WTF is zero rating? | TechCrunch

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Whenever you watch a video, post a picture, or send a message, the bytes that make up that item are analyzed and tallied by your internet provider. Once enough of them pile up, you’ve reached your data cap — annoying, right?

But what if some of those data-heavy apps and services just didn’t count towards that cap? That’s what’s called “zero rating,” and while it sounds good in theory, it’s rather problematic in practice. So how does it work, who does it, and why do people think it’s such a big deal?

Many will first have heard the term zero rating relatively recently, in the form of programs like T-Mobile’s “Binge On,” which exempts certain streaming video and music services from data counts. That way, people don’t blow through their data caps while, say, watching Netflix on the bus to work every day.

On a technical level, zero rating is a pretty simple process. The packets of data that go to and fro on the internet (wireless and wired) are all labeled with their origins and destinations; that’s how the routers and switches know where to send them, or who to notify if they didn’t get there.

All an internet provider needs to do is write a bit of code that notes when a packet is going to or coming from a certain place on the internet— for example, a range of IP addresses designating a service like YouTube. It treats those packets the same as any others and sends them on their way, only once that’s done, it doesn’t enter them into the official ledger saying how much data you’ve used. Those packets are on the house.

Sure enough, Binge On and its zero rating ilk have proven popular — though it helped that every subscriber was opted into it — and no doubt people have avoided overage fees through Binge On and its equivalents on other carriers and providers.

But when things sound too good to be true, they usually are. Think about it for a minute, and problems start to appear.

Packet problems

For example, what if the provider decided to zero-rate its own services to give itself a competitive advantage? That’s exactly what Comcast did with its “Stream TV” on-demand video service; shows watched on it didn’t count towards the ISP’s data caps, while competitors like Netflix and YouTube did. (The company’s justification for this was that the other services came over the cable-powered internet, while Stream TV came over the internet-powered cable; you may judge for yourself the quality of this argument.)

Or perhaps that provider might require a service, say a music streaming site, to pay a significant upfront fee to get into the zero rating club. While a big company like Spotify might be able to spare the cash, an upstart service looking to break into the space might not. Consumers would hardly pick the service that ate up a big piece of their data allowance, even if it was better.

Or, maybe the company isn’t completely honest about how the system works. T-Mobile was guilty of this, saying that for certain sites, the price for unlimited streaming was a reduction in video quality to 480p. Only it turned out that they were reducing the quality of all video on their network, regardless of whether the site was a Binge On partner or not. Good thing someone checked, right?

And of course, even if zero rating services were to remain relatively innocent, it’s very simple once consumers get used to the idea to begin charging for it. That’s a bait-and-switch tactic that’s been used since the dawn of time — “The first one’s free” — and ISPs are notorious for having opaque and shifting fees and restrictions.

Those are ways that malicious or incautious use of zero rating can be anticompetitive. But subtler issues are possible, too.

Facebook likely had the best of intentions when it proposed its Free Basics program in India, which would have zero-rated a number of internet resources: Wikipedia, local news and weather, job boards, and… you guessed it, Facebook. While the company saw this as a way to get people connected with what it considered critical online tools, others saw as an American megacompany swooping in to choose what low-income mobile subscribers would be permitted to access — and in the process, a play to get them hooked on the ubiquitous social network.

So while basic zero rating practices may not be in themselves highly harmful, they’re part of a class of conduct that’s against the principles of net neutrality: choosing certain bits and bytes to treat differently from others. It’s simpler and more effective to make sure this never happens in the first place than to waste everyone’s time scrutinizing every method, business model, and motive.

Highly illogical

On top of all that, it is worth noting that the whole zero-rating model is based on a lightly camouflaged logical fallacy that carriers are counting on consumers not to spot. Think about it:

  • If high-traffic activities like video streaming can be offered for free and without counting towards caps, then networks must have more than enough bandwidth to handle it.
  • If networks have enough bandwidth to handle it, then there’s no need for data caps.
  • If there’s no need for data caps, then there’s no reason to zero-rate anything!

It turns out that the entire concept of zero rating contradicts the notion that data caps were necessary in the first place. Bandwidth isn’t unlimited, but clearly there’s enough that carriers don’t need to charge for using enormous amounts of it — you can stream ten times your cap amount via zero-rated services and they won’t say a thing. But go a kilobyte over with a messaging service or game download and you’ll be charged.

This means cap amounts, and the ways they’re tracked, are completely arbitrary — they have nothing to do with how much bandwidth is actually available, or how much you actually use. So why do carriers have them? Because deceptive or not, they make money. And in the end, that’s why carriers have zero rating as well: it’s the carrot, and data caps are the stick.

For now, zero rating is mostly limited to programs that you can opt in and out of. But the FCC, which is largely responsible for determining the legality of these things, recently made it clear that it won’t be looking into existing or future zero rating schemes — unless, one hopes, they’re really egregious. Until that happens, you can expect zero rating to become more common, although it won’t become any better of an idea.

Featured Image: Bryce Durbin / TechCrunch



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