Will FCC Regulations Threaten Market Differentiation, Innovation and Consumer Benefits?

This article originally appeared on Forbes by Steve Pociask.

Wireless companies are experimenting with new offerings that allow consumers to use data to access some content at no charge. You would think that a plan to give customers free data would not be controversial, but it is. Now a Commissioner at the Federal Communications Commission (FCC) has stepped forward to announce that she would not be voting to block these new offerings. That is good news for consumers.

 

As background, wireless Internet service providers are beginning to offer consumers access to some content for free. Called sponsored data, these plans allow consumers to stream content from such potential sources as ESPN, HBO, Hulu, Netflix and others on their mobile devices, or to engage with marketing, advertising and promotional content without using data against their monthly wireless data cap. This means consumers, if they chose, can enjoy promotional content, including videos and music, for free and without impacting their data plans.

Who would argue against free?  Apparently, some special interestgroups do and would prefer that consumers pay more for their wireless services. Now the FCC is considering reviewing and possibly blocking these offerings. That would be very bad news for consumers.

But, there is hope for commonsense. At the FCC’s recent Consumer Advisory Committee plenary meeting, which I attended, Commissioner Mignon L. Clyburn offered a refreshing message saying that she would not vote against these plans, adding “we want product differentiation.”

She is right. These plans serve to differentiate wireless service provider and provide clear competitive benefits to consumers. For example, T-Mobile is offering Binge On, Virgin Mobile is offering Data-Free Streaming Music, AT&T is offering Sponsored Data, and Verizon is trialing FreeBee Data. For content sponsors, these plans can increase subscribership. Therefore, blocking these plans hurt would both content providers and consumers.

These plans are fairly new, and innovative business models and content offerings are still being developed. Product differentiation is an important form of competition and competition is good for consumers. While the competitive plans are all a little bit different, they are all free and voluntary. Who would want to discourage competition for free data?

For consumers, sponsored data has all upside (free data) and no downside. It provides another market choice for consumers. If consumers choose not to have these services, nothing changes and no one is worse off.

Commissioner Clyburn gets it. Addressing the Consumer Advisory Committee, she stated “these are the types of things I do not want to eliminate,” adding that these offerings represent an “affordable way for people to stream and connect with content.”

It’s refreshing to hear these pro-consumer sentiments.

Note: The author participates on the FCC’s Consumer Advisory Committee.

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