Earlier this year, the Swedish telecom giant Telia signed a so-called ‘zero-rating’ deal with Facebook. This means that Telia customers will be able to access Facebook content on an unlimited basis, without this traffic being counted towards their monthly data cap. It’s an intriguing offer at first glance – what could be wrong with ‘free stuff’? Quite a lot, actually. The announcement has already provoked a flurry of criticism from Swedish commentators, including the country’s biggest press organizations. The question is one of „net neutrality“, a fundamental principle of the Internet that zero rating threatens to undermine.
This article was co-drafted by Paddy Leerssen and Thomas Lohninger from the www.savetheinternet.eu campaign.
Net neutrality is the principle that Internet providers shouldn’t arbitrarily favor certain sites over others. Zero-rating is controversial because it does just that; dividing internet traffic into privileged and non-privileged categories. Privileged sites get special subsidies to appear „free“, encouraging more visits and locking in more users. Meanwhile, non-privileged competitors incur even higher data charges, driving away visitors. Far from mere idealism, the level playing field that net neutrality guarantees has been crucial for the growth of the internet as a platform for creativity, social change and new, competitive businesses. By requiring sites to make special deals with internet providers, or lose their users, zero-rating destroys the basic open conditions that make the internet so special.
Zero-rating is profoundly anti-competitive. Studies have shown that zero-rating has a powerful influence on the choices of internet users, making these deals a powerful weapon against competitors, for any site rich enough to afford one. Telecoms giants like Telia can charge massive premiums for zero-rating privileges, affordable only to major online players such as Facebook or Spotify. Meanwhile, competing actors without such deep pockets, such start-ups and non-profits, are relegated to a second-rate internet service. In this way, zero-rating enables media and telecoms giants to further entrench their dominant position.
This is why the Swedish media sector has responded with outrage to the Facebook-Telia power grab. In a joint letter signed by the 27 biggest Swedish broadcasters, publishers and media associations, they lambasted the partnership as „an attempt to test and push the limits of how far telecom companies can go to control web content“. If Facebook is zero-rated, the report continued, „[i]t will be even harder for small and medium-sized players to gain a (local) foothold – if they don’t want to submit to Facebook’s business logic and publication rules“. What the Swedish media fears is a situation where „public discourse is regulated from Menlo Park, California“.
Zero-rating isn’t just bad news for media diversity, it also harms consumers. To better profit from zero-rating deals, operators commonly drive up prices for regular internet data. As normal data becomes more expensive, users can be pressured into using zero-rated services instead, which in turn drives more demand for zero-rating deals. EU-wide studies have confirmed that zero-rating leads to significantly higher prices per gigabyte of mobile internet traffic—unsurprising, given the perverse incentive that zero-rating creates to raise fees and lower caps. Indeed, after the Netherlands outlawed zero-rating, market leader KPN doubled the data caps for most of their contracts. In Slovenia, a ban on zero-rating also resulted in larger and cheaper data offers.
From the perspective of zero-rating companies, these price hikes make perfect sense: More expensive data means more demand for zero-rated services. Or, in technical terms: The telecom operators can create and monetise artificial scarcity. Even worse, through zero-rating, telecoms can control which services are on offer, rather than giving consumers a free choice of all internet services. If zero-rating is allowed to continue, the Internet will start to look a lot more like cable TV, with a few large companies deciding the programming and political viewpoints that reach viewers.
Sweden’s Post and Telecom Service (PTS) – the national authority responsible for protecting consumers and competition on the internet – has been ignoring the problem zero-rating presents. In contrast to their colleagues in the US, India, the Netherlands and elsewhere, they have not yet intervened to protect net neutrality. As the PTS sees it, consumers who disapprove of net neutrality violations are free to switch to another internet service provider. That stance gives big incumbent telecom operators like Telia the freedom to discriminate in their network as much as they want, as long as some of their competitors don’t restrict access, and it does nothing to protect internet users from the impact of these deals on society, or the market as a whole. Though zero-rating is hardly a new phenomenon, and PTS has had ample time to provide their perspective, their only official reaction so far is the announcement of an investigation into the case.
While PTS is stalling the zero-rating debate in Sweden, they are also negotiating at EU level on new net neutrality rules. This August, the Body of European Regulators of Electronic Communications (BEREC) must adopt common rules on zero-rating for the entire EU. The stage is set for a heated debate: on the one end we find states such as the Netherlands and Slovenia, which have set promising examples by prohibiting zero-rating outright. On the other end are lax, unresponsive states such as Sweden and the UK, which have let their markets stray further and further away from net neutrality. The UK is known for taking market-oriented, Eurosceptic position in regulatory discussions. But the Swedish regulator is a more unlikely villain, given Sweden’s reputation as a champion of regulation and consumer protection. Sources close to the negotiations describe the Swedish regulator as the most extreme anti-net neutrality voice, taking a laissez-faire stance which is „worse than the Brits“.
Thankfully, the issue is not just up to regulators. The law requires BEREC to issue a public consultation, where everyone and anyone can provide their perspective on net neutrality from consumers and start-ups to major business lobbies. Similar consultations have already provoked mass mobilisations in the US and India, receiving millions of responses and quickly resulting in strong net neutrality reform. Now, an international coalition of over 20 activist groups, www.savetheinternet.eu, is attempting to achieve similar public engagement in Europe. Given the reluctance of Swedish authorities to act, anyone and everyone who uses the internet on a regular basis—whether it’s for work, for fun, or for changing the world—should consider taking action. Visit www.savetheinternet.eu and make your voice heard. The future of the European internet depends on it.