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Does Verizon's FreeBee Sponsored Data Program Trash Net Neutrality?

Verizon became the third wireless provider to offer select content that doesn't count against monthly data caps. Is this fair to everyone?

Does Verizon's FreeBee Sponsored Data Program Trash Net Neutrality?
[Photo: Flickr user Metamorfa Studio]

Anyone even remotely following technology news in recent weeks probably caught the firestorm between some advocates of net neutrality (no special preference for content providers) and T-Mobile's self-described "foul mouthed" CEO, John Legere. At issue is whether T-Mo's Binge On program, which exempts certain content from eating into customers' data buckets, gives those video providers an unfair advantage over video sources that don't participate in the program. AT&T also has a cap-exempt data program, called "Sponsored Data," though it has only four obscure companies participating.

Today, Verizon jumps into the controversy with its own program, called FreeBee Data, which also exempts certain content from monthly data caps. But there is a big difference. In Binge On, T-Mobile picks up the cost of the extra megabytes (or gigabytes). In FreeBee—as well as AT&T Sponsored Data—the content providers pay. (Binge On is strictly for video, but the other programs are for any data.) This looks, at first glance, like it would rub up against the net neutrality policies of the FCC, which prohibit "paid prioritization." But as with most legal and political matters, the answer isn't so simple.

Why Is Free Stuff Bad?

A legitimate question on the part of customers: What's wrong with something being free? If I can watch videos from other online services from AOL, Hearst, or the Gameday app (the first three companies to sign on to FreeBee) to my heart's content, how is that a bad thing? The simple answer is: It's not. The longer answer: It may be unfair to competitors who can't afford to pay and may keep you from discovering those other great sites because you are focused on the free-data ones.

So far, that doesn't seem to be the case. Netflix, which has plenty of money, is not participating in the AT&T and Verizon sponsored plans, nor are other big video providers (or other websites, period). But Netflix is one of the more than 50 T-Mobile Binge On participants, including other major video providers like Crackle, HBO, Hulu, Sling TV, Ustream, Vevo, and VUDU (though conspicuously not Amazon video).

It's also unclear if any of these programs technically violate net neutrality. "In terms of net neutrality and whether it complies, we believe this is in accordance with the FCC rule…and it's an open service," says Verizon spokesperson Marie McGehee. And that may not be just corporate speak, according to Matt Wood, policy director of online rights advocacy organization Free Press. "They [AT&T and Verizon] are not blocking, unless we stretch it to say, you're blocked unless you pay," says Wood. "They are not speeding you up or slowing you down. It's not prioritization for pay."

In terms of FCC policy, prioritization means putting some content ahead of others in the data queue because the source pays for that better placement, says Woods. That's not technically happening with any of these programs. A user can get to any content as quickly as the source can deliver it.

Still, I ask Wood, does sponsoring data violate the spirit of the FCC policy? If consumers know they can use certain services without limits, will they themselves give a priority to the freebie providers (who paid), at the expense of the others. "I'm really shying away from 'paid prioritization' because it has a meaning in the [FCC Net neutrality] order," he says. "I definitely think it's a Net neutrality concern."

The FCC was not caught off guard, at least; and it's reserving judgement for now. "Verizon proactively let FCC staff know about the new offering and provided associated materials. We will continue to communicate with the company on this issue," said the FCC in an emailed statement to Fast Company.

Wood, however, wants to turn the tables on sponsored mobile data by questioning the entire practice of data caps. He calls it double charging for both users and content providers to pay Verizon or AT&T for data usage because, he claims, data delivery is way cheaper than the prices that the wireless companies charge for it. In a follow-up email, he writes: "Verizon is making record returns from its subscriber base, and I haven’t seen any suggestion that sponsored data schemes are necessary either for it to recover its costs, turn a profit, or manage its network."

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