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January 10, 2014

Toll-Free Data Is a Good Thing

 

I don’t recall toll-free 800 numbers harming consumers. Do you?

With toll-free calls, a business pays for an 800 or 866 number so that its customers can call without incurring a charge. The benefit to both consumers and businesses is obvious--consumers get a free call, and might choose a business based solely on the toll-free option. It’s a win-win.

Well, toll-free is coming to mobile data. AT&T has announced a new service called Sponsored Data, which means that a company could choose to pay for the data its customers use to access its services, exactly like businesses choose to pay for their customers’ voice traffic. In other words, eBay might say that if you are using its mobile app on your Android or iPhone, that data won’t count against your monthly data usage, because eBay is paying for it.

One can easily see that Internet services like Amazon and Facebook (and especially data-hungry services like Netflix and YouTube) might agree to pay for their customers’ data usage as a service. And, after all, might you not watch more Netflix movies if you knew the data was free (at least to you)?

The benefits of sponsored data to consumers, to Internet companies, and to providers like AT&T are obvious. So who’s complaining?

The net neutrality ideologues, that’s who, because this is a major reason why they agitated for net neutrality regulations in the first place: Their anti-corporate impulses drive them to fear that consumers will be harmed as companies aggressively compete for market share over the Internet.

In the analog world, of course, companies continually innovate and compete, sometimes succeeding and other times failing, gaining advantages where they can and learning from failure. Success is rewarded in the marketplace with greater market share, and consumers and the economy benefit from the continuous competition and innovation.

Of course society also has an interest in ensuring that new competition can easily emerge, which is a rationale for antitrust law.

If anything, such innovation and competition is even more intense in the digital world. IPI opposed net neutrality regulations in part because we believe companies should be permitted to experiment with new business models on the Internet like sponsored data without having such experiments precluded by uninformed regulations based upon fear rather than upon real evidence of harm.

As long as everyone is allowed to play in the sponsored data sandbox, it’s hard to argue that the practice is anticompetitive. It’s also hard to argue that sponsored data will be anything other than a boon to consumers and an additional way to fund continued investment in our burgeoning wireless infrastructure. In other words, a win-win for everyone.


 

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