An interview with Evan Swarztrauber, communications director at Tech Freedom.
T-Mobile’s successful new offering “Binge On” is shaking up the mobile industry. Yet it is unclear whether the offering is legal under the Federal Communication Commission’s Open Internet Order, which reclassified broadband under 1930s-era rules designed for the telephone monopoly—in the name of preserving “net neutrality.” The FCC is currently investigating the question. In other words, T-Mobile could be in trouble for giving away free data to its customers. Evan Swarztrauber, the communications director at Tech Freedom, explains:
JM: What exactly is Binge On?
ES: Most Americans have a monthly limit on how much mobile data they can use, whether it is two gigabytes, five gigabytes, etc. Binge On allows T-Mobile customers to stream unlimited video, from an ever-increasing number of providers, without that data consumption counting against their monthly cap. The program includes major players such as Netflix and ESPN, but also some lesser-known services, including Crackle and Newsy. The platform is neutral — any video streaming service that meets the technical specifications can participate.
JM: Unlimited video sounds like a big undertaking for a wireless network. How can T-Mobile afford to do this?
ES: The biggest driver of wireless network congestion is the exploding demand for video streaming, as more and more consumers watch television and movies on their phones. With Binge On, T-Mobile reduces video resolution to optimize it for smartphone screens. While the change in video quality is hardly noticeable to a consumer, as 480p (DVD-quality) streams look great on small screens, the optimization helps T-Mobile mitigate network congestion and improve overall customer experience.
JM: Sounds like I may have to switch to T-Mobile. In the face of these benefits, why do groups such as the Electronic Frontier Foundation (EFF) oppose this new offering?
ES: The FCC’s Open Internet Order codified certain principles of net neutrality for broadband providers: no blocking of lawful content, no unreasonable discrimination or throttling, and no paid prioritization. But it did not make a clear judgment about free data given away through zero-rating programs, which include Binge On. Instead, the FCC said it will judge these offerings on a case-by-case basis. Net neutrality, in its most extreme form, requires that all Internet traffic be treated exactly the same with few, if any, exceptions. Under this interpretation, any type of zero-rating should not be allowed at all. This is why some self-styled “consumer advocacy” groups oppose Binge On.
In other words, T-Mobile’s exemption of video streams from data caps is not the issue that EFF is fighting. EFF argues that when T-Mobile optimizes or downgrades video quality, it is in violation of the FCC’s no-throttling rule.
JM: I take it throttling means lowering the quality of some data transmission?
ES: Essentially, yes. It would be like your Internet provider turning your data faucet almost all the way off so that only a steady drip comes through.
JM: So is Binge On’s model actually illegal?
ES: At this point, it is not clear. We have to wait for the FCC to decide. Experts on different sides of the political spectrum are unsure whether Binge On violates the no-throttling rule. It depends on how you resolve the ambiguity in the regulation. And besides, T-Mobile is not forcing any of its customers to use Binge On; while the option is turned on by default, customers can simply turn it off.
The underpinning of the net neutrality movement was always, ostensibly, about consumer empowerment. If T-Mobile is offering consumers a simple choice, “Binge On or Binge Off,” then it should not be a violation of the rules. If Binge On turns out to be a violation, then this will be the perfect example of how the FCC’s regulations are discouraging innovation and hampering the ability of the nation’s third-largest wireless carrier to compete with the market leaders, Verizon and AT&T.
JM: This is my main problem with intrusive Internet regulation. Regulators are prescribing solutions for non-existent, or at least hypothetical, problems. In doing so, they are threatening the growth of a shining spot in today’s economy. Making the Internet one-size-fits-all is no way to promote a dynamic market.
ES: Absolutely, and how the United States regulates the Internet has an outsized effect on what happens in the rest of the world. If T-Mobile loses on Binge On, it is an unfortunate loss for consumers, but it will not necessarily devastate the American Internet ecosystem, where most of us have access to high-speed options.
But U.S. elites have been exporting their vision of a one-size-fits-all Internet to the developing world, where zero-rating is crucial to connecting the roughly four billion people who still lack access to broadband. The premier example of this dynamic is Facebook’s offering, Free Basics (formerly known as Internet.org). Facebook works with wireless carriers to offer a free, stripped-down version of the Internet to low-income people around the world. The company sees its offering as an on-ramp to the full Internet, and, indeed, 50 percent of Free Basics users go on to purchase full Internet access within 30 days. For those that do not, Free Basics continues to provide access to vital resources such as municipal and healthcare websites.
Sounds great, right? Well, not so fast. This week, India’s telecom regulator shuttered Free Basics over concerns raised by net neutrality activists. Only 20 percent of India has Internet access. And while many on Twitter are cheering the Indian government’s ruling for taking a bold stand for net neutrality purism, 80 percent of the country cannot even participate in that discussion, since those people are not connected. It is a shame that so many people in India will go without Internet access because Indian regulators were swayed by Western academics and so-called “public interest” groups. This is really a case of First World concerns trumping Third World problems.
JM: So what are the chances that the FCC takes down Binge On?
ES: For now, the FCC is merely investigating zero-rating programs. Its letters of inquiry may seem benign, but they are anything but that. Companies such as T-Mobile and Comcast have the lawyers necessary to navigate the FCC’s confusing web of rules, but smaller companies may just give up on providing potentially innovative offerings to avoid tangling with regulators. While the FCC might not fully shut down Binge On, especially while its net neutrality regulations are mired in court, it may extract concessions from T-Mobile. We have seen this type of extortion from the Commission before, most recently in its review of the AT&T-DirecTV merger. It would not be surprising if the agency uses its bully pulpit to modify Binge On through intimidation and threats. Of course, this entire debate might shift dramatically if the FCC’s Open Internet Order goes down in court.
JM: This is another war against consumer empowerment, in the name of consumer empowerment. Not only are regulators always at least one step behind innovators, but their vague language stands in the way of innovation and competition. If the FCC rules against T-Mobile, it will serve as another example of regulators myopically focusing on one objective, while ignoring all the nuances and negative consequences of their crusade.
For readers who want to learn more about this issue, and other government attempts to stymie technological progress, check out TechFreedom.org and subscribe to its Tech Policy Podcast. For more on Binge On, you can listen to Episode 9, which delves into the controversy over zero-rating. To follow Evan on Twitter, click here.
This piece originally appeared in Forbes
This piece originally appeared in Forbes