Data cap cash.Aurich Lawson | Getty Images
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AT&T and Verizon on Friday urged the Federal Communications Commission to drop a net neutrality investigation into the companies’ practice of exempting their own video from mobile data caps while charging competitors for the same exemptions.
The wireless carriers have a good chance of avoiding any punishment because the FCC next month will switch to Republican control under President-elect Donald Trump, an opponent of net neutrality rules.

For now, the companies are cooperating in the case, with each carrier sending replies to the FCC by the commission’s Friday deadline.
AT&T lets its subsidiary DirecTV stream video without counting against AT&T mobile customers’ data caps, while Verizon’s Go90 video service doesn’t count against data caps on the Verizon Wireless network. Other video providers must pay AT&T or Verizon to get the same data cap exemptions, also known as “zero-rating.”
Zero-rating is a gray area in the net neutrality rules passed under Democratic Chairman Tom Wheeler.
It’s not explicitly outlawed, but the FCC examines specific implementations to determine whether consumers or competitors are being harmed.
In this case, the FCC says AT&T and Verizon are using their control over data caps to prevent other video services from competing on a level playing field against the carriers’ video services.

AT&T and Verizon claim their own video services must pay for the data cap exemptions just like everyone else, but the FCC notes that the money paid by DirecTV and Go90 is simply shifting from one part of the company to another.
Verizon disputed the FCC’s argument in a letter to the commission, posted online by The Verge. “Free data offerings like Verizon’s are fully consistent with FCC rules,” Verizon told the FCC. “Yet your letter appears to take issue with Go90’s participation in [the] FreeBee [paid zero-rating program], asserting that there is a ‘notably different financial impact’ on the affiliate program versus unaffiliated edge providers.

But under that logic, no provider could ever participate in its own paid free data program—which can’t be the case.
Such a regulation would only allow providers to offer third parties this benefit if the provider itself did not partake.”
Verizon said the FCC’s argument on zero-rating conflicts with decades-old rules applied to transmission services sold by telephone companies. “Well-established telecommunication and competition laws consistently recognize the legitimacy of arrangements where providers charge their affiliates the same price for the same services they provide to competitors,” Verizon wrote.
AT&T argued that it can’t “benefit from a predatory pricing strategy” because “[n]either AT&T Mobility nor DirecTV is or could conceivably become a monopolist in any relevant market.” Customers who don’t like AT&T’s zero-rating practices “can switch to other carriers in this highly competitive market, in which AT&T is not even the leading provider, let alone a monopolist,” AT&T said.
When asked what the next step in the investigation is, an FCC spokesperson told Ars only that the commission is “reviewing the letters” from AT&T and Verizon.

The commission doesn’t have much time to punish the companies or force them to change their practices, as Chairman Tom Wheeler is leaving the commission on January 20, when Trump is inaugurated. Republican Commissioners Ajit Pai and Michael O’Rielly, who oppose the investigation into AT&T and Verizon, will then have a 2-1 majority.

The zero-rating investigation is being led by FCC staff rather than commissioners themselves, but the new Republican majority will be able to hire new staff to better fit their agendas.

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