Zero rating: Why are people using a half-baked Internet?

Zero rating – the waiving of data charges for access to select Internet services such as music streaming, Wikipedia or WhatsApp – has attracted a storm of controversy over the past year and the storm still doesn't seem to be abating.

At the Internet Governance Forum (IGF) held in November in Brazil, zero rating was one of the most emotionally discussed topics at the event. The zero-rating service that drew the most criticism was Facebook's Internet.org app (now renamed Free Basics), which offers access to a slew of different websites, including a text-only version of Facebook known as Facebook Zero.

However, Helani Galpaya, the CEO of the Asian ICT think-tank LIRNEasia, takes a more pragmatic approach to zero rating. She talks to #mediadev about what makes Facebook Zero so popular, the need for more competition, and why poor people also have a right to watch cat videos.

Much of the debate around zero rating focuses on Facebook. What is the relevance of Facebook's Free Basics to the zero-rated market?

There are many forms of zero-rated services but social media is the most attractive type of content to most human beings and Facebook is one of the most dominant social media platforms. This has huge network effects. When your friends are online, you are more likely then to get online. Because of this attractiveness, and because of network effects, Facebook Zero is the most popular zero-rated service and the most talked about one. WhatsApp is also a very popular service and is surprisingly very frequently zero rated – even though it is competition to the SMS service offered by telecom operators. So Facebook is not the only one, but it is the most popular one.

Why is zero rating so attractive to telecommunications companies?

In Asia, telecommunications companies operate in an environment where competition is incredibly high. In some markets, we have six to eight operators and prices as a result are very low. At the 2015 IGF, we heard from the Indian Cellular Operators Association representing telcom companies that they need to make money on two to three dollars a month per user. This is a challenge. Historically, this revenue has come from voice and SMS. Voice traffic is down, so one way to increase revenue is to get users to use data instead of voice, or on top of voice. But very few of our users are buying data.

How do I get users to buy data? Well, let me try giving something for free, let me try giving the most attractive content for free, which is social networks, and see if they join. That is the strategy. That is why the telcos at this moment, in the short term, appear willing to bear the cost of giving free connectivity because at some point, they hope consumers will start paying for the full Internet to then be able to click through the links for which data charges apply.

Facebook is saying 50 percent of users who start off with this free content actually end up paying for regular Internet at the end of thirty days. So it seems to be quite a rational investment from the telcom operators' point of view.

Why is the zero rating debate so emotional?

The emotion comes because of this broad concept of network neutrality; the general definition of this is that every packet of data on the Internet should be treated equally when it is routed irrespective of what content is in that packet, who sends it and who is going to view it. Nothing should be throttled, or downgraded in speed, or blocked.

The fear of zero-rated content is that a telecom operator will have the incentive to speed up and give preferential treatment to packets of content like Facebook, or whatever else is zero rated, at the expense of content that is not zero rated. So the danger is that the zero-rated content goes on the fast lane but other data is downgraded.

The second fear of net neutrality advocates is that when we – the rich and the middle class who are already connected – started to use the Internet, we had access to the full Internet. Nobody stopped us from accessing every site and we know what the Internet is. But poor people who come online through these walled gardens such as zero-rated Facebook don't know what the Internet is so they think the zero-rated service is the Internet. Therefore, they will miss out on the huge positive potential that the Internet has.

There is a third fear held by competition advocates. That is, if Facebook wants to decide which applications are zero-rated or a telco gets to decide which applications are zero rated, it may not be the most popular app that people use. Rather, it may be the app whose company can cut the best deal. My feeling is that these are all unrealized, although we do need to watch this.

So you are not categorically saying no to zero rating?

The idea of some zero-rated content packets getting preferential treatment while other stuff gets throttled is theoretically, and potentially, a real problem, because consumers in South Asia already have terrible service. We often get less than what is advertised in our broadband packages so if telecommunication operators are going to throttle certain services on top of that, then this is a big problem. There is no evidence of this, yet. We need to monitor the quality of these services regularly and publicize data management practices of operators so that users know, for example, on this particular network, Skype is really downgraded because they are giving preference to Facebook etc. But because we have competition and we can switch, these are not huge concerns. That is the key.

Secondly, this idea that poor people get online through Facebook and stay there is a danger. We have evidence from our research in South East Asia, and research in Africa has replicated our findings, that there is a phenomenon of people thinking “the Internet = Facebook”. We saw this way before zero rating became a phenomenon, but what we don't know is if this number has suddenly increased because of zero-rated content which is a relatively new phenomenon. So I can't directly attribute this to zero rating.

The competition argument about giving too much power to Facebook, or the incumbent operator or certain app developers, there is no research about this. Sylvia Elaluf-Calderwood and Roslyn Layton have done research that showed there are no competition harms at the moment. That is because zero-rated content strategies adopted by the operators included in her paper are predominately among the second or third largest mobile operators. So they are already trying to fight against a big dominant operator and zero rating is helping them fight. In fact, zero rating is helping competition. This is the area where we have the least research and we need to observe this.

Many critics of Facebook's Free Basics say the public should decide what they want to be able to access, not Facebook. Because Facebook isn't so transparent about what it does.

Yes and no. Facebook was completely non-transparent about what apps got on Free Basics. What they have done now is made the platform available to any app that meets the technical requirements. One of these requirements is that all apps need to work on the old-fashioned keyboard phones that many people use and not just on smartphones. So that concern seems to have gone away.

There were lots of privacy concerns that Facebook would have access to all this data and this connection is insecure. Now Facebook appears to have addressed this, or so they say. However, the broader debate of zero rating is about user data and privacy. Are these secure? Who gets to monitor them? These are important questions that we absolutely need to discuss whether zero rating continues forever or dies tomorrow. These are broad Internet user right issues and if zero rating is forcing us to have this debate, then I am happy. But they are not just related to zero rating.

Some argue that it isn't enough to get people connected, they also need to know what the value of the Internet is.

What we know is that being connected is better than being unconnected. There is this view of social media use being somehow frivolous. “Oh, this is not an economically valuable use of being connected, people need to be doing other things like checking market prices and finding jobs.”

My opinion on this is twofold. Firstly, we cannot make the value judgments on what content poor people or newly-connected people use or do not use because they have the same rights as we do, and we use it for whatever we like.

Secondly, even the rich and the middle class who are already connected sometimes use up to 85 percent of their data for Facebook, WhatsApp and YouTube. So the rich aren't necessarily learning econometrics all the time online either. There is a danger of equating quantity of use of a certain type of application with impact. You might be browsing cat videos with 90 percent of your data, but that 10 percent that you use look for jobs is going to give you the best impact.

And another point – we now have evidence of what people do on Facebook. Of course people on Facebook also find cat videos and have fun. But they are also finding jobs and doing political activism and running campaigns in countries where there is no other form of connectivity. They are communicating with their friends and using Facebook Messenger as an alternative to SMS and voice. A lot of nuanced things are happening when people get online so we really can't make a call of whether we should ban it or allow it to run free.

But aren't you afraid of the dependence of people on a US company? You said it is better to have connectivity than no connectivity. Isn't the cost very high?

The danger of a monopoly is always extremely high, that is no question. In the old telecommunications world, we saw monopolies got us nowhere. Competition is what got poor people connected to telephony. Absolutely, I am not for monopolies. But we don't know whether Facebook is a monopoly. Is there danger of that? Sure. Which is why we need strong regulatory institutions and competition regulators who can keep an eye on this, as well as processes where companies can say, “look, this is a volition, this is an anti-competition practice. Or look, they have so much market share in a particular platform or service that there is danger of it becoming an uncompetitive market.”

The rational response if we are so worried about Facebook, then we need to enable the competition. Why are users using this free so-called half-baked version of the Internet? Because another version that is affordable and open is not available to most people in the world. Who can control that? Regulators. They need to have a lot more competition, not just at a retail market level – they also need to stimulate apps, they need to educate users, other companies need to wake up and say there is a real threat. There is a whole lot you can do.

The danger is like at the IGF to have six sessions on zero rating worrying about this phenomenon, which may well be a passing phenomenon, and not talk about solutions. The only solution people around the world seem to have at the moment is to say, “let's ban it.” I think that is wrong.

So what is your solution?

Enable competition at every level of the Internet value chain so prices come down and plurality of platforms and content is enabled.

Helani Galpaya is the CEO of the Sri-Lankan based organization, LIRNEasia, which describes itself as a pro-poor and pro-market think-tank working across the emerging Asia Pacific. The organization explores how poor people in the region use certain infrastructures, such as telecommunications, as well as the policy and regulatory barriers keeping people from using them.

This interview was conducted by Steffen Leidel in November 2015 on the sidelines of the Internet Governance Forum in Brazil.