Verizon Wireless is hopping on the free data train, confirming it will launch a “sponsored data” pilot program in the next few days that will allow customers to access certain online services without it counting against their data caps.
The move would make Verizon Wireless the third major U.S. carrier to experiment with free data offerings. T-Mobile US made a splash with its Binge On and Music Freedom promotions, which allow customers to downgrade quality in order to access certain music and video services without it counting agains their data limits.
AT&T Mobility has also dabbled with a “zero-rating” program of its own for the past few years called 1-800-DATA, which is “a new way for eligible 4G customers to enjoy mobile content and apps over AT&T’s wireless network without impacting their monthly wireless data plan,” the company said back in 2014. AT&T Mobility’s plan would charge content providers instead of consumers. So far, it has seen little traction in the consumer market.
While many details are still unknown, Verizon Wireless’ approach is said to be similar to AT&T Mobility’s as Verizon Wireless tries to monetize its growing content business. Verizon EVP Marni Walden told Re/code she sees three business models to make sponsored data commercially viable: ads, higher data usage, and subscription/pay-per-view upsell services. She also says they have the technology to do it.
“The capabilities we’ve built allow us to break down any byte that is carried across our network and have all or a portion of that sponsored,” Walden said. 451 Research Principal Analyst Rich Karpinski says that capability could play an important role in Verizon Wireless’ sponsored data strategy.
“That capability isn’t trivial, and in talking to vendors that can deliver that type of smarts – via deep packet inspection and other types of network intelligence – it has been one of the barriers for sponsored data moving out of the test phase and into full commercial deployment,” Karpinski said. “For it to work at scale, carriers must be able to correctly identify network traffic so as to rate and bill it properly. Verizon’s confidence in this area is a nice compliment to its growing confidence – and capabilities – in the areas of advertising and content.”
Verizon Wireless hopes to have a large-scale rollout of the program by the first quarter of 2016.
Many worry free data services such as these may have larger implications in the net neutrality debate. Federal Communications Commission Chairman Tom Wheeler has called the offerings “innovative and competitive,” but has also said he sill be keeping a close eye on the outcomes.
