Layton

In short, we cannot find evidence that shows that zero rating creates harm. We find that
zero rating has a negligible but not negative impact on the marketplace.
Zero rating is one of a number of marketing techniques that mobile operators need to
employ in competitive marketplace. For some operators in the study, they outcomes are
the opposite predicted by critics. Some operators that deployed zero rating actually lost
market share, and their zero rated applications were insignificant in terms of rank. We do
not believe that this is a result of zero rating, but rather that zero rating is the result of
the operator’s competitive situation. To rephrase Baumol, operators don’t deploy zero
rating because they can, but because they must.
It is strange however that a service that has such a minimal impact should be so
maligned. It is also an inconsistent that zero rating is rampant across Internet
applications and services (e.g. advertising supported games, search, social networks,
music streaming etc) but arbitrarily prohibited on mobile broadband services.
We noticed that in the three countries that advocates have a goal to make flat rate
internet subscriptions and high data caps (preferably no data caps) the norm, if not the
law. While such offers have appeal, they necessarily mean low volume users, whether by
choice or budget constraint, are forced to pay more for internet access. Meanwhile high
volume users, those who want to stream movies or play video games, pay
proportionately less for their service. Such a situation would be a particular boon to
companies such as Netflix, whose streaming service takes up a disproportionate share of
mobile traffic. Thus it appears that campaigns against zero rating are waged as a way to
pressure mobile operators to change their pricing in favor of users who consume high
volume video and against those users who have never used the Internet but want an
incentive to try.
Zero Rating - Layton/Calderwood
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