This week, AT&T ended its controversial “sponsored data” policy, which exempted use of the telecom’s streaming video services, notably HBO Max and AT&T TV, from counting against data caps of AT&T wireless and wireline internet products. 

It’s unclear as to specifically how many AT&T customers this will impact. But it doesn’t appear that it will be many.

On the mobile side, AT&T has been promotionally tying HBO Max only to unlimited data plans. Meanwhile, on the wireline side, the telecom has been bundling HBO Max, as well as its IP-based pay TV service, AT&T TV, with fiber internet products, which don’t have usage caps. 

AT&T does, however, employ usage-based pricing on non-fiber wireline internet products—a pricing policy that was suspended at the outset of the pandemic, but returned at the beginning of 2021. Notably, Comcast, the biggest ISP in the U.S, pushed back plans to reinstate a 1.2 terabyte usage cap.

AT&T has been phasing out DSL for some time, but it still reported 653,000 DSL connections as of the end of the second quarter of 2020, located in Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, and Tennessee. These customers are capped at a very low overhead of 150 gigabytes of monthly data usage before having to pay an additional $10 for each additional 50 gigs they use. 

If these users are trying to stream video, 150 GB goes fast. 

Given that the fastest downstream speed offered for AT&T’s legacy DSL services is 6 megabits per second, it’s highly doubtful that there are a lot of AT&T DSL users even attempting to stream HBO Max’s premiere of the Snyder Cut Thursday in 4K/HDR. But they'll still use 0.9 GB an hour trying to stream base-level HD resolution (720p).

AT&T also caps its limited number of LTE fixed wireless customers at 350 GB. 

And, perhaps most importantly, AT&T Internet customers who have downstream speeds of 300 Mbps and below are capped at 1 terabyte. Of AT&T’s nearly 15.4 million wireline broadband users, fiber customers, uncapped with speeds of 500 Mbps and above, represent the fastest growing cohort. But most AT&T wireline subs still fall into the group capped at 1 TB. 

For the millions of customers in this group, streaming 4K content on services including HBO Max and AT&T TV will chew up about 7.2 GB per hour. According to OpenVault, a company that consults cable operators and telecoms about how their networks are used, 14.1% of U.S. internet customers exceeded an average monthly usage of 1 TB in 2020. That number will undoubtedly grow in 2021, most likely in a significant way. 

A Little Background

In 2014, AT&T introduced the concept of “sponsored data,” which allowed services running on its networks to pay for the privilege of having their customers’ data usage “zero rated”—meaning, it didn’t count against customer usage caps. 

Ultimately, the only services that really ended up using sponsored data were owned by AT&T. And this week, the telecom ended the practice, blaming California net neutrality laws aimed at protecting consumers. 

"Unfortunately, under the California law we are now prohibited from providing certain data features to consumers free of charge," AT&T wrote on its website. "Given that the Internet does not recognize state borders, the new law not only ends our ability to offer California customers such free data services but also similarly impacts our customers in states beyond California.”

Some prominent Democratic senators are pressing AT&T on reports that it is not counting its owned HBO Max streaming against its customers data caps, a practice dubbed zero rating.

By contrast, Netflix, Hulu and Disney Plus is not exempted from data usage limits.

That came in a letter to AT&T CEO Randall Stephenson from Sens. Ed Markey (D-Mass.), Ron Wyden (D-Ore.) and Richard Blumenthal (D-Conn.).

"According to recent reporting and comments from AT&T executives, your company has a policy of favoring a specific streaming service in a manner that appears to runs contrary to your stated support for a free and open internet,” the senators wrote. “The Trump FCC may have gutted critical net neutrality protections, but AT&T nonetheless has a responsibility to avoid any policies or practices that harm consumers and stifle competition.

"Although HBO Max may technically be paying for this benefit, AT&T is essentially paying itself. This practice of allowing one arm of your company to 'pay' another arm of your company for preferential treatment attempts to mask its true impact."

“Our wireless subscribers can stream HBO Max video without incurring data charges, which will save money for millions of consumers," said AT&T in a statement. "This is based on a Sponsored Data arrangement and is a program we offer on the same terms to any entities who wish to sponsor data for their customers. This is similar to arrangements some of our competitors have.”

The FCC under former chairman Tom Wheeler put out an advisory that zero rating and sponsored data plans violated the FCC's Open Internet Order net neutrality rules, but that advisory was rescinded by FCC chair Ajit Pai in 2017, as were the net neutrality rules a year later.

Fans of zero rating plans, including Pai, say they are pro-consumer.

Broadband providers argue that zero-rating plans are a user-friendly way to differentiate service — for example, T-Mobile zero-rated Pokémon Go as a way to differentiate its service as the wildly popular VR game swept the nation. On the other side, opponents argue zero rating is a pay-to-play way for some services to get an unfair advantage and divide the net into haves and have nots."

Some prominent Democratic senators are pressing AT&T on reports that it is not counting its owned HBO Max streaming against its customers' mobile data caps, a practice dubbed zero rating.

Also read: AT&T Excuses HBO Max from Mobile Data Caps … but Enforces Them on Netflix and Disney Plus

By contrast, Netflix, Hulu and Disney Plus are not exempted from data usage limits.

Objection to the practice came in a letter to outgoing AT&T CEO Randall Stephenson from Sens. Ed Markey (D-Mass.), Ron Wyden (D-Ore.) and Richard Blumenthal (D-Conn.).

"According to recent reporting and comments from AT&T executives, your company has a policy of favoring a specific streaming service in a manner that appears to runs contrary to your stated support for a free and open internet,” the senators wrote. “The Trump FCC may have gutted critical net neutrality protections, but AT&T nonetheless has a responsibility to avoid any policies or practices that harm consumers and stifle competition.

"Although HBO Max may technically be paying for this benefit, AT&T is essentially paying itself. This practice of allowing one arm of your company to 'pay' another arm of your company for preferential treatment attempts to mask its true impact."

“Our wireless subscribers can stream HBO Max video without incurring data charges, which will save money for millions of consumers," said AT&T in a statment. "This is based on a Sponsored Data arrangement and is a program we offer on the same terms to any entities who wish to sponsor data for their customers. This is similar to arrangements some of our competitors have.”

The FCC under former chairman Tom Wheeler put out an advisory that zero rating and sponsored data plans violated the FCC's Open Internet Order net neutrality rules, but that advisory was rescinded by FCC chairman Ajit Pai in 2017, as were the net neutrality rules a year later.

Fans of zero rating plans, including Pai, say they are pro-consumer.

Broadband providers argue that zero-rating plans are a user-friendly way to differentiate service — for example, T-Mobile zero-rated Pokémon Go as a way to differentiate its service as the wildly popular VR game swept the nation. On the other side, opponents argue zero rating is a pay-to-play way for some services to get an unfair advantage and divide the net into haves and have nots."

Verizon said Fios TV subs can now use the Fios Mobile app to watch live TV and on-demand content, and access DVR recordings without eating into their data plans if they also get mobile phone service from the carrier.

Verizon recently joined rivals by adding an unlimited mobile data option, but said the new data plan exempt capability brings more value to mobile tiers that are outfitted with monthly data plans.

The Fios Mobile App currently provides access to 140-plus live TV channels for viewing outside the home.

AT&T currently zero-rates DirecTV Now traffic that travels AT&T’s mobile network.

The FCC, under new chairman Ajit Pai, recently tossed out the Wireless Bureau's advisory that AT&T’s zero-rated policy for DirecTV Now likely violates the FCC’s Open Internet order.

As expected, the FCC under new chairman Ajit Pai has scrapped the Wireless Bureau's advisory that AT&T’s DirecTV Now sponsored video data (zero rating) plan likely violates the FCC’s Open Internet order and that Verizon’s FreeBee Data 360 sponsored data plan probably does, too.

The Wireless Bureau has rescinded that report and signaled to AT&T and Verizon that it has no legal effect.

"On January 11, 2017, the Wireless Telecommunications Bureau (Bureau) issued a report titled “Policy Review of Mobile Broadband Operators’ Sponsored Data Offerings for Zero Rated Content and Services” (Policy Review Report)," the Wireless Bureau order says. "Today, the Bureau sent letters to AT&T Mobility, T-Mobile, and Verizon Wireless closing the inquiries into each company’s sponsored data and zero-rating offerings, taking no further action.  By this Order, and pursuant to Section 1.113 of the Commission’s rules, the Bureau now sets aside and rescinds the Policy Review Report and any and all guidance, determinations, and conclusions contained therein, including the document’s draft framework. The Policy Review Report will have no legal or other effect or meaning going forward."

“Today, the Wireless Telecommunications Bureau is closing its investigation into wireless carriers' free-data offerings," said Pai of the move. "These free-data plans have proven to be popular among consumers, particularly low-income Americans, and have enhanced competition in the wireless marketplace. Going forward, the Federal Communications Commission will not focus on denying Americans free data. Instead, we will concentrate on expanding broadband deployment and encouraging innovative service offerings.”

“We’ve always believed that our free data programs like “FreeBee data” benefit consumers, and we’re very encouraged that the FCC agrees," said Verizon spokesman Rich Young. "We’re quite certain our customers feel the same way, particularly those who plan to watch the big game over the weekend – free of data charges.”

“Today’s announcement is a win for the millions of consumers who are reaping the benefits of services made available through free data programs," said AT&T sernior VP Joan Marsh. "We’re pleased that these innovative products will be able to continue to flourish in the marketplace.”

That zero rating report had come with only days left in FCC Chairman Tom Wheeler's tenure (http://www.multichannel.com/wheeler-fires-parting-zero-rating-shot/410196), and was described by the then commissioner Pai as among various 11th-hour actions "pursuing partisan, political agendas that only harm investment and innovation."

He had called it "midnight regulation of free data," saying: "This time the midnight regulations come in the form of a Bureau-level report casting doubt on the legality of free data offerings—offerings that are popular among consumers precisely because they allow more access to online music, videos, and other content free of charge.  This report, which I only saw after the FCC released the document, does not reflect the views of the majority of Commissioners.  Fortunately, I am confident that this latest regulatory spasm will not have any impact on the Commission’s policymaking or enforcement activities following next week’s inauguration."

The initial Wireless Bureau report (https://transition.fcc.gov/Daily_Releases/Daily_Business/2017/db0111/DOC...) concluded: “The limited information we have obtained to date … tends to support a conclusion opposite from AT&T’s contentions — namely, that AT&T offers sponsored data to third-party content providers at terms and conditions that are effectively less favorable than those it offers to its affiliate,” adding, “the structure of Verizon Wireless’s FreeBee Data 360 sponsored data program offering may pose concerns for the same reasons as AT&T’s Sponsored Data program.”

Under the FCC's Open Internet order, there is a general conduct standard beyond the bright-line rules drawn against blocking, degrading and paid priority. It is a way for the FCC to look, on a case-by-case basis, at conduct that could impede the free flow of content from the edge to the consumer. Pai is no fan of that standard, either.

"Today, the Commission finally puts an end to the past Commission’s zero-rating inquiries and recommits to permissionless innovation," said Commissioner Michael O'Rielly. "While this is just a first step, these companies, and others, can now safely invest in and introduce highly popular products and services without fear of Commission intervention based on newly invented legal theories."

Democratic Commissioner Mignon Clyburn was not pleased with that and other bureau actions rescinding prior decisions of the Democratic majority.

“It is a basic principle of administrative procedure that actions must be accompanied by reasons for that action, else that action is unlawful," she said in a statement. "Yet that is exactly what multiple Bureaus have done today. The Bureaus rescind prior Bureau actions by simply citing a rule that allows them to do so, when in prior invocations of that rule there have been oft-lengthy explanations for the reasoning behind the actions.

“My office requested more than the allotted two days to review the dozen items released today. We were rebuffed. Then, we simply asked to have the Bureaus comply with the reasoned decisionmaking requirements of the APA. No deal. It is disappointing to see this Chairman engage in the same actions for which he criticized the prior Chairman. I am hopeful that in the future this Commission, consistent with our shared commitment to increased transparency, will heed the APA’s requirement for reasoned decisonmaking. The American public deserves no less.”

Chairman Pai had an answer: “In the waning days of the last Administration, the Federal Communications Commission's Bureaus and Offices released a series of controversial orders and reports," he said in a statement. "In some cases, Commissioners were given no advance notice whatsoever of these midnight regulations. In other cases, they were issued over the objection of two of the four Commissioners. And in all cases, their release ran contrary to the wishes expressed by the leadership of our congressional oversight committees. These last-minute actions, which did not enjoy the support of the majority of Commissioners at the time they were taken, should not bind us going forward. Accordingly, they are being revoked.”

Sen. Ed Markey (D-Mass.), who pushed the FCC to investigate zero rating plans, was not happy.

“It is clear that net neutrality is public enemy number one for Chairman Pai, and he is starting his campaign by protecting harmful zero-rating plans," Markey said. "Zero-rating plans can allow ISPs to favor their own content while putting everyone else at a competitive disadvantage. Instead of siding with big corporations, Chairman Pai and the FCC should explore how to fully enforce the Open Internet Order and ensure a free and open internet for everyone.”

New House Energy & Commerce Committee Chairman Greg Walden (R-Ore.) and new Communications Subcommittee Chair Marsha Blackburn (R-Tenn.) are in agreement that FCC Chairman Tom Wheeler should have kept the just-released zero rating report to himself.

It was actually members of Congress--Senate Democrats--who urged him to look into the sponsored data plans. The Wireless Bureau issued a report this week finding that while there was nothing wrong with the plans, per se, they had issues with specific plans of AT&T and Verizon.

"We are disappointed to see the FCC moving controversial items like the recent staff report on zero-rating in the waning hours of Chairman Wheeler’s tenure,:" they said in a statement, a sentiment shared by FCC senior Republican Ajit Pai.

"Chairman Wheeler’s decision to move forward with this report is a rare trifecta of anti-consumer policy, inappropriate use of delegated authority, and directly contradicting a request of Congress,” said Walden and Blackburn of the report. “Ultimately, if taken at face-value the findings in the report threaten to reduce consumer choice and drive up monthly bills. Our regulatory agencies should aim to foster innovation and competitive service offerings that benefit consumers, not squelch innovative business plans in their infancy. We remain hopeful that the agency will refrain from taking action on controversial items in the remaining days of this administration, and we’re looking forward to working with the next commission to encourage robust technological innovation for consumers across the country.”

Pai, who is likely to be the interim chair at least, signaled the report would not have an impact on his view of the issue.

Related: Zero Rating Report Gets Zero From Industry Groups

Some Hill Democrats were praising the FCC's report finding that some zero-rating plans may run afoul of network-neutrality rules.

Sen. Ed Markey (D-Mass.) had led calls for tough action on "harmful zero-rating offerings" thought to run afoul of the rules and led the applause at the findings.

RELATED > FCC: DirecTV Now Plan Appears to Violate Net Neutrality Order

Zero-rating offerings exempt some services, including video streaming services, from counting toward a user's broadband data plan. In some cases, the service pays the ISP to exempt its content.

“In response to our inquiry, the FCC has issued clear guidelines on how to protect consumers from harmful zero-rating plans that violate the core tenants of net neutrality,” Markey said. “These guiding principles will help the FCC, industry, and the public evaluate zero-rating offerings and identify plans that distort competition, stifle innovation, and hamper user choice and free speech. I will continue to work with my colleagues to encourage the commission to enforce these guidelines and ensure that the internet remains a permission-less environment where anyone with an idea or voice can participate.”

The FCC's senior Republican, Ajit Pai, signaled that the FCC under new management did not share the report's opinion.

But Sen. Al Franken (D-Minn.), a big network-neutrality fan, and among those who joined in a letter to the FCC last November asking for the review, shared the FCC's concerns.

"A free and open Internet has been a crucial engine for innovation and economic growth," Franken said. "That's why I'm pleased to see that the FCC has heeded our call and released a framework for evaluating zero-rating plans, which can often harm competitors and consumers. This report evaluating whether zero rating plans violate net neutrality will help make sure the internet remains the free and open platform that it's always been. Keeping the internet open is critical to our democracy.”

The FCC under Republican control is widely expected to roll back the FCC's approach to network neutrality, likely including the "general conduct standard" review under which the FCC concluded that AT&T's DirecTV Now sponsored data and Verizon's FreeBee Data 360 zero-rating plans were problematic.

Sens. Ron Wyden (D-Ore.) and Richard Blumenthal (D-Conn.) were also signatories to the letter and added their applause. 

“Despite clever branding gimmicks, so called ‘free data’ or zero-rating plans like those offered by AT&T and Verizon are a scheme to manipulate consumers and transfer money from their pockets to a company’s bottom line,” Wyden said. “This report lays the framework for ensuring zero-rating plans don’t betray net neutrality and is a step in the right direction towards maintaining a free and open Internet.”

Blumenthal added: “I commend the commission for undertaking this careful and thorough report on how zero-rating offerings may negatively affect consumers and competition. As wireless carriers look for creative ways to differentiate themselves, it would serve them well to take heed of this report’s findings and address any red flags in their own offerings. This report confirms my concerns that some zero-rating offerings not only subvert the spirit of net neutrality, but also unfairly distort competition, disadvantage consumers, and decrease choice.”

WASHINGTON — Herman's Hermits once intoned, "Second verse, same as the first." AT&T sang a similar tune Thursday in responding, "again," to the Federal Communications Commission Wireless Bureau's query (and competitive concerns) about DirecTV Now and other zero rating--free data--business models. That is according to a copy of the AT&T letter to the FCC obtained by Multichannel News.

Zero-rating plans are ones in which subscribers watch wired or wireless video without that counting against their data allowances.

The FCC has said those, which content suppliers sponsor, can be pro-competition, the FCC has said, but they need to be looked at on a case-by-case basis. In this case, the FCC's Wireless Bureau has suggested -- twice -- it was anticompetitive.

In AT&T's second response, filed today (Dec. 15), after the bureau still had issues with AT&T's first response, AT&T explains "again" that the bureau's suggestion that its zero-rating plan may violate the FCC's Open Internet order is an approach to the consumer-friendly offerings that "would deny consumers a service they value, raise prices, lower consumption, and curb the disruptive potential of Data Free TV, all in the name of preserving profit margins for individual DirecTV rivals."

The network neutrality rule violation issue could be moot under a Republican FCC that could roll back the order or ramp down general conduct standard reviews, but Wheeler will remain chairman until Jan. 20.

AT&T also points out in the letter that the FCC's zero ratings concerns remain at the bureau level, not the commissioner level, because the letter "would require that the commissioners be given an opportunity to consider the analysis," which they have yet to get.

As for the bureau, "it has still articulated no plausible basis for challenging Data Free TV as “anticompetitive," said AT&T.

The Republicans on that commission, soon to be in the majority, are not likely to agree with the bureau analysis, one that AT&T calls a "novel interpretation" of the Open Internet order's general conduct standard that "guts decades of regulatory and competition policy precedent."

AT&T points out that fact to the bureau in its letter when it talks about the bureau lacking the authority to take any action: "Any doubts on that score were put to rest when two FCC Commissioners, both of whom will remain in office after the imminent change of administration, criticized this investigation and warned the Bureau against unlawfully usurping core policymaking powers that only the Commission may exercise," AT&T wrote. "Those Commissioners also observed that whatever judgment the Bureau purports to pass on this program before January 20 will very likely be reversed shortly thereafter. 

Their remarks confirm that the Bureau lacks delegated authority to pull the plug on Data Free TV and disrupt service to the millions of customers who now enjoy that feature."

Asked at a press conference Thursday (Dec. 15) what action the FCC might be taking on zero rating before he left, Wheeler would only say that the investigation continues, suggesting that was just part of an ongoing investigation and a job still to do, rather than a controversial item Republicans warned the FCC not to proceed on during the transition.

AT&T's main points of issue with the bureau's position are: 1) "the bureau does not defend its original proposal For a broad presumption against charging third parties For telecommunications inputs that a common carrier also provides to its edge affiliate; the bureau articulates no cognizable “price squeeze” claim; pulling the plug on data free TV would affirmatively harm consumers; and "the Bureau lacks delegated authority to challenge data free TV."

Back in October, the FCC fired a warning shot at AT&T's free data service for mobile customers, saying the combination of DirecTV Now and AT&T Mobility sponsored data plans "appears to present significant anti-competitive effects." 

On the same day that Donald Trump was elected, signaling a likely far more deregulatory FCC -- Trump wants two regulations jettisoned whenever one is added -- Jon Wilkins, chief of the Wireless Bureau, wrote to AT&T SVP Bob Quinn, to say the bureau thinks their sponsored data mobile broadband plan combined with zero rating DirecTV video apps for AT&T Mobility subs "may" obstructs competition.

He "invited" AT&T to explain why the bureau was not right to be concerned. AT&T did, saying that DirecTV Now was precisely the kind of pro-consumer challenge to cable that the commission heralded in approving AT&T's acquisition of DirecTV," saying data-free TV allows DirecTV to better compete with cable incumbents." But  Wilkins countered that the bureau still thought such free data plans are anticompetitive and sought further input. That is what AT&T submitted Thursday (Dec. 15), the day FCC Chairman Tom Wheeler announced he will exit Jan. 20 to make way for the Trump-led FCC.

Looking to turn the tables on one of its wireless rivals, T-Mobile on Thursday announced it will give AT&T Wireless subs a free year of  DirecTV Now if they switch to T-Mobile starting Friday (Dec. 16).

T-Mobile said the offer represents a value of $420, implying that it’s targeting DirecTV’s introductory price of $35 for a tier of 100-plus channels.  To qualify for the offer, AT&T subs must activate two lines and bring their number to T-Mobile ONE.

The irony, of course, is that T-Mobile is using AT&T’s new OTT-TV service to do exact some damage on AT&T’s wireless subscriber base.

DirecTV Now, which has had a bumpy ride early on amid service outages and issues with sporting event blackouts, launched on November 30. AT&T CEO Randall Stephenson said at an investor conference earlier this month that DirecTV Now was exceeding expectations in the wake of the launch.

RELATED: DirecTV Now to Launch on November 30

AT&T is zero-rating DirecTV Now data that’s delivered on the carrier’s mobile network.

T-Mobile is doing the same for DirecTV Now that’s being delivered on its network, and, for its Simple Choice customers, has added DirecTV Now to Binge On, a bandwidth-saving service that delivers mobile video at 480p (roughly DVD) quality.

T-Mobile CEO John Legere unleashed a tweetstorm Thursday to tout the DirecTV Now promo and, per usual, take some brutal jabs at his competition:

3/ They act like #DirecTVNow is exclusive to @ATT…WRONG!! Both DTVNow & DTV apps stream free on @TMobile plus you get a faster network!!

— John Legere (@JohnLegere) December 15, 2016

FCC Chairman Tom Wheeler has some parting gifts for AT&T and Verizon: Letters doubling down on the FCC's suggestion that zero-rating data plans run afoul of the FCC's Open Internet rules.

RELATED: FCC Takes Aim at DirecTV Now

The FCC last month fired a warning shot at AT&T's free data services for mobile customers--video services, for example, that don't not count against a customer's data usage--saying the combination of DirecTV Now and AT&T Mobility sponsored data plans "appears to present significant anti-competitive effects."

RELATED: Verizon Launches ‘FreeBee Data’

AT&T had responded, explaining why that was not the case, but the FCC's Wireless Bureau was not persuaded, and also fired of a first letter to Verizon targeting its free data.

"We find that those responses fail to alleviate the serious concerns expressed in our November 9 letter regarding the potential anti-competitive impacts of s wholesale Sponsored Data program for zero-rated mobile video services," Jon Wilkins, the chief of the wireless Telecommunications Bureau, wrote in a letter to AT&T.

"I am writing to express concern about the potential impact of Verizon's "FreeBee Data 360" sponsored data program on competition for mobile video services," Wilkins wrote Verizon. "Based on public reports as well as information you have orally provided to us, the Wireless Telecommunications Bureau ("the Bureau") believes that the FreeBee Data 360 offering to edge providers unaffiliated with Verizon, combined with Verizon' s current practice of zero-rating its affiliated edge services for Verizon subscribers, has the potential to hinder competition and harm consumers. We request that you respond to address this concern by no later than December 15, 2016." He wanted a response by Dec. 15.

In the letter to AT&T, Wilkins did not stop at video.

"We are also concerned that the impacts of these practices, which could be reasonably expected to be extended to additional edge markets if permitted here, will go beyond video, potentially advantaging AT&T (or any other network owner employing similar practices) and its affiliates in a wide-range of usage-intensive services that rely on cloud-based solutions for businesses or consumers - such as hosted enterprise software or remote data storage - to the detriment of competing services not affiliated with an incumbent network operator," He wrote.

Wilkins said it was not a blanket criticism of the pricing of DirecTV Now, the online video service that launched this week, "nor its strategy for competing in the retail video market. Indeed, as an over-the-top (OTT) offering that is available over any Internet service provider's network - including those owned by video market incumbents such as cable operators - DIRECTV Now relies on the safeguards provided by the Open Internet Order's pro-competition rules. Nor do we question bundled retail offerings or vertical integration per se."

Then what was the problem?

"Our concern is that AT&T's Sponsored Data program - i.e., the terms and conditions on which AT&T makes its own network available to similarly situated unaffiliated providers denies unaffiliated third parties the same ability to compete over AT&T's network on reasonable terms,” he wrote.

“These are incredibly popular free services available to millions of customers," AT&T said in a statement. "Once again, we will provide the FCC with additional information on why the government should not take away a service that saves consumers money.”

"We will review and respond to the inquiry as requested," said Verizon spokesman Richard Young. "In the meantime, we remain quite confident that our practices are good for consumers, non-discriminatory and are consistent with current rules."

Senior Republican and possible FCC interim chair Ajit Pai, blasted what he called a "yet another broadside against free data for consumers."

Pai reminded Wheeler of Congress' call to ramp down regulatory initiatives during the transition to a Republican Administration, suggesting the Wireless Bureau letter represented NOT doing that.

"This end-run around Congress’s clear instruction is sad—and pointless," he said. "[A]ny unilateral action taken by the Wireless Telecommunications Bureau at the Chairman’s direction in the next 49 days can quickly be undone by that same bureau after January 20, 2017."

Soon-to-be-in-the-majority Republican Commisssioner Michael O'Rielly was equally critical.

“In light of the multiple directives we have received from Congress to avoid directing attention and resources to complex or controversial matters, the staff of the Wireless Telecommunications Bureau is inappropriately pressing forward and escalating its investigation of certain providers’ zero-rated video services," said O'Rielly. "It would be difficult to come up with a better example of a complex, controversial policy at the current Commission than this attempt to intimidate providers in order to shut down popular offerings to consumers. It just reaffirms my objection to this entire investigation process and the use of delegated authority in general.

Cricket Wireless is joining a growing group of service providers and CE companies to promote and sell DirecTV Now, AT&T’s OTT-TV service that’s slated to launch Wednesday (November 30).

RELATED: DirecTV Now to Launch on November 30

Cricket Wireless, the prepaid mobile service subsidiary of AT&T, said it will offer customers a code for a free month of DirecTV Now and offer detail about the offer at its retail outlets.  CordCutter News said the offer is for new and existing Cricket Wireless subs. AT&T ended Q3 with 9.96 million prepaid mobile connections.

At a presser on Monday, AT&T announced that it will launch DirecTV Now on Wednesday with an initial batch of four pay TV packages: Live a Little ($35/month – 60+ channels); Just Right ($50/month – 80+ channels); Go Big ($60/month – 100+ channels); and Got to Have it ($70/month – 120+ channels).

RELATED: AT&T Intros ‘Stream Saver’

For a limited time, AT&T is also offering the Go Big package for an introductory price of $35 per month. Designed to keep churn in check for the no-contract OTT-TV service, Customers can keep that price for as a long as they stay on the package, though future pricing changes are subject to “future reasonable programming price increases.”

AT&T said it will zero-rate DirecTV Now traffic delivered on its mobile network, meaning that data will be exempt from monthly mobile data plans.  The FCC is scrutinizing AT&T’s sponsored and zero-rated data polices, but AT&T has defended them, holding that they adhere to the Commission’s Open Internet Order and that it provides the kind of pro-consumer cable competition that the FCC has called for.

UPDATE: Cricket confirmed a report by PhoneArena.com that it will not zero-rate DirecTV Now streams.  

AT&T Defends DirecTV Now, Sponsored Data

In addition to stating the case for AT&T’s proposed mega-merger with Time Warner, AT&T president and CEO Randall Stephenson also noted that DirecTV Now, the coming OTT-TV service, is on track to launch in Q4, with some room to spare.

“The more we iterate and work on DirectTV [Now] and launch it in November, the more excited we get about what we'll be putting in the marketplace,” he said. “There are a lot of things we really aspire to do with this platform as you think about incorporating social into the platform and as you begin to think about how you share content on this platform: clipping content that you're watching and sharing it with your friends via messaging or via social media.”

AT&T has yet to reveal pricing or a specific launch date for DirecTV Now, but Stephenson envisions it as a “mobile-centric” product, adding “there should be advantages of using DirecTV Now on AT&T's network; and there will be.”

That appears to be another clear indication that AT&T intends to zero-rate DirecTV Now traffic on the carrier’s mobile network, meaning that it won’t count against the user’s monthly mobile data plan.

RELATED: AT&T to Take DirecTV Over-The-Top

However, time will tell if there will be any conditions put on the deal that might prevent any that. “As a practical matter, you can almost forget about all strategies that depend on differentiating distribution with preferential access to owned content,” MoffettNathanson analyst Craig Moffett said in a research note issued in the wake of the announced deal, noting that the FCC’s net neutrality rules ban preferential treatment of owned content. “With the inevitable consent decree conditions, you can also forge about zero-rating Time Warner (or DirecTV, and the planned DirecTV Now) content on AT&T’s wireless or wired network.”

When asked about that possibility, Stephenson said he “can’t prejudge any of this. I just really don’t know. We're just going to have to get into the process and put the data out for the regulators, and then begin that effort.”

Despite those lingering questions in the months ahead, AT&T appears to have salted away most of the digital distribution deals it needs for DirecTV Now.

RELATED: Next TV Summit 2016: Goncalves: No Skinny Bundles for DirecTV Now

“Those are largely done,” Stephenson said, noting that they required “a lot of heavy lifting” and that AT&T’s acquisition of DirecTV last year accelerated those discussions.

Stephenson also put a finer point on the audience that AT&T will be targeting with DirecTV Now.

“There is a huge customer base out there that we are convinced, while they don't subscribe to a bundle of premium content today, at the right price point [delivered] over-the-top, they will,” he said. “If you can bring a compelling price point and a compelling content package and some innovation with it, we are absolutely convinced that this is going to be very, very attractive for a large group of customers who really aren't even in the market today.” 

Looking to light a fire under the FCC, a group of 76 organizations have written Chairman Tom Wheeler and the other commissioners to urge them to take action on three items/issues currently before the commission.

Those are the set-top box proposal, broadband privacy and the zero rating plan investigation.

The commissioners are currently vetting an updated set-top proposal, zero rating is an ongoing inquiry, Wheeler has said recently; and broadband privacy is up for a vote at the Oct. 27 public meeting, so it appears to be the closest to action, though Wheeler could add set-tops to the October meeting if he can get three votes for it and though the privacy proposal has been tweaked, it continues to get pushback from industry and some in Congress.

In the letter, they called the three items "big opportunities" to protect consumers. Wheeler has said he wanted to act on set-tops and broadband privacy by year's end, but has not provided a timetable for the zero rating investigation/inquiry.

The FCC is looking into zero-rating plans both on its own dime and in response to a complaint under the Open Internet general conduct standard, which the FCC can use to decide, on a case-by-case basis, that a practice not specifically prohibited under the rules impedes an Open Internet.

Related: O'Rielly Says Zero Rating Plan Has Chilled Offerings

The groups asked the commission to "liberate" those consumers from the set-top "monopoly; "promulgate rules that foster

trust in the integrity of broadband privacy"; and "prohibit abusive data caps and zero rating plans that violate net neutrality."

The set-top proposal would require MVPDs to make their content available to third parties via a device or app as a way to promote competition in navigation devices, and give online video competitors a stronger platform for competing with that MVPD content, both of which are FCC goals under Wheeler.

While the broadband privacy item is scheduled for a public vote, it is unclear when the set-top box order will be voted. It was pulled off last month's meeting agenda and placed on circulation, which means it could be voted any time, though if the chairman does line up three votes, he could add it to the Oct. 27 agenda, which would make sense politically given that both Democrats and Republicans in Congress have called for transparency in how that item is dealt with.

Among the many signatories to the letter, which was dated Oct. 17, are Public Knowledge, Free Press, Demand Progress and the Center for Digital Democracy.

DirecTV Now, the new OTT-TV service from AT&T, is still on track for a Q4 launch, and will come out of the chute with a lineup of more than 100 channels, Randall Stephenson, chairman and CEO of AT&T, said Wednesday at the Goldman Sachs Communacopia Conference.

RELATED: AT&T: DirecTV Now Will Be a Game Changer

“We are very close,” Stephenson said of the launch, noting that it will be an app-based service with no truck roll requirement, while also giving a nod to zero-rated mobile data policy that is baked into the economics of the service – DirecTV Now streams delivered on AT&T’s mobile network won’t count against a customer’s data plan.

“We’re talking 100 plus channels at a very, very aggressive price point. And when you buy this content, the data required to stream it on your mobile device is incorporated into the price of the content,” he said, adding that the service is about “90% there” with respect to carriage agreements with programmers. Recent AT&T renewal pacts with programmers have added channels from NBCUniversal, HBO, Disney and, Scripps Networks Interactive to the upcoming OTT mix.

RELATED; Turner, AT&T Renew Carriage Deal

Stephenson was also pressed on the OTT service’s cost structure (Comcast, for example, has argued that the economics of an OTT TV offering don’t add up), but the AT&T exec is confident that the model will work because it uses a completely different cost structure than a more traditional MVPD offering.

“This is a very, very low cost customer acquisition product. It is a very low cost to install product meaning the customer has just done it once they downloaded the app. There are no set-top boxes, they are no truck rolls involved in this,” he said.

Stephenson also acknowledged that DirecTV Now could cannibalize the existing pay TV sub base, but said measures are being taken to limit that exposure in the short-term with a model that limits a subscriber’s access to one or two streams.

“I do think, yes, that there is risk of cannibalizing the existing product. And I think that’s always a good sign,” he said, noting that DirecTV Now will be targeted to what he estimates to be 20 million homes without a pay TV service.

RELATED; Study: Virtual MVPDs Could Lure 15M Subs by 2020

“We think a significant number of those would like [a] 100-plus channel, pay TV subscription, if or at a very, very attractive price point.”

Pricing for DirecTV Now has not been announced, but the margin on it will be “thinner than we we’re accustomed to,” Stephenson said. “But I’m always willing to take thinner margins, when there is low capital intensity in the product.”

Stephenson was also confident that DirecTV Now will be able to scale to meet the streaming demands.

“We're not trying to do something where you just get buffer fatigue while you're waiting on content,” he said. “We want this to be an…MVPD-like experience on a mobile device. And we feel pretty good we're going to be able to pull that off.”

Verizon and AT&T/DirecTV are pushing forward with more zero-rated fare on the mobile front as the FCC continues to mull how such policies should (or shouldn’t) apply to its network neutrality rules.

RELATED: Pro Zero-Rating Comments Flood FCC (subscription required)

Verizon Wireless, for example, is now zero-rating live local and primetime NFL games delivered on its mobile network through its exclusive with the league. Games streamed on Verizon’s mobile network don’t count toward the subscriber’s monthly data allowance, with the caveat that they are postpay subs and watching on the carrier’s LTE network.

Verizon’s already been active with zero-rated policies with a FreeBee Data, which focuses on sponsored content.  

AT&T and DirecTV, meanwhile, launched a new app last week that lets users view live and recorded content without eating through their mobile data caps via a “Data Free TV” feature. Of course, that only applies to pay TV subs who get AT&T’s mobile service.

Among other enhancements, the DirecTV app now offers up to 315 live TV channels via WiFi or mobile and access to recorded content on the home DVR and an option to download most shows and movies recorded to the sub’s local DVR.  The catch for those features is that that the customer must be on a “Select” subscription or above and have the Genie HD DVR 44 model and above.

And here’s a video about it:

Democratic ranking members from various committees and subcommittees are probing Pokémon Go developer Niantic on the impact of its wildly popular app on consumers' data usage plans.

One veteran game player suggested it was not a data-heavy application, but it is being played heavily across the country as any trip to the park or strip mall will attest.

The legislators cite reports of users maxing out their monthly data usage plans in a week of playing, and "complained of eating through an entire family plan within a few days."

In a letter dated July 19, Energy and Commerce Committee Ranking Member Frank Pallone (D-N.J.), Commerce, Manufacturing, and Trade Subcommittee Ranking Member Jan Schakowsky (D-Ill.), and Oversight and Investigations Subcommittee Ranking Member Diana DeGette (D-Colo.) framed the issue:

"Pokémon Go has quickly become the biggest mobile game in U.S. history and within a week of its release has surpassed the average daily usage of popular social media platforms including Instagram and Snapchat.  Third-party testing has found that a typical Pokémon Go player uses 10-20 megabytes of data per hour of play and that serious users playing for several hours per day could use up to two gigabytes of data per month, leading to concerns that consumers could quickly consume their monthly cellular data allotment." 

THey asked the company the following questions, and they want answers by Aug. 9.

1. "Are there best practices that Niantic follows to minimize the amount of data consumers use when playing Pokémon Go?

2. "Has Niantic worked with wireless carriers to ensure that consumers are not unexpectedly hit with large overage charges? [The letter quotes T-Mobile CEO John Legere reporting that Pokemon Go users data usage had quadrupled in the past four days. T-Mobile is zeroing out the game from its usage plan for a year].

3. "Does Niantic conspicuously warn consumers before they start using the app about how much data the app consumes?

4. "Does Niantic have any mechanisms in place to make sure consumers are made whole in the event they are hit with an unexpected overage charge resulting from the use of the app?"

Related: IT Industry Group Calls for Workplace Ban On ‘Pokémon Go’

T-Mobile is jumping on the Pokémon Go bandwagon, announcing that it will zero-rate mobile data tied to the wildly popular mobile/augmented reality game starting next Tuesday (July 19) for a full year.

That’s one on Pokémon Go-related perk that T-Mobile is teeing up for its next “T-Mobile Tuesday” promotion.

RELATED: Sen. Franken Takes Aim at ‘Pokémon Go’

In addition to providing free, unlimited data on Pokémon Go for a year, T-Mobile is also offering free Lyft rides of up to $15 to get customers to a new PokéStop or Gym, a free Wendy’s Frosty for those “hunting” trips, plus a 50% discount on select accessories, including portable power packs.

Interested customers can redeem those offers by downloading the T-Mobile Tuesdays app.

T-Mobile CEO John Legere share the news on Twitter...

Ready to catch them all!? #TMobileTuesdays is giving you unlimited data use for #PokémonGo! https://t.co/NrFAxW3KYqpic.twitter.com/pPXxezGV0r

— John Legere (@JohnLegere) July 14, 2016

In addition to pushing the latest offer amid the rapid rise of Pokémon Go, which is already attracting a record 21 million daily users in the U.S., T-Mobile’s latest promo also enters play as the FCC and its chairman, Tom Wheeler, continue to vet information about zero rating plans and how they square with the Commission’s network neutrality rules. T-Mobile, which exempts data for more bandwidth-intensive video apps that are part of its Binge On program, has long-held that the use of zero-rating is well within those rules.

YipTV said it has joined Binge On, T-Mobile’s controversial optional service that delivers mobile video in 480p resolution and  zero-rates the streams of its growing list of OTT partners.

YipTV is a no-contract OTT-TV offering launched last May that’s focused on Spanish-language video and features plans from more than 100 international and domestic live TV channels.

In addition to smartphones, YipTV supports several other streaming platforms, including the Google Chromecast, Web browsers and Apple TV boxes.

“T-Mobile is aligning itself nicely with OTT broadband services and mobile cable operators like us as a result of its new, very flexible approach to data and mobile usage,” said Mike Tribolet, co-founder and CEO of YipTV, in a statement.

YipTV joins a growing list of Binge On partners, including YouTube, Hulu, Netflix, Starz, HBO, Showtime, Vudu, Sling TV, A&E, Lifetime, History, PlayStation Vue, Tennis Channel Anywhere, FuboTV, Kidoodle TV, CuriosityStream, Univision Now and WWE Network, among others.

The FCC is investigating new zero-rated services in relation to the commission’s new open Internet rules.

Stream TV, Comcast’s in-home, managed IPTV service that’s being offered in two markets, has entered the news cycle again, and again there seems to be some confusion about how it’s being delivered into the customer’s home.

The latest round got started this week when TV Predictions noticed that Comcast’s FAQ about Stream TV, a $15 per month skinny TV service tailored for mobile devices, mentions now that the operator is working on new option that would allow consumers who wanted that skinny bundle service to get it if they happened to get broadband service from another provider, and not from Comcast. Actually, Ars Technica made note of this coming option earlier in the month.

Here’s that language: “If you're not an XFINITY Internet customer, we are working hard to make the required equipment available in 2016.”  It also reiterates that  Stream TV – an in-home service (Stream TV subscribers also have access to some authenticated TV Everywhere content that's available when they are on the go) -- will only work if the supported video viewing device (a PC, laptop, smartphone or tablet, in this instance) is connected via the Comcast-supplied in-home network (wired or via WiFi).

Early on, Comcast has been offering Stream TV to customers who also get broadband from the MSO. The plan is to add an option whereby customers who get high-speed Internet service from another provider can still subscribe to Stream TV as a stand-alone pay TV service, though those customers will still need a new IP gateway (the new piece of the puzzle) to obtain the managed IPTV signals from Comcast's network.

Comcast isn’t saying much about this gateway, but it would seem that the operator is working on a new type of “headless” gateway – headless in the sense that it doesn’t support direct video outputs like a set-top or a “headed” gateway (like the XG1) do. The video output device, in the case of Stream TV, would be the laptop, tablet or smartphone. Bottom line: it would give Comcast a way to market and sell Stream TV to consumers who get broadband from another ISP – however big or small that part of the market is.

The confusion is coming about because there have been some suggestions made that this means Comcast will be delivering Stream TV into the subscriber's home via someone else’s access network, which is false and would sure be a neat trick (of course that could change someday if Comcast decided to offer an over-the-top video pay TV service that travelled the public Internet, which would be an explosive, market-changing thing for sure).

But as of today, the Stream TV service will still come into the home via Comcast's managed IP network using bandwidth that does not mingle with the bandwidth it has set aside for the MSO’s public Internet service (in some ways this is akin to how AT&T U-verse delivers U-verse – some IP capacity is set aside for the broadband service, while other IP capacity is set aside for its managed IPTV service; they are kept separate).

So, this means that Stream TV does use IP transport, but it isn’t delivered into the home “over-the-top” like Netflix, Sling TV or PlayStation Vue, for example.

This is all of supreme interest, of course, because Stream TV streaming (just like Comcast’s legacy QAM-based video services, which is also managed but uses a different kind of transport technology, MPEG) is exempt from the usage-based data policies that Comcast is testing in several markets for its high-speed Internet service.

Critics believe this violates network neutrality rules (Public Knowledge filed complaint to the FCC about it in earlier this month), while Comcast argues that it doesn't because Stream TV doesn't use the Internet to get into the customer's home. Bu critics also say such policies put OTT services at a competitive disadvantage. And this discussion is also somehow being tied into the debate around new, controversial “zero-rated” and sponsored-data services from mobile providers such as T-Mobile (Binge On) and Verizon (FreeBee Data). If anything, it’ll make for an interesting debate for both sides of the argument.

Zero-rating plan foes got together over the weekend to collect signatures on a letter they plan to send today (March 28) to FCC chairman Tom Wheeler urging him to crack down on zero-rating plans before they "break the Net."

The FCC is currently investigating zero-rating plans -- in which some video content does not count against usage caps -- from a handful of top ISPs as part of its Open Internet general conduct standard of review for business practices that could impede a free and open Internet, including Comcast's Stream TV, which has a complaint filed against it.

The groups appear to have no doubt the practice violates both the spirit and the letter of the new FCC Open Internet rules.

"As currently offered, these plans enable ISPs to pick winners and losers online or create new tolls for websites and applications," they wrote.

Referring to the Comcast, AT&T, Verizon and T-Mobile plans being vetted by the FCC, the groups say the services "distort competition, thwart innovation, threaten free speech and restrict consumer choice." Those are all harms the FCC's Open Internet rules were meant to prevent, they argue, and allowing them would be "a serious threat to the Open Internet."

The groups also made a point of saying the FCC's Open Internet order "ensures that Internet users control the content they access, not their ISPs."

"The Open Internet rules say that ISPs cannot pick winners and losers online by slowing down some applications and services while speeding up others," they added.

The net-neutrality rules do not hold edge providers to the same standard, however, since, as Wheeler has pointed out pointedly, the rules to not apply to them.

That disparity hit the fan last week when Netflix conceded its users did not have control over the Netflix content they accessed over AT&T and Verizon broadband service -- Netflix said it was limiting the quality to keep users under bandwidth caps, though the company added it was working on a technology to give users control over bit rates vis-a-vis bandwidth caps.

A spokesperson for those groups calling for no zero-rating plans was checking at press time whether they were also concerned about Netflix throttling online video without telling customers or the companies.

Among the groups signing on to the letter were MoveOn.org, ColorOfChange, Center for Media Justice, Fight for the Future, Demand Progress, Free Press and Open Technology Institute.

Free Press policy director Matt Wood said he sees a clear difference between ISPs as carriers subject to neutrality rules, and Netflix, which is not.

"The bottom line for me is that net neutrality prevents carriers from dictating what we say to each other,” he told Multichannel News. “It doesn't dictate what we say to each other ["we" including Netflix as a speaker]. Netflix is free to transmit its content however it wants. If users want to leave that behind because they don't like that, that's fine. I'm not here to defend anything Netflix is doing, but you can't shoehorn this into net neutrality because it is not about the carrier in the middle interfering with content."

"Free data services are pro-consumer, innovative offerings that we should all embrace," said Brad Gillen, EVP at CTIA, which represents wireless ISPs. "It should also come as no surprise that mobile consumers love free data so they can watch videos, listen to music or use the Internet without charges to their monthly data allowance. The FCC should reject efforts to take away from consumers these free data services and options."

“To claim that zero rating is anything other than good for consumers makes zero sense," says Mobile Future board chair Jonathan Spalter. "It is almost as ridiculous as defending Netflix on Friday (March 25) for secretly throttling video to millions of unsuspecting customers and turning around on Monday to attack consumer-friendly free data offerings. "New service options that make it easier for consumers to afford access to more content is a good thing. Free mobile data offerings give consumers more than they pay for, which is particularly important for price-sensitive consumers. If the FCC is trying to encourage competition and consumer choice, it will reject efforts to thwart carriers from vying for customers with differentiated new service offerings. Doing anything less will make America’s wireless consumers the ultimate losers.”

Mobile Future members include Samsung, Verizon, and Qualcomm.

Netflix confirmed Thursday that it’s working on a “data saver feature” for mobile apps following a report in The Wall Street Journal about a policy in which Netflix reduced the quality of video delivered on AT&T and Verizon cellular networks, but not on those operated by T-Mobile or Sprint because the latter have historically implemented sed “more consumer-friendly policies.”

AT&T said it was “outraged” by it, claiming it was akin to “throttling” those streams without consumer  consent.

Netflix is a supporter of Binge On, T-Mobile’s optional video optimization service that limits streams to 480p and exempts partner traffic from its data-usage policies. T-Mobile recently adjusted its policy to provide more info on the option and an easier way for subs to toggle the service on and off, moves that Google and YouTube approved of after originally railing against the  Binge On program over claims that it was throttling its streams.

Sprint used to throttle the streams of heavy users, but stopped that practice last year after the policy came under fire.

In a blog post, Netflix official Anne Marie Squeo announced that Netflix would soon “give members more control over their Netflix experience,” as the OTT provider aimed to introduce a new data saver feature that is “on track” to become available to Netflix subs sometime in May that will let them adjust their data consumption settings.

“So in an effort to protect our members from overage charges when they exceed mobile data caps, our default bitrate for viewing over mobile networks has been capped globally at 600 kilobits per second,” she wrote. “It’s about striking a balance that ensures a good streaming experience while avoiding unplanned fines from mobile providers.”

She said Netflix’s research showed that “many members worry about exceeding their mobile data cap, and don’t need the same resolution on their mobile phone as on a large screen TV to enjoy shows and movies. However, we recognize some members may be less sensitive to data caps or subscribe to mobile data plans from carriers that don’t levy penalties for exceeding caps.”

More details about the feature will be shared closer to launch, she said.

The matter heated up last week when T-Mobile CEO John Legere called out AT&T and  Verizon for throttling video, and Verizon shot back with a statement that his assertion was “dopey” and “has no basis in fact at all.”

Amid the latest news, which found that it was Netflix, not AT&T and Verizon, that were limiting the video streams, Legere weighed in with a Periscope video in which stirred the pot again by wondering if AT&T and Verizon were being evasive on the subject. “No one has accused AT&T and Verizon of ‘throttling,’ but did they knowingly have this…and not tell customers?” he asked.

About 81%  of all U.S. smartphone users now use those gadgets to stream video, The NPD Group found in its new Connected Intelligence Smartphone and Tablet Usage Report, which based its findings via an opt-in panel.

As might be expected, usage is driven by users who are 25 years and younger who spend twice as much time watching on YouTube and Netflix mobile apps versus those who are older than 25 (see chart).

NPD said the younger set in the study consumes, on average, 6.2 gigabytes of data (cellular and WiFi) for video streaming purposes each month. By comparison, the older group averages 4.9 GB.

And while most of that video streaming happens over WiFi, NPD  Smartmeter, an opt-in metering app that tracks live smartphone and tablet usage, found that the average U.S. smartphone user consumes nearly 3 GB of cellular data per month, with video streaming as the top app driving that consumption.

That trend bodes well for new zero-rated video services from companies such as T-Mobile (Binge On) and Verizon (FreeBee Data). 

“Users are spending more time watching videos on their smartphones than ever before, as the adoption of smartphones that boast larger displays increases,” Brad Akyuz, NPD Connected Intelligence Mobility practice research director, said in a statement. “This mobile streaming behavior is further bolstered by the new offerings of wireless operators, such as T-Mobile’s Binge On and Verizon Wireless’ go90, which run on free sponsored data.” 

WASHINGTON — Depending on who’s doing the talking, zero-rating plans are either potentially anti-competitive violations of the Federal Communications Commission’s new network-neutrality rules or an innovative business plan that could help drive broadband adoption and benefit low-income Web users.

But the key to the future of those toll-free or sponsored data plans, which are becoming increasingly attractive, is what the FCC decides they are after it completes an inquiry into the practice.

The FCC is still vetting the information it requested in December from major Internet-service providers — the mid-January deadline for data in the inquiry was pushed back by Winter Storm Jonas, which buried the nation’s capital.

The inquiry appeared to be a reaction to pressure from zero-rating plan critics after FCC chairman Tom Wheeler in November praised T-Mobile’s new “Binge On” offering, which allows the mobile phone provider’s subscribers to access video from certain providers without it counting against subscriber data caps, as just the type of innovation the FCC’s new Open Internet order would not discourage.

When Wheeler seemed to backtrack on that praise and said the agency wanted more information about Binge On, Comcast’s Stream TV service and AT&T’s sponsored data plans, AT&T responded, “We remain committed to innovation without permission, and hope the FCC is too.”

AN INQUIRY, NOT A FIAT

Wheeler insisted two weeks ago that the FCC’s inquiry was merely that, telling reporters he had not sat in on any of the meetings, nor had any of the members of his staff.

But the chairman controls the agency’s bureaus, Republican commissioner Michael O’Rielly countered. “We do all know that the bureaus are at his discretion because otherwise, I would get a lot more information,” O’Rielly said.

O’Rielly said he is still trying to find out more information about the inquiry, but said that he was troubled by the direction in which the FCC was heading. He said he was troubled by the “mother may I” approach of the agency’s having to bless — or reject — new business models. That was concerned him about the net-neutrality rules, he said.

The new Open Internet rules do not prevent zero-rating plans, but they do prevent paid prioritization and also give the FCC some wiggle room through a general-conduct standard with which it can essentially review any business practice it thinks might have the effect of favoring some content over others for anti-competitive purposes.

“Because the Internet is always growing and changing, there must be a known standard by which to determine whether new practices are appropriate or not,” Wheeler said back when he proposed the Title II-based rules.

At the Internet Education Foundation’s 12th annual State of the Net conference in Washington two weeks ago, people on both sides of the issue were trying to help the FCC decide.

Roslyn Layton, a visiting fellow at the American Enterprise Institute’s Center for Internet, Communications, and Technology Policy, made the case for why zero rating plans were not the threat to Internet openness that some have claimed.

She said that there is no good or service that is not subject to a differential price and said it was “strange” to her why Internet service would be singled out.

She said the one of the best things about the history of TV, radio and the Internet was that advertisers and sponsors were allowed to lower the cost to end users. That’s a key difference between media industries in the U.S. and Europe, she said, saying Europe’s license-fee model has meant fewer channels and less content.

The Internet also benefits from third-party subsidization, she said, pointing out that edge provider Google effectively zero-rates its search by displaying ads.

One criticism of the FCC’s approach to its new Internet rules is that they target ISPs while leaving edge-provider business practices alone. ISPs aren’t explicitly asking the FCC to regulate the edge, but point out that there are opportunities for edge providers to interrupt the virtuous circle that the FCC appears to gloss over in focusing on regulating ISPs. Wheeler has said edge providers are outside the scope of the rules.

On the other side is Stanford University law professor Barbara Van Schewick. The key to the issue is whether a zero rating plan has the effect of “picking winners and losers online,” she said. The bright-line net neutrality rules are about doing that with technology, via slowing or blocking traffic or by buying a technical advantage for a fee, aka paid prioritization.

Zero-rating is just a different form of favoring some content over others, she argued — via business plan, rather than technical limitations or advantages.

WATCHING FOR ‘COMPETITIVE ADVANTAGE’

Comcast’s Stream TV, for example, was not about subsidizing access, but instead about “giving a competitive advantage to [Comcast’s] own application,” she said. That is a key net-neutrality concern, she said.

Kevin Martin, former FCC chairman and now an attorney for Facebook, which has its own zero-rating program to try and boost basic connectivity, said he didn’t have any problem with the FCC taking a case-by-case approach to vetting business plans under its new rules, but said zero-rating can be beneficial.

Martin signaled the FCC was right to be vetting the plans, but did not throw cable operators under the bus. He said MSOs would argue their customers have already paid for the programming ISPs are zero-rating.

But unlike cable operators, which have issues with the FCC’s case-by-case approach under the general conduct standard, Martin was all for it. “I think an analysis of what’s actually going on with each program is appropriate, and the FCC got that component right,” he said.

Layton argued zero rating plans aren’t just for the big dogs. She said they benefit smaller network providers who can’t compete with larger providers in terms of speed, but need another way to differentiate themselves.

Verizon has begun to zero-rate streaming of go90 content for postpaid customers when they are connected to the mobile carrier’s LTE network.

That’s according to a new customer agreement distributed this week by Verizon, caught first by DSL Reports.

“Beginning on or about February 4, 2016, if you are a Verizon Wireless post-paid customer and you download the current version of go90 (release 1.4), you can watch any video on go90 without incurring Verizon Wireless data usage charges so long as you are connected to LTE," the agreement states. "Other activity that does not involve watching videos, such as downloading go90 from an app store, browsing or searching for shows, posting comments, sharing clips and viewing settings will incur data usage charges.”

Verizon, which launched the ad-supported go90 OTT service in October 2015, has already been experimenting with zero-rated policies that have gotten the attention of network neutrality advocates. Last month, it began to test FreeBee Data, a sponsored service that is exempt from mobile data-usage policies.

The current go90 agreement also makes note that Verizon may also offer  “promotions and/or plans that allow you to watch some or all go90 Content without incurring data use charges” from Verizon and other wireless providers.

Update: Verizon told Re/code that the new policy for go90 does “take advantage of Verizon’s FreeBeeData 360 service, which allows them to pay for customer’s data usage associated with watching videos on the Go90 app….“FreeBee Data 360 is an open, non-exclusive service available to other content providers on a non-discriminatory basis. Any interested content provider can use FreeBee Data 360 to expand their audiences by giving consumers the opportunity to enjoy their content without incurring data charges.”

Those data usage costs, the carrier added, “falls to Go90 and we wanted to give our users an opportunity to watch everything in the app without it counting against their data plans.”

Verizon's FreeBee approach followed the launch of “Binge On” from T-Mobile, which uses a proprietary, bandwidth-efficient encoding system that delivers mobile video in 480p format (DVD quality), and zero-rates streams from several content partners, including Netflix, HBO, Starz, Sling TV, and Hulu. AT&T, meanwhile, has dropped hints that it is evaluating sponsored-data services.

Verizon gave the FCC the heads up about FreeBee Data prior to the launch of the sponsored-data offering. The FCC, which will take a case-by-case approach on new sponsored-data and zero-rated policies and services, noted that it "will continue to communicate with the company [Verizon, in this instance] on this issue.”

 In the meantime, the FCC is on a fact-finding mission for services such as Comcast’s "Stream" IPTV service, an in-home, managed IP-based service tailored for cord-cutters that’s not delivered “over-the-top” and, therefore, not tied into the MSO’s usage-based broadband data trials, as well as T-Mobile’s Binge On service.

T-Mobile presented new stats indicating that Binge On is a hit with customers while also announcing a handful of new partners have joined the zero-rated service: Amazon Video, Fox News, Univision NOW (Univision’s recently launched subscription OTT service), and WWE Network.

Binge On, an optional service launched about three months ago, exempts streams from partnered OTT services from T-Mobile’s data-usage plans, and uses a proprietary, bandwidth-efficient encoding scheme that delivers video at resolutions at up to 480p. More than 40 partners are involved, including Netflix, HBO Now, Hulu, Showtime, Starz and Sling TV.

As usage goes, T-Mobile said customers on qualified data plans are watching more than twice the video than before via Binge On. The company added that one unnamed partner has seen a 79% increase in daily views since Binge On was introduced, and that its customers have streamed 35 petabytes of data for “free” so far, claiming that it’s equivalent to more than 109 million episodes of Game of Thrones (at DVD quality).

T-Mobile also introduced new “short codes” to change settings and to toggle the Binge On  service on or off (#BOF# (#263#) to turn it off,  and #BON# (#266#) to turn on Binge On).

Among other U.S. wireless carriers, Verizon Communications has since introduced FreeBee Data, a sponsored-data service, and AT&T has hinted that it’s looking into similar, sponsored-data offers.

Zero-rated and sponsored data offerings have been criticized by network neutrality advocates and by Google over claims that Binge On is “throttling” YouTube streams, but T-Mobile has been adamant that its approach isn’t throttling and is well within the FCC’s guidelines.

Canadian service provider Videotron has launched a mobile music streaming service that won’t count against customers' cellular data plans.

That service, called Unlimited Music, is launching with support for a handful of services – Stingray, Rdio, Google Play, Deezer and Spotify. Videotron said it will add other services, including Songza, in the coming weeks and months.

Unlimited Music is offered free to customers on a Premium plan, with at least 2 GB of data, or an Internet-mobile package with at least 1 GB of data.

In the U.S., T-Mobile introduced a similar offering that zero-rates music that’s streamed on its mobile network. Partners include Rhapsody (unRadio), Pandora, iHeartRadio, Apple Music, Slacker, Spotify, and Milk Music.

Videotron, which has 702,900 mobile subscribers, noted that its LTE network covers nearly 90% of Quebec, supporting speeds up to 150 Mbps.

“Music streaming is growing quickly around the world,” said Myrianne Collin, SVP, strategy and marketing at Videotron, said in a statement. “The numbers tell the story: more and more consumers are making their mobile device the nerve centre of their entertainment system and their constant electronic companion.”

Unlimited Music joins a growing list of new services from Videotron, which recently introduced a 4K set-top from Samsung for a coming Ultra HD offering, and is testing a 1 Gig broadband service Montreal that is powered by DOCSIS 3.0.