Why AT&T Sponsored Data Isn’t the End of the Internet as We Know It

Brian Washburn
Brian Washburn

Summary Bullets:

  • AT&T Sponsored Data has a strong corporate applications angle. Annoying mobile ads may be a concern, but it’s not out to destroy the Internet.
  • If AT&T Sponsored Data seems a product of wireless data caps set too low, competition and market forces – not regulations – should correct that.

On January 6th, AT&T debuted its Sponsored Data service. The service is a way for businesses to let AT&T’s wireless customers access content of the business’ choice on their mobile devices, across AT&T’s 4G network for free. In this case, “free” means that AT&T Mobility customers don’t count Sponsored Data transfer volumes over AT&T’s 4G network against their monthly bandwidth caps. AT&T Sponsored Data has some initial sample applications and intriguing possibilities. A colleague, Kathryn Weldon, published a business services report about Sponsored Data that is accessible to subscribers of Current Analysis content here: AT&T Helps Business Customers Engender Loyalty via Sponsored Data Service, Jan. 6, 2013).

When Kathryn and I discussed the service with AT&T executives, we mused that it would be easy for consumers to misconstrue what the service is, and how it works. It turns out we were more correct than we thought. In the wake of the announcement, alarmists suggest net neutrality or common carrier violations; a few even project the end of the Internet as we know it. It’s a lesson in what can happen when a large incumbent provider introduces a new concept.

Except it isn’t new, there are many precedents in other media: the postage-paid envelope, the toll-free voice number and “free” channels on pay TV. Cable systems that use IP for video delivery (e.g., AT&T U-Verse), where video is not part of a bandwidth cap. Even free text message notifications. Net neutrality is an issue of blocking or throttling that affects service quality, not reversing charges on best-effort data transfer.

AT&T Sponsored Data can only exist in an unregulated environment not because it isn’t fair, but because otherwise it would be too vulnerable to abuse by other businesses. Going back to a toll-free calling analogy, imagine over-the-top competitors jumping on Sponsored Data to launch a wireless data service equivalent to discount calling cards: recruit subscribers, connect Sponsored Data to a proxy Internet server, roll up the charges, then bill back the mobile subscribers. This discount dial-around analogy may sound great for consumers, except there’s no free lunch. There’s a set cost to operating and upgrading a national wireless network.

What is legitimate, is questioning whether wireless data plans have caps set too low in the age of 4G wireless broadband. If wireless plans have higher caps, Sponsored Data becomes less relevant. There are wireless competitors that sell unlimited data plans today. If it’s important to subscribers, they can switch. Market pressures can decide the matter.

So it’s not the end of the Internet as we know it. But there could be a consumer controversy brewing about the level of advertising consumers are willing to bear on mobile web sites. For example, if a news site regularly interrupts mobile content with 30-second videos, that’s annoying. At least it’s slightly less annoying if the content provider, not the subscriber, is paying to carpet-bomb with bandwidth-sucking ads. For now, the fact that Sponsored Data is limited to transfers for AT&T’s 4G wireless customers makes even this consumer controversy more about theory than practice.

What do you think?

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