AT&T's proposed $85 billion merger with Time Warner could prompt the company to "dramatically increase the use of data caps and zero-rated content," Sen. Ron Wyden (D-Oregon) warns in a letter to the Federal Communications Commission.
"AT&T proved itself to be an early and enthusiastic adopter of zero-rating in order to monetize data and boost its bottom line," Wyden writes. "I am deeply concerned that if AT&T acquires Time Warner's content, the new mega-company will have incentives to prioritize its own content over content created by small business, independent artists or by its rivals," the lawmaker adds.
Wyden says that "zero-rating" -- or exempting certain material from consumers' data caps -- violates net neutrality principles because the practice creates "an internet where one bit is favored over another bit."
In September, AT&T said it would exempt material streamed through the DirecTV app from wireless customers' caps. Earlier this year, the company began enforcing data caps on wireline subscribers.
Wyden, a longtime critic of data caps, says in his letter that broadband caps "have nothing to do with network management and everything to do with profiting from an ever-more-consolidated broadband market."
Many consumer advocates and Silicon Valley companies have asked the FCC to crack down on data caps, arguing that they violate at least the spirit of the net neutrality rules. "Zero-rating profoundly affects Internet users' choices," Mozilla, Yelp and others wrote to the FCC earlier this year. "Giving ISPs the power to favor some sites or services over others would let ISPs pick winners and losers online -- precisely what the Open Internet rules exist to prevent.
The FCC hasn't taken a position yet on zero-ratings services.The net neutrality rules prohibit broadband providers from blocking or degrading service and from creating online fast lanes. The regulations also broadly ban Internet service providers from engaging in conduct that interferes with people's ability to access Web content. Carriers could potentially violate that last prohibition by excluding certain material from data caps, but the FCC has said it will take a case-by-case approach to the question.
Separately, consumer advocacy group Public Knowledge said today there is reason to doubt that AT&T will comply with potential merger conditions, given the news that the Department of Justice filed suit today against DirecTV for allegedly violating antitrust law by colluding with other pay-TV providers. The alleged violations occurred before AT&T merged with DirecTV, but Public Knowledge says the lawsuit demonstrates the challenges of policing large companies.
"Behavioral merger conditions may be so difficult to enforce that the best path is for the Department of Justice to block deals that would harm competition," the group states.