Sponsored Data . . Huh . . What is it Good For?

Internet_Explorer_e_and_Nuvola_red_XAdmit it, your mind finished that headline with ‘absolutely nothin’. And rightfully so. AT&T Wireless announced last week that they are starting a new program they are calling Sponsored Data. This is a plan that let’s content providers pay for data usage for their customers, and any data used by a sponsored plan would not count against their data caps.

Of course, this announcement came along with the promise that this does not violate Network Neutrality. In fact, AT&T swears that they are big fans of Network Neutrality. Nothing could be farther from the truth. You know the big network providers have always wanted to get into the revenue streams from content providers. After all, they spend a lot of money always upgrading their networks to be faster and each time those nasty content providers find content that makes customers use the new bandwidth. It must be very frustrating to be a huge network owner.

Of course this idea violates Network Neutrality. One has to wonder how long the AT&T marketers had to work to spin this to sound like a good idea. And they have done so. What they want to do is to let large app providers pay for the bandwidth for customers who use their app. What customers isn’t going to think this is a great idea?

But it’s a dreadful idea. This is exactly the kind of scheme that Network Neutrality is supposed to stop. In reality, under this plan, large wealthy content providers will pay AT&T a big fee to cover the bandwidth that customers use for their apps. This will let them get even more customers, at a cost. But this idea will have two consequences. First, a handful of large companies will do this if they believe it will get them more users. Because user is what creates value on the Internet. The more faces you have, the more billions a company is worth.

But the corollary of this is that small start-up companies won’t be able to afford this. And so the next big app may never get off the ground when competing with companies who can afford the sponsor fees. Over time, getting content providers to pay for bandwidth is going to kill innovation and stop the next generation of companies from getting started. And that benefits nobody.

It’s not like the wireless carriers like AT&T aren’t already getting a fortune for their data. The US already has some of the highest data prices among developed nations and cell phone data is by far the most expensive data in the US. So cellphone companies like AT&T are already gouging their users for their capped data plans.

There is no doubt that customers would like this, at least at first. After all, who wouldn’t like playing the newest game on somebody else’s dime. But we all know that programs and apps on the Internet come and go quickly and over time all users will suffer from lack of new content and new content providers.

It’s also pretty easy to envision that if this is allowed to stand that it won’t be too many years when only large ‘sponsors’ are expected to pay for their users’ data, but that AT&T will have their hand out to all of the app providers on the web.

The whole point of Network Neutrality is to not let content providers and network owners conspire to make some content preferred over others. Because once that barrier is broken then the Internet will stop being a source of innovation and will become the playground of a handful of large wealthy companies who will control the content. The big carriers come up with some scheme to get around Network Neutrality every few months and this is the latest. It’s quite clever, but it can’t be allowed to stand.

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