Are free data options a good thing for American consumers?
I guess it depends on whether you ask consumers or advocates.
For some in Washington D.C.’s rarified, digital, public interest policy elite, the very idea that mobile innovators would offer creative new low-cost or no-cost data service to consumers is a bad thing. New free data choices they say may create (in some unspecified and unproven way) a less “neutral” Internet.
But if you were to ask most Americans, particularly lower-income Americans who increasingly rely on their mobile devices to access the Internet, the answer is a resounding, unequivocal, and emphatic yes.
This is just the question the Multicultural Media, Telecom and Internet Council (MMTC) posed in their new white paper. And what they found is that the new, innovative free data options a range of wireless operators and content providers are bringing to market could be a game-changer, helping millions of American families struggling to make ends meet more easily access the mobile Internet – and all the benefits and opportunities it offers – without digging into their monthly data plans.
With more wireless subscriptions than people in the United States, any consumer would undoubtedly agree that free is good — especially when it comes to their mobile data. A recent study, in fact, found 84 percent of all adults expressed incredible enthusiasm for the free data or ‘zero-rating’ business models. For lower income households and many in our nation’s minority communities, however, new plans that allow for certain amounts of no-cost data is yet one more way to help promote digital inclusion for all.
According to the Center for Disease Control, adults living in poverty (64.3 percent) and near poverty (54.0 percent) are more likely than higher income adults (45.7 percent) to be living in households with only wireless telephones. And communities of color are embracing the ubiquity of mobility with Hispanic adults (60.5 percent) more likely than non-Hispanic white (44.0 percent), non-Hispanic black (48.5 percent), or non-Hispanic Asian (48.4 percent) adults to be living in households with only wireless phones. Wireless is helping keep many Americans connected – particularly those who too often have been on the wrong side of the digital divide. And the diverse business models currently offered by a host of wireless providers are helping bridge the connectivity gap by offering free data to ensure affordable digital connections for all communities.
Given the clear consumer benefits, it’s bewildering that free data plans have come under scrutiny at the Federal Communications Commission (FCC). And it is downright incomprehensible that some Washington, D.C. advocacy groups which profess to work in the public interest are stoking the flames of concern based on groundless fears that these new consumer choices will undermine ‘net neutrality’ in the wireless space.
In its report, MMTC correctly refers to the “digital elite” as dominating the discussion with little regard for the millions of our fellow citizens who could benefit from the new free data offerings coming to market, and the public and family benefits they bring. But in the real world, wireless consumers know differently and clearly understand that over-hyped claims from inside the beltway policy advocates fly in the face of our nation’s open, competitive, and ever-evolving wireless reality.
In today’s mobile arena it is hard to see how free data options could be seen as anything less than an important way for companies to compete and differentiate themselves from other players in the space. In fact, a recent report on free data from network company Sandvine explains that, “an increasingly important basis for…competition is the differentiation of Internet service offerings.” And Doug Brake from the Information Technology & Innovation Foundation had a similar take in a new report exploring the issue, “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.”
FCC Chairman Tom Wheeler’s initial praise for T-Mobile’s “highly innovative and highly competitive” BingeOn product recognized the clear consumer benefits from free data offerings. While some interest groups have pushed the FCC to ban these options outright, the Commission chose instead to look at the offerings on a case-by-case basis. But with consumers flocking toward free data, these options should be celebrated rather than taking steps that could deter or derail them.
There is a lot at stake for the mobile future and it is critical that wireless consumers, not regulators, continue to drive the incredible momentum, choices, and access available to all of our nation’s communities. Free data offerings are one of many new tools and services that will help propel this progress and promote inclusion.
As we prepare to enter the next great wireless frontier, users should fully benefit from pro-consumer options, including free data that will continue to fuel our mobile future.
Jonathan Spalter is chair of Mobile Future. He has a long track record building innovative technology, mobile, Internet, and research companies in the U.S, Asia/Pacific, and Europe, both in the public and private sectors.