Zero Rating Creates Value for Consumers, New ITIF Analysis Finds

Zero-rating programs should be welcomed as a way to increase value for consumers, not as a threat to the open Internet as some critics have charged.

May 23, 2016

WASHINGTON—Zero-rating programs, which allow consumers to access certain Internet content and services without it counting against their monthly smart phone data plans, should be welcomed as a way to increase value for consumers, not as a threat to the open Internet as some critics have charged. This is the main conclusion of a new analysis by the Information Technology and Innovation Foundation (ITIF), a leading technology policy think tank.

ITIF urges the Federal Communications Commission (FCC), along with regulators around the world, to create more certainty in the marketplace by declaring that open-participation zero-rating programs are indeed in the public interest.

“Those who argue zero rating is a ‘sneak attack’ on net neutrality are capitalizing on rigid abstractions and demagoguery to sway the FCC,” said Doug Brake, ITIF telecommunications policy analyst and the report’s author. “Doing so turns a blind eye to the numerous benefits of zero rating for consumers and competition alike. The FCC and its counterparts around the world should recognize these programs are in the public interest.”

In the report, Brake outlines a series of benefits for consumers, content providers, and the Internet ecosystem as a whole that stem from zero-rating programs:

  • Zero rating is an economically efficient way to support innovation.
  • Zero rating expands access to information, particularly in developing countries.
  • Zero rating is generally pro-competitive because it allows companies to differentiate offerings.
  • Zero rating provides consumers more of what they want.
  • Zero rating leads to more efficient use of networks without hurting quality.
  • Zero rating improves the efficiency of advertising.

Brake also refutes critics who assume that zero-rating programs will be a race to the bottom in which users will only choose to partake in a narrow set of offerings. As programs already in place have shown, most customers who are introduced to a stripped-down version of applications will soon migrate to the full Internet. Furthermore, zero rating does not diminish quality or availability of other services. If anything, additional data would be available to explore other services outside the zero-rated offerings. Moreover, zero rating programs can mean much more efficient use of scarce spectrum resources with no diminution of consumer benefit.

Thus far, the FCC has taken a case-by-case approach to overseeing these business practices. Brake suggests that while it makes sense for the government to retain oversight, the FCC and its global counterparts should resolve uncertainty in the marketplace and formally recognize the procompetition, proconsumer benefits of zero-rating programs.

“Zero rating is a win for content providers, who see more use of their products and services,” said Brake. “It is a win for network operators, who are working to gain market share and explore new business models to meet growing demand. And most importantly, it is a big win for consumers, who end up getting more for less. Given the broad success of zero rating thus far, it is time to send a strong signal to innovators that this kind of program will not be obstructed by governments.”

Read the report.

U.S. Must Embed Digital Technologies in Its Infrastructure to Seize Next Wave of Economic Growth, ITIF Concludes in New Analysis Marking National Infrastructure Week

The U.S. must transform physical infrastructure into digital to seize economic opportunities.

May 16, 2016

WASHINGTON—The United States must transform existing “brick-and-mortar” physical infrastructure into digital infrastructure to seize the next wave of economic opportunities that will create jobs and improve people’s quality of life, according to a new analysis from the Information Technology and Innovation Foundation (ITIF), a leading technology policy think tank. Released on the first day of national Infrastructure Week, the report serves as a policymaker’s guide to digital infrastructure, its benefits, barriers to deployment, and policy solutions to overcome them.

“Infrastructure has always been a prerequisite for economic growth and vitality—and now, as advances in information technology have fundamentally changed the economy, infrastructure also must evolve,” said ITIF President Robert D. Atkinson, the report’s lead author. “Most existing infrastructure will need to be hybridized, by integrating digital features, while some new infrastructure will be purely digital. But make no mistake: The country’s future growth prospects will hinge in no small part on whether it successfully transforms our infrastructure systems.”

The report outlines the many benefits the United States can derive from deploying robust digital infrastructure, including:

  • Expanded capacity—through increased use of both existing and new infrastructure;
  • Time savings and convenience—through reduced congestion, simplified operations, and better decisionmaking capability;
  • Cost savings—through waste reduction, increased efficiency, and more flexibility in the provision of key services;
  • Improved reliability—with greater predictability and fewer interruptions in key services; and
  • Enhanced safety—through improved resiliency to threats and interruptions.

ITIF identifies several barriers to faster and wider deployment of digital infrastructure, including costly and outdated regulations, a lack of public funding for investment, a small pool of workers with requisite tech skills, and ill-founded fears about data privacy and security.

The authors propose a series of recommendations to overcome these barriers and ensure that government policies support the transition from traditional infrastructure to digital infrastructure:

  • Create “digital-friendly” regulation;
  • Develop strategies for how agencies can support digital infrastructure in their areas of influence;
  • Increase funding for digital infrastructure; and
  • Don’t let privacy and security concerns slow deployment.

“Information technology is creating a world of smart enterprises, smart governments, and smart cities. It’s time to accelerate the creation of smart infrastructure to support them,” Atkinson concluded. “Doing so will generate an array of economic and social benefits. But without a clearly articulated goal of transforming traditional infrastructure into digital infrastructure and the right policies to make it happen, this much-needed transition will continue to lag.”

Read summary.

Download PDF.


U.S. R&D Policy Must Go Beyond Funding to Ensure More Federal Research Produces Innovation and Jobs, ITIF Testifies Before Senate Commerce Committee

We can no longer simply hope that some R&D funding actually yields economic results.

May 11, 2016

WASHINGTON—Robert D. Atkinson, founder and president of the Information Technology and Innovation Foundation (ITIF), a leading science and tech policy think tank, today testified that in reauthorizing the America COMPETES Act, Congress has an important opportunity to do more than provide funding for research and development; it also can ensure that federally funded knowledge creation more effectively leads to innovation, competitiveness, and jobs.

In testimony before the U.S. Senate Commerce Committee, Atkinson argued, “It is no longer enough to simply fund scientific and engineering research and hope it somehow produces commercial results. Federal R&D funding as a share of GDP is lower today than before the Russians launched Sputnik. This means the nation needs to be much more efficient about transferring discoveries into commercial applications. Otherwise, we risk slowing the pace of innovation even more.”

Atkinson added, “Other nations can now more easily take advantage of discoveries stemming from U.S. investment in R&D, so if America doesn’t commercialize its own R&D, then a competitor likely will. This is why reauthorization of the America COMPETES Act is so important: Congress has an opportunity to focus on improving the rate at which federally funded discoveries serve as catalysts for actual innovation and job creation.”

In his testimony, Atkinson emphasized that improving the efficiency of the U.S. scientific and engineering research system can provide significant benefits at lower cost than increasing funding alone. Moreover, continuing to underfund research while also not improving the efficiency of the system is a recipe for underperformance. The better alternative would be to provide more federal funding for R&D and a better commercialization and tech-transfer system.

Atkinson proposed a series of policy recommendations:

  • Establish a “manufacturing universities” program focused on manufacturing-oriented research and teaching;
  • Increase funding for commercialization activities;
  • Increase funding for the Regional Innovation Program;
  • Expand the share of the National Science Foundation (NSF) budget devoted to the Engineering Research Center and Industry & University Cooperative Research Center programs;
  • Authorize into law the NSF I-Corps program;
  • Support and reform the Small Business Innovation Research program, including allowing awardees to spend funds on commercialization activities;
  • Increase support for the National Institute of Standards and Technology’s Manufacturing Extension Partnership and modify the match requirement to a one-to-one match;
  • Authorize and appropriate National Strategic Computing Initiative funding levels as requested in the administration’s FY 2017 budget; and
  • Increase the supply of STEM talent by improving immigration and education policies, including by funding the administration’s computer science initiative.

“Given the decline in R&D funding and the dramatic increase in technological competencies of America’s competitors,” Atkinson said, “we can no longer simply hope that some R&D funding actually yields economic results. We can and must do better.”

Read the written testimony.

ITIF's Center for Data Innovation and Almost 50 Other Organizations Urge Congressional Action on Bipartisan OPEN Government Data Act

ITIF's Center for Data Innovation and almost 50 other organizations urged congressional action on the bipartisan Open, Permanent, Electronic, and Necessary (OPEN) Government Data Act.

May 6, 2016

WASHINGTON—ITIF's Center for Data Innovation, a data policy think tank, and almost 50 other civil society organizations, businesses, industry groups, and transparency advocates today urged congressional action on the bipartisan Open, Permanent, Electronic, and Necessary (OPEN) Government Data Act (H.R. 5051 / S. 2852), introduced last week by Rep. Derek Kilmer (D-WA), Rep. Blake Farenthold (R-TX), Sen. Brian Schatz (D-HI), and Sen. Ben Sasse (R-NE). In letters sent to the leaders of the House Oversight and Government Reform Committee and the Senate Homeland Security and Government Affairs Committee, the organizations wrote:

In recent years, open data—data that is made freely available to use without restrictions—has proven to be an enormously effective platform for innovation in both the public and private sectors, supporting significant economic value, increasing transparency, efficiency, and accountability in government operations, and powering new tools and services that address some of the country’s most pressing economic and social challenges. 

We support the OPEN Government Data Act for several reasons. First and foremost, this legislation would institutionalize the federal government’s commitment to open data and allow the United States to remain a world leader on open data. Second, adopting a policy of open by default for government data would ensure that the value of this public resource would continue to grow as the government unlocks and creates new data sets. Third, a firm commitment to providing open data as a public resource would encourage businesses, non-profits, and others to invest in innovative tools that make use of government data. 

Given the many benefits of this legislation, as well as the broad industry and public support for open data, we respectfully ask Congress to take quick action on this bill.

Read the letters.

Watch event cohosted by the Center on the OPEN Government Data Act.