Zero Issues with Zero-Rating

Continuing his fast action upon assuming the Acting Chairmanship, last Friday FCC Chairman Ajit Pai put to rest one of the oddest and most curious theories of the old Commission: the idea that giving something to consumers for free is somehow anti-competitive.

More specifically, Pai ordered the end of the FCC’s investigation into “zero-rated” programs.  He took this step as part of a broader push against “midnight regulations” adopted by the Wheeler FCC at the end of the Obama Administration, but the implications are far broader:  from now on, the FCC appears determined to use common sense and real-world experience to drive policy results.

Wheeler’s FCC launched an investigation to determine whether programs such as Verizon’s FreeBee Data 360, AT&T’s “sponsored data” program, and T-Mobile’s BingeOn violated the FCC’s “net neutrality” order.  Bureau staff recently claimed that Verizon’s and AT&T’s programs did, while T-Mobile’s did not.

The investigation and findings made little sense.  Why, after all, is getting something for free bad for consumers? As Pai’s own statement noted, these programs are popular with consumers, and particularly among lower-income consumers. Surely both content providers and the FCC can agree that making more content available to more consumers for lower cost is a good idea.  And when one company starts this type of program that proves popular with consumers, the others follow quickly. That’s called competition.

So what will the FCC do now that it is no longer investigating sponsored data programs?  That’s easy: it’s going back to first principles and working to speed broadband deployment to everyone, in all income brackets, across America.  As Pai said, instead of trying to deny Americans free data, “we will concentrate on expanding broadband deployment and encouraging innovative service offerings.” Of course, “free” is itself an innovative service offering, as many telecom experts noted at the time the FCC started the investigation.

But before leaving consideration of this issue, it’s also worthwhile to understand another reason why Pai is taking action so quickly: his views on the nature of regulation itself. In another statement, Pai wrote that “[i]n the waning days of the last Administration, the Federal Communications Commission’s Bureaus and Offices released a series of controversial orders and reports. In some cases, Commissioners were given no advance notice whatsoever of these midnight regulations. In other cases, they were issued over the objection of two of the four Commissioners. And in all cases, their release ran contrary to the wishes expressed by the leadership of our congressional oversight committees. These last-minute actions, which did not enjoy the support of the majority of Commissioners at the time they were taken, should not bind us going forward.  Accordingly, they are being revoked.”

So — good news for consumers, good news for competition, and good news for content providers. And more evidence of a very strong start by Chairman Pai.