FCC Drops Investigation of Sponsored Data Plans in First Blow to Net Neutrality

New chairman Ajit Pai reverses course on so-called “zero rating” programs

The Federal Communications Commission announced Friday that it has dropped its investigation into “zero rating” data plans offered by wireless providers, dealing a first blow to the net-neutrality principles put in place by the Obama-era commission.

While zero rating plans allow consumers to stream mobile video without worrying about how much cellular data they’re using, net neutrality advocates are concerned they could be used as ways for certain companies to gain an unfair advantage by playing favorites with content.

“Today, the Wireless Telecommunications Bureau is closing its investigation into wireless carriers’ free-data offerings,” newly installed FCC Chairman Ajit Pai said in a statement on Friday. “These free-data plans have proven to be popular among consumers, particularly low-income Americans, and have enhanced competition in the wireless marketplace.”

The FCC had previously taken a look at zero rating plans offered by Verizon, AT&T and T-Mobile. AT&T uses zero rating to not charge its wireless customers for data they use while streaming DirecTV Now, the over-the-top service the company launched in November.

The FCC sent a letter to AT&T in December expressing competitive concern about zero rating, but with a new regime led by net-neutrality opponent Ajit Pai, CEO Randall Stephenson wasn’t worried about its longer-term prospects.

Stephenson’s confidence was rewarded with Friday’s statement.

“Going forward, the Federal Communications Commission will not focus on denying Americans free data,” Pai said. “Instead, we will concentrate on expanding broadband deployment and encouraging innovative service offerings.”