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Companies Avoiding AT&T's 'Free Shipping' Data Idea So Far
Has Had Talks With ESPN, But Nobody is Biting (Yet)
by Karl Bode 10:03AM Friday May 10 2013
Early last year we noted that AT&T, the company that really started the network neutrality debate to begin with, had come up with yet another awful new idea: charging app makers a fee if they wanted to send data to consumers without impacting their usage caps. While AT&T presented the idea as akin to a 1-800 number for data or "free shipping," what it actually is a troll toll imposed by AT&T allowing them to rake in new cash -- and impose their power on a content ecosystem and app marketplace that operates better with companies like AT&T out of the way.

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AT&T then proceeded to insist that some un-named content companies were begging for this kind of system, said companies apparently oblivious to the fact that such a system would not only put content companies in the position of having to subsidize AT&T's network, but would also place AT&T in position to determine market winners and losers.

Now a report in the Wall Street Journal strongly suggests that ESPN was at least one of the companies engaged in those conversations:
quote:
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, according to people familiar with the matter. Under one potential scenario, the company would pay a carrier to guarantee that people viewing ESPN mobile content wouldn't have that usage counted toward their monthly data caps.
There's still no evidence that any companies have asked for this new model. In fact, the Journal notes that while companies have had talks with AT&T in the year and a half since AT&T suggested this idea, none of them have signed off on such a plan yet. At least some of these companies appear to see what AT&T is actually up to here in terms of trying to shift market power equilibrium:
quote:
Some media companies may balk at paying carriers to relax data caps, arguing that their popular apps and services are a major reason users buy data plans to begin with. At least one other major media company that considered the idea rejected it on those grounds, a person familiar with the matter said.
While AT&T's idea sounds new and exciting to those who haven't dug into it, this is still AT&T's dream vision to retain control by imposing strange, arbitrary and unnecessary new tolls on the companies using their network. Years back, AT&T wanted to charge content makers a toll so their traffic saw network priority. In this new idea, AT&T wants to charge content or app makers a toll so that their apps have less of an impact on a user's cap. The end result is the same, with AT&T imposing arbitrary tolls on content companies to obtain preferred customer status, picking winners and losers while avoiding the dumb pipe fate that terrifies all incumbent carrier executives.

It's an idea AT&T is pitching as a cost-saving endeavor for consumers, but given this is AT&T, you'd be naive to think cost savings will be in the equation. You'll still pay the same steep data rates, content companies will now just pay a fee to obtain preferred "reduced cap impact" status and marketing, then pass the higher development costs on to you. It's a ridiculous and potentially dangerous idea that hopefully most content companies and consumers won't be duped by.

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amasa
Surrender Your Women

join:2001-09-28
Colorado Springs, CO

good article

The last paragraph sums it up, it'll ultimately be more price pressure on the shrinking punchbowl of bandwidth.
--
I'd rather be hated for who I am, than loved for who I'm not

AnonMan

@comcast.net

BS BS BS

I still just don't understand this.

They pay for internet, I pay for internet. Now they want them to pay again?

This whole data cap stuff is just fluff to get more money. On wireless I understand. On wired, not so much. Does AT&T have a cap on how much data Level 3 can send/receive from the network? Nope, so why should I?

If a network was properly built and maintained this wouldn't be an issue. Because they decided to delay upgrades so long now they want to make us pay for it.

In the end of the day this is bad for the consumer only.

Even IF companies agreed or wanted this who pays this fee in the end? WE do. ESPN would just jack up the programing cost for example. Meanwhile AT&T makes more money and give us less...

What's next, the power company wants Dell to pay them because people are plugging Dell computers into the power grid?

Our FCC suck a$$ and this shiz needs to stop. Either get rid of all the dumb laws and restrictions so new business can be an ISP or local gov or regulate the crap.

My area can't even start up an ISP if I wanted because local regulation and laws prohibit it... BS.
ISurfTooMuch

join:2007-04-23
Tuscaloosa, AL

Re: BS BS BS

Of course it's BS. In the carriers' view, they want to extract money from every single person or company they can.

Hell, if they could figure out how, they'd charge your friend extra when you allowed him to watch a Youtube video with you on your phone. They'd spout some BS line along the lines of, "The data you buy is for your personal consumption only. If someone else benefits from it, they must pay for that."
Kearnstd
Space Elf
Premium
join:2002-01-22
Mullica Hill, NJ
kudos:1

Re: BS BS BS

I have actually made a theory that when cable boxes get cameras, The MPAA will force this on VOD providers... Make people register how big the family is and if it senses greater than that number is pops up a screen requesting more money.

foil hat theory I know, But also not something I would put passed the content industry.
--
[65 Arcanist]Filan(High Elf) Zone: Broadband Reports
ISurfTooMuch

join:2007-04-23
Tuscaloosa, AL

Re: BS BS BS

I seem to remember reading about a company (Microsoft, I think) patenting a technology to do exactly that.

Karl Bode
News Guy
join:2000-03-02
kudos:39

Re: BS BS BS

Verizon and Microsoft both did. IIRC Verizon's patent was rejected for some reason.
ISurfTooMuch

join:2007-04-23
Tuscaloosa, AL

1 recommendation

Naturally, this makes sense for ESPN

This scheme makes perfect sense for ESPN. First, their content would use a good deal of bandwidth, so customers may freak out when they notice how much data it's consuming, an event that might cause them to reconsider whether they want to use ESPN on their mobile devices. Second, I suspect that ESPN feels that it hasn't reached the price ceiling with these customers just yet, so these people may be willing to pay more to cover the cost of the "free" bandwidth they're getting, should ESPN sign on.

FFH5
Premium
join:2002-03-03
Tavistock NJ
kudos:5

Re: Naturally, this makes sense for ESPN

said by ISurfTooMuch:

This scheme makes perfect sense for ESPN. First, their content would use a good deal of bandwidth, so customers may freak out when they notice how much data it's consuming, an event that might cause them to reconsider whether they want to use ESPN on their mobile devices. Second, I suspect that ESPN feels that it hasn't reached the price ceiling with these customers just yet, so these people may be willing to pay more to cover the cost of the "free" bandwidth they're getting, should ESPN sign on.

Excellent analysis. And why ESPN, Netflix, Hulu, & other video providers eating up huge amounts of bandwidth will eventually sign up for a service like this; unless the FCC or courts prevent it.
--
"If you want to anger a conservative lie to him.
If you want to anger a liberal tell him the truth."
ISurfTooMuch

join:2007-04-23
Tuscaloosa, AL

Re: Naturally, this makes sense for ESPN

For ESPN, it makes sense, but I'm not so sure about Netflix and Hulu. The difference is that their programming isn't live, which means that watching it later on a wired or wi-fi network isn't such an issue, and it's also theoretically possible to download the content and store it for later viewing. Also, I think that Netflix and Hulu users will be more sensitive to price increases. Actually, a better way to put it is that sports fans will probably be more willing to accept higher prices than those watching non-sports programming. And finally, sports programming doesn't compress as well as other programming because of more on-screen motion, so it will often require more bandwidth to stream.

Actually, Netflix missed an opportunity to make something like this work. If they'd charged an additional fee to use their service via a mobile app and a cell network at the outset, they might have been able to build in these charges and have people swallow them in exchange for the convenience of having mobile access to movies. But, by launching mobile apps and not charging extra for them, they set a precedent of including them for free with a subscription, and that will be extremely difficult to undo without incurring customer backlash. Granted, ESPN did the same thing, but, as I said, I think they feel that they can charge their customers and get away with it.
TBBroadband

join:2012-10-26
Fremont, OH
It would have to be the courts as the FCC wouldn't have any power to say what happens over the Internet.
rradina

join:2000-08-08
Chesterfield, MO
The only caveat I have is streaming video content is today's bandwidth elephant. If we rewind the clock 15 years to when DSL was just spawned, quality streaming video on par with with broadcast/cable video just wasn't possible. As technology continues to march forward (and it will because other than rural coverage, the fixed-price model seems to have provided sufficient capital to build where we are today), video will no longer be an elephant. This means even if some of these schemes have some logic today, they won't tomorrow. It would be far better for innovation if ISPs competed with fixed-plan prices (and maybe they need to increase the prices to cover inevitable upgrades) rather than turning to the airline model of including almost nothing in the ticket price and everything else is extra.

My thoughts turn to the revenue generated when monopoly AT&T charged fees for touch-tone dialing and unlisted numbers. Once they start down that path again and today's duopoly just gets more entrenched, we'll never get rid of it short of DOJ action.

axiomatic

join:2006-08-23
Tomball, TX

Acts of desperation

Acts of desperation are desperate.
rradina

join:2000-08-08
Chesterfield, MO

I like ESPN but...

My understanding is ESPN is one of the most expensive pieces of content included in most cable packages. While I watch sports on ESPN, I'm not a sports "fanaddict" as some are.

While there may be some logic in ESPN paying a "troll toll", they'll just pass it to consumers. Unless there's some massive price-reduction per GB by going through ESPN, what advantage does involving a third party to pay for data yield? Even if there's a price advantage, it still seems like a bad idea because the precedents created.
georgeglass5

join:2010-06-07
New York, NY

Uhg...

AT&T in my book, wins what I'm coining as the (TrollCorp Award) they are the (CTD - Cellular Transmitted Disease) of the mobile wireless world.

karpodiem
Hail to The Victors
Premium
join:2008-05-20
Detroit, MI

this is why Google will eventually be forced to go national

...with fiber. their life depends on it.
percosan

join:2002-03-13
San Francisco, CA

Why the drama?

This is not a neutrality issue. Nothing is being blocked and no "internet bit" is being prioritized. What is happening is that an internet source (ESPN in this case) is looking to keep the bits that they offer on the open internet from counting against end user caps. This only seems to be a good thing for the end customer. What am I missing?

The issue seems to be with caps ... not fairness.

-s
en103

join:2011-05-02
Reviews:
·Time Warner Cable

Re: Why the drama?

The issue is really that AT&T would like to double dip if possible.

I will collect money at every possible point, and if I'm smart about it - I can collect twice for the same service.

The part that gets me is that this makes AT&T like an arms dealer selling the same product to both sides. Some point they'll get (too) greedy and get caught raising the price on both claiming that each side isn't being paid for.
percosan

join:2002-03-13
San Francisco, CA

Re: Why the drama?

Not to be argumentative, but, isnt data only "double dipped" when a consumer does not exceed their bandwidth cap?

My assumption would be that a consumer could subscribe to lower cost services (lower cap) in this case.

-s

n2jtx

join:2001-01-13
Glen Head, NY

Not Always Stupid

The content companies are not always stupid. One can certainly expect that should AT&T's scheme take off, it would only be a matter of time before AT&T would be going back to the providers with hat in hand demanding even higher rates. Consumers would continue to see their bills go higher and the content companies would be getting it too. By then, the companies would be in the position of either having to pay up or remove themselves from the program thus potentially cutting them off from paying customers. Basically head or tails, AT&T wins.

Gad I really dislike that company... I much preferred the original AT&T. At least they were kept on a leash most of the time.
--
I support the right to keep and arm bears.
wispalord

join:2007-09-20
Farmington, MO

VPN

all some one wouild need is to make a vpn app behind this and make it all unlimited

anondownload

@comcast.net

how much does it cost ?

what does at&t charge for this?

also are there any restrictions on apps?

could this be used to offer a discount proxy service thats provides open internet access at a reduced cost?

i am thinking perhaps something similar to early calling card services that offered discounted lopng distance via 800 numbers

cork1958
Cork
Premium
join:2000-02-26

that operates better with companies like AT&T out of the way

That line of the article sums it up for me.

Get those morons, including Verizon, out of the way by eliminating them, period!!

Will never, ever use either of those s**t hole companies again!! Luckily, I've never had to use AT&T, but still can't stand them.
--
The Firefox alternative.
»www.mozilla.org/projects/seamonkey/

savage25

@sbc.com

Making money

AT&T is a corporation in a capitalistic democratic country. They have the choice to make money anyway they can. Shareholders and the public will influence the outcome. If you don't like the pricing model, start your own wireless company or choose a competitor that does not do this. When did this country forget that freedom extends to public or private corporations. This idea is a great new revenue source. All you complainers have dropped your land line because of technology. Why can't a company who is loosing the main product that they have relied on for a hundred years, try to make up some slack with a new revenue stream.
biochemistry
Premium
join:2003-05-09
92361

Re: Making money

The problem is that people are sheeple. The people have unwittingly given away billions in subsidies as well as right of ways and wireless spectrum to a limited number of companies who turn around and then screw them any which way they can. We end up not with democratic capitalism but with monopolies and duopolies.

fg8578

join:2009-04-26
Salem, OR

Saying it doesn't make it so

Karl, you dismiss AT&T's claim that this is like 800, but you don't explain why. I know in your mind, just saying it makes it so, but that doesn't work for me.

So how about explaining why ESPN paying AT&T Wireless for a data cap exemption is any different than ESPN paying AT&T LD to allow me to call them toll-free on an 800 number?