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Why Zero Rating & Flexible Pricing Options Are Just & Reasonable to FCC

Always be careful what you ask for, because you might get it.

Net neutrality absolutists demanded Title II regulation of the Internet in hopes of getting the “strongest possible” net neutrality rules.

They imagined Title II to be their ultimate tool and power to enforce whatever they want to redefine net neutrality to be, whenever they want to redefine it: e.g. no paid-prioritization, no zero rating offerings, no usage-based pricing, etc.

Never mind the nettlesome fact, that net neutrality, as a term, principle or concept, can’t be found in U.S. law.

And never mind the nettlesome Title II reality, that decades of FCC/court precedents have established that economic price discrimination can be, and often is, legally just and reasonable.  

Net neutrality absolutists had to learn in Comcast v. FCC that the FCC could not enforce net neutrality without prior net neutrality rules.  

They learned the FCC did not have the legal authority to ban commercially reasonable market behaviors in Verizon v. FCC.

Now they appear on path yet again to learn in USTelecom v. FCC that the FCC does not have the authority to ban paid prioritization given that the FCC and the courts have never found it just and reasonable to compel a carrier to provide a service permanently for a price of zero.

Apparently net neutrality absolutists are desperate to find or manufacture a new net neutrality “problem” because their complaints against zero rating offerings like T-Mobile’s “Binge On,” AT&T’s “Sponsored Data,” or Verizon’s “FreeBee Data,” are fed with pretty thin gruel.

Apparently they also realize that it is PR thin ice to jump up and down in opposition to competitive companies giving consumers more choices to get more data for less cost, because isn’t that exactly what competition is supposed to produce?

That’s why those complaining about zero rating offerings are defaulting to their triple-carom-shot fear, and patently un-provable assertion, that broadband pricing freedom like zero rating, threatens to “tilt the playing field” in favor of big companies at the expense of entrepreneurs and start-ups.  

Opponents of zero rating plans are increasingly looking like self-appointed barking guard dogs that chase and “catch” a car driving by, only to keep chasing and barking because they belatedly realize there is nothing else they can do.  

Why?

For decades FCC/court Title II precedents have determined multiple forms of economic price discrimination to be in the public interest under Title II regulation.  

Remember Title II was originally a law to regulate a government-sanctioned, national telephone monopoly. And the FCC established and the court affirmed that even a monopoly had the right to many pricing freedoms to operate a profitable business under Title II regulation.

How could the FCC possibly find that competitive companies could not price like a monopoly could price?

Consider just some of the many forms of economic price discrimination the FCC and courts have long ruled commercially reasonable: economic price discrimination between local service and long distance; between instate and interstate long distance; between different countries; between low and high volume users; between business and consumers; etc.

And Title II for decades has allowed and encouraged zero rating, toll-free plans like 1-800 sponsored phone service.

So be careful what you ask for.

Net neutrality absolutists asked for Title II regulation of the Internet, and now they are in the process of learning that Title II is ironically and actually a powerful legal protection against them getting the FCC to ban a zero rating offering because that likely would be found unjust and unreasonable under longstanding FCC/court precedent.

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Scott Cleland served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration. He is President of Precursor LLC, a research consultancy for Fortune 500 companies, and Chairman of NetCompetition, a pro-competition e-forum supported by broadband interests.

 

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