The timing of the newly elected President, Donald Trump, has clear implications for AT&T’s proposed acquisition of Time Warner Inc. Donald Trump has stated he opposes the said deal.
However, the bigger issue at hand is the transition in government administration and the proposed AT&T merger are combining to bring to light the complicated intersection of vertical industry integration and zero rating for mobile video services.
The Breakdown of Zero Rating and the FCC
The FCC has allowed zero rating, the practice by which mobile video providers exempt their own video services from mobile data caps.
After passing net neutrality in 2015, the FCC said it would keep an eye on zero rating for signs of consumer harm, but the Commission effectively approved the practice by not stepping in as AT&T and Verizon Communications Inc. implemented it with their DirecTV and Go90 video apps.
The AT&T acquisition of Time Warner Inc. has thrown the issue of zero rating back into debate because the FCC fears AT&T would be gaining too much competitive power through its control of premium content and wireless spectrum used to deliver that content.
This is just another example of how content is king. The right acquisitions help grab new consumers from other providers and retains your own by delivering content that is wanted.
According to the Wall Street Journal, the FCC has sent a letter to AT&T saying it’s concerned that telco’s practice of zero rating may obstruct competition.
What’s happens next for AT&T?
There’s always more to the story…
While the FCC has raised zero rating as a concern, and opponents of the AT&T deal might have used the issue as a point of leverage to either block the transaction or to impose limits on it. That argument only works when net neutrality is the law of the land.
According to Forbes, Donald Trump is looking to overturn rules on net neutrality the first month he takes over as President.
So what does this mean? There’s a few ways this could turn out.
- The FCC suggests that vertical integration and the practice of zero rating mobile services both pass regulatory rules separately. If you combine the two, like AT&T and Time Warner Inc. then you might be pushing your luck.
- The other side suggests that Donald Trump could be willing to give leeway to AT&T and exempt their own services from Internet data caps supporting his opposition to vertical integration.
- One way strives for balance and competitive leeway in the media space while the other could cause a provider to become a dominant player causing unfair competition and rough sparring for the cable players.
As always, time will tell over the coming months which way the decision will go.