January 06, 2014, 3:22 PM — AT&T will let media companies and other partners cover the cost of delivering some data over the carrier's mobile network, letting subscribers click on videos and other content without worrying about their monthly data caps.
The Sponsored Data service, announced on Monday at an AT&T developer conference held alongside the International CES in Las Vegas, sets up a new way for the carrier to get paid for delivering data over its network. AT&T compared it to free shipping for online purchases or free voice numbers for customer service, such as the 800 numbers widely used in the U.S.
In this case, revenue to AT&T from the sponsoring companies would help to cover the cost of building and running its growing mobile network. The program could also encourage more overall data use, all of it paid for in one way or another.
Though sponsored streams and downloads won't use different network technology or run faster than standard data, they may be more appealing to consumers because they don't count against data caps. Standard, non-sponsored apps and online services will still be counted against those limits. That could give big content providers an edge over smaller players that can't afford to sponsor content, but the program doesn't violate net neutrality rules for mobile networks, which are more lax than for wired broadband.
However, consumer advocacy group Free Press attacked the service right after it was announced, saying it would only benefit AT&T.
"While sponsored data will be pitched as a way to save customers money, it's really just double charging," Free Press Policy Director Matt Wood said in a prepared statement. AT&T subscribers won't get refunds on their bills for using sponsored content, he said. At the same time, sponsoring companies will probably find other ways to charge subscribers for the data, such as by raising their own rates for cable channels or access to websites, Wood said.
"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," Wood said. "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."
AT&T named three initial customers for Sponsored Data on Monday: health care company United Health Group, mobile development cloud provider Kony Solutions and Aquto, a vendor of mobile data rewards systems. Customers can choose specific content such as videos, songs, Web pages, images or files to be offered as sponsored data, AT&T said. When a subscriber uses that data, the sponsor is billed directly for the cost of delivering it.