AT&T waves a weed whacker at FCC staff

19 December 2016 by Steve Blum
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Which side of the dirt do you want to be on?

Mommy might have said no, but daddy is going to whack your weeds. That’s the message AT&T delivered to Federal Communications Commission staff who had challenged the legality of allowing customers who buy a package of DirecTv programming to watch it without incurring data charges or burning through data caps. The practice is called zero rating and it was left in a regulatory grey area by the FCC’s 2015 decision to classify Internet access as a common carrier service.

You can read the letter the FCC sent to AT&T here, and AT&T’s reply here. FCC staff aren’t exactly saying the practice is illegal, but that’s where they’re clearly heading, saying that AT&T is exploiting its control of the network to create barriers to video competitors, who would be forced to pay a “sponsored data” charge to get the same treatment…

As consumers increasingly use mobile video services – a process which the practice of zero-rating mobile video usage will accelerate – these Sponsored Data charges could reasonably be expected to increase even more. By contrast, AT&T incurs no comparable cost to offer its own DIRECTV Now service on a zero-rated basis. If we understand these facts correctly, 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 difficult, 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 customers the same usage for free.

AT&T’s reply makes a perfunctory attempt to pick apart those arguments, and then finishes by saying it’s the FCC that’s breaking the law and then playing the, well, trump card…

Any doubts on that score were put to rest when two FCC Commissioners, both of whom will remain in office after the imminent change of administration, criticized this investigation and warned the Bureau against unlawfully usurping core policymaking powers that only the Commission may exercise. Those Commissioners also observed that whatever judgment the Bureau purports to pass on this program before January 20 will very likely be reversed shortly thereafter. Their remarks confirm that the Bureau lacks delegated authority to pull the plug on Data Free TV and disrupt service to the millions of customers who now enjoy that feature.

We trust that the Bureau will acknowledge that point and await further action by the Commission itself.

There’s a fair debate to be had about whether and to what extent zero rating and sponsored data plans violate the common carrier rules that now apply to AT&T mobile data service. But it’s clear that AT&T has no interest in participating in that discussion because it expects the Trump administration will appoint a biddable FCC that will “fire up the weed whacker” on rules it doesn’t like.

Like it or not, that looks like a safe bet.