I've been following net neutrality issues pretty closely and this is the first I've heard the term "zero rating". I didn't have a clear understanding of the term after reading the article, since I wasn't sure if zero rating was the exemption or if ISPs were exempting services from the zero rating. The wikipedia[0] entry helped, also referring to it as "toll-free data" which cleared up the confusion for me.
A few centuries ago England used number of water channels for transportation. There was a law that owner of channel could not be associated with user in any way.
Until 1990, it used to be that the mobile phone networks in the UK were not allowed to have a relationship with the retail customers on their network, instead with the billing and account management performed by a range of third parties.
I've lived in Canada and the US. Canada's providers made me like Comcast. The service is very bad, with caps on cable (80G when I left), high cost, collusion among the two service providers, a regulator in their pocket, and publicity campaigns to stoke nationalism to block foreign (i.e. US) providers from coming in.
Personally, I think zero rating is a good thing, especially as it operates in the Australian environment (or, at least, how it has operated previously). It has largely been consumer positive, allowing premium tier ISPs to differentiate themselves by making the effort to peer with service providers, and consumers benefit from the free quota. There are some distasteful uses though - where there are exclusive peering agreements, particularly around sporting events.
All in all, I think the CRTC has taken a pretty good approach. Perhaps the third-party only rule should be extended to refusing exclusivity arrangements, but a complete ban is over the top in my opinion - it discourages passing on savings made by peering with companies to consumers.
Without zero-rating, ISPs still have a strong incentive to make the effort to peer with service providers because it cuts their transit costs.
The article points out the big downside: Zero rating takes away a strong incentive to raise bandwidth caps, as low bandwidth caps makes it more attractive for content providers to negotiate zero-rating deals.
The net result is a market heavily distorted in favour of a small set of major content providers.
> it discourages passing on savings made by peering with companies to consumers.
Cellphone data costs rarely have much relation to transit cost. Ex. my provider in the UK offers 2GB at 20 pounds a month. The actual data cost from a really expensive transit provider in a non-carrier neutral data centre for 2GB is about 7p. 0.07 pounds.... With some peering, decent volume, and sourcing bandwidth in a carrier neutral location where there's decent competition would bring that down to a tiny fraction.
The article makes the correct point that even if the upside is access to more services for now, zero-rating effectively favours big companies and big services, (who have the money and time to negotiate these deals with carriers and ISPs) and removes the "level playing field" which most people believe is at the core of the Internet and fuels innovation and allows startup services to thrive and grow.
There's no level playing field in business as it is. Incumbents have the advantage of having more resources than start-ups, that's what makes disruption hard. Saying zero rating shouldn't be allowed is worse for me as a consumer, I'd definitely like it if music streaming apps I use made deals with my wireless carrier so I could stream as much as I wanted.
You (and startups) are basically asking for a subsidy that doesn't exist for anyone else. No one is giving Jolla a hand in taking on Samsung or Apple in the phone business.
If they do (by incentivizing people to conserve bandwidth on, say, mobile connections) then they need to be consistently enforced, with no exceptions.
If they don't serve a purpose for consumers then they should be abolished anyway.
If Spotify and WIMP use equal amounts of data then they should cost you, the consumer, the same in transfer costs. Anything else just ends up with all consumers subsidizing the incumbents no matter what vendors they choose (like the often criticized "Microsoft tax"), unless they only go with startups that do not have these agreements in place (yet).
> You (and startups) are basically asking for a subsidy that doesn't exist for anyone else. No one is giving Jolla a hand in taking on Samsung or Apple in the phone business.
Oh yeah, let's never try to improve things in new markets that work differently.
You should just say that you don't buy the argument of net neutrality. The intent is that network access is non-discriminatory. ISPs will not be allowed to offer special deals that benefit one service provider over another. It's not a subsidy, it's treating bandwidth as a regulated utility.
You can choose to imagine cellphone hardware as a utility but clearly it is not.
So, an ISP that makes a deal with a content provider to host a server caching the content provider's data on their network, specifically to improve bandwidth and reduce transit costs, should not be allowed to pass on that savings to the customer, and should instead be forced to pocket it all themselves?
They shouldn't pass on the savings to just some of the customers; there's no reason they can't pass on the savings to all of their customers. After all, everyone benefits: those using the service with the CDN node get a faster path to that content, and everyone else gets a less congested path to the rest of the internet.
> They shouldn't pass on the savings to just some of the customers; there's no reason they can't pass on the savings to all of their customers.
So they shouldn't be allowed to pass the savings on to the customers who actually use the service in question and thus benefit from the colocated server? And this is supposed to be more "fair"? And somehow the ISP's rate model for their customers is yours to dictate?
Consider if ISPs actually charged customers by data transfer, the way many large datacenters do. What actually costs the ISP money is data transferred outside the ISP's network, going over peering connections. Many datacenters don't charge for bandwidth within their own network; for instance, bandwidth between AWS nodes in the same area is free. So why can't an ISP use the same model, and only charge for bandwidth going over their peering connections but not for bandwidth that stays inside their own network (such as to the YouTube or Wikipedia mirror they're hosting)?
For the record, I do believe in network neutrality in the sense that ISPs should not be artificially limiting bandwidth to particular Internet services (though I'd prefer to see that solved more naturally through ISP competition, but there's a severe lack of local ISP competition available). I don't, however, see anything wrong with setting up additional peering/colocation/etc arrangements that are designed to be mutually beneficial to the ISP, their customers, and the services whose data they're carrying.
The cost savings from CDN colocation and peering to the ISP as so miniscule that, even if they were passed on in full, would barely register on your bill. We are talking about fractions of a cent per customer.
Zero rating is not about passing on cost savings, it's about market power and discrimination.
Also, datacenters do not usually charge by data transfer. Just because Amazon does it (and overcharges by two orders of magnitude) does not mean others do it.
To give some context, zero rating in Australia came about as a response by smaller ISPs to the 'Gang of Four' 'cartel' of large telcos, who have settlement-free domestic peering between themselves[1], and until ~2009-2010, had a monopoly over international transit (via ownership of submarine cables to the US)
Australia is a country which imports the majority of its content (submarine cables are not cheap), so smaller ISPs have an incentive to direct eyeballs to 'friendly' content sources - those who peer at major peering exchanges locally, or directly.
At least with the independent providers, this has been used for good - unmetered Linux mirrors, Steam, Netflix - as these providers do not have any content of their own, unlike Telstra (who holds 50% of Foxtel, alongside Newscorp).
[1] this 'cartel' was created under pressure of the competition regulator/ACCC in the late '90s, ironically. The criteria isn't based on any merit, just the largest market share holders at the time.
I lived and worked in Sydney for a year or so, and used iiNet while I was there. They had a mirror of free software, and also zero-rated most iTunes content. With most ISPs there having caps (mine was just 100GB), it was difficult to not see this as a benefit, but overall of course it's far from ideal.
The other problem was just terrible speeds; best I could get in a central district was ADSL2+, with about 16/0.8 mbit d/u, and that's not including the terrible latency issue you had to deal with for a whole host of US and EU based websites and services.
Then again, I'm back in London now with a 150/15 mbit d/u connection for under £30, no caps in sight.
> Personally, I think zero rating is a good thing, especially as it operates in the Australian environment (or, at least, how it has operated previously).
> "Zero rating isn't great for consumers, as it has the potential to distort consumer choice in favour of choices selected by an ISP," Netflix spokesman Cliff Edwards says. "We'll push back against such efforts, but we won't put our service or our members at a disadvantage."
I think you just don't see the problems it creates.
> It has largely been consumer positive, allowing premium tier ISPs to differentiate themselves by making the effort to peer with service providers, and consumers benefit from the free quota.
They already have the incentive of the fact if they don't peer with service providers, they won't actually be able to connect you to the rest of the internet at a reasonable speed. Australia's market for the internet is worse than the US because of things like this distorting it + the distance from the rest of the world.
I would never setup a server in Australia because of the ISPs. I would stand them up on the west coast of the US instead precisely because of their behavior. I think you don't really understand how much the ISPs of Australia have made the entire Australian market completely uncompetitive with the rest of the world.
Here is a random example of a company that operates in Australia and abroad.
> Bandwidth quotas listed are for North American and European locations. Overage is priced at $0.02/GB in North America, $0.02/GB in Europe, $0.05/GB in Tokyo and $0.10/GB in Australia. Full plan details are listed on the customer portal.
Why do you think Australia costs $.10/GB while the rest of the world [outside of Tokyo] costs $.02/GB?
> All in all, I think the CRTC has taken a pretty good approach. Perhaps the third-party only rule should be extended to refusing exclusivity arrangements, but a complete ban is over the top in my opinion - it discourages passing on savings made by peering with companies to consumers.
It has the opposite effect. It makes things more expensive. The only reason it appears "cheaper" in the Australian market is because they decided to screw not-consumers in the Australian market even harder.
These sorts of conventions are rarely good for consumers in the mid-long term. They're like dealer financing, free device contracts, introductory rate loans.
They shift price around in a way that creates a local maxima or suboptimal equilibrium.
I have to disagree. It limits new entrants, as new entrants can't get into the large agreements easy enough to have a fighting chance.
You mention sports, but that's a total anomaly, because upstart sports franchises are not common and they tend to be big entrenched players anyhow, due to the massive physical infrastructure required to run a league.
Sporting events is just not a good example of why zero-rating should be any sort of norm. And I can't think of a good one.
> Personally, I think zero rating is a good thing, especially as it operates in the Australian environment (or, at least, how it has operated previously).
It only feel like a good thing because Australia has an abnormal telecom market which includes such strangeness as quotas even on fixed broadband.
If used in the right context, I don't see a problem with 'zero rating.' T-mobile[0] has been doing this for a little bit now and, to me, it seems to be beneficial. The issues only arise when you are zero rating individual services belonging to one genre or vertical. Saying that Netflix won't count against your usage but Hulu does would be a problem.
Zero rating is a pox upon the Internet and should be killed with fire, regardless of any perceived short term benefit to some end users. In the long term zero rating is always toxic.
There are over 800 telcos in the world. Even if zero rating was free to the app/service provider, just negotiating with each and every telco would be a huge burden.
Zero rating is, however, neither free nor available to all app/service providers. Thus zero rating creates both a toll booth and a gatekeeper who gets to discriminate against app/service providers and pick winners and loosers.
what if mobile carriers where not allowed to discriminate whom they could sell zero-rated services to, so each service provider/app should have the freedom to choose the business model that works best for themselves?
what if 3rd parties where allowed to buy zero-rated URLs or IPs in "bulk" from all the carriers in a geography, making it much easier to contract all mobile carriers?
preventing companies to provide zero-rated services increases the digital divide as it inhibit people who cannot afford to buy a data plan to use services. In many areas of the world, the majority of mobile consumers are on pre-paid plans and have zero credits most of the time (most countries have calling party pays, so a smartphone with zero credit is still very valuable to receive calls)
> what if mobile carriers where not allowed to discriminate whom they could sell zero-rated services to, so each service provider/app should have the freedom to choose the business model that works best for themselves?
While nominally better, it would just be like putting lipstick on a pig. There would also be serious real world problems with actually enforing such a regimen.
> what if 3rd parties where allowed to buy zero-rated URLs or IPs in "bulk" from all the carriers in a geography, making it much easier to contract all mobile carriers?
My answer is pretty much the same as above, only this one is a bit more ambitious. It's basically like suggesting world peace as a solution to global conflicts. Getting all the carriers in a geographic region on board, implementing, rolling out and enforcing such a thing would almost be an effort worth a Nobel price in itself.
> preventing companies to provide zero-rated services increases the digital divide as it inhibit people who cannot afford to buy a data plan to use services. In many areas of the world, the majority of mobile consumers are on pre-paid plans and have zero credits most of the time (most countries have calling party pays, so a smartphone with zero credit is still very valuable to receive calls)
Offering zero rating as a solution to this problem is a false choice. Zero rating is providing a means of communication for free AND limiting what it can be used for. The correct choice is to provide the same means of communications for free and NOT limiting what it can be used for. That is how you remove the digital divide.
If need be this free mode of communication can be limited by speed or by amount, as is customary in the mobile world. What is not reasonable is to limit what can be done with it.
TL;DR zero rating is evil, give users a free tier or quota instead.
[0] http://en.wikipedia.org/wiki/Zero-rating