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FCC Calls Out AT&T, Verizon For 'Zero Rating' Their Own Video Apps (zdnet.com) 56

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.
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FCC Calls Out AT&T, Verizon For 'Zero Rating' Their Own Video Apps

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  • It's ok (Score:5, Insightful)

    by cdrudge ( 68377 ) on Friday December 02, 2016 @03:47PM (#53410913) Homepage

    Just wait about a month and a half AT&T and Verizon. Everything will be a-ok.

    • by Anonymous Coward

      I for one look forward to paying 150 dollars a month for my all-access pass that includes sports, all the home shopping channels, HBO, Wikipedia, Google, facebook, and Youtube!

      Of course for 200 they throw in the whole internet for free!

      • Oh, also, once Trump is in the white house everyone gets a pony too. Little known campaign promise...

        • by bondsbw ( 888959 )

          Nah, that's Vermin Supreme's campaign promise. It's easy to confuse the two, I know... one is a satirical candidate wearing something ridiculous on his head who wants to dismantle the government, and the other is Vermin Supreme.

        • Oh, also, once Trump is in the white house everyone gets a pony too. Little known campaign promise...

          That might not be true though. His actual words were:

          Hillary would never do it...You all deserve that...I always say that...Ponies...All of you..."

          This could be interpreted either as a promise of ponies or that he was having a stroke. Maybe we should call for his medical records, just to see if there is any mention of ponies!

    • Re:It's ok (Score:4, Insightful)

      by DickBreath ( 207180 ) on Friday December 02, 2016 @04:03PM (#53411061) Homepage
      Dear Internet Service Providers:

      If we didn't have data caps, then we wouldn't need data cap exemptions or Zero Rating, or whatever marketing euphemism you want to call it.
    • Re:It's ok (Score:4, Funny)

      by space_jake ( 687452 ) on Friday December 02, 2016 @04:04PM (#53411065)
      Shut up and buy it consumer, America is great again....
    • Re:It's ok (Score:4, Interesting)

      by Skuld-Chan ( 302449 ) on Friday December 02, 2016 @04:09PM (#53411109)

      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.

      • by Pikoro ( 844299 )

        Actually, that's not net neutrality. Net Neutrality can be summed up in 5 words: A packet is a packet. I don't know what is so hard about this. Some people will say stuff like: you have to prioritize VOIP for 911, or real time emergency alerts, or whatever. Bullshit. A packet is a packet. If you throttle or prioritize, you're not neutral. Period.

        • Net Neutrality can be summed up in 5 words: A packet is a packet.

          No, that is packet or service neutrality.

          Some people will say stuff like: you have to prioritize VOIP for 911, or real time emergency alerts, or whatever.

          You don't HAVE to, but if done NETWORK NEUTRAL, then yes, you can prioritize VoIP over SMTP if you want, as long as you do it for VoIP on every network, and you've still accomplished Network 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.

        Like, I couldn't understand, like, anything you said. Like, I guess it's time to read, like, another post.

        • Think of it like a private highway where people who drive chevrolet cars have to go 5 miles per hour - not because they didn't pay the fee's/taxes to use the highway, but because the highway company actively wants to destroy chevrolet as a competitor.

          That's essentially what Comcast was doing to Netflix a couple years ago.

    • by Anonymous Coward

      Did you read the paper that Eisenach wrote on net neutrality and using anti-trust litigation to stop content producers and network providers from colluding with content producers in this way? Here it is: https://www.judiciary.senate.gov/imo/media/doc/Eisenach%20Attachment%20II.pdf

      Now you can be informed instead of just parroting what you hear on TV and Facebook!

  • by Anonymous Coward on Friday December 02, 2016 @03:47PM (#53410921)

    "the government should not take away a service that saves consumers money"

    But the only reason it costs money in the first place is because you decided it does.

    • The $20Billion the FCC sold the spectrum for sort of made that decision...

      • by Zxern ( 766543 )

        The justification for data caps is that customers would overload the network and abuse it. So zero rating apps doesn't make any sense if there is a real need for data caps.

    • by drakaan ( 688386 ) on Friday December 02, 2016 @04:12PM (#53411141) Homepage Journal
      How about zero-rating *all* streaming data. That would save customers even *more* money, right?
      • How about zero-rating *all* streaming data. That would save customers even *more* money, right?

        You don't think that is already coming?

        I'm old enough to remember when all cell phone calls were charged by the minute regardless of when the call was made. Then came tiered pricing, cheaper calls after peak hours, and then off peek calls became free.

        When texting became a thing people were charged per text message sent. This was also about the time when this technology called a "pager" was a thing. Then texting became cheaper, and it's common practice to get free unlimited texts with even the cheapest ph

  • by SailorSpork ( 1080153 ) on Friday December 02, 2016 @03:48PM (#53410927) Homepage

    With the anti-net neutrality people the new administration is putting in place in the FCC advisory committee, they just need to stall for a few months and it'll blow over. Then they can continue their anti-competitive ways in peace.

    • by Anonymous Coward

      With the anti-net neutrality people the new administration is putting in place in the FCC advisory committee, they just need to stall for a few months and it'll blow over. Then they can continue their anti-competitive ways in peace.

      AT&T has deserved the corporate death sentence for awhile. They don't even pretend to have any purpose beyond short term profits. They have had a chance to invest and improve their infrastructure outside of cities and major areas for what over a decade, and despite numerous promises haven't done much.

      Whatever you do folks, I urge you to vote with your wallets. Do not support an organization that does this crap, if you can possibly avoid it. Right now I'm stuck paying cricket wireless for smart phone

    • by mysidia ( 191772 )

      With the anti-net neutrality people the new administration is putting in place in the FCC advisory committee

      Can't be too sure. The advisory committee is just that a council of advisors representing the Telecommunications and Media industries.

      The advisors are not the commissioners, they don't diect the FCC.

      There are two commissioners whose term expired and need new appointments, but Senate confirmation is required for those.

      The FCC is not supposed to be a politicized entity, as such, congress structured

      • It's not exactly what I'd call a good sign, though.

        And no, while the FCC isn't supposed to be "politicized", its structure expressly states that there will be two commissioners for each party, and the chair will be from the President's party. The President doesn't get to dictate the policy, but that doesn't mean his choice won't have a huge impact on the policies they pursue.
      • by Anonymous Coward

        When the 5 commissioners are always a 3:2 split in favour of the ruling party, it can't help BUT be political.

  • They're lying. (Score:4, Insightful)

    by msauve ( 701917 ) on Friday December 02, 2016 @03:52PM (#53410961)
    "AT&T said exempting services like DirecTV Now from data caps saves customers money. "

    No, it doesn't. Wireless network costs are shifted onto consumers who don't buy their streaming services. If all the costs of streaming bandwidth are included in the price of the streaming service, then reduce the cost of that service and let the consumers pay for the bandwidth directly, just like customers who use competitive streaming services.
    • "AT&T said exempting services like DirecTV Now from data caps saves customers money. "

      No, it doesn't. Wireless network costs are shifted onto consumers who don't buy their streaming services. If all the costs of streaming bandwidth are included in the price of the streaming service, then reduce the cost of that service and let the consumers pay for the bandwidth directly, just like customers who use competitive streaming services.

      My reply to them: "Yeah.. Why don't you reduce my data cap and save me, as a customer, money."

      You're right, that makes NO sense.

  • The primary cost factor for wireless bandwidth is the wireless part (see wired networks and their unlimited bandwidth for far less money or, in cases where there is throttling, SIGNIFICANTLY more data allowance for less money). Since these zero rated services share that same wireless medium, any use of them will require higher data rates(money) for any other traffic so that those other services welfare the zero rated service. IE: it will cost me more for data for my own use, or for use for other non-zero-ra

    • I just switched from Dish (back to) DirectTV just for the free-data streaming of content that I'm already paying for. Based on history, in 4 or 5 years Dish will have a better deal again, and we'll switch ... again.

  • Should be illegal (Score:5, Interesting)

    by Solandri ( 704621 ) on Friday December 02, 2016 @03:56PM (#53411013)
    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 [wikipedia.org] 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.
    • 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 [wikipedia.org] 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.

      You got that right. It also implies that there is a load of bandwidth available to use. So, wait a sec.. If there's a load to use, why do you place a high value on it because of its limitation? Then, why do you encourage people to use it for something that limits it further and then say there isn't a a problem with limitation? Stupid circle.

    • by Agripa ( 139780 )

      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 might agree with this argument however ISPs do *not* charge based on transit, peer, and local usage. If I transfer data between two adjacent subscribers of the same ISP, it does not get zero rated. Many services would be happy to meet peering requirements for essentially free transfers but ISPs deliberately avoid this in favor of their own services.

  • Ethically/morally/etc it's one thing. It gets a bit trickier. When you offer a service like that, it also pushes more traffic onto the network, which affects other users of said network.

    Personally, I think it's interesting that the FCC is calling out a company early (though this would have to be fought outside the FCC in the end). If I'm paying for bandwidth that isn't throttled and don't abuse it, it seems a bit lopsided that my bandwidth gets throttled by the heavy usage of others that were encouraged

    • Ethically/morally/etc it's one thing.

      AT&T spokesperson: Sorry... what? I'm not sure what you're saying here. Is there a legal document that perhaps defines those terms in an appendix somewhere? If possible, we'd also like them defined in the proper context of how they relate to maximizing corporate profit and alienating customers. I'm afraid our discussions can go no further unless we're all on the same page with some of this confusing terminology.

  • "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 hey AT&T, if you can save them money by giving them YOUR data stuff for free, why not save them a bunch more and do that for all data? idiots.
  • "exempting services like DirecTV Now from data caps saves customers money"

    Cool. Netflix is a a service like DirecTV Now. I assume you will be exempting it from data caps to save customers money as well...

  • If Verizon wants to charge nothing for data to their video apps, I'm fine with that. After all, they know best what their services are worth.

  • Comcast are not Zero Rating. When the network is used for competitors streaming they earn nothing so they cahrge for the bandwidth. When it is using their apps they get an opportunity to show ads and earn from ads so they do not charge from bandwidth. Its no differnt from google not charging for its search Engine because they get to show us ads. If there was a way to switch off Google Ads and still use Google Search Engine then surely Google would start charging for those Searches.
    The Network providers did

    • This makes no sense. If I use Netflix over AT&T's network then netflix makes the money I paid them to serve the video over the internet and AT&T makes the money I paid them to give me internet access. If AT&T offers a video streaming service that doesn't count towards your data cap, then they've just rolled the data costs into the cost of the streaming service. And when they do this, they do so at a much lower rate than normal users pay, which is anticompetitive. Your post doesn't make sense.

      • by ghoul ( 157158 )

        Read my post again. Reading comprehension is a valuable skill. Work on developing it

  • by Anonymous Coward

    The FCC cannot take any action at this point. They had the chance to do it years ago, but wimped out. Thus ensuring the total screw-over of consumers.

    We are about to see the rape of the U.S. by the 1%, starting early next year.

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