Last week we watched as Verizon, a company that spent years telling users they didn’t want or need unlimited data, was forced to bring back unlimited data. AT&T quickly followed suit with similar plans of its own, despite having spent years waging a not so subtle war on grandfathered unlimited connection customers. The reason for this sudden collective about-face? The continued rise of T-Mobile, which has increasingly brought something vaguely resembling competition to the wireless sector (even if non-price, often superficial competition remains the predominant law of the land).
While this was happening, we’ve been noting how new FCC boss Ajit Pai has been taking an axe to consumer protections, moving to gut broadband privacy rules, making it easier for prison telco monopolies to rip off inmate families, and killing efforts to bring competition to the cable box. Pai also recently killed off the FCC’s inquiry into zero rating, after the former FCC stated Verizon and AT&T were using usage caps to give their own content an unfair market advantage.
If you ask industry lobbyists, this behavior makes Pai an incredible consumer champion. Apparently that narrative is very much alive in Pai’s head as well. In a speech this week at the Mobile World Congress in Barcelona, Pai was quick to proclaim that he’s simply returning to an era of “light-touch” regulation of telecom, one that will result in massive, unspecified benefits to all:
“We are confident in the decades-long, cross-party consensus on light-touch Internet regulation—one that helped America’s digital economy thrive. And we are on track to returning to that successful approach.
In telecom, “light-touch regulation” is code for letting AT&T, Verizon, Comcast and Charter do whatever the hell they’d like. The narrative usually goes something like this: if you free giant ISPs from the burdens of “onerous federal regulation” (like net neutrality), Utopia magically springs from the sidewalks. But as we saw during Michael Powell’s tenure, this narrative is flimsy, and the blind federal deregulation of telecom only makes things worse. Why? When you let revolving door regulators like Pai and Powell run the show, their breathless dedication to industry means they intentionally overlook the lack of competition in the sector.
Eliminate functional regulatory oversight and refuse to address limited competition? The end result is… Comcast Corporation and its record-shatteringly-bad customer service, high prices, and usage caps.
But Pai took things further in his speech, actually claiming that his refusal to enforce the agency’s net neutrality rules somehow resulted in a flurry of competition and a return to unlimited data:
“Earlier this month, for example, we ended the FCC’s investigation into so-called “zero-rating,” or free-data offerings. Free-data plans have proven to be popular among consumers, particularly those with low incomes, because they allow consumers to enjoy content without data limits or charges. They have also enhanced competition. Nonetheless, the FCC had put these plans under the regulatory microscope. It claimed that they were anticompetitive, would lead to the end of unlimited data plans, or otherwise limit online access. But the truth is that consumers like getting something for free, and they want their providers to compete by introducing innovative offerings. Our recent decision simply respected consumers’ preference.
The best evidence of the wisdom of our new approach is what happened afterward. In the days following our decision, all four national wireless providers in the United States announced new unlimited data plans or expanded their existing ones. Consumers are now benefiting from these offers—offers made possible by a competitive marketplace. And remember: Preemptive government regulation did not produce that result. The free market did.
That’s an incredible load of nonsense. T-Mobile only still exists because federal regulators blocked AT&T from acquiring it. So in reality, it was government intervention that allowed T-Mobile to continue to exist, with the resulting competition driving AT&T and Verizon to adopt all manner of more consumer-friendly positions. It’s hard work, but one needs to weigh each instance of government regulation on its merits. Insisting all regulation is good or bad is just lazy thinking, and the idea that gutting all consumer protections magically results in the telecom equivalent of Smurf village is utterly nonsensical given the industry’s history.
We’ve also noted how zero rating has nothing to do with giving consumers “free data,” though carriers have certainly conditioned consumers to think as much. Usage caps are entirely arbitrary, and are completely untethered to real-world network congestion or financial necessity. Caps and overage fees are simply glorified price hikes, and they exist as a symptom of limited competition. As competition increased, it became untenable for AT&T and Verizon to continue ignoring consumer demands, especially once T-Mobile began adding significantly more mobile subscribers than any other carrier every quarter.
The irony, of course, is that Pai was in favor of the AT&T and T-Mobile merger, which would have killed off T-Mobile’s disruption entirely. He’s also never seen an incumbent ISP policy idea he didn’t like, and his voting history suggests he’ll happily vote to approve what many expect is a looming Sprint acquisition of T-Mobile. When the resulting diminished competition from that deal results in higher prices, what’s the over/under on Pai blaming himself or his love of a “light touch?”