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AT&T ends “sponsored data” scheme after California net neutrality law takes effect

Wireless phone giant AT&T says it will stop its “sponsored data” scheme that allowed customers to use certain streaming television apps without that usage counting towards their monthly high-speed data allotment.

The decision to stop offering the perk comes after California enacted a variant of the federal network neutrality law that prohibited companies like AT&T from offering fast lanes or other perks to online services that pays for them.

California pushed through its own network neutrality laws after federal regulators eased a similar, national standard several years ago. AT&T and other phone and Internet companies sued California in federal court, arguing they lacked the authority to enact their own network neutrality standard.

Last month, a federal judge sided against the companies, allowing California to move forward with enacting its network neutrality platform.

Prior to the ruling, AT&T had allowed its wireless and Internet customers unlimited access to certain streaming apps through an initiative called “sponsored data.” Customers were given the privilege of accessing certain eligible streaming video apps without that usage counting towards their monthly high-speed data allotment. Streaming apps were eligible if the companies that owned the services paid AT&T for the perk.

Few companies took advantage of the scheme, and AT&T’s own services — DirecTV, AT&T TV and HBO Max — mostly benefitted from the arrangement. It wasn’t clear how much AT&T paid itself for the perk.

With California’s network neutrality rules rolling out across the state, AT&T said it is now forced to stop offering the sponsored data scheme across the board because the company isn’t able to shut off the perk solely for California subscribers.

“Given that the Internet does not recognize state borders, the new law not only ends our ability to offer California customers such free data services but also similarly impacts our customers in states beyond California,” an AT&T spokesperson wrote in a blog post. “A state-by-state approach to net neutrality is unworkable. A patchwork of state regulations, many of them overly restrictive, creates roadblocks to creative and pro-consumer solutions.”

AT&T said it had “long been committed to the principles of the open Internet,” though the company has historically challenged efforts by federal and state lawmakers to enact regulations that regulate Internet traffic in an equitable manner.

“We deliver the content and services our customers want because it’s what they demand, not because it’s mandated by regulation,” the company said. “We also believe Internet access should be available and sustainably affordable to all Americans, and strongly advocate for Congress to adopt federal legislation to make that possible while providing clear, consistent, and permanent net neutrality rules for everyone to follow.”

Critics of AT&T’s sponsored data arrangement heralded the company’s decision to end the program as a win for the open Internet that AT&T claims to support.

“People should be free to choose which videos they want to watch – whether that’s Netflix, Twitch or their local church’s Sunday service, without the company they pay to get online trying to influence their choices,” Barbara van Schewick, a law professor and technologist with Stanford University, wrote in a blog post.

Schewick challenged AT&T’s claim that it could only turn off the sponsored data perk if it did so across the country, saying it was entirely possible for the phone company to restrict the service within California’s borders.

“AT&T customers who have plans affected by sponsored data can go into their settings and turn on or off sponsored data,” Schewick said. “That means AT&T already has the capability to switch this program on and off on a customer-by-customer basis. Doing so for just its California customers is not technically difficult.”

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About the Author:

Matthew Keys

Matthew Keys is the publisher of The Desk and reports on the business and policy matters involving the broadcast television, streaming video and radio industries. He previously worked for Thomson Reuters, Disney-ABC, Tribune Broadcasting and McNaughton Newspapers. Matthew is based in Northern California, has won numerous awards in the field of journalism, and is a member of IRE (Investigative Reporters and Editors).