T-Mobile's Binge On Violates Key Net Neutrality Principles

In November 2015, T-Mobile, the nation’s third largest provider of mobile Internet access, launched a new service called Binge On that offers “unlimited” video streaming. T-Mobile customers on qualifying plans can stream video from the 42 providers currently in the program – Netflix, Hulu, HBO, Amazon Video, and others – without using their data plans, a practice known as zero-rating.

In recent weeks, Binge On has come under scrutiny for limiting all online video to a lower speed. Slowing down online video from all providers, regardless of whether the provider is part of Binge On, seems to violate the no-throttling rule adopted by the Federal Communication Commission (FCC) last year.

But T-Mobile's rate limiting is not the only cause for concern.

This morning, I filed a report at the FCC entitled "Binge On Violates Key Net Neutrality Principles" that offers the first comprehensive analysis of the zero-rating aspects of the program. The key findings: Binge On is harming competition, innovation, user choice, and free speech on the Internet. As such, the program is likely to violate the FCC's general conduct rule and transparency rule.

The report is tailored to help the FCC engage in its case-by-case evaluation of zero-rating as described in the 2015 Open Internet Order. There, the FCC decided not to take a position on zero-rating and instead to evaluate specific instances of the practice under the general conduct rule. The general conduct rule prohibits practices by Internet service providers (ISPs) "that harm Internet openness" by, for example, harming consumer choice, competition, innovation, or free speech online.

Binge On is one of several new zero-rating programs introduced by ISPs in the last few months. Comcast exempts Stream TV, its own Internet TV application, from customers’ data caps; all other online video applications continue to count against the caps. AT&T’s “sponsored data” program allows any provider to pay to have its content zero-rated. Verizon just announced a similar program.

Comcast’s, AT&T’s, and Verizon’s zero-rating programs raise clear net neutrality concerns. Comcast’s zero-rating favors its own online video service over all competing online video services – a textbook example of an ISP using its position as a gatekeeper to pick winners and losers online. AT&T’s and Verizon’s plans allow app providers to buy a competitive advantage, causing the same harms to Internet openness as charging companies to be in a “fast lane.”

The net neutrality implications of T-Mobile’s Binge On program are less obvious but nonetheless significant. Unlike Comcast, T-Mobile welcomes all video streaming providers to join its program. And unlike AT&T and Verizon, T-Mobile allows providers to join its program without paying a fee. As a result, Binge On seems on its face less harmful than these other zero-rated offerings.

But as my report shows, Binge On violates key net neutrality principles necessary to preserve Internet openness. It limits user choice, harms innovation, distorts competition, and stifles free speech online. Therefore, based on what we know about the program, Binge On is likely to violate the FCC’s Open Internet rules.

In sum, Binge On is aptly named – it feels good in the short-term but harms consumers in the long run.

You can find the full report and executive summary here or read some of the highlights below.

Note: The report has been updated to reflect the addition of four providers that joined Binge On yesterday. 

Report Highlights:

• T-Mobile is picking winners and losers online by making Binge On video more attractive than all other video. Research shows that people strongly prefer zero-rated content over content that counts against their cap. In a CTIA survey, 74% of users said that they would be more likely to watch videos offered by a new provider if the content did not count against their monthly bandwidth caps. When the online magazine Slate told some users that a podcast didn’t count against their cap, those who were offered the zero-rated podcast were 61% more likely to click on the link than those who were not offered it. By making Binge On video more attractive than other video, T-Mobile gives the video providers it adds to Binge On a competitive advantage.
• T-Mobile is constraining consumer choice. Net neutrality protects peoples’ ability to use the applications of their choice, but through Binge On, T-Mobile makes additional bandwidth available to consumers without allowing them to choose how to use that bandwidth. Instead, T-Mobile reserves it only for Binge On video. As a result, customers on T-Mobile’s lowest qualifying plan can watch “unlimited” video from Netflix and other Binge On providers, but not more than 4½ hours of video per month, or 9 minutes a day, from providers not in the program.
• There are substantial technical requirements for video providers to join Binge On. As a result, Binge On creates lasting harms to user choice, competition, innovation, and free speech. T-Mobile says that any video provider can join its program as long as they meet “simple technical requirements.” But these requirements are substantial: They categorically exclude providers like YouTube that use certain innovative protocols and discriminate against providers that use encryption and other technologies. The requirements are especially taxing for start-ups and small providers.
• Binge On changes innovation on the Internet as we know it. Until now, innovators could reach people all over the world at low costs. But Binge On requires video providers to work with T-Mobile to join on the program and, in many cases, to change their service to meet the ISP’s technical requirements. As more and more ISPs develop similar programs, innovators will need to work with ISPs around the world to join their zero-rating programs – all just for an equal chance to compete. Small players, non-commercial speakers, and start-ups without the resources to work with numerous ISPs will be left behind.
• These concerns are not hypothetical: T-Mobile’s other zero-rating program, Music Freedom, creates similar harms to competition and innovation. As with Binge On, T-Mobile opened Music Freedom to all music streaming services when it launched in 2014. Today the program has grown from 7 to 40 providers but still only includes a fraction of the more than 2,000 licensed online radio streaming services in the US. Some smaller services had to wait 1½ years to be included; some never heard back from T-Mobile at all. In the past 3 months alone, Twitter users have asked T-Mobile to add at least 109 music streaming providers that are not yet part of the program. The program has created lasting barriers for small players, non-commercial providers, and start-ups.
• Even if T-Mobile could somehow add every single video provider to Binge On – large and small, commercial and non-commercial – the program would still violate net neutrality. Binge On favors video streaming over all other Internet uses, even those that use the same amount of bandwidth or less. As long as Binge On gives special treatment to video as a class, it undermines the vision of an open Internet where all applications have an equal chance of reaching audiences and people, not ISPs, choose how to use the bandwidth available to them. 
• T-Mobile can offer alternative net neutrality-friendly plans that allow customers to “binge on” video or anything else they choose. The report describes three such options. For example, T-Mobile could offer customers a zero-rated low-bandwidth mode at the same speed as Binge On. Use of that mode would not count against the cap, but customers would be able to use this mode however way they choose: They could watch video or do anything else online. This plan is similar to Binge On in its current form but without the host of net neutrality concerns.
• Binge On video is not actually “unlimited:” T-Mobile might be violating the transparency rule. T-Mobile advertises Binge On as “unlimited” video streaming, but customers can no longer watch Binge On video after reaching their monthly cap through other Internet uses, like checking email or video conferencing. Customers need to understand the limits of Binge On in order to make informed choices about their Internet use or data plans. For example, customers who want to preserve the ability to watch Binge On video might decide to carefully monitor all other Internet uses to ensure they stay below their data cap. Some who frequently go over their cap might choose to upgrade to a plan with a higher cap. T-Mobile’s inaccurate advertising is likely to mislead customers and potentially violates the FCC’s transparency rule.