There's no doubt that T-Mobile and its smack-talking CEO have been good for the wireless industry, applying pressure on a lot of customer pain points like subsidized devices, international roaming, and long-term contracts and early termination fees. As a result, T-Mobile's been adding more new subscribers than any of the other three major carriers. But as I've noted a few times now, the pricing response to this competition by companies like AT&T and Verizon has been a bit cosmetic and theatrical in nature, since none of the carriers want a real wireless price war.
Sure, there are some occasionally decent promotions but, by and large, the name of the game right now for both AT&T and Verizon is driving network usage and shoving customers as hard as possible toward large, expensive, shared data allotments. Verizon has pretty loudly stated it's not going to seriously compete on price because it believes its network is just that good. The latest example of not-really-price competition comes courtesy of AT&T, who is responding to T-Mobile's competitive pressure by... raising fees and creating entirely new annoying surcharges:
The new activation/upgrade fee for one and two-year agreements is raising from $40 to $45, which gives AT&T the highest activation fee in the industry (Verizon is still at $40 for now). Going forward after August 1, should you choose to sign-up for a new contract to receive a discounted phone, you will pay $5 more than you used to.
In related news, AT&T Next will no longer be a zero-out-of-pocket installment plan. Come August 1, customers who are new to AT&T Next will have to pay a $15 activation fee when they pick up a new phone. This $15 fee also applies to those who bring their own device (BYOD) and sign-up for a new line of service.
So yeah, AT&T's response to price competition is -- to raise prices. And its response to media inquiries so far as to why this is occurring has been total radio silence, since there's not much it could say to defend the practice. Perhaps that's the reason that while T-Mobile is seeing notable growth, AT&T actually lost phone customers last quarter?
There are still a few reasons why AT&T doesn't really have to care what you or the media thinks. One, the company's mammoth lobbying apparatus ensures it still gets favorable treatment, especially on the easily manhandled state level, where most legislators would happily sell their first born to win the company's affections. Two, AT&T still has a stranglehold over a huge swath of wireless spectrum thanks to auction rules that historically favored large companies (though that's changing... slowly). Three, AT&T and Verizon combined still control around 80% or more of the wireless backhaul special access market, which companies like T-Mobile need to pay to access in order to reach their customers.
Of course hammering customers with a bevy of annoying fees is pretty much standard operating procedure in most industries as a way to pretend your advertised rate is staying the same. But AT&T's latest greedy little cash grab is worth remembering the next time industry trade groups like the CTIA are breathlessly insisting that fierce competition is delivering a bonanza of broadband bargains. There is no "wireless price war." It's more of a theatrical pricing improvisational dance.
from the who-are-you-and-what-have-you-done-with-my-regular-at&t? dept
This new FCC is really quite interesting. After years and years of never actually doing anything to push back against anti-consumer policies by the big telcos, in the last few months it seems like that's all the FCC does. Today's move? Proposing a $100 million fine against AT&T for its bogus practice of throttling "unlimited" customers. As you may recall, AT&T offered "unlimited" mobile data connections, but eventually killed off that offering. To avoid getting in trouble for bait and switch, AT&T grandfathered in those who previously had the unlimited plan... but then started throttling those accounts to try to pressure people into moving to a different plan. The FTC is already suing AT&T over this, and just last month we noted that AT&T had made some changes in response to FCC pressure.
However, this new move by the FCC is a big one -- saying that it thinks the company's throttling practice flat out broke the old open internet rules (the transparency part of the rules -- which the court did not throw out). AT&T, as it's doing with the FTC case, has already indicated that it's going to fight this fine, so expect years to go by before any fine is actually paid. The full FCC notice is worth a read. The key point is pretty basic: don't call it unlimited when it's very, very limited:
The imposition of set data thresholds and speed reductions is antithetical to the term
“unlimited.” AT&T was aware that its continued use of the word unlimited to describe its data plans
was likely to mislead consumers, as evidenced by the focus group studies conducted by AT&T around the
time the Company implemented its MBR [maximum bit rate] policy. Further, since its MBR policy was implemented, the
Commission and the Company itself received many complaints from AT&T unlimited data plan
customers who felt misled about the services they expected to receive when they purchased unlimited
We find that AT&T’s use of the term “unlimited” to label plans that were, in fact, subject
to significant speed restrictions after subscribers used a specific amount of data is apparently inaccurate
and misleading to consumers. As evidenced by the many complaints we have received about the MBR
policy, consumers entered into contracts for these “unlimited” plans with the mistaken belief that they had
unlimited amounts of high speed data sufficient to use any website or application, regardless of how much
data they used in a month. We thus conclude that every time AT&T described such a plan to a customer
as “unlimited,” it misrepresented the nature of its service. It did so in every monthly billing statement for
an unlimited plan and every time a term contract for an unlimited plan was renewed. The Transparency
Rule requires accuracy in all statements regarding broadband provider’s network management practices,
performance, and commercial terms, and providers are prohibited from “making assertions about their
service that contain errors, are inconsistent with the provider’s disclosure statement, or are misleading or
We further find that AT&T’s apparently misleading use of the term “unlimited” to label
its plan impeded competition because it prevented consumers from fully comparing AT&T’s plan to other
similar plans. This inured to AT&T’s benefit and to the disadvantage of its competitors. While AT&T
describes its plan as “unlimited,” its competitors describe almost identical plans as offering “unlimited
talk and text” with a set amount of LTE data. Without adequate disclosures, the average consumer
would consider these plans to be significantly different, when in fact they are not. A consumer was likely
to mistakenly assume that the AT&T “unlimited” plan offers more high-speed data than the competing
plan, thus hindering fair competition between AT&T and its competitors. Continuing to offer the plan to
renewing customers under the original “unlimited” label falsely advertised that the data plan was the same
plan customers originally bought before the MBR policy was implemented.
You can also read FCC Commissioner Ajit Pai's dissent in which he (really) quotes Kafka's The Trial and claims that the FCC is changing the rules as it goes.
A government "rule" suddenly revised, yet retroactive. Inconvenient facts ignored. A business
practice sanctioned after years of implied approval. A penalty conjured from the executioner’s
imagination. These and more Kafkaesque badges adorn this Notice of Apparent Liability (NAL), in which
the Federal Communications Commission seeks to impose a $100 million fine against AT&T for failing
to comply with the apparently opaque “transparency” rule the FCC adopted in its 2010 Net Neutrality
Order. In particular, the NAL alleges that AT&T failed to disclose that unlimited-data-plan customers
could have their data speeds reduced temporarily as part of the company’s approach to managing network
Because the Commission simply ignores many of the disclosures AT&T made; because it refuses
to grapple with the few disclosures it does acknowledge; because it essentially rewrites the transparency
rule ex post by imposing specific requirements found nowhere in the 2010 Net Neutrality Order; because
it disregards specific language in that order and related precedents that condone AT&T’s conduct;
because the penalty assessed is drawn out of thin air; in short, because the justice dispensed here
condemns a private actor not only in innocence but also in ignorance, I dissent.
Pai points out that AT&T did put out a number of warnings that its plan might include reduced speeds... but it still called the plans unlimited.
Either way, this should keep plenty of telco lawyers employed for many years...
For a few years now AT&T has taken heat for its "Sponsored Data" program, which lets certain companies pay AT&T an extra fee to let consumers access their content without it impacting their wireless data usage allotment. Critics have repeatedly charged that the program immediately creates an uneven playing field for small companies, independent and non-profits, who may not be able to afford the toll. While it's clear the plan violates net neutrality, consumers have been fortunate in that corporate interest in the idea so far appears to be minimal.
In an interesting twist, AT&T appears to now be cooking up a new program called "Data Perks" that gives consumers free, additional wireless data should they "interact" with AT&T partner brands in a specific fashion. Leaked information on the program suggests it's being run by AT&T's Sponsored Data partner Aquto, who explains AT&T's new project as such:
"Aquto CEO Susie Riley told VentureBeat that to many brands it’s a lead generation campaign. Subscribers are rewarded with data when they sign up for services, learn about new products, discover new apps, or click through and purchase something at a brand’s e-commerce site. If for example, an AT&T customer bought a DVD from a participating brand, they might be awarded with a gigabyte of data that they could use to browse any site, anywhere on the web, Riley said. Subscribers accumulate their data credits in their Data Perks account, then transfer the data into their AT&T wireless account when they want."
So far that sounds more neutrality friendly than the company's Sponsored Data effort, as it's opt in and doesn't tilt the mobile Internet playing field in any obvious fashion. Of course this is AT&T -- the same company that's been busted time and time again for business models that trample neutrality and consumer rights -- so we'll have to see if there's any nasty caveats when the program launches next Tuesday. AT&T might be engaging in semantics here (exempting some content from the cap, versus giving away "free" data if users "interact" with a brand). With the FCC's new net neutrality rules taking effect this week (you know, the ones AT&T is suing twice to overturn), it seems possible that AT&T would tread carefully
While the FCC's new neutrality rules don't cover data caps and zero rating specifically, when they take effect on Friday there is at least a complaint mechanism for those who find a specific business model obviously anti-competitive. As such, ISPs can still violate neutrality, but as noted previously, they just have to be extra-clever about it, dressing it up as an innovative business model and a great boon for consumers (see T-Mobile's Music Freedom). We'll see next week if AT&T's actually developing a sound business model for once -- or if it's just being extra clever.
Ever since regulators blocked AT&T's acquisition of T-Mobile, T-Mobile has responded by lighting a fire under the wireless industry. With an amusing CEO and consumer-friendly policies, the company is currently adding more new subscribers per quarter than any of the other big four carriers, once again shockingly highlighting how not treating your customers like the enemy can pay notable dividends. But no matter how well T-Mobile has been doing, German owner Deutsche Telekom has made it repeatedly clear that it wants out of the U.S. market.
However, getting a sale done has proven harder than the company expected. After the AT&T deal was blocked by regulators, they also indicated they wouldn't approve a sale to Sprint, in order to keep four large, viable competitors in the market. Rumored for a while, indications now are that satellite TV provider Dish Network is in talks to acquire T-Mobile in a deal worth more than thirty billion:
"The two sides are in close agreement about what the combined company would look like, with Dish Chief Executive Charlie Ergen becoming the company’s chairman and his T-Mobile counterpart, John Legere, serving as the combined company’s CEO, the people said. Tougher questions about a purchase price and the mix of cash and stock that would be used to pay for a deal remain unresolved, the people said. One of the people characterized the talks as at “the formative stage,” and said an agreement might not ultimately be hammered out."
The deal would join a wave of consolidation in the telecom sector, including Frontier's acquisition of Verizon's California, Texas, and Florida fixed-line assets, Verizon's acquisition of AOL, Charter's acquisition of Time Warner Cable and Bright House Networks, and AT&T's acquisition of DirecTV. And while Dish is rumored to be a horrible place to work and boss Charlie Ergen has a reputation for being a pain in the ass to work with, the deal makes quite a bit of sense and should probably have no problems getting past regulators.
Whereas T-Mobile has been a thorn in the side of AT&T and Verizon, Dish has been similarly disruptive on the TV front, whether that's via its ad-skipping Hopper DVR, or the launch of its new Sling TV Internet video service. Dish has also been slowly accumulating a ton of spectrum over the last few years, insisting it was pondering a solo or joint wireless play. And while combined it's believed that the new T-Mobile under Dish would have even more spectrum than AT&T or Verizon, it wouldn't be enough to trip the FCC's "spectrum screen" used to determine competitive harm:
There had been some worry that Dish was just acquiring spectrum in order to sit on it, flipping it down the road for additional cash to AT&T and Verizon. Instead, a Dish buy could result in an even stronger T-Mobile with the spectrum and resources to shore up the one area where it still lags behind AT&T and Verizon: total network coverage. Telecom writers everywhere also win under this deal, as entertaining f-bomb dropping T-Mobile CEO John Legere is expected to remain at the helm of the new, tougher company. Should Sprint finally be able to get things together under new owner SoftBank, we might actually start seeing something vaguely resembling real, sustained price competition in the wireless sector.
We've noted how AT&T and Verizon investors and executives have been terrified for some time that they would have to (gasp) compete on price as T-Mobile continues to disrupt the market with its consumer-friendly, faux-punk rock behavior. Ever since the AT&T deal was blocked by regulators, T-Mobile has been mercilessly (but entertainingly) mocking both companies, offering a bevy of promotions while eliminating a lot of "pain points" for consumers (like overage fees). It's working: T-Mobile's now signing up more subscribers each quarter than Sprint, AT&T or Verizon -- just by treating consumers well.
So far, outside of a few very time-limited promotions, Verizon's been unwilling to compete on price, insisting the company's high prices are justified by a "premium network experience." Verizon also recently tried to shoot down the appeal of T-Mobile's unlimited data offerings by insisting that nobody really wants unlimited data plans, they're just being driven by "gut feelings." With T-Mobile just having one of its most successful quarters ever, Verizon's increasingly under pressure to compete on price, yet the telco continues to proclaim it doesn't have to:
The company reported on Tuesday that it had lost 138,000 postpaid customers in the last three months. Francis Shammo, Verizon’s chief financial officer, apparently won't be missing customers who, he says, value price over quality. "If the customer who is just price-sensitive and does not care about the quality of the network—or is sufficient with just paying a lower price—that’s probably the customer we’re not going to be able to keep," he said in the company’s quarterly earnings call."
It shows you just what kind of competition Verizon's historically used to if the company honestly believes you have a choice of when you get to compete on price. And while the company is busy telling investors that it's not feeling any heat from T-Mobile, the growing, magenta-hued (TM) threat has Verizon simultaneously testing a number of new price promotions it hopes will help tip the subscriber scales back in its favor. Smelling blood, T-Mobile this week launched a new promotion that specifically takes aim at these "price sensitive" customers Verizon apparently doesn't want any more:
Of course Verizon's not entirely wrong. The company does come in first place pretty consistently in most customer service and network performance studies. Verizon's also well aware it enjoys an 80+% retail market share with AT&T, and an 85% market share of the special access (cell tower backhaul) market. The two companies also enjoy an estimated $171 billion in combined spectrum holdings, which certainly helps keep other competitors from market. Still, this belief that the company doesn't have to compete on price in the face of increased price competition seems like a pipe dream narrative they'll only be able to push for so long, especially if Sprint can manage to get out of its own way, fix its lagging network, and become a viable fourth wireless competitor.
Back when AT&T stopped offering unlimited wireless data, it grandfathered many of the unlimited users it had at the time. Unfortunately for those users, AT&T immediately started waging a quiet war on these customers as part of a concerted effort to drive them like cattle to more expensive plans. That included at one point blocking Facetime from working at all unless users switched to metered plans (but net neutrality is a "solution in search of a problem," am I right?) and throttling these "unlimited" LTE users after they'd consumed as little as three gigabytes of data.
Then, just about a year ago, the FCC (like it has on a number of consumer telecom issues like telco accounting fraud or municipal broadband) miraculously awoke from a deep, fifteen-year slumber and decided to do something about this kind of behavior. FCC boss Tom Wheeler started warning telcos that they can't use congestion as a bogeyman to justify cash grabs, and that network management should be used to actually manage network congestion -- not as a weapon to herd users to more expensive options. The FTC also filed suit against AT&T for false advertising over its "unlimited" claims.
"As a result of the AT&T network management process, customers on a 3G or 4G smartphone with an unlimited data plan who have exceeded 3 gigabytes of data in a billing period may experience reduced speeds when using data services at times and in areas that are experiencing network congestion. Customers on a 4G LTE smartphone will experience reduced speeds once their usage in a billing cycle exceeds 5 gigabytes of data. All such customers can still use unlimited data without incurring overage charges, and their speeds will be restored with the start of the next billing cycle."
As of this week, the policy now looks like this:
"As a result of AT&T’s network management process, customers on a 3G or 4G smartphone or on a 4G LTE smartphone with an unlimited data plan who have exceeded 3 gigabytes (3G/4G) or 5 gigabytes (4G LTE) of data in a billing period may experience reduced speeds when using data services at times and in areas that are experiencing network congestion. All such customers can still use unlimited data without incurring overage charges, and their speeds will be restored with the start of the next billing cycle."
In other words, gone are the references to throttling unlimited LTE users just because they hit a totally arbitrary threshold, and the company is now using network management to manage the damn network, not to make an extra buck. AT&T will of course find other, clever ways to annoy these users until they switch to more expensive plans, but it's at least good to see that the network congestion bogeyman (fear the exaflood!) isn't quite as effective as it used to be when it comes to justifying high rates, misleading consumers or conning regulators.
Having written about the FCC for most of my adult life, I've grown cynically accustomed to an agency that pays empty lip service to things like consumer welfare and the painful lack of broadband competition. It doesn't matter which party is in power; the FCC has, by and large, spent the lion's share of an entire generation ignoring last mile competitive problems and the resulting symptoms of that greater disease. When the agency could be bothered to actually address these issues, the policies were so tainted by the fear of upsetting campaign contributors (read: regulatory capture) they were often worse than doing nothing at all (see our $300 million broadband map that hallucinates speeds and ignores prices or 2010's loophole-filled net neutrality rules co-crafted by Verizon and Google).
Whether it was former FCC boss turned cable lobbyist Michael Powell's claims that massively deregulating the sector would magically result in telecom Utopia (tip: that didn't happen) or Julius Genachowski being utterly terrified of taking any meaningful stand whatsoever, the broadband industry has spent decades governed by an agency that, at its best, is too timid to do its job, and, at its worst, is an obvious revolving-door lap dog to an industry it's supposed to regulate.
So in 2013 when it was announced that a former lobbyist for both the wireless and cable industries would be the next FCC boss, the collective, audible sighs of disgust unsurprisingly rattled the Internet. I, like many others, believed we were bearing witness to a twisted culmination of decades of regulatory capture, a giant, living, breathing middle finger to a public hungry for a more consumer and innovator-friendly FCC. John Oliver even put Wheeler's name in lights when he infamously compared hiring the former cable lobbyist to employing a dingo as a babysitter:
Most people (with a few notable industry exceptions) believed Wheeler was the final nail in a grotesque, campaign-cash stuffed telecom coffin long under construction. We were painfully, ridiculously wrong.
In fact, if you read profiles on Wheeler, he's turned out to be a complete 180 from the thinking of a traditional revolving-door regulator, basing his decisions on all available information -- even if that data conflicts with previously-held beliefs (a unique alien indeed in 2015). And while it's true that massive grass roots advocacy helped shift Wheeler's thinking on issues like Title II, his embrace of issues like municipal broadband required little to no shoving, since the lion's share of the public had no idea the issue existed. One of the biggest reasons Wheeler's willing to stand up to the broadband industry? He's 69, and no longer biting his tongue and biding his time for the next cushy lobbyist or think tank gig. Perhaps we should make a rule that all future FCC bosses must be on the brink of retirement to avoid what we'll henceforth call Michael Powell syndrome.
Still, watching Wheeler fills me with cognitive dissonance, as if my frequently-disappointed brain isn't quite sure what to do with an FCC Commissioner capable of objective thought free of AT&T, Comcast and Verizon lobbyist detritus. As a sure sign of the looming apocalypse, last week I watched an FCC Commissioner issue a statement about protecting competition -- and actually mean it:
"Comcast and Time Warner Cable’s decision to end Comcast’s proposed acquisition of Time Warner Cable is in the best interests of consumers. The proposed transaction would have created a company with the most broadband and video subscribers in the nation alongside the ownership of significant programming interests. Today, an online video market is emerging that offers new business models and greater consumer choice. The proposed merger would have posed an unacceptable risk to competition and innovation especially given the growing importance of high-speed broadband to online video and innovative new services."
Though his tenure's unfinished, it may not be a stretch to say that a man most of us believed would be the epitome of revolving door dysfunction has proven to be one of the most consumer- and startup-friendly FCC Commissioners in the agency's history. Granted that may not be saying much; caring more about consumers than Martin, Powell and Genachowski is like getting an award for beating a handful of lobotomized ducklings at a hundred yard dash. And none of this is to classify Wheeler as a saint -- the agency's net neutrality rules have some very concerning loopholes and the FCC still refuses to talk much about pricing, whether that's the problems inherent in usage caps, unreliable meters, or sneaky below the line fees.
Still, it's a lesson learned in letting your mind run on cynicism autopilot, and it's a reminder that even our very broken, campaign-cashed soaked government can still occasionally manage to give birth to consumer-friendly policies. So in short, the tl;dr version is this: I apologize to you, Tom Wheeler, for believing you were a mindless cable shill. I was wrong.
Back in 2010, AT&T eliminated the company's unlimited data plans and began offering users only plans with usage caps and overage fees. While AT&T did "grandfather" existing unlimited wireless users at the time, it has been waging a not-so-subtle war on those users ever since in the attempt to get them to switch to more expensive plans. That has included at one point blocking video services from working unless users switched to metered plans (one of several examples worth remembering the next time someone tells you net neutrality is a "solution in search of a problem").
AT&T also switched some unlimited users to its metered plans without user consent, something the carrier received a whopping $700,000 FCC fine for in 2012. But the telco's primary weapon against these users has been to throttle these users to speeds of 128 to 528 kilobits per second should they use more than a few gigabytes of data in the hopes they'd switch to metered but unthrottled plans. AT&T was sued for the practice by the FTC in October of last year, the agency claiming AT&T violated the FTC Act by changing the terms of customers’ unlimited data plans while those customers were still under contract, and by "failing to adequately disclose the nature of the throttling program to consumers who renewed their unlimited data plans."
As we noted previously, AT&T tried a rather amusing defense to try and tap dance away from the lawsuit. It claimed that because the FCC was now classifying ISPs as common carriers under Title II, the FTC no longer had the authority to police AT&T actions under the FTC Act. In other words, AT&T hates Title II -- except when it allows them to skirt lawsuits for bad behavior. In a twenty-three page ruling (pdf), Judge Edward Chen says the law is "unambiguously clear" that only AT&T wireless voice, not wireless data, was classified as common carrier when the lawsuit was filed last fall:
"Contrary to what AT&T argues, the common carrier exception applies only where the entity has the status of common carrier and is actually engaging in common carrier activity."
In other words, no, AT&T can't have its cake (claim to loathe Title II with every shred of its being) and eat it too (run to Title II and common carrier protections when it suits it).
One of the very first things new FCC boss Tom Wheeler did when he entered office was to get wireless carriers to agree to a list of voluntary cell phone unlocking guidelines. The six "demands" are largely common sense and uncontroversial, and include requiring that carriers offer unlocked devices to active overseas service members, make their postpaid and prepaid unlocking policies as clear as possible, respond to unlocking requests within two business days, and automatically notify customers when their contract period ends and their phone can be unlocked.
I'd heard that carrier lobbyists balked at this last request fearing it would "advertise" unlocking, but ultimately acquiesced out of fear of tougher, non-voluntary rules coming down the pike. Note this is entirely separate from the fight over keeping cell phone unlocking legal and the need for DMCA exemption process reform. The rules also don't require that carriers simply sell unlocked phones outright, since that would probably make a little too much sense. After agreeing to the rules, carriers had more than a year to adhere to all six requirements, and the final deadline arrived last Wednesday.
Interestingly it's Verizon and AT&T, arguably the worst of the major carriers when it comes to attempts to stifle openness over the years, that come out ahead in adhering to all six guidelines (though your mileage may vary, and since the rules don't require much, this may not mean much). For Verizon, that's in part thanks to the Carterfone conditions placed on its 700 MHz spectrum, though that hasn't stopped the company from fighting openness in general tooth and nail in other ways. As I've noted previously the conditions have plenty of loopholes -- and anti-competitive behavior is allowed just as long as companies ambiguously insist that what they're doing (like blocking Google Wallet, or locking bootloaders) is for the "safety and security of the network."
Similarly interesting is the fact that T-Mobile, despite a recent reputation for being a fierce consumer advocate, sits right alongside Sprint when it comes to failing to adhere to the fairly simple requirements after a year's head start. Khanifar notes T-Mobile saddles prepaid and postpaid users with a number of strange restrictions, including the fact that users can't unlock more than 2 devices per line of service in a 12 month period. Between this, the company's opposition to Title II and its failure to understand the problems with zero rated apps, T-Mobile's showing it still needs to actually earn that ultra-consumer-friendly reputation.
Khanifar proceeds to note that despite carrier struggles this is at least a step in the right direction, even if we still need DCMA reform to ensure unlocking remains perfectly legal. That said, he quite justly highlights how cell locking no longer makes any coherent sense, for anybody:
"It's worth taking a step back and examining the absurdity of these locks. If you've paid for your AT&T phone, committed to a 2-year contract, and agreed to an "early termination fee," what purpose does a lock really serve? If you've paid cash to purchase a prepaid device, why should it come locked to just one carrier? There's plenty of evidence that locks serve little real commercial purpose. Verizon's business hasn't suffered since they stopped locking their phones. Countries like China and Israel have made locking devices outright illegal with no harm to their wireless industries and plenty of gain for consumers. But unfortunately it's unlikely that Congress or the FCC will take action to implement a similar policy here in the US."
Of course unlocked, open devices widens the competitive door, and with the kind of lobbying power AT&T, Verizon and the entertainment industry wield over Congress, getting real DMCA reform or mandated unlock-at-sale rules in play will likely be nothing short of a miracle.
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.