I mentioned in my Blog last week that Zero Rating would be a hot topic for operators, especially mobile operators. I thought it would be useful to take a look at what has happened in the past few weeks on this topic.
Back in January, the FCC voiced concerns about the zero rating practices of AT&T (and to a much lesser extent Verizon) due to the "sponsored data" view that AT&T has taken with DirectTV content on their network (which AT&T also owns). T-Mobile was given a pass on their practices so far since they have no vested interest in the applications that they are zero rating on their network at this point.
However, an election was held in the US, and a changing of the guard at the FCC occurred. The new Chairman of the FCC, Ajit Pai, subsequently cancelled the inquiry and stated that zero rated data was good for consumers:
"Going forward, the Federal Communications Commission will not focus on denying Americans free data," Pai said in a statement. "Instead, we will concentrate on expanding broadband deployment and encouraging innovative service offerings.”
So where to now for US operators? Can you replicate the success that T-Mobile has experienced with zero rating?
Let's take a look at five steps that operators need to take to succeed at zero rating:
Step 1: Understand what content your subscribers value: Although this sounds easy, i.e. "Everyone loves Netflix", every network is slightly different. Different geographies may utilzie differnet services more than others, even the US is not homogenous in the use of Amazon vs. Netflix vs. Hulu vs. YouTube. Very important to the process - will promoting this service as free give you a competitive advantage or remove an advantage your competitor has?
Step 2: Analyze how consumption of this content affects your network: Is this application the one causing congestion on your network? Would an increase of the bandwidth used by this application make your network quality worse than it is now? If so, that needs to be factored into the equation. Would peak hour consumption require network upgrades?
Step 3: Determine if an increased consumption of the content can be mitigated: There are applications and content that you can reduce the impact on your network through network engineering. Caching content, allowing the content provider's CDN to connect closer to your subscriber, even managing the traffic to reduce the imapct (i.e. the way T-Mobile limits zero rated video to lower resolution) on your infrastrcuture.
Step 4: Define how you will identify and zero rate the content: Some applications are easier than others to detect on your network - i.e. many video streaming services come from specific CDNs. Other applications, like messaging applications and gaming, are more peer-to-peer oriented and require application signatures that are frequently updated to ensure correct zero rating. This is a key, as a Northeastern University report on BingeOn highlighted. Are you going to zero rate a class of applications (i.e. Video or audio streaming), or just specific applications (i.e. Facebook and Skype) - because zero rating a single application might be a simple configuration, zero rating an entire class of applications (as the EU requires) is a much bigger challenge.
Step 5: Launch the service with clear value proposition to your subscribers: Make sure that you highlight the competitive differentiation you gain (or nullify a competitors differentiation) with the service. Keep an eye on the uptake and the impact on your network (as mentioned above) and add to the service as it makes sense to stay competitive and keep your subscribers happy.
If you are interested in this, we would be happy to explain how our customers are deploying zero rating and how it has led them to happier subscribers! A brief overview of our solution is here and some customer examples are here.