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Verizon Wants Companies to Pay to Bypass Data Caps
by Karl Bode 12:47PM Wednesday Sep 25 2013
Early last year AT&T, the company that really started the network neutrality debate to begin with, came up with yet another controversial new idea: charging app makers a fee if they wanted to send data to consumers without impacting their usage caps.

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While AT&T presented the idea as akin to a 1-800 number for data or "free shipping," consumer advocates argued AT&T was simply imposing arbitrary caps, charging customers who crossed it, then charging the biggest companies yet more money so their content received special treatment.

The shift would give AT&T and Verizon new control and power over a content ecosystem and app marketplace that has traditionally operated better with carriers out of the way.

Most content companies, especially smaller ones, appear smart enough to understand the dangers of such a model -- with wireless carriers suddenly giving select, deep-pocketed competitors a huge leg up. AT&T had previously stated companies were clamoring for such a model, though they were only able to cite ESPN as an example of an interested party.

"We'll be able to come up with something that's a win-win" for both wireless carriers and content companies.
Verizon CEO Lowell McAdam
Speaking this week about the idea at an investor conference in New York, Verizon CEO Lowell McAdam stated Verizon was also interested in such a model, again citing ESPN as the only verified company that has shown interest.

"ESPN has been one of the more advanced, I would say, in those sorts of discussions," stated McAdam to investor attendees, adding the company could also offer "1-800 type services" for video content. McAdam told attendees such an idea is "still a couple years out before it's a big factor," adding that "we'll be able to come up with something that's a win-win" for both wireless carriers and content companies.

It's rather less clear if this will be a "win win" for consumers or smaller content companies. Recall, Verizon has struck an LTE co-marketing arrangement with Comcast NBC Universal, and the two companies are working on unspecified "magical" video service collaborations. What if Comcast users got to bypass the Verizon LTE cap? What if Verizon's own Red Box service bypasses the cap? How would that impact Netflix?

Content development costs will simply get passed on to consumers, but now you'll have AT&T and Verizon picking application winners and losers based on who ponies up the most cash. Having network gatekeepers impose a completely arbitrary limit, charging everyone who crosses it, then charging some companies extra if they want special treatment. What could possibly go wrong?

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Glen Head, NY

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No surprise ESPN is willing to play ball. They print money through holding every cable customer hostage to pay for their programs whether or not we want them. I have less than zero interest in watching their channels, or any of the sports channels for that matter, yet I would be expected to pay for them. ESPN will just raise their per customer charges to cover the cost of bypassing AT&T and Verizon caps.
I support the right to keep and arm bears.

Jason Levine

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reply to elefante72

Re: It is MY loop and I pay for it.

To be fair, the content companies aren't getting any of this "win-win" either. This is a win-win with both wins going to Verizon.
-Jason Levine