Reverse-Robin Hood Approach Helps Top 1%

WASHINGTON, D.C. —­­  A coalition of activist organizations that previously pushed the FCC to reclassify broadband service under Title II of the 1934 Communications Act has launched a new campaign urging its supporters to file complaints with the FCC against their ISPs over so-called “data caps” (basic data tiers) and zero-rating. The group claims that exempting certain websites and apps from data caps violates the rules laid out in the FCC’s Open Internet Order.

Battleforthenet.com also attacks wireless operators for either offering ‘sponsored data’ programs (Verizon and ATx&T) or reducing video quality to save on data use (T-Mobile).

“If you hate getting free data, then this is the campaign for you,” said Berin Szóka, president of TechFreedom. “It takes real chutzpah to attack data plans that help users avoid overage charges and ration their data. A recent Harris Poll found that 94% of millennials were more likely to use Internet services if they don’t count against their monthly data allowance, and 98% are more likely to stay with a provider that zero-rates such services. That’s why consumers are flocking to T-Mobile, where Binge On allows you to watch as much mobile video as you want.”

“Zero-rating is particularly crucial in helping to close the Digital Divide,” continued Szoka. “Wireless bandwidth is naturally more scarce than fixed broadband. Minority and low-income users disproportionately rely on mobile plans, as having both a fixed and wireless connection can be cost-prohibitive. As the Multicultural Media, Telecom and Internet Council notes, ‘Zero-rating is also 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.’”

“This is really an attack on differentiated data plans in general,” continued Szoka. “So-called ‘consumer advocates’ are saying that the only data plan worth having is unlimited — as if paying for what you use is somehow unacceptable in Internet land.  Apparently it’s ‘progressive’ to want the top 1% of users who burn through fifty times more data than their neighbors to pay the same monthly rate for broadband. Even the FCC’s 2010 Open Internet Order recognized that ‘prohibiting tiered or usage-based pricing … would force lighter end users of the network to subsidize heavier end users.’ This is Robin Hood turned upside down.”

Comcast recently raised its basic data tier from 300 GB to 1,000 GB — a threshold so high that only the top 1% of power users will ever exceed it. Comcast charges a mere $10 for an extra 50 gb/month. So if a typical home pays $80/month but uses only 60 gb, they’re paying $1.33/gig, while a power user who uses 1000 gig pays just $.08/gig — sixteen times less.

Netflix estimates that standard video streaming consumes 1 GB/hour and high-definition streaming takes 3 GB/hour. So Comcast’s old ‘cap’ was enough for 10 hours/day of SD, or 3.33 of HD — and additional HD streaming would effectively cost $.60/hour. But a terabyte basic data tier means ten hours of HD/day (and 33 hours of SD).

“The claim that such high data tiers stop consumers from switching to Internet video services is preposterous,” concluded Szóka. “Is anyone really going to be deterred from abandoning their cable video subscription by such generous data plans? Usage-based pricing isn’t about blocking video competition, it’s simply about basic fairness in pricing for broadband: the heaviest users should pay more.”

The FCC recently coerced Charter and Time Warner Cable into offering unlimited data plans for seven years as a condition of their merger. Szóka concluded: “Given the close coordination between the FCC and these activist groups, there’s every reason to think that this campaign was encouraged by the FCC — to give Chairman Wheeler cover for backing off his tepid praise for zero-rating in 2014 and the FCC’s full-throated endorsement of usage-based pricing in 2010.”

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We can be reached for comment at media@techfreedom.org. See more of our work on net neutrality and Title II, including:

  • A statement explaining how net neutrality absolutism hampers efforts to connection the developing world
  • A blog post explaining how Netflix’s throttling controversy reveals the incoherence of the FCC’s net neutrality rules
  • A summary of our opening brief challenging the FCC’s Open Internet Order
  • A statement on why we’re challenging the Open Internet Order in Court

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