AT&T Tells FCC: DirecTV Now Data-Free Pricing Poses No Threat To Competition

T-Mobile may have unwittingly done a favor for AT&T today when it offered to give a year of free DirecTV Now streaming video to those who switch from Ma Bell’s wireless service.

AT&T cited the initiative as evidence that “the competitive process at work, driving innovation, lowering prices, and increasing consumer value” in a letter vigorously defending its offer to waive DirecTV Now data fees for its wireless customers who subscribe.

The telco responded to an information request from the FCC Wireless Telecommunications Bureau: It reached a “preliminary conclusion,” it said this month, that AT&T’s so-called zero rating plan favoring DirecTV Now might “inhibit competition, harm consumers, and interfere with the ‘virtuous cycle’ needed to assure the continuing benefits of the Open Internet.”’

The idea is that competitors including Netflix, Sling TV, and Hulu would find it hard to compete because AT&T wireless customers would rack up data fees when they watch their videos. In other words, it would violate the spirit and possibly the letter of the FCC’s net neutrality rules.

But AT&T Federal Regulatory SVP Joan Marsh calls the FCC bureau’s view “a radical departure from settled law” with “no plausible basis” for its conclusion.

The telco adds that neither its wireless service nor DirecTV Now “is or could conceivably become a monopolist in any relevant market.” And if it charged data fees to its wireless customers then “consumers would be substantially worse off.”

They “are more likely to perceive DirecTV Now as a cable substitute if, as with cable, they can consume as much of it as they like without worrying about overages,” Marsh says.

She also notes that the FCC bureau’s challenge to the zero rating offer is out of step with the views of the Republican commissioners who will dominate the agency when Donald Trump becomes president, and Chairman Tom Wheeler leaves.

If the bureau formally opposes AT&T’s pricing before January 20  then it “will very likely be reserved shortly thereafter.”

T-Mobile’s offer this morning would give a $35 a month DirecTV Now credit for one year to AT&T Wireless customers who switch and subscribe to two lines.

“AT&T wants you to think DirecTV is theirs exclusively, but that’s a load of crap,” T-Mobile CEO John Legere says. “Both DirecTV Now and the DirecTV apps stream free on T-Mobile with a faster, more advanced network that covers nearly every American.”

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