South Africa: Data Discrimination On The Internet: A New Model For 2014

Last Updated: 10 March 2014
Article by Stephan Viollier

Wireless Sponsored Data

AT&T Inc., the United States' second largest wireless carrier, announced early January that it is setting up a toll-free service for wireless data.

Content providers and companies wishing to promote their apps and services will be able to pay AT&T directly to "sponsor" their data for free, without counting towards a User's monthly data caps – providing free internet access to their services.

AT&T suggested a number of possible benefits to companies:

  • Encouraging customers to try a new smartphone or tablet app
  • Promoting movie trailers or games
  • Providing patients with healthcare support via wellness videos
  • Encouraging customers to browse mobile shopping sites
  • Allowing businesses with bring-your-own-device policies to pay for the data employees use for specific business-related apps and services
  • Enhancing customer loyalty programs by providing sponsored data access to products and services

A widespread adoption of the "Sponsored Data" model by more operators was seen as potentially spelling significant changes for the Internet going forward, creating a tiered structure, where certain data can be prioritized, instead of the level playing field we are accustomed to. Established companies wealthy enough to pay for their customers' data could gain competitive advantage for their apps and services, with startups that can't afford it at a disadvantage.

Net Neutrality

Criticism of the program was largely aimed at the threat to Net neutrality - a policy intended, in its simplest form, to keep the internet open to all users, applications and content and to support efficiency and freedom on the Internet by guaranteeing a level playing field for all Web sites and Internet technologies.

Net neutrality requires Backbone and Internet service providers (ISPs) to move data packets across the network without favoritism and to treat all data equally, not discriminating or charging differentially by user, content, site, platform, application, type of attached equipment, and modes of communication.

Supporters of net neutrality argue that the presence of content restrictions by network providers presents a threat to the future of digital innovation, individual expression and the US' First Amendment rights to free speech.

The Open Internet Order

In 2010 the US Federal Communications Commission (FCC) introduced the "Open Internet Order" (OIO) a set of regulations to form the legal basis for Net neutrality, aimed at guaranteeing equal access to all sites on the Internet and ensuring that ISPs do not discriminate between different content types and providers and do not prevent access to lawful internet content, such as their competitors' services, blogs critical of their own services or certain websites that required heavy bandwidth.

The regulations differentiate between two classes of Internet access, with an aggressive net neutrality stance for fixed-line providers but a more lenient and less regulated approach for wireless and mobile phone providers.

AT&T successfully argued that Net neutrality does not apply to its "Sponsored Data" program, which is aimed at wireless services.

Fixed-Line Regulation: No More

Then, a week later on 14 January, the US Court of Appeals for the District of Columbia struck down important segments of the FCC's Open Internet rules pertaining to fixed-line providers. It decided that the FCC exceeded its statutory grant of authority and did not have the jurisdiction to regulate broadband carriers in the way it does traditional telephone operators.

The Internet, as defined by the FCC itself in the US Telecommunications Act 1996, is merely an "information service" not a utility of vital importance (such as telephone lines or electricity) under federal law and thus not subject to regulations banning discriminatory arrangements.

The court's decision could be reversed, either on appeal to the Supreme Court or by the FCC rectifying the situation by reclassifying ISPs as "common carriers", servicing a utility, to bring them under its regulatory umbrella, but it presently expressed no interest doing so


The result is that now any provider, whether fixed-line or wireless, is free to structure its services in any way deemed fit – for example to make deals with online businesses, allowing them to pay to stream their products to online viewers through a faster, express lane on the web.

Internet users will probably not see an immediate difference with their service, but consumer advocates warn that higher costs to content providers could be passed on to the public, leaving a handful of cable and phone providers to give preferential treatment to the content they profit from.

Further, some suggested that the ruling is likely to accelerate the development of paid-access deals between ISPs and content creators, and to motivate them, in turn, to ensure that their un-partnered service is bad enough that a paid partnership is attractive, which may increase the relative start-up costs for new Internet-based companies.

How these developments will affect the international Internet User, considering much of the Internet's content is running through United States' infrastructure, is not immediately clear.


In Europe meanwhile net neutrality is facing similar changes, with the European Commission's net neutrality proposals, due in March, presently containing provisions for ISPs to create, at their discretion, a two-tiered Internet – a fast lane and a slow lane.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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