Mobile Streaming Market Heats Up
When AT&T acquired DirecTV for $48.5 billion in 2015, they had big plans to expand into mobile video streaming because the mobile market is saturated.
The buyout made AT&T the largest U.S. Pay-TV operator with 25.3 million video subscribers.
FCC “Serious Concerns”
In early November, the Federal Communications Commission (FCC) conveyed to AT&T that it had “serious concerns” whether rivals can compete with its upcoming DirecTV Now online video service that will cost $35 per month.
The FCC went on to say that DirecTV Now streaming service “may obstruct competition and harm consumers” because it could be too expensive for rivals not affiliated with AT&T to sponsor data programs to compete.
They demanded a response by November 21.
Sponsored Data Services
The FCC’s concerns are related to their 2015 net neutrality, or open Internet, rules requiring Internet Service Providers (ISP) to treat all data equally.
DirecTV Now will provide unlimited content to subscribers who are on AT&T’s network without data overages or additional charges.
This arrangement is known as Sponsored Data Services.
Bob Quinn, AT&T’s senior executive vice president, responded to the FCC saying said that through its sponsored data program any unaffiliated content provider can pay AT&T to offer video services with free mobile streaming on the same terms and conditions as DirecTV Now.
AT&T lets any content provider “specify how much data they want to sponsor” and charges them “the same low per gigabyte rate regardless whether they are big or small or how much data they purchase,” Quinn said.
The FCC’s argument that AT&T does not incur costs in using its network to offer free data for video services is “flatly incorrect,” Quinn said.
AT&T Signs Fox for DirecTV Now
On November 21, AT&T signed an updated licensing agreement with Fox networks. The continuing deal will deliver Fox content across AT&T video services including, DirectTV Now.
The signing of Fox leaves CBS Corp as the last major holdout not to have its networks on DirectTV Now. CBS likely views DirecTV Now as a direct competitor to All Access.
On October 28, 2014, CBS launched CBS All Access, a subscription streaming service – priced at $5.99 per month ($9.99 with the no commercials) – which allows users to view past and present episodes of CBS shows.
DirecTV Now will have a mix of live and on-demand programming available on over 100 channels and will cost $35 per month.
Fox is a co-owner of Hulu, which is planning to launch its latest online video streaming service that will include live programming early next year.
AT&T is holding a launch event on November 28 to provide more details.