The Internet has unsurprisingly become an essential part of consumers’ lives and is now a primary driver of our country’s economy. As such, businesses have taken note, developing their company models and strategies around this growing trend.
“Sponsored data” programs, the latest marketing offering from cell phone carriers, allow brands and content providers to subsidize their content, making content available for free to customers. Three of the top four leading carriers in the U.S. are now offering deals to customers looking to extend their data usage, providing a mutually beneficial opportunity for both corporations and consumers. Each provider has developed different offerings which suit the needs of the customers and their sponsors.
T-Mobile, for example, offers a plan where customers can stream music sites from a list of online music services including iHeartRadio, Apple Music, Pandora, and Spotify, and the company’s Binge On program allows customers to stream video services from 50 major content providers without affecting data plans and incurring additional costs. Verizon customers can watch, visit, and download certain content exempt from monthly data caps with its FreeBee Data program.
While most would argue that free, especially when it comes to expensive mobile data, is a good thing, there are a dissenting few who say that these programs limit competition, are unfair, and violate the Federal Communications Commission’s net neutrality, zero-rating, and “paid prioritization” rules.
These opponents argue that sponsored data programs could potentially give certain content providers an unfair advantage over others that don’t participate because their programming does not eat into customers’ data allowance.
However, unless certain groups or services are actively restricted from offering those same enticements, competition is actually being encouraged rather than undermined. If a restaurant offers coupons, it may be more appealing to customers than one next door that does not, but should coupons be outlawed?
Some FCC bureaucrats apparently think so.
The FCC is concerned that some content is given favorable treatment over others because a provider pays for better placement.
But it’s clear that this is not happening with these particular programs in question; users can access any content they want, as quickly as the provider can handle.
Further, research shows that the FCC’s net neutrality rules are actually hurting low-income Americans by imposing sanctions on free content delivery, more commonly known as “zero-rating.” Providers have, for decades, provided content for free as a way of helping price-sensitive consumers. Toll-free calling is perhaps the best example of this within the telecom space. Prohibiting zero-rating will make it harder for the poor to obtain certain Internet services.
Zero-rating is hardly different than many other customer-service business strategies, but it does have the potential to connect entire communities, improve digital literacy in low-income communities and bridge the digital divide. According to a Pew Research report released last year, 64% of Americans own a smart phone and many rely on these devices as their only access point to the Internet, a resource that is quickly becoming as essential to modern life as running water and electricity.
Nearly half of these smartphone-dependent users, typically minority and low-income Americans, have had to cancel or shut of their cell phone service for a period of time due to financial constraints. Increasing the amount of data allowed for less money would allow these consumers to stretch their budget a bit further.
Sponsored data and zero rating are important ways for mobile carriers to differentiate themselves in a highly competitive marketplace. These “more for less” benefits encourage long-term spending and put advertisements in front of customers who would normally not be exposed. Additionally, saving customers money allows for more spending elsewhere.
Simply put, subsidized data and zero-rating makes it cheaper for consumers to access new, more, and different content. Customers who utilize these sponsored data programs enjoy content without having to worry about going over their monthly data cap.
It’s hard not to view these perks for what they are: a benefit to customers and an opportunity for competitors to stand out in the marketplace. The only folks who seem to disagree are regulators who think it’s reasonable to keep the most economically vulnerable from getting the services considered by many to be a necessity.