It seems that AT&T is trying to change cable TV services forever. They are planning to offer their internet only subscription TV package, DirecTV Now, which offers more than a hundred channels for just thirty-five dollars per month. Experts say that if the pricing and channel selection are interesting as promised by AT&T, it will surely be a massive hit. However, AT&T is also relying on some other things to sell DirecTV Now services; integration with the cell network of AT&T.
Integration with the cell network would let a user stream TV channels on their smartphone or tablets without using up the data plan. This is the type of deal that only AT&T can offer, being the owner of a national mobile and cable network. However, a letter from the Federal Communications Commission say that doing so can be illegal.
In their letter, FCC says that it, “believes that the terms and conditions under which Sponsored Data is offered to content providers unaffiliated with AT&T, combined with their current practice of zero-rating DIRECTV video applications for AT&T Mobility subscribers, may obstruct competition and harm consumers by constraining their ability to access existing and future mobile video services not affiliated with AT&T.”
Yet again, the problem is not completely with the zero-rating. FCC allows for some data zero-rating if it is equitable across the various content providers. This is the reason the Binge-On program from T-Mobile, which zero-rates data for free from the content providers that take part in the program, is allowed by FCC to continue. However, in the case of DirecTV Now and AT&T, the Commission is much worried about the fairness of the zero-rating program.
AT&T says that their program is legal, as it allows the competitor to pay same amount to DirecTV as zero-rate data. This means that if Netflix wanted the AT&T users to watch shows without losing data, AT&T says Netflix can pay the low wholesale rate as DirecTV to have the chance. FCC says that the important difference here is that Netflix will need to pay AT&T up-front, but DirecTV will be offering an internal transfer of payment.
AT&T responded to the letter from FCC saying, “With our Data Free TV offer, DIRECTV picks up the tab for our Mobility customers’ data use when they’re streaming content… We welcome any video provider that wishes to sponsor its content in the same “data free” way for AT&T Mobility customers and we’ll do so on equal terms at our lowest wholesale rates. Saving consumers money is something we all should support.”