Wolverton: FCC late in scrutinizing broadband data schemes

Consumers and their advocates have long warned that broadband providers are thwarting competition by giving preferential treatment to their own streaming video services through a scheme known as “zero-rating.”

At long last, the Federal Communications Commission has started to look into those concerns. But its belated interest will almost certainly be too little and too late to actually curb the practice.

On Thursday, Jon Wilkins, chief of the FCC’s Wireless Telecommunications Bureau, sent letters to AT&T and Verizon asking for information about their zero-rated plans.

Many broadband providers place limits on the amount of data their customers can use in a given billing period without incurring extra charges. Zero rating is the practice of exempting the data sent from certain sites or services from those limits.

Both AT&T and Verizon allow third-party companies to participate in their zero-rating schemes by paying for the data their customers are consuming to access their services. Both companies also exempt some of their own streaming video services from the data caps.

In his letters, Wilkins noted that both companies appear to be treating their own services differently than those of other companies. Their own video services not only don’t count against consumers’ data caps, those services don’t have to pay for the data that consumers are using.

All other video services, by contrast, either have to pay AT&T or Verizon to provide their services to consumers in a zero-rated manner or force their customers to tap into their limited data allotments to access them.

“The Wireless Telecommunications Bureau believes (the zero-ratings scheme) has the potential to hinder competition and harm consumers,” Wilkins wrote in his letter to Verizon.

In his letter to AT&T, which was a follow-up to one Wilkins sent last month, he was even more direct. The company’s response to his earlier missive had failed to address the bureau’s concerns, he said.

“We have therefore reached the preliminary conclusion that these (zero-rating) practices inhibit competition, harm consumers, and interfere with the ‘virtuous cycle’ needed to assure the continuing benefits of the Open Internet,” Wilkins wrote.

Included with his letter were a list of detailed questions about AT&T’s zero-rating practices. Wilkins asked for a response by December 15 “in order to finalize the Bureau’s review of this matter.”

For consumers and aspiring entrepreneurs, Wilkins’ letters are nice to see. Indeed, in a statement issued Friday, Matt Wood, policy director at Free Press, a consumer advocacy group that has urged the FCC to scrutinize zero-rating plans, praised the commission’s action.

“We’re glad that the FCC continues to raise concerns about these companies’ self-dealing exemptions,” he said.

But Wilkins’ letters should have been unnecessary. And given the recent election, they now seem almost pointless.

Consumer advocates have been warning for years now that zero-rating and related schemes pose a distinct threat to competition online by giving a leg up to broadband providers’ own services and those of their preferred partners.

Advocates, including yours truly, have also argued that zero-rating plans go against the spirit of — if not the actual rules guaranteeing — net neutrality. Net neutrality is the principle that broadband providers should treat all data the same, neither blocking nor slowing nor giving preferential treatment to particular sites or services. Zero-rating does exactly the opposite; it explicitly gives preferential treatment to particular sites and services, most notably those of broadband providers themselves.

The FCC had an opportunity to ban zero rating entirely last year when it issued its Open Internet order, which put in place strong new net neutrality rules. Instead, the commission said it would permit such schemes, but would examine them on a case-by-case basis to see if they disadvantaged rivals or harmed competition.

That’s a loophole that broadband providers have driven right through. In addition to AT&T and Verizon, T-Mobile and Comcast have put zero-rating or related schemes in place.

Had Hillary Clinton won the election, the FCC might have had the time and the inclination to crack down on those schemes or even outright forbid them. But it’s almost certain to go the opposite direction under President Trump.

That’s because Trump’s election has endangered net neutrality itself. Trump opposed the Open Internet order, and the men he’s placed in charge of the FCC during his transition have spoken out repeatedly against the net neutrality rules.

Even if net neutrality somehow survives, it’s unlikely Trump’s FCC will lead a crackdown on zero rating. One of the two men heading up the FCC transition for Trump, Jeffrey Eisenach, a scholar for the conservative think tank the American Enterprise Institute who doubles as a consultant for Verizon, has defended the practice of zero rating, calling concerns about the practice “misplaced.”

So, it’s great that the FCC now shares consumers’ concerns about zero rating plans. It’s too bad it didn’t pay heed to those concerns much, much earlier.

Photo: Protesters hold a rally to support net neutrality outside the FCC’s offices in Washington, D.C. in May 2014. (Karen Bleier/AFP/Getty Images)


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