In recent times, telecom companies like AT&T, Verizon, and other have started to use zero-rating feature in more services. This allows companies to charge less as users can access as much content as they like without surpassing a data cap. 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.
Jon Wilkins, the FCC’s chief of wireless telecommunication has emphasized the need for the two companies to respond to the commission’s concerns with appropriate measures by December 15th. Both companies responded to the FCC letters. AT&T has stated that it will provide the FCC with any information on the reason why it shouldn’t limit a service that saves consumers money. Verizon has said that it plans to review and respond to the FCC’s inquiry but the company remains confident about their good practices.
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