Are Free Data Plans The Key To Closing The Digital Divide?

This article originally appeared on NewOne.

As a frugal consumer (and who isn’t these days), I remain on the lookout for coupons or sales that will stretch my dollars. Deals and deal-making have been, in fact, an integral part of American culture, shaping our shopping habits probably well before Coca-Cola gave away its first coupon in the late 1800s offering customers a free glass of Coke at the local pharmacy.

Who could object to these kinds of promotions in which everyone — companies and consumers — win? It turns out quite a few — at least in the arcane arena of telecommunications regulation in Washington, D.C. And they are largely corporate lobbyists and activists who claim to protect the public’s interest, even as their positions defy common sense.

At issue for consumers is whether the Federal Communications Commission will succumb to pressure from online activists and curb free data plans offered by AT&T, T-Mobile, and others.

Like other consumer perks (from free coffee refills to toll-free calling), the idea behind free-data plans is straightforward enough. Companies that are seeking more visitors to their web sites simply cover the data costs (to carriers) that consumers would otherwise incur visiting those sites. But given the increasingly important role the Internet plays in modern life, these free-data programs provide more social value than run-of-the-mill promotions.

For low-income communities, particularly in cities and rural towns, access to the Internet remains costly and difficult, leaving too many individuals on the losing side of the digital divide.

Historically, public resources in those communities, particularly those comprising African-Americans, Hispanics, and Native Americans, have little to no internet service.

In today’s digital age, though, the Internet can help lessen the burdensome legacy of such neglect by serving as a gateway to new opportunities for individuals to improve their lives.

At this very moment, millions of Americans are relying on the Internet to enhance their education, catch up on current events, find employment, and even check their health records, among countless other uses. In many cases, this Internet access is made possible because of free data plans and the applications on mobile devices, which are included among the abundance of content made free for consumers to use.

For African-Americans and Hispanics — two groups that strongly prefer using mobile devices to access the Internet — the benefits of the free-data plans are particularly clear.

There’s great irony in the claims being made by critics of free-data plans. Netroots activists, as these critics are known, say such plans give big companies an advantage over small ones and thereby violate the principle of net neutrality, a policy the FCC adopted to ensure Internet service providers did not give certain content priority over other content, all in the name of promoting an open Internet.

But in their championing of a principle, they may do actual harm to people on the economic margins who have experienced the loss of their mobile phone service at some point precisely as a result of not being able to afford the cost of data usage overruns.

There is, of course, no guarantee that free data plans, sometimes called zero data plans, mean that consumers will use that extra data in ways that are productive and worthy. The high-school drop-out may well be watching a movie instead of studying online for the GED. But who’s to judge? And who knows. Maybe it ends up being a motivator to pursue higher education. Or maybe a consumer frittered away his or her free data on entertainment but still has data from his or her own paid plan to devote to more serious pursuits.

Note the findings in the recent report by the Pew Research Center, Home Broadband 2015: “[T]hose without home high-speed service are much more likely than in the past to say that lacking a home subscription is a major disadvantage when it comes to accessing government services, searching for employment, following the news, learning new things, or getting health information.”

And the subtitle of the report is: “The share of Americans with broadband at home has plateaued, and more rely on their smartphones for online access.”

For the moment, smartphones are the Internet play. Is it fair for those folks to be put at risk of losing their primary means of online access over a political dispute between Washington lobbyists? Of course not.

My reading of the Pew report is that as Americans increase their Internet usage, they gain a better appreciation of its potential to improve their lives.

To its credit, the Multicultural Media, Telecom and Internet Council, an organization that has long been at the forefront of diversity policy initiatives and consumer advocacy, has voiced its opposition to terminating free data plans.

On this issue, the consequences of coming up short are far too great. Preserving free data plans is about much more than getting access to a few websites — it’s about opening the door to a future in which all, not just the privileged, can access the vital information we seek. An unfavorable outcome from an FCC ruling could force millions living in underrepresented communities to face yet another barrier to closing the digital divide.

Khalil Abdullah is a writer, editor and business consultant. A former national editor and reporter for New America Media, and a former managing editor for the Washington Afro-American, Khalil staffed the Telecommunications and Energy Committee of the National Black Caucus of State Legislators from 1995 to 2000 when he served as Communications Director. He was NBCSL’s executive director from 2000 to 2003.

Burner Phone Bill Would Violate Privacy

This article originally appeared on Opposing Views.

There’s a scene in the seminal police procedural show “The Wire” when Baltimore’s detectives get schooled on burners.

Detective Kima Greggs, played by the excellent Sonja Sohn, is sitting in her unmarked car with Bubbles, a heroin addict who’s also Kima’s confidential informant. Bubbles produces a cell phone from his pocket, presses the call button, holds the phone up to his ear, then frowns and tosses the phone out of the car window.

“You too?” Kima asks. “What the [expletive] is up with these phones? I’ve been seeing kids throw them away all day. You’ve got cash like that to waste?”

Bubbles shakes his head and licks his lips.

“They’re laying all over, man,” he tells Kima. “Sometimes you get lucky and find minutes on them. Burners, Kima.”

“Burners?”

In the show, the detectives realize the notorious Barksdale drug gang is using burners — cheap, disposable cell phones loaded with prepaid minutes — to avoid wiretaps and make it more difficult for police to track them.

That was 2004. Sixteen years later, a California congresswoman is treating burners like cutting-edge tech, and claiming they’re used almost exclusively by criminals, to push a bill that would require customers to present ID when purchasing burners.

The bill, dubbed the Closing the Pre-Paid Mobile Device Security Gap Act of 2016 by its sponsor, Democratic State Rep. Jackie Speier of San Francisco, would deputize retailers by forcing them to collect identifying information about the buyer “and share that information with the cellular provider for that individual device.”

Speier claims it’s a necessary step to prevent terrorists, crime lords and human traffickers from duping investigators.

Speier’s proposed legislation is unconstitutional and invasive.

First, let’s get the obvious truth out of the way: Americans have good, legitimate reasons for using burners. Some people use them because they don’t require contracts. For others, especially the nation’s poor, burners are one of the few ways people can get their own cell phones without credit checks.

Others use them to protect their own privacy. That’s their right. There’s nothing in the constitution — and no legal precedent in the history of judicial decisions — that says a technology should be regulated, or privacy violated, simply because its existence is inconvenient for law enforcement.

As The New York Times’ Jim Dwyer noted in a 2012 column, burners are also used by whistleblowers and media sources who wish to remain anonymous.

“There are reporters in New York who carry a half-dozen prepaid cellphones, loaded with minutes purchased in cash,” Dwyer wrote. “The numbers are not registered to a real person, nor do they have to be under current law. They are peace of mind for confidential sources who have something to say but don’t want to make calls to a phone associated with a reporter or a news organization.”

Secondly, it’s disingenuous to say that police and the feds can’t track or tap burners. They’ve been doing it for years. The National Security Agency has software that analyzes network traffic, call times and contacts to track people who switch between burners, according to documents obtained by the Electronic Frontier Foundation.

A little detective legwork can easily reveal the owner of a burner, as security blog B3RN3D points out — all the police have to do is pull security camera footage from retailers. It’s also easy for law enforcement to triangulate the location of a burner device by using information from cell phone towers, as well as law enforcement “honeypots” that masquerade as legitimate cell phone towers, but exist for the purpose of collecting network information.

“If you think the government is after you, there’s really not much a burner phone is going to help you with,” B3RN3D notes.

Speier’s proposed legislation isn’t the first time a politician has tried to make it easier for law enforcement to track burners. Similar legislation has been proposed — and shot down — several times over the years.

But like any good politician, Speier knows that it’s easier to slip legislation through when the public and fellow lawmakers are emotional. To that end, she’s invoked the March 22 terrorist attacks in Belgium, as well as the earlier Paris attacks and even 9/11, to bolster her argument for approving the bill.

Passing legislation on emotion is like grocery shopping while hungry. It’s not a good idea, and leads to often regrettable decisions. But with privacy in the balance, the stakes are higher. Let’s hope Speier’s fellow lawmakers recognize the legislation for the bad idea it is, and reject this attempt at further infringing on privacy.

Mobile Zero Rating: The Economics and Innovation Behind Free Data

This article originally appeared on ITIF.

Zero rating should be welcomed as a sign of healthy product differentiation that better allocates scarce resources while improving customer value.

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Zero-rating programs, which allow consumers to access certain Internet content and services without it counting against their monthly data plans, have proven polarizing, being met with reactions ranging from derision to praise. The crux of the controversy is whether the practice of zero rating violates the spirit of network neutrality principles. Strictly speaking, zero-rated data is treated differently than other data in a way that influences consumer behavior. But adhering to such a strict interpretation of net neutrality would be misguided. 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. The Federal Communications Commission—along with other regulators around the world—is examining zero rating, and while its case-by-case approach to overseeing these programs is sound, telecom regulators should make it clear that they believe nonexclusive zero-rating programs are in the public interest.

Zero rating is being rolled out, by major carriers in the United States and around the world. Zero rating offers a number of benefits.

First, it is good economics to help advance innovation in information technology markets. Where both content or “edge” firms as well as network operators make large investments in establishing platforms that have relatively low marginal costs, and gain value with each additional user, zero rating can help bring new customers into a firm’s customer base, enhancing the value of the product, and providing additional revenues to defray the investment for additional innovation.

Second, zero rating is an important tool to expand access to information, particularly in developing countries. As of 2015, mobile broadband networks covered about 78 percent of the world’s population, but only 43 percent were actually using the Internet. That 35 percent—some 2.5 billion people—who have access to mobile networks, but choose not to subscribe, could be given the opportunity, with zero-rating programs, to connect at a relatively low cost.

Third, zero rating is generally pro-competitive. There is little difference between zero rating and common-place discounts that sellers provide through middlemen that everyone accepts as normal, like toll-free 800 numbers. Zero rating allows for differentiation of company offerings, both at the application layer and between competing carriers. This ability to differentiate services tends to most benefit maverick firms that change the terms on which firms compete, and allows new applications a foothold to get discovered.

Fourth, consumers enjoy zero rating plans, and appreciate the ability to use zero-rated apps without having to worry about their data limits. We should celebrate when competitive markets work to provide consumers more of what they want. Critics argue that zero rating is against the public interest, but the bar for arguing that the public interest directly contravenes consumer preference should be a high one.

Fifth, zero rating programs can lead to more efficient use of networks if they zero-rated services use fewer bits than a non-zero rated version while having essentially no diminution of quality and customer experience.

Lastly, zero rating can help facilitate more efficient advertising, leading to more transactions online, boosting economic growth and adding fuel to continued growth in the advertising supported Internet.

These programs are a win for “edge” video providers, who see more use of their products and services. They are also a win for network operators, who are working to gain market share and explore new business models to meet demand. And most importantly, they are a big win for consumers, who end up getting more for less.

Free Mobile Data is Good for Consumers

This article first appeared on Computer World.

Have you ever attended a sporting event where billboards flashed advertisements? Quite likely. Have you ever been to a conference with sponsored events, shuttles and meals? Happens all the time. In these cases, and many more, advertisers in effect help subsidize your ticket purchase. The practice is so common as to be unremarkable.

And yet the Federal Communications Commission (FCC), prodded by self-styled consumer interest groups, is seeking to ban sponsored data on the Internet. Spotify and Pandora may want to help pay for part of your T-Mobile subscription, and Facebook may wish to defray the cost of getting online for cash-strapped young people, but these groups insist these consumer subsidies are secretly dangerous. Free data, they are hoping the FCC will declare, is bad for you.

But wait, you reply, doesn’t the FCC talk urgently about getting more people online and trying to reduce the cost of broadband? Aren’t regular mobile subscribers tired of bumping up against their data limits? And, therefore, might not free data sponsored by content and app firms help resolve these challenges? Let’s hope the FCC can see past the hollow claims of the shadowy online activists and encourage free data for consumers.

Opponents of free data plans don’t argue they are bad for consumers. Rather they’ve adopted a convoluted rationale: Free data is bad for the sponsors. Or at least for potential sponsors. Not every app and content firm, they say, has the resources to sponsor data. Those that can pay may enjoy an unfair advantage. Therefore, no app or content firm should be able to sponsor data.

Yes, and not every firm has equal resources to pay luxurious office rent or high salaries, or to invest in cutting-edge machinery. It’s a fact of life. But even life’s inherent unfairness misses the point. Banning free data means both denying consumers lower prices and also denying small firms the ability to gain access to those consumers through innovative partnerships.

Magazines are another good example of what are known as multisided markets. So are online newspapers such as WSJ.com and NYTimes.com. These publications are supported by both consumer subscriptions and advertisers. The cost of producing the magazine or website is split between consumers and advertisers (sponsors), who each find value in this platform, which brings multiple parties together. If federal law banned advertisements in magazines, websites or sporting events, the entire cost of the product would fall on consumers, and consumers would have to pay much higher subscription and ticket prices.

But that’s exactly what the effort to ban free data would do: force consumers alone to bear the burden of mobile broadband networks, which cost hundreds of billions of dollars to build and maintain. The second harmful effect may be less intuitive, but it directly contradicts the FCC’s oft-stated goal of increasing competition in the Internet ecosystem. You see, a sponsored data ban could also block upstart firms with new apps or innovative content from reaching new audiences.

Think about the ways that new firms often attract new customers by giving away free samples or subsidizing their products. Uber and Lyft, for example, have used subsidized rates to attract a vast new ridership and improve transportation options in underserved markets. Numerous Web content firms are now signing up for the sponsored data programs of T-Mobile, Verizon and AT&T, at least until a federal agency tells them to stop. Far from helping small upstarts, a sponsored data ban could impose a crucial obstacle to Internet innovation and consumer choice.

If new mobile business models are restricted, all consumers may be forced to buy an all-you-can-eat package at a single price. There would be no disincentive for consumers to grab as much of the available capacity as possible. Heavy users will hog the data, while light users suffer the effects of an overloaded network. Prices will rise for everyone, regardless of usage. The endgame will look like the heavily regulated old telephone network: high prices, few choices and little innovation.

Opponents of free data are also ignoring a third consideration: the need to build a new, fifth-generation (5G) mobile network to keep up with massive consumer demand for video and the immersive Internet of Things. The impetus for 5G is to serve a much wider array of users, devices, content and industries than the traditional mobile phone market. Yes, 5G will provide faster data speeds for smartphones and tablets. But the new network will also serve connected cars and transportation networks, remote sensors, appliances, industrial machines and super-high-definition interactive entertainment. It will also provide a competitive connection for residential and enterprise broadband.

The whole point of 5G is building a single network to serve numerous markets. These applications and verticals — virtual reality, retail apps, connected cars, autonomous trucks, health care monitoring, industrial maintenance, supply chain and smart city services — will all require distinct data capabilities and price points and thus business models. Some will require high data throughput at certain times of day. Some won’t need as much data capacity but will require high reliability and low latency. Some will be unpredictable. As the variation in use cases explodes, so will the business models needed to build sustainable solutions.

Limiting the evolution of business models in the mobile ecosystem will not only make today’s 4G services more expensive, but also make it difficult to invest in 5G networks, content, apps, devices and services.

The FCC Should Decline Activists’ Call to Arms Against Zero Rating

This article first appeared on Tech Policy Daily.

Most American households spend considerable sums of money each month to access voice, video, and information services over the nation’s telecommunications networks. But some companies have figured out how to secure an advantage by sidestepping this traditional model. By negotiating deals to offer their content at zero cost to consumers, these companies have secured an unfair competitive advantage, attracting consumers because their content is free rather than because it is of good quality.

We call these companies “broadcasters.”

Free over-the-air broadcast, of course, has been a cornerstone of telecommunications policy for nearly a century. Although more than 80 percent of households subscribe to pay television, we recognize the benefit of providing some channels for free to all Americans. With an antenna, cost-conscious cord-cutters can purchase a smaller telecom bundle, adding free broadcast channels to a standalone broadband plan rather than purchasing a more expensive broadband/cable bundle. Virtually no one argues that HBO is at a competitive disadvantage in the video market because it is only on cable, while consumers can get CBS for free. Nor does anyone seriously complain that CBS offers only a limited “walled garden” of content chosen to suit advertisers’ preferences. Were someone to propose that the Federal Communications Commission (FCC) eliminate free broadcasting and force everyone into a single, comprehensive cable bundle, consumers’ rights groups would roundly criticize the proposal as anti-consumer. And rightfully so.

The illogical battle against a consumer-friendly business model

I was contemplating America’s original zero-rated content business model while reading the latest salvo in the ongoing war to regulate the Internet. On Tuesday, an unusual consortium of special-interest groups and Internet content providers sent a letter to all five FCC commissioners, demanding that they open a formal proceeding regarding zero-rating practices. The letter paints these practices with a broad brush, arguing that zero rating “let[s] ISPs choose winners and losers online” in violation of the spirit of the Open Internet order.

This letter fails to acknowledge the potential benefits of giving consumers access to additional content or services at no extra charge as part of their service plans. As the letter notes, the FCC’s Open Internet order declined to issue a bright-line rule against zero rating. In the months since, the industry had validated that decision by experimenting with a variety of zero-rated content bundles. The Information Technology and Innovation Foundation released a study earlier this week highlighting the benefits of this experimentation. Perhaps the highest-profile experiments are T-Mobile’s Music Freedom and Binge On promotions, which offer unlimited streaming audio and video, respectively, to T-Mobile customers. These plans have proved popular and have increased the planes of competition in wireless, helping the renegade company steal market share from Verizon, AT&T, and especially Sprint.

Of course, there is the possibility that a carrier may use zero-rating practices for anticompetitive ends. But the FCC has shown it is on the beat. Late last year, the agency requested that Comcast, T-Mobile, and others provide information about their zero-rating plans to make sure that no practice violates the agency’s “general conduct” standard for ISP behavior.

The letter from interest groups and content providers does not complain that the FCC is failing to monitor these practices. Rather, it complains that the agency is operating “behind closed doors,” denying the public any input in the process. Of course, this claim is patently false. Any consumer may file a complaint if he or she believes a specific carrier offering violates the Open Internet order — a fact that signatory Fight for the Future is well aware of, as it has created a form letter for activists to bombard the FCC with identical, generically worded zero-rating complaints.

The consequences of opening a formal zero-rating proceeding

The bigger issue is that the letter fails to offer a reason why the agency should open a formal proceeding on zero rating at this time. The signatories argue that all zero rating is inherently anti-consumer. But the Open Internet order rejected that conclusion in favor of a case-by-case determination of this innovative new field of competition. Absent some showing that individual practices are harming consumers, the agency should continue doing what it has been doing: quietly allowing in-house agency experts to monitor industry developments by analyzing what may be competitively sensitive data with an eye toward the effects on consumers.

The letter explicitly requests that the agency cease this carefully calibrated, detailed policymaking process and instead issue a general invitation for activists to letter bomb the agency about the issue. This, of course, was the same tactic that transformed the Open Internet debate from a rational discussion about network management practices to a shouting match between sloganeers — leading Chairman Wheeler to yield important questions of tech policy to a literal mob that blocked his driveway until he gave in to their demands.

These issues are too complicated to be reduced to Twitter hashtags or form letters (or even blog posts), and the FCC’s work is too important to be surrendered to mob tantrums. If the agency suspects a particular zero-rating practice harms consumers, it should investigate, and there is a role in that process for individuals to share their experiences and provide input. But until then, one hopes the commissioners will decline this invitation to open the floodgates to activist-driven rants against zero-rating practices.

– See more at: http://www.techpolicydaily.com/communications/fcc-decline-activists-call-arms-zero-rating/#sthash.hWsmDdiU.dpuf

Smartphones Rule the Internet

This article first appeared in The Atlantic.

Laptops aren’t exactly quaint yet, but we’ve officially reached the point in the mobile revolution when desktop Internet access is waning.

The trend toward smartphones—and away from desktops—has been underway for the better part of a decade. But in recent years, the shift toward mobile has been particularly pronounced. In 2014, by several measures, total mobile Internet usage outpaced desktop Internet access. In Africa and Asia, people of all ages call smartphones—not laptops—the most important device they use to go online, according to a GlobalWebIndex survey last year. Worldwide, most people under age 34 say the same thing.

A look at the web’s most popular sites is similarly telling. More than half of Facebook’s roughly 1.7 billion monthly users visit the site exclusively from their smartphones—that’s 894 million mobile-only users each month, up from 581 million such users last year and 341 million mobile-only users in 2014, according to the company’s latest earnings report.

Google confirmed last year that more searches come from mobile devices than computers in 10 countries, including the United States. Over the holiday season, Amazon said more than 60 percent of shoppers used mobile. And Wikipedia, which recently revamped the way it tracks site traffic, says it’s getting more mobile than desktop visits to its English language site.

In April, Wikipedia had about 361 million unique visits from smartphones and tablets compared with some 229 million from desktops—meaning roughly 61 percent of traffic to the English-language version of Wikipedia came from mobile devices, according to data provided by a spokeswoman.

The trend toward mobile-only is likely to continue. Last month, the audience-tracking firm Nielsen found that smartphones are the most-used medium in the United States—beating out television, radio, and desktops, even though more Americans own TVs and radios than smartphones.

“Consumers carry their phones everywhere,” said Glenn Enoch, a vice president at Nielsen, in a statement about the findings. “High penetration plus portability and customized functionality have made them a staple of consumers’ media diet.”