Zero-rating programs increase wireless data prices, according to new study

A lack of net neutrality rules can have real-world consequences on wireless data prices, according to a new study by Epicenter.works. The new data from dozens of countries in the European Union suggest that when a country allows zero-rating programs, it ends up seeing an increase in wireless prices over time.

Zero-rating programs (like AT&T not counting DirecTV toward a customer’s data usage) can allow people to use specific apps and services without the data used going toward their monthly data caps. At face, it looks like a pretty solid deal for consumers, but in the long run, critics of the programs have suggested that they could end up having anti-competitive effects. This multi-year study by Epicenter.works found that countries that allow these programs end up seeing higher costs for wireless data down the road.

These programs were explicitly prohibited in the Federal Communications Commission’s Open Internet Order in 2015, which also required internet service providers to abstain from blocking or throttling consumer internet service. When the Ajit Pai administration rolled back those rules a year ago, it allowed carriers like AT&T, Verizon, T-Mobile, and Sprint to create these programs again since they were no longer against the agency’s rules.

“Based on the evidence, zero rating not only serves as a means to enhance ISPs’ power over the Internet, but it’s also how they charge consumers more money for wireless service,” the Electronic Frontier Foundation said in a blog post.

The study looks into 30 member countries of the EU which diversify in the way that they enforce net neutrality rules. The countries that prohibited zero-rating programs saw around a 10 percent drop in the price of wireless data after a year. Prices increased incrementally for countries that have no restrictions on these programs.

Zero-rating programs have long been subject to criticism which claimed that they would increase prices, but they also have the potential to stifle innovation in certain markets.

As another example, T-Mobile once allowed its customers to freely stream Netflix, Amazon Prime, and Hulu without worrying about data. This Binge On perk was phased out with the return to unlimited data plans, but there’s nothing stopping carriers from going down the same road with new streaming services. If zero-rating programs became more prominent, they could pose a significant threat to competition among music and television streaming services.

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