Entner: Zero-rating, sponsored data services could help close digital divide

Roger Entner Recon Analytics

Roger Entner

The Pew Research Center recently published a report called US Smartphone Use in 2015, which provides some interesting survey data on how Americans are accessing the Internet. When looking at the survey results, it becomes apparent that zero rating data--the practice of exempting data usage charges when accessing certain websites or apps--is a viable, market-driven opportunity that improves the affordability of access to everything from health information, to job applications, to encyclopedias, to music and more. The societal gains by making mobile data more accessible to low-income users, who often correlate with minority populations, outweighs any real or perceived transgression against an aggressive and expansive definition of net neutrality principles.

Pew's survey indicates that 64 percent of American adults--156 million Americans--now own a smartphone. More interesting is the fact that 13 percent of households with incomes of less than $30,000 are wholly dependent on their smartphone to access the Internet, compared to only 1 percent of households with incomes of more than $75,000 that solely rely on smartphones for Internet access. Further, 13 percent of Hispanic households and 12 percent of African American households are exclusively using their smartphone to access the Internet, but only 4 percent of white households are smartphone dependent.

Pew notes that "compared with smartphone owners who are less reliant on their mobile devices, … smartphone-dependent users are less likely to own some other type of computing device, less likely to have a bank account, less likely to be covered by health insurance, and more likely to rent or to live with a friend or family member rather than own their own home." The Pew research also shows that 62 percent of smartphone owners have used their device to get healthcare information, 30 percent use it to take a class.

Not surprisingly, Americans who only use their smartphone to access the Internet are reaching their data limits faster than their counterparts who use a variety of ways to access the Internet. Together, these data points indicate that tools such as zero-rating or sponsored data that can make accessing certain Internet content without it counting against usage, can help close the digital divide among the very communities that need Internet access the most. For example, consider United Healthcare's contract with AT&T pursuant to which AT&T customers can access United's health information and related videos without incurring data charges. T-Mobile has zero rated 33 different streaming music sites. Even net neutrality proponent Netflix has entered into zero rating agreements with Australian iiNet and Optus that exempts Netflix's content from customer's data caps. Sprint offers a low-cost plan for consumers that only want to access Facebook and Twitter. Netflix's Australian competitor Presto came to a zero-rating agreement with Telstra. Even Chile, which initially outlawed the practice of zero-rating, has changed its position exempting non-profit endeavors and is allowing Wikipedia Zero to be zero rated against data. The entire position is hypocritical: While it is accepted, even welcome, to provide services such as Facebook, Google, Twitter, Outlook Email, and the alike for free , it is not allowed to provide the means to access these services for free. Everyone gets it for free as long as they can pay to access it. Now what do you do if you are struggling to pay for access?

The proliferation of smartphones among low income and communities of color is a first step in closing the digital divide. The next step is to allow the proliferation of zero-rating and sponsored data services so that low income smartphone users can access critical employment, health, education and other information that they otherwise may not be accessing due to data charges. Chile's move highlights the slipperly slope of basing policy decisions on dogma rather than on a factual assessment of how a policy impacts consumers. Many countries around the world understand that mobile services should serve people and improve their lives. Wikipedia Zero without data charges is available in more than sixty countries. Facebook and Google are providing zero-rated access in some countries outside the U.S. to people who would otherwise not access the Internet. Zero rated data is the logical extension of these companies providing their services for free to those who can afford internet access to those who cannot. The benefits of making mobile data services available to consumers who are otherwise unable or unwilling to access information with their mobile device is well worth letting go of a dogma that only the affluent can afford. The alternative is no access, which is infinitely worse.

Roger Entner is the Founder and Analyst at Recon Analytics. He received an Honorary Doctor of Science from Heriot-Watt University. Recon Analytics specializes in fact-based research and the analysis of disparate data sources to provide unprecedented insights into the world of telecommunications. Follow Roger on Twitter @rogerentner.