Coming soon to your smartphone: unlimited video streaming of some television shows, without getting stuck with an expensive wireless bill for high data usage.
The idea of allowing consumers to subscribe to a content provider such as ESPN so they can watch their favorite shows without being charged for data use has been controversial. But it got new momentum this week when Randall L. Stephenson, AT&T’s chief executive, said he saw such deals in the industry’s future.
That has sparked concern among some consumer groups, who say the practice would make it harder for upstart content providers to compete against big companies willing to pay for consumers’ voracious mobile-video consumption.
Stephenson said Wednesday at an investor conference that media companies will try to partner with wireless carriers to drive more traffic to their Web-based content.
“This won’t be driven by us but driven by content creators, driven by app developers,” Stephenson said at the J.P. Morgan Global Technology, Media and Telecom Conference in New York. “Will models emerge where they are willing to defray some of consumers’ . . . charges by paying themselves, either by advertising or monetization of data and sharing of revenue stream by the ecosystem? I think that is yes.”
The comments follow reports by the Wall Street Journal that ESPN is mulling a deal to bring unlimited viewing of its sports shows to wireless carriers without bumping up against customers’ monthly data caps.
The country’s wireless carriers have struggled to keep up with the demand for unlimited data usage. Verizon and AT&T, the nation’s biggest carriers, in recent years have introduced tiered data packages that give customers the option of paying more to use more data.
Stephenson did not mention specific plans to broker deals with content providers. But his forecast that such deals could be feasible sparked protest from consumer advocacy groups. They say carriers have long argued that networks are strained from too much video traffic. But, the groups say, wireless firms appear to welcome more traffic if the content provider pays a higher fee.
“Allowing a few deep-pocketed partners to pay for preferred treatment will stifle innovation, hinder competition, raise prices over time and give mobile phone companies the power to pick and choose the content you can access,” said Matt Wood, policy director for the public interest group Free Press.
Federal regulators have not opposed the idea, and analysts say President Obama’s nominee to lead the Federal Communications Commission, Tom Wheeler, probably won’t put up any obstacles.
Consumer groups and some Democratic lawmakers may push Wheeler to look into the issue. But current “open access” rules at the FCC are “lenient toward wireless operators,” said Paul Gallant, an analyst at Guggenheim Securities, in a research note. And “while the rules are not black and white, they do not appear to ban such payments by content companies.”
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