Wireless Carriers Say 'Zero-Rating' Schemes Boost Broadband Adoption

Consumer advocates and Silicon Valley companies have repeatedly criticized broadband carriers for implementing "zero-rating" schemes that reward subscribers for accessing music and video from preferred companies.

The carriers accomplish this by excluding material offered by certain companies from customers' data caps. For instance, earlier this month, AT&T said it would exempt material streamed through the DirecTV app from wireless customers' caps. Verizon also recently launched the zero-rated video service go90, and T-Mobile rolled out Binge On, which doesn't count video streams from around 100 companies toward users' caps.

Subscribers have an incentive to access material through those preferred services, given that exceeding the monthly data cap typically results in higher fees. For that reason, consumer advocates and many Silicon Valley companies say data-cap exemptions violate the spirit of net neutrality. They argue that carriers shouldn't encourage consumers to use particular services, like DirecTV, especially at the expense of rival services like Netflix or Amazon.



"Zero-rating profoundly affects Internet users' choices," Mozilla, Yelp and others wrote to the FCC earlier this year. "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."

This week, wireless carriers defended zero-rating arrangements -- which the carriers call "free data offerings" -- to the Federal Communications Commission. The trade group CTIA argues to the agency that zero-ratings plans encourage people to adopt mobile broadband.

"Free data plans allow customers to use more of the services that they want to enjoy," the group writes.

The CTIA also argues that a survey it recently commissioned revealed that 84% of U.S. wireless customers were likely to try a new service that was part of a free data program.

For its part, the FCC hasn't taken a position yet on zero-ratings services.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.

Carriers could potentially violate that last prohibition by excluding certain material from data caps, but the FCC has said it will take a case-by-case approach to the question. Three months ago, FCC Chairman Tom Wheeler said the agency was still gathering information about zero-ratings services.

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