Slashdot Mirror
FCC Calls Out AT&T, Verizon For 'Zero Rating' Their Own Video Apps (zdnet.com)
U.S. regulators are calling out AT&T and Verizon for exempting their own video apps from data caps on customers' smartphones. The FCC has sent letters to the country's biggest wireless carriers saying the way they handle the practice, known as "zero rating," can hurt competition and consumers. From a report on ZDNet: AT&T launched DirecTV Now earlier this week. AT&T Mobility customers can stream video data over LTE without impacting their data allowance. Verizon offers something similar with its go90 service. AT&T and Verizon don't see any wrongdoing. In a statement Friday, AT&T said exempting services like DirecTV Now from data caps saves customers money. Verizon said its practices are good for consumers and comply with regulations. "We will provide the FCC with additional information on why the government should not take away a service that saves consumers money," AT&T wrote in a statement Friday. The FCC hasn't released any official ruling on "zero rating," just guidance. It said on Thursday a similar letter was sent to AT&T in November, but the FCC didn't like AT&T's original response.
Pricing their video service over cellular implies that the cost of the cellular hop is zero, and that the expense of transmitting the video to the viewer is all in the Internet link. Since their own video service is hosted locally, there is no Internet bandwidth consumed, and thus the price should be zero (which was what Netflix offered these guys for free on their landline ISP service and they turned it down). For a market economy to function properly, the minimum pricing has to reflect the expense incurred by the seller.
I can understand zero rating as a temporary promotional measure (e.g. streamed video doesn't count against your cap for the first 6 months if you use our service). But making it the standard price is equivalent to dumping to try to kill off competition. Especially if they're using revenue from other sources to subsidize this service, like say, extra money they're collecting from Netflix in contravention of Net Neutrality.
To expand on this - a lot of people are like "Trump is right people should have to pay for usage". Thing is - ISPs already pay for peering, and their customers already pay for access to the internet - that's already happening and normal. What isn't ok is degrading someone else's service because a paying customer of your is using a competitor's application or host.
Say like - Comcast intentionally slowing down the speed of Netflix because Netflix is competitor (Comcast probably views services like that as the literal end to their cable business).
This is net neutrality.