AT&T launches “Sponsored Data,” inviting content providers to pay consumers’ mobile data bills

ATT flagship store logo

AT&T launched a new billing program called Sponsored Data Monday at its developer conference at CES, which shifts mobile data costs from the consumer to the content provider. The idea is to create a two-sided charging model for mobile data, letting app developers and content providers foot the bill for their customers’ data use. That kind of the model has the potential to save consumers money, but as we’ve pointed out before it also messes with some of the foundational principles of the internet.

AT&T and other carriers have been hinting at such a subsidized mobile internet for some time, but this is the first time that it’s actually put those ideas into practice. Under the program a content or service provider would pay AT&T to exempt their app, websites or even specific bits of content from consumers’ mobile data plans. Anytime someone consumed such exempted content on the mobile network, AT&T customers wouldn’t see it deducted from their data buckets. Instead, AT&T would subtract that data from a kind of universal data pool bought by the content provider.

No sale cash register

Ma Bell gave several positive examples about how this model could be used not only to spare its customers’ data plans, but also give developers more opportunities to expose their content to the public. For instance an app startup could temporarily exempt its newly launched app from all download and usage data charges in order to encourage more AT&T customers to try it out. A movie studio could pay the mobile freight for its video trailers to promote an upcoming film release.

There’s even an enterprise use case. Businesses with bring-your-own-device (BYOD) policies could opt to pay for data charges incurred on specific apps (such as an enterprise email client), creating a separately billed virtual work-phone within an employees personal handset. AT&T can track and charge for almost any kind of content through its policy engines. According to an AT&T spokesman, a proxy server in AT&T’s networks match content requests from the phone or tablet against sponsored requests from content provider in real-time and then bills accordingly.

The flip side of all this though is that content providers that can afford to pay for data costs will be able to entice more AT&T customers over to their services. Instead of encouraging more variety in content consumed it could reinforce the status quo as consumers naturally gravitate to the websites, apps and videos from the big internet brands willing to foot the data bill.

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But one of the foundational principles of the internet is that it’s neutral, that no content is prioritized over other content. While AT&T stressed it won’t actually prioritize traffic in the Sponsored Data program — apps and content will work the same on the network no matter who’s footing the data bill — this type of program creates a kind of de facto hierarchy from the consumer’s standpoint. If all other things are equal, why not watch the video or use the app that doesn’t drain your data plan?

While AT&T cited small app developers and healthcare providers in its examples, the key targets here are obviously the big video providers like Netflix, YouTube and Hulu. If AT&T can get those companies to pay for data consumption, it benefits in numerous ways. Not only do its customers conserve their data allotments (which they can then spend on non-sponsored services), it also encourages those consumers to eat far more video, boosting AT&T’s data revenues. “Win-win” is a tired term, but in this case, it sums up the situation. There’s no way AT&T can lose.

AT&T hasn’t announced any specific content provider customers for Sponsored Data yet, but it may provide some updates at its developer conference in Las Vegas later today.

Register photo courtesy of Shutterstock user Robert Kyllo

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