AT&T unveiled a new program Monday that will let businesses pay to cover the costs of data plan usage when consumers use their mobile apps and services or visit their websites via mobile devices.
“Similar to 1-800 phone numbers or free shipping for Internet commerce, AT&T’s new "Sponsored Data" service opens up new data use options for AT&T wireless customers and customer-friendly mobile broadband channels to businesses that choose to participate as sponsors,” AT&T says in a news release.
The idea is that consumers will feel more comfortable surfing the mobile web and downloading movies, playing games and using other data-sapping services if they know they aren’t spending down their data plans. For example, YouTube could pay so that consumers wouldn’t use up data when they watch a YouTube video on their smartphone or iPad.
AT&T promises that non-sponsored services and apps will run at “the same speed and performance” as sponsored services. Sponsored services will, however, get the benefit of more data insights on their users.
Many large companies will likely see great potential in sponsoring consumers’ data usage. But what will this mean for small businesses and startups? It’s probably not a good thing.
AT&T is positioning itself as a Internet gatekeeper that lets companies essentially buy traffic to their apps and mobile services. It has “huge implications” for companies trying to compete online, writes Nilay Patel of technology news website The Verge:
“If Facebook feels threatened by Snapchat and launches Poke with free data, maybe it doesn't get completely ignored and fail. If Apple Maps launched with free data for navigation, maybe we'd all be driving off bridges instead of downloading Google Maps for iOS," Patel writes. "That's not fair competition; that's just pay-to-play.”
In other words, small businesses and startups will have to compete against large corporations that simply pay to give consumers free data usage. But many small businesses don’t have the budgets to take on major brands online as competition for paid search-engine traffic shows.
Kevin Fitchard of tech news site Gigaom predicts that AT&T Sponsored Data will indeed give a lift to major brands' online services and apps at the expense of small competitors: “Instead of encouraging more variety in content consumed it could reinforce the status quo as consumers naturally gravitate to the websites, apps and videos from the big internet brands willing to foot the data bill.”
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