Late Wednesday, the FCC’s Wireless Telecommunications Bureau (WTB) wrapped up its year-long inquiry into “zerorating” and sponsored data practices of the U.S. wireless industry with the publication of a report which specifies that the FCC has “no concern with zero-rating per se.” Nevertheless, the WTB voiced concern with certain sponsored data offerings provided to wireless customers of AT&T and Verizon that it found to “present significant risks to consumers and competition in downstream industry sectors because of network operators’ potentially unreasonable discrimination in favor of their own affiliates.”
Toward the end of 2015, the WTB launched its probe into wireless carrier zero rating practices with information requests that were addressed initially to AT&T and T-Mobile US (and, later, to Verizon) about data offerings that exclude certain content from being counted against subscriber data allowances. In its report, the WTB concluded that T-Mobile, in offering its zero-rated “Binge On” video streaming service to mobile subscribers through participating providers, “is not likely to have strong incentives to unreasonably disadvantage unaffiliated edge providers.” The report observed that TMobile “did not compel edge providers or consumers to participate in Binge On, and did not charge them anything if they opt to do so.” With respect to AT&T’s zero-rated “DirecTV Now” service, however, the WTB asserted: “there’s a substantial possibility that some of AT&T’s practices may violate the General Conduct Rule” promulgated by the FCC in the 2015 Open Internet Order. Although it stipulated that the information provided by AT&T does “not enable us to compare the terms and conditions of AT&T Mobility’s offerings to sponsored data customers with the terms and conditions of its treatment of DirecTV,” the WTB maintained that, based on the “limited information” it received, “AT&T offers sponsored data to third party content providers that are effectively less favorable than those it offers to its affiliate, DirecTV.” The WTB voiced similar concerns with Verizon’s “FreeBee Data 360” program.
While the report outlines a draft framework by which the FCC should assess the sponsored data practices of individual carriers in the future, the WTB stopped short of proposing any corrective measures to address the zero-rating practices of AT&T and Verizon. Meanwhile, AT&T senior vice president Joan Marsh responded by defending her company’s zerorating practices as having “enabled millions of consumers to enjoy the latest popular content and services for free.” Marsh added: “it remains unclear why the [WTB] continues to question the value of giving consumers the ability to watch video without incurring any data charges.” Verizon senior vice president Will Johnson quipped, “we don’t agree with [the WTB] view on free data, and we don’t think our customers do either.”