FCC said to have 'serious concerns' over AT&T's price tag for DirecTV Now

FCC
FCC Chairman Tom Wheeler, left

The FCC has reportedly told AT&T it has “serious concerns” about whether its upcoming OTT video service is anti-competitive. But whether it will be able to do anything about it before the Trump administration takes control is far from clear.

The nation’s second-largest wireless carrier recently outlined plans to offer DirecTV Now at $35 a month, a price so low analysts say the company will be hard-pressed to make money on it. AT&T zero-rates the service for its wireless customers, allowing them to access it without taking a toll on their monthly data allotments.

Reuters reported Thursday that the Commission’s wireless telecommunications bureau informed AT&T the offering “may obstruct competition and harm consumers” because rival services may not be able to compete. The FCC demanded AT&T respond to its letter by Nov. 21.

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As Roger Entner of Recon Analytics pointed out via Twitter, though, the Commission is currently controlled by Democrats, who outnumber Republicans 3-2. That’s sure to change after Donald Trump is inaugurated Jan. 20.

“You have to remember this is the Democrat-led FCC, not the Republican-led FCC that will take over soon,” Entner tweeted. “In the past they disagreed a lot.”

Indeed, the Commission has been at odds over the growing trend of sponsored wireless data. The Commission summoned both AT&T and T-Mobile to explain their policies late last year, but the FCC has yet to officially intervene, saying only that it is monitoring such offerings and evaluating them on a case-by-case basis.

T-Mobile became the first U.S. wireless operator to wade into zero-rated data with the 2014 launch of Music Freedom, which provides music from more than three dozen content partners without having an impact on users' monthly data allotments. The carrier followed that offering last year with Binge On, a similar service that provides unlimited zero-rated video from participating content providers.

Such issues are growing thornier as the wireless market collides with the world of digital media and advertising. AT&T is moving aggressively into media with last year’s acquisition of DirecTV and the recently announced a massive $85 billion bid for Time Warner. Meantime, Verizon is making similar moves with its effort to add Yahoo’s internet business to its media portfolio. Those actions could give wireless carriers a distribution edge, and they could enable operators to push their own content – or that of their competitors – over competing content.

While a Republican-led FCC would likely be more tolerant of such models, it isn’t clear what kind of stance it will take under a Trump administration. Trump has already voiced opposition to AT&T’s proposed takeover of Time Warner, but he’s had little to say about net neutrality. Regardless, DirecTV Now is clearly facing scrutiny in advance of the transition at the White House.

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