Free data: Focus on consumers

At last week’s congressional hearing on the proposed AT&T-Time Warner merger, Sen. Mike Lee (R-Utah) stated, “Consumer welfare is maximized when we promote competition and not individual competitors.”

Lee’s statement caught my attention in light of the ongoing debate over the consumer benefits of “zero-rated” or “free data” offerings from wireless carriers. Although the specifics of each offering vary, “free data” programs essentially allow consumers to watch video, listen to music, or engage in other online activities using their wireless devices without incurring additional mobile data charges. 

{mosads}Since early last year, “free data” offerings have been embraced by consumers. Consumers are saving on their mobile broadband bills while consuming more mobile video. Earlier this year, CTIA – the wireless industry’s main trade association –commissioned a Harris Poll to get a sense of what consumers think of “free data” programs and the results were overwhelming.

CTIA found that consumers in all age groups, but millennials in particular, were more likely to try an online service if it was free. In fact, 98 percent were more likely to stay with their current wireless provider if it offered such a service and 77 percent were more likely to sign with a new wireless provider that offered them “free data” programs.

The CTIA survey results aren’t surprising. Businesses have been conducting promotional giveaways and reducing consumer costs as a way of attracting new customers. A generation ago, when long distance charges made calls expensive, some companies paid for 800-numbers so their customers could call free of charge. For example, 1-800-Flowers was one of the first floral retailers to use a toll-free telephone number for direct sales to consumers. Consumers no longer had to make a trip to the flower shop or pay for a long-distance call to send flowers across the country.

Because “free data” offerings can reduce a consumer’s overall spend for the latest and greatest video content, they can help bridge the digital divide. By shifting the costs to produce and/or provide video content away from mobile users, especially low-income users, “free data” makes available content and access not otherwise affordable to Americans most desperately in need. Considering the ways in which “free data” programs can be built around the provision of educational programming, healthcare, and government services, it would be unwise to outlaw the practice.

The Multicultural Media, Telecom & Internet Council (MMTC) released a report in May of 2016 describing the ways the programs themselves are premised on the fact that intense competition among device, content, and network providers will bring a more “affordable connection to the future” for consumers.

If consumers like “free data” programs and these programs are driving broadband adoption and keeping consumer’s bills down, then why are these programs controversial? Many net neutrality advocates believe “free data” programs are a violation of the Open Internet Order and are inconsistent with basic net neutrality principles. As Doug Brake, Telecommunications Policy Analyst at the Information Technology and Innovation Foundation’s Doug Brake says, “Zero-rating products are unlikely to harm the open Internet; instead they are a sign of healthy product differentiation that more efficiently allocates scarce resources in a competitive market, ultimately improving consumer value.”

Regulators seem to have forgotten that these “free data” offerings allow consumers to consume more content without increased costs. Without the various offerings, consumers will incur additional mobile data charges. By accepting and promoting “free data” offerings, regulators have an opportunity to promote competition all in the name of consumer benefits. After all, how could anyone argue against these cost-saving measures for consumers?  Free data is a win-win.

Debra Berlyn is the President of Consumer Policy Solutions and leads the Consumer Awareness Project; an effort dedicated to educating and informing consumers about communications issues.

views expressed by authors are their own and not the views of The Hill.