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AT&T's (T) Stream Saver to Cut Data Costs for Customers

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AT&T Inc. (T - Free Report) has announced that it help wireless customers save data costs by offering them a choice to stream videos at a lower DVD quality (480p). The feature, dubbed as ‘Stream Saver’, is similar to the ones offered by T-Mobile US Inc. (TMUS - Free Report) in its ‘Binge On’ services. Notably, the service has received criticism with regard to its possible violation of the net neutrality rules laid down by the Federal Communications Commission (FCC).

AT&T will be launching its online video streaming service ‘DirectTV Now’ which will allow wireless subscribers to watch TV shows and videos without incurring any data charge. Notably, AT&T is the largest pay TV operator in the U.S. Meanwhile, the company looks to gain wireless customers through its online streaming services which will now offer data saving options.

Data Caps: An In-depth Analysis

Zero-rated plans, unlimited video streaming offers by wireless carriers and net neutrality principles lead us to one common question – are data caps necessary? Let us find out.

Data caps allow telecom service providers the scope to earn higher revenues in the event of a customer crossing his/her data limit. However, in order to remain competitive, telecom providers are increasingly adopting zero-rated plans to lure customers with the attractive option of unlimited streaming of popular services. Apart from T-Mobile and AT&T, cable companies like Comcast Corporation (CMCSA - Free Report) have launched similar plans. But these schemes have been heavily criticized for rendering small-scale and startup video service providers uncompetitive. Moreover, once net neutrality rules are adopted in full, it is unlikely that these plans will continue to remain in service.

Recent Events

Owning to a matured market, telecom players are looking at alternate sources of revenue. Mobile streaming offers a feasible revenue driving option for the future. AT&T is no exception. The company is keeping no stones unturned to build a media portfolio and has recently reached an agreement to acquire Time Warner Inc. (TWX - Free Report) for the purpose. However, high level of post merger debt and regulatory issues threaten the proposed merger.

AT&T currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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