Wednesday, September 21, 2016

AT&T DirecTV Now Launch Will Include Zero Rated Bandwidth on the Mobile Network

In the fourth quarter of 2016, AT&T will launch DirecTV Now , an over the top video entertainment product with a heavy mobile or untethered focus, featuring “100-plus premium channels.”

There are a couple angles here. Consider the way AT&T plans to manage bandwidth consumption and pricing, something that, in the mobile realm, has been a challenging barrier.

“And when you buy this content, the data required to stream it on your mobile device is incorporated into the price of the content,” said AT&T CEO Randall Stephenson at an investor conference.

“If you choose to use that in a mobile environment on AT&T your data cost associated with this is incorporated into your content cost,” he said.

There is a precedent for this: broadcast TV, broadcast radio, Sirius XM and cable TV and other linear video services. Or, if you like additional examples, newspapers and magazines that consumers can subscribe to, with delivery cost simply bundled into the price of the subscription.

Media products, in other words, always have featured incorporation of delivery cost into the purchased product price.

Zero rating of delivery cost (no incremental charge, in the above examples), is simply a common media and content product pricing model. Though some insist on casting zero rating as an infraction of network neutrality, it is simply an accepted model for media products.

As some have argued, video entertainment services can be viewed as “managed services,” not “Internet” apps. By definition, managed services are not subject to network neutrality rules.

The other angle is that in zero rating video entertainment, AT&T shows its belief that its mobile network can handle the huge increase in consumed bandwidth. And if the mobile network can handle entertainment video, it can handle all the other conceivable media types.

If the mobile network can handle all the media types, and former bandwidth restrictions are not impediments, then mobile increasingly will be a viable substitute for the fixed network.

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