T-Mobile and Sprint have decided to test the FCC this summer. Both ISPs have recently unveiled zero data cap plans in which customers are promised unlimited data use for a single monthly price. However, once customers purchase the service, they find they must pay more for a higher quality service.  In other words, despite bright line rules against it, both ISPs appear to be engaging in a clear throttling of service. Now the question is, how will the Commission respond?

Up until now, despite criticism from consumer groups that zero data cap plans violate net neutrality rules, they have so far passed muster with the FCC. The Commission has reviewed the existing plans and discussed them with the ISPs offering them. However, it has not taken any action to restrict them. It is difficult to know for sure whether FCC Chairman Tom Wheeler actually supports zero data cap plans, or more likely, is loathe to act on possible net neutrality violations until all the court appeals of his Open Internet Order play out.    

Regardless of the Chairman’s feelings, T-Mobile and Sprint have pushed the envelope so far out with their new zero data cap plans that the FCC may be forced to act. That is because after introducing so-called unlimited plans, both ISPs then unveiled certain restrictions demonstrating that their initial “unlimited” plan offers customers a lower quality service. T-Mobile's new “One” plan is a prime example.

T-Mobile asserts that its T-Mobile One plan is “a radically simple subscription to the mobile Internet at one low price” with “unlimited everything.” However, the fine print describing the plan notes that video is delivered at a lower quality, Internet speeds might get throttled after using 26 gigabytes in a month, and if a device is turned into a Wi-Fi hot spot, it could be slowed. So the plan clearly isn’t unlimited.

More problematic, however, is that subsequently, T-Mobile launched its “T-Mobile Plus,” plan which allows consumers to pay an extra $25 a month to get faster Wi-Fi and higher-quality video streams. However, consumers must open an app to turn on higher-quality streams every day they want to use it.  Thus, without paying more, customers in the “One” plan would be offered inferior service

Similarly Sprint launched its “Unlimited Freedom” plan in mid-August with limits on video, music and gaming streaming. On August 26, 2016, the ISP added “Unlimited Freedom Premium,” which is $20 more a month and allows for higher quality streaming than the original offering.

Both the T-Mobile and Sprint plans appear cases of illegal throttling. As Ryan Whitwam of Extreme Tech notes:

Net neutrality holds that internet service providers cannot treat data differently based on type — the caveat being that the FCC rules make allowances for reasonable network management. That’s not what T-Mobile One is, though. The carrier is offering unlimited data as part of this plan only because it knows people won’t be able to use very much of it with throttled video… Video streams at 480p can look similar to higher-resolution ones on a small mobile device display. However, we’re not just talking about resolution. The compression of lower resolution video is also much more noticeable. It simply doesn’t look as good. If you do want all the features T-Mobile’s current plans have, it’s going to cost you more. If you add tethering and HD video to a T-Mobile One plan, it’s much more expensive. There’s no lower tier if you don’t need that much data, either.

Even if you’re not that picky about video quality, T-Mobile One sets a troubling precedent. If T-Mobile can start charging more for unthrottled video data, what’s to stop carriers from charging more for other types of full speed data (Extreme Tech On-Line, August 22, 2016)?

So at this point what are the FCC’s options? If the Commission stays on its current course, it would most likely not take any formal action against T-Mobile or Sprint but instead would hold informal meetings to warn them off these plans. If those carriers persist, only then would the Commission be likely to begin a formal complaint process. Of course consumer groups can pressure the Commission to take action, but with ongoing court cases, the Commission is unlikely to act formally.

More interesting is why are these ISPs trying to test the FCC? Are they trying to goad it into action or test the limits of net neutrality? The feeling here is that these carriers believe they have nothing to lose by offering these services. The plans can provide them with a quick competitive advantage.  Moreover, the ISPs believe their customer base is on their side, pushing back against the big, bad government.  If these services are forbidden, there is a clear scapegoat. As time passes we are likely to see numerous attempts to differentiate certain Internet traffic from others. It is human nature for parties to attempt to pay more for better service. Just because we are dealing with the Internet does not mean that human nature has changed.

By Andy Regitsky, CCMI