Despite Limited Interest In AT&T's Sponsored Data, Company Still 'Bullish' On Its Awful Precedent

from the creative-gatekeeping dept

After hinting about such a project for some time, you might recall that AT&T introduced "Sponsored Data" at the company's developer summit around this time last year. It works like this: if companies pay AT&T a fee their content is specifically allowed to bypass AT&T's already entirely arbitrary (as in, not tied to any real world costs or network conditions) usage caps. To hear AT&T pitch it at the time, this would be akin to "free shipping" or a 1-800 number for data, and an incredible boon for consumers who want to conserve their pricey data allotments.

While some consumers seemed quick to applaud the idea, they weren't understanding the awful precedent AT&T was setting. If you allow AT&T to set arbitrary caps then charge companies to bypass them, you're injecting a company with a rich history of anti-competitive behavior into a content and service ecosystem that works much better with it out of the way. Also, as VC Fred Wilson correctly noted at the time, such a model puts smaller companies and developers at a distinct disadvantage to their deeper-pocketed counterparts. What AT&T pitches as a great creative boon to industry is actually AT&T just desperately trying to retain gatekeeper power.

While AT&T executives have spent two years claiming that interest in this idea is through the roof -- one year later, just ten (mostly smaller) companies have signed up for AT&T's pilot. While Sponsored Data played a starring role at last year's AT&T Developer Summit, executives didn't mention the project once during this year's event. To hear AT&T tell it, there's still tremendous interest in the idea -- despite the fact there's clearly not tremendous interest in the idea:
"Nonetheless, AT&T CMO David Christopher told FierceWireless that the carrier is still "very bullish" on the program...What we said last year, and what we've continued to say, is Sponsored Data is a really unique, interesting capability that is going to take time for it to evolve into various business models," Christopher said in an interview. "We are seeing interest from a variety of developers and content owners in Sponsored Data."
While some companies aren't eager to court net neutrality controversy, others seem entirely oblivious to the threat such a model poses to innovation and smaller developers. Beyond just the obvious neutrality implications, the idea doesn't appear to be gaining traction with companies because new wireless shared data plans have most people signing up for significantly much more data than they need in order to avoid costly overages. In other words, when you have more cellular data than you need, and you're spending a lot of additional time using Wi-Fi, having a few apps or ads that don't impact your data allotment doesn't mean all that much in practice.

As such, it seems like only a matter of time before AT&T mutates the Sponsored Data idea into something notably more awful with a better sales pitch. As I've noted previously, while most of the net neutrality discussion focuses on outright blocking of websites or throttling of connections, the real danger zone is these kinds of "creative" pricing efforts where carriers try to use their gatekeeper power to desperately avoid being dumb pipe providers. It's here, under a glossy coat of PR paint where the real neutrality violations are going to occur, but as we've seen, it's difficult to craft neutrality rules that protect consumers from obnoxious shenanigans -- while allowing for real pricing and service experimentation (should that actually happen in the broadband sector someday).

In this case, we appear to be just lucky in that AT&T's implementation was just so bad most companies were bright enough to steer clear. That's not always going to be the case. As we've seen with the positive reaction to T-Mobile's decision to let the biggest music streaming services bypass its cap (which of course hinders smaller companies or nonprofits not big enough to get whitelisted), it's very clear it's possible to create new business models that tilt the playing field and screw smaller companies and consumers -- all while receiving thunderous applause for the effort.
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Filed Under: net neutrality, playing favorites, sponsored data, zero rating
Companies: at&t

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  1. icon
    JP Jones (profile), 8 Feb 2015 @ 5:18pm

    Re: Re: Re: Re: Re: Domino Theory Isn't Right

    So if I buy a gym membership, I buy it with the understanding that I will pay a fee per month, regardless of my use, and that I will be sharing the gym with others, and at peak hours I may not have access to the machines I want, which will slow down my workout. This is actually a pretty good analogy.

    Now, if the gym were an ISP, they'd also say I can only spend 20 hours per month in the gym, and this is fine, because the average member spends less than 20 hours per month. It's only those few powerlifters that spend longer, and they get charged $10 extra for every 5 hours they spend in the gym extra. Also, once they reach their limit they have to wear a lanyard that gives priority to all other gym members because they've already used their share.

    And that's the current situation. ISPs are proposing some "innovative" solutions. Now, Cybex Fitness Equipment can pay the gym a monthly fee and so any time you spend on their equipment doesn't count towards your monthly hour limit. Also, all equipment companies need to pay a monthly fee to the gym for their floor space, because they shouldn't get to use the gym's infrastructure for free. And since Precor paid some extra money, their equipment can be used as long as you want; everyone else has a one-minute maximum use time.

    But hey, there's plenty of competition for this gym. In fact, there are four other gyms in town! They all only have two treadmills and single weight bench, but hey, you have options for your workout needs! Some other big gyms are available in other cities, but due to contracts with those gyms, only one of the big gyms exist in your city. Coincidentally, those gyms give their customers the same service and pricing.

    When I'm paying for a possible maximum capacity with a monthly fee I'm sort of bothered by a bunch of random fees and restrictions that aren't actually caused by any technical restriction. The gym has a limit to its capacity, and during peak hours you'll probably have to wait to finish your workout. But that limit exists regardless if you spend all your hours in one energy-drink fueled 20-hour marathon or 20 days of one hour workouts. And the exercise equipment is the entire reason you want to buy a gym membership in the first place.

    I'm not saying that ISPs should be required to give me my advertised speed at all times. Nobody is (or should be) saying that. I just want my limit to be caused by the capacity of the network, NOT some arbitrary data limit that has little to no impact on my speed. And the whole reason I go online is to access websites, so I don't understand why the websites have to pay my ISP extra so I can access them. I'm already paying for that (and they're paying their own ISPs to be there).

    If they weren't making insane profits, I could sort of understand it as a method to make up the money they're losing because actually charging me for what they're selling isn't enough to cover their costs. But that's clearly not the case.

    Since competition doesn't exist, and because they're trying to charge me and everyone else for imaginary resources, I believe they are engaged in anti-consumer, monopolistic, behavior that is not required for the health of the network or for their own business requirements and therefore should be regulated. And unlike a gym membership, for the majority of Americans internet access is not optional. We use it for business, we use it for networking (the social kind), we use it for knowledge, and much more. Living without internet access in the modern age is almost akin to living without electricity; possible, but miserable, and suicidal from a business standpoint.

    We need the internet to stay accessible to all people, and to prevent the fact that access is necessary to allow monopolistic business to abuse their customers. It's sort of like banks in many ways, and I doubt many people would argue at this point that banks should be unregulated.

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