Should zero-rating be part of the net neutrality debate?

AT&T recently had a moan about a new California net neutrality law and how it affects its ability to zero rate certain content.

Like almost everything else, in the US the concept of net neutrality polarises opinion and has become politicised. Investopedia defines net neutrality as “the concept that all data on the internet should be treated equally by corporations, such as internet service providers (ISPs) and governments, regardless of content, user, platform, application, or device.”

Inevitably it is the concept of equality that creates the political tension, with rightists typically leaning more towards open competition and meritocracy, while leftists tend to favour greater state intervention and egalitarianism. As ever, where nuance is permitted to enter the debate, it is the extent to which data should be treated equally, not the hard principle, that is the key area of contention.

How do you judge how a piece of data is treated? That is a question California attempted to answer with its Internet Consumer Protection and Net Neutrality Act, which was approved into law this week. Here’s what it has to say about net neutrality.

The act would prohibit, among other things, blocking lawful content, applications, services, or nonharmful devices, impairing or degrading lawful Internet traffic on the basis of Internet content, application, or service, or use of a nonharmful device, and specified practices relating to zero-rating…

Most of it is great, especially since it would appear to prohibit the call by, hilariously, two Californian Representatives to compel ISPs to block cable channels they don’t like. But what are these specified practices related to zero-rating?

‘“Zero-rating” means exempting some Internet traffic from a customer’s data usage allowance’ the law states. Specifically it prohibits ‘Engaging in zero-rating in exchange for consideration, monetary or otherwise, from a third party,’ and ‘Zero-rating some Internet content, applications, services, or devices in a category of Internet content, applications, services, or devices, but not the entire category.’

It’s that last cherry-picking clause that caused AT&T to have a public moan about the law. “We regret the inconvenience to customers caused by California’s new “net neutrality” law,” lamented the AT&T blog team. “Given that the Internet does not recognize state borders, the new law not only ends our ability to offer California customers such free data services but also similarly impacts our customers in states beyond California.”

Ars Technica took exception to this interpretation of the law, however, even going so far as to accuse AT&T of lying. ‘In reality, the California law allows AT&T to continue zero-rating HBO Max, its own video service, as long as it exempts all competing video services from data caps without charging the other video providers,’ insists the piece.

This seems accurate. The law doesn’t prohibit zero-rating in general, just seeks to define the parameters of its acceptability. While those parameters should be subject to scrutiny and debate, the law also prompts the question of whether its any of the government’s business what a CSP chooses to charge its customers.

The main argument against selective zero-rating on net neutrality grounds asserts that pricing is one way in which traffic can be treated unequally. But nobody is suggesting ISPs shouldn’t be able to charge different rates for different packages, including those with no data caps that effectively zero-rate all content. It’s differential pricing at the level of the content, as opposed to the package, that remains contentious.

Which brings us back to politics. Laissez faire types will insist that everything to do with billing is a matter between the provider and the customer, so long as there’s transparency at the point of purchase. Interventionist types will argue that people with monthly data caps will be steered towards those services that don’t count against it, thus creating inequality.

While there is some merit in the latter position, on balance we would prefer pricing to be kept out of the net neutrality debate. So long as all data is treated equally with respect to delivery and censorship, providers should be able to charge what they want for that delivery and answer to their customers accordingly. In the US, however, where there is very limited CSP competition in many areas, the free market position is somewhat undermined.