AT&T plans to release their own TV streaming service known as DirecTV Now might be derailed. The service offers a lot of content for a much cheaper monthly rate than any of its competitors. However, the zero-rating feature allows free data for video streams, which enables the low price of the service, might be violating net neutrality rules.
The zero-rating feature is officially known as Sponsored Data program. It is quite a popular strategy in the industry as it is used by other companies. T-Mobile uses the free data for music and movies while Verizon makes use of the zero-rating package in its Go90 app.
Although the FCC has not blocked the use of zero-rating features and strategies, it is still viewed to have certain implications for net neutrality rules. The main problem for AT&T is that it also owns the DirecTV Now streaming service. The FCC is worried that using the zero-rating’s free data on their own service will provide AT&T with an unfair advantage. This situation could lead to the marginalization of its competitors on the market as they won’t be able to offer the same service at the same price.
AT&T has argued the Sponsored Data program is the same for every party that participates in the program. As such, the feature is nondiscriminatory and DirecTV use of it isn’t anything special. The FCC further emphasized that DirecTV is not a third-party adhering to the service as it is owned by AT&T. In a letter to the company, the FCC cites that unaffiliated providers are the ones who actually pay the cost while DirecTV is only paying a token cost. This cost is translated by the company into Sponsored Data revenue.
FCC has asked the company to officially respond to its letter. At this point, it’s unknown if AT&T has complied with their request or not. However, the carrier might be preparing for a fight on this matter. AT&T’s head of external and legislative affairs, Robert Quinn, has stated that the company welcomes any provider which wishes to sponsor their content through zero-rating packages.
The FCC is ready to impose penalties on all companies which violate the rules of net neutrality. Last year, AT&T was the recipient of a $100 million penalty because of the lack of transparency in its Maximum Bit Rate policy.
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