AT&T vigorously defended its plan to let its wireless customers watch the soon-to-launch DirecTV Now streaming service without incurring data charges, telling the FCC in a letter today that it will make wireless broadband more competitive with cable.
The practice — known as zero rating — will provide wireless customers with the kind of “mobile video experience they increasingly demand in the most consumer-friendly manner possible,” AT&T’s Senior EVP External & Legislative Affairs Robert Quinn Jr. says.
He’s responding to a November 9 letter from Jon Wilkins, the head of the FCC’s Wireless Telecommunication Bureau, questioning whether AT&T’s pricing plan might “obstruct competition and harm consumers.” The FCC has said that it will examine zero rating practices on a case-by-case basis to see whether they run afoul of the agency’s net neutrality rules.
Critics say that rival video streaming services including Sling TV and one planned by Hulu will find it hard to compete if AT&T Wireless customers incur data charges for using them, but not if they subscribe to DirecTV Now. AT&T will formally unveil it next Monday, but says that it will offer more than 100 channels for $35 a month.
AT&T says it “faithfully adhered” to the net neutrality laws in the zero rating plan.
The FCC “recognized that sponsored data programs can offer significant benefits to consumers and competition, including: increasing choice and lowering costs for consumers, enabling edge providers to distinguish themselves in the marketplace and tailor their services to consumer demands, and promoting the virtuous circle of innovation and investment,” Quinn says.
Indeed, “AT&T made its sponsored data program available to all content providers on the same terms and conditions” — meaning that others could pay AT&T to waive consumers’ data charges for their services.
Although AT&T may offer DirecTV Now without data charges, it will still “need to respond to those new usage demands by making capital-intensive investments, which will add to the billions AT&T has already spent to keep up with skyrocketing mobile video usage,” Quinn says.
If the FCC objects, he adds, then it would “upend decades of commercial arrangements between telecommunications carriers and their vertically integrated affiliates.” That’s beyond the Bureau’s authority, and “could only be attempted in a rulemaking proceeding after notice and comment.”
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