Skip to main content

FCC says streaming deals from AT&T and Verizon violate net neutrality

AT&T and Verizon respond to FCC's complaints

FCC Tom Wheeler Net Neutrality
Mark Wilson/Getty Images
If you thought plans from Verizon and AT&T to exempt streaming videos from only some services from data plans sounded a little unfair, you weren’t alone. In a sternly worded pair of letters sent to the carriers, the Federal Communications Commission accused them of a potential violation of the net neutrality rules it approved in 2015.

Net neutrality, for the uninitiated, is the principle that broadband providers should treat all content, sites, and platforms equally in terms of traffic. Columbia University law professor Tim Wu, who’s credited with coining the term, compares the idea to an electric grid. “The electric grid does not care if you plug in a toaster, an iron, or a computer … [It’s] a model of a neutral, innovation-driving network.”

Related Videos

In 2015, the FCC reclassified broadband providers as so-called “Title II” common carriers, or services bound to “act in the public interest.” That includes ensuring that they can’t make any “unjust” or “unreasonable” charges, for one, or introduce any regulations that would actively suppress competing services.

Carriers like AT&T and Verizon have attempted to sidestep those rules with so-called “zero-rating,” a policy that exempts certain applications and services from counting against subscribers’ data plans. Zero-rated music streaming doesn’t contribute to your overall data bucket, for example, and neither do video services.

AT&T began zero-rating its DirecTV on-demand and live-streaming mobile app in September and plans to do the same for its forthcoming DirecTV Now streaming service when it launches later in December. Verizon currently waives data charges for National Football League games, its Go90 video platform, and other participants affiliated with its FreeBee Data 360 program.

The FCC’s net neutrality rules do not expressly prohibit zero-rating, but the agency evaluates implementations on a case-by-case basis to determine whether they “hinder competition.” It found that AT&T and Verizon’s programs did. “[We have] reached the preliminary conclusion that these practices inhibit competition, harm consumers, and interfere with the ‘virtuous cycle’ needed to assure the continuing benefits of the open internet,” John Wilkins, head of the FCC’s wireless division, wrote in Thursday’s letter. “It would [be] very difficult, if not infeasible, to offer a competitively priced service.”

AT&T and Verizon beg to differ.

“We will provide the FCC with additional information on why the government should not take away a service that saves customers money,” AT&T said Friday. A spokesperson for Verizon said that the carrier remains “quite confident that [its] practices are good for consumers, non-discriminatory, and are consistent with current rules.”

Both carriers contend they provide competitors like Netflix, YouTube, and others a means to the same zero-rated status as their first-party services. AT&T exempts streaming services from subscribers’ data caps on a metered basis, charging roughly $16 a month for each customer who uses 10 minutes of streaming video a day, and charges up to $47 a month for customers who use 30 minutes a day. But the FCC argues that the policy is discriminatory, especially toward smaller startups which that might not be able to swallow the cost.

“[The program] strongly favors AT&T’s own video offerings while unreasonably discriminating against unaffiliated edge providers and limiting their ability to offer competing video services to AT&T’s broadband subscribers on a level playing field,” Wilkins wrote.

The FCC requested responses from both carriers by December 15, and on Friday, December 16, the Commission received those responses.

With regard to the FCC’s inquiries regarding DirecTV, AT&T continued to insist that the feature is just a perk, and not anti-competitive. “Although the [FCC Wireless Bureau] implicitly concedes that Data Free TV offers substantial consumer value, the Bureau ignores the many ways in which consumers would be substantially worse off if DIRECTV were forced to discontinue this program,” the company said in its letter.

The FCC first raised concerns about zero-rating in a letter to AT&T in November. The carrier responded, arguing that the practice was to its customers’ benefit. “These initiatives are precisely the kind of pro-consumer challenges to cable that the Commission heralded in approving AT&T’s acquisition of DirecTV,” Robert Quinn, AT&T’s policy chief, wrote in a letter to the agency.

As for Verizon, the company noted in its response that it was “disappointed” by criticisms of its free data service. Adopting a similar line of argument as AT&T, the carrier wrote, “FreeBee is a non-discriminatory program that fully complies with the Commission’s Open Internet rules. There is no evidence that FreeBee — or go90’s participation in FreeBee — has injured or could harm consumers or competition.” Rather, Verizon said, its program “provides tangible benefits to consumers by increasing the amount of what they can do and watch online, at no cost to them.”

Another major U.S. carrier, T-Mobile, adopted a policy of zero-rating last year with the launch of Binge On, a video streaming service that exempts approved video and music streaming services from customers’ data caps. Wheeler has characterized the plan as “pro-innovation,” “pro-competition,” and in full compliance with the government’s net neutrality rules, but consumer advocacy groups have voiced concerns about the program’s exclusivity.

Content providers must meet certain technical specifications that allow T-Mobile to identify their content as Binge On-friendly, for instance. And Binge On reduces the quality of streaming indiscriminately — even content hosted on services that haven’t opted into T-Mobile’s plan.

T-Mobile’s new One plan offers data-free video streaming, but at reduced quality. Subscribers can unlock improved definition for $25 a month on top of what they pay for the plan itself, an option that has raised the ire of net neutrality advocates like the Electronic Frontier Foundation.

An FCC spokesperson told Digital Trends in August that the Commission’s policy review was “ongoing.”

The future of the FCC’s net neutrality policy is unclear. Roslyn Layton, Jeffrey Eisenach, and Mark Jamison, advisers who will oversee the FCC’s transition under President-elect Donald Trump’s administration, are outspoken opponents of the FCC’s Title II rules, and have argued that government regulations are not necessary to protect net neutrality. A Republican-led commission, whose members Trump will have the power to appoint once he takes office on January 20, could choose to overturn the current rules entirely.

Article originally published on 12-02-2016. Updated on 12-16-2016 by Lulu Chang: Added AT&T and Verizon’s responses to FCC complaints. 

Editors' Recommendations

U.S. Senate votes to overturn FCC’s repeal of net neutrality protections
senate overturns fcc net neutrality repeal chuck schumer nancy pelosi

The United States Senate on Wednesday voted in favor of reversing the Federal Communications Commission's recent order to end net neutrality protection in a narrow 52-to-47 victory. In order for bill to pass the Senate, a simple majority was needed, but 50 senators had already declared support for the preservation of net neutrality prior to Wednesday's vote. Senate Democrats used the powers granted to the legislative branch under the Congressional Review Act to potentially overturn regulations created by federal agencies, like the FCC's decision to end requirements for net neutrality.

All 49 Democrats in the Senate voted in favor of the bill, along with Republicans Susan Collins of Maine, John Kennedy of Louisiana, and Lisa Murkowski of Alaska. The bill is now headed to the House of Representatives, where Democrats must convince at least 25 Republicans to cross the aisle in a similar simple majority vote. Democrats argue that the net neutrality regulations would create an open internet, as it prevents internet service providers (ISP) from discriminating against certain types of web traffic. Many Republicans consider these requirements burdensome for internet providers, and that competition in an open market will allow industry players to self-govern.

Read more
FCC puts a date on net neutrality’s tombstone ahead of Senate vote
ajit pai

Net neutrality finally has an official expiration date. Announced Thursday morning, May 10, the Obama-era regulations that ensured an open internet are now set to end on June 11, 2018. This will mark the first date that internet service providers in the United States will be legally allowed to obstruct or alter internet traffic according to their whims, but the fight's not over yet.

"The agency failed to listen to the American public and gave short shrift to their deeply held belief that internet openness should remain the law of the land," FCC commissioner Jessica Rosenworcel told Reuters. "The FCC is on the wrong side of history, the wrong side of the law, and the wrong side of the American people."

Read more
FCC’s net neutrality rules officially end, but 18 ISPs promise to stay honest
FCC's historic decision on Net neutrality

The Federal Register showed that the Federal Communication Commission's (FCC) net neutrality rules would come to an end on April 23, and now, that has come to pass. The killing blow entered the register on Thursday, February 22, stating that the FCC returns to the "light-touch regulatory scheme" that kept America's public-accessed internet in check since the 1990s. As promised, this ruling went into effect on Monday, April 23. That means internet service providers (ISPs) no longer fall under the government-regulated "utility" umbrella. 
"The Commission restores the classification of broadband internet access service as a lightly regulated information service and reinstates the private mobile service classification of mobile broadband internet access service." 
The demise of the FCC's net neutrality rules doesn't necessarily mean ISPs will go wild and start charging outrageous fees and throttle connections on a whim. They didn't do that prior to the creation of the net neutrality rules, and likely won't resort to evil plotting once the rules expire this spring. But the FCC does have a few leashes set in place to keep internet subscribers from quivering in their boots. 
Called the Restoring Internet Freedom Order, the regulation forces ISPs like Comcast to publicly provide their commercial terms of service. They must also keep the public informed about their network management practices and their performance characteristics. The FCC believes this level of transparency will protect the "openness" of the internet versus imposing rules that are "costly" rather than beneficial. 
Yet there is still an uncertainty about what happens next. The big fear is that, with the net neutrality rules now eliminated, ISPs will start regulating internet traffic based on content and price. For instance, an ISP could provide its own video streaming service at full speed, but force Netflix to cough up extra cash if it wants customers to experience identical streaming speeds. That rise in cost would trickle down to subscribers. 
This wasn't a problem prior to the net neutrality rules, but streaming services are now more abundant, hence the fear that the services we use every day -- especially for cord cutters -- could end up costing more money now to access the same services they loved when net neutrality rules kept ISPs in check. 
Hopefully, the FCC's transparency push will help customers understand the pros and cons of what an ISP could offer. Right now, just getting the prices of the several different internet tiers provided via Charter's Spectrum service feels like pulling teeth. It's little details like price hiding that has internet surfers up in arms about any lack of regulation. 
Many ISPs such as Comcast, Charter, and 16 other companies have already pledged not to block or throttle internet connections outside the piracy envelope. In the case that throttling and/or blocking does occur, they will be required to report the root cause. ISPs must also answer to the Federal Trade Commission, and the Department of Justice. 
Though the net neutrality rules have become defunct, customers likely won't see the aftermath for a few months. Yet with government agencies keeping a watchful eye, ISPs may stay on their best behavior.
Updated on April 24: The FCC's net neutrality rules are officially no more. 

Read more