The WasteWatcher: The Staff Blog of Citizens Against Government Waste

Government Should Not Restrict Free-Data Plans

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


One only needs to look at the mobile phone bill of a connected teenager’s parent to know that mobile data use is on the rise.  Often driven by homework and school expectations, teenagers consume large amounts of mobile data performing classroom internet searches, video messaging their fellow students working on team assignments, as well as watching video streams and podcasts.  These activities are in addition to the music streaming and game playing one normally associates with teenage internet use.  For households with limited income, paying for data overages can often strain the family budget. 

Mobile providers are responding to consumer demand for more data by putting together options, such as zero-rating to help their customers receive the services they want without eating into their allotted data plan.  Zero-rating, also known as free-data, is where content “sponsors” or generators enter into agreements with service providers to pay for the data consumers use when accessing their content or services.  The content or services could include gaming apps, streaming video content, streaming music, or any other type of content that uses large amounts of data. 

Free data plans benefit consumers by providing them with services that are not charged to their account, allowing them to use their data plans for other purposes such as job hunting, shopping, and online research.  According to a May 8, 2016 report by the Multicultural Media, Telecom and Internet Council (MMTC), zero-rating is “poised to play a key role in helping to close the digital divide by addressing cost concerns and strengthening the value proposition offered to skeptical non-users, two key considerations for the millions of Americans who remain offline.”   

On May 24, 2016, the Federal Communications Commission (FCC) was asked to review zero-rating programs to determine whether such programs might violate the Open Internet Order.  Net neutrality proponents continue to demand FCC action to prevent providers from giving consumers free data, claiming that this service neutrality and “chills competition.”  Yet, nothing could be farther from the truth.  Free data offerings allow mobile providers to distinguish themselves from the competition and provides benefits to consumers.  AT&T now offers sponsored data to its subscribers, Verizon has Free Bee; and T-Mobile offers Music Freedom and Binge-on services.  It is apparent to anyone paying attention that competition in the mobile industry is alive and well.

This is not the first time the FCC has been asked to impose prophylactic restrictions on disruptive innovation.  However, the government should avoid restricting free-data plan offerings for consumers and allow the market to work out the best way forward to provide optimal benefits.

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