Mobile Operators Eye 'Free Shipping' of Digital Downloads

Stephen Yagielowicz

LOS ANGELES — An interesting opportunity is rearing its head in the mobile world, where carriers are eyeing new monetization schemes; including charging publishers for the downloads their customers make.

It is a fact of life for many Internet users, as well as mobile customers without unlimited data plans: there’s only so much that you can download before the tap is shut off, or a big bill arrives in the mail. It is the underpinning of consumption based billing, but the reality of its implementation makes the promise of modern media a pipe dream for many users.

Shifting patterns of Internet use and mobile network access, coupled with bandwidth caps and over-limit fees, are driving the development of new business and revenue models — including a proposal by AT&T to charge app publishers a fee in exchange for the ability to send data to their customers without affecting those customer’s bandwidth usage caps.

“While AT&T presented the idea as akin to a 1-800 number for data or ‘free shipping,’ consumer advocates argued [that] AT&T was simply imposing arbitrary caps, charging customers who crossed it, then charging the biggest companies yet more money so their content received special treatment,” Karl Bode wrote for “Most content companies, especially smaller ones, appear smart enough to understand the dangers of such a model — with wireless carriers suddenly giving select, deep-pocketed competitors a huge leg up.”

Bode explains that this shift would give AT&T and Verizon new control and power over a content ecosystem and application marketplace that many observers view as operating better with carriers out of the way — a sentiment that is well established within the ranks of adult entertainment operators.

For its part, Verizon wants to get in on the gravy train by allowing companies to pay to bypass data caps and hopes to come up with something that is a win-win for stakeholders including wireless carriers, content companies and consumers alike.

According to Verizon CEO Lowell McAdam, unlimited data plans are unsustainable as wireless Internet surpasses fixed access, and video content becomes more commonplace. 

“With unlimited, it’s the physics that breaks it,” McAdam stated. “If you allow unlimited usage, you just run out of gas.”

Someone has to shoulder the bill, however, and the carriers are eyeing those with the deepest pockets — content publishers and app developers. It is a situation akin to adult tube sites charging producers to post their clips. Regardless of the route that the dollars take, however, it’s consumers that will ultimately bear the brunt of these pricing schemes.

“Content development costs will simply get passed on to consumers, but now you’ll have AT&T and Verizon picking application winners and losers based on who ponies up the most cash,” Bode concluded. “Having network gatekeepers impose a completely arbitrary limit, charging everyone who crosses it [and] then charging some companies extra if they want special treatment. What could possibly go wrong?”

All of this bears watching by adult entertainment marketers given the size of the audience and the huge amount of cap-busting bandwidth it pushes.