FCC kills investigation into ‘data-free’ plans

Broadband companies who want to give their own sites and services a leg up on the competition can now do so without worrying about getting any hassle from the Federal Communications Commission.

In a statement issued Friday afternoon, Ajit Pai, the new FCC chairman, announced the commission is ending its investigation into so-called “zero-rating” plans. Under those plans, broadband providers allow their customers to access certain sites and services without tapping into their limited buckets of data bandwidth.

Pai gave little explanation for the move, saying only — without any kind of documentation — that the plans “have proven to be popular among consumers, particularly low-income Americans, and have enhanced competition in the wireless marketplace.”

He continued: “Going forward, the Federal Communications Commission will not focus on denying Americans free data.”

The abrupt decision brings a quick end to a debate that has been going on for years and right as the commission had finally started to take the competitive threat of such plans seriously. As critics, including yours truly, have argued, zero-ratings plans have the potential to distort the market and undermine innovation because they give preference to broadband providers’ own sites and services and to those companies who can afford to pay for preferential treatment.

Faced with a choice between a site that gobbles up their data and one that doesn’t, consumers are like to go to the one that doesn’t, even if it offers an inferior service. And zero-rating plans that only allow no-cost access to certain sites and services can give consumers a distorted view of the overall universe of sites and services available online.

Because of such concerns, zero-rating programs have been banned in some countries, like India. Consumer advocates here urged the FCC to do the same when it was crafting its latest net neutrality rules.

For their part broadband providers and some website operators have promoted zero-rating programs as a way to encourage innovation and as a means to make access to at least some internet sites and services more affordable.

The FCC under its previous chairman, Tom Wheeler, decided not to take a firm position on such plans. Instead the commission said it would evaluate them on a case-by-case basis to see if they gave an unreasonable disadvantage to certain competitors.

Zero-rating plans have come in different forms from different providers. T-Mobile’s Binge-On plan, for example, allows its subscribers to access videos from a variety of different sites without incurring any data charges. AT&T’s Sponsored Data program primarily allows its wireless customers to access the company’s own DirecTV services data-free.

Last spring consumer advocacy groups, responding to a slew of new zero-ratings plans that had been announced following the issuance of the new net neutrality rules, urged the FCC to investigate them. The commission belatedly did, sending letters to AT&T, Verizon and T-Mobile in November, three days after the presidential election.

In a letter issued last month, right before he left his post, Wheeler told seven Democratic senators that AT&T and Verizon’s plans — but not T-Mobile’s — appear to violate the FCC’s net neutrality rules.

It was clear at the time — because Wheeler was heading out the door — the FCC was unlikely to do much about those alleged violations. Now Pai, who used to work as an attorney for Verizon, has given broadband providers the green light to use zero-rating as much as they want.

In a statement issued Friday, Free Press, a consumer advocacy group that pushed for the zero-rating inquiry, decried Pai’s dismissal of the matter among other actions.

“The public wants an FCC that helps people,” Matt Wood, Free Press’ policy director, said in the statement. “Instead, it got one that does favors for the powerful corporations its chairman used to work for.”

Photo: FCC Commissioner Ajit Paj speaks as Commissioner Mignon Clyburn, center, and FCC Chairman Tom Wheeler, right, look on during a meeting of the commissioners in May 2014. (Karen Bleier/AFP/Getty Images)


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  • Ronald Lo

    Bring it on your only going to light the fire in Amazon to really challenge the current providers, and maybe get Google to restart Fiber again. If Bezos thinks your messing with him then you got another thing coming. HAHA!