Bloomberg News

AT&T Proposal to Take Providers Pay Signals Fight, Gallant Says

February 28, 2012

An AT&T Inc. (T) proposal to let providers of mobile applications pay part of the cost of data traffic may ignite a “major political battle in Washington,” an analyst said.

Policy groups would contend such a plan violates Federal Communications Commission rules designed to prevent Internet providers from unfairly favoring some content and service companies over others, Paul Gallant, a Washington-based analyst with Guggenheim Partners, said today in a note to clients.

AT&T, the second-largest U.S. wireless carrier, has warned it will reduce access speeds or limit consumption by the heaviest users as it copes with a surge in data traffic from more smartphones and tablets. The plan to accept payment from companies that provide applications and content such as video was reported yesterday by the Wall Street Journal.

The FCC’s rules adopted in 2010 don’t directly forbid such payments, Gallant said. Groups may argue the arrangement would harm innovation by small companies, he said.

Michael Balmoris, a Washington-based spokesman for AT&T, said in an e-mail today that the company hasn’t “landed on any new business models for supporting consumers’ use of data- intensive applications, but we’re always thinking about how we can innovate and collaborate with others to provide the best mobile experience for our customers.”

Neil Grace, a spokesman for the FCC, declined to comment.

To contact the reporters on this story: Todd Shields in Washington at tshields3@bloomberg.net; Scott Moritz in New York at smoritz6@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net


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