AT&T Sponsored Data Plan: Aiming to Kill Net Neutrality

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Monday’s announcement by AT&T Inc. (NYSE: T) that it would allow rich companies that push a lot of bits through AT&T’s pipes to subsidize costs to end users is an end-run around the long-standing debate about net neutrality. Under the company’s plan, potential sponsors like Netflix Inc. (NASDAQ: NFLX) and Google Inc. (NASDAQ: GOOG) that send out bandwidth-intensive videos would be allowed to pay the cost of those transmissions so that the transmitted data would not count against an end-user’s subscription plan.

Whether or not Netflix or Google will take advantage of the opportunity is another whole question. But given the rise in popularity of mobile video, carriers like AT&T and Verizon Wireless have to try something to keep their revenues up and their subscribers from defecting as usage and data costs rise.

The carriers have long-argued that they should be allowed to charge more for bandwidth-intensive transmissions like video, and they have been kept from doing so by Federal Communications Commission (FCC) rules that prohibit Internet Service Providers (ISPs) from favoring one kind of service over another. The FCC has, in effect, stood behind the concept of net neutrality, where transmission of data does not depend on either its source or destination. Data is neutral, and every bit is no more or less equal than any other.

The rules, however, apply only to fixed-line ISPs, not wireless carriers. The effect of a sponsored data plan will be to favor those companies that can and are willing to pay to the disadvantage of those who cannot or will not pay.

Expect the cable and satellite providers to raise a stink about AT&T’s plan. Consumer advocacy groups, too, have already joined the fray. As one consumer advocate told Wired, “Letting the carriers charge more or less money to reach certain sites is discriminatory, and it’s not how the Internet is supposed to work.” Maybe not, but if AT&T gets its way, that is how the Internet will work in the future.

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