AT&T Wants To Be Able To Charge Video Streaming Services For Exemption From Customers’ Data Caps

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(Mike Mozart)

Data caps on home broadband stink, but they’re also a reality for millions of internet users (and probably soon for all of us). And as the FCC’s new open internet rules go into effect in the coming days to protect net neutrality, they’re also becoming one of the main ways in which ISPs can soak up extra cash from consumers and businesses alike.

Ars Technica noticed the filings with the FCC this week, in which AT&T claims that their data caps are high enough for most users and most use, and so therefore these deals won’t actually harm anyone — and in fact, are actually better for consumers and competition.

AT&T places data caps on not only their mobile data services but also on their traditional fixed wireline broadband services. For AT&T’s DSL subscribers that cap is 150 GB. U-verse customers get 250 GB, and U-verse with GigaPower customers can subscribe to either a 500 GB or 1 TB tier. Overage runs subscribers $10 for every 50 GB, which seems to be emerging as the new industry standard.

But where the new net neutrality rule requires that all data coming through those networks be allowed equally to reach the customers who asked for it, it does not require that all data must be treated equally with regard to those caps. And AT&T as asking the FCC to make sure it stays that way.

AT&T has already struck several such “sponsored content” deals on the mobile side of its business. The deals allow companies to pay for exemption from data caps by, in effect, pre-paying for the data instead of charging the customer for it.

If, for example, Streaming Music Company were to become a data sponsor, they would pre-purchase an absolute mass of data from AT&T. Then Streaming Music Company users on the AT&T network wouldn’t see their data allowance take a hit when listening to music on that service. The data for Streaming Music Company would, instead, be charged on the other end, against their pre-purchased allotment. It’s sort of like the digital version of business reply mail or prepaid return shipping labels.

It becomes a good deal for Streaming Music Company because the use of competitors like Google, Amazon, Pandora and Spotify, on the other hand, would count against a user’s data cap. So users who are at risk of running into a data cap, but still want to enjoy their streaming music, would be more likely to choose the service that wouldn’t cost them extra.

In mobile, such zero-rating deals are common. In wired broadband, it’s much less so — but the potential is there, and AT&T wants to protect it.

Streaming video is over half of primetime network traffic, these days. AT&T could strike very lucrative deals with the Amazons, Hulus, or YouTubes of the world (but probably not all at once) to guarantee those services an exemption from broadband caps. (Netflix has stated publicly that it will no longer seek exemption from data caps, after signing a deal of that type in Australia created a great deal of negative press for them here in the U.S.)

AT&T could also — especially if the DirecTV merger goes through — go the Comcast route and exempt any of its own services from counting toward data caps.

A group of competitors and consumer advocates including, among others, Dish, Cogent, and Public Knowledge, asked the FCC to include a bar on these agreements as a condition of approving the merger between AT&T and DirecTV. AT&T, however, is fighting back.

“The record does not support Opponents’ request that AT&T be barred from exempting any online video service from any usage-based tracking, metering, or billing in its broadband services,” AT&T wrote.

“Opponents offer no reason for the Commission to … issue a blanket, abstract prohibition that would apply only to AT&T. Doing so would deprive AT&T customers of service offerings tailored to fit their usage and their budget. It would also distort competition by hindering AT&T’s efforts to close the gap and compete with cable’s higher-speed broadband products.”

Got that? Implicitly pressuring consumers to choose some services instead of others by making some subject to and others exempt form a data cap is providing “service offerings tailored to fit their budget.”

AT&T also pointed to their recent deal with Hulu as an example of their commitment to keeping internet video available to customers. Neither AT&T nor Hulu have said if the deal includes a data cap exemption.

AT&T wants to choose which online video services count against data caps [Ars Technica]

by Kate Cox via Consumerist