AT&T dials up toll-free 'Sponsored Data' as CES starts

Long-talked about, AT&T is the first of the carriers to pull the trigger on the 1-800 equivalent of data that wouldn't count against customers' caps.

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Roger Cheng (he/him/his) was the executive editor in charge of CNET News, managing everything from daily breaking news to in-depth investigative packages. Prior to this, he was on the telecommunications beat and wrote for Dow Jones Newswires and The Wall Street Journal for nearly a decade and got his start writing and laying out pages at a local paper in Southern California. He's a devoted Trojan alum and thinks sleep is the perfect -- if unattainable -- hobby for a parent.
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Roger Cheng
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LAS VEGAS -- AT&T is shaking up how it will deliver and charge for specific kinds of data.

The company on Monday introduced "Sponsored Data," or data that is paid is for by a business that wouldn't count against a subscriber's capped plan. Think a toll free 1-800 number or free shipping for the delivery of data.

The notion of subsidized data crops up at a time when subscribers are wrestling with more limitations on how much data their phones and tablets can consume each month. AT&T and Verizon Wireless in particular have been aggressive in getting their customers to switch to tiered plans that require people to pay more to get more data.

Enter Sponsored Data. The program could theoretically provide a break on certain media or Web sites that are delivered over a cellular network. For example, an early partner, United Health Group, plans to offer educational videos and its visual interactive voice response app under Sponsored Data to encourage patients to more frequently use those resources.

Mobile advertising provider Aquto plans to use it to entice customers to watch ads, including longer product commercials, without any data penalty.

There's also an opportunity for businesses to provide their customers or even employees with toll-free data. Kony Solutions, which provides enterprise mobility management services, is another early partner.

Other potential services could be video teleconferencing, access to your bank information, or uploads of photos of a car accident to your insurance company -- with the data tab picked up by the company.

Not everyone is enamored with the announcement. Consumer advocate group Free Press has already criticized the plan.

"Caps are supposed to help wireless carriers manage congestion," Free Press Policy Director Matt Wood said in a statement. "But if getting a big check from another company suddenly makes AT&T's congestion concerns go away, that shows data caps aren't necessary in the first place. Caps are merely another way to pad AT&T's profits."

Wood said that AT&T is essentially double-charging for the delivery of data -- consumers are still paying their monthly fees, but now companies are encouraged to pay on their end as well.

Sponsored Data should start to pop up on phones and tablets later in the first quarter. Customers will see a Sponsored Data icon signifying the toll-free data, and the data will be delivered at the same speed as normal. There will also be a list of Sponsored Data content displayed on the monthly phone bill.

AT&T sees Sponsored Data as another business potential opportunity and a way to slightly offset the limitations that it has placed on its customers. While the company said it is largely pleased with customer reaction to tiered data plans, smaller competitors have been making noise about offering unlimited data, negating the need for toll-free data.

AT&T said the caps are required after seeing 30,000 percent growth in mobile data traffic over the last six years.

"Sponsored content will provide a compelling option for customers who may need to keep a closer eye on their data usage month-to-month, removing a potential barrier to usage or viewership," according to a company representative.

Sponsored Data, meanwhile, provides another revenue stream -- this time from businesses -- at a time when growth in wireless revenue from AT&T's core cellphone service is slowing and its landline and enterprise businesses continue to stagnate.

The program was one of the marquee announcements at AT&T's annual developer conference, held on the first unofficial day of the Consumer Electronics Show.