Apps, Free of Charge

Another kind of package digital and communications service providers are beginning to embrace is to offer subscribers one or more apps free of charge. This is largely a means to attract and retain particular customer segments, especially those who often run out of data, but value a specific app enough for it to influence their purchasing decision.

For example, GoSmart Mobile, a T-Mobile sub-brand in the U.S., offers access to Facebook via an app regardless of whether customers have run out of their monthly data allotment. Likewise, in Germany, operator E-plus offers WhatsApp access at all times through its WhatsApp SIM, even if a customer’s data balance is zero.

The commercial agreements here between digital and communications service providers and OTTs can prove to be a significant competitive advantage for those that form partnerships early on. The complication, of course, is who should pay for the app access if customers are using an app for free. Previously, operators subsidised that access, but now more nuanced models are developing – sometimes involving a shared cost.

It’s important to note that this kind of zero-rating can be a violation of net neutrality legislation in certain countries. However, digital and communications service providers can take measures to minimise discrimination against competing services when offering free apps. For example, T-Mobile U.S. zero-rates not just one but a whole set of music streaming services (currently 27) under its Music Freedom program.

Either way, if operators choose to zero-rate an app, the first step is to implement a policy and charging system that allows apps to be categorised as “free” in the offer catalogue. So making an app free for users doesn’t just require a business conversation, it requires a technical one as well.

Click here to read part 3.

Ari Vänttinen, Comptel
Moving Telco companies in Europe and Asia from ground to cloud. Born 1969, M.Sc. (Economics). Joined Comptel in 2014, member of Executive Board since 2014. Has previously held various marketing executive and management roles at McAFee and Stonesoft Plc since 2010. Before that management consultant at Talent Partners 2007 – 2010 and marketing management and business development roles at Nokia Networks 2004 - 2007.
Connect with Linkedin to Comment

Don't worry. It's stupid easy.