As the demand for high-speed wireless data access continues to grow, carriers are trying to come up with new ways to cover their costs. The latest proposal from the folks at AT&T: That the people who build data-hogging apps should ante up.
AT&T executive John Donovan likens the idea to that of 1-800 numbers. “If you take this app, this app will come without any network usage,” he explains.
So imagine that you only have a 1GB/month data plan (or a so-called “unlimited” plan that gets throttled somewhere around 2GB), but the company that makes your favorite streaming video app is the one paying for the data used by that app. You could stream away without fear of going over your limit.
Donovan says that some companies have shown interest in the idea as a sort of promotional tool that would allow them to get a leg up in a crowded app market.
But some argue that AT&T’s proposal could stifle competition.
Currently, a clever developer can have success simply by creating a solid product at a reasonable price. But if developers are suddenly expected to foot the bill for data usage, they wouldn’t be able to bring their product to consumers without significant financial backing.
“On its face, AT&T’s new proposed plan to charge app developers for data consumption is troubling news for consumers,” explains Parul Desai, communications policy counsel for Consumers Union. “They could face limited choices in the app market: While established app makers would be able to comply with this new scheme, new entrepreneurs with great ideas but limited capital could view such a pricing plan as a barrier to reach consumers.”
Another thing to consider here is whether or not AT&T would be double-dipping.
Say, for example that 75% of a customer’s data usage is from Facebook and Netflix, and say that both of these businesses agree with AT&T to cover the data used by these apps. Can you imagine a world where AT&T would decrease the price of that customer’s data plan by 75%? No, of course not. So the customer would be paying and the app builders would be paying.
GigaOm’s Stacey Higginbotham points out this is precisely what AT&T and other internet providers have long been praying for: “[I]f those apps choose to pay that cost,then AT&T has managed to do what it has tried to do since Ed Whitacre famously put forth the idea in 2005 — force those pesky web companies to pay to use AT&T’s pipes.”