FCC Must Strike Balance Between Enforcing Net Neutrality and Encouraging Innovation

The commission is now starting to examine new offerings by three ISPs, a move that could help clarify the line between promoting competition and improperly tilting the online playing field.

by Los Angeles Times / December 29, 2015
Tom Wheeler, FCC Chairman Flickr/ALA Washington Office

(TNS) -- Innovation is a good thing — unless it's done to fend off rivals or gouge consumers. And when you're a broadband Internet service provider in a market with little or no competition, you're in a position to use new products and services to enrich yourself, not to improve your customers' experience.

That's why the Federal Communications Commission adopted net neutrality rules in February to prevent ISPs — the cable and phone companies that sell cable modems and DSL, and the mobile carriers that sell wireless broadband — from misusing their control over the virtual pipe connecting consumers to the Internet. The challenge has been to strike the right balance between giving ISPs room to innovate and stopping them from interfering improperly with consumers, websites and online services.

The commission is now starting to examine new offerings by three ISPs, a move that could help clarify the line between promoting competition and improperly tilting the online playing field.

One is T-Mobile's “Binge On” initiative, which allows customers to watch unlimited videos from participating sites with no data charges. T-Mobile says that any site can be included for free in Binge On and exempted from data charges, which presumably would make it more appealing to mobile users with limited data plans. At the same time, the initiative reduces the picture quality for all high-definition video streams — even those from sites that aren't participating — to standard definition (that is, DVD quality) for Binge On consumers. And the vast majority of T-Mobile customers automatically became Binge On consumers when T-Mobile launched it last month.

The advantage for consumers is that they can watch far more video on the mobile network without exhausting their monthly data allowance. Nevertheless, some critics — most notably Google's YouTube, which is not participating in Binge On — complain that T-Mobile violated the FCC's rules by converting high-def streams to lower-resolution ones without the content provider's permission. They also complain that T-Mobile didn't disclose enough to consumers and websites about what it was doing.

Transparency is a must for any new offering, as is the ability of consumers and sites to decide whether to be included. Yet the commission needs to recognize that Binge On's primary effect is to help T-Mobile compete with Verizon Wireless and other mobile phone networks, not to favor the sites that participate in Binge On over the ones that don't.

Another new offering is by Comcast, whose “Stream TV” service lets Internet customers sign up for a stripped-down version of cable TV delivered to their home computers without the usual limit on the amount of data consumed. Comcast says it's simply trying to sell a TV service through its cable wires to Internet-centric customers who may not own a TV. But critics say that by exempting Stream TV from the data caps it is trying out in some markets, Comcast is giving itself an unfair advantage over online services that are subject to the data caps.

Comcast argues that the data caps don't apply to Stream TV because it's being delivered through bandwidth that's not part of the broadband service. A better question for the FCC, though, is whether Stream TV is competing directly with multichannel video services online, such as Dish's Sling TV. If so, it would seem anti-competitive for Comcast to impose data caps or other bandwidth constraints that put its online rivals at a disadvantage without offering any benefit to consumers.

The third offering is by AT&T Wireless, whose sponsored data program invites content providers to pay the data fees that AT&T would charge customers for streaming that content. The benefit to consumers is obvious: the ability to send and receive more data on their mobile devices without incurring extra charges. But the FCC should explore how consumers may also be harmed if the program damages fledgling sites and smaller online players that can't afford to pay to sponsor data.

ISPs have challenged the commission's neutrality rules in court, arguing that they exceeded the agency's authority and set too vague a standard for future conduct. But new services often raise novel issues that are best judged on a case-by-case basis. The agency has teed up the first three, which should put some flesh on the bones of its latest rules.

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