First published in June 2013
Six years ago, just before the smartphone era, mobile network operators (MNOs) were trying to get people to use their networks for data transfers, but they weren’t having much luck. There were plenty of reasons why this was the case.
Attempts to access the internet using GPRS via substandard handsets were less than gratifying experiences and the cost, calculated per kilobyte was even less appealing. Early content service providers (CPs) all but gave up offering music and games over mobile networks because the cost of downloading far outweighed the price of the content itself.
As a result, enterprising CPs in some Asian markets came up with the idea of pre-buying data in bulk, rolling the much-reduced cost into the content price and offering customers free downloads. Brilliant idea, but short-lived because operators, fearing a demise in voice revenues, started offering very attractive data bundles, including the now dreaded all-you-can-eat unlimited plans to stimulate traffic.
Little did they know then that soon after, with the advent of smartphones, downloadable apps, faster networks and explosive data growth, they would have to revert back to a pay-by-volume, limited data or ‘capped’ model. This has managed to achieve revenue growth but has made customers critically aware of data usage and this has gotten some content and app providers concerned.
So much so that some are going back to the future and looking again at subsidizing wireless access to their content. According to a report in the Wall Street Journal, sports media giant ESPN is in talks with at least one US operator that could potentially lead to a ‘toll-free’ data plan that could open up new revenue streams for both parties. There is some precedent already with Amazon’s Kindle model where it is understood Amazon covers the cost of limited internet access and content downloads by its customers.
ESPN is a logical candidate for this type of service offering as its rich content and video streaming needs would chew through any capped plan. The report states that it already has 45 million digital users, including about 16 million that access ESPN content exclusively from mobile devices. It also mentioned that one US carrier told ESPN that significant numbers of its subscribers reach their monthly cap before the end of the month, thus supporting the theory that customers will likely ‘switch off’ and stop consuming content rather than paying excess usage fees.
These may be early stage discussions but if true could signify a dramatic change in thinking by OTT players that have been working on the basis that the user pays the data bill. It would be great news for MNOs as well if they can generate a new revenue stream. It all sounds great, but have they thought through the ‘billing’ issues this model raises? How many MNOs would actually be ready to launch a model like this tomorrow?
Presumably every billing vendor has a solution or work-around to cope with this but it may mean considerable investment for those operators that don’t have systems in place right now. Think of the billing model for just a minute. Customers with limited volume data plans that access content from participating OTT players will not have that usage deducted from their totals, or they will be zero-rated if on a pre-paid or pay-as-you-go plan. Those same data volumes will need to be added and charged to the OTT player account.
Of course, there will be a hundred variations to this simplest of scenarios, but it still highlights the need for some interesting billing procedures and reconciliation requirements, including multiple concurrent sessions via the one device. Let’s hope that these new data stream do eventuate and that it won’t be billing that prevents them from happening.