“We’re ready to intervene,” FCC Chairman Tom Wheeler said this week about the new AT&T plan that has raised the hackles of net neutrality advocates. But that’s short of a full-fledged commitment to deal with an issue that media and entertainment companies will closely monitor. The wireless carrier told an audience at the International CES confab that it will begin to let content providers pick up the tab for some of their 4G transmissions. It’s “similar to 1-800 phone numbers or free shipping for Internet commerce,” AT&T says. In theory, that could range from a studio paying data costs for mobile device users to watch a movie trailer — to ESPN or Netflix helping people to watch their programming. The idea is “a win-win for customers and businesses,” says AT&T Mobility CEO Ralph de la Vega. Net neutrality advocates counter that AT&T’s plan would give well-funded industry giants a huge advantage over challengers in an environment where companies would effectively have to pay in order to reach mobile device users. “In addition to being a ripoff for both consumers and content creators, AT&T’s plan erects a massive barrier in front of anyone hoping to be the next big thing online,” says Public Knowledge Acting Co-President Michael Weinberg.
What will the FCC do? Probably nothing, says Guggenheim Partners’ Paul Gallant. Its net neutrality rules “only ban a few specific actions, such as a wireless carrier blocking access to a VoIP service and do not appear to ban services such as AT&T’s Sponsored Data.” But media companies likely won’t rush to support the initiative according to MoffettNathanson Research’s Craig Moffett. Ad supported networks would probably lose money even if they could run a 15-second ad every three minutes, and charge $30 for every thousand viewers, his back-of-the-envelope calculations show. They might deem the change to be “a mind-bender,” he adds. “In short order, no content provider could survive without paying for transport,” not a concept that “media companies would eagerly embrace.”
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