An investigation launched by the FCC on January 17, 2017 concluded that AT&T and Verizon were in violation of the Open Internet Order and the Telecommunications Act of 1996 for providing favorable pricing for their zero-rate service to their in-house content providers. The service allowed providers like AT&T’s DirecTV to be accessed free of charge by the consumer, while other providers would have to pay a premium to offer their content for free through these networks.
On February 3, new FCC chairman, former Verizon lawyer, Ajit Pai rescinded the investigation, in favor of the zero rate programs. In order to stay competitive with AT&T and Verizon’s free content, third party content creators must also deliver theirs for free to the consumer. AT&T and Verizon currently own over 67 per cent of the United States network market, forcing most third parties to distribute their content through them. As most of them cannot pay the premiums charged by these networks, they must charge the consumer to view their content. The consumer will then gravitate to the free content delivered by the networks, effectively beginning the monopolization of the video distribution industry.
On March 1, 2017, both Verizon and AT&T announced they are going to expand their zero-rate services to encompass more of their own content. This will affect anyone who watches US video content, as independent content creators die off. It will also cause a stagnation in the industry as the amount of competition between content providers is drastically reduced. A handful of independent media sites have reported this story but very few have looked into the detrimental effects of the allowance on the American video content industry.
Jon Brodkin, “Under Ajit Pai’s FCC, Mobile ISPs Can Charge Tolls to Bypass Data Caps,” ArsTECHNICA, March 1, 2017, https://arstechnica.com/information-technology/2017/03/paid-data-cap-exemptions-can-still-be-big-despite-rise-of-unlimited-data/.
Steve Dent, “FCC: Verizon and AT&T ‘Zero-Rating’ Perks Harm Consumers,,” Engadget, January 12, 2017, https://www.engadget.com/2017/01/12/fcc-verizon-and-atandt-zero-rating-perks-harm-consumers/.
Jon Brodkin, “After Escaping Net Neutrality Probe, Verizon Expands Data Cap Exemptions,” ArsTECHNICA, March 9, 2017, https://arstechnica.com/information-technology/2017/03/verizon-exempts-fios-tv-streams-from-mobile-data-caps/.
Student Researcher: Joshua Diaz (University of Regina)
Faculty Evaluator: Patricia Elliott (University of Regina)