Airtel is launching Airtel Zero, which essentially is a platform that will enable users free access to apps and services (free as in totally free – i.e. no data charges will apply).
Airtel will instead charge app companies to buy a presence in the platform. Given that Indians love to ‘buy free’, expect this to be a disruption (and much needed for Airtel to stay ahead of Reliance’s Jio launch).
And in the process, Airtel will own the consumer experience and will decide what they see. In short, they own the pipe.
Why Airtel Zero Is A Brilliant Move
Take a step back and look at the last quarter startup funding data :
More than $75mn has been invested in mobile app-only startups (across various stages). The mobile market is growing fast (Myntra is going mobile-only) and while investors have invested in a lot of hyperlocal app-only businesses (foodtech/traveltech/classifieds/healthcare categories), the big picture is this :
1 .A consumer can only have max of 2 apps per category on their smartphone.
2. The race for any company is to be one of those two apps.
3. There are no great platforms to drive app installs (Facebook is the most efficient so far).
This opens up a huge opportunity for app installs. Facebook, in Q4, 2014 alone made $2 billion in app ad revenue (mobile advertisements), which turned out to be more than two-thirds of its total $3.59 billion in total ad revenue for 2014.
Mobile app install is a huge opportunity and while investors have poured in a lot of money on app only businesses, somebody (beyond Facebook) too needs to monetize the business.
And That’s When Airtel Zero Is A Brilliant Idea
Google won the ecommerce marketing war and telecom operators won’t let Facebook win the app install business this time.
Airtel essentially will end up creating a hyperlocal auction platform for app businesses to use its network and monetize the pipes more effectively.
Is Airtel Zero anti net-neutrality? Well, maybe yes – maybe not.
Argument for yes : Consumers will flock to free service and Airtel will ‘define’ what they see. Small companies/startups will get crushed badly.
Argument for no : Airtel isn’t really killing its data business. They are offering an alternative access.
And let me tell you this : Other operators too are working on a mix of online-offline app distribution business model and everybody is using its core strength to grab a pie of app install investment.
The mobile app install business is the NextBigWhat for everybody and expect more innovative models there – we just hope that smaller app companies/startups don’t get crushed in this mad race.
[Image credit : shutterstock]