What the 'Zero Rating' Debate Reveals About Net Neutrality

Net Neutrality can work against developing nations


February's vote by the Federal Communications Commission (FCC) to impose demanding net-neutrality rules on Internet Service Providers (ISPs) has now been followed by a 300-plus-page Report and Order. Add in more than 80 extra pages of individual Commissioner statements (including Democrats' concurrences and Republicans' dissents), and you've got 400 pages. So we've got plenty of fresh fuel for years of heated net-neutrality debate between proponents and opponents, not just at the Commission, but also in Congress and in the courts.

Understanding this particular issue, in the larger context of the FCC's assertion of public-utility regulatory authority of broadband internet access service (a.k.a. "BIAS"), is like zooming in on computer-generated fractal imagery—the closer you look, the more detail you see. But we can start picking out the details by unpacking a couple of the Commission's terms and concepts.

Take "net neutrality." Basically, this is the broad term for policy and regulation that prevents service providers from favoring some services and applications over others. Not all versions are the same—some regulators prefer a "light-touch" regulatory framework (the FCC's majority says this is what they're providing in the March 12 Report and Order). Some net neutrality advocates don't trust incumbent telecommunications companies and ISPs to do anything at all without regulatory oversight. And, perhaps unsurprisingly in the telecom world—long afflicted with captured regulators and crony capitalism—even the most free-market talk is invariably reducible to incumbents wanting different regulations rather than no regulation at all.

A big sub topic in the net-neutrality debate have been the "zero-rated" services, services whose data costs nothing at all and is exempt from the data usage count. Hungry competitors in the smartphone market here in the United States have offered services (such as music streaming) that, while providing digital content over the Internet, don't count against the "data cap" of a subscriber's plan. Phone companies argue that the freedom to make such offerings (which can be interpreted as discriminating in favor of one kind of internet service as against other kinds) allows them to be more competitive. Critics say "zero-rating" lets the providers pick winners over losers among internet content, and that giving providers this option allows them to distort the content market (and, in addition, to extract more cash from the chosen content services). The Commission appears to take arguments from both sides seriously, and expressly "forbears" (as regulators like to say) from regulating zero-rated services in any categorical way, reserving instead the right to determine on a case-by-case basis whether a particular zero-rated service is being deployed anti-competitively.

What that debate mo

stly won't address is an issue dear to my heart: whether "zero-rated" Wikipedia is a blessing or a curse.  My non-neutral view is that zero-rated Wikipedia is an unalloyed blessing, especially in the developing world where internet access is priced expensively by the byte, but, really, pretty much anywhere. So the FCC has wisely chosen to avoid any categorical regulation of zero-rated services in general.

While it's good to see the FCC remain agnostically "retail" on an issue where it might have chosen to regulate "wholesale," it's discomfiting to see the Commission apply the terms "sponsored data" and "zero-rated" interchangeably. The former suggests that money is changing hands between the carrier and the service, so that if you're lucky enough to have a special "zero-rated" relationship with a provider, you get to lock out competitors.  There's plenty of reason to think that muddying the waters this way does no one any good—not even net neutrality's advocates—and no example better makes this point than net-neutrality advocates' consistent, yet misguided, criticisms of the Wikipedia Zero project.

This is the heart of my concerns about net neutrality, so I should admit my own non-neutrality upfront. I served as general counsel for the Wikimedia Foundation, which operates Wikipedia and other free internet resources, for more than three years. I also admit I've favored at least some limited forms of network neutrality from time to time. But I have to be deeply skeptical of any kind of thinking that, even indirectly, could imperil or discredit Wikipedia Zero, the "zero-rated" version of Wikipedia that offers the massive online encyclopedia in developing countries in ways that don't run up against the limits of mobile users' data caps on their smartphones.

Wikipedia has had a complicated relationship with net neutrality, due in part to the way Facebook and other frankly commercial entities point to Wikipedia Zero to justify their own zero-rated services. Let me be clear: I think there really are some good arguments for zero-rated commercial services too. But whatever the arguments for and against zero-rated commercial services may be, they don't really apply to Wikipedia, whose primary mission is to make the world's information available for free to everyone.

Wikipedia, in other words, is a charity—the non-profit Wikimedia Foundation exists almost entirely on charitable donations, which average (last I checked) at around US $25 per person. As a committed Wikipedian and supporter of this charity, I have no trouble stepping away from absolutist arguments for net neutrality where doing so advances that mission. This is why I think the estimable blog Techdirt is misguided when it trashes all zero-rated offerings as inherently corrupt and anti-competitive (see "T-Mobile Still Doesn't Understand (Or Simply Doesn't Care) That Their 'Music Freedom' Plan Tramples Net Neutrality"). The normally more thoughtful Susan Crawford is similarly misguided when she crows over Chile's prohibition of zero-rated services—a prohibition she assumes includes Wikipedia Zero. (See "Zero for Conduct".)  (It turns out she got this last bit wrong; Chilean regulators welcomed Wikipedia Zero.) This attitude is especially true for citizens of the developing world and transitioning democracies, where the need for access to free knowledge is particularly acute.

In the sorts of developing countries where Wikipedia Zero is deployed, Internet access exists almost solely on mobile platforms—many of these countries skipped landline technology altogether. Mobile devices are typically saddled with data caps, in which a user pays a certain monthly rate and is allowed to use the Internet until the cap is met. Beyond that point, a user has to pay more, sometimes a lot more, for more data or web-surfing. This kind of harsh data rationing may remind you of what water rationing feels like after a year-long drought, but that's precisely what those in the developing world must contend with.

In wealthier societies like the United States, the European Union, and Japan, a rich informational resource like Wikipedia gets richer if more people use it and contribute to it.  In developing countries, data caps effectively discourage people from using Wikipedia as extensively, cheating them of the gift of a free informational resource, and thus cheating us all of their contributions.

To address this systemic problem and help citizens of developing countries along the paths of economic and democratic development, the Wikimedia Foundation makes arrangements (never based on a cash exchange, never exclusive) with mobile carriers to offer "zero-rated" access that allows Wikipedia users to dodge those killer monthly data costs. (The rules are pretty simple: in essence, if a carrier offers Wikipedia Zero, a user's use of this service does not count against his or her data cap. In return, the carrier gets to use—nonexclusively—Wikipedia trademarks like the famous puzzle-globe logo.) This result is something very closely aligned with the longstanding mission of the project: free knowledge, available to everyone, to which everyone can contribute.

Understanding that zero-rated services might actually be a good thing requires a degree of nuanced analysis that some, though not all, advocates of network neutrality either don't understand, or simply don't take the time to consider.

Those who love Wikipedia Zero, as I do, can't let arguments by net-neutrality absolutists define "zero-rated" services for us or paint the issue of net neutrality only in black and white strokes. Wikipedia is not in economic competition with, well, anyone. Legally, you can start your own Wikipedia tomorrow, lifting the content right off of Wikipedia's own pages and repurposing it for commercial uses. In particular, Wikipedia is not a market-dominant player competing against similar entities for market share and revenue, for eyeballs and advertising dollars. The encyclopedia doesn't allow advertising at all. Instead, it actively gives away the information that makes it so valuable. In economic terms, Wikipedia is as close to a "non-rivalrous" good as one can imagine. Its provision of free knowledge does not exclude other enterprises, including commercial ones, from using and sharing Wikipedia-hosted knowledge on their own sites, or re-using it in other ways.

There can be no question that Wikipedia Zero, by encouraging higher usage of Wikipedia without additional costs to users, increases demand on the mobile infrastructure. Providers will have to expand capacity to handle the increased demand, and they can't do this by demanding fees from Wikipedia, which the Wikimedia Foundation can't and won't pay in any case. In the long run, increased demand and increased capacity, together with the free informational resources that Wikipedia and its sibling projects provide, will promote increased Internet access in the developing world.

That is an unalloyed positive result, in my view. For true believers in the strongest forms of net neutrality, the necessary build-out in capacity driven by Wikipedia Zero and other similar free resources could be precisely what, in the long term, makes a neutral net more tenable in the developing world.  (I'm deliberately avoiding the first-world-problem perspective I detect in some net-neutrality absolutists.) As I've hinted, a similar argument may be advanced for Facebook Zero and other for-profit offerings, but you don't even need to ask cui bono when it comes to Wikipedia Zero. We all benefit, including those of us who never will use Wikipedia Zero.

Nor is the lesson here limited to Wikipedia Zero. While I personally think some limited forms of net neutrality promote free markets and free expression, I also see the potential for unsubtle regulation to do just the opposite. And even some free-market advocates in Congress seem to be signaling that some kinds of basic fairness-oriented regulation of Internet service providers may be ok. Like me, they may look at the market distortions already baked into our telecom laws—none of us outside of a cryogenics lab will live to see restoration of any kind of pre-regulation Golden World of Telecom—and find themselves tacitly accepting the Theory of the Second Best.

There's a higher-level free-market argument that deserves at least some consideration, and it's this: I believe Justice Oliver Wendell Holmes would agree that concepts like "net neutrality" and "common carriage" are also part of his formulation of the "free trade in ideas," even when they put some economic limits on markets. That's OK by me. In the same dissenting opinion in which he coined that phrase, Holmes reflected that the "theory of our Constitution" is "an experiment, as all life is an experiment."

We're currently in the early experimental stages of net neutrality as a policy in the United States. It's too soon to say whether our American experiment has already proved the theory right for the world.