Monday, December 9, 2013

[Analysys Mason]: Business Models for Application-based Pricing

As it seems that the FCC is considering more flexible Net Neutrality rules (see "FCC Chairman re-defines Net Neutrality: 'we're going to see a two-sided world'" - here), it is time to evaluate the business models for the relations between the customers, carriers and OTT content providers.

A new report by Ronan de Renesse, Principal Analyst, Glen Ragoonanan, Senior Analyst, Eva Weidinger [pictured], Research Analyst, and Anil Rao, Analyst, Analysys Mason on Application Based Pricing, finds that "The fact that consumers generally do not pay for content and apps is a fundamental consideration when deploying ABP solutions and exploring the underlying business models".
"Operators need to consider innovative tariffs to maintain ARPU and remain competitive as mobile data prices and per-user spending on digital content decline. Application-based pricing (ABP) is the inclusion of third-party content and services (applications) as part of tariff structures. ABP helps operators and over-the-top (OTT) players to further monetise consumer demand for popular apps on mobile devices. Apps drive smartphone adoption, and generate mobile data traffic, which in turn generates mobile data revenue for operators"

".. three typical business models, which are based on examples of exclusivity agreements:
  • Fixed rate: the operator pays the OTT player a fixed rate, as per the Deutsche Telekom and Spotify agreement [see "DT to Offer Zero-Rate Video Calls, Messaging, File sharing and Music Services" - here]
  • Revenue-sharing: the OTT pays the operator a share of revenue, as per Telefónica Digital and Aurasma‟s partnership.
  • No-one pays, as per agreements between Facebook and dtac Thailand (part of Telenor), [see "Facebook Offers Free Messaging Through 18 MNOs" - hereas well as SingTel and WhatsApp".
See "Application-based pricing: opportunities, business models and case studies" - here.

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