Critics Slam AT&T Plan to Charge App-Makers For Data Use

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AT&T’s plan to ask application developers to pay the mobile giant for data use by their customers hit a buzzsaw of criticism Monday, hours after a top company executive floated the idea in an interview with The Wall Street Journal. AT&T executive John Donovan told the paper that the company is preparing a feature that could shift the burden of paying for data-intensive mobile apps away from the consumer and onto the developer.

AT&T’s plan, which Donovan said wouldn’t appear until next year, would create another revenue stream for the wireless giant at a time when mobile data usage is exploding. “A feature that we’re hoping to have out sometime next year is the equivalent of 800 numbers that would say, if you take this app, this app will come without any network usage,” Donovan told the paper.

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If implemented, the plan could effectively force data-heavy application-makers like YouTube, Spotify, or even Facebook to pay for the use of AT&T’s “pipes.” This idea — jacking up fees for both users and content/app-makers — has been a long-term goal of many wireless companies. In fact, many observers were reminded of now-infamous remarks made in 2005 by Ed Whitacre, who would shortly become CEO of AT&T, when asked about “Internet upstarts” like Google.

Now what they would like to do is use my pipes free, but I ain’t going to let them do that because we have spent this capital and we have to have a return on it. So there’s going to have to be some mechanism for these people who use these pipes to pay for the portion they’re using. Why should they be allowed to use my pipes?

Public interest groups and wireless industry observers slammed the idea as an attempt by AT&T to place a “toll” on its network at a time when consumers and content/app-makers already pay dearly for access to the company’s bandwidth.

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“This new plan is unfortunate because it shows how fraudulent the AT&T data cap is, and calls into question the whole rationale of the data caps,” Harold Feld, legal director of Public Knowledge, said in a statement. “Apparently it has nothing to do with network management.  It’s a tool to get more revenue from developers and customers.”

“The plan creates two new groups of customers and app developers — those who pay AT&T extra for the privilege of being exempt from the cap and those who don’t,” Feld added.

The new scheme comes on the heels of a ruling in California in which a judge awarded a user $850 after finding that AT&T had “throttled” data on his iPhone even though he had an unlimited data plan. AT&T has said it plans to appeal.

AT&T says it needs to throttle unlimited data plans to address network congestion, but that claim seems questionable in light of a recent study that found that there is almost no difference between the amount of data used by customers on limited plans and the amount used by customers on unlimited data plans.

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“When we look at the Top 5 percent of data users, there is virtually no difference in data consumption between those on unlimited and those on tiered plans — and yet the unlimited consumers are the ones at risk of getting their service turned off,” wireless industry research firm Validas found recently.

Wireless industry observers from around the web were roundly critical.

GigaOm: AT&T’s mad, mad plan to charge wireless app developers

TechCrunch: AT&T’s Latest Boondoggle Is To Let App Makers Pay For Users’ Data

DSL Reports: AT&T Devises Entirely New Wireless Troll Toll

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