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$ponsored data - is this a revival or a final $plutter?

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via Flickr © y KJGarbutt (CC BY 2.0)

Perhaps market forces have caught up with ‘sponsored data’ in the US. Just as the new FCC chairman, Ajit Pai, took his trusty weed-wacker to his predecessor, Tom Wheeler’s, investigation into the impact of sponsored data in the net neutrality context, Verizon announced that it was changing tack and reversing its bandwidth caps policy by offering an unlimited tariff.

The resulting ‘Verizon Unlimited’ plan must reduce Verizon's room for manoeuvre in what looks like being a non-neutral environment in North America as the new FCC and the Republicans in Congress gear up to undo Obama and Wheeler’s hard-fought net neutrality protections - removing the close inspection of sponsored data by the FCC was part of that.

In that context, the 180 degree policy reversal by Verizon is just a bit embarrassing - until this week Verizon hammered home that ‘Unlimited’ was anathema. Now that the FCC is signalling that big net neutrality policy changes are in the offing, it seems a bit weird to forgo the advantages of bandwidth caps just at the point where you might really be able to use them without getting regulatory push-back.

What gives?

That previous Verizon adherence to caps, could have been because Verizon has spent the last couple of years buying content properties, much of which will be video-streamed across its network to its multi-play subscribers. To make multi-play work and still leave it a healthy margin, Verizon could do with the ability to squeeze one property to adjust the overall pricing and attractiveness of the bundled offering. For instance, a bandwidth cap on Internet access can be engineered to reduce the attractiveness of so called ‘cord cutting’ where the subscriber decides to drop the video service and just get all its entertainment from the Internet.  A cap is a major disincentive for this course of action and it’s also a major revenue earner for the carrier which gets to charge overages every time a customer goes over the limit.

In different circumstances, though, Unlimited data access within the bundle can be designed to increase the value for the consumer without shaving any revenue off for the provider (except for the overages). But unlimited  tariffs always reduce the attractiveness of ‘sponsored data’ unless the deal comes with some sort of net neutrality-busting speed or quality boost.

Flip and flop

The return to ‘unlimited’ has been under way for some time and Verizon was, until this week, the last hold-out amongst the US big four. So the real reason for the sudden change by Verizon is good old ‘market forces’. Both T-Mobile and Sprint have been adding customers at a rapid rate by offering unlimited plans - Verizon needed to move in that direction to staunch flow.

Besides, if can always do another 180 degree turn down the track and reintroduce them.

Meanwhile in Europe and the rest of the world, sponsored data is also getting a boost as Mobile World Congress rolls around. Telefonica has lined up sponsored data specialist Datami in a strategic partnership to commercialize brand-sponsored mobile data across its footprint.  The platform is now commercially active in nine countries with use cases that span sponsored data apps/web, sponsored data for video and call-to-action data rewards.

Telefonica says it will roll the Datami platform out to further territories during 2017 and claims brand-sponsored data drives more effective customer engagement by removing customers’ concerns over the mobile data costs associated with content consumption. And it encourages customers to “respond at the point of engagement,” so that data traffic stays on the mobile network rather leaching out over cheaper Wi-Fi connections.

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