10 Ways to Use Zero Rating to Change the Business Model

It’s fair to say that net neutrality in the US looks like it’s on the way out. Now the grey area of zero rating can take centre stage and service providers can use zero rating in many ways to grow their businesses. The traditional telco service provider model of here’s a bundle of here’s 10 GB of data, that’ll be $50 please, is changing.  The range of content, wholesale and marketing partners in the digital services value chain is ever changing and in the past few years service providers have found themselves being pushed down the food chain in terms of customer importance and relevance. Zero rating offers a possibility to help change this. The service providers now have a tool to help them take a stronger position in the digital service value chain and better engage with their customers.  As well as this zero rating could also do some social good – it’s not just about selling mobile TV or placing ads – it offers the potential to remove the biggest barrier to getting on-line for many people in developing countries – cost.

So here’s 10 areas where zero rating can make a difference.

1.      Get the unconnected on-line and connected. This was Facebook’s driver for internet.org. Get the unconnected on-line, and give them access to on-line education, healthcare and the basic internet services that most of us take for granted. But as we seen in India giving free internet access could go against net neutrality. With zero rating service providers and organisations like internet.org can select essential apps and make them available in certain markets free of charge. At Openet we wrote a blog last year on how zero rating can drive data adoption and help connect the unconnected. The economic benefits of getting people on-line are huge – check it out here.

2.      Free apps to drive spend– a good example is in Ireland where national service provider, Eir, is offering more than you can eat data. This started out as unlimited Facebook and Twitter for pre-paid customers as long as they topped up by €20 a month. Next up Pokemon Go was added, then YouTube and several more. Providing application service passes, where a specific application is zero rated is a good method of driving up frequency and value of pre-paid top ups.

3.      Try before you buy – with service providers rolling out new services such as music and mobile TV one way to get customers to try them out is to zero rate them as part of an initial marketing offer.

4.      Driving app usage and moving transactions to digital platforms – there’s a well-documented case study on Banco Bradesco using free data to drive up usage of their mobile banking service in Brazil – which in turn saved them millions by reducing the number of in-branch transactions. The opportunity here is for service providers to go to enterprise customers, who want to move their transactions to web based (increasingly mobile) platforms, and use zero rating to save these enterprise customers money – and use the service providers’ enterprise solutions.

5.      No overage charges – switch to advertising funded usage – when a customer is approaching their monthly usage limit – they usually have a choice – they can buy more data, or they can have their speed throttled. What if you gave them a third option? Move to advertising funded usage – so they’re exposed to ads on their device until their data allocation is refreshed. This can be for all services, or indeed just certain apps, or at certain times of the day. The main point here is that the customer has a choice – ads are not being forced on an unwilling customer. The customer is making an economic decision whether to accept ads or not.

6.      Happy hour and location based freebies– time of day passes can zero rate certain applications at different times of the day. For example, if a service provider has just launched a TV service with a business channel, then they could offer zero rating of this channel from 5 – 7pm when people are on a commute home from work. A twist on this is offering zero rating for specific cell sites. This could be to tie in with a sporting event, or even to ramp up usage in cell sites with lots of unused capacity.

7.      Roaming data usage – brought to you by your favourite airline – service providers can do deals with travel companies on roaming data – this can be for all data services, or indeed just certain apps. They could also use tie in with major events – e.g. World Cup, Olympics, etc and have event advertisers sponsor mobile data or specific apps.

8.      TV everywhere – as all service providers seem to be rolling out TV services and promoting TV Everywhere then removing the high cost of watching TV on a mobile devices over a cellular network could remove a barrier to entry. Service providers could even do this for specific promotions – e.g. free football for a month.

9.     Sponsored apps – e.g. Netflix brought to you by Coca-Cola, etc. Customer gets exposed to ads (as they do with most TV services) and the advertising pays the service provider for the traffic.

10.   Zero rated services by device – if a service provider is pushing a new device (e.g. a new tablet) they can zero rate traffic (or certain traffic) for a particular device for a given time period. This could be useful in helping shift those ‘old’ devices (as opposed to just cutting device cost) or indeed using as a marketing tool to drive sales of new devices.