#sponsored data

Sponsored data, the way forward for digital inclusion in Ghana?

It is an accepted fact that the Internet has brought a huge revolution which has affected every sphere of our lives. We are no longer limited by physical boundaries, today almost everyone and everything is just a digital handshake away.

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Today, several Indian web companies withdrew from Internet.org, a program that allows mobile Internet users unlimited use of Facebook and other participating sites and services without counting that use against their mobile data cap. Such “Zero-Rating” has helped mobile carriers gain new customers, especially in developing markets with low adoption rates but has been criticized as a “net neutrality” violation. In India, Internet.org had offered 38 such sites, in addition to Facebook.

“This is a textbook example of net neutrality absolutism run amok,” said Berin Szoka, president of TechFreedom. “Offering free services helps get people online for the first time. It’s also is an important way for carriers to distinguish themselves in a market as vibrantly competitive as India’s, which includes no fewer than seven strong mobile carriers.”

“Unfortunately, this isn’t the first time absolutists have stoked outrage to stop zero-rating,” noted Szoka. “Back in 2011, MetroPCS offered an entry-level data plan with unlimited YouTube aimed at new adopters, mainly minorities in America’s inner cities. Despite the program’s obvious benefits and MetroPCS’s obvious lack of market power as the distant #5 provider, net neutrality activists fueled such a media frenzy that the company abandoned the program — even though it was almost certainly legal under the FCC’s new net neutrality rules. A year later, the company decided it couldn’t survive on its own, so merged with T-Mobile, the #4 carrier.

“There are better ways to address concerns about zero-rating,” concluded Szoka. “Net neutrality advocates should focus their efforts on ensuring that participation in zero-rating programs is open and that traditional antitrust and consumer protection laws are enforced. But most of all governments everywhere need to do everything they can to make it easier for private companies to expand and upgrade broadband networks. That means making as much spectrum as possible available for mobile service and ensuring that carriers can effectively and creatively market their offerings to consumer — because mass adoption is essential to making investment profitable.”

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Today, NCTA, CTIA, and ACA filed lawsuits against the FCC’s Open Internet Order, which was published in the Federal Register yesterday. The rules will go into effect on June 12, 2015.

“No one should have to ask the FCC for permission to give away products for free,” said Berin Szoka, president of TechFreedom. “America’s wireless sector is the envy of the world, offering not just faster speeds but also innovative services like T-Mobile’s free music streaming. But the FCC’s ‘Mother, May I?’ approach creates very real uncertainty that could end such pro-consumer experimentation. This will harm consumers and actually make it harder for smaller carriers and new entrants to the wireless market like Google to compete with Verizon and AT&T. While lawyers squabble, creative new offerings will be squashed.”

“Sponsored data plans have long been vital to driving adoption in underserved communities,” continued Szoka, “but that didn’t stop net neutrality absolutists from hounding upstart MetroPCS into abandoning its free-YouTube plan back in 2011 — a plan targeted to first-time adopters in urban areas, mostly minorities. The same quasi-religious zealotry is driving calls to ban ‘zero-rating’ around the world, despite its vital role in promoting adoption among the world’s poor. The FCC’s Title II regulations will only encourage such reverse-progressivism — which is why it’s a good thing the FCC is very likely to lose in court, especially on reclassifying mobile broadband.”

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No. No. No. This is probably the worst thing for the consumer. 

AT&T was careful to make clear that there will be no performance difference between sponsored and non-sponsored data. The only difference is who's picking up the tab. Still, it's easy to see how the proposal might worry net neutrality advocates who cried foul at a data-capped version of this plan, which was hinted at earlier this year. One observer called it "a scary proposition," worrying that once carriers start differentiating between data on the network, fair competition will fall by the wayside. 

Even without data caps, it's easy to imagine this service being used to drive smaller firms out of certain markets. If a major company like Apple or Google decided to sponsor traffic to its movie streaming site, for instance, consumers would have to pay with their own data to use a competitor — an extra tax that dramatically changes the nature of the freewheeling internet market. That would mean cheaper phone bills but a much less healthy marketplace, with all the money ending up in AT&T's coffers.

"Careful to make it clear" now... but this is going to have repercussions. It just smells of it. I think Nilay covers it pretty well.

This is the beginning of the end. Fuck. AT&T announces neutrality-baiting 'Sponsored Data' mobile plans http://t.co/izCBWHmabS

— nilay patel (@reckless)

January 6, 2014

And on top of it, most AT&T subs are locked into two year contracts, so all that "free" data won't even really reduce prices.