Silicon Valley Protests 'Zero-Rating' Schemes, Calls For New FCC Rules

Yelp, Etsy, Mozilla, Medium and Vimeo are among dozens of online companies calling for new rules that could affect how cable companies and telecoms charge for broadband service.

Specifically, the Web companies are asking the Federal Communications Commission to examine decisions by Internet service providers to exempt certain material from subscribers' monthly data caps -- a practice known as zero-rating. Typically, people who exceed their data caps are charged extra fees or throttled to slower speeds.

Data cap exemptions have become more prevalent in the last year. Currently, ISPs including Comcast, Verizon, AT&T and T-Mobile exclude at least some material from consumers' data caps, while Sprint will do so as of June 3.

"Zero-rating profoundly affects Internet users' choices," Mozilla, Yelp and others write in a letter to the FCC. "Giving ISPs the power to favor some sites or services over others would let ISPs pick winners and losers online -- precisely what the Open Internet rules exist to prevent."

Earlier this year, a coalition of advocacy groups also argued that zero-ratings schemes undermined net neutrality rules. "They present a serious threat to the Open Internet: they distort competition, thwart innovation, threaten free speech, and restrict consumer choice -- all harms the rules were meant to prevent," the Center for Media Justice, Daily Kos, Electronic Frontier Foundation, Free Press and others wrote to the FCC.

ISPs counter that data cap exemptions benefit consumers by enabling them to access a broad array of programs without incurring extra charges.

T-Mobile's Binge On exempts video streams offered by dozens of companies, including Netflix, HBO and YouTube, from data caps, but also throttles all video to 1.5 Mbps. Binge On is activated by default, but users can turn it off.

AT&T and Verizon zero-rate data from companies that pay to sponsor it, and in Verizon's case, from its own video service, go90. Sprint just this week said it will zero-rate soccer matches that are part of the Copa America Centenario soccer tournament, which takes place in June.

Comcast, which charges extra fees after customers in some markets hit a cap, doesn't count material from its online TV service Stream when calculating data usage. But the company also raised the monthly maximum to 1 TB -- which is high enough that it isn't likely to affect the vast majority of subscribers.

It's not known whether the FCC views those initiatives as problematic. The net neutrality rules prohibit broadband providers from blocking or degrading service and from creating online fast lanes. The regulations also broadly ban Internet service providers from engaging in conduct that interferes with people's ability to access Web content.

Zero-rating could potentially violate that prohibition depending on the circumstances. The FCC said last year that it intends to take a case-by-case approach to the question.

But Mozilla, Yelp and the other tech companies say case-by-case decisions aren't good enough. "ISPs have created a broad enough set of test cases that a decision on each of them would have much the same effect as a new rule, only without the same public participation and transparency," the companies write. "These decisions are too important to happen behind closed doors."

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