No One Is Paying Attention To The Way Wireless Companies Could Destroy Internet Freedom

Steve Kovach

Over the past few months, there's been a lot of anger, debate, and misinformation regarding the FCC's plans for net neutrality. Since the FCC introduced a proposal that would essentially prioritize some internet traffic over other traffic, something net neutrality advocates fear could ruin the internet.

But the irony is the debate around net neutrality largely ignores the wireless industry. As much of our computing shifts to mobile devices like smartphones and tablets, wireless carriers are increasingly becoming the primary gatekeepers to the web.

Two recent moves by AT&T and T-Mobile have net neutrality advocates freaking out. In January, AT&T announced its Sponsored Data program, which lets content providers pay AT&T so usage of their apps and services don't count against a customer's data plan. In June, T-Mobile announced a plan that will let customers stream all the music they want from select services like Spotify without it counting against data plans.

With AT&T's Sponsored data, the fear is that it will allow rich companies that can afford to pay gain an unfair advantage over scrappy startups. That will, in turn, create monopolies over some services and will ultimately result in higher prices and fewer choices for consumers.

T-Mobile's case isn't as blatant of a violation against the core principles of net neutrality, but the notion remains that the carrier is inadvertently giving customers an incentive to choose one of its preferred music apps over competitors. If you're a T-Mobile customer, why would you sign up for a service like Rdio when you know you'll be able to stream all you want from Spotify without being penalized?

And while these moves seem good for the consumer in the short term, there's a chance they could set a precedent for some point in the not-so-distant future when the majority of our online activity is on mobile devices, not gadgets tethered to wired broadband.

"No one is bringing wireless into the conversation," BTIG analyst Rich Greenfield said an in interview with Business Insider. "The whole world is going wireless, and yet the big push right now is to heavily regulate what's happening on wired lines."

It's the slippery slope argument. If wireless carriers start giving preferential treatment to some apps and services now, how does that affect the playing field down the road when people rely on it for most, if not all, of their internet access? Won't the wireless carrier moves we're seeing today translate into a few services becoming so big and so dominant that others won't have a chance?

Gary Greenbaum, the CEO of Syntonic Wireless, AT&T's newest Sponsored Data partner, had an alternative take. He sees sponsored data programs like AT&T's as a better way to get content to the consumer without the consumer having to worry about eating into his or her data plan. Syntonic Wireless works with mobile content and app makers to provide their stuff to users without it counting against data plans. Greenbaum's plan is to make online mobile content more like the way TV works today — users should pay for the stuff they want to see, not necessarily the networks that deliver it.

And the little guys don't have to worry, Greenbaum said.

"I signed up for [AT&T Sponsored Data] and I'm a startup," Greenbaum said. "I'm a small company. I don't see any disadvantage in what we're doing. A lot of smaller companies come up to me and see the opportunity, too."

There are even more practical advantages to sponsored data, according to Greenbaum. For example, a school district can provide free access to an online curriculum for students who can't afford internet access at home. And businesses can pay carriers so usage of certain enterprise apps don't count against their employees' data plans.

Even though wireless net neutrality has largely been ignored in the current debate, there's a chance it could get some attention as we see more consolidation in the industry. As has been widely reported, Sprint and T-Mobile are considering a merger, and could formally start the process before the summer is over.

BTIG analyst Walter Piecyk said in an interview with Business Insider that Softbank, the Japanese telecommunications giant that owns a majority of Sprint, could throw in a lot of offers that'll make net neutrality advocates happy in order to sweeten the deal for U.S. regulators. For example, Sprint and T-Mobile could commit to offering unlimited data plans, making sponsored data plans a non-issue.

"As part of the merger discussions with companies trying to gain approval, there's an opportunity for the FCC to do some things on wireless net neutrality," Piecyk said.

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