Zero Rating ≠ Net Neutrality

Last week, the FCC Wireless Telecommunications Bureau released its Policy Review of Mobile Broadband Operators’ Sponsored Data Offerings for Zero-Rated Content and Services.  The report examined the 2016 sponsored data and zero-rating initiatives of mobile broadband providers.  Specifically, the Commission examined T-Mobile’s Binge One, AT&T’s Data Perks, AT&T’s Sponsored Data, and Verizon’s FreeBee Data 360.    The focus of the evaluation was “the potential harm to consumers and competition in downstream industry sectors that could result from upstream network operators’ unreasonably discriminating in favor of select downstream providers that are affiliates”. 

The FCC found that T-Mobile’s Binge One and AT&T’s Data Perks “did not discriminate against or disadvantage edge providers or end users.”  However, the FCC found that AT&T’s Sponsored Data to third party content providers were offered at less favorable terms and conditions compared to what was offered to DIRECTV (benefiting DIRECTV NOW), an AT&T affiliate.   (Note: Verizon’s sponsored data plan was also shown to benefit its affiliate service, go90, but since go90 is much smaller than DIRECTV NOW, the magnitude of the current anticompetitive harm was estimated to be much less.)

The Commission concluded that “Given the powerful economic incentives of network operators to employ these practices to advantage themselves and their affiliates in various edge service markets, we are equally concerned that – absent effective oversight – these practices will become more widespread in the future.”