AT&T to FCC: Giving Our Content Unfair Advantage Is Pro Consumer

AT&T continues to pretend that giving its own content an unfair advantage in the market is somehow pro-consumer. For some time now we've noted how AT&T intends to use "zero rating" -- or the act of exempting only its own content from its usage caps -- as a cornerstone of its upcoming DirecTV Now streaming video service. In other words, DirecTV Now traffic won't count against AT&T's bandwidth caps, but video content from competitors -- be it Netflix or a non-profit -- will.

A few weeks back, we noted how the FCC finally got around to realizing the anti-competitive implications of this sort of behavior.

In the letter to AT&T from the FCC's Jon Wilkins, the agency expressed concerns that zero rating DirecTV Now "may obstruct competition and harm consumers by constraining their ability to access existing and future mobile video services not affiliated with AT&T."

"It is not difficult to calculate usage scenarios in which an unaffiliated provider's Sponsored Data charges alone could render infeasible any third-party competitor's attempt to compete with the $35 per month retail price that AT&T has announced for DIRECTV Now," the letter said. "Unaffiliated video providers not purchasing Sponsored Data would likewise face a significant competitive disadvantage in trying to serve AT&T Mobility's customer base without zero-rating."

AT&T responded to the FCC this week in a letter (pdf) that tries to claim that giving its own content an unfair advantage is somehow good for consumers.

"These initiatives are precisely the kind of pro-consumer challenges to cable that the Commission heralded in approving AT&T's acquisition of DIRECTV," claims AT&T. "We are extremely bullish on the pro-consumer benefits of sponsored data," says the company.

Right. Except there's nothing pro-consumer about making it harder for streaming competitors to do business. Many consumers are arguably blind to the negative repercussions of zero rating, believing they're getting something for free. But once you realize that usage caps are entirely arbitrary and unnecessary constructs in the first place, it's only a logical skip and a jump toward understanding how caps can be used by broadband duopolists to anti-competitive advantage.

As for the fact that AT&T's preferential treatment of its own content harms competitors, AT&T proclaimed that companies that are worried can also get cap-exempt status -- if they're willing to pay AT&T for the privilege.

"The suggestion that Data Free TV creates “significant disadvantages” for online video distributors who wish to reach AT&T’s wireless subscribers is likewise off-base," claims the telecom giant. "Any unaffiliated content provider can participate in AT&T’s Sponsored Data program on the same terms and at the same rate as DIRECTV, and the sponsored data rate is as low as the market based rates AT&T currently offers even to wireless resellers who commit to significant purchase volumes."

Right, but AT&T owns DirecTV -- making that sort of comparison more than a little disingenuous. Companies still wind up having to pay AT&T a troll toll just to be on equal footing with AT&T -- the exact behavior that triggered the net neutrality debate a decade ago. There's simply no debate that AT&T is using arbitrary usage caps as a weapon against competitors in this instance. Meanwhile, it's unclear if zero rating will apply to solely AT&T's wireless usage caps, or the usage caps also imposed on the company's fixed-line broadband services.

It's worth repeating that his is a problemwhen it decidedto ban zero rating when implementing its net neutrality rules last year. And there's every indication the FCC's "enforcement" (if that's what you can call a sheepish letter) is too little, too late. With the incoming Trump administration picking cozy telecom industry insiders to guide the FCC transition team, and the GOP intent on using its expanded power to rewrite the Communications Act, there's every indicationnet neutrality rules may soon be walked back, and the FCC could soon be powerless to act against this sort of anti-competitive market behavior.