Thursday, September 18, 2014
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AT&T's new plan: Charge app-makers for phone data

The Wall Street Journal says AT&T plans to charge app-makers for smartphone data.

AT&T's new plan: Charge app-makers for phone data

Here's a new twist in the smartphone "data-throttling" issue I wrote about in my column last Thursday: According to the Wall Street Journal, AT&T "is preparing a service that would let content providers and developers of mobile applications pay the wireless carrier for the mobile data its customers use."

The Journal's Anton Troianovski - reporting from Barcelona, where the Mobile World Congress began today - doesn't make the connection to the data-throttling issue, but it's clear enough: Such a plan would sidestep the soft data caps that AT&T, Verizon and T-Mobile have imposed on users - including on AT&T and Verizon customers who are still paying for "unlimited data" plans that they purchased before the two leading U.S. carriers quit offering them.

AT&T customers have reported as much as 99 percent drop in data-transmission speeds when the throttling take place.  A company spokeswoman didn't respond to my requests for clarification about its practices, except to say that throttling only applies to the top 5 percent of data users - at least one of whom won $850 from the carrier on Friday in small claims court. But that two-orders-of-magnitude reduction is entirely plausible, and it's enough to turn a smartphone into a device good for little more than phone calls and text-based emails.  T-Mobile, which is throttling customers who exceed monthly plan limits of 2GB, 4GB or 10GB, says the reductions drop such customers from 4G down to 2G speeds, according to spokesman Troy Edwards. 

Quoting John Donovan, AT&T's network and technology head, the WSJ Online says the carrier sees charging app-makers for data as the data equivalent of toll-free calling:

More coverage
 
Why wireless carriers throttle data

"A feature that we're hoping to have out sometime next year is the equivalent of 800 numbers that would say, if you take this app, this app will come without any network usage," Mr. Donovan said on the sidelines of a mobile-industry conference here.

It's far from clear how willing technology companies would be to pay wireless carriers for data use. Mr. Donovan said there was interest from companies who could use the feature to drum up new business from customers wary of using data-heavy services like mobile video....

"What they're saying is, why don't we go create new revenue streams that don't exist today and find a way to split them," Mr. Donovan said. A customer nearing his data limit for the month could be more likely to download a movie if the content provider covered the price of the data transmission.

"It'd be like freight included," Mr. Donovan said.

So, on the plus side: This would be a way that data-heavy apps could continue to work for customers who believe they have unlimited data from AT&T but really don't, and for customers who fear using data-heavy apps because they're already on metered plans.

And on the minus side?  Well, just start with this: The maneuver will only work with apps backed by the most deep-pocketed developers who can pay AT&T's toll, or with pricing models that pass the data costs back to the consumers.

Gigacom makes the correct connection to the network-neutrality issue: Because the FCC doesn't require it of wireless carriers, they can pretty much do what they want:

... The reality is this is a brilliant way to implement the double-sided pricing model ISPs have coveted for years. And without net-neutrality rules protecting wireless applications that don’t deliver voice or video-conferencing style services, this could affect Facebook, Spotify, maybe Netflix and any startup considering a hot new bandwidth-using mobile application.

Or as blogger Lauren Weinstein puts it succinctly: "Here we go again. Camel. Nose. Tent. Greed."

Jeff Gelles Inquirer Business Columnist
About this blog

Jeff Gelles, who writes the Inquirer's weekly Consumer 14.0 and Tech Life columns, takes a broad look at the marketplace of goods, services, and ideas.

Reach Jeff at jgelles@phillynews.com.

Jeff Gelles Inquirer Business Columnist
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