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Bloomberg
US regulators are calling out AT&T and Verizon for exempting their own video apps from data caps on customers’ cellphones. This may not result in any changes in how the wireless carriers operate, however, as agency leaders appointed by Donald Trump, the incoming president, are expected to look more favorably on such practices.
The Federal Communications Commission sent letters to the country’s biggest wireless carriers Thursday saying the way they handle the practice, known as “zero rating,†can hurt competition and consumers. The agency had warned AT&T in November and said in its Thursday letter that AT&T’s response did not ease its concerns.
Other services — say Hulu or Netflix — can pay Verizon and AT&T so that consumers could also use those apps without eating up cellphone data. The FCC says that could harm the market for streaming services as it makes it more expensive for internet companies to compete with video services that are owned by the carriers. For example, the FCC estimates that a video service provider would have to pay AT&T $16 a month for a customer who streamed video for 10 minutes a day without using up his data on the cellular network, or $47 a month for a user watching a half-hour a day.
Adding in those costs makes it difficult for a rival to compete on price with AT&T’s new online TV app, DirecTV Now, whose cheapest bundle costs consumers $35 a month, wrote Jon Wilkins, the head of the FCC’s wireless bureau. Competing video providers would also be at a disadvantage if they didn’t zero-rate their services at all, as consumers could need to pay for more data to watch.