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Summary

Industry regulators in many countries consider zero-rating of mobile data costs for users visiting social media platforms to be a useful instrument to support their digital agendas, since it increases competition and lowers barriers to service adoption. However, some regulators in emerging markets have completely failed to foresee the social impact of approving such policies, especially for certain types of application. Zero-rating of social media platforms should go through additional scrutiny as the platforms quickly evolve to become repositories of user-generated content.

Because this model of free internet access increases subscribers’ dependence on a sole source of information without providing a way to verify that information, it can amplify the social impact of hate speech and fake news. Although some platforms are taking corrective actions on such issues, Ovum believes regulators in emerging markets should be more careful with legislative interventions when it comes to dominant social media services. Due to the inherent challenges faced by emerging economies, zero-rating of platforms not only helps them gain prominence but supports the creation of a walled garden, limiting users’ perception of the internet to just one platform or application.

Users in many emerging markets conflate popular zero-rated apps with "the internet"

In the famous December 2017 decision that overturned the US's Open Internet Order, otherwise known as net neutrality, FCC chairman Ajit Pai stated that “zero-rated free-data plans have proven to be popular among consumers, particularly low-income Americans, and have enhanced competition in the wireless marketplace.” The US decision on zero-rated applications and sponsored data plans was echoed by many developing countries, which saw the rise of zero-rated promotions that enabled subscribers to adopt data services without increasing their monthly expenditure on mobile and communication services.

A key example is Myanmar, where just under 90% of the lower-middle-class population and 65% of all citizens live in rural areas. Zero-rated data was introduced in the country in 2016 and was used as a tool by leading mobile operators to draw subscribers to their mobile broadband networks. Within two years of launch, 3G subscriptions accounted for about half of the total customer base for challengers Ooredoo and Telenor, as they flooded the market with zero-rated content promotions. Unlike state-owned MPT, which allowed users to access only text updates and messages through Facebook’s Free Basics service, Telenor’s free Facebook and Viber program was a full-feature service that allowed users to access pictures and videos without incurring additional data charges.

As a result, many urban subscribers now use Facebook as a low-cost alternative to access content, and many of those with low technological literacy conflate it with the open internet because they do not distinguish between content within and outside of the walled garden created by the free platforms. Driven by these factors, Facebook has become Myanmar’s predominant online portal, with an active user base of over 10 million as of end-2017. This represents around 16% of Myanmar’s total mobile subscription base and over 60% of active social media users in the country.

Regulators must act with stronger legislative interventions for dominant social platforms

Whereas policy makers in India rejected Facebook’s Free Basics on the grounds of net neutrality, Myanmar and, more recently, Sri Lanka have become pressing examples of failed regulatory interventions to limit the negative impact of dominant social platforms on communities.

In both Sri Lanka and Myanmar, Facebook has been used to spread hate speech against minority communities and create an online culture akin to a digital or virtual mob. Although the platform has responded by proactively deploying technology to help resolve the problems of hate speech and fake news, the lack of transparency on measurable parameters that can be used to demonstrate effectiveness has made their efforts questionable. While legislative action is necessary and inevitable, given many users' dependency on social media, governments in emerging markets need to first stop looking at social media platforms as charity organizations that are there to support a country’s digital agenda by offering their services for free.

Policy makers in emerging markets also need to understand that regulation of social media platforms, especially as they evolve to feature largely user-generated content, should address more than just user privacy and data protection. Even in developed markets, where data privacy is the dominant concern, regulators are making hate speech related to migration issues a priority. Countries including Germany and Malaysia are passing laws to make social media companies accountable for fake news that appears on their platforms. Overall, the social challenge posed by cultural tensions is greater in developing countries, making them more susceptible to problems caused by a proliferation of fake news.

Appendix

Further reading

Internet Openness Indicator, GLB005-000007 (January 2018)

"US net-neutrality policy was years in the making, and will continue being modified for many more," GLB005-000021 (January 2018)

Author

Inderpreet Kaur, Senior Analyst, Asia-Pacific

inderpreet.kaur@ovum.com

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