Sponsored Data: AT&T’s “Solution” to Data Caps

In the face of mounting data usage and data cap criticism, AT&T may have found a way to keep those caps in place while shifting resentment towards content providers…and turn over an additional profit at the same time. They call it “Sponsored Data.”

AT&T and Verizon have been shamelessly defending data caps ever since they first imposed them on subscribers. For years, they’ve argued that network congestion made data caps a necessary evil (which has been disputed), and insisted that most users would never exceed their limits anyway. It was one thing to say that in 2012, when monthly data consumption averaged around 700MB, but that amount nearly doubled in 2013 (1.2GB per month), and is expected to double again this year. Unless data caps get a “Cost of Living Adjustment” this year, Verizon and AT&T are going to clean up on overage charges, at the expense of their customers.

Anticipating this fallout, AT&T announced a new “solution” to data caps—“Sponsored Data”—that would put the onus of access onto the shoulders of content providers, instead of the carrier. AT&T will “allow” content providers to pay for their content to be accessible even when a mobile user has exceeded his or her monthly data, with no additional charge to that user. Essentially, they’ve created Data Cap Insurance.

The move was quickly criticized as a potential violation of the FCC’s Net Neutrality rules, which until last week guarded the equality of data in order to keep the Internet a level playing field. AT&T responded with a statement defending their adherence to the letter of the law, if not the spirit. “AT&T’s sponsored data service is aimed solely at benefiting our customers,” said executive Jim Cicconi. “This is purely voluntary and non-exclusive. It is an offering by that company, not by AT&T.”

“If Netflix really cares about you, they’ll pay us to forgive the overages we arbitrarily impose on you.”

Many in the industry remain unconvinced, however. “This definitely violates the spirit of network neutrality,” said John Bergmayer, of Public Knowledge. “Once you have a data cap, set artificially low, that opens the door to all kinds of shenanigans.” Not only does Sponsored Data suddenly invalidate the “network congestion” defense of data caps, it permits AT&T (and the carriers that are bound to imitate the model, if it’s successful) to double-charge for data. They’ve called it “win-win” for content providers and subscribers, but the only clear winner here is AT&T itself.

What will happen now that Net Neutrality has been abolished, pending appeal? Will Sponsored Data become the norm, and eventually give way to tiered levels of Internet access, as so many fear? Tell us what you think in the comments!

photo credit: afagen via photopin cc


Brent Urmey is an avid reader and writer on a variety of subjects, including social media, SEO, the Wireless industry, and life in Lancaster County, PA. He is a graduate of Drexel University and a survivor of the 2012 Mayan Apocalypse. You can connect with Brent on Google +.