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Are we seeing the emergence of a two tier mobile society?

By June 21, 2017 No Comments

Last week Sprint announced that it will offer free unlimited data for a year for new customers switching from AT&T, Verizon or T-Mobile. Like most unlimited deals there are caps – 23GB per month, plus a maximum of 1080p for streaming video, 1.5 Mbps for streaming music, and 8 Mbps for games. Also at busy times customers may find themselves bumped as “data de-prioritization applies during times of congestion”. This is short term offer and will run out at the end of June.

Is this a one off, or are we seeing the emergence of major service providers offering their connectivity services for free? If the latter is the case, then there is the obvious question – how are they going to make money? There’s a few options here.

  • Sell content and other services direct to the customer.
  • Sell the customers’ data to third parties for marketing or advertising purposes.

While data protection laws exist to ensure that customer data can’t be abused (for example data needs to be anonymised) the issue of something for nothing is bound to raise its head. Last year I read about a charging workshop where a group of students were asked to compare their views on Google and their mobile phone service provider. They were happy with Google. They didn’t mind that Google was using their data to drive advertising revenues. When asked their views about mobile service providers and if they’d be ok for the mobile providers to sell their data, the students said that they’d not be too happy. So it’s ok for Google, but not for the mobile phone provider. The reason – Google doesn’t charge for services and the mobile company does.

To stop all data becoming commoditised will we see the emergence a two tier mobile society? We’ve already seen the success of apps like mCent in low ARPU countries that enable free data for viewing ads. So is the next step in the ‘unlimited’ marketing battles to make services available free of charge. Albeit with tight data caps, de-prioritised access when networks get busy and lower speed for streaming services.  Will the revenue from this segment come from selling anonymised data to advertisers? On the flip side there are customers who pay for data. Will they get better service? This could include special offers (e.g. zero rated bundled content), higher fair usage caps, priority at busy times, ability to set personalised controls and deals on promotions (e.g. concert tickets, etc).

Either way both will need network controls to build, shape and manage the offers. It’s also ironic that free services will need flexible charging. Consumers will not be paying for basic mobile data but usage will need to managed and analysed to identify opportunities for chargeable upsells. Then there also new wholesale and partner business models that this two tier model will no doubt throw up.