Larry Magid: AT&T Looks At ‘Sponsored Data’ Plan

SAN FRANCISCO (KCBS) — AT&T is introducing a new program called “sponsored data” that the telecommunications giant said will help customers stay within their data limit. The idea is that AT&T would contract with companies and pick up the data cost of accessing their service.

Netflix was not listed as one of those companies, but let’s say hypothetically for our purposes that they were. As you may know, if you were to watch a lot of Netflix on your phone, tablet or mobile device via the cellular system, it would cost you a fortune. So this new program is almost like an 800 or 888 number. When you call those types of numbers, the company you’re calling is picking up the cost rather than you.

It’s sort of like how in Africa, where data charges are very high, Facebook actually picks up the data cost in Kenya.

The problem with this is that it’s getting a lot of criticism with supporters of network neutrality, who argue that the AT&T plan gets around that.

Let’s go back to the Netflix example. If Netflix where a part of this deal, and I wanted to create my own start-up streaming-movie service to compete; my customers would have to pay for data, but Netflix customers wouldn’t. That’s where the net neutrality issue lies.

This new data program could catch on with consumers and companies, but it isn’t clear what the government would say because there are rules in effect on preferential treatment.