FCC Commissioner: Free Mobile Video Streaming Might Violate Agency Rules

FCC Commissioner Ajit Pai warned consumers that free mobile video streaming might be found in violation of the agency’s new rules and that a national broadband tax could soon pop up on consumers’ Internet bills.

Pai explained that programs such as T-Mobile’s “Binge On” program, which does not count video streaming toward users’ data plans, is currently under investigation by the agency for violating its “Internet conduct standard.”

Pai had sounded the alarm on the Internet conduct standard during the net neutrality debate, arguing that it would give the FCC a mandate to review business models and “upend” pricing plans that benefit consumers.

“It was a marked shift away from the era of permission-less innovation and, sure enough, the FCC is now hauling companies into our headquarters to justify their service plans,” Pai said at the Heritage Foundation.

Pai recalled the agency’s leadership, praising the “Binge On” program as “highly competitive and highly innovative” back in November.

“Just one month later, after pressure was applied by many of the same special-interest groups that demanded utility-style regulation in the first place, the FCC flip-flopped. It opened an investigation into whether Binge On violated the new Internet conduct standard,” Pai said.

“And now, net neutrality proponents claim that letting consumers watch online video for free is ‘discriminatory,’ ‘limits user choice,’ and ‘stifles free expression.’ Some even argue that such a practice, known as zero-rating, is a human rights violation,” he added.

Pai told the audience T-Mobile is not the only company under the FCC’s microscope.

“At least three other companies have received similar treatment. This episode has made clear that nobody can be certain that they’re complying with the rules if and when the political winds change direction,” he said.

Pai also warned the public to prepare for the FCC to impose a national broadband tax in the near future. He explained that every American with a phone bill currently pays a universal service fee, which is a tax on voice service collected by every telecommunications carrier. He said the same could happen for broadband.

“By reclassifying ISPs as telecommunications carriers last year, the FCC explicitly opened the door to the imposition of a universal service tax on Internet access. At the time, the FCC observed that it had already asked the Federal-State Joint Board on Universal Service to report by April 2015 whether and how the Commission should impose a broadband tax,” he said.

“One long year later, we still have no clarity. To be sure, we do know that the federal government and others are eager to dip further into consumers’ wallets, for the FCC has already decided to boost E- Rate spending by $1.5 billion per year,” he added.

Pai said the agency would soon “dramatically expand” the Lifeline program for low-income consumers to subsidize broadband.

“As I said one year ago, read my lips: The money to fund this spending spree will come from a broadband tax. The only question is when,” he said. “Thus far, all we’ve been told is that no decision on broadband taxes will be made until after the D.C. Circuit decides whether the FCC’s regulations are legal.”

Pai suspects the decision would ultimately be put off until after the November elections. He also said the FCC’s net neutrality rules have caused small ISPs not to invest more money in expanding broadband access.

According to Pai, KWISP, a wireless ISP, delayed network upgrades that would have increased speeds from 3 Mbps to 20 Mbps for 475 of its rural customers in northern Illinois. He also said Wisper ISP, which serves 8,000 customers around St. Louis, abandoned its plans to triple the number of new base stations it would deploy each month to provide broadband to new customers.

“I’ve heard similar stories from other small businesses over and over again. Remember, these are the companies many Americans rely on, or would like to, for competitive alternatives,” he said.