At the time of ints conception, toll-free phone lines made a world of sense. Many businesses wanted to encourage phone sales, but hefty long distance charges created friction for the consumer. These businesses could ease that friction by purchasing an 800 number that would essentially transfer the long distance charge from the consumer to the business. That is to say, Ma Bell didn’t care how she got paid so long as she got paid.
Toll-free numbers still exist today, though they really only serve the function of creating an easier-to-remember phone number (i.e., it’s easier to remember the seven digits after 800 or 888 or 877 than it is to remember an entire 10-digit phone number). Cell phones, with free long distance as a standard feature, started killing the usefulness of 800 numbers, and the switch from traditional copper wire landlines to VOIP services really put the nail in the coffin. New technology made the idea of toll-free obsolete.
That is, at least as it pertains to voice calls. In general voice calls are a nonfactor for modern telecoms. You can look right to Verizon’s Share Everything plans as evidence. Every plan, even for feature phones, comes with unlimited voice. They’re not just handing that out, without an alternative tier, if voice is a valuable asset. Instead telecoms today focus on the one feature that can earn them billions: data. And as we’ve seen, the quest to squeeze more money out of us for the same data usage is in full effect.
While Verizon’s and AT&T’s ploys to charge more for less data have prompted some users to simply fork over more money, many have chosen the alternative, which is to curb their data usage. So, as in the days when Ma Bell turned to big business to fund people’s increased use of long distance, so will Verizon target big businesses — namely big content businesses — to fund consumers’ rising data consumption habits. CFO Fran Shammo yesterday talked about the idea of businesses paying Verizon for data usage, allowing consumers to view that business’s content without depleting their data plans.
“The content providers will be willing to pay for the content, if we don’t charge the consumer,” Shammo said.
The topic of net neutrality, a fight that Verizon fights alone, came up, but Shammo rightly brushed it aside. “This is who pays for the delivery of the content,” he said, as opposed to carrier-driven content prioritization. Yes, allowing users to consume certain content without depleting their data plans can be considered prioritization. But to me it seems to be a minor point. What I’m wondering is…
Where is this money coming from?
Content companies doesn’t exactly have Scrooge McDuck money. While some content providers have found ways to be profitable even as advertising dollars have dwindled, others have gone through massive restructuring, including layoffs. Then again, the prior statements refer primarily to text-based content providers. No text-heavy publication would have to pay Verizon; that kind of content requires very little data. It’s streaming video where we see the opportunity.
At the same time, a content provider has to be very sure that mobile video can truly rake in the dollars. They have all the same overhead costs as they do now, plus the money they’ll pay Verizon for the toll-free service. All in all they have to think that the revenues from more easily reaching Verizon’s customers will far outstrip the money they pay to Verizon. Otherwise such an arrangement doesn’t provide enough value to the content provider.
(To be even more clear, the content provider has to find that the profits from serving video to Verizon customers who wouldn’t have viewed the content if charged for the data would outstrip the costs paid to Verizon for the toll-free service.)
At a distance, it seems far-fetched. Then again, basically every media company has placed an enormous emphasis on making money from mobile content. If they think they have a model that works, and think that they can encourage people to view more of their content, and thereby make them more money, by offering their content toll free, then this could work. This is definitely one of those instances where I’d love to see some field tests before coming to a solid judgement.
Via FierceWireless.
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