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AT&T’s new toll-free data is bold, but it could end up being a nightmare

AT&T Sponsored Data Analysis

AT&T on Monday announced a compelling new initiative during this year’s International Consumer Electronics Show. Dubbed “Sponsored Data,” the carrier’s new program will allow companies to pay for the data used by specific mobile applications, so that any data used by those apps will not apply to users’ monthly data plan limits — like toll-free calling for mobile data. Sponsored Data might be used by companies to promote their apps and services, and it can also be used by businesses that will now be able to pay for data used by their employees while working with enterprise apps. The initiative is novel and it could end up being a big deal if it is marketed well by AT&T and its partners, but as noted by one industry watcher, it could also end up being a PR nightmare.

“While this service has significant potential for AT&T, the carrier needs to tread carefully or pay a PR price for the innovation,” NPD Group analyst Eddie Hold wrote in a blog post on Monday. “Lining up an A list of sponsors will be key to turning this potentially interesting service into success.”

He continued, “Toll free data services have the ability to further turn the smartphone market on its proverbial head: theoretically, if there are enough compelling content solutions offering sponsored solutions, a carrier could offer smartphone services without the obligatory data plan. For example, what if Facebook were to try again, offering a ‘Facebook phone’ with sponsored/free data access. Such as move would drive a very different billing solution, and potentially drive very different mobile behavior from the consumer base. But it’s a very brave step out from today’s data offerings.”

Hold’s analysis is spot on. AT&T’s new Sponsored Data program has tremendous potential. If the carrier manages to line up some high-profile partners that offer very appealing promotions with this new tool, it could be a huge success. But that’s a big “if.”

From a public relations standpoint, there is already some blowback. Some bloggers immediately argued that AT&T’s new program is akin to double dipping, since companies will be paying for data and users already have to pay for a data plan in order to have access to mobile data networks. Toll-free calling works the same way, of course — you can’t call a toll-free number from your home phone or cell phone unless you pay for phone service — but it’s certainly true that in many cases, companies will be paying for data that wouldn’t have exceeded the user’s monthly allotment.

AT&T’s data revenue will indeed soar if Sponsored Data is a success.

Other bloggers immediately pointed to net neutrality issues during their attacks on AT&T’s new program. While the carrier made it a point to stress the fact that Sponsored Data will not receive any priority over standard data on its network in terms of resources and bandwidth, it definitely flirts with a hot-button issue that will often be used in arguments against it.

As with any product or service that blazes a new trail, there are arguments on both sides of the fence. How AT&T responds to those arguments and how it markets Sponsored Data to subscribers will ultimately determine the success or failure of this new initiative.

Zach Epstein

Zach Epstein has been the Executive Editor at BGR for more than 10 years. He manages BGR’s editorial team and ensures that best practices are adhered to. He also oversees the Ecommerce team and directs the daily flow of all content.

Zach first joined BGR in 2007 as a Staff Writer covering business, technology, and entertainment. His work has been quoted by countless top news organizations, and he was recently named one of the world's top 10 “power mobile influencers” by Forbes. Prior to BGR, Zach worked as an executive in marketing and business development with two private telcos.