FCC to monitor AT&T's 'Sponsored Data' toll-free data plans, could intervene

LAS VEGAS--FCC Chairman Tom Wheeler said the commission will observe AT&T Mobility's (NYSE:T) new toll-free data plans, which allow partners to subsidize consumer data, to ensure that they are not anticompetitive.

"My attitude is: Let's take a look at what this is, let's take a look at how it operates," Wheeler said during an appearance Wednesday here at the 2014 Consumer Electronics Show, according to The Verge. "And be sure, that if it interferes with the operation of the Internet; that if it develops into an anticompetitive practice; that if it does have some kind of preferential treatment given somewhere, then that is cause for us to intervene."

Under the new plans, called "Sponsored Data," data charges resulting from certain times of usage will be billed directly to the sponsoring company, and not AT&T customers. AT&T said subscribers will see the service offered as AT&T Sponsored Data in their devices' status bar, and it will appear on their monthly invoice as Sponsored Data. AT&T said the new service will be available this quarter.

AT&T has noted that Sponsored Data will be delivered at the same speed and performance as any non-Sponsored Data content. However, net neutrality advocates, including representatives from public interest groups, have argued against such toll-free plans, saying that they will favor rich and large content companies over smaller ones.

"It is time for the FCC to heed Public Knowledge's over two-year-old call to investigate data caps and gather basic information about their use," the group's acting co-president, Michael Weinberg, said earlier this week, according to Bloomberg BNA. "It is impossible for the FCC to examine the impact of today's announcement on net neutrality until it develops an understanding of data caps."

The FCC's net neutrality rules prohibit wireless carriers from discriminating against content. However, the rules go light on wireless carriers, which do not face the same restrictions wired operators do on blocking Web traffic and other applications--a ban on unreasonable discrimination in transmitting lawful network traffic. The rules were a key piece of former FCC Chairman Julius Genachowski's legacy, but have been challenged by Verizon Communications (NYSE:VZ) in federal court. That case is ongoing.

Here at the CES show, T-Mobile US (NYSE:TMUS) CEO John Legere used an expletive to explain his opposition to AT&T's Sponsored Data plans.

For companies to avoid raising the ire of the FCC over violating net neutrality rules, Wheeler said "you won't screw up operation of the Internet, you won't act in anticompetitive or preferential ways." He added: "We'll use those kinds of tests to see what the appropriate response [from the FCC] will be, if any."

For more:
- see this The Verge article
- see this Bloomberg BNA article

Related Articles:
AT&T's Sponsored Data service isn't a threat, it's an innovation
AT&T to launch 'Sponsored Data' toll-free data plans
Verizon's Shammo: Toll-free data still faces hurdles
AT&T's Stephenson: Content players will subsidize consumer's data

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