19 August, 2015

BREAKING: Netneutrality more complex than you thought!

It was simple: netneutrality is good. Companies shouldn't be able to buy their way on a fast lane! That stifles innovation and competition and risks ruining the internet. Just like John Oliver explained it! But now the Brazilians are making things complicated.

Brazil was one of the first countries to introduce strong Net Neutrality laws, points for them. But now, Brazilian banks and local government are paying for the data bundles of users! Heresy! Why?

Well, many Brazilians can't afford a data bundle. Yet they need to bank, or order new passports. And it turns out that handling people in person at the office is more expensive for the banks and local governments than have them use an app on their phone. So, they made a deal with some local providers: users, even without a data bundle, can do their banking online and order their passports without paying. That seems like a win-win.

Zero rating, as this practice is called, exempts some services from from the data bundle - exactly what Brasil is doing. It is used widely in India ("internet.org") and in Chile it offered many people access to a limited set of internet services - until it was outlawed. But in a country where only a quarter of the citizens has access to broadband internet, aren't we doing the population a disservice by taking away their internet access, however limited?

Zero rating is essentially the equivalent of a collect call - the receiver pays. What is wrong with that? Even wikimedia supports zero rating!

It isn't win-win but lose-it-all

The thing is - the provider will be the gate keeper of what services you can. You are allowed only on a piece of the internet, being blocked not by technical boundaries but by a business model. A model which allows providers to extract more money from their business than they otherwise would have - not by offering more services, but by offering less.

The result will inevitably be lower data caps because it forces more companies to pay for zero rating! This is exactly what happens in Canada, where $45 gets you 2GB of data - compare that to the price of 8 dollars for the same amount in Finland. Canada is now changing the rules. Cable providers have figured that out, too, and try imposing limits while excepting certain services. And indeed, when providers introduce zero rating, prices go up!


Interestingly, when zero-rating is squashed, the opposite happens. When the government forbade zero rating in the Netherlands, its largest provider KPN responded by doubling their users' data caps without a price hike.

Thus, my suggestion to the Brazil government would be: work with providers to get indiscriminate data bundles to more users, rather than empowering providers to control their users' Internet usage.


Zero rating exist by virtue of artificial Internet scarcity in the form of usage caps and it is not part of the solution to bringing Internet access to everybody. It is part of the problem.