February 9, 2017 | By Gennie Gebhart and Elliot Harmon

FCC Abandons Zero-Rating Investigation and Moves Backward on Net Neutrality

Bad news for Internet users. In his first few days in office, FCC Chairman Ajit Pai has shelved the Commission’s investigation into Internet companies’ zero-rating practices and whether they violate the Commission's Open Internet Order.

As recently as January, the FCC was rebuking AT&T (PDF) for seemingly prioritizing its own DirecTV content over that of its competitors. Now, Pai has made it clear that the FCC doesn’t plan to move forward with the investigation.

Simply put, zero-rating is the practice of ISPs and mobile providers choosing not to count certain content toward users’ data limits, often in exchange for capping the speeds at which customers can access that content. Most major mobile providers in the U.S. offer some form of zero-rated service today, like T-Mobile’s BingeOn program for zero-rated streaming and Verizon and AT&T’s FreeBee Data program. Facebook, Wikimedia, and Google have their own zero-rated apps, too. While they are currently focused on emerging mobile markets in developing countries, this recent development from the FCC may open the domestic market to them in new ways.

EFF doesn’t flat-out oppose all zero-rating. But in current practice, it often has the consequence (intended or not) of giving ISPs unfair control over the content their customers access and, ultimately, stifling competition. When the ISP has sole control over what content sources are eligible for zero-rating, it becomes a de facto Internet gatekeeper: its choices around free bandwidth can bias its customers’ Internet usage toward certain sites and services. That can make it prohibitively difficult for new, innovative services to get off the ground. For example, entrepreneurs trying to promote a new video streaming site will face hurdles to widespread adoption of their service if users have unmetered access to existing competitors like YouTube and Netflix.

This problem gets particularly dodgy when the mobile provider owns the zero-rated content source, as is the case with AT&T and DirecTV. In the course of its now-shuttered zero-rating investigation, the FCC asked AT&T to prove that it treated DirecTV and other video services the same. AT&T claimed that it did, but the FCC found evidence that AT&T’s practices were obstructing competition and harming users:

The limited information we have obtained to date… tends to support a conclusion… that AT&T offers Sponsored Data to third party content providers at terms and conditions that are effectively less favorable than those it offers to its affiliate, DIRECTV. Such arrangements likely obstruct competition for video programming services delivered over mobile Internet platforms and harm consumers by inhibiting unaffiliated edge providers’ ability to provide such service to AT&T’s wireless subscribers. (Emphasis added.)

According to Pai, “These free-data plans have proven to be popular among consumers, particularly low-income Americans.” But that’s a red herring. That a service is popular doesn’t mean that rules protecting users’ freedoms shouldn’t apply to it. If anything, zero-rating’s supposed popularity among low-income users is another reason to make sure that it doesn’t further curb users’ Internet experience and funnel vulnerable users towards certain content.

On top of that, users have different preferences and habits, and do not necessarily agree on the optimal content and services to zero-rate. Instead of expanding carriers’ discretion over the content their customers can or cannot easily access, EFF would like to see edge providers given a clear path to being included in zero-rating plans, one that doesn’t favor established players. And ultimately, users themselves should be empowered to decide what content gets zero-rated.


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