Commentary

Verizon Joins AT&T And T-Mobile In Offering Toll-Free Data

Almost two years ago, AT&T pioneered the concept of "sponsored data" for smartphone users. The initiative allows companies that partner with AT&T to pay have their data exempted from consumers' monthly caps.

Rival carrier T-Mobile subsequently rolled out BingeOn, a program that exempts video offered Netflix, HBO Go, Hulu and 20 other video providers from subscribers' monthly data caps.

Now, Verizon is following suit with its version of toll-free data. The carrier reportedly said this week that it plans to allow consumers to access content from certain Web sites, without counting that material against consumers' monthly data caps.

It's not yet clear whether broadband providers offering "sponsored data" will face regulatory pressure. The Federal Communications Commission's net neutrality rules broadly prohibit carriers from engaging in conduct that hinders the ability of consumers and content companies to reach each other online. When the FCC published those rules, it said it would take a case-by-case approach to evaluating whether data caps -- and exemptions from them -- are harmful.

Since then, FCC Chairman Tom Wheeler has suggested that some exemptions from data caps could be beneficial. Last month, Wheeler called T-Mobile's decision to exempt video from data caps "highly innovative and highly competitive." (Unlike AT&T, and presumably Verizon, T-Mobile isn't asking online video distributors to pay in order to exempt their material from the caps.)

At the same time, Wheeler says the FCC intends to monitor the situation. "What we are going to be doing is watching Binge On, keeping an eye on it," he says.

Net neutrality advocates and other observers have been more critical.

"AT&T is imposing its own tax on anyone who wants to connect to its millions of subscribers," the group Public Knowledge said soon after AT&T unveiled the initiative. "Of course, this tax is only attractive to content creators if AT&T’s normal service is too shabby to deliver their content without it. That gives AT&T a big incentive to keep data caps low and overage fees high."

The New York Times recently questioned T-Mobile's decision to rollout BingeOn. "There are real concerns about whether such promotions could give telecommunications companies the ability to influence what services people use on the Internet, benefiting some businesses and hurting others," the Times wrote in a recent editorial.

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