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AT&T Defends DirecTV Now, Sponsored Data

AT&T has responded to the FCC's questions about its sponsored data (zero rating) plans, saying essentially: You asked for them.

The FCC last week 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 regs jettisoned whenever one is added — Jon Wilkins, chief of the Wireless Bureau, wrote to AT&T senior VP 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" obstruct competition.

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Not so, Quinn responded in a letter to Wilkins.

AT&T launched Data Free TV in September as a way to let DirecTV's subs watch that content on their AT&T mobile phones and other devices without that counting against their data allowances. Quinn says that in the first four weeks, three million of its customers used the service. DirecTV Now, which "will offer customers the ability to stream more than 100 channels of
DirecTV content on any device from a smartphone to a 55 inch TV starting at $35 a month with, no annual contract, no credit check, no installation charges, no set top box, and, for AT&T mobile customers, no data charges."

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Quinn says that is "precisely the kind of pro-consumer challenges 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.

The FCC has long promoted over-the-top video as a needed competitor to traditional cable.

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AT&T says the programs "faithfully adhere" to the FCC's 2015 Open Internet Order, which recognized that sponsored data programs can be pro-consumer.

The FCC is currently looking at such programs on a case-by-case basis under that same Open Internet Order's general conduct standard.

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AT&T said that since the FCC "had argued that such arrangements could distort competition, and therefore cautioned that they should be non-discriminatory...consistent with decades of Commission precedent, AT&T makes its sponsored data program available to all content providers on the same terms and conditions," including to the degree of letting those content providers "specify how much data they want to sponsor, and charging them the same low per gigabyte rate regardless whether they are big or small or how much data they purchase."

Quinn tells Wilkins he is "perplexed" that the FCC would single out AT&T's sponsored data programs for "serious concerns."

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With the FCC about to change to Republican leadership, presumably deregulatory given President-elect Donald Trump's attack on government regs, Quinn does not want the FCC's Wireless Bureau to weigh in on its own authority, saying it doesn't have it since delegated authority "does not extend to matters 'present[ing] new or novel questions of law or
policy which cannot be resolved under outstanding Commission precedents and guidelines.'"

Quinn also points out what he says are two misconceptions in Wilkins' letter. The first is that AT&T does not incur real costs when it makes its network available for Data Free TV, while an unaffiliated provider’s payment to AT&T for a sponsored plan is a real cash cost. It says that just isn't so. "AT&T will see escalating usage on its mobile network, where video already accounts for a clear majority of traffic. AT&T will need to respond to those new usage demands by making capital-intensive investments, which will add to the billions AT&T has already spent to keep up with skyrocketing mobile video usage."

He said the second is that Data Free TV puts competing online video distributors who want to reach AT&T wireless subs at a “significant" disadvantage. "Any unaffiliated content provider can participate in AT&T’s Sponsored Data program on the same terms and at the same rate as DirecTV,” he said, "and the sponsored data rate is as low as the market based rates AT&T currently offers even to wireless resellers who commit to significant purchase volumes."