Did AT&T just create a pay-for-play mobile Internet?

January 6

AT&T just made surfing the mobile Web a little easier on your wallet — but in doing so, it risks threatening the long-term openness of the Internet.

With a new product unveiled Monday called Sponsored Data, AT&T subscribers will be able to take advantage of certain Internet services without that usage counting against their data caps. Instead of paying for that data out of their monthly allotment, customers' consumption will be paid for by the third-party companies offering the services used. Everyone who has a smartphone, tablet or mobile broadband subscription will be covered under the offering, and it seems like a great move by AT&T to help you save on your wireless bill.

AT&T has already sealed deals with three sponsors: United Health Group, which plans to use Sponsored Data to promote its visual, interactive customer service offering; Aquto, a mobile advertising platform that'll use its Sponsored Data to cover "long-format product infomercials" and other ads; and Kony Solutions, a company that provides mobile application platforms to other businesses. Each deal was negotiated separately and charges sponsors different prices, according to AT&T spokesman Mark Siegel.

AT&T CEO Randall Stephenson foreshadowed the rise of subsidized data last year, telling investors in May that the industry would soon find ways to keep data charges from spiraling out of control.

On the one hand, Sponsored Data promises to relieve a bit of the pressure on you to keep a close eye on your data cap. On the other hand, critics say the setup establishes just the kind of pay-for-play Internet that consumer advocates have long warned might affect the wired Web if a federal court quashes regulations mandating that all traffic be treated equally. In this version of the future, Internet providers that charge businesses to reach people effectively steer consumers toward fee-paying services at the expense of others, limiting the power of Americans to make their own choices.

"The company that connects you to the Internet should not be in a position to control what you do on the Internet," said Michael Weinberg, acting co-president of the consumer advocacy group Public Knowledge.

What AT&T is doing is a little different. It's not degrading or blocking "normal" Internet traffic, just shifting the cost onto a different player. Federal regulations that ban outright traffic discrimination also apply only to wired ISPs and not cellular carriers, so AT&T isn't likely to run afoul of those rules. But it's also why observers say the wireless industry is a kind of bellwether for the broader Internet when it comes to network neutrality.

It's still questionable whether Sponsored Data will save you money in the end. Companies that pay AT&T to provide their content for free might pass those costs onto consumers in other ways, whether those consumers are AT&T subscribers or not.

Critics also argue that Sponsored Data could make it harder for new businesses to grow if they can't afford to participate in the program. That said, if the companies that can afford it do pay up, that leaves more room in a customer's monthly data budget for those smaller businesses, so that might prove a wash.

Of course, data caps themselves are the subject of intense debate. They were initially justified as a method for managing congestion, but some network operators outside the wireless industry have grown increasingly frank about their real benefits as a revenue generator.

Brian Fung covers technology for The Washington Post.
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