AT&T's Sponsored Data Plan May Change The Balance Of The Mobile Economy

The most memorable AT&T story from this week’s CES technology conference might be when it kicked out T-Mobile’s colourful CEO John Legere from its party. But an announcement from earlier in the week has the potential to be industry-changing.

AT&T announced a Sponsored Data plan that will allow brands to subsidise user data so that streaming their content would not cut into monthly data allotments. It will likely be available by the end of the first quarter of this year.

Here’s a hypothetical example: Netflix signs onto this plan. A user subscribed to the Sponsored Data plan will be able to watch all the shows and movies he wants on his phone without it counting against his monthly data.

The sponsored content will be signified by an icon, and subscribers will have a list of Sponsored Data content on their monthly bill, according to CNET.

Data is expensive. AT&T currently offers a mobile data plan for smartphones that charges $US55 per month for 2 GB of data. That barely gets an hour of HD video streaming.

AT&T, which has said data caps are now necessary for the size of it network, likened its subsidized program to toll-free 1-800 numbers.

United Health Group, app development platform provider Kony Solutions, and the startup Aquto are the first companies who have signed on.

AT&T states that the payment plan will provide a compelling option for users stressed out by their data limitations. Its critics say that despite its allure, it will end up upsetting the entire mobile market.

The Verge‘s Nilay Patel sees it as a threat to fair competition, and one that will not benefit the consumer in the long-run:

…if sponsored data becomes a de facto cost of business in the exploding mobile market, those costs will just get passed right back to customers. That “free” $US4.99 “Elysium” rental will just end up costing $US5.99…

The digital rights group Public Knowledge is also against it. Its acting co-president Michael Weinberg told Adweek:

In addition to being a ripoff for both consumers and content creators, AT&T’s plan erects a massive barrier in front of anyone hoping to be the next big thing online.

And these fears may have merit. The FCC wants to see how it will play out, and will monitor the new service to see if it creates an anticompetitive marketplace and interferes with access to the Internet.

“Make no mistake, we’re ready to intervene,” said FCC chairman Tom Wheeler at CES.

FCC commissioner Ajit Pai added, however, that it would be imprudent for his organisation to dismiss a business model before it even went into practice.

Keep in mind that the FCC chose to exempt wireless broadband from its net neutrality regulations in 2010, which prevented broadband providers from discriminating between different content providers.

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