The Wall street journal
New Plan Is Notable
Development in Relationship Between Carriers and Web Firms That Use Their
Networks
By
RYAN
KNUTSON and THOMAS GRYTA
Updated Jan. 6, 2014
12:16 p.m. ET
AT&T Inc. formally opened the door
Monday for companies like Google Inc. to
subsidize the cost of using their services on smartphones and tablets. The
trick will be getting them to actually sign up.
AT&T's new
service, called Sponsored Data, works like a 1-800 number but for data. In
theory, a company like Netflix Inc. could promote a new series by
covering the cost of data that otherwise would count against a subscriber's
plan. Subscribers will see a logo that lets them know the content they are
accessing doesn't count against their data plan, and sponsored data volumes
will be broken out on their bills.
The move comes as
plans by carriers like AT&T and Verizon Wireless to capitalize on data
traffic are running up against the reality that cellphone bills already consume
a large and growing share of household budgets. But it faces uncertain odds of
success, as big Internet and media companies are wary of setting the precedent
that they should help cover those costs.
The new plan is a
notable development in the relationship between carriers—which spend billions
building and maintaining broadband networks—and Web firms that use those
networks to deliver lucrative services. Carriers have long hoped to grab a
bigger share of that revenue. It's also a concern for consumer advocates who
worry big, cash rich Internet companies could use subsidies to tilt the playing
field against startup rivals that can't afford them.
Three companies have
signed up to participate in the Sponsored Data service at launch: insurance
conglomerate UnitedHealth Group Inc., mobile marketing company
Aquto Corp. and cloud-computing company Kony Inc.
UnitedHealth will pay
for consumers to access certain mobile health apps and websites. Aquto will let
its clients use sponsored data for mobile ads, and Kony plans to help its
business customers pay for employee data when accessing work-related content.
AT&T, which
wouldn't disclose the financial terms of the agreements, said it is in talks
with several other companies and could announce other partnerships by the end
of March.
"The
possibilities are endless based on the type of companies and the type of
commercial relationships they'd like to strike with us," said Mark
Collins, senior vice president of AT&T data and voice products.
AT&T's Sponsored
Data offering formalizes one way that goal could be reached. Under the plan,
companies can pay AT&T for the data consumers use when accessing videos,
websites or mobile apps, and the data usage won't be charged against a
subscriber's monthly data allotment.
Carriers and content
companies have been experimenting with ways of shifting data costs away from
consumers.
Amazon.com Inc. already pays AT&T for the
wireless connectivity that allows it to deliver electronic books to owners of
its Kindle e-readers without additional cost.
ESPN, the cable sports
channel majority-owned by Walt Disney Co. ,
has had discussions with at least one major U.S. carrier to subsidize wireless
connectivity on behalf of its users, The Wall Street Journal reported last
year, citing people familiar with the matter.
This month, T-Mobile US Inc. began giving subscribers to its lower-cost GoSmart
Mobile prepaid service free wireless access to Facebook, even if those customers aren't paying for a mobile-data
plan. Unlike with AT&T's new plan, T-Mobile is bearing the data costs under
the offer, which could bring new customers to the service and get lower-end
subscribers into the habit of using mobile data.
Smartphone subscribers
increasingly have to pay attention to the amount of data they use. Limits have
become more common as the biggest carriers cycle subscribers off of unlimited
data plans in favor of arrangements where people pay based on how much data
they use. The new pricing plans position carriers to pull in more revenue as
mobile video, music streaming and games take off.
Common wireless plans
at AT&T and Verizon Wireless offer two gigabytes of data a month at a cost
of about $25 to $30 per gigabyte. U.S. mobile subscribers used an average of
931 megabytes of data in the third quarter of 2013, according to Nielsen, but
it wouldn't take too much to significantly increase use. Streaming one
high-definition movie could eat up nearly a gigabyte of data, according to
AT&T's site.
Carriers have invested
in fast, new LTE networks that can handle more data traffic and are eager to
make them pay off. They hope sender-subsidized data will tempt subscribers to
try out more offerings.
"It's the natural
next step to give companies and other organizations the opportunity to get
customers to engage in this content," Mr. Collins said, adding that the
offering only works for LTE service.
AT&T envisions
customers using the service to subsidize movie trailers, online shopping or
loyalty programs. The carrier also says companies could use it to cover the
cost when workers access work-related apps or services on their own devices.
Traffic under the
sponsored data plan will be delivered at the same speed as any other traffic.
Mr. Collins said there weren't plans to let companies pay for faster or more
seamless data delivery, but said AT&T was working on technology that could
make such an offering possible in the future.
The new AT&T
partnerships aren't likely to run afoul of the Federation Communication
Commission's "open Internet" rules, which generally require that
wired broadband providers treat all Internet traffic equally but don't cover
wireless providers. Verizon is challenging those rules in court.
"If we were
concerned that it would fall afoul of any regulations we wouldn't be offering
the service," Mr. Collins said.
Regardless, consumer
advocates may not view the new arrangement as a positive development. They have
previously warned that deep-pocketed content companies could use their
resources to ensure that competitors, especially smaller startups, have a
harder time reaching customers.
Write
to Ryan Knutson at ryan.knutson@wsj.com and Thomas Gryta at thomas.gryta@wsj.com
No comments:
Post a Comment