FCC Report Clearly Says AT&T & Verizon Are Violating Net Neutrality -- And Nobody Is Going To Do A Damn Thing About It

from the unpopular-populist-reform! dept

When the FCC was crafting net neutrality rules, it refused to ban zero rating -- or the practice of giving an ISP's own content an unfair advantage by exempting it from usage caps. At the time we noted how this would open the door to all manner of anti-competitive shenanigans, and that's precisely what happened. Before we knew it, AT&T, Verizon and Comcast were all zero rating their own content while still penalizing streaming competitors, documenting how companies can abuse the lack of broadband competition to impose unnecessary and arbitrary caps -- then use those caps as an anti-competitive weapon.

This is not "free market competition." It's duopolists using their domination over the broadband last mile to hamstring emerging new markets and competitive threats. Caps aren't necessary. They don't actually even help manage congestion. Caps and overage fees are glorified, confusing and arbitrary price hikes that let incumbent broadband mono/duopolists extract additional revenues from captive customers, with the added bonus of hamstringing streaming market competitors.

While the FCC didn't ban zero rating (unlike India, Japan, The Netherlands, Norway and Chile), it did say it would take a "case by case look" at zero rating to see if it hurt competition. And after a clumsy, glacial, year-long review, the FCC has concluded precisely that. In a series of letters and full FCC report (pdf) released by the agency, the FCC makes it abundantly clear that AT&T and Verizon's zero rating plans are clearly anti-competitive, and clearly violate net neutrality:

AT&T’s Sponsored Data program is designed to enable third party edge providers to deliver streaming edge content on a zero-rated basis to AT&T’s mobile broadband subscribers. Unlike the two sponsored data programs discussed above, we have serious concerns that AT&T Mobility’s Sponsored Data program presents competitive problems and, to date, nothing in AT&T responses to the Bureau’s requests for information has addressed our concerns. Based on the information gathered to date, we believe there is a substantial possibility that some of AT&T’s practices may violate the General Conduct Rule.

AT&T and Verizon have breathlessly insisted that they can't possibly be acting anti-competitively, because companies can pay them a completely unnecessary troll toll to have their content placed on equal, cap-exempt footing. But the FCC clearly notes that AT&T's charging competitors notably more for this "favor" than it charges itself (DirecTV):

The limited information we have obtained to date, however, tends to support a conclusion opposite from AT&T’s contentions – namely, that AT&T offers Sponsored Data to third party content providers at terms and conditions that are effectively less favorable than those it offers to its affiliate, DIRECTV. Such arrangements likely obstruct competition for video programming services delivered over mobile Internet platforms and harm consumers by inhibiting unaffiliated edge providers’ ability to provide such service to AT&T’s wireless subscribers.

And while it's all good and lovely that the FCC finally woke up from its nap to realize that broadband caps and zero rating can be (ab)used anti-competitively, the timing of the FCC's effort is comical. Trump and his incoming telecom advisors have made it abundantly clear they intend to not only gut net neutrality, but defund and defang the FCC itself. As such the FCC's "enforcement action" here is too little, too late. Ajit Pai, on the shortlist to be the next boss of the agency, issued a statement to the FCC website (pdf) making that abundantly clear:

It is disappointing that the FCC’s current leadership has yet again chosen to spend its last days in office the same way it spent the last few years—cutting corners on process, keeping fellow Commissioners in the dark, and pursuing partisan, political agendas that only harm investment and innovation.

This time the midnight regulations come in the form of a Bureau-level report casting doubt on the legality of free data offerings—offerings that are popular among consumers precisely because they allow more access to online music, videos, and other content free of charge. This report, which I only saw after the FCC released the document, does not reflect the views of the majority of Commissioners. Fortunately, I am confident that this latest regulatory spasm will not have any impact on the Commission’s policymaking or enforcement activities following next week’s inauguration.

Pai, a former Verizon lawyer, has long had a bizarre, distorted, and inaccurate view of what net neutrality actually is. When crafted properly, net neutrality rules protect innovators from last-mile broadband monopolies. Pai and friends, in contrast, have made it abundantly clear their top priority is to gut, hinder and hamstring any regulator that would dare stand up to companies like AT&T, Verizon, Comcast or Charter. That dismantling some of the only rules protecting consumers from these behemoths in telecom market dysfunction is being passed off as populist reform is the ultimate insult and irony, the closing whimpering footnote to a zero rating saga that, moving forward, will wind up being the very least of the open internet's problems.

Filed Under: broadband, fcc, net neutrality, title ii, zero rating
Companies: at&t, verizon