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FCC Chairman Says AT&T Sponsored Data Plans Warrant Watching

Tom Wheeler says the agency will take a look at anything that threatens to make the airwaves less open.

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Regulators may keep an eye on AT&T’s toll-free data plans after all.

AT&T, which announced its plans on Monday, has tried to characterize the move as simply another billing option and argued it shouldn’t raise net neutrality concerns because sponsored data will be treated with the same speed and priority as traditionally billed data service.

“Essentially it is a billing service,” AT&T wireless unit CEO Ralph De La Vega told Re/code on Monday. “That’s really all it is. It’s nothing to do with ‘Net neutrality’ principles.”

In a speech on Thursday, Federal Communications Commission chair Tom Wheeler was equivocal on how he viewed the service, saying that such efforts shouldn’t be barred out of hand, but also stressing the need to keep networks open for companies large and small.

“It is not the sort of thing that should be prohibited out of hand,” Wheeler said. “But, again, history instructs us that not all new proposals have been benign. There has to be some ability on the part of government to oversee, to assess, and, if warranted, to intervene.”

Consumer group Free Press spoke out against AT&T’s plans as soon as they were announced.

“Caps are supposed to help wireless carriers manage congestion,” Free Press policy director Matt Wood said in a statement. “But if getting a big check from another company suddenly makes AT&T’s congestion concerns go away, that shows data caps aren’t necessary in the first place. Caps are merely another way to pad AT&T’s profits.”

Free Press also argued that sponsored data could hurt smaller players that can’t afford to underwrite data costs.

“Content and app providers that can’t pay this new toll to reach customers will be at a huge disadvantage, and may never get off the ground in the first place if they can’t afford AT&T’s sponsor fees,” Wood said. “Letting the carriers charge more or less money to reach certain sites is discriminatory, and it’s not how the Internet is supposed to work.”

AT&T further defended the service on Thursday.

“AT&T’s sponsored data service is aimed solely at benefiting our customers,” AT&T public policy chief Jim Cicconi said on Thursday. “It allows any company who wishes to pay our customer’s costs for accessing that company’s content to do so. This is purely voluntary and non-exclusive. It is an offering by that company, not by AT&T. We simply enable it. The bottom line is that this can save money for our customers. We see no reason why this is not a good thing.”

“Also, we are completely confident this offering complies with the FCC’s net neutrality rules, which our company supports.”

Here are Wheeler’s comments in full on the subject.

The necessity for these policies and the wisdom of case-specific approaches to implementing them is demonstrated by a coincidental occurrence earlier this week. AT&T announced a mobile service offering that enables subscribing firms to cover the airtime costs of accessing their content. Based in part on the premise that consumers have more choices for mobile wireless service than for fixed, the Open Internet Order did not discourage this type of two-sided market for mobile uses. It also made clear, however, that the Commission would monitor these types of development carefully.

… It may well be that the kind of offering AT&T has announced enables increased competition and increased efficiency—both things that benefit consumers. It is not the sort of thing that should be prohibited out of hand. But, again, history instructs us that not all new proposals have been benign. There has to be some ability on the part of government to oversee, to assess, and, if warranted, to intervene.

Let me be clear about this. I am not advocating intervention unless there is an unmistakable warrant for it. I am not interested in protecting competitors from competition, nor am I interested in presiding over a festival of rent seeking. But I am committed to maintaining our networks as conduits for commerce large and small, as factors of production for innovative services and products, and for channels of all of the forms of speech protected by the First Amendment. We should not let these things be impaired.

This is all closely related to competition policy, of course. Competitive markets produce better outcomes than regulated or uncompetitive markets. We must protect competition where it exists. We must promote competition where it may not be fulsome.

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