Analysis of Sponsored Data Practices in the Case of Competing Wireless Service Providers

Abstract

With wireless sponsored data, a third party, content or service provider, can pay for some of your data traffic so that it is not counted in your plan’s monthly cap. This type of behavior is currently under scrutiny, with telecommunication regulators wondering if it could be applied to prevent competitors from entering the market and what the impact on all telecommunication actors can be. To answer those questions, we design and analyze in this paper a model where a content provider (CP) can choose the proportion of data to sponsor and a level of advertisement to get a return on investment, with several Internet service providers (ISPs) in competition. We distinguish three scenarios: no sponsoring, the same sponsoring to all users, and a different sponsoring depending on the ISP you have subscribed to. This last possibility may particularly be considered an infringement of the network neutrality principle. We see that sponsoring can be beneficial to users and ISPs depending on the chosen advertisement level. We also discuss the impact of zero-rating where an ISP offers free data to a CP to attract more customers, and vertical integration where a CP and an ISP are the same company.