The Federal Communications Commission (FCC) slammed two zero-rated video streaming services offered by AT&T and Verizon respectively for violating net neutrality rules and harming competition in the US.
A new report, issued by FCC commissioner Tom Wheeler less than two weeks before he is set to leave office, looked into various zero-ratings offerings on the market after Democratic Party senators questioned whether the practice violated net neutrality.
As part of the 2015 Open Internet Order, net neutrality laws prohibit providers from offering a better quality of service to certain online content at the expense of other services.
The FCC, through its Wireless Telecommunications Bureau, reiterated “zero-rating per se does not raise concerns”, but highlighted AT&T’s Sponsored Data programme and Verizon’s FreeBee Data 360 offering.
The report suggested both programmes “unreasonably discriminate in favour of downstream providers owned or affiliated with the network providers”.
Zero-rating has proved controversial throughout the world, and the FCC previously said it would review offerings available on a case by case basis.
With operators now buying media and TV companies, and launching video packages, the issue is gaining more prominence.
In the case of AT&T, the FCC said its Sponsored Data programme offers third party content providers “less favourable” terms and conditions than those it offers to its affiliate DirecTV, which it acquired in mid-2015.
It added AT&T imposes “hefty per gigabyte charges on third parties” for use of Sponsored Data, with indications that the charges far exceed its own cost in providing the service.
This, the agency added, is a “significant, unreasonable disadvantage” to content providers competing against AT&T’s DirecTV.
The same concerns were raised about Verizon’s FreeBee Data 360, which offers mobile video through its Go90 platform.
“We are aware of no safeguards that would prevent Verizon from offering substantially more costly or restrictive terms to enable unaffiliated edge providers to offer services comparable to Verizon’s affiliated content on a zero-rated basis,” read the report.
However, the FCC did note the anti-competitive effects of Verizon’s practices may be smaller than AT&T’s, because Verizon currently competes in a less developed segment.
T-Mobile US’ Binge On offering avoided the agency’s ire. The report observed charges to all edge providers were at the same zero rate for participating in Binge On.
Despite the concerns about AT&T and Verizon, the FCC report may in fact have limited impact in the long term.
With Wheeler stepping down, it is thought President-elect Trump will appoint a new commissioner who is likely to oppose net neutrality laws, given Trump’s well-publicised stance on the issue.