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Verizon has confirmed that any video streamed through its new Go90 service won't count towards the data plans of Verizon customers. That's bad news for Netflix, YouTube, and other competing streaming video services, which will continue to count against your data cap---unless perhaps those companies participate in one of Verizon's FreeBee program, which allows companies to underwrite their app's bandwidth costs on behalf of users.
The practice of exempting some internet usage from a data cap is known as "zero rating," and most major internet providers are now dabbling in one form of it or another. T-Mobile exempts video and music streaming from various partners through its Music Freedom and Binge On services. AT&T has been experimenting with various forms of sponsored data in recent years. Sprint's prepaid service includes some zero rated content. And Comcast allows viewers to watch its Stream TV service, which it classifies as a traditional cable television service, on their computers without having it count towards data limits.
Although these services certainly violate the spirit of network neutrality by allowing providers to give certain partners or themselves an advantage over competitors, zero rating isn't necessarily banned by the FCC's Open Internet Order. Instead, the FCC reserved the right to address data cap issues on a case-by-case basis, and there is also a "general conduct" provision that states that bans "unreasonable interference" with internet traffic. That may or may not be enough for the FCC to end zero rating.
Stanford Law professor Barbara van Schewick argues that in a paper on T-Mobile's BingeOn and Music Freedom programs that regardless of its intentions, T-Mobile prioritizes commercial entertainment video over other types of video as well as other internet use, including educational and non-profit use. This skewing of priorities is a violation of the FCC's general conduct rules, van Schewick argues, and is therefore illegal.
If van Schewick is right, then Verizon's move would surely be illegal, because it favors its own services, while T-Mobile at least claims to allow any music or video streaming provider to participate in its zero rating services.
Still, the FCC may have a hard time going after zero rating because the programs look, at least on the surface, as very customer friendly. No one likes the idea of internet fast lanes, but getting unlimited music or video streaming sounds like a good deal. One solution may be to force providers to provide unlimited data with all plans, but if that ends up raising rates, the FCC still end up looking like the bad guys. That could be why the FCC has yet to go after Comcast or T-Mobile over zero rating. But because Verizon's Go90 exemption so brazenly disadvantage's Verizon's own competition, the company may just force the FCC's hand.
