The pro-consumer data free-for-all
There’s been a lot of talk recently about the practice of wireless companies not imposing data charges when their customers access certain content. It’s an innovative way for companies to price their services and broadly helps consumers.
T-Mobile offers “BingeOn,” providing its customers with data-free access to a range of content including YouTube and some music services in exchange for the customer agreeing to T-Mobile’s network management, which may involve slowing speeds under certain circumstances. It’s a way to promote smart network utilization. Both the company and the consumer receive a benefit. Customers can also opt out of BingeOn if they wish, getting higher speeds but reaching their data caps more quickly.
Verizon’s program “FreeBee” does not count viewing Verizon content against a customer’s data threshold.
AT&T’s DirecTV offers “Data Free TV,” with a wide array of content. Nearly 3 million consumers used the service in the first four weeks after launch. It also just rolled out DirecTV Now, which offers consumers the ability to stream more than 100 channels of DirecTV content on any device starting at $35 monthly with no annual contract. Users can watch TV programs on their phones or other wireless devices rather than be glued to the big box screen, and their viewing does not count against their data allowance. Data is freed up for consumers to use on other applications — everything from an online course to, yes, content from other providers.
These services are catching on, a sure sign both of innovation and of competition in the wireless marketplace. The response has been strong; most people like getting something for free. And streaming is becoming routine and increasingly convenient on a wireless broadband connection.
It wasn’t that long ago when making a long-distance phone call was pretty expensive. At the time, telephone companies gave businesses an option to make it less expensive for their customers to reach them: a toll-free 800 number. Merchants had a cheap and easy way for consumers to reach them and consumers got something — the telephone call — for free. It was win-win for both sides — and it, too, was a sponsored service similar to today’s free data plans.
Just as yesterday’s consumers expected businesses to provide a less expensive telephone calling option, today’s generation will likely find it equally important that cheaper data options become commonplace.
If free data began as an experiment in the marketplace, there is evidence that that experiment is succeeding. Wireless network operators are making billions in investments to keep up with mobile service demand, and the popularity of an expanding range of free data plans is accelerating that demand.
The Federal Communications Commission (FCC) has understood in the past that there are clear consumer benefits to these types of free data programs, and it should reaffirm that understanding now. These are early days in free data; it could easily become a service with unlimited potential. Just as 800 numbers started with hotels and airlines and now serve to help domestic violence and suicide prevention hotlines, so, too, free data could be used in innovative ways in healthcare, education and many other areas. It’s not just about watching movies for free. Given the potential future benefits for consumers, government should tread lightly and not skew the marketplace in response to some hypothetical and unidentified harm.
The carriers’ free data programs fully protect copyright. Any content provider can participate through arrangements with the wireless carrier for its content to be delivered without data charges to the wireless carrier’s customers. Many content providers sign up believing that both the benefits of promoting their content and associated advertising revenues make the arrangement beneficial. On the other side of the equation, the consumer benefits because the content is free, even if it is delivered slightly more slowly in T-Mobile’s plan. Low-income consumers, in particular, benefit from these discounts.
It’s actually pretty easy to understand sponsored-data programs: In essence, wireless carriers are working with content providers, who have a clear interest in promoting their own content. It seems little different than any other marketing program, whether a fast-food chain promoting a new movie or matching a competitor’s coupons at a grocery store.
So, binge on, America. Be free as a bee. Stream the content you want. After all, the data’s free.
Rick Boucher was a member of the U.S. House for 28 years and chaired the House Energy and Commerce Committee’s Subcommittee on Communications and the Internet. He is honorary chairman of the Internet Innovation Alliance (IIA) and head of the government strategies practice at the law firm Sidley Austin.