FCC Not Ready to Judge AT&T’s Sponsored-Data Plan

President and CEO of AT&T Mobility Ralph de la Vega (L) joins Cisco Systems Inc. Chairman and CEO John Chambers as he delivers a keynote address at the 2014 International CES at The Venetian Las Vegas on January 7, 2014 in Las Vegas, Nevada. CES, the world's largest annual consumer technology trade show, runs through January 10 and is expected to feature 3,200 exhibitors showing off their latest products and services to about 150,000 attendees.
National Journal
Jan. 9, 2014, 5:42 a.m.

The Fed­er­al Com­mu­nic­a­tions Com­mis­sion will keep a watch­ful eye on AT&T’s sponsored-data of­fer­ing, but it is not ready to pass any quick judg­ments.

AT&T an­nounced a new of­fer­ing Monday at the Con­sumer Elec­tron­ics Show in Las Ve­gas that al­lows brands to sub­sid­ize data used by con­sumers to view their sponsored con­tent. The an­nounce­ment pro­voked an in­stant re­ac­tion among net­work-neut­ral­ity ad­voc­ates who fear it will cre­ate an un­level play­ing field.

“The an­nounce­ment of a sponsored-data pro­gram by AT&T puts it in the busi­ness of pick­ing win­ners and losers on the In­ter­net, threat­en­ing the open In­ter­net, com­pet­i­tion and con­sumer choice,” Rep. Anna Eshoo. D-Cal­if., said.

But the FCC wasn’t so quick to judge. The five com­mis­sion­ers ad­dressed the is­sue care­fully in two sep­ar­ate pan­els at the elec­tron­ics show on Wed­nes­day.

FCC Chair­man Tom Wheel­er said “we are ready, will­ing, and have leg­al jur­is­dic­tion to in­ter­vene,” but wants to see how AT&T’s of­fer­ing will de­vel­op first.

“My at­ti­tude is let’s take a look at what this is. Let’s take a look at how it op­er­ates,” Wheel­er said. “If it in­ter­feres with the op­er­a­tion of the In­ter­net, if it de­vel­ops in­to an an­ti­com­pet­it­ive prac­tice, if it does have some kind of pref­er­en­tial treat­ment, then that is cause for us to in­ter­vene.”

The four com­mis­sion­ers re­it­er­ated Wheel­er’s prudent ap­proach.

“I don’t want to pass reg­u­lat­ory judg­ment right now,” said Demo­crat­ic Com­mis­sion­er Mignon Cly­burn, who served as act­ing chair­wo­man for six months un­til Wheel­er’s con­firm­a­tion in Novem­ber.

Ajit Pai and Mike O’Re­illy — he two Re­pub­lic­an com­mis­sion­ers — were un­sur­pris­ingly hes­it­ant to make any judg­ment calls.

“We need to let things de­vel­op,” agreed Pai. “The FCC shouldn’t a pri­ori de­clare busi­ness mod­els out of bounds.”

The leg­al­ity of Open In­ter­net Or­der — es­tab­lished by the FCC in 2010 to co­di­fy the prin­ciple that all In­ter­net traffic should re­ceive equal treat­ment — is be­ing chal­lenged by Ve­r­i­zon in a fed­er­al Ap­peals Court. It is widely be­lieved that the D.C. Cir­cuit Court’s de­cision is im­min­ent, and many ex­perts ex­pect the court to strike down part or all of the open In­ter­net rules.

The FCC’s In­ter­net nondis­crim­in­a­tion rules only ap­ply to In­ter­net traffic and do not ex­tend to wire­less broad­band, but the prin­ciple holds. 

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