FCC drops inquiries into zero-rated data

Just like that, the battle over zero-rated data is over.

The FCC issued a report last month saying that while zero-rated data services don’t necessarily run afoul of net neutrality rules “per se,” AT&T’s DirecTV and Verizon’s Go90 violate them because they allow the carriers to deliver their own content without having an impact on customers’ wireless data charges. That gives the carriers an edge over other video providers, because viewing content from third parties takes a toll on users’ monthly data allotments.

That report was issued while Tom Wheeler was still serving as chairman of the commission, however. The FCC has reversed itself under Ajit Pai, who succeeded Wheeler as chairman two weeks ago as Donald Trump was inaugurated. Wheeler left the FCC last month.

“Today, the Wireless Telecommunications Bureau is closing its investigation into wireless carriers’ free-data offerings,” Pai said in an official statement. “These free-data plans have proven to be popular among consumers, particularly low-income Americans, and have enhanced competition in the wireless marketplace. Going forward, the Federal Communications Commission will not focus on denying Americans free data. Instead, we will concentrate on expanding broadband deployment and encouraging innovative service offerings.”

Commissioner Michael O’Rielly also issued a statement (PDF) echoing Pai’s sentiments. The two Republicans hold a 2-1 majority on the Commission.

The FCC sent letters to Verizon, AT&T, T-Mobile and Comcast informing them that inquiries into their zero-rated offerings had been dropped, according to The Verge.

Zero-rated data became a key strategy for all four major U.S. carriers last year. T-Mobile was the first U.S. carrier to try to leverage zero-rated data in a significant way, first with its Music Freedom offering in 2014 and then a year later with Binge On for video, which has seen significant success. While Binge On has also drawn criticism over net neutrality concerns, T-Mobile’s policy of accepting content from any provider who meets certain technical criteria helps alleviate those issues.

But the model attracted more attention from legislators last year as Verizon and AT&T embraced it when they simultaneously moved more aggressively into digital media.

The green light will almost surely encourage carriers to continue to pursue zero-rated data strategies as they struggle to differentiate their offerings in a U.S. wireless market that has essentially plateaued. The looming question now is how quickly Pai’s FCC will work to loosen or reverse other Wheeler initiatives related to net neutrality. Today’s statement indicates that might occur soon.