Zero rating and end-users’ freedom of choice: an economic analysis
| Published date | 08 March 2019 |
| DOI | https://doi.org/10.1108/DPRG-06-2018-0030 |
| Date | 08 March 2019 |
| Pages | 115-128 |
| Author | Laure Jaunaux,Marc Lebourges |
| Subject Matter | Information & knowledge management,Information management & governance,Information policy |
Zero rating and end-users’freedom of
choice: an economic analysis
Laure Jaunaux and Marc Lebourges
Abstract
Purpose –According to European Union Open Internet Regulation, commercial practices of internet
access serviceproviders (IASP) should not restrict end-users’ choiceregarding services, applications or
contents. Thispaper aims to analyze the effects of Zero Rating (ZR) on freedomof choice translating this
regulatory criterion into a formal expression: providing a ZR offer on a content or application provider
(CAP) restrictsend-users’ choice if it reducesthe volume or provision of others usages.
Design/methodology/approach –The analysisis made in two steps. First, the authors assessthe direct
effect of introducingzero rating on non-ZR usages, all other things equal. Second, the paper studiesthe
knock-oneffect of ZR on IASP offers and the supply of CAP.
Findings –In the short term,zero rating does not restrict end-users’ choiceincreasing both ZR and non-
ZR usages. In the long term, in the case of pure ZR, IASPs may adapt their offer to support ZR costs
impacting negatively otherusages. However, in practice, these effects are compensated or diluted by
competitive forcesor if the ZR traffic is small relatively to the data allowance. In the case of SD,the CAP
coversthe cost which prevents cross-subsidies and protectsfreedom of choice if SD is open to all CAPs.
Originality/value –The economic literatureon zero rating is scarce and assesses this practicefrom the
general economic criterion of social or consumer welfare. This paper is the first one to use economic
analysis to analyze whether Zero Rating is compatible with the EU regulatory criterion of freedom of
choice.
Keywords European union, Regulation, Telecommunications
Paper type Conceptual paper
1. Introduction
Zero rating is a commercial practice by which an internet access service provider (IASP)
does not charge the user for the internet traffic related to specific contents or applications,
or categories of contents or applications, available on the internet. The practice generally
concerns mobile IASPs which propose limitedor metered data plans. If an end-user has an
unlimited data allowance, a zero rating offer has no additional benefit. Therefore, this
practice is mostly found in mobile broadband services which, owing to underlying
bandwidth constraints, aremore likely to have data caps.
The provisions of European Regulation (2015/2120) concerning open internet do not
explicitly mention zero rating, but provide general principles which guarantee an open
internet, in particular concerningcommercial practices and prices.
Article 3 paragraph 1 providesthat:
End-users shall have the right to access and distribute information and content, use and provide
applications and services, and use terminal equipment of their choice, irrespective of the end-
user’s or provider’s location or the location, origin or destination of the information, content,
application or service, via their internet access service.
Article 3 paragraph 2 specifies:
Laure Jaunaux and
Marc Lebourges are both
based at Orange, Paris,
France.
Received 27 June 2018
Revised 26 September 2018
Accepted 11 November 2018
DOI 10.1108/DPRG-06-2018-0030 VOL. 21 NO. 2 2019, pp. 115-128, ©Emerald Publishing Limited, ISSN 2398-5038 jDIGITAL POLICY, REGULATION AND GOVERNANCE jPAGE 115
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