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DirecTV Now and the FCC

DirecTV Now has been making headlines since its launch; most recently due to their higher than projected initial subscriber numbers. However, is DirecTV Now here to stay? One of the driving factors behind DirecTV Now’s success is the ability given to subscribers to watch their content on any of their mobile devices. While that is exciting, the immediate concern for most consumers is the effect that streaming DirecTV Now content could have on their monthly data usage. Foreseeing this issue, AT&T announced prior to the DirecTV Now launch that any subscribers streaming their content will not see that count towards their monthly data usage. Consumers were thrilled. The FCC? Not so much.

To understand the FCC’s concern, you need to understand how AT&T is able to fund DirecTV Now’s free data usage. Currently, AT&T has made it so the only cost to the DirecTV Now user is their monthly subscription fee. They are able to do that by moving the cost from the subscriber to third-party video providers who want the DirecTV Now subscribers to view their content. The FCC contends that since the subscribers are not paying for the data, the new net neutrality laws are being violated. AT&T disagrees.

In November 2016 the FCC sent AT&T a letter detailing their concerns. AT&T replied, stating that they are not violating the net neutrality laws because the data is being paid for. They contend that it should not matter who is paying for the data, as long as the data is paid for. AT&T also contends that the FCC has not provided detailed guidelines on what exactly the rules are for sponsored data. This is something we can expect to see come from the FCC in that not too distant future.

The FCC is still not appeased. Their concern extends beyond net neutrality laws. They are also concerned about how DirecTV Now’s free data usage for their subscribers will affect the entire subscription video content on demand industry. With such an incredible offering, AT&T might force many of their competitors out of the space entirely.

AT&T seems to be the source of primary concern for the FCC now, but they are not the only concern. The FCC recently sent an official inquiry to Verizon regarding their FreeBee Data 360 program. This program essential lets some Verizon customers completely avoid data caps. Verizon has not yet responded to the inquiry but needs to do so before 2017.

While this may seem like a piece of inconsequential news, it is important in regards to how it will affect the SVOD space. It’s already difficult for companies smaller than AT&T and Verizon to compete. If these giant corporations can offer such drastic advantages, like side-stepping data caps, it will make competition with these giants virtually impossible. This story is still playing out and will certainly be one to follow as we move into 2017.

Sources:

  1. https://www.thetripleplay.net/blog/fcc-says-directv-offer-from-att-means-less-competition/
  2. http://www.technobuffalo.com/2016/12/02/fcc-is-worried-about-att-directv-now/

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