Executive Summary
In November 2015, T-Mobile, the third largest provider of mobile Internet access in the U.S., launched a new service called Binge On that offers “unlimited” video streaming from selected providers. Customers on qualifying plans can stream video from forty-two providers in Binge On – Netflix, Amazon, Hulu, HBO, and others – without using their data plans, a practice known as zero-rating. As currently offered, Binge On violates key net neutrality principles and harms user choice, innovation, competition, and free speech online. As a result, the program is likely to violate the FCC’s general conduct rule.
Binge On undermines the core vision of net neutrality: Internet service providers (ISPs) that connect us to the Internet should not act as gatekeepers that pick winners and losers online by favoring some applications over others. By exempting Binge On video from using customers’ data plans, T-Mobile is favoring video from the providers it adds to Binge On over other video.
T-Mobile says that it does not intend to become a gatekeeper on the Internet: It says Binge On is open to all legal video streaming providers at no cost, as long as they can meet some “simple technical requirements.” The idea is that any discriminatory effects of Binge On disappear as more providers join the program. However, the technical requirements published on T-Mobile’s website are substantial. They categorically exclude providers that use the User Datagram Protocol (UDP), making it impossible for innovative providers such as YouTube to join. They discriminate against providers that use encryption, a practice that is becoming the industry standard. While some providers can join easily, a significant number will need to work with T-Mobile to determine whether their service can be part of Binge On. Many will have to invest time and resources to adapt their service to T-Mobile’s systems. The smaller the provider, the longer it will likely take for T-Mobile to get to it.
The result: Binge On allows some providers to join easily and creates lasting barriers for others, especially small players, non-commercial providers, and start-ups. As such, the program harms competition, user choice, free expression, and innovation:
First, Binge On distorts competition. Research shows that customers prefer zero-rated content over content that uses their data plans. As a result, Binge On video is automatically more attractive to customers because it is zero-rated. Providers in Binge On enjoy a competitive advantage, not based on merit but simply because T-Mobile added them to its program. Video creators are also more likely to use Binge On providers over other platforms for their video content, further distorting competition. So far, T-Mobile has added only a subset of providers in each market category, giving these services an immediate advantage over competitors.
Second, Binge On limits user choice. Customers on T-Mobile’s lowest qualifying plan can watch unlimited video from Netflix and other Binge On providers until they reach their cap, but not more than 41⁄2 hours of video per month, or 9 minutes per day, from providers not included in Binge On. This is not a meaningful choice.
Third, Binge On stifles free expression. The forty-two providers currently in Binge On deliver mostly commercial video entertainment – not user-generated, educational or non-profit video. If T-Mobile continues to favor entertainment from commercial providers over other content, it turns the mobile Internet offered by T-Mobile into an optimal platform for commercial entertainment at the expense of all other speakers. This undermines the potential of the Internet as a democratic space for free expression.
Fourth, Binge On harms innovation. The Internet was built on a central principle: As long as innovators respect fundamental Internet standards, they can reach people all over the world at low costs. Binge On changes that. It requires video providers to work with T-Mobile to join Binge On and, in many cases, to change their service to meet the ISP’s technical requirements.
The above concerns are not hypothetical. Music Freedom, T-Mobile’s zero-rating program for music streaming, has created similar harms that continue today. T-Mobile has said that Music Freedom is open to all music streaming services since it launched the program in 2014. Although the program has grown from 7 to 40 providers, it still includes only a fraction of the more than 2,000 licensed online radio streaming services in the US. Some smaller services had to wait 11⁄2 years to be included; some never heard back from T-Mobile at all. In the past three months alone, Twitter users have asked T-Mobile to add at least 109 music streaming providers that are not yet part of the program. Regardless of T-Mobile’s intentions, it is not feasible for the ISP to immediately add every music provider that wants to join. So far, T-Mobile has at least in part focused on adding larger, more popular services first. While that is a rational business strategy, it distorts competition in a way that puts small players at a competitive disadvantage. Moreover, the program is limited to commercial providers as a matter of policy. As a result, Music Freedom has created lasting barriers for small players, non-commercial providers, and start-ups.
Even if T-Mobile could somehow add every single video provider to Binge On – large and small, commercial and non-commercial – the program would still violate net neutrality. Binge On favors video streaming over all other Internet uses, even those that use the same amount of bandwidth or less. As long as Binge On gives special treatment to video as a class, it undermines the vision of an open Internet where all applications have an equal chance of reaching audiences, and people, not ISPs, choose how to use the bandwidth available to them.
If left unchecked, Binge On leads us down a slippery slope. As other ISPs offer similar programs, the cumulative harms will change the Internet as we know it. More and more ISPs will become gatekeepers that pick winners and losers online, distorting competition for an increasing number of Internet users. Innovators will now need to work with ISPs around the world to join their zero- rating programs – all just for an equal chance to compete. Small players, non-commercial speakers, and start-ups without the resources to engage numerous ISPs across the globe will be left behind.
;">This will end the era of “innovation without permission” – an important principle that has allowed innovation to flourish on the Internet up until now.
Binge on in its current form violates net neutrality. However, T-Mobile could offer alternative innovative plans that benefit customers and allow the ISP to compete without violating net neutrality. For example, T-Mobile could offer customers a zero-rated low-bandwidth mode at the same speed as Binge On. Use of that mode would not count against the cap, but customers would be able to use this mode however way they choose: They could watch video or do anything else online. This plan is similar to Binge On in its current form but without the host of net neutrality concerns.
Alternatively, T-Mobile could allow customers unlimited access to the entire Internet after they reach their cap, just at a slower speed – the same speed currently offered through Binge On. After reaching their cap, customers could watch video or do anything else online; again it would be their choice. This option offers customers truly unlimited video, unlike Binge On. Contrary to advertising, Binge On video is limited: Customers can watch video included in the program only until they reach their monthly data cap through other Internet uses that are not zero-rated. As such, advertising Binge On as “unlimited” video might violate the FCC’s transparency rule, which requires ISPs to accurately describe their service. In contrast, this alternative option would allow T-Mobile to offer “unlimited video streaming” that stands up to its name and respects net neutrality.
Finally, T-Mobile could increase the monthly data caps on its capped plans to account for the average amount of video that people are watching. Customers could use that additional bandwidth to do anything online, including watching video. Again, it would be their choice. All of these alternative plans are entirely consistent with net neutrality.
In sum, Binge On violates key net neutrality principles that the Open Internet rules are designed to protect and creates harms to Internet openness that the general conduct rule is meant to prevent. Taken together, it is likely that Binge On violates the general conduct rule and is therefore illegal.
Read Full Story from Architecture & Public Policy http://cyberlaw.stanford.edu/publications/t-mobiles-binge-violates-key-net-neutrality-principles
This article by Center for Internet and Society originally appeared on cyberlaw.stanford.edu on September 13, 2016 at 12:09AM
