FCC Zero-Rating Queries to AT&T, Comcast, T-Mobile Spark Controversy

FCC Chairman Tom Wheeler and the two Republican commissioners are at odds over letters the agency sent Wednesday to AT&T, Comcast and T-Mobile, seeking input on zero-rating product offerings that could have net neutrality implications. "This is not an investigation," Wheeler said Thursday during the commission's meeting. "These were 'let's get informed.' This is to help us stay informed as to what the practices are." On the contrary, Commissioner Ajit Pai said later as he and Commissioner Michael O'Rielly criticized the letters and the way they were issued: "This is an investigation. This is not simply benign."

Agency watchers say the letters are common. "The idea here is that the FCC can get informed and the carriers can speak frankly without worrying about proprietary information and in a way that de-politicizes things and avoids the need to posture," Public Knowledge Senior Vice President Harold Feld told us in an email. Wheeler said after the last FCC meeting that T-Mobile's zero-rating product is both highly competitive and innovative (see 1511190045).

Pai and O'Rielly said Thursday they didn't learn of the letters until after they had been sent -- Pai on Wednesday night, O'Rielly at the FCC meeting. Both said they hadn't read the letters. "I'm kind of flabbergasted," O'Rielly said. Pai said the letters were "a fishing expedition ... that ultimately won't benefit the American consumer." He also said if it's interested in fact-finding, the agency could take advantage of ex parte meetings with industry or undertake a notice of inquiry. An FCC spokeswoman said Thursday that all commissioner offices received the letters that day and were notified Wednesday before they were sent out.

The letters to AT&T and T-Mobile were signed by Wireless Bureau Chief Roger Sherman, and the letter to Comcast by Wireline Bureau Chief Matthew DelNero. All three, in nearly identical language, say, "We want to ensure that we have all the facts to understand how [the service or services] relates to the Commission's goal of maintaining a free and open Internet while incentivize innovation and investment from all sources." The letters also ask all three companies for "any additional perspectives that you may have about changes in the Internet ecosystem as a whole." Internet law experts have told us zero-rating issues could become a large area of inquiry for the FCC as more such products and services come to market (see 1511240032).

All three companies' products involve offerings that don't count against customers' data plan allowances. The letter to AT&T said its Sponsored Data and Data Perks programs have raised concerns "that sponsored data unfairly advantages incumbent content providers." In the Comcast letter, the FCC said its streaming video service has raised questions about whether it skirts net neutrality guidelines. The T-Mobile letter said there have been concerns raised that Binge On "may harm innovation."

In a statement, AT&T said it's "reviewing the letter and will respond as appropriate. We remain committed to innovation without permission and hope the FCC is too.” In a statement, T-Mobile said it looks "forward to talking with the FCC and sharing more details about Binge On. We continue to be strong supporters of net neutrality and firmly believe in the principles of equal access to an open and free-flowing Internet. This program provides both great customer choice and industry innovation that encourages competition and we believe it is absolutely in line with net neutrality rules.” Comcast didn't comment.

"This kind of thing is pretty common," Andrew Schwartzman, senior counselor at the Georgetown Institute for Public Representation, told us in an email. "There is frequent informal back and forth with regulated companies and, less frequently, with the public interest community. While I welcome the fact that the Commission is paying some attention, what is needed is an aggressive investigation, with deadlines. I don't take this as a commitment to do that." PK's Feld said Wheeler has taken this approach "on several occasions (such as with interconnection)." Criticism of the letters is "part of a Catch-22," Feld said. "If the agency issues a notice of inquiry, Pai and O'Rielly will shout, 'Why do we even think we need an NOI?' When the FCC tries to collect more information in a more informal context so it can even decide whether any official action is warranted, Pai and O'Rielly complain, 'Oh how awful that the FCC is acting lawlessly and doing all this unofficial intimidation! We should do a formal process like an NOI!' Frankly, letters asking the companies to come in to explain their systems is just due diligence."

While Wheeler emphasized the letters aren't investigatory and don't carry deadlines, they do in fact carry deadlines of a sort. In all three, the FCC said it asked that the companies "make available relevant technical and business personnel for discussions" by Jan. 15.