A 1-800 number for data plans?

People walk past an advertisement for the Nokia Lumia 900 phone, which runs on a Windows platform, in the window of an AT&T store on April 9, 2012 in New York City.

AT&T is rolling out a new plan that could mark a major change in mobile video. Called Sponsored Data, it will allow companies to send content to consumers’ phones and tablets that they can watch without it eating up their data plan. These companies pay AT&T for the privilege, of course, which it compares to what 1-800 numbers did for phone service. In this case, it’s about content instead of conversation. AT&T says it’ll open up a number of possibilities for companies and customers.

“If you wanted to have someone see movie trailers and not have to spend their mobile data package on it or try games,” says AT&T spokesman Mark Siegel.

That’s potentially a golden opportunity for companies to reach customers wirelessly. Imagine a company selling a tablet app. Testing it out away from home will gobble up data, so many potential buyers won’t bother. AT&T’s Sponsored Data offering gives that company the opportunity to save those sales.

“People might not be willing to try it if they’re gonna have to pay for it and essentially you pay for it by having it get charged against your data plan,” says Constance Helfat, technology strategy professor at Dartmouth’s Tuck School of Business. “But if it’s free, you might try it.”

This all sounds like a rather sweet deal, with free content for customers and new opportunities for companies to reach them. But critics aren’t sure, raising worries familiar to those following the long-running debate over net neutrality. A key concern: whether rich companies can keep down upstarts by buying this special access to customers.

“If they’re small, they may not be able to afford to pay AT&T for the privilege of reaching AT&T’s data customers,” says Susan Crawford, visiting professor at Harvard Law School and author of “Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age.”

If they can’t reach those customers, small companies making innovative content may not be able to succeed.

That’s one of several open questions about how Sponsored Data will change how we watch online video outside the home. Another is to what extent any of the heavyweight media companies will actually play ball with AT&T. So far it has announced a handful of companies signing up, but no streaming media giants such as Netflix or YouTube.

Mark Garrison: First, for our younger listeners who grew up with nationwide calling plans, the introduction of the 800 number was a big deal back when people used landlines and paid long distance charges. Just google it or something. That was about companies letting you call them without paying the phone company. Now, companies can do the same with content. AT&T spokesman Mark Siegel explains what that could mean.

Mark Siegel: If you wanted to have someone see movie trailers and not have to spend their mobile data package on it or try games.

And that’s a golden opportunity for companies to reach customers wirelessly. Imagine a company selling a tablet app. Trying it out will gobble up your data plan, so many potential buyers won’t bother. The Sponsored Data plan gives that company the opportunity to save those sales, says Constance Helfat, technology strategy professor at Dartmouth

Constance Helfat: People might not be willing to try it if they’re gonna have to pay for it and essentially you pay for it by having it get charged against your data plan. But if it’s free, you might try it.

So this all sounds like a sweet deal: free content for us, new opportunities for companies. Critics aren’t sure. Harvard Law professor Susan Crawford worries about a scenario where rich companies can keep down upstarts by buying special access to customers. Remember, AT&T is charging companies for Sponsored Data.

Susan Crawford: If they’re small, they may not be able to afford to pay AT&T for the privilege of reaching AT&T’s data customers.

And if they can’t reach those customers, small companies making innovative content may not be able to succeed. It’s also an open question, whether companies like Netflix and YouTube will even go for this deal. I'm Mark Garrison, for Marketplace.

About the author

Mark Garrison is a reporter and substitute host for Marketplace, based in New York.

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