O'Rielly: FCC Zero Rating Inquiry Has Chilled Offerings

Says worried lawyers shouldn't be deciding tech winners and losers
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FCC Commissioner Michael O'Reilly says industry execs have told him some innovative broadband offerings have stayed on the drawing board thanks to the threat of FCC action on zero rating plans.

That came in a speech to the International Bar Association.

O'Rielly pointed out that after declaring T-Mobile's Binge On "highly innovative and highly competitive," FCC Chairman Tom Wheeler then launched an investigation into that and other zero-rated services--which don't count toward data usage plans.

With no resolution of that investigation in 10 months, O'Rielly said, such zero rated offerings are "under a perpetual cloud of doubt where the Commission can dictate – apparently at any time – that the provider terminate the offering and, adding insult to injury, potentially be sent to the FCC’s Enforcement Bureau for staggering penalties."

Given that threat, he said, "I have had conversations with industry participants that withheld new offerings because it isn’t worth being caught up in an FCC investigation," adding: " One company told me that their engineers came up with some new interesting ideas that were shot down almost immediately by their general counsel because of this rule."

He joked that, no offense to the audience, but lawyers should not be dictating tech winners and losers.

The FCC is investigating zero rating under its Open Internet general conduct standard, a way for the FCC to go beyond its no blocking or degrading bright-line rules to look at practices that might also be potentially anticompetitive or disrupt the virtuous cycle of edge provider to Web surfer--the ISPs are considered the potential snakes in that garden of online delights.

O'Reilly is no fan of the standard, either. He said that while it is better than an outright ban on zero rating, the "mother-may-I approach to regulation [is], at best, going to cause marketplace uncertainty and delays and, at worst," as he suggested had already been demonstrated, would "result in new and innovative offerings never seeing the light of day."

wheeler has likened the general conduct standard with a flag that the referee can throw, or not throw, depending on the particularly circumstances. But O'Reilly says: "Clearly, it’s impossible for companies to keep in compliance and avoid regulatory 'flags' when the overall game is not explained in advance."

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