AT&T's "Sponsored Data": A Wolf in Sheep's Clothing

This week AT&T announced another wolf in sheep’s clothing. It’s just the latest example of how big companies are trying to reshape the open Internet.

AT&T’s latest idea is to let businesses pay extra to keep their traffic from counting against AT&T users’ data caps. For example, Facebook would pay extra so you could download your friends’ pictures or image-based ads without risking any data overages.

This is a big, bad thing for mobile users (read: pretty much everyone). AT&T claims that its “sponsored data” scheme would save customers money (free data!) on their expensive plans. (Note that the company didn’t even suggest offering these “sponsored” plans to their prepaid customers, because lots of competitive prepaid plans are already unlimited and this scheme wouldn’t make any sense.)

AT&T claims that data is scarce, and that’s why it has to institute low data caps and expensive overage charges in the first place. But if that’s true, why is AT&T suddenly making it “free” to users?

The reality is that it’s not free. AT&T has invented a new form of double dipping: It charges customers for monthly data plans, and goes back and charges websites and content providers again for the same data. AT&T gets paid twice for the same product. Nice work if you can get it.

AT&T’s bizarre twist on “free” will cause other problems too. App developers’ and content creators’ extra costs could flow back to consumers in the form of higher cable bills or subscription fees. For example, if ESPN pays more money to AT&T to sponsor data for wireless customers, ESPN will make that money back somewhere else, i.e., our pocketbooks.

Meanwhile, content and app providers — including nonprofits and small businesses — that can’t pay this new toll will be left behind. They may never get off the ground in the first place if they can’t afford AT&T’s sponsor fees. This is not how the Internet is supposed to work.

Indeed, over the last two decades the open Internet — on wired and wireless connections — has provided an open playing field for thousands of upstarts to challenge the incumbents. The open Internet has enabled Amazon, Etsy, Google, Netflix and so many other iconic companies to flourish. As the Verge’s Nilay Patel writes, “[AT&T’s new plan is] a huge blow to the free and vibrant market of the Internet economy, and the first step towards a new era of carrier control.”

With its new plan, AT&T is reviving the age-old fallacy that there is, in fact, such a thing as a free lunch. But when it comes to data plans and the open Internet, AT&T always has a way of sticking its customers with more than their fair share of the bill.

Original photo by Flickr user Stefan Powell

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