AT&T appears to be violating the net neutrality rules by exempting DirecTV video from customers' data caps, the Federal Communications Commission told the company this week.
The agency's move came just days after AT&T officially launched "data-free TV" -- a zero-rating program that allows wireless customers who purchase DirecTV to watch video through the provider's mobile app, without burning through their monthly data caps.
That program appears to violate the net neutrality rules because it "strongly favors AT&T's own video offerings while unreasonably discriminating against unaffiliated ... providers," FCC Wireless Telecommunications Bureau Chief Jon Wilkins wrote Thursday in a letter to AT&T.
In other words, the decision to offer DirecTV on a "data-free" basis gives consumers an incentive to purchase DirecTV, at the expense of companies like Netflix or Amazon.
Wilkins added: "We have therefore reached the preliminary conclusion that these practices inhibit competition, harm consumers, and interfere with the 'virtuous cycle' needed to assure the continuing benefits of the Open Internet."
Wilkins also told Verizon Thursday that it may be violating the net neutrality rules by exempting its Go90 video service from wireless users' data caps. The FCC asked AT&T and Verizon to provide more information about their zero-ratings programs by Dec. 15.
The net neutrality rules broadly prohibit ISPs from blocking or degrading service and from creating online fast lanes. The regulations also ban Internet service providers from engaging in conduct that interferes with people's ability to access Web content. Zero-rating could potentially violate that prohibition, depending on the circumstances. The FCC said last year that it intends to take a case-by-case approach to the question.
Consumer advocates, as well as companies that offer Web content, have argued for many months that Internet service providers like AT&T shouldn't give consumers an incentive to watch video from affiliated companies, like DirecTV, over unaffiliated ones like Amazon Prime, Netflix or YouTube.
Data-cap exemptions "present a serious threat to the Open Internet: they distort competition, thwart innovation, threaten free speech, and restrict consumer choice -- all harms the rules were meant to prevent," advocacy groups including the Center for Media Justice, Daily Kos, Electronic Frontier Foundation and Free Press wrote to the FCC earlier this year.
AT&T and other Internet service providers have countered that data-cap exemptions benefit consumers by allowing them to access programs without the possibility of incurring extra charges.
While the current FCC appears to have rejected that argument, an FCC led by an appointee of President-elect Donald Trump may well feel differently. All three of the transition team members advising Trump on telecom policy have criticized the net neutrality rules, and one -- Roslyn Layton -- has made it clear that she doesn't believe zero-ratings schemes are problematic.