Netflix now covers the first 5GB of mobile app streaming for AT&T customers at no cost to you.
Beats Music: no data charge, no worries - only on AT&T.
Amazon Prime Members now get free Instant Video streaming on AT&T.
When put in the right light - that is, the light AT&T wants you to see it in - the company's new "Sponsored Data" program doesn't sound all that bad. In fact, it actually sounds pretty good, in theory. Free Instant Video streaming over your AT&T connection? Guess I'm renewing that Amazon Prime membership. 5GB of Netflix a month? Well, no reason to cancel my subscription just yet. Beats Music with no data impact? Maybe I'll look into it, after all.
These are, of course, just hypotheticals. But when consumers start expressing these thoughts, companies start to listen. In a world increasingly powered by all-you-can-eat media services, whether music, movies, or television, the cost of getting your entertainment fix on the go can become prohibitive pretty quickly. Even figuring out the amount of data you'll use during these activities can be daunting - a movie streamed over Netflix will have wildly different data usage depending on video quality, and the Netflix app has no way for the user to control or cap that quality. At the least, a 2 hour film will consume around 600MB of data, but at the high end (720p on mobile), it could be 2GB or more. For users with tiered data plans on carriers like Verizon or AT&T this can lead to major bill shock, something carriers have promised many times was a "thing of the past."
While Sprint and T-Mobile continue to offer unlimited data as an option to customers, there's substantial reason to believe that this is mostly because of their need to remain competitive (eg, not bleed subscribers every quarter). There's also the fact that their network operating costs are lower, because of a relative neglect of the less dense - and thus less profitable - suburban and rural markets AT&T and Verizon tend to dominate. At the dawn of the smartphone era, though, AT&T and Verizon likely experienced a much greater impact, proportionally, on their network costs in those areas. The cost of supporting smartphone users in less densely-populated regions was probably something of a surprise, and so emerged the great fiction we've all come to abhor: the "cost" of data usage.
What a fiction it is, too, from a technical standpoint. Can you possibly imagine how AT&T or Verizon could even calculate the actual cost of sending 1GB of data to a user on the network? You'd have to factor in the cost of electricity at the tower at the time of transmission, the various routing equipment, whether or not something like a small cell or repeater site was used, how many packets had to be resent because delivery failed... and that's just looking at things from a very high level. Then imagine how impossibly granular a level that usage would have to be quantified at. The cost and complexity of monitoring and calculating it would be insane.
Data caps, rather, are simply designed to do two things: curb abuse of the network at peak hours, and to ensure that the "cost" of data becomes engrained into the consciousness of consumers for continued exploitation, as though gigabytes are some kind of commodity, just as the "cost" of minutes was so used for decades. Megabytes really are just a replacement for minutes - same fiction, new arbitrary measurement.
The case of the missing minutes
AT&T's Sponsored Data scheme, you may be unsurprised to learn, is also a disguised telecom throwback - the toll-free number. The toll-free number was another AT&T "innovation," which launched back in 1967. Companies would pay to subscribe to a 1-800 number and then be billed, while calls to that number were completely free. Sounding familiar? With the fiction of minutes firmly laid out and exploited among consumers, AT&T moved onto businesses with the 1-800 scheme, creating a supply-demand system out of a non-existent commodity. That is quite literally what is happening now, and the similarities are downright eerie.
The stumbling block for AT&T is that unlike the telephone lines of yore, it doesn't own all the means of transmission on the web, and it never will. The web is such a complex and humungous net of connections that we have generally established as a society that it is too important and too interwoven to let companies or governments (with a few notable and largely unwanted exceptions) decide whose traffic is more important (on an arbitrary level, at least), or which traffic is preferable and which is not. This is the basic tenet of a concept we've come to call net neutrality - the idea that all of the web should be equally accessible and no part of it discriminated against regardless of your ISP, end device, or location.
The debate now raging over AT&T's sponsored data program, at its core, is more about defending the spirit of net neutrality, and not about net neutrality itself, and I think that's a distinction worth making.
Net neutrality is about augmenting, stopping, or unfairly prioritizing web traffic - changing the flow of information. For example, if Comcast one day decided to cut the bandwidth allocated to Netflix traffic in order to push consumers to its bundled VOD service, or another competing service paying for Comcast's favor, that would be a serious violation of FCC's rules on net neutrality in the US. However, if Comcast offered to give Netflix's traffic a boost over normal, baseline QoS web traffic in exchange for a fee, those are uncharted waters - subject to the interpretation of the FCC's Open Internet Order.
As far as I know, this is The Internet
In a perfect world, Comcast and every other ISP would just manage a dumb pipe - everyone could use it for whatever and however much they wanted, and Comcast's job would only be to make sure the pipe flows smoothly and fairly for everyone.
In reality, things are much more complicated. The US lacks any enacted law regarding net neutrality (something that, unfortunately, is widely misunderstood), and while the concept is partly embraced by the current president's administration and the FCC, that all can change with a single election. The FCC's power to enforce its own net neutrality principles remains murky at best, too, and so something of a standoff has emerged between ISPs and net neutrality advocates.
The currently accepted state of net neutrality between the FCC, FTC, and the ISPs is therefore much weaker than true net neutrality. For example, most ISPs in the US block port 80 for home internet connections, to prevent people from hosting web servers on service designated only for personal use. And this is considered acceptable by the government. We also sell web service in speed tiers, a practice more hardline net neutrality advocates are avidly against. When it comes to wireless internet, the FCC is even more lax - most of the provisions of the Open Internet Order do not apply to wireless service providers at all. Net neutrality advocates have often rushed headlong into more nuanced issues - like AT&T's FaceTime blocking scandal - quoting the FCC's order like a set of holy commandments, though at least two federal courts have explicitly ruled that the commission has no right to enforce those rules in the first place.
The issue with AT&T's sponsored data and this current state of affairs is that it looks like it still technically isn't breaking any rules. AT&T isn't augmenting the pipes, nor is it prioritizing them, at least not (yes, that word is coming again) technically. Under AT&T's scheme, the pipe to and from the customer is always wide open. AT&T won't give any company preferential speeds, it won't de-prioritize any traffic, and it won't prevent customers from accessing any content. AT&T's hands are still as off the pipe as, say, Verizon's.
But AT&T's finger is atop the switch on a little meter at the end of that pipe, counting the bytes - turning the meter on and off based on what it sees go through. If Netflix arranges a sponsored data agreement with AT&T for 5GB a month of free streaming, AT&T will turn off the data counter for that traffic. It doesn't matter whether you agree with the practice or not - this is clearly not augmenting the way in which internet traffic flows, and so I think it's wrong to characterize this as a true net neutrality issue.
I'm pretty sure this is exactly how AT&T monitors your data usage. Yep.
However, as many people rather emphatically pointed out shortly after AT&T's announcement, there is potential for abuse here. The startup crowd has come down particularly hard on AT&T's plans, claiming that smaller video, music, and other content delivery services will see growth stall when their much larger competitors start footing customers' data bills. If, for example, Netflix were to offer 5GB of free mobile streaming on AT&T per month for no extra charge, where does that leave Joe Startup and his cash-strapped outfit Flixnet? (I am not a creative man.) The argument goes further down the rabbit hole, suggesting that AT&T will start a trend, and that once that trend begins, it will be impossible to halt the momentum of the sponsored data Trogdor, who will go about burninating all of the startups who refuse to pay into the free data treasure hoard.
The other point being made is that somehow, someway, AT&T will still need to increase profits from customers down the line. If you aren't paying for all those extra gee-bees, how's Ma Bell supposed to make a living (read: appease investors)? The inevitable answer, of course, seems to be that service will get more expensive. And nobody likes paying more for the same amount of stuff.
All in all, this just seems to point to less freedom for wireless subscribers, right?
Let's go back for a moment, though. Let me state what I mean when I say this fight is in the "spirit" of net neutrality, but not really about net neutrality itself, at least as we have it in the United States currently. The fact is, consumers have already given up a fair amount of their freedom on the web here - we pay for often [very] overpriced speed-based web service tiers, we cave to ISP bundle packages for value and convenience, get ripped off on equipment rental fees, let mobile providers charge us by the gigabyte, and most of the time all of this also involves getting locked into a multi-year contract. No, I'm not suggesting "what's one more thing on the pile really matter?" What I am saying is that when you look at the affronts to the American consumer by the broadband and wireless industries to date, the internet's few-day-long tiff with AT&T's sponsored data program won't make most people blink.
Michael Bay just heard about sponsored data. He didn't blink, but he did walk away for no apparent reason.
Do you think Joe Guy on the street cares about the net neutrality issues and anticompetitive implications of sponsored data? I'm pretty sure he'd be stoked to get a few hours of Netflix for free on his phone every month, or all the Pandora he could listen to without running up his data bill. And do you honestly believe The Next Big Startup (you know, Flixnet!) is going to go down in flames unnoticed because it couldn't afford to give users any sponsored data on AT&T? How many services even use enough data that giving it to users for free would even matter in the first place? There's video content, music / audio streaming, eBooks / audiobooks, and... that's really it. Content delivery services. Many of which (though obviously not all) allow you to store content locally - eg, download it on Wi-Fi at home - for later consumption. If you think content delivery services are where the big, world-changing innovations are happening, the jobs being created, and big disruptions need to occur, more power to you and all, but I don't exactly believe you'll find a lot of enthusiastic support in that belief.
Any time the net neutrality gauntlet is thrown down, emotions run high. Advocates will fling volatile, worst-case-scenario accusations, while the corporations causing all the fuss typically respond with the same dismissive and patronizing "invisible hand laissez faire let-the-market-innovate" form letter that they do to every discussion involving regulation. It's not productive behavior - from either side.
I'm not here to argue that AT&T's sponsored data program is inherently a good thing for consumers. And I'm not here to argue it's inherently a bad thing, either. To claim either is to claim to know the future. Certainly, we can infer, we can hypothesize, we can educated-guessisize, but all I see right now is "this is the worst that could happen, so we should all immediately act like that's what will happen." What's the best that could happen? Someone gets some no-data-charge Netflix streaming, or some free Pandora?
If the behavior truly does become anticompetitive, the FCC has said it's ready to step in. And if it does reach that point, hey, I guess the naysayers were right, we couldn't trust AT&T to not screw it up. And if it never really ends up being a big deal, and some people on AT&T watch some videos and listen to some music without impacting their data cap and the world keeps on turning? Call me crazy, but I think net neutrality will live through that, and go on to fight bigger, better battles.