The problem with sponsored data and data caps

Data caps have always been about money, but that fact has always been denied by internet service providers (ISPs). Data caps mean either your internet speed is reduced when you reach your limit or you’re slapped with overage charges. The reasoning for data caps to exist has been that it helps to control the bandwidth used by consumers. Bandwidth is limited and adding a limit is supposed to discourage customers from using that bandwidth excessively. Sponsored data such as that AT&T and Verizon have introduced and T-Mobile’s Binge-On service contradict this, though.

Sponsored data is a concept first introduced by AT&T and now by Verizon. The idea behind it is that companies can pay AT&T or Verizon (or both) to reach those cellular services’ customers without counting towards those customers’ data caps. For instance, Netflix can pay Verizon so that Verizon customers can watch Netflix on the Verizon network without it counting towards their data limit. T-Mobile’s Binge-On service works similarly, except that the services excluded from the data limit aren’t paying for the privilege.

Think about this for a minute. Data caps and similar limits exist because these companies are complaining customers are using too much bandwidth. They cry that there isn’t enough bandwidth to handle the internet usage of their customers and it costs too much to expand their network to meet these needs. However, they are allowing certain services to bypass these limits for a fee and ignoring their original claims that bandwidth is too limited to support unlimited data.

T-Mobile proved this by offering unlimited music streaming and video streaming for many popular services through Binge-On. Music and video streaming use a large amount of data, more than typical web streaming or email. If bandwidth were really an issue, these would be the last services to give exemptions to. T-Mobile’s only defense right now is the fact that they compress all video streamed over their network, which does reduce the data used. This isn’t a great defense, however, because even compressed video uses a large amount of data.

T-Mobile doesn’t charge overage fees for data on their network, so it’s also hard to argue money as a reason for their implementation of data caps. However, AT&T and Verizon do push users to purchase more data and add fees related to this. Add in the idea that these two companies want to allow certain services to bypass data cap limits for a fee, it becomes clear that these limits only exist as a way to add extra fees to customers.

Besides the obvious ties to money data caps have, it is questionable whether it violates Net Neutrality rules as well. While these rules do allow for paid prioritization such as sponsored data, they also prevent companies from acting in ways that prevent users from accessing the internet or specific content. Where sponsored data becomes a problem for Net Neutrality is in the instance that some customers may reach their data limit and be unable to access Netflix, but can stream Hulu because Hulu is sponsoring the data. This specific example can very easily become a reality with Comcast customers as they slowly introduce data caps in various markets, yet exclude their own streaming service from counting towards their data caps. This is a direct conflict of interest and designed to restrict access to competing services, especially considering home internet is used more widely than cellular data. In addition to restricting competing services through sponsored data, it can also prevent new companies from effectively competing with established ones that can afford to sponsor users’ data. A startup with the promise of being the next YouTube, Facebook, or Twitter may struggle to get off the ground due to the fact it may not be able to afford to sponsor data, limiting users’ activity and thus limiting the revenues of the startup.

It is time we speak out against data caps and sponsored data before it shapes the internet even more in favor of corporate greed. Inform the FCC that these practices hurt consumers and competition. Rules need to be more clearly defined to prevent loopholes such as these to block or restrict access to services throughout the web.

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