
Senators Want FCC to Crack Down on ‘Harmful Zero-Rating Offerings’ - thesagan
https://morningconsult.com/2016/11/18/senators-call-fcc-crack-harmful-zero-rating-offerings/
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slavik81
Zero-rating was recently made illegal in Canada. Previously, Bell was giving
away 10 hours of streaming video on their service with all plans, even when
their reasonably priced plans only offered 500MB of data. The CRTC came back
and told them that if they wanted to make their video service viable, they had
to do it by making data in general actually reasonably priced rather than
giving their own services giant discounts.

It was briefly unpopular as some people lost the zero-rated services they were
used to, but it is a good policy to increase Internet bandwidth in general.

~~~
slavik81
It seems that zero-rating of third-party services is considered different and
is under review [1]. Zero-rating your own products is illegal.

Also somewhat fascinating to me is that the CRTC did a public consultation on
reddit.

[1]
[http://crtc.gc.ca/eng/internet/diff.htm](http://crtc.gc.ca/eng/internet/diff.htm)

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Lazare
Analogies can be more harmful than helpful for understanding issues like this
but...

...this seems a lot like if a POTS/VOIP provider announced that instead of
charging you the same rate per minute no matter who you called, they were
going to start charging you less for some calls, and perhaps even make some
phone numbers free to call.

Which now that I write it down like that actually _does_ sound a bit dodgy!
(And would sound even more so if you were viewing it from circa-1980, when
phone calls were vastly more important, and AT&T has vastly more power and
reach than any comparable ISP today.)

Except, of course, we've accepted that sort of price discrimination on phone
calls forever, and with 1-800 and 1-900 numbers (or equivalents) we've long
been of accepting of very explicit skewing of the costs of phone calls based
on business deals worked out between the phone company and the content
provider.

So I dunno. I see some arguments in favor of having the providers of networks
be _strictly_ neutral when it comes to content. But it also feels to me like
this is not a principle we've adopted in other cases, and (for me at least)
it's actually quite hard to discern the harm that "harmful zero-rating
offerings" are causing.

In fact, I'm not even entirely sure who's _meant_ to be harmed; are we trying
to protect consumers or content creators? The article seems to suggest it's
other content creators. Which brings up an interesting thought experiment: If
zero-rating is fine, would it be okay for AT&T to charge some data at higher
rates, and then split the profit with the content creators? :) Eg, "AT&T now
offers Netflix as a premium service; all AT&T customers now have a full access
to the Netflix service! (Note, higher premium data usage rates apply when
viewing premium Netflix content)" Would that be okay? Would it be harmful? To
whom would it be harmful? :)

(Note, incidentally, that I live in a country where for many years
international data was charged at a higher rate than national data, for fairly
obvious reasons involving undersea cables. There's no historical precedent
that says all data must be charged the same, even if your personal experience
has been that it has been for you.)

~~~
raverbashing
But 1-800 numbers are not cheaper, they just get charged to a different person

The "call" part of an 1-900 costs the same, but it's an added value charge

~~~
Lazare
Yes, that was the point.

100 MB of DirectTV data costs AT&T the same as 100 MB of Netflix data; the
difference is that it's being charged to a different person. Hence why I chose
1-800 numbers as an analogy. :)

~~~
asddddd
> 100 MB of DirectTV data costs AT&T the same as 100 MB of Netflix data

Considering colocation with ISPs of service "black boxes", is this really
true? Thinking of Netflix Open Connect and similar programs.

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kyledrake
“We welcome any video provider that wishes to sponsor its content in the same
‘data free’ way for AT&T Mobility customers and we’ll do so on equal terms at
our lowest wholesale rates”

So the 2x+ "wholesale" rates they currently overcharge for peering right now,
then. Wonderful.

The eyeball ISPs gouge on both ends. They rip off their customers and they rip
off the companies that need IP transit. They don't need to get rid of net
neutrality to engage in anti competitive behavior, as they continue to
demonstrate with stunts like this. Companies like Comcast could conceivably
destroy Netflix margins in a day by increasing peering costs as much as they
want and running their own video service that doesn't pay it. I'm actually
surprised they haven't tried it yet.

I'm not sure if Net Neutrality covers this scenario - if they just raised
peering costs for everybody, it that not still neutral?

~~~
cmdrfred
User (who lives in an area with competition): "It says Netflix can't be served
by my provider? Something about Comcast increasing the cost of data? I'll call
Comcast"

Comcast (after a while): "Yes, we increased the cost of our data to Netflix's
backbone provider to provide the highest value service and now they won't
serve to you. But for only $99.99/month you can get our deluxe cable package
that includes...."

User: "Cancel my account, I'm switching to my local internet provider as they
provide free Netflix."

The solution to this problem is to encourage small local internet providers to
pop up and provide much needed competition.

~~~
ekidd
> User: "Cancel my account, I'm switching to my local internet provider as
> they provide free Netflix."

What local internet provider?

Where I live, the only lines into my home are classic phone (completely
useless), DSL (ultimately controlled by the phone company, even if I think I'm
buying it from somebody else), and cable (controlled by Comcast). The only
good option is Comcast, because the phone company can't keep the DSL working.

~~~
cmdrfred
>The solution to this problem is to encourage small local internet providers
to pop up and provide much needed competition.

That involves invalidating the franchise agreements that Comcast and others
have with major cities and allocating funds for municipal broadband programs.
Unfortunately, that won't happen under Obama[0], or Trump[1]. Looks like it's
about time for a third party to come forward in America.

[0][http://www.politico.com/blogs/media/2013/08/obama-golfs-
with...](http://www.politico.com/blogs/media/2013/08/obama-golfs-with-comcast-
ceo-170524) [1][http://www.latimes.com/nation/politics/trailguide/la-na-
trai...](http://www.latimes.com/nation/politics/trailguide/la-na-trailguide-
updates-trump-s-victory-could-spell-the-end-of-1479474374-htmlstory.html)

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chicagobob
Yea, that's nice, but under a Republican administration that's not going to
happen.

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josh2600
Fascinating! Does it matter if the Zero-Rating is a choice the carrier is
making as an offering to its customers without support from the content
provider vs in a deal with the content provider?

I don't think T-Mobile receives money from YouTube for making YouTube
unmetered on their network, but there are countless examples (including
internet.org) of worldwide lobbying for zero-rating.

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oli5679
Can someone articulate the theory of harm here? How would consumers be worse
off than in the counterfactual world where this practice is banned?

~~~
JoBrad
I thought the reasons in the article were good, but here's a concrete one:
Comcast was counting data used for Netflix against your data cap, but they
were not counting data used for their own streaming video. Keeping with the
concept that an ISP is similar to an electric company, this would be like your
power company charging you to use lamps from Company A but not lamps made by
Company B (whom they've presumably partnered with). This is incredibly
anticompetitive, and especially harms small businesses.

~~~
oli5679
Antitrust is designed to protect consumers, not downstream firms. Restraints
on trade are only illegal if they are 'unreasonable' in the sense that they
are viewed as likely to lead to long-run harm for consumers.

To some extent, it is a company's job to 'harm' suppliers, sellers and
competitors.

It may well be possible to tell a compelling story that this is an
unreasonable constraint (I'm not an expert on US case law). I just find it
interesting that so many complaints on the topic fail to directly articulate
the theory of harm for consumers.

[https://www.ftc.gov/tips-advice/competition-
guidance/guide-a...](https://www.ftc.gov/tips-advice/competition-
guidance/guide-antitrust-laws/antitrust-laws)

~~~
JoBrad
Protecting downstream firms (in aggregate), also protects consumers. From the
site you linked to: "to protect the process of competition for the benefit of
consumers, making sure there are strong incentives for businesses to operate
efficiently, keep prices down, and keep quality up."

~~~
oli5679
Ok so explain that process without hand waving then! There are plenty of cases
of bundling that are 1) Allowed to operate under scrutiny of competition
authorities 2) Can be theoretically/empirically justified on efficiency
grounds. The emphasis is on you to demonstrate that this is not the case if
you are arguing that the constraint is unreasonable. This is the basis of
modern antitrust enforcement.

One possible efficiency justification for bundling.
[http://s3.amazonaws.com/academia.edu.documents/4170761/10.1....](http://s3.amazonaws.com/academia.edu.documents/4170761/10.1.1.83.655.pdf?AWSAccessKeyId=AKIAJ56TQJRTWSMTNPEA&Expires=1479588902&Signature=7c9kWZ2gsh4GEKbVpSA1V2rYyy4%3D&response-
content-
disposition=inline%3B%20filename%3DBundling_information_goods_Pricing_profi.pdf)

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awinter-py
Who are the core "tenants" of net neutrality?

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Kenji
Absolute rubbish. Let companies make their plans however they want. I cannot
see a single benefit coming from this ban. More bureaucracy, less options, and
nobody benefits.

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Treblemaker
I am strongly in favor of network neutrality, but this seems to me different
in substance from the net neutrality issue. The ISP is not inhibiting or
degrading packets from non-favored services. The ISP is not trying to
surreptitiously steer the customer to the ISP's preferred content by
inhibiting or degrading non-preferred packets. The only thing changing is who
is paying for the delivery, and the consumer can still make a conscious choice
about whether to avail themselves of that offering.

One might compare this to a new company "SeeAlltheFilms.com" sending out an
offer such as, "We'll pay for your next month of internet service if you sign
up for a one year contract". Same result: Customer still gets all packets
delivered with the same priority; the only change is who pays for it.

~~~
dibujante
Not really. Your example is a relationship between a content business and its
customer. The conflict of interest that Net Neutrality is concerned with
exists within the ISP. It's like SeeAlltheFilms.com getting a special deal
with your ISP. Sure, it's still your choice to see it or not, but they'll
probably get seen more now that they have that deal, and should making a deal
with an ISP be the marketplace in which content providers compete, instead of
creating great customer experiences?

~~~
Treblemaker
> should making a deal with an ISP be the marketplace in which content
> providers compete

That's a business issue, not a packet delivery issue. I guess I don't see how
this threatens net neutrality as long as the business deal does not degrade
the experience of ISP customers who choose not to participate, and does not
give preferential treatment to that content provider's _packets_.

> The conflict of interest that Net Neutrality is concerned with...

And that conflict is specifically one in which connectivity with non-preferred
providers is degraded and/or connectivity with preferred providers is given
preferential treatment. That becoming such a "preferred" content provider also
involves a business deal does not necessarily mean any business deal between
an ISP and a content provider impinges upon net neutrality.

~~~
kpcyrd
But they are.

You're using $randomStartup until you reach your data cap of (let's say)
2GB/month, after that your bandwidth gets (actively) throttled to 64kb/s and
becomes virtually unusable.

Usually this is normal because this happens for every website (ie "my internet
is reduced"), but now imagine there's an elite of the major sites and services
and users get used to that. How are you going to compete in a market where
everybody else has zero rated traffic to their customers but you don't? For
them everything else appears to be of low quality and broken. (ie "this
service doesn't work right").

