The Federal Communications Commission (FCC) has demanded answers of AT&T against speculation of breaching net neutrality rules with its DirecTV Now video streaming with a charge of only $35 per month.
DirecTV Now is offered by the telecom network operator with no charges for video streaming from mobile data, against all other service providers being charged for the same.
The DirecTV streaming exemption for mobile data caps began in September.
The FCC wireless bureau conveyed concerns on the same in a letter sent to AT&T yesterday.
In the letter, FCC has asked AT&T to explain the zero-rating of its video service with no charges on mobile or smartphone data.
Meanwhile, other companies are required to pay for the so-tagged ‘Sponsored data’ service for the right to stream video or other media without charging on customer data caps.
Though the net neutrality rules are not violated directly, the Open Internet Order empowers the commission to halt proceedings that harm competitors or consumers.
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The move “may obstruct competition and harm consumers by constraining their ability to access existing and future mobile video services not affiliated with AT&T,” added the FCC.
AT&T has come up with the counter argument that DirecTV pays for the right to bypass data caps and other companies are on equal terms at lowest wholesale rates.
But the regulator is not convinced with it.
“The position that the participation of DirecTV in Sponsored Data is the same as that of third parties, however, fails to take account of the notably different financial impact on unaffiliated providers,” the FCC adds.
“While there is no cash cost on a consolidated basis for AT&T to zero-rate its own affiliate’s mobile video service, an unaffiliated provider’s Sponsored Data payment to AT&T Mobility is a true cash cost,” cleared the regulator.
Other service providers not paying to override the data cap charges will face the disadvantage by serving without zero-rating.
The FCC stated this as the prominent concern.
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As per AT&T information the commission added that the cost of zero-rating full-fledged video services on AT&T’s network could be significant.
The formal response to FCC will come in later by the provider.
The situation will not have cropped if regulations against the same were imposed during the merger of AT&T and DirecTV last year.
The regulator imposed restrictions from exemption against online video services from AT&T internet data caps applied to competitors, but did not extend it to mobile Internet data caps.
The FCC though not against zero-rating completely, believes it may provide consumer and competitive benefits, as per the letter to AT&T.
Once the regulator moves under Republican control from January 20, its stand may vary alongside possible variations in net neutrality rules.
The effect of the same may also hinder AT&T and Time Warner merger, with Trump earlier promising to block the merger during campaigns.
AT&T has invested $5.9 billion in 3Q16 and with over $16 billion spent in Capex in 2016 till date. The company revealed net Capex expectations of $22 billion in 2016.
Rivals Verizon, T-Mobile, and Sprint are expected to spend about $17.7 billion, $4.7 billion, and $3.0 billion, respectively, on Capex this year.
Vina Krishnan
editor@telecomlead.com
