AT&T Begins Testing Its Power In The Wake Of Merger Mania & The Death Of Net Neutrality

from the boiling-frog dept

So as we've long noted, the death of net neutrality and the latest round of M&A mania isn't going to result in an immediate internet apocalypse. ISPs are nervous about looming court challenges which, thanks to all manner of ridiculous behavior at the FCC, have a good chance of succeeding. They also know that unless they can get a phony, pre-emptive law on the books, the next FCC or future, less-cash-compromised Congress could just come in and restore the rules. As such, they're going to be testing their newfound freedoms very slowly, much like the boiling frog metaphor (you are the frog in this equation).

Case in point: on the heels of the company's $86 billion merger with Time Warner, AT&T introduced a new $15 per month streaming video service dubbed "AT&T Watch." Watch is a bare-bones skinny bundle that competes with services like Philo, a $16 per month offering from several major broadcasters. But AT&T's ownership of the pipes this content flows over gives the telecom giant a very notable advantage. In this case, that has resulted in AT&T offering the service for free to the company's wireless customers, an advantage smaller streaming operators may find hard to overcome:

"Not that it matters anymore since the Federal Communications Commission, headed by telecommunications shill Ajit Pai, successfully killed net neutrality protections earlier this year, but AT&T’s tiered unlimited plans that are strapped with limitations and its decision to offer access to properties it owns for free to its subscribers are cardinal sins against the bright line rules of net neutrality."

Of course that's just the start. With no hard net neutrality rules on the books and the FCC stripped of its authority to police ISPs, there will ultimately be nothing stopping AT&T from disadvantaging its competitors further in more aggressive ways, whether that includes counting a competitors' content against usage caps while exempting AT&T's own services (zero rating), or engaging in gamesmanship at interconnection points in a bid to drive up costs of would be competitors (as we saw with the ISPs' battle with Netflix a few years ago).

Meanwhile, AT&T continues to engage in very AT&T-like behaviors beyond just net neutrality. For example, AT&T began offering its wireless customers free access to HBO last year as it tried to sell regulators on the idea the Time Warner merger would be wonderful for everyone. But it didn't take long for that perk to quickly disappear this week as the company began fiddling with (and raising the prices on) its unlimited data tiers:

"But AT&T revamped its two unlimited mobile plans this week, and in the process it raised the price for the entry-level plan by $5 a month while removing the free HBO perk. The entry-level unlimited plan now starts at $70 instead of $65. Existing customers can keep their old plan and the free HBO, but new customers or those who switch plans will have to buy the more expensive unlimited plan to get HBO at no added cost."

Synergies, yo! Again, like the boiling frog metaphor, these companies make these changes at a somewhat glacial pace, hoping that consumers won't notice as they are gradually squeezed. For example, AT&T this week also leaned in on a long-standing, misleading practice in the telecom and cable TV sectors: bullshit fees. The company quietly announced it would be jacking up its "administrative fee" for all customers from $0.76 to $1.99, effectively providing AT&T with roughly $800 million in additional revenue every year.

The fee, as with most similar fees, simply involves taking some errant cost of doing business and then shoveling it below the line. This serves two real purposes: it lets companies falsely advertise a lower rate, and it allows a company to quietly raise prices while claiming it isn't -- by pointing to the unchanged advertised price. And for years, we've let companies like AT&T provide flimsy justifications like this one:

"When reached for comment, an AT&T spokesperson confirmed the existence of the fee increase. “This is a standard administrative fee across the wireless industry, which helps cover costs we incur for items like cell site maintenance and interconnection between carriers,” the spokesperson said in a statement."

Right. But "cell site maintenance" and "interconnection between carriers" are just the cost of doing business . There's no reason to break these out below the line outside of trying to falsely advertise a lower rate. This behavior has become an obnoxious standard of the telecom and cable TV industries, and you'd be pretty hard pressed to find a regulator or politician from either party that cares. Meanwhile, numerous lawsuits over these kinds of practices haven't done much to limit the behavior.

Again, it's important to remember that the FCC's net neutrality repeal didn't just kill net neutrality. It also dismantled state and FCC oversight of ISPs, intentionally throwing any fleeting, remaining oversight back to the FTC -- an overhwhelmed agency with such limited authority over telecom these kinds of concerns will fall through the cracks (the entire point of the ISP policy gambit). The one-two-three punch of limited competition, crippled regulatory oversight, and unchecked vertical integration power is going to reverberate internet-wide for the next decade.

To keep public and press outrage muted as they cash in on this newfound lack of any real checks and balances, ISPs are going to slowly-but-surely impose an endless array of new restrictions and caveats that seen alone aren't earth-shattering. But if you pay attention over time, you'll note that the temperature of the pot we're all currently sitting in will slowly but surely start to feel decidedly uncomfortable.

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Filed Under: ajit pai, fcc, fees, hbo, limited, net neutrality, raising prices, unlimited, zero rating

Companies: at&t