Senator Concerned AT&T/Time Warner Merger May Create Net Neutrality Violations

Image courtesy of Consumerist | Sen. Ron Wyden speaking in March, 2016

Well, that didn’t take long: Although the formal paperwork to make the AT&T / Time Warner merger happen hasn’t yet been filed anywhere for review and approval, several lawmakers have already been out in front of it voicing their sternest disapproval. Joining the club today? Sen. Ron Wyden (OR), who’s asking the FCC to please think of net neutrality, and consumers, when it comes time for merger review.

In his letter (PDF) to the FCC, Wyden says that he’s deeply worried that the proposed merger between AT&T and Time Warner is basically rife with the potential for “anti-competitive practices that harm consumers.”

Wyden’s big areas of concern are the same ones that we see popping up all over all the time: data caps and zero-rating. The two issues go hand in hand; without the one, you don’t need the other.

Data caps are what they sound like: limits on how much cumulative bandwidth your account is allowed to use in a billing cycle before either being cut off or, more typically, incurring extra fees.

ISPs generally couch their fondness for data caps in the language of fairness — “if you use more, you should pay more” — while neglecting to mention that those who pay less don’t get the opportunity to pay less. They also try to say it’s about managing network congestion and making sure a handful of users don’t ruin it for everyone, despite leaked internal documents proving that’s not actually true.

Comcast, AT&T, and Cox Communications have all set the data cap for their customers at the 1 TB mark within the past year. Charter, as a condition of its purchase earlier this year of Time Warner Cable and Bright House Networks, is not permitted to impose data caps on its users for another seven years — so, 2023 at the earliest.

If you’ve got a data cap, then it becomes a tool for managing your customers, and that’s where zero-rating comes in.

Zero-rating is the practice of exempting some data from counting against a data cap, and those business arrangements can manipulate consumer behavior. If Video Service A is going to make you hit an overage charge, but Video Service B is exempt, the reasoning goes, that pushes you harder not only to use Video Service B, but to avoid using Service A in a way that may be construed as discriminatory.

Neither data caps nor zero rating are explicitly addressed in the 2015 Open Internet Rule (the real name of net neutrality). That rule, upheld by the Court of Appeals earlier this year, leaves zero-rating subject to a case-by-case review by the Commission to make sure that it is “innovative” rather than anti-competitive.

The Commission is, meanwhile, investigating data caps, but as part of an annual report on broadband deployment, rather than as part of the Open Internet proceeding. That investigation has brought us recent gems like Netflix saying data caps are bad and Mediacom saying the internet is Oreos, but has not yet brought us a conclusion on whether data caps are kosher or not.

Wyden confirms all this: “Nearly all data caps,” he writes, “have nothing to do with network management and everything to do with profiting from an ever-more-consolidated broadband market. Data cap plans that zero-rate data at the discretion of the ISP violate the principle of net neutrality by creating an internet where one bit is favored over another bit absent user control.”

Letting a distribution company buy a content company, Wyden continues, only increases the risk. “Should AT&T decide to zero-rate data associated with streaming HBO,” he hypothesizes, “one can easily foresee a quick uptick in Game of Thrones streaming, instead of Mr. Robot, which is owned and produced by a rival network.”

AT&T’s already exempting DirecTV app users from AT&T wireless data caps, and is expected to do the same when it eventually launches its full over-the-top service, DirecTV Now. That, Wyden concludes, “could give AT&T even more incentives and abilities to disadvantage other competitors, such as Netflix and Sling.”

Wyden’s letter may be one of the first to land with the FCC, but he’s decidedly not alone. Other senators who have already publicly voiced concern about the merger include Al Franken (MN), Bernie Sanders (VT), Amy Klobuchar (MN), Mike Lee (UT), Richard Blumenthal (CT), Tim Kaine (VA), and Ed Markey (MA).

AT&T CEO Randall Stephenson and Time Warner CEO Jeff Bewkes will be testifying before the Senate Judiciary Committee’s antitrust subcommittee about the merger on December 7.

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