DirecTV Now remains in the media spotlight, but not for the reasons AT&T had hoped. The Federal Communications Commission’s (FCC) Wireless Bureau released a new report in early 2017 that found AT&T’s DirecTV Now unlimited data plan violates the Open Internet order’s general conduct standard. This is bad news for DirecTV Now and sets a clear precedent that could have ramifications throughout the entire broadband industry. Well, it would have ramifications if the FCC was not about to undergo a complete executive overhaul as the Trump administration plans to replace Wheeler as the FCC chairman.
The Wheeler-led FCC finished its long-standing review of zero-rating business plans, finding no issues with zero-rating itself, but serious concerns surrounding DirecTV Now’s sponsored data-plan. While this report only directly implicates DirecTV Now, it also mentions that Verizon’s sponsored-data plan, Verizon Wireless FreeBee Data, raises similar concerns. The report characterized its findings saying:
“In light of the rates at which DIRECTV is offering its DIRECTV Now service to end users, the information we have indicates that AT&T (including both the network operator and edge provider affiliates) does not consider zero-rating to be a real cost of business,” ” the report said. “Instead, AT&T appears to view the network cost of Sponsored Data for DIRECTV Now as effectively de minimis. Unlike T-Mobile, however, which charges all edge providers the same zero rate for participating in Binge On, AT&T imposes hefty per-gigabyte charges on unaffiliated third parties for use of Sponsored Data. All indications are that AT&T’s charges far exceed the costs AT&T incurs in providing the sponsored data service. Thus, it would appear that AT&T’s practices inflict significant unreasonable disadvantages on edge providers and unreasonably interfere with their ability to compete against AT&T’s affiliate, in violation of the General Conduct Rule.”
While this report may seem incredibly detrimental for DirecTV Now, there are a lot of politics involved that, in this case, seem to be playing out in AT&T’s favor. Most specifically, the new Trump Administration is replacing Wheeler as the head of the FCC with a more conservative chairman. This new Republican-controlled FCC is far more likely to come down on the side of businesses like AT&T and Verizon as the traditional conservative values tout less regulation rather than more. Both Verizon and AT&T representatives have made comments to the effect that they are disappointed in the FCC’s findings, but confident that the new FCC administration will not support the Wheeler agenda.
While politics have created an interesting safe zone for AT&T and Verizon for now, the issue of free data packages and how they interact with the new net neutrality laws is an important one to watch moving forward. Particularly as the FCC transitions out of the Wheeler administration.