AT&T wireless
has announced a campaign offering content providers the opportunity to pay for
access to end users so that the downloading does not debit customers’ data
plans. Some think this constitutes double
or triple dipping, because AT&T already receives compensation from end user
broadband subscriptions and ISPs with which the last mile provider has a peering
or transit agreement.
What’s “fair”
and “unfair” in this discussion highlights the complexity when a transaction
combines content and conduit. Efforts to
separate the two and price them out can raise fairness concerns.
Consider a
transaction where the separation occurs more readily: paying for an item, e.g.,
book content from Amazon, and paying for shipping, e.g., postal delivery of a
hard copy book, or download from Amazon to an e-reader. Vendors often bundle “free shipping.” For its part Amazon wants customers to use “free”
wi-fi for the download, but the company does pay for wireless carrier delivery when
necessary to cellular equipped e-readers.
A content
distributor, like Netflix, wants to avoid having to pay the U.S. Postal Service
for physical delivery of DVDs and similarly the company wants to avoid having
to pay last mile retail ISPs. For Netflix Internet delivery can save the
company money, because end user retail Internet access subscriptions can
include the book delivery within the “free delivery” monthly data allotment. Bear in mind that until now Netflix consumers
didn’t have to think about downloading costs thanks to unmetered data delivery.
With monthly
data caps, the delivery aspect becomes more visible and potentially costly to
both the content provider and the consumer.
Cost recover gets murky, because even before companies like AT&T
want to hit up Netflix for “toll free” downloading there already are two sources
for offsetting carrier download costs.
Offering
Netflix the opportunity for not causing a downloading debit adds a potential
third revenue stream. Is this an extension of the double-market economic
construct like that envisioned by Chairman Wheeler? Bear in mind that even now Internet
compensation arrangements are negotiated between directly interconnecting
parties that barter access or secure payment.
