FCC Says AT&T's DirecTV Data Cap Exemption Violates Net Neutrality

  • FCC Says AT&T's DirecTV Data Cap Exemption Violates Net Neutrality

FCC Says AT&T's DirecTV Data Cap Exemption Violates Net Neutrality

The FCC sent strongly-worded letters to and Verizon on Thursday over their zero-rating data plans.

Net neutrality advocates have always been concerned of zero-rating plans, which may set a risky precedent.

AT&T and Verizon offer sponsored data programs that lets companies pay so that the carrier customers can use their apps without touching their high-speed data.

The letter comes four days after the AT&T-owned DirecTV announced its new pay-TV streaming service aimed at cord-cutters, expected to attract 3 million users, or 20 percent of the market, by 2020. AT&T Mobility customers can stream video data over LTE without impacting their data allowance. The plan gives preferential treatment to providers on the Go90 video platform and could potentially extend its FiOS home internet service. "We will review and respond to the inquiry as requested", Verizon spokesman Rich Young said "In the meantime, we remain quite confident that our practices are good for consumers, non-discriminatory and are consistent with current rules". Both Verizon and AT&T state that the "zero rating" of the data saves their respective customers money, and are incredibly popular services.

But critics of how AT&T is marketing DirecTV Now argue that America's second-largest telecommunications company has just upped the ante in an ongoing effort to keep the Internet a level playing field. The FCC in a letter to Verizon yesterday stated that "while there is no cash cost on a consolidated basis for Verizon to zero-rate its own affiliated edge service, an unaffiliated edge provider's FreeBee Data 360 payment to Verizon is a true cash cost that could be significant".

Verizon and AT&T have until December 15 to formally reply to the FCC and address the concerns raised by the agency.

Based on information AT&T has provided, the FCC's Wireless Telecommunications Bureau reached a "preliminary conclusion" that zero rating plans for DirecTV Now "inhibit competition, harm consumers, and interfere with the "virtuous cycle" needed to assure the continuing benefits of the Open Internet,"writes the unit's Chief Jon Wilkins". The same goes for the standard DirecTV mobile app when used on AT&T's mobile network. But it could be running out of time to take action before the Trump administration takes the helm.

Wilkins asked Verizon to respond to "the concerns expressed in this letter" by December 15.

"If we understand these facts correctly", Wilkins says, "AT&T seems to present the unaffiliated provider with a choice that is unreasonable on its face: either pay a Sponsored Data rate (resulting in a $16-$47 per month - or higher - incremental cash cost not incurred by AT&T) that would make it very hard, if not infeasible, to offer a competitively-priced service, or instead require its customers to pay significant amounts for their own usage of data while AT&T's zero-rated DirecTV Now service offers the same usage for free". That's significantly more than the $35 a month AT&T charges customers for its new DirecTV Now streaming service.

The FCC stopped short of taking action against AT&T and has asked the company for more information about how much it's charging competitors.

For everyone tracking this issue, the big question is how the the FCC and Justice Department will deal with it under President Donald Trump and a Republican-controlled Congress. All three of Trump's transition team members overseeing the FCC have spoken out against the net neutrality rules.

Even if net neutrality somehow survives, it's unlikely Trump's FCC will lead a crack down on zero rating.