T-Mobile Defends Binge On, Seen a top FCC Zero-Rating Target

T-Mobile’s Binge On program, unveiled in November, allows subscribers to stream video from a wide number of services without that usage counting against the customer’s monthly data bucket (see 1511120045). In T-Mobile’s favor, the service has by all accounts proven popular, industry lawyers said. Revelations that Netflix throttled its transmissions to AT&T and Verizon (see 1603250050) -- though Netflix isn't covered by the net neutrality rules -- also makes going after T-Mobile more difficult, lawyers said. The FCC didn't comment Tuesday.

T-Mobile customers with limited data plans are watching twice as much video from free streaming sites as they did before Binge On was launched and have streamed more than 190 million hours of video for free, T-Mobile said Tuesday in a news release. T-Mobile also said Dailymotion, Epix, Nickelodeon, Spike and TV Land have been added to the companies that are participating in Binge On. “With Binge On, customers can watch all they want from more than 60 participating video providers without ever burning their high-speed data with an eligible rate plan and video subscription where applicable,” T-Mobile said.

A recent letter to the FCC by public interest and consumer groups called on the agency to find that all of the zero-rated telecom offerings violate net neutrality rules (see 1603280026). “T-Mobile zero-rates select video providers but only those that meet its substantial and sometimes burdensome technical requirements,” the letter said. “It also throttles all online video, a whole class of applications, while allowing other classes to reach the user without interference.”

Meanwhile, T-Mobile CEO John Legere questioned Tuesday in a video blog post whether AT&T and Verizon really didn’t know that Netflix transmission rates were being slowed to their subscribers for five years (see 1603250050). AT&T and Verizon didn't comment.

“Netflix has been getting all the heat while AT&T and Verizon sit silently or pretend to be outraged,” Legere said. “Seriously? Does anybody really believe the duopoly had no idea that their customers were getting 360p for the last five years. Nobody seems to want to ask them the tough questions like, ‘Did you know? If not, what are going to do about it now?’” Legere said Netflix's throttling makes another point he has been trying to make about Binge On, the carrier’s streaming service that offers video at 480p. “I’ve been saying all along that high-def on a small device is a waste of data,” he said. “No customers at AT&T and Verizon noticed for five full years.”

Public Knowledge Senior Vice President Harold Feld told us he would be surprised if the FCC did anything on T-Mobile's throttling without also addressing zero-rating complaints against AT&T, Comcast and Verizon. PK and Comcast have clashed on whether Comcast’s Stream TV service is a cable service or an over-the-top Internet service subject to the net neutrality rules (see 1603150051). Comcast has argued the service is regulated under Title VI of the Communications Act, not the common carrier provisions in Title II.

There doesn’t even seem to be a formal complaint against T-Mobile, Feld said, noting that last week’s public interest group letter was more generally about zero rating. “In addition to our complaint against Comcast, there were several thousand additional consumer complaints relating to Comcast's data cap and its zero-rating practice,” he said. “Frankly, I would hope the FCC would not ignore a rather blatant anti-competitive and anti-consumer practice where complaints are pending.”

"Once again Public Knowledge ignores simple facts," a Comcast spokeswoman said reacting to Feld. "Stream TV is not an Internet service, it never touches the Internet. It is a cable service that we pay franchise fees on and provide [public, educational and governmental] channels and closed captioning."

In testimony before the Senate Appropriations Committee Tuesday, Commissioner Ajit Pai said under net neutrality rules a service like Binge On can be seen as “innovative” one month and fall under investigation the next (see 1512170030).

Roger Entner, analyst at Recon Analytics, said the T-Mobile investigation points to bigger problems with net neutrality rules. “Outlawing zero rating is the first step of rate regulation as the commission is declaring that prices can't be zero, even when the only beneficiary is the consumer,” Entner said. “It would sacrifice consumer benefits and innovation on the altar of Title II net neutrality orthodoxy.”

“It would be ironic if the FCC zeroed-in (pun intended) on T-Mobile as the first target in what is likely to be an ongoing process to curtail the various zero-rating and sponsored data experimental models,” emailed Randolph May, president of the Free State Foundation. T-Mobile’s Binge On and music-oriented Music Freedom programs, “because of their popularity with consumers, appear to have strengthened T-Mobile’s ability to compete with AT&T and Verizon,” he said. T-Mobile’s throttling shouldn’t be seen as a problem because the practice was disclosed up front, he said. “Because the commission's 'general conduct standard' provides no meaningful guidance, unless reined in by the courts or Congress, the agency can pretty much do as it pleases.”

“The way the FCC goes about reviewing various zero-rated plans is likely to reinforce the need for restricting the commission’s regulatory actions to cases in which the agency can demonstrate a market failure and consumer harm,” May said. “That’s certainly not the case with zero-rated plans in the wireless marketplace."