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'Nothing' doesn't look good on the bottom line

As featured in the BillingViews blog

News about customizable plans and freemium-based access plans being offered to customers have been know to strike fear in the hearts of billers. There appears to be no limit to the brilliance and skill of marketing departments at coming up with ‘killer’ campaigns that sound great but are not necessarily great revenue generators. Unless, of course, that they can be charged for, and accurately.

News last week that Virgin Mobile in the USA, the virtual prepaid arm of Sprint, has launched an offering that allows customers to control how many minutes and text messages and how much data they want on their plan on the fly directly on their smartphones.

Called Virgin Mobile Custom, the service is powered by ItsOn, and will be exclusive to Walmart customers initially. It is no secret that Sprint continues to lose customers, particularly from its core business, so it should be no surprise that it is looking to target the prepaid sector to pick up the slack.

But why go to extent of offering a sophisticated package with customizable bells and whistles to what is being offered through Walmart and, ostensibly, the lower end of the market?

It seems even this has been accounted for by Sprint as customers can go to Walmart to have their plans altered if it’s too difficult for them to do on the phone. Hmmmm, sort of defeats the purpose doesn’t it?

Of course, this sort of functionality is not new and has been demonstrated by leading charging vendors for some time now, but it is a first in terms of being banked on it to bring in new customers in one of the world’s toughest markets. Only time will tell if customers warm to the idea or whether it is overkill for the market it is aimed at.

One can imagine advanced users and corporate managers liking the model to control comms spend and, presumably, they will be targeted next.

Facebook is trying a slightly different tack by imitating previous tactics by mobile operators in developing markets to get people using the internet. It will be offering customers of Bharti Airtel in Zambia free access to a set of services including Facebook, Messenger, Wikipedia, AccuWeather, Google Search, and a selection of local services such as jobs portals, the women’s rights app WRAPP, and a basic library of Zambian laws, via an Android app.

It’s all part of Mark Zuckerberg’s drive to make basic internet access free in emerging markets through the internet.org initiative and an expansion of the Facebook Zero program where Facebook works with network operators to offer free access to the social network. Does this mean Facebook is becoming an MVNO of sorts?

This is all highly admirable and works in the interest of all parties, but it is nothing new. Operators in Indonesia and the Philippines introduced similar models many years ago. The idea was that by allowing access to Facebook, even via feature phones with text-only capabilities, customers would become used to accessing the internet and stray outside of the free portals into chargeable territory. The model worked and those markets not only boast the highest penetrations of Facebook users per head of population, they also have incredibly high mobile internet penetration figures as well.

However, it was not easy at first to implement charging models that could track usage accurately and the Indonesians went as far as introducing internet access charged by time online as an easier billing option.

Of course, Facebook is hoping to be able to win the hearts and minds of the Zambian users and, in due course, expose them to ads linked to product sales. It’s a natural progression. Yet again, unless the mechanism is in position to charge for the ‘extra’ services, the freemium model will amount to nothing. And nothing does not look good on the bottom line.