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

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