FCC Says AT&T Zero-Rating Likely Violates Net Neutrality

FCC Says AT&T Zero-Rating Likely Violates Net Neutrality

"We find that those responses fail to alleviate the serious concerns expressed in our November 9 letter regarding the potential anti-competitive impacts of s wholesale Sponsored Data program for zero-rated mobile video services", Jon Wilkins, the chief of the wireless Telecommunications Bureau, wrote in a letter to AT&T. Indeed, as an over-the-top (OTT) offering that is available over any Internet service provider's network - including those owned by video market incumbents such as cable operators - DIRECTV Now relies on the safeguards provided by the Open Internet Order's pro-competition rules.

Both AT&T and Verizon said their programs, which charged video providers rather the cost of streaming the data, were open to any video company willing to pay the cost of customer data. Zero-rating has tended to be a hit with consumers, who are eager to consumer video on the go and avoid high data charges in the process. Under its current structure, AT&T offers a cheaper data deal to DirecTV, its own video service, than it does to outside video providers. Verizon offers something similar with its go90 service.

Harold Feld, Senior Vice President at DC-based digital rights group Public Knowledge, applauded the the FCC's apparent willingness to crack down on zero-rating, but lamented the fact that the agency had taken so long-nearly one year-to get tough on the practice, especially now that Trump appears ready to appoint FCC officials who will likely roll back numerous FCC's open internet protections. Zero rating is the practice of exempting the data sent from certain sites or services from those limits. Verizon said its practices are good for consumers and comply with regulations.

In a statement, AT&T said it would once again "provide the FCC with additional information on why the government should not take away a service that saves consumers money".

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"When you zero-rate things, people are much more likely to use the zero-rated service", Harold Feld, senior vice president of Public Knowledge, a Washington, D.C. -based consumer advocacy group, told Salon.

In his letter to AT&T, which was a follow-up to one Wilkins sent last month, he was even more direct. 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". The FCC said that AT&T's practices "inhibit competition, harm consumers, and interfere with the "virtuous cycle" needed to assure the continuing benefits of the Open Internet". The FCC argues that by forgiving data charges on its own video service, AT&T could be giving DirecTV an unfair advantage. The FCC may however, be running out of time as it is in for a major redevelopment under Donald Trump. Verizon, meanwhile, exempts its own Go90 streaming service from using data on the Verizon network and does not pay fees to do so.

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. But as president-elect, Trump appears to be picking a team that seems friendly to corporate consolidation and critical of net neutrality rules. Today, the FCC's initial findings show that the company's Sponsored Data program is, in fact, a violation of net neutrality laws.

"Any unilateral action taken by the Wireless Telecommunications Bureau at the chairman's direction in the next 49 days can quickly be undone by that same bureau after January 20, 2017", Pai added.

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