Record Detail

Zero rating (ZR) is the practice of providers of Internet access via fixed or
mobile telecommunication networks of excluding traffic generated by specific online
applications from usage counted towards capped allowances or strictly metered
tariffs of their end customers. Advocates of ZR characterize such offers as a form
of price differentiation that is non-hazardous from a consumer and a competition
policy perspective and whose concrete design should be left to market forces. Critics
of ZR offers suggest that they are subtle, but severe violation of network neutrality
principles. Therefore, opponents call for a legislative general ban on ZR practices or
for case-related interventions of national regulatory authorities responsible for the
telecommunication sector. Worldwide and particularly in the EU, current regulatory
frameworks for ZR offers imply that regulators have to examine on a case by
case basis whether they prohibit a concrete ZR offer or restrict it by conditions
because it 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
assessments and which feature levels speak against or in favor of regulatory measures
linked to ZR offers. The present article identifies nine design features of ZR offers,
three characteristics of customer groups targeted by such offers and three structural
characteristics of the markets for Internet access services and applications that are
of special importance in decisions concerning the need to regulate (to abstain from
regulating) ZR practices. 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 Internet service and application markets are served best
if regulatory authorities tolerate ZR offers and control for potential harmful effects
after their market launch. Moreover, the study reveals that empirical research on
customer reactions to ZR practices is urgently required.