FCC concerned over "zero-rating" from AT&T, Verizon

The Federal Communications Commission (FCC) in separate letters to AT&T and Verizon on Thursday expressed concerns over the carriers' use of data cap exemptions, a practice better known as "zero-rating."

The letter to AT&T is the latest in a string of exchanges the regulator had with the company over the past month.

The FCC in November said it had "serious concerns" with AT&T's use of zero-rating, especially with regard to its new DirecTV Now streaming TV service, which users of AT&T's mobile service could stream over mobile data without it counting against their data caps.

In response AT&T said its data exemption policy benefited consumers, though it did not mention  that the FCC had no hard-and-fast rules in place regarding the practice.

That response failed to quell worries at the FCC. In the letter which was cited by Ars Technica, Jon Wilkins, the FCC's wireless and telecoms chief, said the Commission has now "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."

According to the letter, the FCC's primary concern was with how AT&T's Sponsored Data programme required companies to pay AT&T for the ability to not count against a user's data cap, while its own services, such as DirecTV Now, received the same benefits at no added cost.

Both AT&T and Verizon said their programs, which charged video providers rather the cost of streaming the data, were open to any video company willing to pay the cost of customer data. However, the FCC said it was concerned AT&T and Verizon still had a cost advantage over rivals, since they provided the streaming service and owned the networks.

In its letter to AT&T, the FCC said its preliminary conclusion is that the carrier's practices "inhibit competition, harm consumers, and interfere with the 'virtuous cycle' needed to assure the continuing benefits of the Open Internet."