AT&T Inc (T.N) said Wednesday it will halt some free data services in response to a California net neutrality law, the latest flashpoint in an ongoing debate over internet rules.
The U.S. wireless carrier said the state law bans "sponsored data" services that allowed companies such as video providers to pay for some data usage of certain AT&T wireless customers.
"Given that the Internet does not recognize state borders, the new law not only ends our ability to offer California customers such free data services but also similarly impacts our customers in states beyond California," AT&T said in a statement.
It declined to disclose how many customers are impacted.
In February, U.S. Judge John Mendez said he would not block California's 2018 net neutrality law that barred internet service providers from blocking or throttling traffic, or offering paid fast lanes. The law had previously been on hold.
AT&T wireless customers on tiered plans who also have an AT&T video service like DIRECTV or AT&T TV and stream that service over the AT&T wireless network are impacted. AT&T wireless customers on unlimited plans are unaffected.
The company notified customers late Tuesday of the change effective March 25 in an email titled "Data Free TV ends."
The Federal Communications Commission (FCC) under former President Barack Obama adopted net neutrality rules in 2015. These were overturned in 2017 by the FCC under President Donald Trump. California's legislature responded by adopting a state law requiring net neutrality in August 2018.
Under the Obama administration, the FCC sent letters raising concerns about AT&T and Verizon (VZ.N) sponsored data practices violating net neutrality rules. The Trump FCC ended those inquiries and said the free data plans had "enhanced competition in the wireless marketplace".
Some critics contend sponsored data services could prod users into avoiding competitors’ video services.
In January, the U.S. Justice Department withdrew its Trump-era legal challenge to the California net neutrality law after President Joe Biden, a Democrat, took office.
Industry groups that challenged the law have appealed Mendez's decision to the Ninth U.S. Court of Appeals.
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