AT&T Criticized For Data Cap Carveout

AT&T is getting some pushback from Washington over its just-announced sponsored data service that allows mobile broadband business customers to stream content without it counting against their monthly data allowances.

In concert with the Consumer Electronics Show in Las Vegas Jan. 6, AT&T announced the effort, which it likened to a toll-free 800 number or free online shipping.

"With the new Sponsored Data service, data charges resulting from eligible uses will be billed directly to the sponsoring company," said AT&T in announcing the effort. "[T]he customer simply enjoys their content via AT&T’s wireless data network. Customers will see the service offered as AT&T Sponsored Data, and the usage will appear on their monthly invoice as Sponsored Data.  Sponsored Data will be delivered at the same speed and performance as any non-Sponsored Data content...The Sponsored Data service allows sponsors across a variety of industries such as healthcare, retail, media and entertainment and financial services with the opportunity to better engage with customers and their own employees."

AT&T said that the sponsored service customers will not be paying for faster speeds. "Sponsored Data will be delivered at the same speed and performance as any non-Sponsored Data content," the company said.

AT&T talked in its announcement about the 30,000% increase in data traffic on its network in the last six years and said the new service was a way to “expand engagement.”

“Customers love mobile content. Whether it’s shopping, banking, entertainment or personal wellness, mobile content is increasingly available for customers almost anywhere and anytime. And that’s what makes this a win-win for customers and businesses–customers just look for the Sponsored Data icon and they know the data related to that particular application or video is provided as a part of their monthly service,” said AT&T Mobility President Ralph de la Vega in a statement. 

But that did not assuage the critics of usage-based pricing.

Free Press called it a "lose/lose scheme" for customers and app makers. “Caps are supposed to help wireless carriers manage congestion," said Free Press policy director Matt Wood. "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."

AT&T actually pitches a number of added values with the service, including "Promoting movie trailers or games, providing patient healthcare support," and "encouraging customers to browse mobile shopping sites."

Public Knowledge argued that the new play would be a way for AT&T to pick online winners and losers. "This plan would require that Internet services pay to make sure customers are able to view their content by exempting it from data caps. Service providers that can't meet the price tag that AT&T sets could be left behind," the group said.

Acting president Michael Weinberg said it was time for the FCC to investigate data caps. While usage-based pricing is allowable under FCC open internet guidelines, the commission also said it would monitor to insure such pricing was not being used anticompetitively.

"It is impossible for the FCC to examine the impact of today's announcement on net neutrality until it develops an understanding of data caps," Weinberg said.

Public Knowledge's complaint should get a fair hearing. Weinberg is acting president because the former president, Gigi Sohn, is now a top aide to new FCC chairman Tom Wheeler, serving as a liaison between such groups and Wheeler, who has said he wants to hear from all voices on key issues.

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.