AT&T's app developer billing scheme: Will app makers buy in?

AT&T's trial balloon of charging app developers for bandwidth their users consume might not stay in the air very long. The question is whether a significant number of app developers would agree to pay a premium so that consumers would be able to use their apps without fear of incurring data overage charges. AT&T’s John Donovan told the Wall Street Journal that app developers that use data-heavy services could reach a wider audience if users were able to access their applications unhindered. "Why don't we go create new revenue streams that don't exist today and find a way to split it with them," Donovan explained.

Gerald Faulhaber, a professor of business and public policy at the University of Pennsylvania's Wharton School, says AT&T's reasoning is perfectly sound and that no application developer will be forced to pay AT&T if they don't feel they their users will feel inhibited by bandwidth limits. "It seems clear that AT&T is offering this as an 800-type service that firms can buy or not buy, as they choose," he says. "If a firm wants to give customers the option of downloading an application without risk ... then this would be a good marketing tool for them. Otherwise, the firm wouldn't buy it. Lots of firms, big and small, offer their customers 800 telephone service and it is a win-win. Why not do the same on the Internet?" The big problem from AT&T's perspective is that it's unlikely to get big-time app developers to sign up for its new payment scheme if it's the only carrier to offer it.