Blog

Is AT&T’s Sponsored Data today’s “sender pays” SMS?

We saw a lot of news come out of the first day of CES in Las Vegas today, but the most important announcement in mobile was AT&T’s unveiling of its Sponsored Data initiative. As my colleague Kevin Fitchard reports, the carrier aims to create a two-sided charging model for mobile data that would enable developers and other content providers to subsidize the data bills of subscribers. Apps, websites or even specific pieces of content could be paid for by the content provider, allowing users to access them without taking a data toll on their monthly allotments.

Reaction to AT&T’s plan has been mixed, even within the GigaOm family. Om Malik calls it “a sneaky attack on innovation” that allows AT&T to “double dip” while providing a way for established publishers to elbow startup content providers out of the way. My colleague Stacey Higginbotham takes a more restrained view, noting that AT&T users can always use Wi-Fi to access mobile data to avoid data charges and that, unlike the fixed-line broadband market, most consumers have a choice of at least four mobile service providers.

I can see both sides here, but I question whether AT&T — or any other major carrier, for that matter — can actually make a sponsored data business work. U.S. carriers have consistently failed to develop innovative business models beyond monthly plans for voice and data, and a viable sponsored data business will require complex business models and billing mechanisms. That makes me wonder if Sponsored Data is pretty much an extension of the “sender pays” SMS model that never got anywhere in the U.S.