What is “zero rating?”

Zero rating is a big buzzword right now. It started off innocently enough but it’s now being used in ways it was never intended. Some are calling it a threat to net neutrality and some are calling it a fair way for service providers to survive. It could be the next big telecommunications fight depending on who wins the White House (remember, the FCC commissioners are appointed by the Executive branch.)

The idea is simple – a cell data provider normally charges by the gigabyte for data. Obviously there’s going to be some stuff that they don’t want to charge for. The idea started with text messaging, where the carrier wanted to send you information but didn’t want to charge you for the text. (Remember when you paid for texts?) This made sense, because why would you want the cell company to charge you for the text saying your bill just posted?

So the real core of it is, if the carrier itself is sending data to your phone, they have the right not to charge for it.

Except, now it’s being used in ways it wasn’t intended. Verizon and T-Mobile both use zero rating for their video services and it’s pretty likely that AT&T will do the same. The rules allow for it, but net neutrality supporters say it isn’t fair. They say that if you can get video from Verizon for free and the very same video from Discovery.com is not free, that’s not fair and neutral. It creates an unfair advantage and Verizon could force Discovery to pay to put their videos on Verizon’s video service. And that would be the end of net neutrality, at least on wireless devices.

At least that’s one doomsday scenario. The core of the whole zero rating idea is that you’re not charging customers for something you’re providing. Right now it’s really sketchy whether or not you could take content from a third party directly, for example iTunes, and apply the zero rating to it. Before net neutrality rules came in, T-Mobile was not charging customers for streamed music. Net neutrality rules say you can’t do that. But what if Verizon partnered with Apple to create a pathway where iTunes content could be hosted by Verizon and streamed for free using zero rating rules? This third party hosting is done all the time already.

Believe it or not, China — not the shining example of intellectual property law — says zero rating rules can’t apply because they violate net neutrality. Our FCC says they “might” violate net neutrality. But for the moment zero rating is legal and it’s being used by Verizon for curated video that comes from third parties. AT&T could do the same thing with its new DIRECTV streaming services. Verizon’s Go90 is free, while DIRECTV Mobile won’t be. If DIRECTV mobile doesn’t count against data caps, is that against net neutrality rules?

That’s why I’m glad I’m not on the FCC. They have to figure things like that out.