AT&T today announced a new "Sponsored Data" program that lets developers and brands pay to deliver content to your mobile device outside of your data caps. It sounds great for consumers on its face — you'll be able to get more stuff without paying for it! — but in reality it's a huge blow to the free and vibrant market of the internet economy, and the first step towards a new era of carrier control.
Here's just a simple example: right now you can rent Elysium from both Apple and Google for $4.99. In addition to the amount you'll pay to rent the movie, streaming that movie over mobile broadband will also obviously count against your data plan, an additional cost that you pay monthly to carriers like AT&T. Sponsored Data allows companies to eliminate that extra charge by paying AT&T directly, so if Apple wanted to stick it to Google, it could subsidize Elysium rentals and advertise that renting the movie from iTunes won't hit your data cap.
That's not fair competition; that's just pay-to-play
Again, that sounds great — as consumers, we'd get more for our money — but in reality it's a way for AT&T to levy taxes on companies who can afford to pay. That has huge implications for the free market of the internet: if YouTube doesn't hit your data cap but Vimeo does, most people are going to watch YouTube. If Facebook feels threatened by Snapchat and launches Poke with free data, maybe it doesn't get completely ignored and fail. If Apple Maps launched with free data for navigation, maybe we'd all be driving off bridges instead of downloading Google Maps for iOS.
That's not fair competition; that's just pay-to-play.
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. Lower-income customers on cheaper plans will be disproportionately affected: you and I might still pay for data and use whatever services we want, but anyone counting bits will be buffeted into a world of corporate control.
We're paying the price for a huge policy mistake
If AT&T can levy taxes on access to a hundred million subscribers who are increasingly turning to mobile devices over traditional PCs, that turns the wireless behemoth into major economic gatekeeper on the internet — a situation that would flagrantly violate the net neutrality principles that govern landline internet but were waived for mobile. That was a huge policy mistake, and now we're paying the price.
The smartphone revolution was all about escaping the stifling and restrictive control of the carrier walled garden for the freedom of the internet. With Sponsored Data, AT&T is trying to put those walls back up.