AEI, Anticipating Net Neutrality Ruling, Defends AT&T Sponsored Data

The American Enterprise Institute, anticipating a net neutrality ruling soon, hosted a discussion on whether the concept has legs or merit.

The American Enterprise Institute (AEI), a Washington, D.C.-based nonprofit focused on "expanding liberty" and "strengthening free enterprise," hosted a discussion Jan. 13, ahead of what it said is an expected decision on the FCC vs. Verizon suit from the U.S. Court of Appeals and in light of the controversy surrounding AT&T's new Sponsored Data plan, both of which focus on net neutrality.

A heavily debated concept, net neutrality promotes the idea of the Internet as an open and equal market in which Internet service providers can't give preference to some Internet traffic—can't slow down or speed up traffic, for example, or force sites to pay for users to access their content.

The members of the morning's panel were Jeffrey Eisenach, an economist and director of the AEI's Center for Internet, Communications and Technology (CICT); Richard Bennett, a visiting scholar at AEI; Roslyn Layton, a visiting Fellow at AEI's CICT in Copenhagen; and Bret Swanson, president of Entropy Economics and a visiting Fellow at AEI's CICT. All were critical of net neutrality as a workable concept—Eisenach, with other economists, has said there's no "economic basis" for it—and called foul on the way AT&T has been pounced on for supposedly violating it.

Introduced Jan. 6, Sponsored Data lets businesses cover consumers' data costs when they interact with sponsored content, whether a Website, a video, an app or more.

"When T-Mobile [mobile virtual network operator GoSmart] released a program that allows free Facebook access, it wasn't a problem. But when AT&T tries something like, that it's abuse of its market power," said Layton. She went on to downplay the issue as a first-world problem.
"Maybe we have too much time on our hands that we're worrying about these issues in the United States," said Layton.

Bennett called the controversy around Sponsored Data "manufactured," and added to the number of voices saying that the offer isn't really something new.

"If you get an [Amazon Kindle] and you have the 3G option, Amazon pays the carrier for underlying 3G service. You don't have to use the [data] on your cell phone service to receive books. … So there are precedents for [Sponsored Data]."

He offered connected cars as another example, saying drivers will enjoy Sponsored Data–like service to connect their cars to the Internet.

"The thing that bothers me about this is that the Internet is still an evolving system. … There needs to be freedom for engineers to innovate and develop ever more [sophisticated systems]," said Bennett.

Swanson took up the argument that Sponsored Data will give an advantage to deeper-pocketed players, saying it wasn't true.