Trump to tap Pai as FCC chair, paving way for zero-rated data

President Donald Trump will reportedly name Ajit Pai to replace Tom Wheeler as chairman of the FCC in a move that will almost surely lead to an increase in zero-rated wireless data offerings.

Politico was among the first to report that Trump plans to elevate Pai to the top post at the commission following the departure of Wheeler, who said last month he would step down as Obama left office. The FCC has yet to confirm the move, and the White House has yet to make an official statement, but both Wheeler and Commissioner Mike O’Rielly took to Twitter late last week to offer their congratulations to Pai.

Pai, a former lawyer for Verizon, was sworn in as an FCC commissioner in 2012 and often opposed Wheeler’s agenda as Democrats held a 3-2 majority at the agency. As chairman overseeing a Republican-led commission, Pai would likely oversee the rollback of net neutrality rules that regulate wireless carriers and other broadband service providers.

“Mr. Pai had opposed government intervention in the telecommunications market and has been an open critic of an FCC report disapproving of zero-rating data, also known as toll-free data—a business model used by internet service providers under which they charge no connectivity fees for specific content,” CCS Insight said in a blog post. “Zero-rating strategies allow mobile and, in some cases, wireline carriers to favor particular content, either their own or that of a partner. … Under new FCC leadership, potential further dilution of net neutrality is possible. If carriers have been holding back with content-centric business models, they will be less timid in the future.”

Indeed, zero-rated models emerged as a key strategy among U.S. operators last year. Verizon brought zero-rated content to its homegrown Go90 mobile video service, then built on that model with streaming content in its NFL Mobile app. Sprint took a more modest tack, enabling its customers to watch every match of the summer’s Copa América Centenario soccer tournament on their phones data-free. And AT&T was perhaps the most aggressive of them all in 2016, extending zero-rated data from DirecTV to its wireless customers, then doing the same with DirecTV Now, the cross-platform OTT video service it launched in November.

Those models expanded on earlier efforts from T-Mobile, which moved into zero-rated data first with its Music Freedom offering in 2014 and then a year later with Binge On for video.  

The FCC criticized zero-rated wireless data offerings earlier this month, saying AT&T’s DirecTV and Verizon’s Go90 violate net neutrality rules because they allow the respective carriers to deliver their own content without having an impact on customers’ wireless data charges, giving them an edge over other content providers. But Pai said such policies “only harm investment and innovation.”

Pai has also pushed for the FCC to free up airwaves for wireless use, pushing aggressively for spectrum sharing and for incentives encouraging service providers to deploy consumer services on higher-band airwaves.