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Internet

Verizon to test 'toll-free' sponsored data that doesn't count against caps

Verizon will soon begin testing sponsored data plans, in which Internet companies pay to keep their traffic from counting against users’ data caps.

The tests will begin in the next few days, followed by a larger commercial rollout in the first quarter of next year, Recode reports. It’s unclear which companies will take part in these plans, which Verizon likens to toll-free calling.

Verizon won’t be the first carrier to test this kind of scheme. In January 2014, AT&T announced its own “Sponsored Data” plan, which also lets companies pay to steer clear of data caps. Nearly two years later, that program is still in a limited trial, and not a single major streaming service is participating.

Meanwhile, T-Mobile doesn’t count certain streaming music and video services against users’ data caps, but with a crucial difference: Those services don’t have to pay a toll. In the case of Music Freedom, T-Mobile simply supports an expanding list of popular services. Binge On is open to any legal video service, provided they meet technical requirements such as 480p resolution streaming. (Still, one might argue that T-Mobile’s largesse is paving the way for more money-grubbing plans from AT&T and Verizon.)

There’s still some uncertainty about whether sponsored data programs are allowed under the Federal Communications Commission’s net neutrality rules, which forbid paid traffic prioritization but don’t explicitly prohibit toll-free data. AT&T has been seeking clarity on the matter before expanding its own programs, and Verizon’s latest moves could prompt the FCC to pipe up.

The impact on you at home: Just as AT&T did, Verizon will likely pitch sponsored data as a win-win. Internet companies get promotion, and consumers effectively get more data. In reality, these programs are a form of double-dipping, with revenue coming from both the subscribers and from the services those subscribers want to access. The downside is that smaller services will face a disadvantage if they can’t pay the toll. And either way, the money has to come from somewhere, which means users could end up paying more for streaming video and other online services.

IDG Insider

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