Bloomberg BNA - AT&T Sponsored Data Plan Threatens Open Internet, Consumer Groups Argue

January 30, 2014
In The News

By Bryce Baschuk

AT&T Inc. will permit online content providers to pay to deliver their mobile apps and traffic to consumers' mobile phones and tablets without increasing users' monthly data usage, the company announced Jan. 6.

But the new business model was met with swift criticism from public interest groups who said such a plan would threaten open-Internet principles.

AT&T aims to encourage Web companies like Google Inc. to sponsor their data traffic so that the data aren't counted against AT&T customers' monthly data caps. AT&T's “sponsored data service” will deliver data at the same speed as non-sponsored content, the company said in its announcement timed on the eve of the annual International Consumer Electronics Show in Las Vegas.

The program is a “win-win for customers and businesses,” said Ralph de la Vega, president and chief executive officer of AT&T Mobility. “Customers just look for the sponsored data icon and they know the data related to that particular application or video is provided as a part of their monthly service.”

Rep. Anna Eshoo (D-Calif.) dismissed AT&T's sponsored data program as a threat to the open Internet, competition and consumer choice. “Embedded in programs of this type are serious implications for fairness and competition in the mobile marketplace,” Eshoo said in a Jan. 6 statement. “It's exactly why net neutrality rules came to exist in the first place and why these rules should apply equally to all forms of broadband Internet service.”

Consumer advocacy group Public Knowledge urged the Federal Communications Commission to step in and prevent telecommunications companies like AT&T from threatening the commission's net neutrality rules.

“It is time for the FCC to heed Public Knowledge's over two-year-old call to investigate data caps and gather basic information about their use,” said the group's acting co-president, Michael Weinberg. “It is impossible for the FCC to examine the impact of today's announcement on net neutrality until it develops an understanding of data caps.”

Free Press Policy Director Matt Wood also raised concerns.

“While sponsored data will be pitched as a way to save customers money, it's really just double charging,” Wood said. “The customer is still paying for the connection, and won't get a refund just because Facebook or YouTube or ESPN are also paying for some data usage now.”

The service does not technically run afoul of the FCC's net neutrality rules because it does not block or discriminate against online content. The FCC's Open Internet order also contains an exemption for wireless Internet service providers. An FCC spokesman did not comment.

FCC Chairman Tom Wheeler recently told the House Energy and Commerce Subcommittee on Communications and Technology that the FCC's Open Internet order does not prohibit carriers and ISPs from entering into agreements with edge content providers to reach their subscribers.

“But there is a clear responsibility for the commission to make sure that what takes place does not interfere with Internet access, is not anticompetitive, does not offer preferential treatment, and we will enforce that,” he said.