(Updates with public policy comment in sixth paragraph. For more CES stories, see SHOW <GO>.)
Jan. 6 (Bloomberg) -- AT&T Inc., the second-largest U.S. wireless carrier, introduced a plan that lets companies cover a customer’s cost for mobile-data charges on downloads of videos, music or apps, taking the toll-free model to Internet users.
Companies can use the service to encourage consumers to test out a new smartphone application or preview a video, or just as a courtesy to their customers to get in touch. Dallas- based AT&T introduced the Sponsored Data plan at the International Consumer Electronics Show in Las Vegas today.
Getting businesses to pay for consumer downloads would help AT&T add a new category to data sales. The phone carrier is searching for ways to increase wireless-data revenue as new user growth slows and subscribers try to stay within their monthly data allocations.
“We’re seeing considerable demand,” Mark Collins, senior vice president of data and voice products for AT&T Mobility, said in an interview last week. “Pretty much every company is looking at a mobile as the best way to first engage the customer.”
Streaming-media companies offering online video or music could use Sponsored Data to send programming at no cost to customers -- a prospect that may unnerve advocates of net neutrality, the idea that companies shouldn’t have to pay telecommunications providers for special access to their users.
The U.S. Federal Communications Commission needs to act to protect consumers and content creators from Internet-service providers “who want to pick winners and losers online,” Michael Weinberg, acting co-president of the Washington-based policy group Public Knowledge, said in an e-mailed statement today.
While the FCC passed open-Internet rules in 2010 barring wired broadband providers from blocking or slowing Internet traffic, it set fewer restrictions for wireless traffic. The rules have been challenged in court by Verizon Communications Inc.
AT&T said Sponsored Data will be delivered at the same speed and quality of any other data.
“AT&T is being really innovative here,” said Jan Dawson, an analyst at Jackdaw Research in Provo, Utah. “It’s the first time there’s a way to charge anyone other than the end user for mobile data. But it’s going to be hard for consumers to understand at first, so educating users will be really important.”
UnitedHealth Group Inc. will be one of the first Sponsored Data customers, offering AT&T subscribers health and wellness videos without increasing their data bills. The more customers the health insurer can get to use the videos, the fewer calls to customer-care representatives will be needed, saving costs, AT&T’s Collins said.
AT&T has several pricing strategies for the service, from a standard data charge to possible revenue-sharing based on service or product sales, Collins said.
--Editors: Crayton Harrison, Ben Livesey