Three's Binge Tariff: Good For You; Bad For Society (Updated)

By James O Malley on at

Three has lobbed a grenade into the battle between mobile networks today as it has announced that if you take the company’s new “Go Binge” tariff on your phone, you’ll be able to stream Netflix, Deezer, TV Player, Soundcloud and other services without the data usage counting towards your data cap. In industry jargon, it means these services are being “zero rated”.

Sounds great, right? No need to rush home to catch the start of the match - you can watch it on the bus without worrying that you’ll run up massive bill or max out your data.

Unfortunately, Three’s decision to zero-rate these services is actually bad.

A Violation of Net Neutrality Principles

One of the biggest digital policy debates of recent years - and one that is still raging - is the debate over net neutrality. This is the idea that your internet provider - whether a phone network or a fixed line broadband provider - should essentially be blind to the data that you transmit on its network.

Concern over the principle has become A Thing in recent years, because ISPs have realised that if they can discriminate on what content is allowed on their networks, it could be profitable. For example - imagine if an ISP threatened to charge Netflix money if it wanted to stream using the maximum available bandwidth to customers. If Netflix didn’t pay up, it might mean that the ISP artificially restricts bandwidth, meaning that you’ll end up watching House of Cards in 480p rather than glorious 4K.

It’s easy to see why this could be a bad thing: It would enable the ISPs to shake down providers of internet services, and make the internet a less competitive place to do business as the playing field would become uneven. Amazon might be able to pay for access in such a scenario - but a much smaller competitor might not be able to, thus further entrenching Amazon’s market position.

It would also further empower ISPs as gatekeepers of internet content, as they’d be able to do what economists call rent-seeking - accumulate more wealth without doing anything innovative to get it. In fact, not having a neutral internet seems pretty backwards to me; it would make the market with low barriers to entry harder to access (anyone can build an app or a website with enough time and talent), and a market that already has high barriers to entry even higher (starting a new ISP is hard as you have to dig up roads and lay cables and so on.)

Three Network, One Choice

And this brings me back to Three. It hasn’t done exactly what I describe in the nightmare scenario above - and the company is careful to point out that it has followed all of the EU’s recent net neutrality laws. It has also confirmed to me that no money has changed hands between Three and any of the companies that are part of today’s announcement, suggesting that the company sees it as a way to sweeten the deal in mobile network oligopolis.

Functionally however, the zero-rating could have the same negative impact on competitiveness - especially if the other ISPs follow suit and zero-rate specific partners too. And this could, in the long run, hurt consumers.

If you’re on this new tariff, suddenly it makes a lot more sense to you as a consumer to sign up for Deezer instead of Spotify, and Netflix instead of Amazon Prime Video. But you wouldn’t be picking between these similar services based on, say, the distinct qualities of the apps or the price that they choose to offer their services for - instead, your choices will be shaped by Three.

I asked Three if it would conceivably be possible for a rival company to one of the existing partners to join the scheme - though sadly Three wouldn’t be drawn, instead saying simply that, “We will continue to identify new platforms to partner with, with the aim to open up as many streaming opportunities to our customers as possible for the ultimate bingeing experience”.

It also drew attention to the fact that Three isn’t the first company to zero-rate specific services. Virgin Media zero-rates Facebook Messenger and WhatsApp (which is also owned by Facebook), and O2 zero-rates Spotify, for similar reasons.

All of these cases make me uncomfortable - tying choice of network to strong incentives to use specific apps and services doesn’t seem particularly consumer-friendly to me. You know how once you buy an Apple Watch you’ve really got to get an iPhone again next time you upgrade? Imagine that, but if it put its thumb on the scale for your choices across the entire internet.

In a sense, this is one of those problems where something is a direct impact on a small group of people (good for some Three customers), where the bad flipside is diffused across many more people (undermining net neutrality bad for the wider industry and consumers). So as much as I might complain about these abstract but meaningful concerns - ultimately Three’s offer is going to be attractive to consumers when considered in isolation.

Yes, the binge tariff might be good for you in the short term, but ultimately this could be bad for all of us.

Perhaps though, calling it the binge tariff is apt. Rather than incentivising greater competition or efficiency, if zero-rating becomes even more commonplace, it means that companies don’t have to work hard to earn our money - they can just slump on the proverbial sofa, getting fat while watching Netflix instead.

James O'Malley is Interim Editor of Gizmodo UK and tweets as @Psythor.

Update (11:38): Three has got in touch to with the following statement:

"Three will continue to identify new platforms to partner with, with the aim to open up as many streaming opportunities to our customers as possible for the ultimate bingeing experience so if someone like Amazon Prime wanted to get in touch Three would very much welcome this."

I asked again whether, say, Amazon would be charged for the privilege of being zero-rated and was given the following response:

"The platform is open to any provider at no cost. However, it takes time to bring partners on board and to implement the technical ability to apply the zero rating. We have been speaking with more suppliers than the ones we have launched with and will look forward to adding more."

In any case, as I describe above, this is still a violation of the principles of net neutrality - so in my view, this is still a bad outcome for society at large.

More Three Posts: