T-Mobile, CTIA urge FCC to preserve zero-rating, give carriers flexibility under net neutrality

The FCC is set to vote on final net neutrality rules on Feb. 26, and T-Mobile US (NYSE:TMUS) and the CTIA are urging the agency to give wireless carriers a great deal of flexibility in designing new service plans and business models.

Meanwhile, both net neutrality proponents and detractors think that one component of the FCC's rules, which would govern future "general conduct" on the Internet is too vague. The general conduct rule would also put future uses of zero-rating and sponsored data programs under greater scrutiny. T-Mobile currently uses zero-rating for its Music Freedom program, which exempts many streaming music services from counting toward customers' data usage.

The FCC's general conduct rule will have seven elements to determine whether such offerings harm consumers and content providers, according to Reuters, which cited unnamed agency officials. However, carriers and ISPs want to change that general conduct rule because they believe it is too broad and too vague, according to FCC disclosures, filings, lobbyists and activists.

An FCC spokeswoman told Reuters that three of the factors are related to impacts on competition, innovation, and free expression. According to Reuters, the other four factors relate to broadband deployment and investments; whether carriers' actions are specific to some applications and not others; whether they comply with industry best standards and practices; and whether they take place without the awareness of consumers.

Carriers fear they may have to go to the FCC every time they want to launch a new service to make sure it complies with the FCC's rules, while net neutrality advocates worry the rules will be difficult for carriers and consumers to understand and that the rules could be administered arbitrarily.  

"A 'general conduct rule,' applied on a case-by-case basis with the only touchstone being whether a given practice 'harms' consumers or edge providers, may lead to years of expensive litigation to determine the meaning of 'harm' (for those who can afford to engage in it)," the Electronic Frontier Foundation, a net neutrality advocate, said in a filing submitted last Thursday.

In light of that debate, T-Mobile said that it "needs the flexibility to experiment with innovative, pro-consumer offerings to survive in a ferociously competitive retail marketplace dominated by  AT&T (NYSE: T) and Verizon (NYSE: VZ)," T-Mobile said, citing its Music Freedom offering. "Without the ability to offer services that provide unique value to our subscribers, T-Mobile would find it much more difficult to attract customers from our largest competitors. Music Freedom, and similar service offerings, should not be part of the Net Neutrality debate. T-Mobile does not receive compensation from any party for not counting music streaming traffic against data limits, does not grant music streaming traffic any priority or other special treatment, and does not favor any particular music streaming service over another. Yet, [FCC] Commissioner [Ajit] Pai recently stated that the proposed Open Internet Order casts doubt on the continued permissibility of this wildly-popular offering."

T-Mobile also said that the FCC should give carriers flexibility on what constitutes "reasonable network management." According to an FCC fact sheet, under the rules such practices must be "primarily used for and tailored to achieving a legitimate network management--and not commercial--purpose. For example, a provider can't cite reasonable network management to justify reneging on its promise to supply a customer with 'unlimited' data." That would seem to prohibit wireless carriers' ability to throttle the speeds of customers on legacy unlimited data plans simply because they are not on usage-based plans.

"Any definition of 'reasonable network management' must be sufficiently flexible to ensure that mobile broadband providers can manage their own networks to optimize service for all subscribers without concern over being continually second-guessed by third parties," T-Mobile wrote. "Moreover, while we understand the desire to ensure that network practices are tailored to achieving a legitimate network management practice, the rules should acknowledge that reasonable network management done for technical reasons is distinct from transparent, legitimate and permissible consumer-driven choices, such as T-Mobile's Simple Choice plans."

T-Mobile said tiered rate plans and allotments of particular speeds of service that customers choose "should not be swept away by a rule designed to define reasonable network management. These are business plans and practices designed to match consumers with their desired price point and service level, not network management practices done solely for technical reasons, and the Order must acknowledge and preserve this difference."

CTIA largely echoes T-Mobile's points and said the FCC "should state that data allowances, zero-rating, Music Freedom, and sponsored data are all pro-consumer features and should explicitly state that they are permitted under the new rules and standards, including the General Open Internet Conduct Standard. It is important for the Commission to recognize that existing pro-consumer practices are permitted under the new standard to provide some guidance as to how the standard will apply and to show good faith that future mobile innovation will continue to be encouraged."

CTIA also said new developments like Voice over LTE, LTE Broadcast, mobile healthcare and the Internet of Things should not be considered broadband Internet access services. "The Commission should make clear that these offerings are therefore not subject to Title II and any open Internet rules and standards," CTIA wrote. "In doing so, the Commission should explicitly note that the wireless industry's version of managed VoIP, VoLTE, is treated in the same manner as other managed VoIP services."

For more:
- see this Reuters article
- see this T-Mobile filing
- see this CTIA filing 

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