AT&T Sponsored-Data Scheme Is a Lose-Lose for Customers and App Makers

WASHINGTON -- On Monday, AT&T announced plans to allow businesses to pay AT&T to keep their traffic from counting against AT&T data plans. This so-called sponsored data service would bill Web content and app providers for data used by their customers, but apparently would not reduce wireless users' monthly bills or increase their data caps for non-sponsored content.

This announcement follows one made last May by AT&T CEO Randall Stephenson when he told a group of investors that he expected content providers and app developers to pay him to keep their traffic from counting against mobile data caps. Verizon was also in talks last year with ESPN to get the sports network paying the carrier so that ESPN content would not count against monthly limits.

Free Press Policy Director Matt Wood made the following statement:

“Caps are supposed to help wireless carriers manage congestion.  But if getting a big check from another company suddenly makes AT&T’s congestion concerns go away, that shows data caps aren't necessary in the first place. Caps are merely another way to pad AT&T’s profits.

“While sponsored data will be pitched as a way to save customers money, it's really just double charging.  The customer is still paying for the connection, and won't get a refund just because Facebook or YouTube or ESPN are also paying for some data usage now. Both the customer and the content or app provider are paying for the same data. Only AT&T makes out better.

“The extra costs could flow back to consumers too, in the form of higher cable bills, or higher prices to use the websites and apps taking on this expense.  For example, if ESPN has to pay more money to AT&T just to reach wireless customers, ESPN is going to try to make that money back somewhere else.

“Content and app providers that can't pay this new toll to reach customers will be at a huge disadvantage, and may never get off the ground in the first place if they can't afford AT&T's sponsor fees.  Letting the carriers charge more or less money to reach certain sites is discriminatory, and it's not how the Internet is supposed to work."