Yesterday, Verizon announced its new sponsored data program. Those words are boring, but they’re just the latest in a growing trend from carriers and ISPs to undermine the core tenets of net neutrality. Here’s what it means and how it affects you.


What Is Sponsored Data?

Not every sponsored data program is the same, but they all follow a similar pattern: First, carriers (like AT&T, Verizon, and T-Mobile) start by capping your monthly data allotment. Then, they make a deal with specific online services (like Netflix in T-Mobile’s case) so those companies don’t count towards your data cap. In some cases, this service may be offered for free (T-Mobile’s Music Freedom and Binge On programs are prime examples), but in most other cases, the companies that provide services have to pay the carriers for the privilege.


So far, AT&T and Verizon have sponsored data programs. AT&T’s program was introduced about two years ago. The carrier’s landing page for it lists no-name partner companies (Aquto, HipCricket, and others), but those companies partner with tons of brands you’d recognize including Coca-Cola, Disney, Samsung, Kellogg’s, Lionsgate, and more. Verizon’s plan, called FreeBee is much newer. For their initial test run, Verizon is partnering with AOL (which they own), Hearst Magazines, and Gameday. We don’t know who else Verizon will partner with in the future, but the landing page indicates it’s aiming at streaming video and music, app downloads, and even specific websites. Essentially, Verizon could theoretically charge nearly every service you use online for the privilege of not counting towards your data cap.

This sounds like a feature. In fact, T-Mobile proudly claims its programs are beneficial to the consumer. They don’t charge service providers a fee for entry to Music Freedom or Binge On (which technically means it’s not “sponsored” data, but the principle is similar) those providers have to adhere to certain technical requirements, or else they get the boot and count towards users’ data caps. Worse yet, Binge On reduces the video quality for all video streams, regardless of whether they are included. This led YouTube to be understandably upset when it still “cost” users data, but also couldn’t deliver more than 480p video. The controversy over this move did not go smoothly.

Why Is It Bad?

Every carrier that’s introduced sponsored data plans has pitched them as a good thing for consumers. Indeed, on the surface, they seem to save customers money. The less data that counts towards your cap, the less data you have to pay for, and the fewer fees you’re likely to incur. If companies want to foot the bill for your data usage, what’s the big deal?


Sponsored Data Violates the Spirit of Net Neutrality

To understand why this is bad, we have to look back at the basics of net neutrality. At its core, net neutrality says that everything on the internet should be treated equally—a packet is a packet, and no one packet should be treated differently than another. You don’t have to pay more for the electricity that powers your TV than the electricity that powers your light bulbs, so why should you have to pay more for the pipe that carries Netflix than the internet that carries Facebook? This neutrality ensures that when new sites and companies pop up, they have a fair shot at getting customers, and you can use the internet the way you like without worrying it’ll cost you more to do something your carrier doesn’t “encourage.”


Net neutrality doesn’t just mean that you never have to pay for a fast lane. It means that the services you use don’t have to pay extra to reach you. Over the long term, this is beneficial to everyone, and encourages competition. If a company popped up that wanted to challenge Netflix, it will have an easier time doing it (and more money to focus on content) if it doesn’t have to tack on the exorbitant fees that Netflix pays wireless carriers just to deliver normal video.


Sponsored data programs don’t technically charge users extra for the services included in their packages. But they do charge extra for the services that aren’t included, if indirectly. Even with T-Mobile’s more-or-less consumer friendly Binge On, when you hit your data cap, you’ll have to pay extra in data charges to watch YouTube, but you won’t have to pay extra to watch Netflix. This choice impacts which service you choose to spend your time with.

Sponsored Data Gives Carriers Too Much Control

The way T-Mobile’s programs work gives them undue power to control how services connect to the internet. At the moment, it may be simple for Spotify or Netflix to make sure they’re compatible with T-Mobile’s programs, but in the future it may be more complicated, especially if this trend becomes the norm for all carriers.


We’ve seen similar things in the smartphone manufacturing world. Google technically has an “open” Android platform—and indeed you can do just about anything you want with Android proper—but if a manufacturer wants Google Play Services (Gmail, Drive, the Play Store, and so on) on their phone, they have more hoops to jump through. That gives Google effective control over Android OEMs, if not explicit control. T-Mobile may promise that it won’t abuse this power right now, but other carriers (or a future T-Mobile) may not be so trustworthy. Even if no-fee programs like T-Mobile’s become the norm—and Verizon and AT&T’s plans seem to indicate that other carriers will still want to extract fees—we still have the problem of carriers dictating terms of connection to third-party companies.

Extra Fees Make the Services You Want to Use More Expensive

AT&T and Verizon’s sponsored data programs are more immediately problematic too. Partnerships with companies like Disney and Samsung, make it clear bigger companies can pay to keep themselves in a dominant position. It’s unclear just which services those companies are paying AT&T and (soon) Verizon to exempt from their data plans. It may be as simple as ads for Samsung products not counting towards your data cap. Or maybe Samsung will pay to give Milk Music (yes, this is a real service Samsung offers) an advantage, while Spotify is stuck on the lower-tier capped internet.


If you’ve followed the net neutrality debate, you might recognize this image. It’s the thing we’ve all feared: paying an extra fee for each service or group of services we want to access on the internet. Sponsored data programs don’t charge customers extra money directly, nor do they necessarily forbid any service from being delivered. However, they do provide a paid lane (or at least a lane with extra technical requirements) on the internet for a select group of services that then become more appealing to the end user. Companies that can’t afford good performance don’t get it, whether they’re paying in data or dollars. Inevitably, those costs will get passed to the consumer, which means even if you’re not paying your carrier extra for those services, you’re still getting charged more. No matter how you slice it, the carriers get to choose winners and losers, and that’s bad for everyone.

What You Can Do


As with most net neutrality issues, there’s not a lot that individual users can do on their own. The FCC gained more authority to investigate net neutrality violations last year, but there’s a lot to investigate. Meanwhile, some sponsored data programs are honestly pretty good deals for consumers in the short term, as long as you ignore the subtle ways they harm the system as a whole. Still, if you want to do something to voice your concern about sponsored data programs, there are a couple things you can do:


The bad news is, there’s not really much you can do on your own besides speaking out. The good news is, speaking out can help! Carriers are aware that sponsored data programs are controversial, and the FCC has more power to act on the complaints it hears than it has in years past. If you’re not happy with the idea of carriers charging companies for access to a “better” internet, let them and the FCC know.

Illustration by Jim Cooke.