Verizon has become the latest Internet service provider to test the FCC’s open Internet rules, with the launch of its new Go90 mobile video service.  Go90 is targeted to young adults who can watch about 8,000 TV episodes and clips using their smart phones.  Verizon believes that becoming a content provider is a way to capture the so-called “cord-cutters” who are increasingly dropping their cable TV service due to the unwanted channels they are forced to pay for.

 From a regulatory prospective, the most significant feature of Go90 is the fact that any video that is included and streamed through the service won’t count towards the data plan limit of Verizon customers.

However if Verizon data plan customers stream content from providers such as Amazon Prime and Netflix, which are not included in Go90, it would count toward reaching the capacity of their plans.  Outside content providers can offer Verizon customers a similar free data service, but only if they participate in another Verizon service called FreeBee, and pay the bandwidth costs themselves.

 Go90 is similar to T- Mobile’s “Binge On" plan which exempts 24 services including Netflix, HBO, and Hulu from T-Mobile's high-speed data limits. Other ISPs poised to offer their own zero-data services.

 The big question is what will the FCC do about these plans which appear to push the envelope of the ban on prioritizing Internet traffic? As we have noted here previously, FCC Chairman Tom Wheeler initially stated that he believed zero data plans were innovative and competitive. However, he quickly changed his mind and sent letters to AT&T, T- Mobile and Comcast requesting them to answer questions related to their free data services and whether those services violated the net neutrality rules. The letters also requested meetings with the "relevant technical and business personnel" from those companies.

The meetings were held in January. FCC spokesperson Kim Hart claimed the meetings were productive but would not offer any specifics.  She did note that the meetings weren’t meant to be investigations or anything that would lead to actions being taken against the companies.

 Since the meetings T-Mobile has aggressively attacked even the suggestion that the FCC take any action against Binge On. At a recent meeting of the Open Technology Institute, T-Mobile lobbyist Kathleen Ham stated that the Commission needs to tread lightly on zero-data services:

And certainly more lightly than the wired world in the wireless space — when there is so much experimentation happening, so much differentiation happening. And a lot of it customers responding to.  We do have to be transparent about it. We have to make sure the customer has choices, but I think it is wise to tread lightly in this environment when there is so much going on.

Net neutrality advocates, however, have panned Binge On and similar data services. In a January 29, 2016 report from the Stanford Law School, author Barbara Van Schewick stated the following:

In November 2015, T-Mobile, the third largest provider of mobile Internet access in the U.S., launched a new service called Binge On that offers “unlimited” video streaming from selected providers. Customers on qualifying plans can stream video from forty-two providers in Binge On – Netflix, Amazon, Hulu, HBO, and others – without using their data plans, a practice known as zero-rating.  As currently offered, Binge On violates key net neutrality principles and harms user choice, innovation, competition, and free speech online. As a result, the program is likely to violate the FCC’s general conduct rule. Binge On undermines the core vision of net neutrality: Internet service providers (ISPs) that connect us to the Internet should not act as gatekeepers that pick winners and losers online by favoring some applications over others. By exempting Binge On video from using customers’ data plans, T-Mobile is favoring video from the providers it adds to Binge On over other video.

The opinion here is that these zero data services do violate the Commission’s future Internet conduct rule which permits the agency to review new Internet product offerings on a case-by-case basis. However, lawful discrimination is permitted under Title II and is often seen in special access optional payment plans that provide customers with the benefits of lower prices while guaranteeing providers a stable demand for their services. Zero data services would seem to offer similar advantages. Data customers have the opportunity to sample additional services they might not ordinarily choose to pay for spurring future demand in such services. Edge providers have a chance to innovate and test various new product offerings. It would seem a win-win for all.  But will the Commission agree? The answer is not likely to come until the DC Circuit Court releases its decision on the Open Internet Order sometime in the next few months. Once the Commission has the firm footing of a court decision behind it, it is likely to make clear how aggressively it will regulate new Internet service offerings.

By Andy Regitsky, CCMI