AT&T to FCC: Sticking it to cable with zero rated usage is the consumer benefit you said you wanted

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As cable continues to take market share for fixed broadband services away from telcos, AT&T is working to remain competitive.

AT&T’s regulatory chief has fired back at criticisms levied by the FCC, saying its zero rating and sponsored data plans are delivering the “benefits to consumers and competition” the agency said it wanted during the regulatory run-up to AT&T’s DirecTV purchase. 

Responding to an FCC letter (PDF) addressed specifically to him last week, Bob Quinn, senior executive VP of external and legislative affairs for AT&T, said, “These initiatives are precisely the kind of pro-consumer challenges to cable that the Commission heralded in approving AT&T's acquisition of DirecTV.” 

As cable continues to take market share for fixed broadband services away from telcos, Quinn argued, AT&T’s Data Free TV plan—which will allow consumers to stream upcoming virtual pay-TV service DirecTV Now on their smart phone without using their monthly data allotment—is essential for AT&T to remain competitive.

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

“Cable providers have built-in advantages as a result of which they still supply the majority of pay-TV subscriptions and fully 85% of internet connections that the Commission considers broadband. In fact, during the first three quarters of 2016, telcos lost 475,000 broadband subscribers while cable added 2.44 million,” Quinn said. 

“DirecTV’s sponsorship of that content through Data Free TV allows DirecTV to better compete against the cable incumbents by ensuring that its subscribers receive the mobile video experience they increasingly demand in the most consumer-friendly manner possible,” he added. “Indeed, industry observers have observed that “[t]he pay-TV business finally looks like it’s about to get seriously disrupted by the internet. They have referred to DirecTV Now as a ‘bombshell’ and AT&T as the video ‘insurgent.’"

Yes, disruption fans, the company that swallowed DirecTV last year and which is making an $85.4 billion play to acquire Time Warner Inc., has equated itself to a Silicon Valley startup. 

Quinn also used the platform to, as he said, “correct the record” on two points:

“Data Free TV is certainly not free to AT&T,” he said. “As more and more consumers discover the benefits of that service, AT&T will see escalating usage on its mobile network, where video already accounts for a clear majority of traffic. AT&T will need to respond to those new usage demands by making capital-intensive investments, which will add to the billions AT&T has already spent to keep up with skyrocketing mobile video usage.”

The feature is also exportable by other video distributors, Quinn added. 

“The suggestion that Data Free TV creates ‘significant disadvantages’ for online video distributors who wish to reach AT&T’s wireless subscribers is likewise off-base,” he said. “Any unaffiliated content provider can participate in AT&T’s sponsored data program on the same terms and at the same rate as DirecTV, and the sponsored data rate is as low as the market based rates AT&T currently offers even to wireless resellers who commit to significant purchase volumes.”