NEW BLOG: Mark Zuckerberg, in his MWC 2014 keynote, said he wanted to prove the business model of free mobile internet access in emerging markets. Yet a growing number of operators seem already persuaded that giving away mobile data can reap financial rewards in the long run. The Facebook CEO may well be pushing against an open door.
Avea, the third-largest mobile operator in Turkey, announced only last month it would give away a free week of internet access to 100,000 subscribers, but it’s hardly the first to hand out freebies.
DiGi (Malaysia), Globe (Philippines), Idea Cellular (India), Mobilink (Pakistan), RCom (India), Tigo (Paraguay) and VimpelCom (in Russia and developing markets) are among those that have either zero-rated certain applications, given away ‘full’ internet access for limited periods, or charged nominal sums for special promotions.
Some offers are sponsored. Yandex, a Russian search engine company, is covering at least part of Avea’s cost in exchange for ad placements.
One aim, of course, is to entice more customers onto data plans (after giving them a free mobile internet taster). Another goal, if operators embark on more targeted offers, is to increase data ARPU of existing customers.
Behind many of these discount deals is Opera Software, which provides internet browsers for laptops and mobile phones. Opera Mini, the firm’s mobile-phone browser – popular in many emerging markets – provides data compression in the 60-90 per cent range. It means operators can trim the cost of their mobile data giveaways and so reduce risk.
Ease-of-use is vital too. Opera Web Pass, which allows operators to present internet offers to their customers, can be accessed in two clicks: one to open the Opera Mini browser and another to select the ‘web pass’ option. And courtesy of the Opera platform, operators can set up and tear down web pass promotions quickly. These can be more nuanced than simply offering free internet access for a day or a week. Web passes might take the form of offering hourly passes for Facebook or Twitter, say, or special discount promotions (two full days of unlimited internet for the price of a day, for example).
Also part of the Opera platform is an analytics capability, which, the company claims, can determine a user’s demographic – based on online behaviour – with 90 per cent accuracy. It gives operators a chance to offer “tailor-made” data plans, where offers are based on what customers are most likely to be interested in. If customers choose to share personal data, including preferences, the chance to boost data ARPU through more targeted promotions increases.
“We help operators commercialise what they are really good at, which is access and data plans,” Lars Boilesen, Opera’s CEO, told Mobile World Live. “That’s something they own and that’s where they have a competitive edge. They need to come up with products around that which helps them increase ARPU. This is the future for operators.”
But how effective are these offers? Opera says Web Pass is live with 10 operators but results vary from country to country. One variable, apparently, is how much marketing oomph mobile operators are prepared to give (suggesting perhaps that not all are entirely convinced about the benefits).
The uptake figures that are publicly available nonetheless look encouraging. DiGi in Maylasia, which has been working with Opera since May 2011, reports that more than half of users who bought a web pass are repeating one or more web pass purchases within the same month.
And under Facebook’s Internet.org initiative, which counts Opera among its founder members, Zuckerberg – at MWC 2014 – spoke of “promising results” achieved with Globe in the Philippines and Tigo in Paraguay.
By ‘zero-rating’ access to Facebook and other services, such as Wikipedia and weather information, both operators saw a doubling of mobile data subscribers within three to four months. Customers, it seems, are willing to pay for data once they get a free taster.
It no doubt helps that the data offers are easy to understand. Facebook free for a day is more readily understood by first-time mobile internet users than abstract talk of MBs and GBs.
And more pricing innovation is on the way. Opera is currently developing a function that will alert users going to sites that have web pass offers. By buying a web pass customers can save money. The ability to offer app-specific offers, when customers are using the app, is also in the pipeline.
Facebook, too, has muscled into app-based billing through its recent acquisition of Finnish company Pryte.
Even so, more information to flesh out the ‘free’ business model would be useful. What, for example, are the typical conversion rates from free to paid-for data when operators embark on an upsell strategy? What can operators do to increase those conversion rates? How far have operators been able to bump up existing customers’ data ARPU through more targeted offers? What lessons are being learned?
Getting positive and convincing answers might help calm those that still have fears about free and discounted mobile data.
The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members.