Good news! KPN is offering more internet for less money. A direct outcome of the regulation of net neutrality in the Netherlands.
Positive discrimination and zero-rating are bad for the market
Zero rating (also known as sponsored data) is the policy of mobile network providers and mobile virtual network providers to not charge their clients for using specific services (such as Facebook or YouTube). As we have indicated before, zero rating is a bad idea for several reasons: you give specific services an advantage over their competitors, and push users towards using a certain service and disadvantage others.
This is particularly dangerous in third world countries, because the markets there are still in development. It’s now come to light that in certain African and Asian countries the number of Facebook users is larger than the number of (open) internet users. Which is bad news. It increases Facebook’s ever-growing data monopoly. Internet will soon be equal to Facebook use. It’s also detrimental for these countries because it puts the mobile market under pressure: the larger mobile operators that can offer these kinds of bundles are then able to easily push the competitors aside.
Many of these concerns are also true for Europe: these kinds of plans consolidate the power of large mobile providers, and force internet users towards the existing monopolists on the individual service market. This is not only bad for freedom of communication, but also for innovation, because new businesses don’t stand a real chance.
A new market without zero rating: KPN shows how it’s done
In the Netherlands, the net neutrality policy explicitly prohibits price discrimination. This restriction can be negative (internet providers may not offer more expensive specific individual services in combination with internet access) and positive (internet providers may not offer cheaper individual services in combination with internet access). This is beneficial for both freedom of information and innovation.
Vodafone has recently been fined for such practices in the Netherlands. They wanted to offer the ‘HBO GO’ app to Vodafone clients without it being deducted from their data use for the first three months.
Imagine that you had not read the previous paragraphs. Then you could perhaps think: “So what? Mobile providers should be able to differentiate themselves with this kind of positive marketing” and you’d be partly right. The beauty of it all is that KPN has managed to show us how it can be done. They’re going to start competing with all their data bundles and related charges. The idea behind it: that you can use the internet via their connection ‘worry-free’. Of course the reasoning behind this is that above all you’ll then watch their internet TV, but that doesn’t take away from the fact that your data bundle is larger, and your costs lower, for all your internet use. And that is in your benefit.
The EU doesn’t yet know what they want to do with zero-rating
Negotiations about the European rules that must regulate net neutrality are a bit delicate. Not surprisingly, when the major Member States can feel the large telecom companies breathing down their necks. In the most recent compromise proposal, this sort of price discrimination is not banned, but it does state the need to avoid the kind of agreements being made that lead to the stifling of competition. For us, that’s not enough, so together with other European civil rights organisations we have again submitted a letter with proposals. We hope that the European countries see the advantages of a ban on zero rating.