Most of the time, rumors about tech companies’ moves are about hardware makers, not wireless carriers. But rumors have been flying about an interesting development at T-Mobile, which is largely responsible for catalyzing better prices and plans across mobile networks, and just surpassed Sprint to become the third-largest wireless carrier in the United States. The subject of those rumors? A report that the carrier will let users stream certain services, like Netflix and HBO Go, without the data counting toward the limit on their plans.
As Nick Statt reports for The Verge, the rumor proved true, and T-Mobile announced the plan, called Binge On, at its 10th Uncarrier event. It builds on the carrier’s Music Freedom program — which enables users to stream unlimited music from nearly three dozen apps, including Spotify, Pandora, and Rhapsody without the data usage counting against the user’s data limit. Binge On includes 24 streaming video services, including Netflix, HBO GO and HBO Now, Hulu, and Sling TV. YouTube and its paid subscription service YouTube Red are conspicuously absent from the list of eligible services.
T-Mobile chief executive John Legere headed off the criticism that’s sure to come by announcing that any company can apply to join the Binge On program. “Anyone who can meet our technical requirement, we’ll include,” he explained. “This is not a net neutrality problem.” Binge On doesn’t cost consumers anything extra, and will be automatically activated for every T-Mobile customer with a 3GB or higher data plan on November 20.
CNET’s Marguerite Reardon characterizes the move as the boldest yet of T-Mobile’s Uncarrier campaign, noting that for more than two years, the company has rolled out a series of customer-friendly offers and services under the Uncarrier campaign, from eliminating contracts to offering free international data. Reardon notes that so far, the strategy has paid off, and T-Mobile has added more subscribers than its competitors in the past few quarters.
Binge On sounds user-friendly, but the issue of special treatment for specific kinds of data is more complex
Fixing the annoyance of how easy it is to use up your data by streaming movies or music could be one of T-Mobile’s most expensive Uncarrier moves so far. Video, in particular, is one of the most bandwidth-intensive applications on the Internet, and giving customers unlimited access to streaming content could drive up costs for the carrier as new subscribers switch to its network to take advantage of this offer and the Music Freedom program.
But Tim Fernholz reports for Quartz that the move to exempt streaming services from data caps could provoke the ire of U.S. telecom regulators. Regulators ruled earlier this year that mobile network operators need to abide by the same rules as broadband cable operators, which means that special treatment for specific kinds of data usage is prohibited. “No blocking, no discrimination, no paid prioritization, as the mantra goes,” Fernholz explains.
A growing concern for mobile regulators is zero-rating, the practice of allowing certain kinds of data to be exempt from data caps that determine how much a user is charged for a connection, and sometimes the quality of that connection. Many open Internet advocates question zero-rating, but the FCC ultimately decided to deal with it on a case-by-case basis — which essentially means waiting to deal with it until market participants or consumers complain.
In developing markets, zero-rating has enabled mobile operators to offer access to popular services like Facebook, and simultaneously raise questions about anti-competitive practices. In the U.S., zero-rating is primarily used to fight for market share, with T-Mobile operating its Music Freedom program to attract customers who stream a lot of music, music that would otherwise incur overage charges or necessitate a pricier plan at other carriers.
It may not violate net neutrality, but it does reveal the fallacy behind data caps
Fernholz notes that the idea of exempting streaming services from data caps looks like a violation of net neutrality, since it would prioritize one kind of data over others for reasons other than network management. But the streaming services don’t pay for the prioritization, and almost any streaming service can participate in the Music Freedom program, from the most prominent competitors to more obscure players. T-Mobile spokesperson Janice Kapner told Quartz, “It’s free to everyone—customers and streaming providers alike, and any streaming service can participate by just contacting us and meeting technical requirements so we can identify their incoming music stream.”
Because video is a larger share of data traffic than audio, exempting it will cost the company more than the Music Freedom program. That will likely attract the attention both of competitors and regulators. It will also draw attention from open Internet advocates, who have already pointed out that giving away such a significant portion of data usage for free reveals the lie behind data caps — which are increasingly not a tactic to manage network congestion, but a billing technique to get customers to pay more.
Matt Wood, an attorney at the non-profit Free Press, tells Quartz, “If you’re telling me I can stream as much video as I want, from some partners or from everybody, it becomes more meaningless as a cap overall.” He adds, “It blows a hole in the idea that this is tied to network management, not the carrier picking and choosing what works better and what costs more. Use as much data as you want up to a cap, that is neutral … [but] when the carrier says some data counts and some doesn’t, we worry about this skewing market and skewing people’s usage toward certain kinds of applications.”
As The Cheat Sheet recently reported, it’s not just mobile network operators that are experimenting with data caps (and testing the limits of what they can get away with). Comcast is rolling out caps to limit how much data customers can use on their home Internet networks, accompanied by charges that they can pay to get more data or remove the limits altogether. The introduction of usage limits is one made with Comcast’s bottom line, not the technical limits of its network, in mind.
The data caps won’t improve the network’s performance or reliability and, in many uncompetitive markets, are simply a way to get users to pay more for the data they’ve been using, and the larger amounts they’ll probably be using in the near future as Internet video and 4K streaming really take off. It remains to be seen how consumers and regulators will react as it becomes clear that usage limits are increasingly artificial and, when intertwined with zero-rating, play an important role in manipulating what services people use and what content they consume online.