Net Neutrali-what? AT&T's New Streaming Service Won't Count Against Its Broadband Caps. But Netflix Will.

from the fake-barriers-but-real-penalties dept

For a long time, we've noted how broadband usage caps are bullshit. They don't actually help manage congestion, they have nothing to do with "fairness," and are little more than glorified price hikes on the backs of captive customers in uncompetitive markets. Worse, they can be abused anti-competitively by incumbent broadband providers, one of the major triggers of the net neutrality debate.

For example, AT&T for a while has made its own streaming TV services exempt from its usage caps, while competing streaming services (Netflix, Amazon, whatever) count against a user's monthly data allotment. This gives AT&T a distinct advantage in that users are incentivized to avoid competing services lest they face completely arbitrary and unnecessary usage limits and fees. It's bullshit. It has always been bullshit.

AT&T has added another layer to this bullshit cake. The company has long experimented with something called "sponsored data," which lets companies pay AT&T extra if they want to be exempt from AT&T's (again, completely arbitrary and unnecessary) broadband usage caps. This adds yet another anti-competitive layer to the equation by letting a deep pocketed company (say: ESPN) get a distinct advantage over smaller startups that can't afford to pay AT&T's toll.

Last week AT&T launched yet another streaming TV service, HBO Max. This service also won't count against AT&T's usage caps and overage fees, AT&T confirmed to The Verge:

"According to an AT&T executive familiar with the matter, HBO Max is using AT&T’s “sponsored data” system, which technically allows any company to pay to excuse its services from data caps. But since AT&T owns HBO Max, it’s just paying itself: the data fee shows up on the HBO Max books as an expense and on the AT&T Mobility books as revenue. For AT&T as a whole, it zeroes out. Compare that to a competitor like Netflix, which could theoretically pay AT&T for sponsored data, but it would be a pure cost."

This has been a hard thing for some folks to understand (for whatever reason) so I'll reiterate: this is a regional telecom monopoly, imposing completely unnecessary limits on uncompetitive markets, which don't apply to the incumbent's own services. Efforts to impose net neutrality have always been about preventing incumbent telecom monopolies from abusing their market power by imposing unnecessary barriers to competitors, and this is precisely that. Fortunately AT&T's own incompetence has kept the company from dominating the streaming space so far, but it doesn't make this any less of a bad precedent.

Filed Under: competition, favoritism, hbo max, net neutrality, sponsored data, streaming, zero rating
Companies: at&t, netflix