Positive Net Neutrality : Zero-Rating and the Material Reduction of Consumer Choice

Zero-rating is a permitted class of ‘positive’ net neutrality violations under the European Union’s ‘Net Neutrality’ Regulation. Conversely, ‘negative’ net neutrality violations, normally associated with the blocking and throttling of content that threatens an Internet Service Provider’s business model, are strictly prohibited. With the European Commission set for a public consultation on zero-rating, and The Body of European Regulators for Electronic Communications set to issue updated guidelines on the practice, the paper assesses the present state of zero-rating in Europe, focusing on differentiation cases to assess what types of positive net neutrality violations could result in a “material reduction on consumer choice” for mobile consumers. As zero-rating is generally limited to mobile subscriptions that include data caps, the Office of Economic Development has warned regulators to be vigilant against practices that could result in users constantly monitoring their data usage or limiting access to non-zero-rated services. The practice of ‘zero-rating’ in Europe poses a unique challenge to regulatory authorities keen to protect the principle of net neutrality. While consumers perceive free access to certain content, applications and programs as beneficial, zero-rating also contravenes the general aims of the Regulation: that Internet traffic is managed by Internet Service Providers in a non-discriminatory manner and that consumer choice is protected. While the practice might be seen to benefit consumers, zero-rating can also affect the number of providers entering the market and compromise the Regulation’s aim to “guarantee the continued functioning of the internet ecosystem as an engine of innovation”. The paper examines the state of zero-rating services, with specific emphasis on positive net neutrality violations across the European Union. We examine from both a normative perspective and by analysing rulings from National Regulatory Agencies empowered with supervision and enforcement duties by the ‘Net Neutrality’ Regulation. Drawing on behavioural economics and cognitive psychology literature, the paper suggests too much choice in zero-rating services can actually lead to less than optimal decision-making by consumers. Rational theory posits that more choice is good for consumers; yet, in reality, more choice can actually result in a less-informed decisions, inadvertently empowering more recognizable Content and Application Providers at the expense of lesser-known ones. From our critique of the rulings, we conclude with an overview or what amounts to permitted/prohibited zero-rating practices in the European Union and argue that a hybrid regulatory response – involving market- and principle-based regulation is needed alongside command-and-control rules to ensure zero-rating services do not amount to a material reduction in consumer choice