Net Neutrality Tiff Over Toll-Free Data Pits Verizon Against Venture Capitalists

A week before the Feb 26 Federal Communications Commission vote on network neutrality rules, a battle is flaring over whether it’s fair for wireless companies to exempt services such as music streaming from counting against subscribers’ data caps. Venture capitalists have been asking FCC members to prohibit wireless providers from allowing content companies to pick up the tab for usage associated with their data traffic rather than having the consumer pay.

They said it violates the concept that all Web traffic should be treated equally. To offer such toll-free services “creates hurdles for startups who lack the resources to pay for such preferential treatment,” a group including Union Square Ventures’ Nick Grossman and Brad Burnham said in a Feb. 12 meeting with FCC officials. They were joined by companies including online marketplace Etsy and social network FourSquare. Verizon has told regulators that letting Web companies, rather than subscribers, pay for data usage can save money for consumers. T-Mobile said its Music Freedom offering, which streams songs that don’t count against data caps, helps differentiate it from competitors