I feel like a broken record lately as I've been writing diaries and participating in comment threads about Net Neutrality over the past week or so.
And the hits...oh man, do the hits keep on coming. This time, it's from AT&T and their new "sponsored data" scheme.
In the U.S., AT&T has flirted with zero-rating with its “Sponsored Data,” which lets developers and brands pay to deliver content to consumer smartphones outside their data caps. Earlier this week, AT&T announced a $500 million investment to create a video streaming service similar to Netflix. Will AT&T zero-rate its video streaming app or let it compete on equal terms with Netflix and the rest?So, what's zero-rated traffic, and why is it particularly insidious for AT&T to implement it? Follow me below the fold.
Zero-rated mobile traffic is blunt anti-competitive price discrimination designed to favor telcos’ own or their partners’ apps while placing competing apps at a disadvantage. A zero-rated app is an offer consumers can’t refuse. If consumers choose a third-party app like Dropbox or Netflix, they will either need to use it only over Wi-Fi use or pay telcos hundreds of dollars to use data over 4G networks on their smartphones or tablets.
Zero-rated traffic is a scheme where a service provider doesn't count data from either their own sources or a paying "partner" service against data caps. And as we start to push more and more high-bandwidth content over the 'Net, especially over wireless, it can and will cause a major anti-competitive problem.
As Brad Reed at BGR explains:
This kind of scheme is particularly insidious with wireless, Drossos says, because the wireless carriers don’t technically own the spectrum they’re using — rather, they’re granted licenses to use it by the government. So this is an instance where AT&T would be taking a public good and using it to pick winners and losers on the Internet.This goes well beyond any fast-lane practices that would give advantages to incumbent players in the game. This actually allows AT&T (and other telcos, if they follow it), to use a public good to take on even the incumbent players. After all, if you have a 10GB monthly data cap, a Netflix movie is between 1-2GB each at 1080p, and AT&T says if you use AT&T Films to view it, that doesn't count against your cap... well, I shouldn't have to explain how that's a threat to even large, incumbent services.
It’s not hard to imagine that if AT&T’s “sponsored data” plans are successful that other wireless carriers will rush in to implement similar schemes and that even cable companies who have shown an eagerness to implement data caps might want to try something similar as well. In other words, these schemes could make the Internet more of a scarce resource where only companies that pay the proper tolls are able to thrive.
Even big boys like Netflix can get taken down as mobile Internet becomes the solution of choice for rural broadband. Want to watch MSNBC video on your phone? Shit, if I'm Roger Ailes, I'm paying millions or more to have Fox News be the exclusive "sponsored data" news source for every telco that'll let me.
I mean, Comcast and Verizon are ballsy enough trying to do fast lanes with lines that they (at least under the current law) own. But wireless spectrum is a public resource, leased to wireless companies. Using the people's property as an anti-competitive resource is absolutely beyond the pale.
Never mind the fact that the reason that wireless data has such restrictive caps is supposedly due to the limited amount of wireless spectrum available...which data sponsoring doesn't alleviate.
Thanks, AT&T, for showing us just how completely full of shit you are, and for just how stupid you think we are.
I'd start a petition, but change.org isn't a "sponsored data partner", and I'm near my data limit for the month....