Too Little Too Late: FCC Finally Realizes AT&T's Zero Rating Is Anti-Competitive

Broadband

from the thanks-for-the-help dept

For much of the last year we’ve talked about how the FCC’s decision not to ban zero rating (or the practice of exempting some content from usage caps) when crafting net neutrality rules was a horrible oversight. As we warned initially, it simply opened the door to wireless carriers and ISPs abusing net neutrality in entirely new and creative ways. As a result, despite having net neutrality rules, we now have companies like AT&T, Verizon and Comcast all exempting their own streaming content from the caps while still penalizing smaller streaming startups and competitors.

While the anti-competitive implications of this should have been clear to most people, the FCC apparently decided it was best not to ban the practice, instead promising to enforce net neutrality on a “case by case basis.” But outside of launching a glacial-moving “informal information inquiry” last year, the FCC had given no indication it planned to actually protect this aspect of net neutrality. That was until last week, when the agency fired off a letter to AT&T stating that its plans to exempt its upcoming “DirecTV Now” streaming service is technically anti-competitive and could harm consumers and competitors:

“In the letter to AT&T from the FCC’s Jon Wilkins, the agency states that this behavior “may obstruct competition and harm consumers by constraining their ability to access existing and future mobile video services not affiliated with AT&T.”

“It is not difficult to calculate usage scenarios in which an unaffiliated provider’s Sponsored Data charges alone could render infeasible any third-party competitor’s attempt to compete with the $35 per month retail price that AT&T has announced for DIRECTV Now,” the letter said. “Unaffiliated video providers not purchasing Sponsored Data would likewise face a significant competitive disadvantage in trying to serve AT&T Mobility’s customer base without zero-rating.”

And while it’s great the FCC finally woke up to the fact that ISPs are using caps to both raise rates on uncompetitive markets and hamstring streaming competitors, the FCC’s letter is almost comical in how late in the game it has finally arrived. Given that the man heading up Trump’s telecom transition team (Jeffrey Eisenach) is a paid consultant and think tanker with ties to large broadband providers, there’s every indication a Trump Presidency will go easier on incumbent ISPs like AT&T and Comcast than ever before.

As a result, the FCC’s move here should generally be seen as the agency giving a pointless lecture on playing with matches after the barn has burned down. For what it’s worth, AT&T is simply responding to the inquiry by claiming it can’t possibly be acting anti-competitively because other companies can get cap-excempt status too — provided they pay AT&T significantly more money:

“While we welcome additional questions, we hope the FCC will consider the enormous value consumers find in obtaining free data or free streaming where someone else is footing the bill for their data. We welcome any video provider that wishes to sponsor its content in the same ?data free? way for AT&T Mobility customers and we?ll do so on equal terms at our lowest wholesale rates,” the company added. “Saving consumers money is something we all should support.”

In short, you’ve got a company using arbitrary usage caps to give its own content a leg up, and a regulator that couldn’t be bothered to see the negative impact of this behavior apparently until it had one foot out the door of governance. Where we head now isn’t clear, but I think it’s fairly apparent that all of the griping concerning usage caps and zero rating will likely seem downright quaint in around three to six months.

Filed Under: competition, fcc, net neutrality, zero rating
Companies: at&t