Trump's New FCC Chief Just Opened the Floodgates for Zero-Rating

How's that for a Friday FCC news dump?

President Trump's newly-installed Federal Communications Commission chief Ajit Pai moved to reverse several pro-consumer initiatives on Friday, including the agency's zero-rating review, prompting howls of protest from public interest advocates.

In a series of actions announced with no notice and little explanation, Pai began making good on his pledge to take a "weed whacker" to Obama-era rules—an effort that is likely to eventually include rolling back safeguards protecting net neutrality, the principle that all internet content should be equally accessible to consumers.

Pai's most high-profile action on Friday was to close the FCC's inquiry into zero-rating, the controversial telecom industry practice of exempting certain internet services from monthly data caps, effectively favoring those services by providing consumers with an economic incentive to use them instead of rival offerings.

Many open internet advocates say that zero-rating plans violate net neutrality by creating a discriminatory environment for certain online services. Last month, in one of its final actions under the Obama administration, the FCC released a report tentatively concluding that AT&T's zero-rating plan, which doesn't count the company's DirecTV video content against data caps, likely violates the agency's net neutrality rules.

Telecom giants like AT&T and Verizon argue that such plans are innovative offerings that benefit consumers. Pai's decision to close the zero-rating review, along with a related inquiry into Comcast's Stream TV service, now opens the floodgates for such plans to proliferate.

"Going forward, the Federal Communications Commission will not focus on denying Americans free data," Pai, who worked as a top Verizon lawyer earlier in his career, said in a statement. "Instead, we will concentrate on expanding broadband deployment and encouraging innovative service offerings."

Not surprisingly, AT&T cheered the closing of the zero-rating inquiry. "Today's announcement is a win for the millions of consumers who are reaping the benefits of services made available through free data programs," Joan Marsh, AT&T Senior Vice President, said in a statement. "We're pleased that these innovative products will be able to continue to flourish in the marketplace."

Among the flurry of Friday actions, the FCC also told nine telecom companies that they will no longer be able to offer low-cost broadband service to low-income people under the Lifeline program, reversing a decision made weeks ago by former FCC chairman Tom Wheeler. The agency also rescinded staff guidance that could have subjected TV station sales and transfers to greater scrutiny.

 "With today's action, Chairman Pai is undoing important work that promised to bring the benefits of broadband to low-income families, to put vertically integrated ISPs on notice against prioritizing their own content, and to send a message to broadcasters that covert consolidation won't be tolerated," said Matt Wood, policy director at DC-based public interest group Free Press.

"With these strong-arm tactics, Chairman Pai is showing his true stripes," Wood added. "The public wants an FCC that helps people. Instead, it got one that does favors for the powerful corporations its chairman used to work for."

Pai justified many of Friday's actions as necessary to roll-back so-called "midnight regulations" issued toward the end of the Obama Administration. "These last-minute actions, which did not enjoy the support of the majority of Commissioners at the time they were taken, should not bind us going forward," he said. "Accordingly, they are being revoked."

Mignon Clyburn, the sole remaining Democrat at the FCC, strongly objected to Pai's action. "Today multiple Bureaus retract—without a shred of explanation—several items released under the previous administration that focus on competition, consumer protection, cybersecurity and other issues core to the FCC's mission," Clyburn said in a statement.

"It is a basic principle of administrative procedure that actions must be accompanied by reasons for that action, else that action is unlawful," Clyburn added. "Yet that is exactly what multiple Bureaus have done today."

Wood, of Free Press, called Pai's actions "phenomenally hypocritical" in light of his comments earlier this week that promised increased transparency at the notoriously opaque FCC. "It took him just two days to break that promise."

"Today, Pai followed President Trump's lead by issuing his own types of executive orders, which undermine the democratic process, strip consumers of safeguards and rob millions of the neediest families of the help they need to bridge the digital divide," Wood added.

Although Pai did not act to begin rolling back the FCC's net neutrality policy on Friday, many open internet advocates and industry observers expect that process to begin in the near future. Pai, a former Verizon lawyer, has made no secret of his desire to dismantle the FCC's net neutrality rules, which he has characterized as an egregious example of regulatory overreach.