Zuckerberg’s Internet.org feels the love (and fear) from carriers

At Mobile World Congress on Monday Facebook’s Mark Zuckerberg took the stage with three executives from carriers in developing countries to talk about the progress of Internet.org and its attempts to connect the world’s unconnected with free Facebook use.

You would expect this kind of thing to be a rather boring affair with Internet.org operators celebrating the project, and that was largely the case. But things got interesting toward the end as one CEO voiced what was on every carrier’s mind at MWC: In the process of helping them, [company]Facebook[/company] might just kill them.

That CEO was Jon Fredrik Baksaas of the Telenor Group, which may be based in Norway but runs networks in Eastern Europe and Southeast Asia. It’s also important to note that Telenor is not an Internet.org member, though it is in negotiations with Facebook to join its effort. Baksaas brought up the touchy topic of Facebook’s recent purchase of WhatsApp and how that messaging service directly threatens his company’s SMS revenues. It’s a “point of contention between Facebook and the operators,” Baksaas said.

He went on to say that there is a big risk that by inviting Facebook to offer free services on their networks, carriers risk Facebook converting their customers away from traditional telecom services to Facebook’s own apps and web-based services.

Zuckerberg responded that Internet.org works closely with its operator members to ensure that isn’t any cannibalization of revenue. WhatsApp and Facebook Messenger are not among the free services it offers through Internet.org’s zero rating policies. And the other two carrier panelists, Christian De Faria, CEO of Airtel Africa, Mario Zanotti, SVP of operations at Millicom – both of whom participate in Internet.org – pretty much backed Zuckerberg up.

Zanotti cited some impressive numbers: In Paraguay, Millicom’s Tigo saw a 30 percent increase in mobile data users after it launched free access to Facebook for six months. Millicom’s most recent foray with Internet.org in Tanzania resulted in a tenfold increase in data-capable phone sales, Zanotti said.

During the session Zuckerberg also downplayed the significance of laser-pulsing satellites and drones to Internet.org’s overall mission. He said that everyone focuses on that tech because its sexy, but the vast majority of connectivity in the developing world is going to be supplied through traditional carrier networks. That’s certainly true, but Zuckerberg did have a role in pumping up that technology in the first place, including penning a widely publicized paper on the merits of drones and free-space optics in providing internet access

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Net Neutrality day is here: a guide to today’s vote

What is the right way to run the internet? After months of pitched debate over so-called net neutrality, the FCC will finally vote on a proposal that will prevent broadband providers from slowing down or speeding up certain websites.

While there’s little doubt about the outcome of the vote, Thursday’s FCC hearing could still bring some surprises. Here’s an overview of how the process will unfold, key issues to watch, and what will happen next.

When is the vote taking place?

The hearing begins at 10:30am ET at the FCC in Washington, where the five Commissioners will vote on two items. The net neutrality proposal is the second item (the first is about municipal broadband – update: which has passed 3-2), and a vote is expected to occur in the early afternoon.

What are they voting on?

The crux of the proposal is new regulations that will replace the net neutrality rules that a court struck down in early 2014. The new rules themselves (contrary to recent rhetoric) are rumored to be 8 pages long and, under FCC convention, are an appendix to a larger document that contains the Commissioners’ positions.

The FCC staff will summarize the key parts of the new rules, but the document itself is not likely to be available to the public for several weeks. This is due to agency protocol, which gives the Commissioners time to add final comments (though the substance of the rules will not change between now and when they appear).

How exactly does the vote take place, and what will be the outcome?

After the staff summaries, each of the five Commissioner will offer their comments in order of seniority. Republican Commissioner Ajit Pai, who has been an outspoken critic, is expected to speak for an hour so this could take some time. They will then take a vote, and hold a press conference.

The outcome will be a 3-2 vote on partisan lines, with the two Democratic Commissioners siding with Chairman Tom Wheeler. (Update: that’s exactly what happened)

What are the key things to watch?

While the outcome of the vote is a sure thing, some key details of the proposal are still unknown. The most high profile of these concerns what the FCC will do about so-called interconnection, and what the rules will do to prevent ISPs from forcing sites like Netflix to pay a toll in return for not having their streams degraded.

There is also the issue of “zero rating,” which is when phone and companies exclude certain apps or services (such as music) from a customer’s monthly data cap. While this violates the general principle of net neutrality, Chairman Wheeler has yet to explain how strictly the new rules will prevent this. (Read my colleague Stacey Higginbottam’s excellent overview of potential loopholes here).

Finally, since much of the recent net neutrality debate has been about theater, it will be worth watching to see how far Commissioner Pai (who has been waging a nasty political and social media campaign against Wheeler) will go to stir the pot during the hearing.

So will the new net neutrality rules go into effect right away?

No. According to Harold Feld of Public Knowledge, the rules only go into effect 30 days after they appear in the Federal Register, which could take a few weeks.

Will there be lawsuits?

Yes, buckets of them. Expect big telecom companies like Verizon or AT&T to sue in the coming weeks. Meanwhile, it’s possible that activist groups on both the right and the left may bring suits of their own.

What will be the effect of the lawsuits?

Feld says, in the event of multiple lawsuits, the first order of business will be for various appeals courts to decide which of them will take the case. After that, the telecom companies are likely to receive a brief stay of the rules until they can file their first round of arguments. At that point, the stay will likely be lifted while the court hears the case.

The court cases are likely to kick off in March or April, and a ruling on whether the new FCC plan is legal will probably come in late 2015 or early 2016. In the meantime, the net neutrality rules will be in effect.

I just can’t get enough of this stuff! Where can I learn more?

Gigaom will have updates on the days proceedings through Thursday. The FCC will have a live stream here (if the internet holds up!).

I’ll be tweeting about it here. Other Twitter accounts to watch are those of Gigi Sohn (FCC lawyer), Commissioner Pai, Public Knowledge’s Feld and Professor Tim Wu (who coined “net neutrality” in the first place).

For political flavor: The New York Times has opined on the FCC’s “wise new rules” here while the Wall Street Journal, on the other hand, hates everything about the FCC (paywall).

This story was corrected at 10:05am to note the court decision was in 2014, not 2013.

Opera launches App Pass zero-rating tool for carriers

Opera just released a new tool called App Pass, which gives carriers an easy way to provide people with free access to certain apps for limited periods of time.

The tool is a feature of the [company]Opera[/company] Max mobile data management app and follows the release a few years back of Web Pass, which aims to help carriers provide pay-per-use generalized web access. At launch, it can be used to provide free access for set periods of time; it will soon also allow sponsored and “paid passes” to apps.

The Norwegian company’s first customer is Norwegian carrier Telenor, which will test out App Pass in some of its Asian operations. “We’re eager to see how this service is received in our markets,” Telenor Digital chief Rolv-Erik Spilling said in a statement.

The so-called zero rating of certain apps – a practice also known as positive price discrimination – is becoming widespread, particularly in emerging markets. While it violates net neutrality by steering users towards certain services that have struck deals with the carriers, it’s also a handy way for operators to show people what mobile broadband can do, with the hope of subsequently selling them up to generalized access.

Opera, best known as a browser company, has generally been more successful in the mobile market than on the desktop, and was a pioneer of the data compression techniques that users and carriers in emerging markets – where mobile is king — can employ to save money.

Giving carriers an easy way to deploy zero-rating is yet another way for Opera to ensure that its software maintains a key position on low-cost handsets in such markets. For the carriers, it’s an opportunity to hang onto the gatekeeper role that companies such as [company]Facebook[/company] are trying to seize with their own emerging-market zero rating initiatives.

For users, it may provide the first tempting taste of the mobile internet, but zero rating could ultimately lead to a fragmented experience of what apps and the web can offer.

Canadian carrier sues to block net neutrality rules for wireless TV

Bell Mobility is taking legal action to stop new rules that forbid Canada’s phone carriers from excluding their own wireless TV services from customers’ monthly data caps, a practice that regulators claim is anticompetitive.

In a filing last week with the Federal Court of Canada, Bell made a technical argument that the rules are illegal because wireless TV is a broadcasting service, not an internet service.

The legal fight comes just weeks after the Canadian Radio-television and Telecommunications Commission (CRTC) outlawed the data cap exemptions, which let Bell customers watch up to 10 gigabits of wireless TV streaming for a nominal $5 fee — provided the streams came from Bell’s own TV partners, and not a competitor like Netflix.

In announcing the decision, the CRTC’s Chairman said the agency would intervene in cases where customer perks offered by “large vertically integrated companies” stepped on the toes of equal access principles.

The tussle over wireless TV is likely to bring further attention to a practice known as “zero rating,” which is growing more contentious in both Canada and the U.S. at a time when regulators are moving to tighten net neutrality requirements.

Zero rating is when mobile internet providers exclude certain specific apps or services from customers’ data caps as a feature of their monthly plans. One current example in the U.S. is T-Mobile, which offers uncapped music service to its phone customers.

While such services are a nice feature for consumers, they can also amount to a violation of net neutrality principles, especially when offered by oligopolists like Bell, which controls large stakes in Canada’s internet, mobile and TV markets — including rights to the Super Bowl.

Critics like consumer group Open Media fear it will lead the telecom industry creating de facto fast lanes, and freezing out competing services like Netflix. The issue is also a hot topic in Europe where several countries have come out against zero rating.

Bell’s legal challenge, which was reported by the Globe & Mail, is likely to be the first of several on both sides of the border. In the U.S., AT&T has already warned the FCC that it will sue over new rules that are going to a vote this Thursday.

Report: Google following Facebook down the zero-rate rabbit hole

Google wants to make Android apps free to use overseas, giving more people access to mobile data services in developing markets, according to a new report in The Information. This kind of zero rating, as it is known, is exactly what Facebook does in several countries as part of its Internet.org initiative. The difference is, the report states, Google wants to exempt Android developers’ services from data charges, not it’s own.

Zero rating is a controversial topic since it could help create a two-sided internet where one company’s services are favored over another’s because they’re cheaper for a consumer to access. [company]T-Mobile[/company] for instance zero-rates dozens of music streaming services, allowing its customers to jam to their hearts’ content without having it count against their data plans. It’s great if you’re one of the companies on the list of exempt apps, but not so great if you’re a new company trying to get noticed.

Oddly, [company]Google[/company] isn’t looking to zero-rate its own apps like Gmail, Maps and Hangouts. Instead it wants to act as a middleman between carriers and app developers that want to foot the cost of their customers’ traffic. Google is talking specifically to ecommerce and on-demand transportation apps in India, using Android software to detect when their apps are accessing the mobile network, The Information reported. [company]AT&T[/company] is striking similar deals with U.S. app developers through its Sponsored Data program.

Zero-rating is pretty common overseas, where carriers often offer unlimited social networking plans to lure customers onto data services. Internet.org basically codifies those same policies across a group of pre-approved apps. In Europe and the U.S., though, zero-rating is on iffier ground as regulators decide whether it violates net neutrality principles. In the U.S. the FCC has proposed new rules that would allow for zero-rated programs in general but would give the commission ome wiggle room to review specific cases for net neutrality infractions.

Facebook’s free internet.org portal opens in India

Facebook’s internet.org portal, which emerging-market carriers offer for free in order to give new customers a taste of the web, has rolled out in the Indian states of Tamil Nadu, Mahararashtra, Andhra Pradesh, Gujarat, Kerala and Telangana. Provided by Reliance Communications, the app includes free access to almost 40 services and information sources. If someone wants to click through to the open web, they need to start paying. This scenario exemplifies the mixed impact of “zero-rating” particular content in emerging markets: it gets people online for the first time, offering potentially life-changing services from job search to farming information, but it also raises net neutrality issues by promoting the idea of Facebook’s portal effectively being the internet.

Web inventor warns against zero-rating net neutrality threat

Zero-rating – where carriers charge nothing or very little for the data used by specific apps and web services – is a threat to net neutrality, web inventor Tim Berners-Lee has warned.

The practice is becoming very popular, with mobile operators in particular making special offers that exempt services such as [company]Facebook[/company] and [company]Spotify[/company] from customers’ normal data caps. This steers users to those specific services and harms their rivals, whose traffic becomes much more expensive to the user.

Berners-Lee slammed zero-rating on Tuesday in a guest post on the blog of EU digital single market commissioner Andrus Ansip, who is a staunch supporter of net neutrality and is currently trying to get EU member states to agree to the strong net neutrality rules voted through by the European Parliament last year.

However, those rules don’t call out zero-rating, also known as positive price discrimination, as a net neutrality violation. The European Commission has also so far held back from defining it as such.

Here’s what the web pioneer wrote in his pro-net-neutrality piece:

Of course, [net neutrality] is not just about blocking and throttling. It is also about stopping ‘positive discrimination’, such as when one internet operator favours one particular service over another. If we don’t explicitly outlaw this, we hand immense power to telcos and online service operators. In effect, they can become gatekeepers — able to handpick winners and the losers in the market and to favour their own sites, services and platforms over those of others. This would crowd out competition and snuff out innovative new services before they even see the light of day.

I asked Ansip’s office whether he agreed with Berners-Lee’s views, and was told that, although the guest posts don’t reflect official Commission positions, Ansip considers the post to be “an important contribution to the debate on net neutrality.”

As things stand, the Latvian presidency of the Council of the European Union – the body that represents the government of member states – is busy working out its position on the EU’s almost-concluded Telecoms Single Market Regulation, which includes the new net neutrality laws.

Under the Council’s previous Italian presidency, leaks suggested that the member states were going to dilute the net neutrality provisions by making them aspirational rather than set in stone. However, the Commission and Parliament both pushed back hard, and negotiations are ongoing.

The Council indicated in January that, although some member states were keen on banning zero-rating, opposition from other member states meant there wasn’t enough support to insert an explicit clause about this into the new regulation.

In the meantime, countries such as the Netherlands, Slovenia and Norway have pushed ahead with national bans on zero-rating. Outside Europe, Chile and Canada have done the same.

If anyone wants to hassle the Latvian presidency of the Council about the need for strong net neutrality rules, Berners-Lee supplied a handy pre-written tweet. It might also be worth reminding them that the U.S. looks set to embrace strong net neutrality – ironically, a year ago the old Commission was taunting the U.S. for dithering on net neutrality when Europe was preparing to take a firm stance.

Canada cracks down on zero-rating in two net neutrality rulings

The list of countries that find zero-rating to be a violation of net neutrality just keeps on growing, with Canada the latest to crack down on the practice.

“Zero-rating” or “positive price discrimination” refers to carriers providing certain services or apps for free or at a cheaper rate than they charge for regular internet traffic. Many (including me) see this as a net neutrality violation, because it treats different services unequally and damages the ability of non-zero-rated services to find an audience.

It’s a much more subtle net neutrality violation than straight-out blocking or throttling certain services, though, which is why some – such as the European Commission – don’t tend to see it in that light.

Apparently, Canada does see zero-rating as a threat to the “open internet”. On Thursday, the Canadian Radio-television and Telecommunications Commission (CRTC) issued a decision against carriers [company]Bell Mobility[/company] and [company]Vidéotron[/company], which were exempting their own Bell Mobile TV and illico.tv mobile TV services from their regular data plans (for a small monthly fee of around $5) while counting traffic for rival services against those data caps. Video content is, of course, about as data-heavy as it gets.

Vidéotron has until the end of March to confirm that it has withdrawn its mobile TV app as it promised it would, and Bell has until April 29 to stop its violations. According to the CRTC, the result will be “an open and fair marketplace for mobile TV services, enabling innovation and choice for Canadians.”

Pro-net-neutrality organization OpenMedia.ca reacted with delight, saying the ruling “sets a precedent for mobile providers across Canada.” The group quoted telecoms researcher Ben Klass, who filed the original complaint over Bell’s behavior, as saying:

In a world where Bell could charge 800% more for competing services it seemed unlikely that innovation could thrive. It’s heartening to see the CRTC side with Canadians and strike down this unfair practice.

Over the last week, Dutch and Slovenian regulations have hammered carriers for zero-rating violations, although those cases involved the favored services of commercial partners such as [company]HBO[/company] and [company]Deezer[/company], rather than the carriers’ in-house efforts. Chile has also banned operators from offering services such as [company]Twitter[/company] and [company]Facebook[/company] for free, and Norway’s regulators have advised the same.

A study by bandwidth management firm Allot Communications last year found that half of mobile carriers around the world are now zero-rating certain traffic, most frequently Facebook’s. The practice is also key to developing-world schemes such as Facebook’s Internet.org – they’ve struck deals with carriers that see selected services offered for free, with the idea being that people will start paying for the wider web once they’ve seen what it has to offer.

Dutch and Slovenian regulators nail carriers over net neutrality

While the European Union dithers over EU-wide net neutrality, some European countries are marching on regardless. On Friday Slovenia’s regulators nailed carriers Telekom Slovenije and Si.mobil for violating net neutrality principles, and on Tuesday Dutch regulators fined KPN and Vodafone for similar violations.

The latest ruling, by the Dutch consumer protection agency ACM, saw [company]KPN[/company] fined €250,000 ($283,000) and [company]Vodafone[/company] €200,000. KPN was caught for blocking some VoIP services on its free Wi-Fi hotspots, and Vodafone was zero-rating the [company]HBO[/company] Go app – that is, it was providing free traffic for that service in particular, a practise technically known as “positive price discrimination”.

ACM’s statement read in part:

In addition to the ban on blocking, internet providers may also not charge differing tariffs for the use of services and applications on the internet. This contributes to an open internet. An open internet is important for freely disseminating information and increasing choice on the internet.

The Slovenian ruling was also about zero-rating: [company]Telekom Slovenije[/company] has been providing free data for the music streamer [company]Deezer[/company], and [company]Si.mobil[/company] for cloud storage service [company]Hanger Mapa[/company]. Those carriers now have two months to stop breaking the rules.

The European Parliament voted for strong net neutrality rules in April 2014, but since then the legislative process has stalled, largely due to some member states demanding vague principles rather than strictly-defined terms. The European Commission is dead set against this development, so it and the Council of the European Union, which represents the states, are currently negotiating a compromise.

However, even if that legislation’s strong definitions survive, it doesn’t ban zero-rating, which some argue is not a net neutrality issue because users can still access services other than those being zero-rated, even if it means using up their data allowance.

Those who argue that it is a net neutrality issue maintain that it violates the principles because it favors particular services and apps over others. That includes regulators in the Netherlands, Slovenia, Norway (not part of the EU but part of the European Economic Area, where EU net neutrality legislation would apply), and Chile (definitely nowhere near the EU.)

Last week the Latvian Presidency of the Council indicated that proposals to include an explicit ban on zero-rating in the EU-wide net neutrality legislation would not gain enough support among the states. Some had also suggested making selective blocking a self-regulatory matter, but those proposals seem to be sunk as they would conflict with existing EU legislation and fundamental rights.

In other words, the current situation – where zero-rating is banned in some European countries but not others – looks set to continue into the foreseeable future, whether or not a broader ban on blocking and throttling comes into force.