Verizon Has a Bad Idea

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I’ve always gone on the assumption that people in positions of power can do very well without my advice. They had to be pretty smart to get to where they are, after all.

In one case, however, I will offer them my two cents: Sponsored data is a very, very bad idea.

Re/code and other sites report that Verizon is on the verge of testing a technique in which content companies pay them to offer content to subscribers without impacting their data plan. The content companies simply underwrite the subscribers.

Like all bad ideas, there is a part of this that looks like it will provide benefits: Verizon can offer increased value to its subscribers and appear, at least, to be giving them something for nothing. Indeed, the idea – under the name zero rating – has been around for a while, though it hasn’t gotten much traction.

The problem is that it seems impossible to manage such a program without at least looking like the goal is to find a way around the spirit of net neutrality without technically breaking any law.

The same set of questions that the wired telecommunications companies face would be asked: If two similar services exist and only one is willing or able to pay Verizon’s charges, is it fair for the other? The bottom line is that the statement to regulators and the courts – who are dealing with how wireless fits into the new net neutrality world — essentially would be that everything net neutrality proponents said about the dangers of not having strong regulations is true.

It is possible for Verizon and the other cellular companies to say that the fundamental difference is that, unlike their wired cousins, they paid a lot for the spectrum they are using. It should be their business if they want to implement this or any other business model.

There are two problems with this. The first is that while there may be some truth to that point, regulators won’t be pleased by the overall impact of the programs. The second is that cellular companies aim to start using unlicensed spectrum. This will strip another layer of justification from these schemes.

BGR raises the question in a paragraph that, with minor alterations, could have been taken from a story about net neutrality:

This is very bad news for the open Internet, even though Verizon is claiming that the rates it charges in its program will be “affordable.” If Verizon successfully makes itself the gatekeeper of what apps and websites have their traffic count against the cap, it sets up a completely unnecessary toll for upstart companies. Imagine a world where everyone still used Friendster because a young Mark Zuckerberg never had enough money as a college kid to pay off carriers’ ‘sponsored data’ fees so people would feel comfortable using his service without fear of getting hit with overage charges.

Images may not be everything, as the old Canon camera ads said, but they are something. Is this the context – this is from the story on the test at The Verge — that Verizon wants to create for itself?

Verizon doesn’t just want to squeeze more money out of access to the internet, it wants to claw its way into Comcast’s league as a media conglomerate that controls both the network and the content that travels over it.

This is a corporate version of a get-rich-quick scheme. Verizon – and all the other cellular carriers – should walk away.

Carl Weinschenk covers telecom for IT Business Edge. He writes about wireless technology, disaster recovery/business continuity, cellular services, the Internet of Things, machine-to-machine communications and other emerging technologies and platforms. He also covers net neutrality and related regulatory issues. Weinschenk has written about the phone companies, cable operators and related companies for decades and is senior editor of Broadband Technology Report. He can be reached at cweinsch@optonline.net and via twitter at @DailyMusicBrk.