PACIS 2019 Proceedings


Several Internet Service Providers (ISPs) and Content Providers (CPs) have proposed zero rating plans whereby consumers get access to certain websites without paying for it. While open-access advocates have decried these plans, arguing that they are anti-competitive, ISPs and CPs argue that suchinitiativesenableInternet-deprivedsegmentsofsocietytofinallybeabletoaccesstheInternet. Our worklooksatthisissueinthepresenceofdigitaldivide. WeanalyzeISP’sandCPs’decision-makingas well as its subsequent impact on social welfare when a fraction of the population does not have access to the Internet. Our research finds that zero-rating plans can enhance social welfare for most levels of digital divide. However, Internet regulators need to be vigilant, since the ISPs may sometime deviate fromastrategythatmaximizessocialwelfare. Thestudyhasimplicationsforpolicymakers,particularly those,forwhomincreasingInternetpenetrationremainsacrucialgoal.