AT&T, Comcast and T-Mobile questioned over streaming freebies

The Federal Communications Commission wants to know more about services that let customers stream music and videos without it counting against their monthly data caps.

Marguerite Reardon Former senior reporter
Marguerite Reardon started as a CNET News reporter in 2004, covering cellphone services, broadband, citywide Wi-Fi, the Net neutrality debate and the consolidation of the phone companies.
Marguerite Reardon
3 min read

Federal regulators want more information about offers from Internet service providers that allow consumers to stream video and music without eating into their monthly data caps.

The Federal Communications Commission sent letters to AT&T, Comcast and T-Mobile asking each company for details about their specific service, said Chairman Tom Wheeler during a press conference Thursday. The agency requested responses by January 15, 2016.

Wheeler was quick to point out that the letters are not part of a formal investigation nor is this part of an enforcement action against the companies.

The FCC has not taken a strong stand on "zero rating," the practice of not counting data usage for certain applications against a customer's monthly cap.

CNET/Marguerite Reardon

"Let me be real clear," he said. "These were 'let's get informed letters.'"

Comcast customers can stream video via the Stream TV service without it counting against their monthly data caps. T-Mobile's Binge On service allows customers stream endless video from certain services without it counting against their monthly data allotment. And AT&T has been experimenting with a "sponsored data" program called Data Perks that allows customers to earn extra data by responding to marketing from brands.

These services are examples of a practice known as "zero rating," which allows Internet service providers to not count data usage for certain applications against a customer's monthly cap. While the practice offers some benefits to customers, critics say it violates the agency's Net neutrality principles, which requires all services on the Internet be treated the same. They claim it puts smaller competitors at a disadvantage and highlights the fact that data caps are unnecessary.

So far, the FCC has not taken a strong stand on this practice. The agency's Net neutrality rules deliberately don't ban such deals. Instead, they allow the FCC to review complaints case by case. Last month Wheeler said he would keep an eye on T-Mobile's Binge On service, but he also praised the service for its innovation. The FCC's inquiry may be a signal it is considering putting the kibosh on some of these offers.

All of this is happening as a federal court deliberates whether the FCC's Net neutrality rules adopted in February are legal. AT&T along with the cable and wireless industry associations are suing the FCC over the rules.

In a research note published Thursday, equities analyst Paul Gallant of Guggenheim Partners called the FCC's move "an unusually proactive step," since no complaint has been filed. He believes the FCC is warning wireless and broadband providers to not get aggressive with these zero-rating services, especially while the appeals court decides whether its Net neutrality rules are legal.

Wheeler insisted Thursday that the agency is just looking to educate itself on the changing business models within the industry.

The companies that received a letter don't seem worried. T-Mobile CEO John Legere described Binge On in an earlier interview as "completely compliant" with Net neutrality rules. A company spokesman on Thursday reiterated that sentiment and said T-Mobile "looks forward to talking with the FCC" about Binge On.

Comcast also said it was happy to cooperate with the FCC, but a spokeswoman noted its Stream TV service does not go over the public Internet and therefore doesn't violate any Net neutrality rules. AT&T said it is reviewing the letter and that the company remains "committed to innovation without permission and hopes the FCC is, too."