12:35 PM — Yesterday, AT&T announced their new initiative dubbed “Sponsored Data.” This new program allows companies to pay for the data used by specific apps. Specifically, the data consumed by those apps will not apply to AT&T subscribers’ monthly data limits. This is a good initiative on AT&T’s part and would free up quite a bit of data for customers. Having capped data on AT&T’s network is already a nightmare for customers, always having to worry about how much they have used.
“Customers love mobile content. Whether it’s shopping, banking, entertainment or personal wellness, mobile content is increasingly available for customers almost anywhere and anytime. And that’s what makes this a win-win for customers and businesses – customers just look for the Sponsored Data icon and they know the data related to that particular application or video is provided as a part of their monthly service,” said AT&T Mobility CEO Ralph de la Vega. “This is an exciting new opportunity for us and, most importantly, our customers.”
While this new initiative is nice, it could end up being a flop for AT&T. According to NPD Group analyst Eddie Hold, he writes in a blog post that “while this service has significant potential for AT&T, the carrier needs to tread carefully or pay a PR price for the innovation.” He continues on to state that “lining up an A list of sponsors will be key to turning this potentially interesting service into success.”
Hold is right if you think about it. This feature does have quite the potential, but AT&T needs to market this program very carefully. Attracting companies to ‘pick up data charges’ isn’t going to be easy. While this could be good for a company to promote their product or service, it would also be very burdensome, rather, expensive.
He continues in his blog post: “Toll free data services have the ability to further turn the smartphone market on its proverbial head: theoretically, if there are enough compelling content solutions offering sponsored solutions, a carrier could offer smartphone services without the obligatory data plan. For example, what if Facebook were to try again, offering a ‘Facebook phone’ with sponsored/free data access. Such as move would drive a very different billing solution, and potentially drive very different mobile behavior from the consumer base. But it’s a very brave step out from today’s data offerings.”
As you may already know, Facebook has already tried their ‘Facebook Phone’ initiative with partners like HTC, but it didn’t turn out so well. Getting big corporations to join in on this program is the key AT&T needs for this to be successful. There is a lot of potential here but there are others who argue against this program. Some bloggers are already arguing that this is another scheme by AT&T to rack in more revenue. Customers already pay for data and then other corporations would end up paying for data as well. Essentially, AT&T is earning money from both ends.
There’s both sides to every coin. AT&T’s new initiative while bold, can also end up costing them. What do you think?