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AT&T finds an end run around net neutrality with 'Sponsored Data' plan

LAS VEGAS—AT&T chose Vegas to announce its new "Sponsored Data" plan, which will allow AT&T wireless customers to access online services of participating (paying) companies without using any of their monthly data allowance. How completely appropriate that the telecom giant chose Vegas, because "Sponsored Data" indeed picks winners and gambles with the competitive future of the Internet. 

Here's how the new program will work: Let's say Facebook signs up for the program with AT&T. If you're an AT&T customer, you'll be able to use Facebook all you want on your mobile device and Facebook will pay AT&T for your data use.

Sounds great, right? Not so much. Consumer activist groups were quick to respond to today's announcement from AT&T. "This is but the latest example of how data caps are increasingly becoming used to threaten the open internet," said Public Knowledge acting co-president Michael Weinberg in a statement.

AT&T has for years been looking for a way to sell preferential treatment on its network to big internet companies who can afford it. Way back in 2005 when Ed Whitacre was CEO the company bristled at having to give everybody equal access, abiding by all those pesky net neutrality rules. Here's Whitacre quoted in an interview with BusinessWeek

Well, AT&T seems to have found an end run around all those old net neutrality concerns now that a huge amount of our web use is happening on mobile devices. It's a neat way for the company to further leverage its network (one of only four national networks in the U.S. and arguably the largest) for more market control and more profit.

Randall Stephenson, AT&T chairman and CEO IDGNS

AT&T CEO Randall Stephenson

AT&T is the corporate embodiment of the affluent and entitled mindset. The company truly believes that its success was caused entirely by its own capital, hard work and true grit. Because it built its massive network with its own two hands, it believes it has the right to sell access to it in any way it pleases, no matter how predatory, anti-competitive, and consumer-unfriendly it might be. 

But AT&T's corporate version of history differs from real history. AT&T, in its various forms and brand names, has been the beneficiary of every kind of tax credit, subsidy, and sweetheart deal from state and federal government. The company continues to leverage legions of D.C. lobbyists—some of them ex-lawmakers—to get its way on issues that could affect its bottom line. 

While "Sponsored Data" sounds like a boon to consumers in the short term, it's bad news for the new and innovative web companies of tomorrow. What if, in the great tradition of Silicon Valley, some little startup company (like Google, Amazon, and Yahoo once were) were to build a social networking site that offers a better all-around experience than Facebook, and even respects your privacy? Can that company survive and flourish in a world where mobile users have to pay to use its site (through data charges) and can use its larger competitor's site for free, because Facebook can afford to pick up the tab on their data?

Public Knowledge believes that AT&T's whole reason for introducing and keeping data caps in place was to create a market among web companies for Sponsored Data. 

"As AT&T CEO Randall Stephenson announced in May, data caps are all about forcing content creators to pay and are no longer about any sort of network congestion," Weinberg writes. "In December, Stephenson admitted to investors that they had addressed the network capacity issues that were used to justify data caps in the first place."

AT&T is also using the new program, which it knows will be desirable to consumers, to push customers to sign up for the more profitable service contracts and more expensive 4G phones. You can't get the free access to these Sponsored Data partners if you don't have a service plan and 4G phone. Oh, and you even have to watch a video advertisement before you get your free Facebook fix. 

It remains to be seen if the FCC, with it's newly elected and carrier-friendly chairman Tom Wheeler, will have something to say about network neutrality implications of "Sponsored Data."

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