LAS VEGAS--AT&T Mobility (NYSE:T) is introducing toll-free data plans, which allow partners to subsidize consumer data. The news comes after years of AT&T saying that content providers are interested in picking up the tab for subscribers' data usage so that it doesn't count toward their data bucket.
Under the new plans, called "Sponsored Data," data charges resulting from certain times of usage will be billed directly to the sponsoring company, and not AT&T customers. AT&T said subscribers will see the service offered as AT&T Sponsored Data in their devices' status bar, and it will appear on their monthly invoice as Sponsored Data. AT&T said the new service will be available this quarter.
On Monday, AT&T announced three initial partners working with Sponsored Data, including Aquto, an ad platform that provides marketers tools to use sponsored data; Kony Solutions, a company that helps businesses develop apps; and UnitedHealth Group, which will use the program to stream educational videos and deliver other healthcare information.
AT&T added that Sponsored Data could be beneficial for a variety of industries, such as healthcare, retail, media and entertainment and financial services. The carrier said that it could encourage subscribers to try new apps or browse shopping sites, help media companies promote movie trailers or games, allow enterprises with bring-your-own-device programs to pay for data employees use on business-related apps and services, and enhance customer loyalty programs by providing sponsored data access to products and services.
According to Re/code, AT&T waited to launch the service until now because it only works on HSPA+ and LTE and the company needed to expand the coverage on those networks. The company's LTE network now covers 270 million POPS. AT&T worked with Amdocs and Ericsson (NASDAQ:ERIC) to make it possible, Re/code said.
AT&T added that Sponsored Data will be delivered at the same speed and performance as any non-Sponsored Data content. However, net neutrality advocates, including representatives from public interest groups, have argued against such toll-free plans, saying that they will favor rich and large content companies over smaller ones.
"Caps are supposed to help wireless carriers manage congestion," Free Press Policy Director Matt Wood said in a statement. "But if getting a big check from another company suddenly makes AT&T's congestion concerns go away, that shows data caps aren't necessary in the first place. Caps are merely another way to pad AT&T's profits."
"While sponsored data will be pitched as a way to save customers money, it's really just double charging," Wood added. "The customer is still paying for the connection, and won't get a refund just because Facebook or YouTube or ESPN are also paying for some data usage now. Both the customer and the content or app provider are paying for the same data. Only AT&T makes out better."
At AT&T's Developer Summit here in conjunction with the 2014 Consumer Electronics Show, John Donovan, AT&T's senior executive vice president of technology and network operations, said that the program will deliver "fantastic benefits for companies that work with us and our mutual customers."
Aquto CEO Susie Kim Riley, a longtime wireless player, said that the company knows that mobile data as a reward works--that customers willing to pay a certain amount of money for a service or product, such as flowers, could get an extra 500 or 600 MB of data, for example. "We believe that the sponsorship capability, which enables you to sponsor specific content free of charge, will have special appeal to users," she said.
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