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AT&T's New "Sponsored Data" Service Sucks For Everyone Except AT&T

This is how network neutrality is slowly dying.

AT&T's New "Sponsored Data" Service Sucks For Everyone Except AT&T

[Image: Flickr user Julian Jensen]

At CES this week, AT&T announced a new sponsored data service. For a fee, a company—like Spotify, for example—could become a Sponsored Data provider, and offer its service to mobile users without costing them any data. AT&T pitches it as a win-win situation: companies want you to use their services, and you get to save your precious, expensive data for other things. It would be pretty swell, if it wasn’t so indicative of everything wrong about mobile data regulation in America.

Over at The Verge, Nilay Patel argues that the service is ultimately bad for every party involved except AT&T. Patel argues that it’s a way for AT&T to muscle out smaller companies and play favorites: if you wanted to rent a movie and Amazon was a sponsored data provider while Google Play was not, where would you download from?

"Pull the thread out even farther and it gets even more evil: if sponsored data becomes a de facto cost of business in the exploding mobile market, those costs will just get passed right back to consumers. That "free" $4.99 Elysium rental will just end up costing $5.99, and advertising in apps like Facebook will just get more intrusive and creepy. And rest assured that AT&T will find a way to keep your service rates high and your contract terms restrictive; nothing about this plan involves shifting AT&T's profits, just increasing them. "

The program is essentially exploiting a loophole in existing net neutrality policy that exempts wireless providers from the same regulations: AT&T’s Sponsored Data program would be illegal over wired connections. This gap in regulation is particularly frustrating as consumers moved to mobile devices in droves over the past year—it’s where the data-using populace is going, and it’s ripe for exploitation.

Furthermore, AT&T’s program wouldn’t exist without the institutionalization of data caps among ISPs. What was an inherently ridiculous instance of false scarcity is now the norm, and while connectivity options like Google Fiber demonstrate how much better our networks can be, there remains little incentive for ISPs to improve their infrastructure.

It would be nice to think that this is all needless handwringing, but history doesn’t support that. We’re already paying money for data limits that don’t exist, and once one carrier finds success, the rest generally follow suit.