Sandvine submitted comments on July 14 to the FCC’s latest Notice of Proposed Rulemaking (NPRM) on the Open Internet. Much of the NPRM focuses on legal questions that others are better placed to address. However, when it comes to real-world experience with the FCC’s notion of Commercially Reasonable Practices, Sandvine draws on some significant experience.
As I pointed out in my last blog post, the FCC has been paying undue attention to the (so far) commercially-uninteresting and technologically-unfeasible notion of Pay for Priority while other Commercially Reasonable Practices get deployed. One such practice is “zero-rating”. With zero-rating, an application or group of applications are bundled into a fixed price plan such that the users get price certainty around usage of their favourite applications. Sandvine’s solutions underlie several such services globally, and there is increasing evidence to suggest that they could be very interesting in the U.S. as well.
Econet Wireless in Zimbabwe is helping people that otherwise could not afford to access the Internet use their favourite applications. Zimbabweans can buy unlimited access to either WhatsApp, the popular messaging app, or Facebook, for $0.30 a day, $0.95 a week or $3 a month.
Recently, competitors in Zimbabwe have started to launch similar plans, giving even wider access to the Internet on an affordable basis. Could such low cost plans be attractive to certain demographic groups in the United States, such as visitors, children, students, or lower-income users?
In the Philippines, Sandvine is helping Smart Communications offer “bite-sized”, application-specific, mobile service plans to fit users’ particular preferences and needs. Smart is offering Email, Chat, Photo and Social packages, in 15-minute, 3-hour or per-day unlimited access, depending on the particular application and plan, for a low fixed price. The packages provide “always-on” access to the apps anywhere, without the need for a Wi-Fi connection or any other data plan. Again, this is making the Internet affordable to people who otherwise could not afford an all-you-can eat plan, to vacationers without an access plan in-country, and others.
Are there users in the U.S. that would like an opportunity to buy access to just those parts of the Internet that they most enjoy in 15-minute increments?
Here in the U.S. Cricket’s Muve Music rate plan included unlimited music downloads from the Muve Music site, plus text, talk, data, video and picture messaging. There were no download fees and no monthly cost for music subscriptions. Cricket Wireless was the first U.S. wireless carrier to offer consumers unlimited music as part of any wireless rate plan.
Recently, in the U.S., T-Mobile announced plans that have bundled popular music services such as Pandora and Rhapsody and iTunes Radio. The demand is there. The innovation needs to be encouraged!
Some may suggest that such plans give unfair advantage to the “bundled” applications – that it creates an unfair barrier to success for competing or start-up services. Sandvine disagrees. For the past decade, Sandvine has published Global Internet Phenomena reports that describe the latest Internet traffic trends, based on real data from Sandvine’s global customer base. Over that time, Sandvine has seen peer-to-peer filesharing, once the most popular way of consuming movies and music online, shrink in total bandwidth share from 60% to 9% in North America, despite the fact that it offered the greatest advantage of all – completely free access to the entertainment. Despite the added cost, users found Netflix and iTunes to be better options. As with all markets, innovation prevails.
In some cases, rather than bundling individual applications, service providers have bundled a number of the most popular applications from a category. For example, in roughly a dozen of Telefonica’s Movistar mobile properties in Latin America, users have been able to buy bolt-ons to their mobile data packages that allows unlimited use of Chat, Email (or the two combined), Social Networking and other packages.
Before these tiers were introduced, subscribers could on purchase data in 200 MB blocks, and all data usage counted against this pre-paid quota. In practice, subscribers were fearful of rapidly consuming the data block, and were not adopting the plans. The tiers introduced the peace of mind that comes with unlimited usage and subscriber adoption soared.
In another excellent example of how such bundles don’t impede innovation, the first version of Movistar’s bundles did not include WhatsApp, yet the service grew dramatically in popularity so Movistar added it to its plans (see WhatsApp logo, the white phone in the green bubble in the image below ). WhatsApp is now the most popular third-party messaging client in the region, overtaking applications in the same bundle from Google, Yahoo and other massive companies.
The result: innovation won again – in both Internet applications and Internet access service plans. It would also be feasible to make application bundles time-specific as well, so as to shift network usage to off-peak hours. For example, a plan that offered free peer-to-peer file sharing or cloud storage/backups between 1:00 a.m. and 5:00 a.m. would make sense for the user as these activities take place unattended and are not time sensitive. Any plan that moves traffic outside of peak hours benefits all users and network operators.
Does the Commercially Reasonable standard proposed by the FCC protect these so-called zero-rated plans? We don’t know. We should all hope so. They increase competition amongst service providers, don’t stifle innovation amongst edge providers, and provide consumers with more (and more affordable) choice.
Dear FCC, say no to haters of zero-raters.
For those interested in reading Sandvine’s full submission on the Open Internet, you can view it on the FCC website.