The FCC has asked AT&T to respond to what it called “serious concerns” around the anti-competitive nature of its new DirecTV Now mobile video service.
According to a report from Reuters, the Commission last week said AT&T’s ultra-low-priced service may “obstruct competition and harm consumers” by undercutting potential competitors to the point they can’t offer a meaningfully similar alternative. The FCC also reportedly called into question the legality of AT&T’s offer to zero rate data for its customers using the app under the Commission’s Net Neutrality rules.
Officials gave AT&T until November 21 to respond.
The letter follows AT&T’s announcement last month that it will launch a new DirecTV Now streaming service app that will offer more than 100 channels for $35 per month. AT&T said data used for streaming on the app would be zero rated for its customers.
The service’s price tag is significantly lower than the average cable payTV cost of around $100 per month, and with the higher number of channels also beats out other streaming options like Dish Network’s Sling TV. According to MoffettNathanson, the price point is so low, the estimated margin for AT&T could be as little as $1 before the inclusion of customer service, transport, computing, and storage costs.
AT&T is far from the only U.S. wireless carrier to propose or offer zero rated services – see also: T-Mobile’s Binge On and Verizon’s sponsored data for its go90 service – but it appears to be the first to trip the FCC’s Net Neutrality wire. Analysts, however, are skeptical that the FCC’s inquiry will lead to any serious changes given the recent election and expected turnover of power.
BTIG’s Walter Piecyk told Fortune he would “question the relevance of any decisions or inquiries” given the upcoming changes. The sentiment was seconded by Recon Analytics’ Roger Entner, who reminded onlookers on Twitter that the FCC regime change may mean totally new opinions.
“You have to remember this is the Democrat-led FCC, not the Republican-led FCC that will take over soon,” he wrote. “In the past they disagreed a lot.”
Filed Under: Industry regulations + certifications