When Should 'Unequal Access' Be Allowed?

By Gary Kim June 06, 2014

Should app providers and mobile Internet service providers be able to sell access packages that feature lower prices for access to only some apps? Many network neutrality supporters might object, but that shows how the notion of network neutrality runs counter to end user welfare when misapplied.

Bharti Airtel -- and other mobile service providers in India -- sells a “WhatsApp only” data package, providing 200 MB of monthly WhatsApp data, costing 36 to 49 Rupees (About $9-$12 US). Reliance Communication, Tata Docomo and Uninor also offer similar packages.

Airtel already offers another data package with messaging app Hike. The advantage for consumers -- 50 million Indian mobile phone users use WhatsApp -- is the ability to use a favored app while saving money.

At the end of March 2014, Bharti Airtel had a customer base of 205.5 million in India, of which 28 percent currently use mobile data, primarily messaging.

India’s 3G subscription rate is less than seven percent. WhatsApp’s wide device support ensures it can reach a range of feature phones as well as smartphones but for now it still requires at least a 2G data connection.

The point is that offering special plans featuring a single messaging app might seem to be a violation of net neutrality principles.

But that is an illustration of how a reasonable “no app blocking” or “no app degradation” policy -- reasonable enough -- can be misapplied to impair consumer welfare.

Pricing WhatsApp or social app access in ways that encourage usage arguably improve value for consumers, even if some would say such access plans favor one app over all others.

In principle, such problems also could arise if mobile service providers partner with app providers to provide the equivalent of toll-free calling. Facebook, for example, has tested such “sponsored access” plans, finding, to no surprise, that usage increases significantly when the feature is available.

In the U.S. market, MetroPCS in 2011 offered lower-cost access packages that blocked Netflix but allowed access to YouTube, for example.

The principle is the same: consumers get access to some favored apps, but save money because they cannot use all apps equally.

So long as there is transparency, some might argue, consumers ought to be able to buy services that cost less, and also cost less because those plans feature one or two key apps consumers want, and can be supplied affordably by mobile ISPs.

That’s why some say net neutrality rules will throttle innovation that helps consumers. 


Edited by Rory J. Thompson

Contributing Editor

SHARE THIS ARTICLE
Related Articles

Bloomberg BETA: Models Are Key to Machine Intelligence

By: Paula Bernier    4/19/2018

James Cham, partner at seed fund Bloomberg BETA, was at Cisco Collaboration Summit today talking about the importance of models to the future of machi…

Read More

Get Smart About Influencer Attribution in a Blockchain World

By: Maurice Nagle    4/16/2018

The retail value chain is in for a blockchain-enabled overhaul, with smarter relationships, delivering enhanced transparency across an environment of …

Read More

Facebook Flip-Flopping on GDPR

By: Maurice Nagle    4/12/2018

With GDPR on the horizon, Zuckerberg in Congress testifying and Facebook users questioning loyalty, change is coming. What that change will look like,…

Read More

The Next Phase of Flash Storage and the Mid-Sized Business

By: Joanna Fanuko    4/11/2018

Organizations amass profuse amounts of data these days, ranging from website traffic metrics to online customer surveys. Collectively, AI, IoT and eve…

Read More

Satellite Imaging - Petabytes of Developer, Business Opportunities

By: Doug Mohney    4/11/2018

Hollywood has programmed society into believing satellite imaging as a magic, all-seeing tool, but the real trick is in analysis. Numerous firms are f…

Read More