As Tom Wheeler Departs, AT&T Tells the FCC to Take a Hike on Zero-Rating

Corporate lawyers don't use profanity when addressing US federal regulators—at least not in public.

But if they did, AT&T's latest response to the Federal Communications Commission's inquiry into the telecom giant's controversial "zero-rating" practices would likely include many "colorful" turns-of-phrase that are not printable by a family-friendly news organization like Motherboard.

In an absolutely scathing letter sent to the FCC on Thursday, AT&T essentially told the nation's top telecom regulator to, um, go fly a kite, after the agency reached a preliminary conclusion earlier this month that the broadband giant's practice of exempting video content from its DirecTV subsidiary for mobile subscribers is anticompetitive and harmful to consumers.

AT&T's response appeared just hours after FCC Chairman Tom Wheeler, the former telecom industry lobbyist turned public-interest champion, whose pro-consumer policies have bedeviled broadband giants like AT&T for the last three years, announced his intention to step down from the agency to make way for a new Republican chairman under President-elect Donald Trump, as is customary for incoming administrations.

Zero-rating refers to a variety of practices that broadband companies use to exempt certain internet services from monthly data caps, effectively favoring those services by providing consumers with an economic incentive to use them instead of rival offerings. Open internet advocates say that many of these practices, including AT&T's Data Free TV and DirecTV NOW products, violate net neutrality, the principle that all internet content should be equally accessible to consumers.

AT&T and other mobile broadband giants, like Verizon and T-Mobile, characterize such offerings as innovative services that will save consumers money, by allowing their customers to access internet content for free or reduced cost, and increase competition against their cable rivals like Comcast and Charter.

In its letter to the FCC, AT&T took aim at the agency's Wireless Telecommunications Bureau, which has led the agency's year-long inquiry into zero-rating.

"AT&T takes sharp issue with the Wireless Telecommunications Bureau's preliminary conclusions," Joan Marsh, AT&T's Senior Vice President for federal regulatory policy, wrote, adding that the Wireless Bureau's approach would "deny consumers a service they value, raise prices, lower consumption, and curb the disruptive potential of Data Free TV."

Marsh, who has spent 20 years as an AT&T telecom policy lawyer, went on to assert that the FCC Wireless Bureau "has no authority to inflict this agenda on American consumers," and warned that any "final conclusions the Bureau may purport to draw against Data Free TV would thus be unenforceable."

Elsewhere in AT&T's letter, Marsh referred to the FCC Wireless Bureau's position as "nonsensical," "error-ridden," and "untenable."

For good measure, Marsh took a clear swipe at outgoing FCC Chairman Wheeler by smugly remarking that the two Republican FCC commissioners, Ajit Pai and Mike O'Rielly, who will assume a 2-1 majority at the agency under a Trump administration, have warned that "whatever judgment the Bureau purports to pass on this program before January 20 will very likely be reversed shortly thereafter."

In other words, AT&T appears to be saying to Wheeler: "You're out of here, so we don't have to listen to you anymore."

In this respect, Marsh is right, which may account for her triumphalist, sharply-worded tone. Under a Trump administration, the FCC is likely to halt, if not reverse, the agency's inquiry into zero-rating, as well as other policies safeguarding net neutrality and protecting online privacy. These policies, which were championed by Wheeler and his Democratic colleagues, including Jessica Rosenworcel, whose reconfirmation to the agency was recently blocked by the GOP-controlled Senate, are now in serious jeopardy.

Wheeler announced Thursday that he will step down on Jan. 20, the day that President-elect Trump is set to be inaugurated, to make way for new GOP leadership at the FCC. In the remaining days of his tenure, Wheeler and his colleagues at the Wireless Bureau face a stark choice.

The FCC can move forward with an enforcement action cracking down on AT&T's zero-rating practices, establishing a regulatory record and a set of principles that the next FCC will be forced to confront and dismantle. Or, the agency can do nothing, and effectively surrender to AT&T and other telecom giants, having concluded that whatever action they take on zero-rating is doomed under a Trump FCC.

A FCC spokesperson told Motherboard that the agency has received and is reviewing AT&T's letter.