Regulators call out AT&T, Verizon
U.S. regulators are calling out AT&T Inc. and Verizon Communications Inc. 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, because agency leaders appointed by Presidentelect Donald Trump 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 the company’s response did not ease its concerns.
Other services — such as Hulu or Netflix, for example — can pay Verizon and AT&T so that consumers could also use those apps without eating up the limited data allowances on their cellphone plans. The FCC says that could harm the market for streaming services as it makes it more expensive for Internet compa- nies to compete with video services that are owned by the carriers.
For example, the FCC estimates 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 his data on the cellular network, or $47 a month for watching half an 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 because consumers could have to pay for more data to watch.
AT&T said Friday that exempting apps such as DirecTV Now from data caps saves customers money, and that the FCC shouldn’t put a stop to that. Verizon Communications Inc. said its practices are good for consumers and comply with regulations. Verizon lets wireless customers watch its go90 video app and NFL football, for which it has exclusive mobile rights, without using up data.