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2015 11 13 WS 79 Zero Rating, Open Internet and Freedom of Expression Workshop Room 8 FINISHED
 Welcome to the United Nations | Department of Economic and Social Affairs

The following are the outputs of the real-time captioning taken during the Tenth Annual Meeting of the Internet Governance Forum (IGF) in João Pessoa, Brazil, from 10 to 13 November 2015. Although it is largely accurate, in some cases it may be incomplete or inaccurate due to inaudible passages or transcription errors. It is posted as an aid to understanding the proceedings at the event, but should not be treated as an authoritative record. 



>> MODERATOR: It's 9 o'clock, so we can -- we wait for some


Good morning, everybody. Welcome to today's workshop.

This type of Zero Rating, Open Internet and Freedom of


A particularly warm welcome to everyone attending this workshop remotely. I have -- as moderator, my name is Antonio Perator. I am Commissioner of the Italian Regulators, AGICOM. have a remote colleague, remote moderator, so we are both managing different -- a different audience, a different -- but both engaged in the wealth functioning of this event.

Allow me to thank the Columbian Regulatory Commission for communication and the telecom Italia for jointly organizing and making possible today's workshop.

A special thank you to Lorrayne Porciuncula, if I may, and the brilliant organizer. Thank you, Lorrayne.

Finally, a big thanks to all of you, each of you, that you reach today's event.

This is a really very exciting issue, the issue of zero rating. It was discussed and created all over the IGF meeting in João Pessoa. It was the real -- sorry. I have to take my notes for a while. Sorry. I have a note on that. Sorry. Technology does not work.

Our panelists are very qualified and diverse, consisting of regulators, academics, international organizations and private sector actors from all over the world. We are very much qualified, so a big thanks to all of you, our panelists.

I think our panelists is able to meet the objective of our


workshop. The objective is to consider the impact of zero


rating on the open nature of the Internet, net neutrality,


freedom of expression and inclusiveness. These are very


crucial objectives. In particular, we will understand zero


rating effect on social and economic development.


Mr. Gapira is very much an expert on that.

To achieve this aim, each of our panelists will have seven minutes to set how his/her views on the subject before we open the floor to the question and viewpoints of the audience. We want this to be an interactive and frank exchange of ideas, so please do not hesitate to intervene. Don't be shy. Take the risk to present your view.

My wish is that we reconsider zero rating and its impact holistically. To do so, we will have to dropout our individual preconceptions and always bear in mind the existing regulatory framework and that each country and zero rating plan is different and needs to be analyzed individually.

As a telecom regulator, I know how difficult it is to consider zero rating effectively, but to preserve net neutrality and efficient market.

The topics difficulty is one of the reasons why it was discussed so, so much here in João Pessoa, and why I very much look forward to hearing your ideas and opinions on it.

In this respect, the workshop is positioned at the right. We can and must use the results of the debate in the other workshops and in the panel yesterday afternoon.

Zero rating is definitely a passionate topic, able to create true passion, and we are the yesterday afternoon career evidence of that. But this morning I would like -- it's, like, different debate from the perspective of the concrete actions to be taken by policy makers and the regulators.

So, our objective is to make a step forward taking account of the different impact the zero rating has. We have to take and to consider much the impact on the policy makers and on regulators.

To do this I would like to give, first of all, the floor to

Mrs. Verena Rieber. She is a policy analyst in the OECD. She has worked for years, for three or four more years, even more, on that topic, so she has developed special knowledge. And, so, she can give us -- she is our reporter. She can give us some clear perspectives on where we can go in the direction of the policy maker and regulator.

Please, Verena, take the floor.

>> VERENA: Thank you very much, and thank you very much for having me here at this panel. It's a great honor for me.

And, good morning, everybody. As mentioned, I'm Verena Rieber, from the OECD, from the digital economy policy division.

So what I would like to do in the next couple of minutes is to show you some cases of zero rating and what happened, also regulators are not active. Okay. So the debate focuses much on services such as at the minute so I would like to give you a better perspective.

Most of you know what zero rating is, but in case we have some people that are new to this topic and just popped in, so what is zero rating? It is basically when specific Internet traffic is un metered compared to meter.

So for than stance when you are buying a mobile service and


you will have a certain service, like what's up or facebook,


that is not counted. Actually in the OCD we see that this is


mainly used in the mobile market because there you tend to see


more data caps, but we, for some countries, and I will get to


that in a minute, we also see it in the fixed markets where you


have data caps in the fixed market.


So these are some examples of zero rated services. So you have, like, the ones that are mainly depressed at the moment, such as what's up, facebook, but then you have also services from national radio stations such as the ABC radio in Australia.

I don't know if you saw it, but to mobile in the US announced a huge zero rating package this week. It is called Bin John and what they do is offer zero rated video streaming. They have 24 applications which include Netflix, ESPN, et cetera, they offer on a zero rated basis.

That said, it is low quality streaming, right. We are not talking about high quality streaming here.

Now the $1 million question is what does zero rating mean for policies? So is it a great opportunity? At the left of the slide, or should we be really worried? Is this what we were thinking about during the last couple of month, years at the OCD. It is pretty recent so what I can bring to you is cases rather than, macroeconomic analysis at this state, right.

So the case of New Zealand.

New Zealand is a market, is a fixed market is that rather uncompetitive, okay. But you have the national writer broadcaster who has very valuable content ask this content includes all the games of the (Indiscernible) team. As you know the all blacks just won the rugby world can you be. So basically we're having this uncompetitive market and there is the largest piece that is telling the national radio broadcasting, wait, we don't peer with you, we force you into transit.

So if you pause your content on, you need to pay us.

The reaction of the national broadcast was, all right, and what they did was they had peering arrangements with smaller ISPs so customers of these smaller ISPs could get the content of the national radio broadcaster zero rated, okay, and in addition, because there were really not amused about what the largest ISP was doing, so they move their ISP to the US west coast and they forge the largest ISP to actually pay back the to get the content from its customers, from the national radio. As I said this radio is important because it has direct content.

So what that did is, like, in the market that was not very competitive, that was not where companies aware like the main incumbent, right, for companies to pay for transit rather than to peer, this had really a good effect on the development of market.

Similar case in Australia where zero rating could also be used as a competitive tool. So this Monize piece was one of the main radio stations in Australia, which is ABC radio, and doing this they had lower costs, right. What they did is they pass these lower costs on to their customers so that mean they had a leverage with respect to the main, two three main ISPs that were there, and what we see is, like, the market developed and we saw, prices dropping.

If the regulator here would have said okay, all traffic


needs to be treated equally, this wouldn't have happened. So


what we saw here was really a case where actually zero rating


had positive effect.


Now, the case of Australia goes on. Netflix. Recently Netflix entered the market and some ISPs were saying, whoa, we use this and, like as a tool to promote our services and we will rate Netflix services, we will do a zero rating for Netflix.

Fine. Great, but what happened as an unintended consequence is there was one operator that said yeah, you can have the Netflix services zero rated, but only via IP4, not via IP6. So what we saw there was an unintended consequence. So maybe slowing down the deployment of IVP6. So this is clearly something that we wouldn't like to see.

So to wrap this up, on the ISP market, I want to make the distinction on the market and the infrastructure, so on the ISP market we saw that zero rating can have positive effects, so if, you have an uncompetitive market for transient, it might incentivize people to buy more services once they saw the zero rating which would increase the market.

On the other hand, zero rating can be negative if the operator uses and it offers free access to services which might not be affordable by small ISPs. So if this is happening in the market, regulator need to watch.

And I brought you some first numbers from a perspective of an operator. So this is Grameenphone that has in service an application Caldwell books. This is in Bangladesh. It has over 1.5 of registered users and any service, you know, that comes -- that is included in this app is zero rated and, so, main services here include news, sports, music and games.

Now, the platform also allows customers to buy additional services, and if they do that they get some more data allowance to actually, you know, serve the web, et cetera.

So, what Grameenphone saw is through this app they have 85,000 daily sales that meant services worked as a teaser and customers would buy packages as a 50 MDB data package or facebook package. And actually it allowed to grow the market, they saw users not only using zero rated content but also by small amount of data to buy content on the web.

For the company they compared with book users and non-well book users and could find a positive effect on their output.

Now, it's a bit trickier when it comes to zero rating in the content market, okay. We can also see some positive effects if the free teaser work, if the free teaser works, and if customers actually not only consume zero rated apps, but actually use the Internet to access it for out of services which might be useful for them.

And also what we don't have to forget in immerge go countries, zero rating allows customers that otherwise wouldn't probably be able to afford it to access at least some part of the Internet.

Now when you come to the negative side, like here the biggest concern is that a wallet garden might be created if this is used by dominant providers on the application rate. If you have really dominant content providers. Because this might impede other customers to enter the market, especially the small ones. So if there is clear indication that this is happening, measures should be taken.

And even -- so facebook is opening its flat form to other applications, which is certainly a good move, but this still means, right, that our applications need to go through the facebook platform. So they control the platform. So this is an issue to consider.

So a couple of proposals have been discussed to actually count its effect in a short term basis. One is certainly that all application providers can sign up to zero rating agreements that this is none on a non-discriminatory basis.

What you can also think of offering the first click outside the zero application for re. So you have an application, but you allow users for instance to go to a Wikipedia page so they can get some content.

You could limit a zero rating to a promotional time period, this is another measure or you could also think of, okay, if companies provide you with a zero rated packages they should also give a very small amount of data to use in special immerging countries which they could use to access other applications on the web, but the ideal solution is actually to work to increase the size of the bit caps, which you can do by increasing competition in the market and decreasing transit prices. Because if you have services, you know, that don't have bit caps or that have huge bit caps, zero rating just doesn't become interesting anymore, right.

I'm living in France. My fixed broadband service I don't have any data caps on that, and for my mobile I have 50 GIs per month and I'm 20 Euros. In this market zero rating is just not an issue because I don't care if certain content is zero rated or not because I have so much data to consume in my package that I can do whatever.

And I would like to end with some current policy approaches. So we see a very diverse pattern across the ICD area, so we have some countries that specifically bends the rating. Chi, Canada had explicit restrictions against zero rating.

Then we have the European law. So at the moment the law allows for zero rating but much it depends on how it will be interpreted by national regulators. This will be done probably next summer.

We have some countries that have really a very strict net neutrality law such as the Netherlands and we see that a couple of those actually have clear statements against zero rating or banded completely.

Finally, the united states, the FCC stated that they will judge on a case-by-case basis, which is probably a good thing to do, because, like, it really depends on the offering on the market center.

Thank you very much.

>> MODERATOR: Thank you very much, Verena, for your contribution. You have really show us the pro and cons of zero rating.

Now it is time to understand the impact of zero rating on the Internet Governance, which is one of the main target of our workshop this morning. And this better give the floor first to Carolina, which is really a true expert on Internet Governance, and she can really show us the impact.

>> CAROLINA: Thank you. I think that was a very ambitious presentation. Anyway.

As you have all noted, this program at the IGF has a main session on net neutrality. This was one of the topics that was addressed, and having been involved as a former MAG member in some of the rep rations of the agenda for this year, zero rating has become definitely one of the key policy debates. So it is interesting to note how the agenda of the IGF evolves on a yearly basis and the fact that this attracted the attention to become part of a main session is something that really capture our attention and it should not pass a notice because this is clearly something that is setting the agenda for the Internet Governance topics and issues in the next coming months and years.

Going back to the present's original idea looking at zero rating from a holistic cull perspective. Because Internet Governance is so loaded and it has been heavily debated from a human rights perspective and principles perspective which have been shaping the governance debates in the last years and the fact that there was net new dial last year for example the net neutrality paragraph was finally not being able to -- there was no consensus among the community to impose a net neutrality statement in the NETMundial.

As you are very much aware zero rating is part of the debate of net neutrality. So it is highly, highly contentious and I'm very glad to hear that the OCD which has a strong evidenced based tradition of making research and it is finding it very difficult to say this is good for one market or for one sector and bad for another. I mean, it's a very complex policy solution which as Verena already stated there is no definite ruling or regulatory perspective and it will be examine owed a case-by-case basis.

Having said that, if we look at the original design principles of the Internet and openness and end to end and some say that net neutrality has or had been an original design principle by the Internet architecture father's, we find that the idea of openness is very much challenged by zero rating. From a principle perspective, I mean, but it's a policy that is really attacking the principle, because it's very difficult to find in the men use that we're seeing of zero rating these days policies that are actually keeping up with this idea of openness, particularly at the infrastructure level, particularly at the content level where we see that there is much more tension there.

So this very basic principle of the Internet openness is very much challenged by zero rating practices and we don't yet have definite and conclusive results as to whether that is hampering innovation and entrepreneurs. But once again, one of the idea of the Internet is that it is a permission less technology. So the idea that one has to seek permission from someone or somebody to upload their content in a certain way or to make it available for others, so I'm specifically here talking about content, is something that is a bit of a challenge to what we have been debating and experiencing around the Internet Governance debates in the past years.

Connecting it with the other idea of freedom of expression. Freedom of expression these days is very much, it's a human right that is related with privacy. And many of these services that are offered in zero rated services or packages are driven by the fact of free apps that work with the data of citizens or consumers as you would like to think of the person at the other side of the device using this, so we know that in many cases in many countries many of these applications and technologies are very liberating and in some cases where there is no democracy, these platforms open up a space for political debate and social mobilization that is very strong, but we also have to bear in mind that many of these platforms, for example in facebook you have to use your real name. I mean, so there is a privacy concern, which is directly related with the issue of freedom of expression, because we don't know what the data is -- I mean, it's a blank check to what the application providers are doing at the other side. So freedom of expression and privacy these days should be very much thought together, particularly in the case of zero rated services. And particularly because the perspective of how this business models are developing around Internet services, content services around data and our data is being challenged by new perspectives that we have heard in this IGF recently and how we should be -- how we should start thinking of new business models where data is taking up in a more ethical manner, but by corporations. I mean, once again, it is interesting to see that the Dutch government has this very specific perspective on zero rating which they are bang it, but they also understand and it is very public, I mean they are also promoting privacy as a basic right in the Internet world.

So, I think that, I mean I've tried to provide a bit of some of the tensions regarding the main principles that are underlying some of these services, and policies and the packages around the different kinds of conceptions that we have around zero rating and how that is affecting not just the Internet Governance debate, but I think this so be key considerations for policy makers because although we still don't have the evidence, they are looking at it from a principle based view, they are in somewhat of a tension or contradiction with many of these.

Thank you.

>> MODERATOR: Thank you, Carolina.

You stress the impact of zero rating on freedom of expression. Maybe afterwards we have here expert on public law and they can also stress the issue and try to develop the question.

Now we move on to social economic impact, which was one of our main target, and I give the floor to a very well-known expert in that issue, study a lot on the impact of Internet and he has knowledge of all this kind of relations between zero rating, net neutrality, zero rating and Internet on the economic development. It is Anon Gaparin, so please take the floor.

>> ANON: Thank you, Antonio.

I was coming on the bus this morning and some of my fellow callers on the bus were asking so where you coming. I said I'm coming on the panel on zero rating. They said another panel on zero rating is this possible? I said yes, it is possible. But I would like to bring something different to the debate. Obviously there has been many, many panels and presentations on this.

But I would like to bring a slightly different perspective, which is a more empirical perspective and evidence about what is happening with zero rating in Latin America.

So I'm going to try to avoid talking principles and rights and so on and talk about data. And the data comes from the work of NDRC which is in Latin America which I'm a director. NDRC we've been collecting supply side data on broadband markets and collecting household surveys on ICTUs in the region.

So let me introduce both sides. On supply side data, what we do is we every year, once a year every year we go out and collect all the plans for all the operators for fixed and mobile throughout all the countries in the region. We use the OCD methodology to do that. We have a very large database for all the plans that both mobile and fixed operators have. We've been doing this for several years. This is a good place to start the debate, because what we see is a clearly zero rating is the new iterations of a process in which both mobile and fixed operators have been segmenting the market farther and farther. We have started with very plain vanilla broadband plans for fixed and mobile, particularly mobile we started seeing a segmentation by data cap and by duration, payment, modality, and the new one is service segmentation.

Of course, when you segment by service you introduce a whole layer of complexity which may not be present in the other variables for segment go the market.

So let me give you the few results of the survey for this year. First of all, zero rating is present in every market in Latin America. That means every market is doing some form of zero rating so the debate is clearly relevant.

Now, it varies by Country. In some countries only one operator is doing it and this is typically the smallest, the challenge operator, some countries two operators are doing it, some countries three operators are doing it, that basically means all the operators are doing it. But it is typically the challenger that is doing this aggressively zero rating and this is interesting, because in Latin America we have the market is essentially dominated by two large companies, but in different markets the companies play different roles. For example, in Mexico where telephonica is a challenger is doing more aggressive zero rating.

Now, in other countries where telephonic or CLARO is aggressive zero rating. So clearly is a challenger or strategy in this market.

Looking operators. So if you aggregate the operators by country, so we're double counting telephonic a and CLARO around the region, we have 45 operators and about half of them are doing some form of zero rating, and the typical modalities are sweetener to a data package.

So, in fact, we found that the Internet, that old motto where you don't have to buy a data package and have zero rating services as part of your basic voice services is fairly rare. In fact, in Latin America we only found in three countries and I believe in para guy, which have Internet, I believe free basics it is called now, it was continued.

It was a temporary promotion.

I list from the point of view from supply, those kinds of zero rating offers are fairly marginal. The typical one is carry initiated and is a sweetener on top of a specific number of mega or gigabytes to the customer.

Which services are most commonly zero rayed? By far facebook is the leading service that is zero rated. Again, not counting Zero rating services by far the most zero rated service is facebook by far. So this is 20 out of 22 operators that do zero rating they zero rate facebook.

The second one is what's up. Another property. And 14 operators zero rate what's up and then 14 also zero rate Twitter.

Now there are other services rated by clearly down the line. My space is zero rated by four operators, high five, Instagram, so there are other operators, and other services being zero rated by other operators. There are messenger services, Email services. Those tend to be fairly marginal. The biggest package by far is the facebook, what's up, and Twitter package.

Now, going to the demand side. It is important to talk about demand because zero rated is being presented as a way to bring more people online, people who cannot afford services, who think they're not relevant, so let's examine this question. How many people really can afford services, how many people are not interested in services and can zero rated services help us bring these people online.

Fortunately, we have a lot of data in Latin America. The statistics office, the regulators have been collecting ICT data on users for a while so we know quite a bit and preferences. So I recently put together all the recent household services in one big data set which allows us to compare across countries. Methodologies and sample sizes are not exactly the same, but still these are the largest household service nationally representative in Latin America.

So this is a work in progress. I'll give you a few highlights. One thing has been said is availability of services is not an issue in Latin America ask the data clearly confirms that.

First of all, when you ask people why you do not subscribe to service, very few people say because service is not available in my area. Very few people. 5 percent, on average. So very few people.

Of course, when you start playing with the data, and


especially when you look at rural areas, it increases, but


increases the effective rule on this answer is it becomes twice


as large. So the marginal effect is high, but still you go from


5 to 10 percent. So still even in rural areas you have a fairly


small amount of people that is saying the main reason is I can't


access, there is no service in this area.


So if -- so clearly this is what we call a demand gap. So if it is not availability there is a gap in demand. Services are available but people are not buying them. So why are people not buying them?

So here is what we do. The surveys vary in terms of how they ask these questions. We divide the answers in four categories. One category is affordability. They say something like, I can't pay it, it is too costly and so on. The second is, I'm not interested. So it is an interest question.

Third one, skills. I don't, though, how to use it or answers of the sort.

And the fourth is availability, which I just referred to.

So, first the service asks people why you are not a subscriber to a broadband service. Either fixed or mobile. Why you don't have a broadband subscription. And here cost clearly appears to be still the main barrier. It varies by Country, an average between 40 and 60 percent of the people say affordability is the main barrier and of course barriers by demographic, and the second one is interest.

So below cost is interest which is about 18 ask 30 percent depending on the Country. And if you look at it in terms of the income distribution, the lines are crossing.

Of course lines cross very high in the Internet distribution and then we start low and going opposite direction.

It is interesting to see in every Country where the lines of interest and cost converge.

For example, in Europe they divide around the third December I'll which is a typical pattern, which is only the poor say I can't pay it, then you start really talking about interest and skills. This is what is happening in Uruguay, because of course one. Richest industries in the region, but when you look at Mexico and Columbia, the lines cross really around the seventh, the eighth, even the ninth income level. So clearly even within middle class and over households you still have cost issues that are creating connectivity barriers.

Now this is when you ask people why you don't have a subscription. Different question is are you an Internet user yes or no and for those that say no, why you don't use it. So here clearly the situation is different. Cost plays a marginal role in explaining non-use. Very few people when you ask them why you don't use the Internet or why have you not used the Internet in the last six months or 12 months and there is some variety there, but the common -- the cost answer is marginal. Very, very few people say I am not a user because I can't pay for it:

Here what happens is the distribution, about half between interest and skills, though my initial hypothesis that there is unreporting of skills problem. I think more people have skill barrier that are on a survey context not really reporting and I think we need better survey tools to measure not to measure skills, self-reported but to really try to measure

in some way ICT skills. Because I think there is un reporting here.

I'm running out of time, so there is a lot more findings but I want to conclude with what I think what are the implications of these findings for zero rating. I think they depend on how zero rating is structured. When you offer zero rating on top of data packs what you are clearly addressing is the cost barrier, your segmented market and offering lower cost services to people already interested in the service because they're buying a data package but you are adding more on top of the data package.

Now the zero rated of the free basic types, those are addressed on the interest question. And because they don't require you to buy a data package. They say you are already buying voice and basic services, here is a little more that you can do. So those are addressing the interest question. I think this is interesting because we know from research that the Internet tends to be what we call a good experience or experienced good, I'm sorry, it is also good experience, but call the experience good, which means you don't really know the value of it until you actually tried. So this is an interesting way to deposit straight a value of the Internet to the users.

And, finally, I think regulators have a real tough die Lemma, and there is -- there is clearly tradeoffs here to make. From the data that I presented, I think there is -- you can think of this in terms of two types of errors. You can error on the side of extent legislation and for closing some of the commercial innovation in the name of net neutrality and competition principles and so on, and you can type two error where you can error on the side of letting this innovation happen and maybe foreclose

down the line competitive entry of new players.

From the data that we have, I think it right now is best to error on the side of type two, basically. Let the market evolve. See how the offers are structured, and keep an I on monitor the impact and also the market structure, but without for closing this innovation that is clearly introducing the Internet to allow people in the region.

Thank you.

>> MODERATOR: Thank you.

I think your presentation was very, very interesting. You stressed the importance ask the role of waiting and it raises a lot of questions and I hope that our audience you will interact in the debate. Is it youre valuations and the evidence you provide us are very important stimulating to the debate, and also to think about the role of zero rating in the economic context.

I would like to give the floor to Ricardo Pedras Bariers. He represents Columbia here. The Columbian authority was one of the promoters of this workshop so we would like to have his experience as expert as businessman, I think as consultant and also if he made the view of a very important regulator in the region.

>> RICARDO: Thank you so much, Antonio.

Good morning to everyone. Let me share with you the government respective on this issue keeping in mind the effect really these kind of zero rating practices is having on a social and economic development in a Country like Columbia.

In 2010 Columbian governments set an objective to produce poverty and creating jobs through the ICTs, and I want to share

with you ask to give us this social content a video on this scope and results achieved so far.


(Video shown)

>> RICARDO: Thank you.

At the same time, at the beginning of the plan you have just watched, the Columbian government introduced a law to promote efficient delivery of services, content applications and to ensure free and fair competition. Several rules follow it and without some net neutrality rules and we were the second Country in Latin America to do it, just after chili. We consider that these type of rules set a common understanding for assuming an open Internet.

As we have realized through the implementation of the vivid digital plan and how at the same time it has been mentioned in the main session about policy options for connecting the next billion, we will still see a lot of people that need to be connected. As Professor Nanion mentioned before, in Latin America there is still a great population that are not connected. Some of the research we have done and we have here is that what is incredible is there is still people that don't see the value of being connected, and that's something that we want to target and ensure that that opportunity is clear for the people who haven't here are being connected.

That is not the only reason. Sometimes you find there is a gap in generation. There is a lack of trust on the Internet. And there is a lack of affordability.

So what the Columbian government has been trying to do,


whether you have seen on the video, is try to encourage the parties involved in finding new ways to connect the rest of our population. And the reason is we have seen and we are seeing the social benefits on how this has changed the life of many people. So, when we try to understand this zero rating initiative, we have to consider different aspects and what we want to bring here to this panel is the context related to a policy structured here of the government to bring not just only connected people but to give them the opportunity to learn what opportunities are behind, to give them the tools and all the different element to become more productive, that they have the chance to speak more freely, open in a different way. So that was when Internet was introduced in the beginning of this year by a private initiative offering a set of free services ranging from Al culture, health and e government and some of the apps that were mentioned in the video were introduced in this part of the offering.

So, so far let me share with you some of the results we have been achieving. 40 percent of the people that have used this kind of free trial of Internet have after 30 days adopt an Internet plan. So for us, for the government, that is the kind of objective, the kind of behavior we want to reach is that people who are not interested and who have not seen so far the value of getting Internet, have the potential of seeing some specific tools that could have helped them in the rural or in the normal day on how to become more productive, how to improve their own lives, and in a way that we have seen that 40 percent is getting to the connected to Internet, that is a good result. In terms of (Indiscernible) that the use of ICT could improve the social life the economic life of many people.

Still the government is focused on facilitating the use of ICT to cut the critical issues of poverty ask creating jobs.

Thank you.

>> MODERATOR: Thank you, Ricardo, for the experience you provide us from Columbia, which is also leading to organization of the regulators in Latin America.

I would like now to give the floor to Lorenzo, who will provide a view of an important telecom operator. The strategy -- he is a strategy man, so he will provide how a view on the, how a very important operator react in front of zero rating and the other perspectives linked to it.

>> LORENZO: Yes. Thank you very much.

So some things have been already said, so what I will try to discuss, to my opinion, to our opinion, and some extent in the majority of cases, we have a land and there are so many different zero rating schemes and so many things cannot be generalized, but we can say that a majority of a case why zero rating is not in contrast with net principles, because in a majority of case there is no -- there are no traffic manager to issue stake, but zero rating is basically only a price difference that has different purpose to increase adoption of services, to increase adoption on the network, it is basically a (Indiscernible) strategies.

Now, why is it important to price differentiation. It is important because sometimes we think enter nets to us like ten, 15 years ago, but Internet is today's completely different thing, you know. It is much more genius, dynamics, and the information technology market that are based on the Internet, there are some basic categories that rely, the economics itself require the need of different strategies, a different level.

What are these categories? Basically markets are much more dynamic, are modular and they are the rights that demand side effect. Dynamics means that innovation is not an option, but becomes the basic to be on the market. In other words, let's make this example that was done, it was discussed also yesterday in the big session. Why if mobile in the US because cannot differentiate in terms of pricing, of quality of services. Try to differentiate in using a new video offer. So it is the fourth operator. So it becomes the using of this scheme becomes competitive for them to try to differentiate themself.

Modularity. Modularity is important because this service are very complement tree. There are PC ask software. So it is important to allow this complementery to work. But probably one of the most interesting issue is the effect of categorize this market. In other words, the network grow with the number of customers that join this network. So it's clear that zero rating allow to increase the base of customers and gives more value to this network.

Now, we have to consider are these practice anticompetitive and what are the effect on freedom of expression. Well, we should be against really clear on take. Zero rating basically are all carrying shaded or based on sponsor data scheme. The carry initiated, when there is carry initiated, the can't be zero rating, they can't pride the face of Twitter, do not pay anything to the network operator, okay.

If we use a sponsor data scheme, this sponsor data arrangement are available to everybody, okay. So, there is not really for a closure of the market. Now some people say, but there are waiting of the zero waiting is more innovative content provider. Well, we have to say that it is in the interest of the operator because they want to have -- because as I say before, Internet today is much more heterogeneous. It is not just a bunch of take your professor, academics, you know, that are on the Internet.

As a billion people there are young people, women, all kind of potential users. So it is an interest of the operator to have a strong diversity of content provider as a (Indiscernible) today network provision or services. There are more content provider, isotonic.

When we come to zero rating freedom of expression, we have to say zero rating do not generally involve exclusivity. So, there are different views that are zero rated.

Second, the companies engaged in zero rating to some significant like facebook, Twitter, Wikipedia, I don't think you can say that a company against the freedom of expression. Of course as Carolina there is this data of use. But I was in a panel yesterday on big data and development and privacy and this is a big issue everywhere. It is not just only really zero rating. This means that of course zero rated parties need to be compliant with the privacy law, because if they are the customers, unless the customers are set to be zero rated there are a lot of roles that should be applied and this will be against the law to some extent.

The danger is the issue of the diversity of a content. Zero rating it is to some extent growing in the significant way. Then when we come to the issue of adoption, we should really as (Indiscernible) was saying before, we should consider it for adoption. It is better to not have access to Internet because you are not interested or try or not. In other words, nothing is better than something. I don't know. I mean, of course, for instance the ICD was suggesting some counter rules, counter some effect to mitigate this initial state, but definitely I think that we should go for this type of scheme and suggest the adoption.

Overall, we think that zero rating is an important mechanism to allow differentiation with positive effect on social welfare. It is used by mobile network operator to reach the attractive necessary of the platform, and we don't consider it's in contest with net neutrality rules, in the majority of case, of course.

Now, again, we have to really strongly and suggest that the best approach is the one the European commission, it is also the FCC suggesting a case-by-case approach, because exactly we -- I think we need to learn more about it and we will avoid the words to foreclose innovation, because again, we are in a different world, and this IT market need this innovation to grow and to allow to bring everywhere, you know, the bounty of this technology.

Thank you.

>> MODERATOR: Thank you, Lorenzo. Gratzi, in Italian.

You have clearly showed there are a lot of changes going on, those in the Internet, so we need the flexibility and but at the same time the entire consumer operator they want to use all the flexibility and full respect of competition and of the rise on Internet.

Last, but not the least, professor (Indiscernible). He has been one of the protagonists of the debate along with these Internet Governance forum and is a professor of law, so he can give the final touch of this debate on the first part of this debate and open the second part with your participation.

>> Well, thank you very much. And it's a pleasure to be


I should say that I'm not just a professor of law, like you're not just a professor of communication, I'm also a professor of engineering so one of the things that I like to do is to try to understand not only the legal implications but also the economic and technical implications. And what is fascinating to me is how prevalent zero rating has become.

According to some published reports it is estimate that he had 45 percent of all carriers do some form of zero rating and it has clearly become an important part of the businesses practices in the industry. There are some documented interesting success stories. There are published reports that zero rating is increased subscriber ship in para guy of 50 percent of participation and we see these numbers.

So we have a very rich story immerging and what I really love about the way this particular panel has shaped up is we're focusing on real data. We're focusing on the ground and not zero rating as an abstract principle.

What often flies below the radar is one of the first zero rating cases that came up was actually in the United States. In 2011 a very small wireless player named metro PCS had 3 percent of the market I believe it was the No. 7 or No. 8 player competing its foreign national providers offered free u tube. So those people, if you follow this, the typical, the minimal offering amount of spectrum is traditionally 20 Megahertz. The preferred implementation is 40 Megahertz. They did it is on 1.4 Megahertz.

These people are heroes.

They are taking minimal spectrum and using it creatively to compete largely with large incumbent players. They found there were various complications to do video because the platform they were using on their feature form didn't support a great deal of their technologies. They were the subject of the original complaint under the 2010 order. It was resolved and they were acquired by T-Mobile and it was rendered moot.

In Chili the case is brought against Virgin Mobile, which had a 1 percent market share on a zero rating plan they had with What's Up. The Slavinian case was again small players using relatively cloud app services like Hanger Mopa. In my opinion, if you have 1 percent market share or 3 percent market share, whatever you're doing to enhance your attraction should be legal. The chance that you're harming competition in the market or harming consumers is virtually non-existent.

What that tells me is a contextual analysis is very important. We have been invited by our moderator to think about this in real policy terms. You have to analyze market structure. You have to analyze if it is very -- if you have small market shares, generally un problematic. If it is non-exclusive it is generally un problematic. You should look at the service that is being zero rated and if they're extremely small market share should be un problematic. The chances of them hurting markets is very low.

Now Ricardo have both emphasized a very important part. There is a demand side to this problem, which all the evidence, there is great surveys, it comes from developed world surveys by off column and the FCC.

A developing world surveys in China and Brazil that shows that people, non-subscribers, two-thirds of them wouldn't take it if it were free. They don't see the value. And I hear him people say, well, they're just misguided.

I started my career in business. There is a saying in business, the customer is always right. What they mean are there are many people that create a great product. They say customers should want my product. You can't say that. They do or they don't and you take your customers as you find them. You have to find a way to appeal to them. Not saying they don't understand.

The beautiful thing about zero rating is it is showing, as Anon says, and Ricardo says, by showing a grandmother that you can talk to your kids through what's up this way, they finally understand and it's a way to operationalize and make it real for them.

It's interesting. We often talk about different populations. In Denmark there is a zero rated app for senior citizens. In an aging global population, we forget that scene your citizens are the least equipped to adopt digital technology and being left behind and they need something different than the zone. My mother who is now 79 years old wants something that has one button, the on and off. That's it. There are a great deal of barriers that need to be overcome had. There are some personal barriers. Islam I can mobile is coming out with zero rated access. Again, for a certain community that makes a great deal of sense. I would quibble with one original design with the Internet. One of the interesting things. If you want to see, I think the best article on that there is a wonderful article by David Clark that was the protocol architect in the 1980's called the design philosophy of the DOPA protocols. They're mostly primarily functional things and about accounting for usage and it has to be resilient against nodes, loss of nodes. You don't actually see -- this is written in the 80's more or less at the same time. You don't tend to see the emphasis that many people attribute to an end to end architect, well to an open or neutral architecture.

The last big point, the point I want to make is usually network neutrality is framed in terms of discrimination and what people who have implemented discrimination have discovered is it's very hard. Well, what is discrimination. If somebody is offering you a different product you can charge different prices. So what you see is if products vary a great deal, it is very hard. The funny thing is, if it costs different amounts you can also charge a different price. So if you are buying something and you're shipping costs are higher than someone else's, you can charge them more because the real costs are more. And there is a deep I Ron knee here.

If two people have different shipping costs are charged the same price an economist will also tell you that is discriminatory. So what is fascinating about the piece, the data represented by the OECD is that for many of these services the real costs are different. And for them to charge the same price within the data plan for them not to zero rate on peering because it is, in fact, free, would be discrimination in the traditional sense.

And, in fact, what you're seeing, Netflix, they are hosting content at individual central offices locally in cities. They don't buy general transit. And, in fact, it's a different cost. The costs are lower. And under a classic economic analysis, not dropping the price for the apps that in fact cost less to deliver would be discrimination.

The other side, Lorenzo alludes to demand place an important rule here often by new entrance. As Anon says dominant players here.

If you are a small player. You see this with T-Mobile. They

are the No. 4 player in the US. They don't have spectrum hold

that is compete with Verizon and AT and T. They are the most

aggressive about competing on services. If they can't compete

on services they have to compete on network quality and price

and that will favor the better established players with the

most, the strongest networks. They're attempting to come pet on

a new dimension which is by offering a specialized set of

services appealing to a smaller group of people. What we know

about the Internet, we've gone from this thing that was the play

thing of academics to send Email and initially to browse the web

to a global phenomenon used in a dazzling set of use these is

both mobile, much more diverse.

If the market you are selling to becomes more diverse, you should expect providers of services and networks to diverse au identify their offers in response.

If I want to know the differences people use it, look how your children use the Internet and compare it to how anyone over 50 uses the Internet. There will be no resemblance to each other.

So I can see why learning is service based differentiation can target senior citizens, youth, people who use things. If you look at your own usage I suspect you use a handful of things very heavily. Those things it is quite possible that a down market player, a new entrant or a recent entrant could use that strategy to target.

Last thought about free speech. There are two theories of free speech. One treats it as an abstract principle of liberty. Another looks at free speech on the ground. Which is not is an abstract principle but how meaningful are people's ability to exercise free speech. A practical application of it. What you start to see is the zero rating has stimulated a great deal of political organizing which they found it easier to do.

What I would say for a pure free speech context we could take a richer perspective than just looking at it with straight liberty. Which focuses on what I hope you take away.

We should focus not on abstract principles on users. How they use the Internet and what they benefit from it and that is in the end is why we have things like the Internet, not for some abstract purpose, but for real benefits for real people.

>> MODERATOR: Thank you, very much professor. You are so clear in your conclusion to have a lot to comment.

It is quite late, but the contribution was very, very interesting. I could not really stop them, our speaker to end.

So now it is time for you, short, but we can take, I think, five questions, and then of course we'll go a bit late.

>> I think we have time for one question.

>> MODERATOR: Five questions. If you are short, we can do it. And then short reply from our speakers.

Okay. First, please, qualify yourself and short question.


>> AUDIENCE: Hello. Can you hear me? All right.

I'm Mike Godwin. I am with R Street Institute. I was the first lawyer for the frontier foundation 25 years ago. I have been working on free speech for a long time but I also support -- I was also the lawyer for Wikipedia so that is my introduction. I am pro zero rating, pro freedom of speech, I am in the abstract and on the ground, I am concerned with both.

Specific question regarding Wikipedia zero. The zero rated version of Wikipedia. As many of you know it is very difficult to learn how to write a Wikipedia article, to learn how to contribute to it and it takes a lot of your data cap if you were in a data capped mobile using Country to learn how to be an active contributor to Wikipedia. The Wickmedia foundation has done some of that to make the apps easier to contribute to, the question is what policies make it possible for Developing Countries, developing minority populations and minority languages with the lack infrastructure to get on the Internet and contribute to their own culture through Wikipedia in their own language, what is your plan or what is the best way to get to that result?

>> AUDIENCE: My name is Sharda. I am a graduate student

from India.

My question is to Professor Galparin. If I got the name right. On the data for mobile offers, I had a question.

If you have collected this data over time, for providers providing zero rated packs, is the cost of free bundles at any specific level comparatively greater than the market standard for that level of free data pack, and if that is so, is there a gender trend across Latin America or does this vary by market, and are there other factors that involve this pricing decision.

If you have done any research on this I would be very interested to hear your data.

Thank you.

>> AUDIENCE: Good morning. I am Flavid (Indiscernible),

Brazilian Consumer Associate from Brazilian Consumers


Among the various types of zero rating planes with limited amount of data and applications, could you discuss a little bit on the difference between them and three basics considering the potential damage to the preservation of the competitive environment and discriminatory access and human rights of freedom of expression and privacy.

Thank you.

>> MODERATOR: Thank you.

>> AUDIENCE: My name is Manoj Maousu. I am working with

orange group. Two questions.

The first one, as you know voice also is data, and mainly in mobile networks. Why it's specific only for data? Many issues that you have discuss it. Because, for example I'm engineer, in mobile network what the capacity that we didn't use for voice we use it for data, in fact there have been times when we use both for data and voice. Why the program is only for data and I remembered that we have the same issue what we call net traffic regarding, in fact, a competitive tee. For example, on net traffic difference of pricing between net --


>> AUDIENCE: The second point is, in fact, there are


another approach very similar zero rating is (Indiscernible)


data. Why nobody ever -- I attended yesterday. Nobody has, in


fact, discussed this approach. Data without discrimination


between service provider.

Thank you.

>> AUDIENCE Hello. I am Karena director of (Indiscernible) Foundation in Columbia.

My question, first I like very much we like your presentation and we would like you to share with us but my question is to Mr. Pedraza from the Government of Columbia.

I was very surprised to see the presentation today because this is exactly the scope of the project that we thought was in Columbia since the first moment, however, we have been asking the government and we sent a four-year request a few years ago on the scope of facebook of project and specifically asking whether there were previous analysis on what the population was going to cover, why were the growth this project will have, the digital project and so forth and so on.

There is a very long four-year request where the government basically answered to all our questions, this is basically a private project,, there are no goals that the government can relate to this project (No English translation) any of the other questions the answer was more this isn't a private project we have no, we have no.

So, my question is: You are mentioning today 40 percent. We have asked facebook. They say they have to data on these, too. Where do we have the 40 percent from? And you have done a very good connection between the Columbian policy and Internet org. How these change from our answer and today.

>> MODERATOR: Okay. We start from -- one more question.


>> AUDIENCE: Hello, my name is Carlos (Indiscernible) from Mexico. I have a question on digital media for example.

For some digital media zero rating may seem like an entry barrier that may cost readers for some of them.

For example, in Mexico, I'm sure that we have it is not (Indiscernible) actually Telcar Sintel. It is broadcasting is very concentrated in Mexico, broadcasting services as well as telecommunications and television is starting to be on ISP.

Mobile ISP soon in the future. And what happens, then, when you have this zero rating services when you start to zero rating your own news services you will shape or you push the readers to your own content. So the other media in Mexico, specially digital media who is the freest of all the media, because as I said broadcasting and printed media are extremely concentrated, what happens with them is because they now have an entry barrier for readers, for Mexican readers, because in the ISP and broadcasting are the same company, because there is much integration, so from an economic point of view, what will be -- that will be a problem for them, and of course will be a problem for the readers at some point. Because the readers will be pushed, as I said, to the ISP in broadcasting corporation.

>> MODERATOR: Okay. Very interesting question.

We start from Carolina, freedom of expression.


>> CAROLINA: Yes. Many of the questions were addressed to particular participants, so yes, I'm just -- I understand the zero rating programs in terms of producing this kind of fostering the demand and for users that would otherwise find it very difficult to access the Internet, but just to think about the future. I mean, in Latin America we are extremely concerned, and not only Civil Society or academics, I mean governments are extremely concerned about the extreme concentration of the industry, or what we call the Internet industry in general.

If you are still focusing on talking about people who need access to the Internet, the next billion and talking about them as just simple users and what will happen to these people in the future if we are still thinking about users and not people who can actually produce more in the Internet.

So I really like the idea of zero rating as a tasting platform for new users that are yet to come, but I would also like to think about the next billion users as promoters on the Internet.

Thank you.

>> MODERATOR: Ricardo.

>> RICARDO: Thank you.

>> MODERATOR: You have the Columbian question.

>> RICARDO: Yeah. I would like to also address a little bit the one that was state about how facilitate the enrichment of Wikipedia by minorities.

I think for the government it is really clear that regarding the priorities the first thing is to try to reach these hi nor it tees. And the second stab is to help them to educate them just by reaching and just by connecting is not an offer. We are clear all about it.

So what the government has been setting in place and through the countries places when these minorities can take some learning and some training that will help them provide some input for the future.

It is aligned with what Carolina has said. It is not just connecting users. It is to help them to become more productive, to improve their lives. So that is the second part.

And as part of the Columbian digital plan that I have

shared with you.

Regarding the second question of what I share regarding Well, the government hasn't changed and is a private initiative that was established by the sector, the private sector, the telecom sector in Columbia. Fortunately, the Columbian market has many operators and these kind of initiatives are open to any of these operators. Specifically regarding the source of information of the zero ratings resulting, that was shared publicly on the main session on Wednesday of policy options for reaching the next billion. So, to say that when they review the results over the 29 countries of how these zero rating programs have been deployed, they share that 50 percent of all the people that were engaged in this zero rating plans after 30 days it adopt some kind of Internet plan. So that's a source. I asked (Indiscernible) of the panel, that main session of the panelist and he just shared with me the data for Columbia.

Thank you so much.

>> MODERATOR: Malina.

>> MALINA: I'm trying to address if Mexican one. And

indeed, I agree, you have a point.


So at the OICD a couple of years ago we did a study on the telecom market and a bit of media market in Mexico and we clearly found that, like, the biggest concern that was there at a time and still is that there is a lack of competition in the telecommunication market, so our view is that this would be the priority what needs to be addressed.

There is one recent development which might be interesting and might change the dynamics of it is that Mexico is currently planning on creating a wholesale mobile network. I think it is (No English translation) so this could enable new opportunities to improve like the access in this area.

Thank you.

>> MODERATOR: Okay. Okay.

Anon, you have your question to reply. Specific question addressed to you.

>> Anon: Yes. One cast comparing price to data.

We're working on comparing with our pricing data and encourage everybody to do it. It is all available if our website. Not as easy when you want to make sure you're comparing orange with orange when comparing zero rated packages with non-zero rated packages so it is somewhat similar but it's hard. We're working on that and encourage anybody to look at our data. It's online.

I think I was asked a gender question and yes there is a gender gap in Latin America in terms of in net use. It varies from 8 to 10 percent, sometimes 15 percent depending on the Country and control for all the other variables. So there is definitely still a gender gap in the region.

>> MODERATOR: Lorenzo.

>> LORENZO: I agree. I mention that, I think, the sponsor data arrangement has no exclusivity so it could not be considered competitive, so something can be promoted, yeah.

>> So quickly, in response to Mike Dodman's question, this is a great point.

There is a wonderful story about a zero rating app where a student applied for a fellowship in the US from Ghana and successfully obtained it. The reason he did it is writing a fellowship application online takes a long time. He had a data plan it would have eaten up a lot of his resources to do it. There are wonderful immerge go stories where people are able to use that.

Regarding historical provisions. It is an artifact of history. I would say that most users don't know SMS is data and they don't really care. What we have a historical division where one is carried in certain way and it is architected in a very different way with an openness. It is going to be treated in a certain way but what we're seeing is an increasing convergence, for example in table television that is all going to IP based television. What we're seeing is true conversions which is what we've been talking about and predicting for 20 years. This is going to put a lot of challenges we historically use.

Regarding impact on competitive environment. The important thing is one of the classic warnings about competition policy you have to protect competition, not competitors. Often they are the same thing, but sometimes they are not. For example, if a restaurant went out of business it is bad for a competitor, but ultimately there are so many restaurants it is ultimately not going to hurt competition. You worry about structural problems, and in fact there are other side benefits about stimulating build out where you have to fold all of them into the analysis and look at the net effect to fully understand what the impact for competition is and that is classic competition policy but it is very hard to do sometimes.

>> MODERATOR: Okay. I think that we can conclude our


It was very interesting and I think we have a lot of lessons to be drawn by the different speakers and the data. Also from your very interesting questions. I think Relena will prepare a report on this workshop and provide it to all of us in the next days.

From my part, I think there is a clear message from this workshop. There is still a lot of work to do to understand the impact of zero rating, because markets are different, regulations are different, and so we have to be much careful and when we take very strong position for the moment. Very tough position. So we have to give the possibility to open a certain flexibility and the case-by-case approach to which several regions, the natural regulatory to apply in order to understand if zero rating is respecting or promoting the interest of consumers is crucial and I think that next year, the next IGF we will continue to talk to discuss about zero rating. It will not be today, the last day, we will talk about zero rating in this context.

>> Thank you. (Applause).

>> MODERATOR: Of course, thanks to all of you for your


patience and the attenders.

(Panel concluded.)