Light Reading

AT&T Toll-Free Data: Innovation or Rip-Off?

Sarah Reedy
1/9/2014
50%
50%
Repost This

Since AT&T announced its plans for toll-free data, reactions across the web have been streaming out, some lauding the big carrier for its innovation, others condemning it for finding another way to rip off customers. (See AT&T Unveils Toll-Free, Sponsored Data.)

So, what is it, an innovation or a rip-off? Well, it could be both, but I'm leaning toward innovation. If you can accept that data caps are here to stay, then this is the kind of service plan experimentation we need to see to make them more palatable to consumers.

That said, consumer watchdog groups immediately took issue with the announcement. Free Press called it a lose/lose for consumers and app makers because it bills the brands for data usage without reducing the cost of the user's plan. Federal Communications Commission (FCC) chairman Tom Wheeler has even pledged to look into it to see if it "interferes with the operation of the Internet."

It might not directly save you money on your plan (although it could help avoid overages), but when an app you use all the time -- say, Facebook or ESPN -- partners with AT&T Inc. (NYSE: T), it could free you up to move to a lower data cap. It makes them pay, instead of you.

Granted, this takes a lot of monitoring and the help of AT&T to figure out what cap suits you best, but it's now an option for bill-minded consumers. They might even find themselves engaging more with interesting, relevant content from the brands that are footing the bill, which makes it attractive for them to get on board as well.

On the flip side, not every brand or app can afford to get on board. It's been argued that AT&T's toll-free data creates an unequal playing field for apps developers. A giant like ESPN would have no problem paying for the right to be excluded from the cap, but startups and smaller names might not have that ability.

That may be true, but just because a brand is sponsored doesn't mean consumers have to use its app or go to its site. They may be more compelled to do so because it's free, but the choice is still up to them. I'm not sure anyone would suddenly stop using an app because it's not sponsored. Let's not forget WiFi is still the network that's most used. That un-level playing field already exists today, and innovative startups have managed to emerge from the noise just fine.

Like most things in life, it comes down to execution. Favoritism, even net neutrality, could muck it up, as could the interface for how sponsored data is presented or the ads we have to endure to get to these apps... But, in theory, AT&T's toll-free data is the kind of innovation we need to see from wireless operators.

This is a good step forward and a move I expect other operators will mimic. My hope is that AT&T doesn't take any steps back in its execution.

— Sarah Reedy, Senior Editor, Light Reading

(24)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
Page 1 / 3   >   >>
brookseven
50%
50%
brookseven,
User Rank: Light Sabre
1/12/2014 | 10:46:49 AM
Re: Win or fail?
Scotte,

1 - Verizon sold only some wireline customers to Frontier.  They had previously sold some lines to Fairpoint.  Verizon still has about 15M wirelne customers.

2 - I think you are asking if Wireline telcos are measured/judged by their investment in their local wireline networks.  Outside of FCC violations, in general the answer is no.  Rate of Return Carriers still want to keep up their Rate Base, but there is no incentive (outside of customer value) in investing in a network for a Rate Cap carrier.

I do not understand why you would think an Enterprise that had AT&T as one of its ISPs would sponsor data to AT&T wireless customers more than others.  The real question is if the vendor perceives any value in the toll free data.  

 

seven
ScottEStewart0101
50%
50%
ScottEStewart0101,
User Rank: Lightning
1/11/2014 | 9:28:41 AM
Re: Win or fail?
What will be the big kicker here, is businesses choosing to pay only one carrier and not others for sponsored data. Perhaps a provider that sits on ATT's Ethernet pipe would be more inclined to pay ATT for sponsored data, but not Verizon because VZ sold their wire lines to Frontier. perhaps ATT would begin giving discounts on wireline enterprise customers that help subsidize content. Wouldn't be illegal, because they are gauged by their overall spend in an individual MSA.
SarahReedy
50%
50%
SarahReedy,
User Rank: Blogger
1/10/2014 | 1:43:44 PM
Re: Good or Bad?
With Facebook, you can change your settings to have the videos auto-play only over WiFi.

When you put it like that, UH does sound interesting. I'm on AT&T, so I'll get to experience these soon enough.

Hope your last CES was a good one!
RitchBlasi
50%
50%
RitchBlasi,
User Rank: Light Sabre
1/10/2014 | 1:28:44 PM
Good or Bad?
As I mentioned, laying the groundwork.  That said United Healthcare actually makes sense.  For example, if someone goes to its website and wants to watch or download a video presentation explaining how the Affordable Care Act impacts Americans (and we all know that presentation could take some time), UH would pay the cost for its subscriber instead of eating up their data plan.  Sounds like a pretty good customer service play for UH.  The advertising stuff - yeah, pretty lame.  

Also, think back to that Facebook announcement a few months back where it said that it would proactively send videos or whatever to its subscriber base - think you guys covered the announcement.  In that case, the unsolicited video message could be paid by FB...no?  I think that might be one of the reasons FB joined the GSMA - to get a better handle on how what they do impacts companies in the mobile ecosystem.

Sorry, I am geeking out -- too much CES!!!!  But thank God, it was my last.

 
SarahReedy
50%
50%
SarahReedy,
User Rank: Blogger
1/10/2014 | 1:16:33 PM
Re: Good or Bad???
Video companies would be the most logical to take advantage of this, and be the most helpful to customers. I was surprised there weren't any at launch, but maybe they are still to comes. The launch partners sound kind of lame -- UnitedHealth Group, Kony Solutions, and Aquto -- but I guess we'll have to see how they use their sponsorships.

 
RitchBlasi
50%
50%
RitchBlasi,
User Rank: Light Sabre
1/10/2014 | 1:03:33 PM
Good or Bad???
My take on this is that it is more about laying the foundation for companies with bandwidth intensive services - like Netflix, Hulu, etc. - to offset the costs and data usage of streaming video services for customers as more folks transition use from wired to wireless environments.  Wi-Fi has served both those issues for now, but again, it is limited in scale and availability.  As someone growing up in a mobile world, do I really want to be required to find a free Wi-Fi hotspot or would I be glad that my video provider is taking some of the burden off my shoulder?  To me, it doesn't sound like AT&T is double-dipping...they are trying an innovative pricing solution to bandwidth management.  
SarahReedy
50%
50%
SarahReedy,
User Rank: Blogger
1/10/2014 | 10:45:25 AM
Re: Win or fail?
It's not being forced on users and doens't change how they access content and where. It really is a choice, even if AT&T is helping to make one choice much more attractive over the other.
SarahReedy
50%
50%
SarahReedy,
User Rank: Blogger
1/10/2014 | 10:30:30 AM
AT&T's response to net neutrality
Probably because it knows it's attracted the FCC's attention, AT&T put out a statement today, saying that toll-free data does not violate net neutrality.

AT&T senior executive vice president of External and Legislative Affairs Jim Cicconi says, "We are completely confident this offering complies with the FCC's Net neutrality rules, which our company supports. AT&T's sponsored data service is aimed solely at benefiting our customers. It allows any company who wishes to pay our customers' 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."
^ip4g^
50%
50%
^ip4g^,
User Rank: Lightning
1/10/2014 | 12:09:46 AM
Re: Win or fail?
How different is this from Walled Garden ?
brookseven
0%
100%
brookseven,
User Rank: Light Sabre
1/9/2014 | 7:00:58 PM
Re: Win or fail?
Yep - why do 4G when you can do free WiFi if you are a restaurant?

seven
Page 1 / 3   >   >>
More Blogs from Light Reedy
While the operators remain quiet on 4G voice, WhatsApp is plowing full steam ahead -- with or without their involvement.
COO Kevin Hankins talks to Light Reading about the carrier's loyalty and rewards program and the opportunity in bridging the chasm between networks and IT.
The big four US operators managed to add 800,000 post-paid subscribers in the past three months, but the scales are tipping in T-Mobile's favor.
Social enterprise vendor Lithium snaps up Klout to add its social influence scoring system to its arsenal of customer experience management tools.
The CCA's biggest members, Sprint and T-Mobile, are friends with the smaller carriers, but would they turn foe if they joined forces?
Flash Poll
LRTV Custom TV
Optimizing SDN & NFV Architectures Through Application Awareness

4|23|14   |   6:24   |   (0) comments


Jerome Tollet, CTO at Qosmos, explains how network equipment vendors and operators deploying SDN and NFV can take advantage of network intelligence delivered by DPI to strengthen products and services.
LRTV Custom TV
Wind River Demonstrates Carrier-Grade Software for NFV

4|22|14   |   5:00   |   (0) comments


Wind River VP of Product Management, Glenn Seiler, takes a look the industry's first and only complete NFV software platform designed specifically for the unique carrier-grade and high-performance needs of telecom networks.
LRTV Documentaries
Cable Eyes Big Technology Shifts

4|16|14   |   03:02   |   (4) comments


US cable engineers are facing a lot of heavy lifting in the coming years, notes Light Reading Cable/Video Practice Leader Alan Breznick.
LRTV Custom TV
Maximizing Customer Experience & Assuring Service Delivery in an IP World

4|15|14   |   4:57   |   (0) comments


Steven Shalita, VP of Marketing, NetScout Systems, Inc., discusses the challenges cable/MSO operators face in assuring the delivery of new IP-based services. Key points include the value of proactively managing performance, and using rich analytics and operational intelligence to better understand service and usage trends, make smarter business decisions and ...
LRTV Documentaries
Bye-Bye DVD: Consumers Embrace Digital Video

4|10|14   |   04:17   |   (7) comments


Veteran video analyst Colin Dixon, founder and principal analyst of nScreenMedia, says research shows 56% are using digital video already.
LRTV Documentaries
Video: TW Cable Puts Multicast Gateways to the Test

4|8|14   |   04:13   |   (1) comment


Tom Gonder, a chief architect at Time Warner Cable, explains how its trial of multicast gateways is impacting IP-based video plans.
LRTV Custom TV
Managing & Monetizing Big Data in Operator Environments

4|7|14   |     |   (1) comment


At Mobile World Congress, Gigamon's Director of Service Provider Solutions, Andy Huckridge, and Heavy Reading Analyst Sarah Wallace discuss the 'big data' issues facing carriers and operators today.
LRTV Huawei Video Resource Center
Data Center Energy – Build Your Data Center in a Modular Way

4|7|14   |   2:13   |   (0) comments


Dr. Fang Liangzhou, VP Network Energy Product Line, shared his thoughts about the challenges for data centers during CeBIT 2014.
LRTV Huawei Video Resource Center
Agile Network Solution – An Overview of Huawei's Agile Network Solution

4|7|14   |   2:31   |   (0) comments


Ajay Gupta, Director of Product Marketing, Networking Product Line, gives an overview of the Agile Network Solutions during CeBIT 2014.
LRTV Huawei Video Resource Center
Huawei’s eLTE Voice Trunking, Video and Data Applied for Railways

4|7|14   |   1:38   |   (0) comments


Gottfried Winter is the Sales Director at Funkwerk, a German specialist in GSM-r terminals and a long-time partner of Huawei. At CeBIT 2014, Winter talks to Light Reading about this partnership and the integration of enhanced voice trunking, video and data functions.
LRTV Huawei Video Resource Center
LeaseWeb Speaks Highly of Huawei's Datacenter Products

4|7|14   |   1:37   |   (0) comments


Rene Olde Olthof, Operations Director LeaseWeb, talks about the next data center transformation during CeBIT 2014.
LRTV Documentaries
Comcast: Reshaping the Cable Network Architecture

4|3|14   |   07:11   |   (8) comments


Shamim Akhtar, Comcast's architect and senior director of network strategy, explains why the cable company is moving to a more distributed network architecture.
Hot Topics
WhatsApp Threatens Carrier VoLTE
Sarah Reedy, Senior Editor, 4/18/2014
The Hungry, Hungry Cloud
Dan Jones, Mobile Editor, 4/22/2014
Who's Ready to Play Broadband?
Carol Wilson, Editor-at-large, 4/21/2014
What's the Magic of Private Equity?
Carolyn Mathas, 4/22/2014
AT&T Turns Up Gig Heat in 21 New Metros
Dan Jones, Mobile Editor, 4/21/2014
Like Us on Facebook
Twitter Feed