AT&T Supports Zero-Rating DirecTV Video Services

AT&T supported its decision to exclude DirecTV's video-streaming products from its customers' data usage in a letter sent to the Federal Communications Commission (FCC) by senior executive vice president of external and legislative affairs Robert Quinn on November 21.

Quinn's letter, a copy of which was sent to Tom's Hardware, was written in response to a complaint from FCC wireless chief Jon Wilkins. At issue was Data Free TV, a service that allows DirecTV customers to stream content on their mobile devices without using up any of their wireless data. Wilkins feared that excluding DirecTV content from AT&T customers' data limits would make it harder for other broadcasters to compete with their own services.

The setup could mean that AT&T was giving preferential treatment to a company it bought in 2015 at the expense of other companies operating in the same market. How are other services going to attract users when another option doesn't require them to use their precious mobile data? Yet it seems that many consumers don't have the same concerns about AT&T and DirecTV working together like this. In fact, many have been quick to embrace it.

Data Free TV debuted in September, and Quinn said in his letter that the service had almost 3 million users just four weeks after its launch. He also said that streams of DirecTV content via the satellite television provider's DTV Everywhere service were three times as high as they were in 2015. Now the company wants to follow on that success with a new service called DirecTV Now. Here's how Quinn described the product in his letter to the FCC:

DIRECTV Now 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.

He said AT&T isn't giving DirecTV special treatment. "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 wrote, "And the sponsored data rate is as low as the market rates AT&T currently offers even to wireless resellers who commit to significant purchase volumes." He later added that AT&T is "extremely bullish on the pro-consumer benefits of sponsored data."

Yet the company is likely to attract more scrutiny because of its $85 billion offer to acquire Time Warner. (Note that Time Warner Cable, the internet service provider, is a separate company that was spun out of Time Warner.) That deal would pose serious threats to free media and privacy, as the combined company might attempt to profit by showing more and better-informed advertisements or making Time Warner content exclusive to AT&T.

The problem with Data Free TV and DirecTV Now isn't that consumers are getting free access to certain content. Instead, the issue lies with the possibility of weakening the concept that no byte of data should be treated differently than other bytes of data. Allowing companies to pay to have data from their services not count against their customers' data allowance gives them an inherent leg up over companies that can't make similar deals.

It almost doesn't matter that DirecTV is paying for this data--that's like pulling a dollar bill from one pocket to put it in another. (Corporate accounting is a bit more complicated than that, but the basic principle is largely true.) Other companies would instead be taking money from their pockets and stuffing them into someone else's. It's not hard to imagine a future where the only services that matter are the ones from companies that can afford to do this.

Mary Poppins said a spoonful of sugar can help the medicine go down. Data Free TV and DirecTV Now are the sugar. Now all that's left is to figure out if AT&T is offering medicine--Quinn said in his letter that offering these services benefits consumers--or if Wilkins is right to think that it's actually poison.