Verizon is rolling out what it’s calling FreeBee Data, the latest wireless company offering that lets subscribers see content without it counting against their data plans. The company that makes the content foots the bill instead. Giving away free data doesn’t sound like a profitable business to be in. But in fact, what is actually happening here may be nothing less than wireless companies finding another way to make money.
Mobile plans come in a million flavors and prices, but they’re the same at the core: customers pay wireless providers for access to the network. In the case of sponsored data plans, brands pay wireless providers for access to the customers.
“All of our core business is based on direct-to-consumer monthly recurring charges for access,” explained Colson Hillier, Verizon’s VP of consumer products. “This gives us another way to position the investment we’ve made in the network.”
Magazine publisher Hearst is one company working with Verizon. It’s basically paying for Verizon customers to be able to watch videos from Cosmo or Esquire for free, hoping that will boost engagement and grow the audience for those magazines.
For wireless companies, it’s a shot at a revenue stream as they hit the limits of what they can get out of subscribers.
“It’s going to be hard for them to get more revenue from consumers,” said Julie Ask, vice president for Forrester Research. “Consumers are pretty tapped out.”
FreeBee Data and services like it are attempts by the wireless companies to leverage their network in new ways. Just how big they get will depend on how much consumers — and the brands that want to reach them — like these offerings.
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