Zero Rating of Video is Inevitable, Necessary

It long has been obvious that mobile video consumption--especially managed streaming services--would “break” the mobile data business model, without fundamental changes to the charging mechanisms.

In other words, mobile data consumption when customers used for-fee video services would have to be zero rated, the same way linear video services, broadcast TV, broadcast radio and other content services have been zero rated.

As the Internet increasingly has become a venue for content consumption, such changes in rating mechanisms have been increasingly inevitable, since pricing video data consumption at comparable rates (cents per megabyte) would quickly break the video streaming business model.

That is happening, as all the leading mobile carriers in the U.S. market have moved to some form of zero rating for consumption of at least some streaming video content.

The reasons for the change are simple enough. Video is the most bandwidth-intensive application typically used by consumers, by an order of magnitude or more. In other words, consumption of one minute of video consumes more bandwidth than one minute of web browsing, and up to a few orders of magnitude more data than one minute of texting, voice or messaging.

Revenue per bit metrics likewise are skewed. By some estimates, where voice might earn 35 cents per megabyte , revenue per Internet app might generate a few cents per megabyte. It gets worse. Mobile operators earn nothing when customers watch over the top services such as Netflix, beyond the typical bigger data buckets such behavior will drive.

As in other markets around the world, data growth is being driven largely by video streaming, a GSMA report says.

source: GSMA
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