's a symptom of the disease of any price structure under which users get charged extra on top of their subscription fee, according to some function of their data use?)
  - shmerl 8y ago
    Good thing IPSs don't charge per unit of data transferred. That would be even worse. So in practice, zero rating in the context of ISPs is very much related to data caps. When there are no caps, zero rating has no meaning.
    - munk-a 8y ago
      It wouldn't be terrible if they charged per unit of data transferred _at a sane level_, we're just all aware that if they switched to this model (which exists in some places like South Africa) then they'd gouge us over prices... it'd also introduce an interesting social dynamic since sites that push megs of ads on you would literally be taking money from your pocket, instead of just wasting your time. It'd actually be kind of neat if bloatware were discouraged this way, since currently there is no cost to bloatware as long as whatever it is remains within the acceptably performant range.
    - kccqzy 8y ago
      Doesn't Google Fi do exactly this? They charge $10/GB for data.
      - AnthonyMouse 8y ago
        $10/GB is high. Purposely high, because the point of Google Fi is to use WiFi as much as possible and avoid cellular. So it's there if you need it but you don't want to need it much. This hardly works for the connection which is actually providing your WiFi, or if you want to try to use cellular exclusively.
- morpheuskafka 8y ago
  I totally agree that data caps are insane with today's technology and need to die for good. However, at least some zero-rating programs are "category-wide" and will enroll any streaming provider on request.
devindotcom 8y ago
Unfortunately it's not always represented accurately! This is a self link but if anyone else is curious about some of the specifics of zero rating, its justifications and issues, I wrote a piece on it a little while back: https://techcrunch.com/2017/04/16/wtf-is-zero-rating/ https://techcrunch.com/2017/04/16/wtf-is-zero-rating/
vinay427 8y ago
I believe the Facebook offering in India was rejected after a series of PR missteps by Facebook and some increased public awareness around net neutrality: https://www.cnet.com/news/why-india-doesnt-want-free-basics https://www.cnet.com/news/why-india-doesnt-want-free-basics
- drewmol 8y ago
  I may be overly cynical here but my understanding is: Facebook tried to build a walled garden development platform on top of TCP/IP, bundle it with free low-bandwidth internet necessities (consisting of Facebook and several other deliberately non-Google properties) and ram it dowm the throats of a billion impoverished and technologicly unfamiliar new internet users of India. At that time in 2013[0], FB market cap was $100B, GOOG was $282B. FB had 1.1B users with ARPU of $1.63, GOOG had 1.3B users with ARPU of $10.09. Looking avoid a market correction, FB aimed to add 1B new users from India and simultaneously prevent them from becoming new Google users and disguised the scheme as philanthropy. It didn't work. FB was then forced to moved fast and break: data access control policies, respect for their users, expectation of privacy, and lots of pesky regulations. By distributing user data for free as an investment in the future, then buying the competition to control the demand, FB cemented their position as a gatekeeper of the online commons and dictator of social media. Insights gained from this freely available, or loosely guarded user data helped explode demand for the user manipulation as a service offering FB had newly monopolized. Gloves now off, FB leveraged this position and acheived hockey stick profit growth after just one US congressional election season, a midterm year at that. FB's Q42018 ARPU ~ $7.37, MAU 2.23B[1]. [0] https://www.forbes.com/sites/tristanlouis/2013/08/31/how-much-is-a-user-worth/#4e8d01a01c51 https://www.forbes.com/sites/tristanlouis/2013/08/31/how-muc... [1] https://www.statista.com/statistics/264810/number-of-monthly-active-facebook-users-worldwide/ https://www.statista.com/statistics/264810/number-of-monthly...
blackoil 8y ago
India does not have Facebook free internet. We do have a billion people and most competetive mobile service companies. For 200₹(3$) a month you can have unlimited calls SMS and 1GB of daily data.
- lesdeuxmagots 8y ago
  This is a relatively recent development! Pretty remarkable the pace of competition within the wireless market, which was relatively stagnant only a few years ago.
scarface74 8y ago
In all fairness, T-mobile’s zero rating is not anti-competitive. Any video carrier can sign up for it and no money changes hands. There were some porn sites that signed up for it - ie T-Mobile didn’t discriminate.
- consp 8y ago
  It usually is "free-as-in-beer" since they are allowed to sell user statistics that way (the Dutch T-Mobile zero rated music being an exception due to law). There is no way to opt out of that practice as it is included in most contracts by default. Setting up these methods are also not trivial for companies. The selection process is hidden (there is no information available), looking at the participating services most probably don't bother either due to cost, restrictions or administrative reasons. Streaming your own library is excluded in the contract, so it is not music, only what T-Mobile says is music. I call that censorship.
  - scarface74 8y ago
    It usually is "free-as-in-beer" since they are allowed to sell user statistics that way (the Dutch T-Mobile zero rated music being an exception due to law). Why would the providers need to buy statistics on their customers? They already know who is listening to and watching what content. There is no way to opt out of that practice as it is included in most contracts by default. T-mobile has a setting where you can turn it off and on Setting up these methods are also not trivial for companies. Setting up adaptive streaming based on bandwidth available has been a solved problem since RealVideo in the late 90s. All providers do it now. Anyone can set this up with WireCast. The selection process is hidden (there is no information available), looking at the participating services most probably don't bother either due to cost, restrictions or administrative reasons. Every streaming provider in the US took advantage of it. Streaming your own library is excluded in the contract, so it is not music, only what T-Mobile says is music. I call that censorship. You can stream your own audio through Apple Music through the Music Match (?) Service. This is all really a moot point now that T-mobile only sells unlimited plans now and if you really want to opt out of compressed video you can pay $10 more.
- 8y ago
Slartie 8y ago
It's a neat psychological trick to get people accustomed to non-content-neutral pricing strategies by mobile network operators. Basically it is a counter-strategy to the net neutrality people. While net neutrality is usually argued as being a proven way to get the best possible outcome for the entire market as a whole, zero rating counters this by appealing to individual greed of the small-minded ("But I like free YouTube now more than your lofty it's-gonna-be-better-for-all-in-the-end future utopia!"). While I strongly detest it, using this strategy in this context is a stroke of genius. The base strategy already is generally proven to work great in all target demographics, but applied in a way in in which the modern, urban, don't-need-to-own-stuff-cause-sharing-economy-and-streaming-exists metropolitans which are traditionally rather opposed to old-school big-corp power grabs, actually get something immediately valuable to them out of the deal additionally boosts its effectiveness. A big fraction of the people that would otherwise possibly take part in the movement to advance the net neutrality cause are now placated by endless Spotify and Netflix on their phones.
woadwarrior01 8y ago
Zero rating is the antonym of net-neutrality.

exabrial 8y ago

I have my doubts whether or not this an apples-apples comparison. EU tends to have extreme regulation and also lofty subsidies. Nevertheless, I agree with the assertion that zero-rating is an anticompetitive practice. Actually rating in general just kind of stinks. Billing this way has lead to the current situation.

illumin8 8y ago

Does anyone know who regulates Comcast/Xfinity in California? I'm a cord cutter and with 4K video becoming more popular, I've almost hit my 1TB data cap twice in the last year. Comcast/Xfinity is illegally promoting their video services by delivering it over the same network, but zero rating their content, while charging customers overage fees for using 3rd party video services like Netflix, Hulu, and Amazon Prime Video. I filed a complaint with the California PUC and they told me they don't regulate Comcast/Xfinity because they are not a landline telephone service. It seems horrible that there might not be any regulator that is keeping Comcast/Xfinity from harming consumers like myself.

dragonwriter 8y ago
> Comcast/Xfinity is illegally promoting their video services by delivering it over the same network, but zero rating their content, while charging customers overage fees for using 3rd party video services like Netflix, Hulu, and Amazon Prime Video. Given the repeal of federal net neutrality regs and California putting it's net neutrality rules on hold pending the result of a federal lawsuit, under what active law is the illegal?
- illumin8 8y ago
  It may not be illegal, but they're using their monopoly provider position (they are the only broadband provider in my city) to harm consumers, so it needs to stop.
  - dragonwriter 8y ago
    If it's an abuse of monopoly issue, the FTC is the venue you want.
cbuq 8y ago
The unfortunate reality is that this is perfectly legal. I feel you are out of the loop with the whole net neutrality fiasco (https://www.eff.org/issues/net-neutrality https://www.eff.org/issues/net-neutrality)

nroets 8y ago

IMHO net neutrality and zero rating are just the tip of the regulatory iceberg. The really hard work of the regulator is to ensure that telcos don't abuse their access to spectrum and other resources. IMHO the best way to do this is to force telcos to give each other access to their infrastructure at a reasonable price. For example, when margins* are high enough, new virtual telcos must be able to start up with minimal infrastructure. The consumer side does not need a lot of regulation. If there is enough competition, consumers will vote with their money. Edit: Changed "prices" to "margins".

rayiner 8y ago
That is not the best way. Defining “reasonable price” is extremely difficult and that’s one thing the market does much better than the government. The history of regulation in the 20th century, not just in the US but all over the world, is a pattern of governments ditching the idea that they can calculate the “reasonable price” and impose price controls, and moving to more market-oriented mechanisms for regulation. In the case of wireless, where there is no natural monopoly, the best approach is to simply open up lots of spectrum and ensure there are a sufficient number of competing carriers. There is a ton of spectrum being wasted for things like television that could be used for broadband instead.
- nroets 8y ago
  It just seems to me quite wasteful that there are so much telco infrastructure is duplicated (redundant): For example digging along the same street more than once to lay fiber. Or have cellular towers from different companies next to each other. On my last visit to the US, I used both "Straight Talk" and "Trac Phone". These are virtual telcos that use Verizon/AT&T and T Mobile infrastructure. New customers can choose a SIM card before activating the service. Surely the prices paid by these virtual telcos are set by the regulator. Here is South Africa, the third and fourth mobile operators roam on the first and second mobile networks. AFAIK, the regulator force these roaming agreements apon the operators. (Here I can get 50 GB of prepaid data for only R500 = $38. Much cheaper than the US!) So there are ways to set prices.

LarryDarrell 8y ago

Step 1: Convince everyone that the goals of anti-trust are low prices, not breaking up the consolidation of corporate power. Step 2: Cripple the regulatory powers of the government by convincing everyone that government is the problem. Step 3: Soak your now captive customers in a regulatory friendly / competion-free environment.

shittyadmin 8y ago
You missed step 0: Regulate RF spectrum such that setting up a new provider is almost impossible but spectrum is extremely valuable so big providers will have incentives to buy smaller ones to stop competition.
- bhhaskin 8y ago
  Here is the deal with that though. Spectrum is finite. There is only so much to go around. There absolutely needs to be regulation, as it cannot be a free for all. Just look at wifi in large hotels or apparment/office complex to see what happens if there are too many devices talking over the air at once.
  - johannes1234321 8y ago
    However there is good and there is bad regulation. During the UMTS frequency auction the German finance minister joked about UMTS meaning "Unerwartete Mehreinnahmen zur Tilgung von Schulden" (unexpected additional income to repay debt) and tried to maximize financial gain. A good regulation would be one which ensures competition, for instance by ensuring infrastructure in rural areas can be used by multiple companies isntead of making entry into the market expensive.
  - bdamm 8y ago
    The ITU bands (e.g. 900MHz, 2.4 GHz) are way too small. If we had larger, national or global, unregulated bands, it would drive wireless innovation to even greater heights. As it is now we have "innovators" who have access to private bands, and should know better (the cellular telecoms) threatening to trash the ITU bands with 5G coverage. It's a travesty since the result will be cellular Big Co basically squashing your Wi-Fi and the smaller players who can't afford private spectrum.

HillaryBriss 8y ago

after reading this article, i have come to view zero-rating as a form of branding. basically, the internet providers are trying to take a step away from the forces of commoditization. once i viewed it that way, it's pretty predictable that the price for the same exact service will be higher than if zero-rating were disallowed.

tzs 8y ago

How much of this is due to in places with cheap wireless offering zero rating won't be as effective at attracting customers as it would be in a place with expensive wireless, hence you are more likely to see it offered in places with expensive wireless? For instance, T-Mobile's "Music Freedom" zero-rates a whole bunch of music streaming services. In the US, where data is expensive, that could easily cause someone to pick T-Mobile over one of the other providers, if they listen to a lot of music. With "Music Choice" I can get by on the smallest data plan. Without it, I'd have to step up, maybe even to unlimited. In a country where data is cheap, something like "Music Freedom" wouldn't make much difference, and so I could see less ISPs bothering with the technical and administrative overhead of having such a program.

proofofconcept 8y ago
This is putting the cart before the horse. Competition is what drives down prices. When companies aren't allowed to zero rate content then they're all offering more or less the same product so they have to compete with each other on price. Also keep in mind that zero rating is itself an explicit admission that network capacity and overhead aren't factors in the price. The whole deal is that the wireless company lets customers on those plans use unlimited data at no extra charge as long as it's for zero rated content. Allowing customers at that same price point to use that same unlimited data without arbitrary restrictions would ultimately be just as profitable.
- hueving 8y ago
  >Also keep in mind that zero rating is itself an explicit admission that network capacity and overhead aren't factors in the price. No, that's not what that means. You can easily take special means to get direct peering to zero rated partners or install CDNs so that zero rated traffic does have any impact on peering links. Congestion at the last mile is only a small part of what an ISP deals with.
  - proofofconcept 8y ago
    If zero rating wasn't allowed then the ISP would still be doing that sort of thing with popular content providers anyway, just the ones that their users prefer instead of the ones their users are being railroaded onto by the ISP itself, so as far as I'm concerned it's a wash.

ikeboy 8y ago

Be cautious of getting causality claims from studies like this that don't try to control for anything

julienfr112 8y ago

What about country with more expensive wireless have zero rating ? If wireless is cheap, you can afford to pay it so zero rating would have no 'client'.

buboard 8y ago

This report is particularly suspect. First of all zero-rating is not banned in the EU, and it's not clear which countries are included in the "has zero-rating" basket. The more likely interpretation of their data is that "in countries with shitty internet, providers tend to offer a lot of zero-rating offers". E.g the internet is vastly better in romania than in greece yet they both have a lot of "differentially rated" offers Then they only show two years , 2015 vs 2016, where there is a slight increase of 2% in prices , without error bars. Then there is this: > we repeated our analysis for zero-rating oﬀers introduced in 2016 or 2017. However, initially this did not produce statistically signifcant results in any category. Closer examination of the data however revealed Finland to be an outlier market, in which the replacement of a single oﬀer signifcantly changed the prices in almost all data volume aaskets. This is likely due to the fact that unlimited data plans, which do not sensibly admit a price per gigaayte calculation, are prevalent in Finland. We therefore repeated the analysis but excluded Finland from our dataset. In this case, we found a statistically signifcant result (p=0.04) for markets in which zero-rating was introduced between 2015 and 2016. These markets showed a 1% price increase between 2016 and 2017, whereas markets without zero-rating in both cases showed a 10% price decrease. I think they are stretching it with p=0.04 on a cherrypicked sample of n=30, and present a rather peculiar conclusion about their data. Zero rating is obviously marketing garbage, but i am very unconvinced that it is the reason why ISPs are not investing in their networks. (It also took 10 minutes to download their 5MB pdf - talk about bad internet ;) )

Reason077 8y ago
> The more likely interpretation of their data is that "in countries with shitty internet, providers tend to offer a lot of zero-rating offers". I agree. They even seem to admit it's a pretty suspect analysis: "However, since zero-rating offers are now prevalent in almost all EU countries this analysis cannot be extended into the future."
- tapland 8y ago
  It's been slow but Telia (first proper zero rating court case in the EU afaik) lost in the national courts in September, with the courts referring to EU regulation from 2015.

makomk 8y ago

I get the feeling that the authors of this report are not entirely honest. For example, part-way through they make this claim about Portuguese operator MEO's plans: "Using applications participating in the DPP is two up to 77-fold cheaper compared to using applications via general data volume. This strong incentive for customers to use participating applications infringes on the rights of consumers to use applications of their choice and the rights of CAPs to provide services independent of the origin of their users." Up to 77 times more for neutral data than data to their partners - sounds scary, but how do they get that figure? Well, they take MEO's smallest month-to-month contract which offers 250 minutes + SMS + 500 MB of data + free in-network calls, divide the amount of data by the total cost, and compare this with the nominally 10 GB Smart Net addon which only offers data to the included services. That is, they're treating the phone and SMS part of the all-internet plan as though it costs nothing when it definitely does not. I think the two-fold cheaper figure on the lower end is wrong too - on paper the non-neutral Smart Net is more like three times cheaper than comparable prepaid data, at least for people who make good use of the Smart Net data limit. Bear in mind that as I understand it each Smart Net plan is for access to one of Messaging, Social, Video, or Music, which includes a handful of the main sites in that category. I imagine most people will have usage that is relatively low and spread across multiple categories plus some outside-of-package usage, in which case a general internet access plan will work out cheaper.

resters 8y ago

While it is interesting to read this, there are a lot of confounding variables. Chances are countries which would allow zero ratings in the first place would also be more tolerant of other incarnations of excessive market power. Note, that in spite of my opposition to net neutrality, I strongly support using traditional antitrust mechanisms to prevent firms' excessive market power and last mile monopolies from leading to unfair prices.

gnicholas 8y ago
I had the same thought. The first paragraph concludes: And the evidence is in that it conclusively makes broadband more expensive, but this seems a bit much given the confounding variables you mention.
qotgalaxy 8y ago
Note, that in spite of my opposition to chemotherapy, I strongly support curing cancer.

k__ 8y ago

I pay 35€ a month for 16GB LTE. Is this expensive?

miguelrochefort 8y ago
Not really. I pay $50 for 1GB in Canada.
gsich 8y ago
Yes.
friendly_chap 8y ago
I have just got 50gigs of 4g for £27 in London.
Strom 8y ago
It can certainly be much cheaper. I pay 17€/month for "unlimited" LTE (includes 9GB EU roaming) and this at ~75 Mbit/s up/down speeds in most cases. Now it's hard to say what "unlimited" actually means in numbers, as it's just defined as reasonable usage in the terms of service. However as another data point, the next cheapest plan is 100GB LTE for 15€/month, so I assume unlimited is at the very least above 100GB.

ummonk 8y ago

Obviously in countries with poorer wireless infrastructure there is more reason to use zero rating to expand coverage...

olivil 8y ago

Highly anecdotal but while visiting Lithuania I had a prepaid SIM card with 200 local call minutes and 6GB of (quite fast) LTE data + unlimited Facebook (including Messenger) and Spotify for 3 Euros for 30 days, SIM card included.

luka-birsa 8y ago

Reading the comments bellow its really funny to hear all this bull about caps being there to protect the providers and their lack of capacity. I have 300 mbit link for 50 USD and no caps. I have full lte and 2TB downlink cap for 25 USD. But we do have strong competition and it seems it was never about capacity. Its about who offers more. Its obvious that they can afford this since nobody is loosing money, and all of this on a very small and marginal market where isps purchsing power is small. You are being bullshited to, dear Americans.