NFLX Netflix Inc

By Thomas Gryta 

Federal regulators on Friday stopped their review of wireless carriers that exclude their own video-streaming services from customers' usage caps, closing an inquiry that began under the previous U.S. presidential administration.

The Federal Communications Commission previously raised concerns about the so-called zero-rating practices by AT&T Inc. and Verizon Communications Inc., in which those carriers didn't apply data used on their streaming services toward customers' data-usage charges. The agency warned that zero-rating could harm competition by deterring consumers from using services, such as those from Netflix Inc., that aren't connected with a carrier. The carriers have argued that the practice complies with existing rules and benefits consumers.

On Friday, however, the acting head of the FCC's wireless bureau, Nese Guendelsberger, said in an order that letters were sent to AT&T, Verizon and T-Mobile US Inc. notifying them that no further action would be taken. T-Mobile allows any video provider to be exempt from data caps without paying the carrier, although the video is delivered at lower quality.

The FCC had been examining zero-rating for months, but it raised eyebrows when it contacted AT&T about the practice the day after the presidential election. Republican congressional leaders later asked the agency to stop taking controversial regulatory actions until the new administration came on board.

The order issued Friday "sets aside and rescinds" an earlier FCC report raising concerns about zero-rating, along with "any and all guidance, determinations, and conclusions contained therein." That report will have "no legal or other effect or meaning going forward."

AT&T and Verizon have said that exempting their streaming apps against data-usage caps saves customers money, and that other video providers could pay to cover data costs for their customers at the same rates they provide their own video businesses.

Both companies applauded the FCC's order on Friday.

"We're pleased that these innovative products will be able to continue to flourish in the marketplace," Joan Marsh, AT&T senior vice president of federal regulatory, said in a statement, calling the move "a win for the millions of consumers."

Verizon spokesman Rich Young echoed the sentiment. "We're quite certain our customers feel the same way, particularly those who plan to watch the big game over the weekend -- free of data charges," he said.

The FCC's newly appointed chairman, Ajit Pai, has criticized the zero-rating investigation in the past, calling it "sad -- and pointless, " and noting that any action "can quickly be undone."

Write to Thomas Gryta at thomas.gryta@wsj.com

(END) Dow Jones Newswires

February 03, 2017 16:49 ET (21:49 GMT)

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