AT&T plans to ask app makers to pay for their subscribers’ data use, as the carrier looks for new ways to bring in revenue without raising prices for consumers.
The carrier’s network and technology head, John Donovan, told the Wall Street Journal Monday AT&T is looking to create a form of “toll-free calling” for mobile apps. Under the proposed system, subscribers will download and use an app without incurring data charges on their wireless bill. Instead, the app’s developer would pay the usage fees.
AT&T compares the system to 1-800 numbers and “no shipping fee” deals from online retailers.
The idea underscores AT&T’s need to find new revenue streams as it picks up the pieces after last year’s failed T-Mobile acquisition. With a slew of faster 4G LTE devices on the way and data consumption steadily climbing, the carrier is trying to capitalize on the increased data high-bandwidth apps consume, without passing on the cost to its subscribers.
AT&T likely hopes technology companies will accept the plan to entice users to download and use their apps. Subscribers are more likely to download and pay for an app, and use it often, if they know it won’t raise their wireless bill.
The change holds big implications for bandwidth-heavy mobile apps, such as those used to listen to music, play games and for social media. Apps such as Spotify, Netflix, YouTube and Facebook would potentially pay for the privilege of using AT&T’s “pipes” if the plan becomes reality.
The plan is getting heavy criticism from app developers, public interest groups and wireless industry observers, Time magazine reports.
Consumers and app makers “pay dearly” for access to AT&T’s bandwidth, and the plan is nothing more than “a tool to get more revenue from developers and customers,” according to Harold Feld, legal director of public interest group Public Knowledge.
The plan’s detractors believe it exposes AT&T’s data caps as fraudulent, saying the carrier is likely more concerned with boosting revenue than conserving bandwidth.
AT&T and rival Verizon no longer offer unlimited data plans, and impose caps so subscribers who exceed their monthly allotment of data pay overage charges. The new plan aims to appeal to cost-conscious consumers who shy away from data-consuming apps to avoid going over their limit.
If developers pay the cost of bandwidth-heavy activities, such as streaming video, it will lighten the burden on both subscribers and carriers.
However, it also squeeze out startup developers who don’t have the available cash to pay for data, and raise “net neutrality” concerns by giving larger, wealthier companies an advantage because they can afford to pay for customers to have more content access. There are no “neutrality” rules governing app use.
This is not the first offbeat strategy AT&T has announced amidst the T-Mobile merger fallout. Last week, the carrier revealed plans to reduce spectrum strain by creating a “living” network that self-adjusts based on network traffic.
The carrier also faces criticism about its data charges and caps. Last month, the company upped its data limits, but raised data plan prices as well.
AT&T’s strategies focus on finding ways to earn more off what it already has, as it tries to stay competitive in an increasingly heated market.
“Why don’t we go create new revenue streams that don’t exist today and find a way to split them?” Donovan told the Wall Street Journal.
AT&T expects to put the app data charges in effect next year, but opposition among technology companies and public interest groups could hinder its plans.