AT&T still 'very bullish' on Sponsored Data despite just 10 customers so far

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LAS VEGAS--A full year after introducing the concept of Sponsored Data, AT&T Mobility (NYSE: T) is still highly enthused about the program's potential despite having signed up just 10 pilot program customers, according to a senior AT&T executive.

Last year at its annual Developer Summit here, AT&T unveiled its Sponsored Data program to much fanfare. Under the Sponsored Data plans, data charges resulting from certain types of usage are billed directly to the sponsoring company, and not AT&T customers--so the data used by the app or service is essentially free to customers.

However, at this year's Developer Summit, not a single AT&T executive mentioned Sponsored Data during the company's keynote address. Nonetheless, AT&T CMO David Christopher told FierceWireless that the carrier is still "very bullish" on the program.

"What we said last year, and what we've continued to say, is Sponsored Data is a really unique, interesting capability that is going to take time for it to evolve into various business models," Christopher said in an interview. "We are seeing interest from a variety of developers and content owners in Sponsored Data."

AT&T has Sponsored Data agreements with Aquto, Macheen (which was purchased by Good Technology), Wazco, DataMi, Syntonic Wireless, LotusFlare, HipCricket, WPS/Kingsoft and Screen Media.

The list represents an interesting mix. Some, like original launch partner Aquto as well as HipCricket, focus on sponsoring content so that consumers engage with different brands via advertising. Others are more network oriented, like Wazco, which provides metro LTE picocells.

Kingsoft Office Software is the latest user of AT&T's Sponsored Data program, and is going to give U.S. users sponsored data access when they use its WPS Office suite on AT&T's network. WPS Office allows users to view, edit and create presentations, spreadsheets and other office documents on any iOS and Android device as well as access and edit files directly from Google Play, OneDrive, Box and Dropbox. The company said access to and transfer of all file types supported by WPS Office will be covered under the deal with AT&T.

Further, Syntonic, which during this summer launched a sponsored content store with links to popular e-commerce, sports, news and other websites, unveiled cross-mobile operator, native application support and other enhancements to its offering. The company also launched its Freeway Development Toolkit, which it said will let Android and iOS application developers, as well as brands large and small, directly integrate Syntonic connected services to provide client application functionality to differentiate their offerings.

The most well-known Sponsored Data business model thus far is for mobile advertising companies to defray the cost of users' access to mobile video advertisements. However, Christopher said there are numerous business models. "There's not a one-size-fits-all with Sponsored Data," he said. "It has a lot of utility in small, pragmatic areas."

Christopher said one example is a user watching a video tutorial on how to use a product that would be sponsored by the company that created the product. Another, he said, is if the customer is a B2B customer, watching a video on a particular business outcome. Yet another is a sponsored public service message.

"People always jump to the idea of watching a movie," which he said may or may not end up as an actual Sponsored Data deal in the market. "There are lots of small, pragmatic ways that Sponsored Data can be very, very useful."

Christopher said the company is actively talking to more companies about Sponsored Data deals but declined to say which ones. "This is a gestation period," he said. "Sponsored Data is a really unique capability that I think is going to manifest itself in really interesting ways over time."

Other carriers have taken stabs at sponsored data. Sprint (NYSE: S) in August launched a service for Android smartphones called "App Pass" that gives users unlimited access to a select catalog of applications and games for $5 per month, after a 14-day free trial.

Some however are critical of the idea of sponsored data. Disruptive Analysis analyst Dean Bubley wrote last year that there are numerous reasons why the offering will likely flop over the long term. "Unlike 1-800 and postal models, users frequently use alternative connection mechanisms, especially 3rd-party Wi-Fi," he wrote. "Few content companies will be happy to have different business models depending on how a user connects with their phone/tablet to their servers, especially as they have no control. It will also be in their interest to push users to free Wi-Fi rather than sponsor cellular data."

Additionally, Bubley wrote that "no content/app company is going to want to pay extra sponsor data where users have more-than-enough in their monthly/PAYG quota," and that "no content/app companies would want to have 800 different 'sender-pays' arrangements with every network operator, and possibly multipliers of that given each has many different plans."

For more:
- see this Kingsoft release
- see this Syntonic release

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