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FCC Puts the Brakes on 'Zero Rating'

By William Vogeler, Esq. on February 08, 2017 | Last updated on March 21, 2019

In what may be the first casualty of net neutrality rules, the new Federal Communications Commission announced it will not investigate internet service providers who may offer "zero-rating" data plans to customers.

The FCC notified AT&T, Verizon, T-Mobile and Comcast that the investigations the Obama administration started are over. The zero ratings investigations looked into whether the companies were violating net neutrality rules by not charging customers to use data with certain apps.

"These free-data plans have proven to be popular among consumers, particularly low-income Americans, and have enhanced competition in the wireless marketplace," FCC chairman Ajit Pai said.

Zero Times Pai

Pai, appointed by President Trump less than two weeks ago, had declared war on net neutrality rules when he was a commissioner with the FCC. While many issues face the incoming chairman, the debate over net neutrality has taken center stage.

In a speech last month, Pai reiterated his opposition to net neutrality rules reclassifying ISPs as "common carriers" under Title II of the Communications Act. He said he would take a "weed whacker" to some rules, having targeted certain regulations since they were enacted in 2015.

"I don't know whether this plan will be vacated by a court, reversed by Congress, or overturned by a future Commission. But I do believe that its days are numbered,'" he said in dissent at the time.

The FCC didn't ban "zero rating" practices in its net neutrality rules, but it reserved the right to investigate whether companies were using data limits for anti-competitive purposes. Under Pai, the companies are free to use the practice without FCC intervention.

Net in Neutral

Consumer groups argue that internet service providers have an unfair advantage over competitors who depend on internet access to provide products and services. Net neutrality advocates say all internet traffic should be treated equally, and it is not fair that ISP's can offer free data for the services they choose.

In a release, the FCC said the change will benefit consumers and businesses. The agency said it was committed to "permissionless innovation."

"While this is just a first step, these companies, and others, can now safely invest in and introduce highly popular products and services without fear of Commission intervention based on newly invented legal theories," Commissioner Michael O'Rielly said.

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