The Net Neutrality End-Around: Verizon joins AT&T in charging for “sponsored data”

by Matt Klassen on December 14, 2015

net_neutralityThis week Verizon announced plans to begin testing so-called “sponsored data,” ostensibly the toll-free calling of the digital age, joining AT&T in letting companies pay the wireless providers to deliver online services that won’t eat into customers’ data caps.

“The capabilities we’ve built allow us to break down any byte that is carried across our network and have all or a portion of that sponsored,” Verizon Executive VP Marni Walden said during an interview this week. Simply put, companies buy data from Verizon and subsequently are able to dictate what content is delivered to the customer, and if the customer chooses to interact with that content, they will have to pay the sponsoring company a fee or the sponsoring company itself will soak up the cost.

While both AT&T and Verizon see sponsored data as an effective way of monetizing data and as a way of keeping the advertising revenue stream open despite the growth of ad-blocking software, many see this latest move as nothing but a clever end-around of the Federal Communications Commission’s Net Neutrality regulations, as selling the wireless data stream to the highest bidder seems like anything but neutral.

Although it remains to be seen exactly what Verizon’s sponsored data program will look like, AT&T has been charging content providers for sponsored data for several years now, with some advertisers paying AT&T to deliver advertising that doesn’t count against customer data caps. Further, AT&T has also been testing “Data Perks,” a program that offers additional mobile data each month for customers who agree to interact with advertising or sign-up for offers from certain companies.

T-Mobile has also dabbled in what has become known as zero-rating, that is, delivering data that doesn’t impact data caps, by exempting certain services (streaming video, music etc…) from its data limits, but the difference there is that T-Mobile isn’t charging the content providers for the service, it simply reduces the quality of the stream and soaks up the remaining cost.

While critics are concerned about the possible infringement on the FCC’s Net Neutrality, it should be noted that no one seems to know what’s acceptable and what’s not, as recently AT&T admitted that it scrapped a zero-rating program much like T-Mobile’s because it wasn’t sure if it violated the current regulations, yet Ma Bell offers its own service that allows companies to pay to control data.

Further, as Ars Technica’s Jon Brodkin writes, “Some net neutrality advocates argue that sponsored data gives unfair advantages to big content providers and gives carriers too much influence over what services consumers access.” Simply put, when you allow companies to pay to dictate the content delivered to a consumer, whether that content counts against the data cap or not, the net, you might say, is no longer neutral, it’s bought and paid for by the highest bidder.

But even if these sponsored data programs smell a little fishy, the FCC has yet to step in to block any of them. In fact, T-Mobile’s zero-rating Binge On program for streaming video garnered praise from FCC chairman Tom Wheeler, making it ever more difficult for carriers, open Internet advocates, and the FCC itself to determine what Net Neutrality really means.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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