When Should 'Unequal Access' Be Allowed?

June 06, 2014
By: Gary Kim

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 (News - Alert) -- 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 (News - Alert) 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 (News - Alert), 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 (News - Alert), 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