Binge of Regulation: Wireless Pricing and the FCC

Wireless data caps, the annoying limits on how much data you can use from your phone, have been a fact of mobile life for several years. Now, a new pricing concept in the wireless marketplace, known as “zero-rating,” promises to relieve consumers of the fear that streaming one too many videos will trigger extra charges. But, instead of receiving plaudits, zero-rating has come under attack by many pro-regulation advocates as a violation of the network-neutrality rules adopted by the Federal Communications Commission (FCC) in 2015. The controversy underscores the danger that the FCC’s rules—which are now under review in federal court—pose for consumers and the growth of the Internet.

It is unclear how the FCC will ultimately view zero-rating. The good news for T-Mobile is that FCC chairman Tom Wheeler has said that he thinks Binge On is “highly innovative and highly competitive.” No official decision has been made, however, as the FCC staff continues to investigate the offering. Little has been said regarding AT&T and Verizon’s planned fee-based plans.

A rejection of zero-rating plans would be bad for consumers, who could benefit from the programs. Equally disturbing is the subjective, extemporaneous nature of the FCC’s decision-making process, which would create unpredictability, forcing firms to go to the FCC for permission before adopting any new practice. In a dynamic marketplace, outside-the-box innovation should be the rule, not the exception. The question is whether the FCC can pass judgment on each such innovation without stifling dynamism.

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