AT&T Tells FCC That Giving Its Own Content An Unfair Market Advantage Is Good For Consumers

from the the-death-knell-of-net-neutrality dept

We’ve noted a few times that the whole net neutrality debate truly started back in 2005, when then AT&T CEO Ed Whitacre proudly proclaimed that he wasn’t going to let Google “ride his pipes for free.” While AT&T’s rhetoric has mutated slightly over the years, its core objective has remained the same: use its monopoly over broadband to extract unnecessary “troll tolls” from competitors, giving its own services an unfair advantage. It’s precisely this kind of behavior that triggered the creation of net neutrality rules in the first place; an effort that took more than a decade of fighting tooth and nail to come to fruition.

And yet here we are a decade later, with the entire concept of net neutrality in the United States about to implode in truly spectacular and depressing fashion (assuming you like markets that function properly).

We’ve been talking about how AT&T intends to exempt its upcoming “DirecTV Now” streaming service from the company’s own, arbitrary usage caps — while still penalizing competing services. In other words, if you use AT&T’s TV service you won’t run into caps, throttling, or surcharges. But use a competitor and you will be penalized, whether that’s Netflix or instructional videos from a non-profit or educational institution. This is precisely why people urged the FCC to join countries like India, Japan, Norway and The Netherlands and ban zero rating entirely. The FCC didn’t listen.

But last week the FCC appears to have woken briefly from its year-long slumber on the subject; long enough to pen a letter to AT&T informing them that the agency had finally realized that this sort of behavior was horrible for the streaming video market:

“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.”

AT&T responded in a letter back to the FCC This week (pdf), claiming that giving its own content an unfair market advantage is going to be really wonderful for consumers:

“These initiatives are precisely the kind of pro-consumer challenges to cable that the Commission heralded in approving AT&T’s acquisition of DIRECTV…DIRECTV?s sponsorship of that content through Data Free TV allows DIRECTV to better compete against the cable incumbents by ensuring that its subscribers receive the mobile video experience they increasingly demand in the most consumer-friendly manner possible.

Sure, unfairly distorting the market so your content and services get a leg up on competitors is great for AT&T, but it comes at the cost of dismantling the level streaming video playing field. Of course that has been AT&T’s goal all along. All of the lawsuits, misleading rhetoric, and farmed studies have always been about one thing for AT&T: protecting its ability to abuse its stranglehold over the broadband last mile to unfair advantage. Calling this molestation of functional markets a consumer benefit only adds insult to obvious injury.

Amusingly, AT&T also tries to tell the FCC that it’s not a big deal that it’s giving its own content an unfair advantage, because other companies can get the same priority treatment — if they’re willing to pay AT&T for the privilege:

“The suggestion that Data Free TV creates ?significant disadvantages? for online video distributors who wish to reach AT&T?s wireless subscribers is likewise off-base. Any unaffiliated content provider can participate in AT&T?s Sponsored Data program on the same terms and at the same rate as DIRECTV, and the sponsored data rate is as low as the market based rates AT&T currently offers even to wireless resellers who commit to significant purchase volumes.”

That’s AT&T intentionally pretending that it doesn’t own DirecTV, if you’re playing along at home. Sure, you can get the same exact deal as AT&T’s own company gets, but you have to pay a premium to do so. But that again distorts the streaming video market, given that large companies are far more likely to be able to afford AT&T’s troll toll than startups, non-profits, or other competitors. There’s simply no planet where what AT&T’s doing shouldn’t be seen as anti-innovation and anti-competitive.

And while it’s nice that the FCC at least woke up a little bit to the threat of usage caps and zero rating, this entire mess is, in large degree, thanks to the FCC’s failure to craft tougher net neutrality rules. The agency ignored net neutrality advocates and didn’t ban zero rating outright. And despite claiming it would take a “case by case” approach to anti-competitive behavior on this front, the FCC turned a blind eye while Comcast, Verizon and AT&T all began taking advantage of the omission to give their own content a leg up. Now, it’s incredibly unlikely we’ll see actual FCC enforcement on this subject anytime soon, if ever.

It seems possible the FCC expected it would have time to examine the issue further under a Clinton administration. But with Trump’s surprise win of the Presidency, it’s not only likely that anti-competitive abuses of zero rating will never be banned, Trump’s FCC transition team is giving every indication that they intend to dismantle the net neutrality rules we do have, entirely. With no hyperbole intended, you’re witnessing the death of net neutrality, and it’s arriving not with a bang but with a whimper, some smug AT&T platitudes, and the thunderous applause of a misled populace that thinks it’s getting something for free.

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Companies: at&t, directv

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Comments on “AT&T Tells FCC That Giving Its Own Content An Unfair Market Advantage Is Good For Consumers”

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Anonymous Coward says:

Re: A decade to get, a month to remove

More to the point, welcome the destruction of the means whereby the power of politicians and corporations can be reduced, enabling people to freely cooperate with each other. This will also damage the new companies that rely on the Internet for learning and co-operation to build a small business.

Anonymous Coward says:

Re: Re: A decade to get, a month to remove

“I doubt we will ever get back to pay-per-minute internet.”

Why would you doubt that?

Let me explain something to you about the multi-generational culture of telecoms. They live and breathe for the billable event: a phone call, a text message, a 411 call, anything and everything that causes an entry to made in accounting — for even a fraction of a cent. They are ridiculously good at this: they should be, they’ve had a century of practice. They are built for it. It’s wired into their DNA. Everything that happens must be a billable event — or it can’t be allowed to happen.

Now along comes the Internet. And the AT&T’s of the world want a piece so of course they dive in. But then they find out that lots of things happen that are not billable events. To them, this is bad. This is wrong. This is intolerable. It is a bug and it must be fixed.

But they can’t really fix it because the FCC is standing in their way. So they fudge around the edges with zero-rating and similar things. They do what they can and they wait.

Until someone amazingly, incredibly, mind-bogglingly stupid enough to dismantle the FCC comes along. And then? Then it’s time to dig in, roll up sleeves, and fix the problem. It’s time to bring the concept of billable events to every Internet connection. Pay by the minute, pay by the byte, pay by the TCP session, pay by the email message, pay by the web site, pay pay pay.

Right now, somewhere inside AT&T (and other telecoms) there are meetings happening where senior management is tasking engineers with figuring out how to make this happen. What will it take, how long will it take, and what’s the expected revenue? They will roll this out (branding it as “consumer fairness” and “billing transparency” and the like) five minutes after the eviscerated FCC loses the power to stop them.

Because they don’t care about the country, or communication, or the Internet, or education, or the economic environment, or anything like that. They don’t care about consumers. They don’t care about start-ups. They don’t care about the vibrant Internet-based ecosystem that’s been growing steadily. They don’t care about the increasing societal dependence on the Internet. They care about The Billable Event and the unending river of revenue that it generates. And they shall have it.

Anonymous Coward says:

Re: Re: Re: A decade to get, a month to remove

“But they can’t really fix it because the FCC is standing in their way.”

The FCC has never been and will never be a “standing in their way” of any kind. The FCC created the monstrous companies to begin with and a mother is not quick to abandon their offspring!

nasch (profile) says:

Re: Re: Re: A decade to get, a month to remove

Why would you doubt that?

Because internet connections are always on now. We may get to per-megabyte home internet though. Comcast already added a data cap to my account a couple of months after I opened it (1 TB). I would expect those caps to get lower and lower (relative to usage if not in absolute terms) and/or move to simply charging by the megabyte.

Anonymous Coward says:

Re: Re: Re:

Well I’m sure it will have its drawbacks but the thing I’m mostly concerned with is that it brings competition to the entrenched fat cable companies who want more to collude and conspire than to compete. And it’ll be (in theory) available everywhere to everybody.

I have no doubt they’ll fight back doing what they do best and bribing politicians and writing laws just like they always do, but it’ll be much harder for them to.

Anonymous Coward says:

Maybe we need a better analogy so dumb politicians understand?

The Telcos want people to think that broadband is some sort of limited resource and needs to be sold like water, gas, electricity, etc. ‘Pay for what you use’

But broadband is nothing like this. It does not need mined and piped to your house, its an infinite resource.

Broadband is like the original analogy of the ‘Information Superhighway’ Big rigs using lots of bandwidth pay more in road taxes where tiny low bandwidth electric only cars pay little. You see just like the roads the limitation in broadband is capacity, only so many vehicles can fit on a given road at the same time time.

I can drive my truck down the highway to NetFlix, pickup my movie and bring it back home. But AT&T converted the road in front of my house into a toll road placing a toll gate at my drive way. Every time I try to go anywhere they ask me where I am going. If I am going to NetFlix they charge me a toll, if I am doing to direct TV they give me a free voucher for any other tolls I might encounter along they way there and back.

Does not matter if I am driving to Netflix or to Direct TV my drive causes the same wear and tear and utilizes the same capacity on the network.

TimesChange says:

I see it as a positive

I see it as a positive

Simply, the more ISPs and content owners push to lock things down. The more anger, frustration and eyeballs will focus on their policy.

This puts pressure on long term investors. Puts pressure on politicians. Thus change when it comes, having seen the vision from Chairman Wheeler which the lobbies quashed, will come with a mighty pen that regulates them into divestment of conflict.

The only thing holding back antitrust on these companies are the lobbies. Citizens outnumber lobbies sheer numbers, if they chose to with a unified voice to congress, they would get the framework and rules they want to subscribe to, not the ones these companies force onto us through their duopoly.

Anonymous Coward says:

Re: I see it as a positive

Read history much? Here is a line from a famous document that implies you are just plain wrong.

“and accordingly all experience hath shewn that mankind are more disposed to suffer, while evils are sufferable than to right themselves by abolishing the forms to which they are accustomed.”

So, guess where that one is from?

Anonymous Coward says:

Re: Re: I see it as a positive

How about what comes after your out of context quote?

“But when a long train of abuses and usurpations, pursuing invariably the same Object, evinces a design to reduce them under absolute Despotism, it is their Right, it is their Duty, to throw off such Government, and to provide new Guards for their future security.”

Anonymous Coward says:

It gets worse

“A top adviser to Donald Trump on tech policy matters proposed all but abolishing the nation’s telecom regulator last month, foreshadowing possible moves by the president-elect to sharply reduce the Federal Communications Commission’s role as a consumer protection watchdog.”


Let’s see how all the naive folks who voted for Trump because he was going to help the working class like it when their cable TV, satellite TV, cell phone, land line and Internet bills all triple (and get capped as a special customer service bonus) (with minimum 5-year contracts) (with penalty clauses) (with even worse customer service, although that will definitely take some effort).

Anonymous Coward says:

Re: It gets worse

The FCC caused this mess, it should die.

If we have a chance of fixing this, it would be in the destruction of the old and formation of the new.

But you are right, I do not see a Trump administration making things better, hard to see how he can make it any worse.

The FTC could just do it’s fucking job and start slapping anti-trust and false advertising against the bastards but they do nothing. Why is that?

Anonymous Coward says:

Re: Re:

His supporters are more like:

“Trump! Trump! Trump! Trump! “

[Trump walks back on one of his impossible to achieve
promises to only just evil to achieve]
“Wait he said he won’t do one of the horrible things I like, I hate him! Impeach!”

[3 minutes later after Trump tweets something racist/stupid/sexist]

“Trump! Trump! Trump! Trump! Trump! Trump! Trump! Trump!”

Bruce C. says:

This type of vertical integration and competitive lockout is exactly what US Steel (Mellons) and Standard Oil of NJ (Rockefellers) engaged in until the Sherman anti-trust act was enacted and the trust-busters got moving. The laws are still on the books even if they haven’t been appropriately enforced for ages in the telecom industry. Maybe it’s time to start going through the FTC? I’m not holding out much hope that Donald Trump is Teddy Roosevelt reincarnated.

Ryunosuke (profile) says:

here is the end result of no net neutrality

AT&T has access to certain cable channels, Comcast has access to other certain cable channele, while Verizon has a different access.

Now since they have a “non-competing clause” they don’t involve in each other’s markets, now with certain channels available to certain providers, that now limits as to what content each provider provides. IE. Comcast broadcasts NBC, AT&T broadcasts Time Warner or CBS, while Verizon broadcasts ABC (As a pure example.)

NOW the Telco’s *COULD* and probably will, cite freedom of expression, but…. this will ultimately also lead to a limitation of sharing and dissemination of information, while also curtailing the freedom of expression to choose what news to consume by the consumer.

This is a purely hypothetical situation at this point, but it is also the path that I see the telcos going down.

Anonymous Coward says:

Re: here is the end result of no net neutrality

What do you mean going down? We are already there? What legal tool can prevent any of the Telco’s from going walled garden?

If you remember history the FCC already granted legal natural monopolies to the telco’s and the cable giants have been walled gardens with their own content since the beginning. What we are seeing here is nothing more than the takeover of telecom by the cable/content giants. A clear anti-trust issue, but the FTC & FCC approves of it based on their history. So does Congress as witnessed by their stance against Wheeler and the new net neutrality rules.

Obama did jack fucking shit, Hillary did jack fucking shit, regardless of what Trump does, it will at least be something different, maybe worse, maybe better.

Web_Rat (profile) says:

Zero Rating is Good for Consumers

Of course this is a good thing for consumers! Everyone needs to step back and look at the bigger picture.

AT&T is one of the largest corporate consumers of customer payments in the United States. By benefiting itself off zero rating, the amounts of cash they generate line the pockets of the upper management and large shareholders. It also covers the costs of the loyal lobbyists in DC that work tirelessly wining and dining our congress members to maintain the status quo. Congress is working tirelessly to maintain the lifestyles of all the poor unfortunates in this support chain, so remember if your against Congress, you must be for progress!

Anonymous Coward says:

Re: Zero Rating is Good for Consumers

“so remember if your against Congress”

Please qualify that in the future.

I can think of a number of way to be against incumbents, or against the oligarchy, whether you believe it be one, or both parties. But to be against Congress, is as much to be against the Constitution, as are the typical endeavors of incumbents themselves, is it not?

Anonymous Coward says:

Simple thing you need to understand: Level playing fields are rarely if ever built on the tops of mountains, they are usually built on the lowest ground. Net Neutrality wouldn’t fill on the gaps between the mountains, it would just plow the mountains down.

Financial motivation to sell add on services will encourage companies to improve their networks. That will raise the floor on everything over time, which gets you more than forcing them to stop innovating and bringing new products to market.

If AT&T wants to bring service via IP network to their customers, they are going to have to make sure their network is fast enough and capable of delivering to their customers. That means improving their distribution, raising network speeds, and so on. That will, like it or no, also improve their overall internet performance.

Absolute net neutrality is a recipe not only to slow progress, but to also move companies to proprietary distribution systems that will do little to advance the overall internet speeds of consumers.

The death of net neutrality is good for consumers.

Gwendolyn Levering says:

I like the zero rating idea…content I stream won’t count against my data caps and cost me more. ANYONE… LIKE T-Mo, VZ etc can do this practice as can any content provider . How is that discriminatory if AT&T charges itself the exact same price to accomplish this as it will offer anyone to do it! It’s cost shifting to others …small independent can offer the same deal ..or offer their content over the top ..their choice…it’s just another choice for consumers. I read both the FCC letter and AT&Ts response … and I don’t see how they’re taking over the world. Someone has to pay contrary to popular belief that the internet is “free” .. it isn’t… I’d rather someone pick up some of the cost, just sayin!

nasch (profile) says:

Re: Re:

How is that discriminatory if AT&T charges itself the exact same price to accomplish this as it will offer anyone to do it!

Seriously? That’s discriminatory because AT&T charging itself doesn’t cost AT&T any money, whereas AT&T charging Netflix (or anyone else) costs Netflix money.

small independent can offer the same deal ..or offer their content over the top ..their choice…

The problem is they might not be able to afford to pay all these zero rating fees. Remember it won’t just be AT&T if this is allowed to continue, eventually they’ll all do it, leaving small players at a competitive disadvantage.

it’s just another choice for consumers.

And consumers will choose the zero rated option, which locks in the currently dominant companies who can afford to pay.

Anonymous Coward says:


How would you like to grow a garden and have anyone pick the fruits of your labor for free?

It takes a lot of heavy investments to grow the network and make it universally accessible. Why would anyone sane do that by investing in a future growth and technology? Not being able to recoup the costs is simply bad business.

I really like the idea of me getting the TV services over all of my devices and not paying extra for additional bandwidth use. This is great for consumers!

Anyone who does not like it can just change the service provider.

nasch (profile) says:

Re: Freebie...

How would you like to grow a garden and have anyone pick the fruits of your labor for free?

That is not what’s happening. Everyone pays for internet access.

It takes a lot of heavy investments to grow the network and make it universally accessible.

And telcos have admitted that it is quite feasible to manage the infrastructure without usage caps, zero rating, etc.

I really like the idea of me getting the TV services over all of my devices and not paying extra for additional bandwidth use. This is great for consumers!

Except now you will probably never get any new service. Whatever we have now is what we’ll have for the foreseeable future because startups will not be able to afford the zero rating fees.

Anyone who does not like it can just change the service provider.

I have a choice between the most hated company in the US, and Century Link which is also terrible, slower, and overpriced. Awesome. Most people are in the same boat or worse have only one option.

Anonymous Coward says:

Re: Freebie...

Zero rating means that the ISPs content is paid for via your subscription to their services. and you will pay the indirectly, via increased subscription or increased cost of goods to pay for increased advertising costs for all other services. They will also be able to increase what you pay for their content, whether you use in or not, via their Internet charges.

Zero Rating simply means that the content costs are not itemized on your bill, while fake costs like regulatory recovery will be.

Also, why the ISPs will always claim that other content providers can pay them to be able to serve you, there is no guarantee that that fee will be affordable by those providers, or that they can be be negotiated in reasonable time by new providers. Also they will like the RIAA try to suck all the profit out of companies that they see as their competitors.

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