Regulator Taking Wait-And-See Approach on Program

By Gautham Nagesh

AT&T Inc. 's plan to let content companies subsidize the cost of using their services on mobile devices has attracted the interest of the nation's top telecommunications regulator, who expressed willingness Wednesday to intervene if necessary.

But Federal Communications Commission Chairman Tom Wheeler and other regulators said they were taking a wait-and-see approach before acting.

On Monday, AT&T unveiled its "sponsored-data" service, which allows companies like Google Inc. and Netflix Inc. to pay the data charges on their services, similar to a 1-800 number for data. The announcement drew immediate rebuke from Rep. Anna Eshoo (D., Calif.) and other supporters of net neutrality.

"The announcement of a sponsored data program by AT&T puts it in the business of picking winners and losers on the Internet, threatening the open Internet, competition and consumer choice," Ms. Eshoo said.

On Wednesday at the International CES conference in Las Vegas, FCC commissioners said they were unwilling to pass judgment on the program before seeing how it will operate. But Mr. Wheeler said the commission had the ability to step in if the program became anticompetitive or interfered with consumers' abilities to access the Internet.

"Make no mistake, we're ready to intervene," Mr. Wheeler said.

"We want to encourage innovation, with the full capability and legal authority to intervene in those circumstances where there are untoward impacts on competition and consumers," he said.

Other members of the commission, including Democrat Mignon Clyburn and Republicans Ajit Pai and Michael O'Rielly declined to weigh in on AT&T's proposal, echoing the need to see how the program would work.

"The FCC should not be in the business of a priori declaring business models like this out of bounds," Mr. Pai said.

The commission's open Internet rules, which require equal treatment for all traffic on the Internet, are facing a legal challenge in a federal appeals court from Verizon Communications Inc., with a decision expected soon. Democratic Commissioner Jessica Rosenworcel said the commission should wait for that decision and then examine AT&T's plan in light of the court's ruling.

There has been widespread speculation that the U.S. Court of Appeals for the District of Columbia Circuit could strike down part or all of the open Internet rules. The same court struck down the FCC's last attempt at enforcing net neutrality in 2010.

Ms. Eshoo, the California congresswoman, said AT&T's move demonstrated why the FCC's rules, which prevent broadband providers from discriminating between different content providers, should have been extended to cover wireless broadband. The commission chose to exempt wireless services from the rules in 2010.