AT&T’s Time Warner deal and net neutrality’s end gave us WatchTV

The Time Warner premium video bundled into new “unlimited” wireless plans from the media giant’s new owner, AT&T, will be zero-rated, or streamed without impacting a subscriber’s monthly data allowance. CNN, TBS, TCM, and other channels from WarnerMedia (the former Time Warner) are part of WatchTV, AT&T’s new skinny video streaming service. Offering 30+ channels, it’s $15 a month as a standalone offering and is bundled into AT&T’s new $80-per-month “Unlimited &More Premium” and $70 “Unlimited &More” wireless plans.

AT&T announced WatchTV one day after lawmakers in California, under intense lobbying from AT&T, removed rules prohibiting zero-rating from what was to be the “gold standard” in state-level network neutrality laws.

AT&T lobbyists worked feverishly for months to kill or water down the California bill after it was introduced earlier this year. The bill passed the California Senate. But in a strange behind-closed-doors move late Tuesday night or early Wednesday morning, members of the California Assembly removed key provisions in the legislation, including the one prohibiting the kind of zero-rating AT&T is using. Had the California bill passed intact, other states may have used it as a model for its own network neutrality bills.

AT&T’s press release for WatchTV suggested that data caps would not apply to WatchTV streaming but didn’t say so directly. “If you’re on an AT&T postpaid or eligible prepaid data plan, streaming the WatchTV app over the AT&T wireless network will not count against your allotted data,” an AT&T spokeswoman confirmed to Fast Company Friday.

Some analysts have told me AT&T is using zero-rating to “weaponize” the content the company acquired when it bought Time Warner. The pricing tactic gives subscribers some good reasons for staying tuned to the WatchTV service rather than competing services such Hulu or Netflix.

“The weaponization is basically the effort to put content that is not owned by AT&T under the data cap while zero-rating things that are owned or affiliated with AT&T,” said EFF attorney Ernesto Falcon in an email to Fast Company. “Without net neutrality, they can do a lot more than just zero-rate–they can prioritize the data from their networks and degrade the traffic from alternative sources of media.”

T-Mobile’s “Binge On” plans helped popularize zero-rated video streaming in the U.S. But, unlike AT&T, T-Mobile zero-rates major services that T-Mobile doesn’t own, such as Netflix, Hulu, and Amazon Prime Video.

Lobbying pays off

The annoucement of WatchTV provides tangible evidence that for AT&T, the Time Warner deal and network neutrality were closely related issues and the two most important policy issues for the company in the Trump era. Without the freedom to zero-rate the Time Warner video assets, Time Warner would have been worth far less than the $85.4 billion AT&T paid. In its quest to influence these key issues, AT&T even went so far as to retain the sketchy personal attorney of Donald Trump himself, Michael Cohen.

Whatever it did, and however many lawyers were involved, AT&T won big in the end. The FCC, under the leadership of ex-Verizon lawyer Ajit Pai, ignored public opinion and used questionable data to justify its dismantling of the network neutrality rules in 2015’s Open Internet Order. The Trump FTC, holding that a coupling of AT&T and Time Warner would give AT&T too much control of the media market and harm consumers, sued in federal court to block the deal, but the court green-lit the merger on June 12. AT&T completed the acquisition three days later.