Ajit Pai, new Chairman of the United States Federal Communications Commission (FCC) recently closed down several investigations into zero-rating practices of Verizon, AT&T, T-Mobile, and Comcast. His predecessor Tom Wheeler was previously investigating the fairness of these data cap exemptions and their potential negative effects on the market. By the point Wheeler left the office in late January, the FCC already expressed concerns about AT&T and Verizon’s zero-rating policies, adding how they are potentially violating the Open Internet Order which established net neutrality rules in 2015. Apart from saying that Wheeler’s previous investigations won’t have any effect on future legislation, Mr. Pai also asserted that zero-rating enhances competition in the market, adding that the FCC won’t stand in the way of Americans and “free data.”
Some are interpreting Mr. Pai’s move as the first step towards reversing the Open Internet Order, which is something that the new FCC Chairman has previously talked about. While AT&T and Verizon aren’t the only two wireless carriers in the country with zero-rating policies, the FCC was previously scrutinizing their practices seeing how they didn’t allow competing services to be zero-rated on their networks without paying. Ajit Pai’s supporters are arguing that zero-rating benefits low-income consumers who are traditionally more reliant on wireless services, but their opponents are claiming that the way most wireless carriers are implementing this practice is anti-competitive. While zero-rating doesn’t directly violate net neutrality rules, it can do so if a wireless carrier refuses to zero-rate competing services. This notion is especially important in 2017 when virtually all carriers are investing into content production companies, meaning they have more incentive to zero-rate their own services at the expense of everyone else. The biggest argument here is whether such practices actively discourage consumers from using competing services. Wheeler believed they do, but Mr. Pai obviously doesn’t share his views.
That isn’t to say Ajit Pai will turn a blind eye if wireless carriers in the country start actively discouraging subscribers from using competing products, but as things stand right now, the new FCC Chairman is apparently willing to let the market evolve on its own without imposing any preemptive regulations. Time will tell whether that proves to be an effective strategy.