Should U.S. wireless carriers give customers free access to specific apps?

Now that unlimited wireless data service appears to be on its way out, will the nation's wireless carriers take the next logical step and begin providing free access to specific apps?
Follow me on this one: Imagine that Verizon Wireless (NYSE:VZ) began providing free, unfettered access to all YouTube videos on its LTE smartphones. Or, similarly, imagine that AT&T Mobility (NYSE:T) announced that customers who purchased its new Samsung Galaxy S II Skyrocket wouldn't be billed for Facebook data charges. Such promotions would help show users what they can do with their smartphones, it would entice heavy users of specific services like Facebook to switch carriers, and it could provide a breakout marketing message in an industry that to date has focused on esoteric measurements of MBs and GBs--measurements most regular people don't understand or care about.
What's more appealing? Double your LTE allotment or free access to Flickr?
Interestingly, the idea of free access to specific services is not new. As far back as 2007 European operators have been providing free access to specific mobile websites such as Facebook and MySpace. And in 2010, Facebook announced a broad effort to expand its platform internationally by teaming with more than 50 mobile operators in 45 countries and territories, from Brazil to Belgium, to provide free access to the Facebook mobile website, 0.facebook.com.
More recently, Mobistar in Belgium announced that it would provide free access to the websites of Facebook, Twitter and Netlog (a local social network)--as well as their respective smartphone applications. ("This is an absolute minefield for confusion, poor customer service and complaints," analyst Dean Bubley wrote of the gambit.)
My point is that free access to specific websites and apps is obviously possible. So when will it come to the United States?
Already, AT&T had the perfect opportunity to introduce this concept to U.S. wireless users with the July introduction of the HTC Status. The "Facebook phone" provides one-click access to the popular social networking service--but AT&T is still billing Status users under its standard $15/200 MB or $25/2 GB per-month model.
To be clear, operators do include a variety of applications and services within their pricing structure--Sprint Nextel (NYSE:S) still provides its Sprint TV service to its Simply Everything customers, Verizon offers some V Cast video stuff to some of its subscribers, T-Mobile offers a Facebook-based VoIP calling service called Bobsled and Leap Wireless (NASDAQ:LEAP) offers its Muve Music service phones. But those efforts are mostly from the carrier and for the carrier. Meaning, they are not popular, useful, third-party services like Twitter and Facebook. They're mostly just random attempts at content and services by the wireless carriers.
So will Americans ever see the kind of third-party, application-specific pricing that is relatively commonplace in Europe and elsewhere? Verizon Wireless offered PCMag.com perhaps a first glimpse at how this model could make its way into the United States. The carrier announced it is planning a "turbo" application programming interface that would allow Verizon customers to buy additional bandwidth for specific applications. Under a possible scenario, a developer would insert the API into their app, and then Verizon customers using that app could purchase faster network access by pressing the "turbo" button within that app.
Verizon's strategy is certainly one way wireless carriers can push themselves back into the app marketplace, after having been sidelined by the likes of Apple's (NASDAQ:AAPL) App Store and Google's (NASDAQ:GOOG) Android Market.
"I think there is a possibility" that U.S. wireless carriers will introduce application-specific pricing, said Monica Paolini, founder and president of research firm Senza Fili Consulting (and a Fierce contributor). "It might take some time."
Paolini explained that app-specific pricing plans are common in Europe and emerging markets due to the intense pricing pressures operators there face. Such pricing scenarios help set operators apart in highly competitive markets.
Further, she said such pricing offerings could help operators push feature phone users into smartphones. For example, if a prepaid operator like MetroPCS (NYSE:PCS) offered feature phone users free access to Facebook, those subscribers could test out wireless data services and, if they found such services useful, those customers might eventually upgrade to a smartphone and a full-blown data plan.
But, Paolini pointed out, there are also a range of pitfalls within app-specific pricing business models. "When you have a problem is when you run Facebook and you run into the ability to upload photos and videos and watch videos," she explained, noting the heavy data traffic that could result. Also: "When you're tied into an application and that application introduces a new feature, how do you deal with that?"
Free access to YouTube, for example, could quickly bring a wireless network to its knees if YouTube owner Google suddenly started streaming first-run movies over the service.
Concluded Paolini: "It's a lot of those sorts of tradeoffs." In deciding application-specific pricing, carriers must weigh the potential marketing benefits against possible network congestion.
Of course, there's one more factor that is likely weighing heavily among U.S. wireless carriers on the issue of app-specific pricing: net neutrality. The FCC's mandate on the topic essentially forbids carriers from restricting access to select Internet applications and services. Does app-specific pricing run afoul of net neutrality? I'm betting none of the nation's carriers wants to be the first to find out. +Mike Dano




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