A Trump FCC advisor’s proposal for bringing free Internet to poor people

Trump advisor says net neutrality hindered free data services for the poor.

When Donald Trump won the presidency, his early decisions made it clear that the Federal Communications Commission would become much less strict in regulating Internet service providers. The FCC transition team he formed to chart a new course for the agency was primarily composed of people who oppose net neutrality rules and want ISPs to face fewer regulations in general. After the transition advisors finished their analysis and made recommendations, Trump named Republican Ajit Pai the new chairman, and Pai has since gotten to work reversing the net neutrality rules and other decisions made by his Democratic predecessor, Tom Wheeler.

One of the most immediate changes was that the FCC leadership now fully supports zero-rating, the practice in which ISPs exempt some websites and online services from data caps, often in exchange for payment from the websites. Zero-rating is controversial in the US and abroad, with many consumer advocates and regulators saying it violates the net neutrality principle that all online content should be treated equally by network providers.

But some zero-rating proponents believe it can serve a noble purpose—bringing Internet access to poor people who otherwise would not be online. That's the view of Roslyn Layton, who served on Trump's FCC transition team, does telecom research at Aalborg University in Denmark, and works as a visiting fellow at the conservative American Enterprise Institute.

Layton wasn't authorized to speak about the FCC transition team's work, but she described her general views about telecom regulation in recent conversations with Ars. Layton believes that zero-rating should be used to get poor people on the Internet in the US, similar to the "Free Basics" program that Facebook has implemented with mobile carriers in developing countries.

"I want Free Basics for the USA," Layton said. "There is a subset of people who are truly poor… who need access to basic kinds of services, and I don’t think they should have to pay for them. If companies want to pay for them to do it and put advertising behind it, I don’t see the harm."

There has been industry speculation that Layton could be nominated by Trump to become an FCC commissioner, but no official announcement has materialized. Although the majority of Trump's FCC advisory team reportedly wants to strip the Federal Communications Commission of its role in overseeing competition and consumer protection, Layton said that was not her proposal.

"If anything, I would like the FCC to strengthen its economic function, its consumer protection function," she said. Instead of strict rules against a broad range of practices, like the net neutrality regulations, Layton says that economists at the FCC should be empowered to determine whether specific actions by ISPs harm consumers. This could help target predatory pricing, bundling, tying arrangements, and foreclosure, she said.

But despite her preference for oversight, Layton still argues that zero-rating and other free data programs would ultimately be good for consumers.

Net neutrality controversy abroad

Facebook's Free Basics application provides free access to a selection of websites on mobile carriers in a few dozen countries in Africa, the Middle East, Asia-Pacific, and Latin America. Free Basics provides a free connection to Facebook and "a range of free basic services like news, maternal health, travel, local jobs, sports, communication, and local government information." It's limited to those sites that are on the platform—it doesn't provide access to the whole Internet.

Facebook says the platform is open and non-discriminatory, but developers, nonprofits, and governments that want to be included must configure their websites to use less data and be compatible with the Free Basics app. Free Basics is optimized for feature phones and slow networks, but it works on smartphones, too. VoIP, video, file transfers, and photos larger than 200KB are not allowed. Facebook opened the platform to developers in May 2015 after an earlier version was criticized for being too restrictive. It was first launched on a carrier in Zambia in July 2014 under the name, "Internet.org," and given its current name of Free Basics the next year.

Layton acknowledges that Ars Technica readers aren't the target audience for this type of application.

"To be sure, Ars Technica readers are savvy and well-educated people who know how to play complex online games with advanced devices," she said. "First-time Internet users don’t. The point of offers tailored for first-time users is to reduce their barriers to get online. This includes lowering the cost, but also simplifying the tasks so that it is easy to use and relevant to them."

Free Basics itself doesn't guarantee access to mobile devices, but could be used in combination with other programs that provide free or subsidized devices.

About 95 percent of US adults own a cellphone and 77 percent own smartphones, but the percentages are substantially lower among people with low incomes, according to the Pew Research Center. For example, 64 percent of people who make less than $30,000 a year own a smartphone.

The FCC has helped subsidize phone service for poor people since 1985 with its Lifeline program, and last year expanded Lifeline to let poor people use a $9.25 monthly household subsidy to purchase home Internet or mobile broadband, or bundles including both voice and Internet. Lifeline can also be used to obtain free smartphones and other cellphones.

Zero-rating bans

India banned Free Basics and similar zero-rated services in its net neutrality rules in February 2016. Canada also took a strong stance against zero-rating, even for services designed to meet social needs. That's because, as Canadian regulators said, "defining a content category is problematic." Facebook has been wary of bringing Free Basics to the US, but it reportedly started talking to White House officials about how to roll out Free Basics without inviting regulatory scrutiny when Barack Obama was still president last year.

Facebook wouldn't face any opposition from Pai's FCC. Besides yesterday's preliminary vote to eliminate the current net neutrality rules, he has already rescinded the FCC's previous determination that AT&T and Verizon Wireless violated net neutrality rules by zero-rating their own video while charging other companies for the same data cap exemptions. Websites don't have to pay Facebook to be included in Free Basics, making it even less likely to be opposed by US regulators.

Facebook's role as a news source raises potential problems with the social network being front and center in a platform designed to provide essential services. Facebook has had trouble preventing its website from contributing to the spread of "fake news," and that problem could be compounded in an Internet service that prioritizes Facebook above other sites. If Free Basics came to the US, it would be up to legitimate news organizations to get onto the platform—and up to Facebook to ensure that legitimate news sites aren't drowned out by unreliable sources.

Facebook is also willing to restrict access to information on its platform in certain countries, as seen recently when it "blocked users in Thailand from accessing a video" of the country's king wearing a crop top, due to "the country’s laws banning criticism of the monarchy," Vice News reported.

The big question: Who will bring it to the US?

Such problems might be moot in the US because it's still unclear whether Facebook or any other entity intends to use zero-rating to bring broadband access to poor Americans. Zero-rating programs have been used heavily by AT&T, Verizon Wireless, and T-Mobile USA, but not for boosting Internet access for poor people. This recent history suggests there may not be a strong commercial case for Free Basics in the US.

"We haven't seen a free zero-rating program introduced in the United States that creates substantial Internet access for people who don't have it," Ryan Clough, general counsel for consumer advocacy group Public Knowledge, told Ars. "That may suggest that economically, there may be insurmountable economic barriers to designing an effective program."

When contacted by Ars, Facebook said it has nothing new to share. Instead, it referred us back to a statement from October 2016 in which it said that "Facebook’s mission is to connect the world and we’re always exploring ways to do that, including in the United States.”

In 2015, Facebook CEO Mark Zuckerberg said that Free Basics supports itself financially because "When people use free basic services, more of them then decide to pay to access the broader Internet, and this enables operators to keep offering the basic services for free."

Layton used Free Basics as an example, but she argues that other companies or organizations might want to deliver a similar service in the US.
"I see a natural fit for health care companies and platforms which want to provide education," Layton said. "There are financial gains to educating people on how to manage their health in that it saves the cost of managing adverse health events and emergency room visits. This saves insurers money, not to mention improving quality of life."

The government might want to let Americans access government websites without any data charges, she said. "I could see any number of organizations which could support the cost of making data free whether it's foundations, non-profit organizations, private companies, government agencies, and the broadband providers themselves," she said.

One of Layton's research papers describes how the mobile carrier Vodacom in South Africa "post[ed] relevant AIDS information on the operator’s website, when the health authorities refused to do so" as "a way to help the vulnerable young adult population get the information and treatment they needed. Overnight some two million visitors accessed the information." Vodacom partnered with entrepreneur Gustav Praekelt on that project, and later, Praekelt set up a foundation to specifically deliver free health information. In 2010, the company "started a partnership with Facebook and shared the idea of a platform for health information which over time became Free Basics."

The nonprofit Multicultural Media, Telecom and Internet Council (MMTC) is hoping for something like Free Basics in the US.

"The first time I heard about Free Basics, I thought, 'what about here?'" said Kim Keenan, the CEO of MMTC who previously served as general counsel for the NAACP.

Keenan argues that zero-rating is "like a 1-800 telephone call. It’s a way of getting people to make a call because they know they don’t have to pay for it." The only reason Free Basics hasn't made it to the US "was the notion that somehow it might violate a net neutrality rule," she told Ars. "Now that Chairman Pai has said he’ll allow that innovation, I’m really hoping they’ll bring that Free Basics to America."

MMTC, which opposed the FCC's 2015 net neutrality decision, has been criticized for taking donations from the telecom industry, though Keenan said the group has numerous funding sources, including a brokerage it runs to help minorities purchase broadcast properties. "Nobody is funding us enough to have our policies be in the position of somebody who gave us money," Keenan said, noting that MMTC has supported strict caps on prison phone rates despite opposition from prison phone providers.

FCC's role: Hands off

Like Keenan, Layton argues that the FCC's net neutrality rules may have prevented the spread of zero-rating programs that could help poor people. She isn't opposed to zero-rating programs that have purely commercial aims, though. The FCC should let the market decide what zero-rating programs work best instead of intervening, she argues.

"There are both for-profit and non-profit motives to do this, and the FCC should not discriminate," Layton said. "Indeed, the previous FCC was hostile to broadband providers experimenting with ways to make broadband more accessible to first-time users. This would require departing from the dogma that all Internet connections need to be one-size-fits-all and that the only parameter on which they could be sold was speed."

Layton also argues that the Federal Trade Commission is better able to protect customers than the FCC in many cases, particularly because of the FTC's ability to get refunds for consumers when they've been harmed by deceptive or fraudulent practices. While Layton supports zero-rating herself, she said the FTC could halt any harmful zero-rating practices with its power to stop predatory pricing. If the FCC finalizes plans to reverse its classification of ISPs as common carriers, the FTC could regain jurisdiction over broadband service, but there's been plenty of disagreement over which agency is best equipped to protect Internet customers.

Pai doesn't always support FCC decisions intended to expand broadband access for poor people. After taking over as chair this year, he reversed a Democratic decision that made it easier for ISPs to get the approvals they need to offer Lifeline-subsidized broadband to people with low incomes. Back when Democrats still held the majority, Pai objected to a condition imposed on the AT&T/DirecTV merger that required $10-per-month Internet for poor people—even though AT&T proposed the condition itself.
But in this case, the FCC doesn't have to do anything to encourage free data programs for poor people, Layton said. "There is nothing that the FCC needs to do to encourage or discourage these kinds of offers… They should allow all companies to make partnerships to serve the needs of consumers. A competitive market means that providers should make their offers and then let them sink or swim based on the merits."

That's exactly what Pai is doing now with regard to zero-rating. If Layton is right, we should see plenty of new types of zero-rating services pop up during the Trump administration.

On the other hand, zero-rating has existed in the US for a few years now while doing little to boost Internet access for poor people. US carriers started using zero-rating before the net neutrality rules were passed in 2015 and continued doing so after the rules went into place. Instead of banning zero-rating entirely, Wheeler's FCC set up a system for determining whether specific zero-rating implementations were harmful to customers or competitors.

No zero-rating implementations were halted under this complaint process, yet nothing like Free Basics has come to the US.

The whole Internet

Public Knowledge argues that programs to boost Internet connectivity for poor people should focus on providing access to the whole Internet rather than a selection of websites.

"What any American would benefit the most from is complete freedom of choice to access the services and websites that they want, as opposed to having to worry about which sites are zero-rated or which sites are in the free tier," Clough said.

The group also argues that zero-rating programs should be prohibited when they're discriminatory, such as when ISPs give their own services an advantage over potential rivals. Public Knowledge is most concerned about the AT&T and Verizon zero-rating programs and Comcast's zero-rating of its own cable TV streaming service. Zero-rating should be "nondiscriminatory in the selection of the services and open" to any app developer, Clough said.

Despite those concerns, Clough said there might be cases where zero-rating programs really do help poor people and aren't discriminatory. But to ensure that a "free" program actually benefits poor people, the service would have to be truly free, he said.

Zero-rating encourages smartphone owners to make heavier use of their devices, as seen with T-Mobile's decision to exempt dozens of music and video services from data caps. But that only benefits people who can afford a mobile broadband subscription. To get people online for the first time, a zero-rated service can't be tied to an otherwise expensive subscription, Clough said.

"We do generally agree that zero-rating programs need to be judged on a case by case basis" instead of being banned outright, Clough said. And while consumer activists like Clough acknowledge that free data programs could help poor people in limited circumstances, he maintains that zero-rating practices carry "significant potential for abuse and anticompetitive harm."

"We definitely need significant regulatory oversight of zero-rating for that reason," Clough said. "That's why we're concerned about the fact that the FCC is essentially indicating that there is none."