AT&T Wireless Lets Content Providers Help Pay for Your Mobile Minutes

Developers cover cost of streaming, but will it favor the wealthy?

AT&T is launching a sponsored data program, allowing app developers and content makers to cover the costs of their services.

Data is the lifeline of the mobile world, allowing users to stream video and music, shop, and socialize on their devices. But it’s expensive. Instead of consumers carrying all the data burdens, the companies could deliver their services without eating into monthly limits on consumption.

Wireless carriers offer only limited access to their 4G networks depending on how much subscribers pay. Plans can start at more than $50 just for 2 gigabytes of data a month, which only allows about 10 minutes of video streaming a day before reaching the limit.

AT&T’s sponsored data is the first attempt in the industry in the U.S. to shift the load to the developers. AT&T likened the program to 1-800 numbers for the mobile Internet age.

“Customers can browse, stream and play content from data sponsors without using their monthly data allowance,” the carrier said in a statement today.

The new sponsored product does not mean that all data will be covered by the companies. Only select sponsored content will be available.

United Health Group, Kony Solutions and Aquto are the first companies participating. Users will see a “sponsored data” tag appear on their mobile device and decide if they want to engage with it.

AT&T said it’s a good way for developers to promote their products and encourage users to click without fear of running up data bills.

“The Sponsored Data service allows sponsors across a variety of industries such as healthcare, retail, media and entertainment and financial services with the opportunity to better engage with customers,” AT&T said.

While that may be great for content providers like ESPN and Netflix, which can afford to pony up the extra cost for distribution, groups like Public Knowledge and Free Press argue it could ultimately squelch start-up video providers on the Internet.

"In addition to being a ripoff for both consumers and content creators, AT&T's plan erects a massive barrier in front of anyone hoping to be the next big thing online," said Michael Weinberg, acting co-president of Public Knowledge.

“While sponsored data will be pitched as a way to save customers money, it's really just double charging,” added Matt Wood, Free Press’ policy director. “The customer is still paying for the connection, and won't get a refund just because Facebook or YouTube or ESPN are also paying for some data usage now.”

If AT&T's plan works, it could draw more subscribers to AT&T wireless network, forcing other wireless carriers to follow suit.

Both public policy groups suggested that if that happens, the next step might be to bring their concerns to the Federal Communications Commission, whose net neutrality rules are awaiting a final decision from the D.C. Circuit Court.