AT&T's zero rating practice raises 'serious concerns,' says FCC

The Federal Communications Commission has zeroed in on AT&T's practice of zero rating.

In a letter Wednesday, the FCC outlined "serious concerns" it has about AT&T's practice of exempting its own streaming-video services from wireless customers' mobile data allotments, while counting content from other providers against the allotments.

AT&T's current practice, through its "Sponsored Data" program, "may obstruct competition and harm consumers by constraining their ability to access existing and future mobile video services not affiliated with AT&T," the FCC's Jon Wilkins wrote in a letter to Bob Quinn, head of AT&T's external and legislative affairs.

In September, AT&T began letting wireless customers stream DirecTV (assuming they subscribe to both) without it counting against their data usage, a practice known as zero rating. AT&T may do the same for its $35-a-month DirecTV Now online video service when that launches later this month.

AT&T spent $49 billion to buy DirecTV in 2015 so it could serve up bundles of wireless, home broadband, video and home phone services. AT&T is now working to acquire Time Warner -- home to channels including HBO, CNN, Cartoon Network and movie studios Warner Bros. and New Line Cinema -- in a massive $85.4 billion deal. With Time Warner in the fold, AT&T could theoretically serve you wireless and home internet service through its traditional business, deliver satellite TV via DirecTV and produce many of the television shows and films you watch.

In response to the letter, AT&T said its services are incredibly popular and that they let consumers say goodbye to traditional cable TV companies.

In an emailed statement Thursday, Quinn said the following:

"With our Data Free TV offer, DirecTV picks up the tab for our Mobility customers' data use when they're streaming content. For example, consumers can watch DirecTV content -- such as NBC, Fox News, CBS, CNN, ESPN -- all on their AT&T mobile devices without incurring any data changes. While we welcome additional questions, we hope the FCC will consider the enormous value consumers find in obtaining free data or free streaming where someone else is footing the bill for their data."

The FCC said AT&T has until November 21 to respond to its concerns.