Yahoo Finance Telecom Providers' Zero-Rated Plans to Face FCC Scrutiny
The Federal Communications Commission (FCC) recently issued letters to two major telecom providers in the U.S.– Verizon Communications Inc. VZ and AT&T Inc. T. The letters raise questions over the zero-rated plans of the companies which seem to violate net neutrality norms. Notably, the FCC has been toughening its net neutrality stance against broadband Internet service providers (ISPs).
What Are Zero-Rated Plans?
Usually, most ISPs provide an upper ceiling on the amount of data consumed. These data caps allow companies to rake in higher revenues in the event of a customer crossing his/her data limit. However, several ISPs provide add-on services like music, video streaming and others that do not affect a customer’s data cap. Such plans, popularly known as ‘zero-rated plans’, have been alleged to breach the principles of net neutrality.
Telecom providers are increasingly adopting zero-rated plans to lure customers with the attractive option of unlimited streaming of popular services. Apart from Verizon and AT&T, T-Mobile US Inc. TMUS and Comcast Corporation CMCSA have also been criticized for their zero-rated schemes. These plans have been heavily criticized for rendering small-scale and startup video service providers uncompetitive.
The Bottom Line
Although the FCC is now questioning the practice of zero-rated plans, it is unlikely that there will be a further crackdown on broadband ISPs. This is because after Donald Trump has been elected as the President of the U.S., he has appointed Jeff Eisenach and Mark Jamison as advisors to the FCC who are staunch opponents of net neutrality.
Price Performance of Four Major Wireless Operators
Year-to-date, the Zacks categorized U.S. wireless industry has registered impressive growth of 14.56%. However, the stock prices of two relatively large telecom operators, namely, Verizon and AT&T have lagged the industry mark. While AT&T has registered a rise of 12.21%, Verizon witnessed just 7.77% growth in the same time period.
Nevertheless, both Verizon and AT&T are gradually diversifying their business model into Internet TV, digital mobile platform and highly lucrative mobile advertising segments. We believe this is the primary reason behind all four nation wireless operators currently carrying a Zacks Rank #3.
Both AT&T and Verizon currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research. See these stocks free >>"
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
AT&T INC (T): Free Stock Analysis Report
VERIZON COMM (VZ): Free Stock Analysis Report
COMCAST CORP A (CMCSA): Free Stock Analysis Report
T-MOBILE US INC (TMUS): Free Stock Analysis Report
To read this article on Zacks.com click here.
