AT&T Stirs Controversy With Data-Cap Plans

AT&T CEO Randall Stephenson reportedly confirmed today that the carrier plans to let content companies pay to exclude their material from data caps imposed on wireless subscribers.

"There will be models that emerge where they defray consumer charges by paying it themselves or by advertising," he said at an investor conference, according to Fierce Wireless. The remarks come several days after The Wall Street Journal reported that ESPN was in talks with carriers about paying to exclude its material from data caps.

If that happens, consumers would be able to stream videos by ESPN -- or other content companies that forge deals with the carrier -- to their smartphones and tablets, without worrying about incurring extra charges. AT&T subscribers who joined in 2010 or later are required to sign up for tiered plans, where they pay fees based on how much data they consume.

The idea to exempt certain content from the caps isn't new; last February, AT&T floated a plan to allow mobile app developers to pay for the data subscribers use.

Then, as now, advocacy groups panned the proposal, arguing that it will disadvantage small players who can't afford to pay for a data-cap exemption.

Free Press policy director Matt Wood said today that the plan “harms the next Netflix, Vimeo or any other start-up that might challenge the big media companies but can't afford to pay for other people's Internet usage.”

The group also points out that the plan calls into question whether data caps are necessary to manage traffic. “AT&T has claimed for years that network congestion is the reason it needs data caps and steep overage fees. But if ESPN and other rich companies can pay to get around these artificial limits, it suggests what we've long suspected: AT&T's jacked-up fees and penalties are just there to gouge consumers,” Wood stated.

Despite the criticism, the idea floated by AT&T doesn't appear to violate the Federal Communications Commission's net neutrality rules. Those regulations prohibit wireless companies from discriminating against some types of competing apps, like Skype. But the rules give wireless companies more flexibility when dealing with companies that don't directly compete.

But the plan certainly seems to go against the spirit of neutrality, or the idea that carriers shouldn't discriminate against certain types of content. And the proposal could spark a renewed push to strengthen the rules. Free Press, for one, already is calling for that. “These are the problems we warned the Federal Communications Commission about when it made the shortsighted decision to weaken wireless net neutrality rules,” the group said. “We hope incoming FCC Chairman Tom Wheeler will take a close look at this situation and ensure that the mobile Internet remains an open platform.”

2 comments about "AT&T Stirs Controversy With Data-Cap Plans ".
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  1. Paul Cosway from Ressen, May 15, 2013 at 5:37 p.m.

    It all depends on the cost of data to the content companies. Consumer cost of an hour of data is a lot more than the ad revenue a content company earns.

  2. Pete Austin from Fresh Relevance, May 16, 2013 at 5:48 a.m.

    The reason why "data caps" are unjustifiable is because network infrastructure is sized for peak load - leaving a lot of unused capacity for free at most times of the day. AT&T's plans treat peak and off-peak alike, so clearly this is about money, not traffic management.

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