Zero-Rating and Net Neutrality

Abstract

An objective of network neutrality is to design regulations for the Internet and ensure that it remains a public, open platform where innovations can thrive. While there is broad agreement that preserving the content quality of service falls under the purview of net neutrality, the role of differential pricing, especially the practice of zero-rating remains controversial. In this paper, we model zero-rating between Internet service providers (ISPs) and content providers (CPs) and show if zero-rating is permitted, the competitiveness in the market is reduced, where low-income CPs often lose utility and high-income CPs often gain utility.