Tuesday, August 26, 2014

The Digital Divide

Zero rating means subsidized access from mobile providers to selected areas on the Internet as a means of gaining increased subscription rates. A Virgin Mobile deal offers unlimited access to Twitter, Facebook, Instagram or Pinterest for $5 a month. Music lovers love T-Mobile for their zero data unlimited music streaming service. It offers tunes 24/7 through all the top services like iTunes, Spotify, Pandora and iHeartRadio.

Is there space left on World Wide Web for start-ups?
Is there space left on World Wide Web for start-ups?
Revenue the mobile phone providers lose out on by handing out free or below cost data is more than made up by increased subscription rates and the returns that come with other services used. Mobile phone users get what they need for free or at a small cost, providers get more business - a winning situation for both parties. It all sounds great, but as with most things advertised with the four letter f-word (free); there is no such thing as something for free. Here the losing party is Internet-based businesses and in particular start-ups.

How zero rating affects start-ups

Subsidized access makes the already popular apps more popular and leaves less room for start-ups to get their share of the market. To get in on the action, tech start-ups have to include the widely held social media streams as part of their marketing plan or simply lose out on a chunk of the market. Social media areas like Facebook are closed off versions of the Internet, not just social tools. You can shop, play games, gather information and do marketing - all in one area. In a MerchantCircle survey it was discovered that 65.7% of businesses use Facebook as a marketing tool. Think of a bag of popcorn in the microwave, the kernels slowly start popping up one by one and then it all goes crazy. Just like that Facebook users started popping up all over, and fast. The difference is that Facebook is an apparently never-ending bag of popcorn and its explosive personal user-base is closely followed by its business user-base.

What is a start-up to do?

The solution is clearly for businesses to get their Facebook profiles up there; start groups, join groups, Tweet, stream, Pin etc.

Unfortunately there is one problem with this, choice. Most start-ups would like to reserve the right to freedom of choice, and rightly so. It has become such an issue that the Subsecretaria de Telecomunicaciones of Chile made a ruling that zero rating was in violation with net neutrality laws and banned it as of June 2014. Not many countries take the stance that Chile has and social media subscription rates continue to skyrocket. Whether mobile providers will take a step back and stop the trend of subsidized access, only time will tell. Until then, hopefully there still is a space on the World Wide Web for start-ups.

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