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FCC: we are watching sponsored data plans

The Federal Communications Commission has released specifics on its new net neutrality rules. There are lots of details to pore over. I gave the document a quick scan to see if it had anything to say about sponsored data plans—deals like T-Mobile’s “Music Freedom” plan in which ISP selected Internet radio services (Pandora, Spotify) don’t accrue towards your data limit. Apparently a lot of people commented on the question during the agency’s lengthy Open Internet proceeding. Not surprisingly then, the FCC has given the matter some thought, but is taking a watch-and-wait policy regarding the problem, at least for now.

On the one hand, the Open Internet Order explains, “evidence in the record suggests that these business models may in some instances provide benefits to consumers, with particular reference to their use in the provision of mobile services.” ISPs like T-Mobile and Verizon told the agency that the model boosts choice and lowers costs for consumers.

From the Order:

“Commenters also assert that sophisticated approaches to pricing also benefit edge providers by helping them distinguish themselves in the marketplace and tailor their services to consumer demands. Commenters assert that such sponsored data arrangements also support continued investment in broadband infrastructure and promote the virtuous cycle, and that there exist spillover benefits from sponsored data practices that should be considered.”

On the other hand, various parties argued against sponsored data plans, among them Public Knowledge and even NPR.

From the Order again:

” . . . some commenters strongly oppose sponsored data plans, arguing that ‘the power to exempt selective services from data caps seriously distorts competition, favors companies with the deepest pockets, and prevents consumers from exercising control over what they are able to access on the Internet,’ again with specific reference to mobile services. In addition, some commenters argue that sponsored data plans are a harmful form of discrimination. The record also reflects concerns that such arrangements may hamper innovation and monetize artificial scarcity.”

Bottom line, for the FCC:

“We are mindful of the concerns raised in the record that sponsored data plans have the potential to distort competition by allowing service providers to pick and choose among content and application providers to feature on different service plans. At the same time, new service offerings, depending on how they are structured, could benefit consumers and competition. Accordingly, we will look at and assess such practices under the no-unreasonable interference/disadvantage standard, based on the facts of each individual case, and take action as necessary.”

And what is the “no-unreasonable interference/disadvantage standard,” you may ask? Here is the definition from the Order:

“Any person engaged in the provision of broadband Internet access service, insofar as such person is so engaged, shall not unreasonably interfere with or unreasonably disadvantage (i) end users’ ability to select, access, and use broadband Internet access service or the lawful Internet content, applications, services, or devices of their choice, or (ii) edge providers’ ability to make lawful content, applications, services, or devices available to end users. Reasonable network management shall not be considered a
violation of this rule.”

At this point I can’t say I know how the FCC will handle the sponsored data question, but the Commission is obviously paying attention to the matter. That’s got to be a good thing.

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