Pixel Envy

Written by Nick Heer.

HBO Max Won’t Hit AT&T Data Caps Because AT&T Owns HBO

Nilay Patel, 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.

That’s why the last time we looked at AT&T’s sponsored data system, the only three streaming services we could find using it… were owned by AT&T. It’s also why sponsored data systems fly in the face of net neutrality principles. AT&T’s streaming services have a major advantage over its competitors, all of which run up against the cap. But there’s no net neutrality in the United States anymore, so AT&T is free to give itself preferential treatment.

Zero rating — the unfair treatment of a telecommunications-multimedia conglomerate’s own holdings — is something that remained effectively unconsidered by Judge Richard Leon when he ruled in favour of AT&T’s acquisition of Time Warner, yet is entirely obvious to anyone who has even the faintest idea about telecom strategy today.

For its part, Comcast has made Peacock free to subscribers because it owns NBC. Both AT&T and Comcast run utilities and movie studios — and exclusively license intellectual property created by the latter to be advantageously distributed on the network infrastructure of the former. It isn’t like Netflix or Disney are small companies, but neither can compete with that degree of vertical integration.

Apathetic antitrust enforcement created this mess, but the dismantling of net neutrality laws will entrench it.

I fully expect a resurgence of piracy as studios and ISPs attempt to isolate media. For obvious reasons, ISPs win either way, but a less stupid future would see the internet treated like a utility and less vertical integration. Perhaps that would culminate in streaming video platforms that work a little more like streaming music. Of course, Spotify’s is taking the opposite route with its podcast strategy; so, unfortunately, perhaps all streaming media is destined for a consumer-hostile model of exclusive intellectual property licensing and the bickering of large companies. C’est la vie.

Update: Three U.S. Senators are looking into the anticompetitive concerns of this decision.