For a while now I’ve been very wary of AT&T’s “sponsored data” program that allows companies to pay AT&T money in exchange for their services being exempt from the carrier’s data caps. This has the potential to seriously distort the market for online services by giving AT&T outsize power to pick winners and losers — after all, what chance would an upstart video streaming company have against an established company if its users are constantly worrying about being hit with overage fees for using it?
Several tech companies, including Netflix, Cogent and Dish, have argued that such “sponsored data” arrangements set a dangerous precedent for the future of online commerce. In fact, both Cogent and Dish want AT&T to scrap its sponsored data program as a precondition of its merger with DirecTV.
However, Ars Technica reports that AT&T is hitting back against critics of its controversial program and insisting that it should have the right to exempt some services from its bandwidth caps if it wants to.
“The record does not support Opponents’ request that AT&T be barred from exempting any online video service from any usage-based tracking, metering, or billing in its broadband services,” AT&T wrote in a filing with the Federal Communications Commission. “Opponents offer no reason for the Commission to reverse these very recent conclusions and issue a blanket, abstract prohibition that would apply only to AT&T. Doing so would deprive AT&T customers of service offerings tailored to fit their usage and their budget. It would also distort competition by hindering AT&T’s efforts to close the gap and compete with cable’s higher-speed broadband products.”
There are so many things to love about this explanation, but the best one is AT&T’s complaint about “distorting competition,” when it’s obvious that its own sponsored data plans have the potential to severely distort the market for online video services. With this program, AT&T is setting itself up as a tollbooth for any prospective new video streaming websites — if you want to have any shot at being a success, you’ll have to fork over cash to AT&T so your customers can use your service without worrying about getting whacked with fees.
If this program is successful, it won’t be long until Verizon, T-Mobile and Sprint follow suit, at which point the winners of the online video wars will essentially be handpicked by wireless carriers. This may sound like a good idea for carriers but it’s a bad one for anyone who values the open Internet and competitive markets.