AT&T: 'Sponsored Data' toll-free data plans don't clash with net neutrality rules

AT&T Mobility (NYSE:T) said its new "Sponsored Data" toll-free data plans, which allow partners to subsidize customer data costs, do not violate the FCC's net neutrality rules. The carrier's statement came just a day after FCC Chairman Tom Wheeler indicated the commission will monitor the new plans and intervene if they develop into an anticompetitive practice or give preferential treatment.

"AT&T's sponsored data service is aimed solely at benefiting our customers," Jim Cicconi, AT&T's senior executive vice president of external and legislative affairs, said in a statement. "It allows any company who wishes to pay our customer's costs for accessing that company's content to do so.  This is purely voluntary and non-exclusive. It is an offering by that company, not by AT&T. We simply enable it. The bottom line is that this can save money for our customers. We see no reason why this is not a good thing."

Under the new plans, called "Sponsored Data," data charges resulting from certain types 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.

AT&T has noted 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.

Cicconi argued that AT&T is "completely confident this offering complies with the FCC's net neutrality rules, which our company supports."

Wheeler, speaking at the 2014 Consumer Electronics Show on Wednesday, said: "My attitude is: Let's take a look at what this is, let's take a look at how it operates. And be sure, that if it interferes with the operation of the Internet; that if it develops into an anticompetitive practice; that if it does have some kind of preferential treatment given somewhere, then that is cause for us to intervene."

Public interest groups have blasted the plans, saying they show that AT&T's data caps, and the data caps of other carriers, are no longer about controlling network traffic if they can be easily circumvented by companies willing to pay the carriers for doing so. "In addition to being a ripoff for both consumers and content creators, AT&T's plan erects a massive barrier in front of anyone hoping to be the next big thing online," Michael Weinberg, acting co-president of Public Knowledge, said in a statement.

However, most analysts seem to agree that AT&T's plans do not violate the FCC's net neutrality rules. The FCC's net neutrality rules are lenient on wireless carriers and allow them to develop business models for charging for data so long as the carriers do not block competing services, such as VoIP.

Paul Gallant, an equities analyst for Guggenheim Securities, wrote in a research note that AT&T's arguments on the benefits to consumers--that they can get data for free when it is sponsored--will set well with the FCC. This is an "effective argument that is likely to lead the FCC to permit AT&T and other wireless operators to pursue Sponsored Data-type arrangements," he wrote, according to CNET.

For more:
- see this AT&T statement
- see this CNET article

Related Articles:
FCC to monitor AT&T's 'Sponsored Data' toll-free data plans, could intervene
AT&T's Sponsored Data service isn't a threat, it's an innovation
AT&T to launch 'Sponsored Data' toll-free data plans
Verizon's Shammo: Toll-free data still faces hurdles
AT&T's Stephenson: Content players will subsidize consumer's data

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