Free Data Programs Benefit Consumers, Increase Competition

According to recent reports, Hulu and YouTube are both planning to launch their own subscription-based programs that will allow their customers to stream programming from TV networks in real-time. These announcements are just the latest examples of companies launching new services in order to address consumers’ swelling demand for access to more online content.

In line with this trend, wireless service providers have begun offering new sponsored data programs that allow consumers to view more content on their mobile devices without it counting toward their data plans.

In short, consumers are getting more value without paying more because the company promoting the content has an agreed to cover the cost. It’s a great thing. Not only do these arrangements give users more flexibility in how they use their mobile data, they also introduce them to new content providers, apps, and start-ups that they may have never come across otherwise.

Some critics claim that sponsored data programs could disadvantage start-ups and nascent content creators because their larger counterparts have more capital to invest in drawing consumers to their own content. I would argue otherwise. Smaller and younger companies can turn to sponsored data programs as a marketing tool to compete.

Furthermore, as sponsored data programs drive up consumers’ ever growing appetite for more mobile data and provide them more flexibility, the rising demand will help everyone as consumers will be able to do more online without having to think about their data consumption.

The critics often ignore the fact that companies across the industry spectrum have enticed consumers at some point by offering incentives or cheaper service than their competitors – this is Business 101.

Would we try to stop Domino’s from offering free delivery because a local pizzeria couldn’t afford to hire enough staff to provide the same service? Of course not—so why would we stop wireless service providers from offering deals to differentiate themselves from their competitors? What’s with the double standard?

Despite the misguided efforts by some to prohibit sponsored data programs through government intervention, these programs are helping consumers just in the nick of time. The rising rate of mobile data consumption—which has increased by nearly 60 percent in just the past year alone—means that mobile consumers are stretching their monthly data plans further than ever before. In fact, over half of Americans who are smartphone-dependent often use up nearly all of the data in their plans.

As these points illustrate, if we can make mobile Internet and related offerings more accessible and more affordable for consumers through sponsored data programs, then we can help realize the long held desire of policymakers and public interest groups to bridge the digital divide. I’m sure most people would agree that the government should never stand in the way of consumers getting the best bang for their buck.

While it’s hard to pinpoint any factual ways that sponsored data could actually be harmful, the benefits they provide for consumers and content creators are clear. These offerings are just another means for businesses to compete in the digital age, and that competition will only heat up as America’s ever growing demand for mobile data continues to raise the stakes for everyone in the Internet ecosystem.

John Celock is the Executive Director of 21st Century Consumers, an advocacy organization focused on the interests of consumers using emerging technologies for goods and services.

Morning Consult