Sports fans just had quite a win. No, not just Patriots fans, but all fans of sports on-the-go are winners as a result of the recent decision of the Federal Communications Commission’s (FCC) Wireless Bureau to close an inquiry into the use of “zero rating” plans by mobile carriers. Such plans have proven popular with consumers, who can enjoy a host of streaming entertainment choices without having it count against their data plans. T-Mobile started the zero rating competitive battle with its Binge On program, and mobile rivals followed with their own plans: Verizon with the NFL Mobile app and Stream Pass (hosting a variety of sports programming), AT&T’s DirectTV and DirectTV Now, and Sprint with Copa América Centenario, to name a few. By closing its investigation into some of these, or similar plans, the FCC has assured that mobile consumers can continue to enjoy free data. But the inquiry process revealed one thing that the FCC should address sooner rather than later — the General Conduct Rule of the Open Internet Order used to evaluate the zero rating programs is dangerously vague and raises uncertainty in the marketplace that can depress innovation and competition.
The inquiry was stopped in part because it was started (with objection) in the waning days of former FCC Chairman Tom Wheeler’s reign. As Commissioner Mike O’Rielly noted, starting this complex and controversial inquiry into zero-rating programs was counter to congressional requests that the agency refrain from such endeavors until the change in administration. Chairman Ajit Pai (0) described the procedural reasons for the end of the inquiry (and the rollback of certain reports and actions) this way:
“In the waning days of the last Administration, the Federal Communications Commission’s Bureaus and Offices released a series of controversial orders and reports. In some cases, Commissioners were given no advance notice whatsoever of these midnight regulations. In other cases, they were issued over the objection of two of the four Commissioners. And in all cases, their release ran contrary to the wishes expressed by the leadership of our congressional oversight committees. These last-minute actions, which did not enjoy the support of the majority of Commissioners at the time they were taken, should not bind us going forward. Accordingly, they are being revoked.”
But there are more than procedural or oversight problems that stem from the regulatory attack on zero rating. To start, from a policy perspective, it is counterintuitive to maintain that attacking free data will somehow help consumers. How does someone convince consumers that free data is “bad” for them? To convince consumers that they don’t know what is good for themselves, zero-rated data has been described by some as violating net neutrality or, more accurately, the spirit of net neutrality. This is a rather broad policy assertion, and an even broader legal assertion, so clarification is useful. To be sure, zero rating plans were being evaluated under new regulations that were part of the Open Internet Order that ushered in the codification of net neutrality principles. In particular, as the Commission itself said it would be, zero rating was evaluated (in large part) under the highly controversial (1) General Conduct Rule.
The General Conduct Rule does not directly touch on any one of the four central principles of net neutrality — no blocking, no throttling, no paid prioritization and transparency. Rather, the General Conduct Rule is an invention of the FCC and a potential catch-all for yet-to-be-named things that the FCC may one day find to violate the Open Internet Order expressly or in spirit. But such a general, unknowable, and potentially varying “rule” creates great uncertainty in the marketplace. It means that certain businesses must ask permission to provide new services or offer services without knowing whether or not they might be found to violate net neutrality regulations after the fact.
The recent zero rating inquiry proved to be insightful in that it revealed what has been feared — that the General Conduct Rule is overly vague, and regulatory review under its authority is currently without a clear legal standard. If the General Conduct Rule is to stand, the FCC would do well to provide strong, clear guidance on exactly how it will be used in the future. For the moment, the Wireless Bureau’s decision to drop the inquiry into zero rating has saved the FCC from itself. Employing the rule to take away popular and innovative programs would have been an inauspicious start to its potential use.