Word that Verizon was exempting its own Go90 video service from data caps for Verizon users understandably raised immediate red flags among net neutrality advocates.
After all, Verizon is essentially saying you can use our data service for free while all other video services count against your data cap, which would appear to be the opposite of neutrality.
Here’s how Verizon says it is doing it legit. The company says it is using its own, recently launched sponsored data program, known as FreeBee. Sponsored data is like toll-free calling, where the provider of the content, rather than the consumer of it, pays the cost.
“Go90 has decided to take advantage of Verizon’s FreeBee Data 360 service, which allows them to pay for customer’s data usage associated with watching videos on the Go90 app,” a Verizon representative told Re/code. “FreeBee Data 360 is an open, non-exclusive service available to other content providers on a non-discriminatory basis. Any interested content provider can use FreeBee Data 360 to expand their audiences by giving consumers the opportunity to enjoy their content without incurring data charges.”
But here’s the problem with that. Verizon runs the network. If a little bit of data traffic isn’t getting paid for, it can just make sure its costs are covered by all the traffic that is paid. Whether or not it can sign up that many advertisers isn’t all that important, at least for a while.
Any rival video service, by contrast, has to cut Verizon a check for all the sponsored data it offers. If it doesn’t generate sufficient advertising dollars, it has to eat the rather substantial cost of all that data.
AT&T, meanwhile, may be looking to do the same thing. It said on its recent earnings call that it is preparing a mobile video service and expects sponsored data to play a significant role.
T-Mobile’s BingeOn (which is controversial in its own right), by contrast, lets users watch any of a number of video services — none of which it owns or controls. However, it does other things that net neutrality advocates don’t like, such as lowering the quality or slowing down the speed of video content as well as making some types of content (music and video services) free while charging for other types of data.
Verizon defended its service as a win for consumers (at least those using its service).
“The real benefit here is for consumers who no longer have to pay for data usage when watching the content in Go90,” a Verizon representative said. “The cost falls to Go90 and we wanted to give our users an opportunity to watch everything in the app without it counting against their data plans.”
The Federal Communications Commission has said it will take a hard look at how companies implement sponsored data.
This article originally appeared on Recode.net.