Verizon Testing Sponsored Data

Verizon says it will begin a test of “sponsored data,” potentially allowing advertiser-supported app usage. T-Mobile US already offers its “Binge On” carrier-sponsored app usage, where use of streaming services do not count against subscriber data usage buckets.

At least so far, the U.S. Federal Communications Commission has said it sees no immediate and obvious problem when ISPs offer such "no incremental charge" features, but is monitoring the developments.

The issue is complicated, as there are many areas where understanding of what network neutrality means bumps up against standard business practices. Consider any program where subscribers can use some apps without those charges counting against data plan usage.

"Binge On" essentially has the ISP underwriting usage, while other programs aim to have advertisers or sponsors underwriting usage.

The business model in the former case is subscriber additions and reduced churn, while the business model in the latter case is advertising revenue.

Considered by some a violation of network neutrality rules, sponsored data in fact is no different than toll-free calling or ad-supported broadcast TV or radio, others would argue.

“We’ll be out in a larger commercial way in the first quarter of 2016,” Verizon Executive VP Marni Walden said.

Such programs also are similar, in concept, to giving consumers something of tangible value in exchange for taking some action a sponsor or advertiser values. Signing up for a trial offer, viewing offers or answering survey questions provide examples.

Again, some would argue such transactions violate notions of “treating all bits equally.” Others would argue only business models and value exchange models are involved.

There are many nuances here, it is fair to say. If no money exchanges hands--if carriers do not pay sponsors, and sponsors do not pay carriers--but consumers get access, services and apps “for free,” is that a violation of network neutrality, or only a business policy?

If users get something of value in exchange for taking actions (participating in surveys, entering contests, watching ads), is that a real problem, in terms of consumer protection?

If users get something of value because an advertiser or sponsor is willing to pay for the charges on behalf of the user, is that necessarily a problem?

If a service provider is willing to effectively cut its own prices, is that necessarily a problem? If an Internet service provider is willing to run a promotion allowing limited-time access, to encourage sampling of a service, is that intrinsically an issue?

Irrespective of the policy issues and judgments, much of the controversy about any understanding of network neutrality is about perceptions of business advantage, on the part of contestants, policymakers and policy advocates.

As with so many other issues in the Internet ecosystem, every practice and policy is perceived to help or harm one or another participants in the value chain, even when end users and people benefit.
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