Recently, the FCC made the allegation that after AT&Ts recent acquisition of DIRECTV, their plans to offer DIRECTV NOW as a streaming service may violate the FCCs Net Neutrality rules regarding exempting the service from its wireless data caps. And while herald the “zero rated” scheme as a boon for cord cutters, it may also be the next step in watering down net neutrality protections.
“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.”
The issue centers around DIRECTV offering streaming NOW customers the perk of not having their streaming activities count against their mobile data caps on AT&T. The FCC warns that the practice of “zero rating” will cause an unfair advantage of one streaming service over another, which is in violation of Net Neutrality rules.
DIRECTV defends the practice, saying that it will make streaming competitive against cable and satellite providers, something that the FCC sought to encourage when they approved the merger of the two companies.
Zero rating, was started in the cell phone industry, as companies have used it to entice customers to jump wireless networks. Depending on the Network, schemes have been adopted including unlimited music streaming through some phone centric plans, and video streaming on others. Each not counting against the user’s overall data cap. But in the case of DIRECTV NOW AT&T will only be zero rating traffic from their streaming service, while counting other streaming services like Netflix and CBS All Access against it.
The loophole here is that DIRECTV technically pays AT&T for access to the wireless network, the devil is in the details, as the cost to provide such traffic to DIRECTV NOW is equal to the revenue it brings in, essentially giving the satellite company the bandwidth at cost.
So it’s a zero sum game accomplished with an accounting gimmick. But AT&T also says it will lose money in the deal as it has to upgrade it’s wireless network to accommodate the increase in streaming traffic.
Meanwhile, FCC commissioners argue that the cost to provide access to other streaming networks is higher, making it financially impossible to compete with DIRECTV Now on AT&Ts playing field. But AT&T responded that Netflix and other companies could get a better deal by making purchases of larger volumes of bandwidth for their customers.
“Finally, despite a mountain of filings on the issue, the Commission has issued no guidance on sponsored-data practices in the nearly two years since it released the Open Internet Order, even though, in the meantime, those practices have become an integral part of the competitive telecommunications landscape.” – AT&T
The bottom line is, while zero rating one streaming service over another in this fashion may technically not violate the letter of the law, as there is nothing in the current FCC rules to prohibit it, it certainly violates the spirit of what Net Neutrality is all about. But this is where AT&T has the high ground, noting that the FCC has let schemes like this proliferate without offering any clear guidance over what is and what isn’t against the rules.
And AT&T can afford to play for time, as time is running out on the current regime, as the incoming President may not be as big a supporter of Net Neutrality as the Obama Administration. So it looks like cord cutters may lose out on this one in the long run, but in the short run they’ll be eating it up.
Source: Ars Technica