AT&T Proposes App Companies Pay for Customer Data Use

Published March 28, 2012

AT&T revealed it may implement a pay plan that would force providers of mobile services to pay for the cost of data usage associated with streaming movies and smartphone applications. The announcement is perceived by industry analysts as indicating the company believes a U.S. District Court will overturn the Federal Communications Commission’s network neutrality rules.

AT&T introduced the plan at the Mobile Wireless Conference held this March in Barcelona, Spain. If it’s implemented, app providers such as Spotify would pay AT&T for the data usage rather than AT&T charging more to customers who employ the data-intensive apps.

“Though net neutrality is likely to be thrown out in court, I don’t think AT&T is gambling here,” said Mike Wendy, director of in Washington, DC. “In fact, their proposed changes appear to be within the limits of the present net neutrality regulations for mobile providers,” he said.

Wendy said AT&T is “simply trying to provide their private resources to customers, consistent with reasonable network management practices, which are defined by a marketplace severely hamstrung through the lack of available spectrum. This reasonable management in turn will allow them to continue to innovate, compete, and provide a better experience for customers.”

Wireless Vigorously Competitive
“The wireless market is vigorously competitive,” Wendy said. “Consequently, AT&T should be able to decide how to serve customers as they choose. If the company fails, customers will flee. That mechanism, brought on by the competitive maelstrom, protects consumers while also helping networks grow to meet new demand.”

Wendy referred to one of his recent MediaFreedom blog posts in which he wrote, “Any time the network providers propose to do something on their private networks, with their private investment, you’ve got guys like Harold Feld [legal director at Public Knowledge, an advocacy group that supports net neutrality] crying foul about how it’s the end of the Internet. It’s a wonder we have any private investment at all, with all of their ceaseless kvetching. Sadly, that’s exactly what they’re after.”

Marketplace Handles Costs
Bill Horne, moderator of the Telecom Digest, concurs with Wendy.

“Network neutrality has nothing to do with paying for [data] transport,” he said. “So long as bits are bits, I have absolutely no problem with companies that charge extra for moving lots of them from my cellphone to yours. The marketplace takes care of the cost in due time.”

Horne added, “If AT&T wants to offer a ‘seller pays’ deal for certain products, that’s their business. All I care about is that they don’t favor a particular company or vendor over others,” he said.

“If startup companies feel that this is unfair, I would ask why they thought it was fair to expect their customers to pay for the transport in the current model,” Horne continued. “I suspect that the answer is ‘We like dealing with young, naive customers who pay with their mommy’s credit card, instead of hard-nosed businessmen who know what these pipes are really worth.”

Phil Britt ([email protected]) writes from South Holland, Illinois.