Wheeler Fires Parting ‘Zero Rating’ Shot

WASHINGTON — Outgoing Federal Communications Commission chairman Tom Wheeler continues wrapping up loose ends or, as senior Republican (and likely soon interim FCC chair) Ajit Pai characterized it, “cutting corners on process, keeping fellow commissioners in the dark and pursuing partisan, political agendas that only harm investment and innovation.”

Pai was referring to a commission report that wrapped up the regulator’s investigation into zero-rating plans, which concluded that AT&T’s DirecTV Now sponsored video data plan likely violates the FCC’s Open Internet order and that Verizon’s FreeBee Data 360 sponsored data plan probably does, too.

The bureau report concluded: “The limited information we have obtained to date … tends to support a conclusion opposite from AT&T’s contentions — namely, 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,” adding, “the structure of Verizon Wireless’s FreeBee Data 360 sponsored data program offering may pose concerns for the same reasons as AT&T’s Sponsored Data program.”

It did not have similar problems with T-Mobile’s Binge On. “Unlike T-Mobile, however, which charges all edge providers the same zero rate for participating in Binge On, AT&T imposes hefty per-Gigabyte charges on unaffiliated third parties for use of Sponsored Data. All indications are that AT&T’s charges far exceed the costs AT&T incurs in providing the sponsored data service. Thus, it would appear that AT&T’s practices inflict significant unreasonable disadvantages on edge providers and unreasonably interfere with their ability to compete against AT&T’s affiliate, in violation of the General Conduct Rule.”

The report said Verizon Communications’s go90 mobile-video product competes in a less-competitive segment but said there is the same potential for discriminatory conduct.

“It remains unclear why the Wireless Bureau continues to question the value of giving consumers the ability to watch video without incurring any data charges,” AT&T senior vice president Joan Marsh said in response.

“The staff’s positions are duly noted,” Verizon senior vice president Will Johnson said. “Hopefully, the next FCC will take into account the views of our customers, who greatly benefit from watching professional football, soccer, basketball and other great content on go90 free of data charges.”

Indeed, Pai signaled that the report would not become the rules of the road under a Republican majority. “I am confident that this latest regulatory spasm will not have any impact on the commission’s policymaking or enforcement activities following [the Jan. 20] inauguration.”

Still, it could lie in wait for a future Democratic chairman, or perhaps surface before that if cable operators view sponsored mobile video plans as a threat to their unsponsored traditional video offerings.

The report and investigation were prompted in part by Senate Democrats, who applauded it last week, though the applause had a hollow ring in Republican-dominated D.C.

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.