Next Stop For Network-Level Ad Blocking: The US?

carrieradblockingIs carrierwide ad blocking coming to the States? That really depends on who you ask.

“Absolutely,” said Roi Carthy, CMO of ad-blocking company Shine.

“Simply no way,” said Mike Zaneis, EVP of public policy at the Interactive Advertising Bureau.

But there’s a reason for Carthy’s swagger. At the end of September, Jamaica-based telco Digicel revealed a partnership with Shine to block ads for its 13.6 million subscribers in 31 markets across the Caribbean, Central America and Oceania.

In late November, two UK carriers – EE and its rival O2 – affirmed that they’re both seriously exploring networkwide ad-blocking options. EE is the UK’s largest mobile carrier, with 27 million subscribers, while O2 trails right behind with 25 million.

According to Carthy, Shine has relationships with “a few dozen” carriers in regions around the world, including multiple telcos in the US. Although Carthy wouldn’t confirm whether Shine is in talks with O2 or EE, he certainly didn’t deny it.

“They haven’t said they’re working with us and we haven’t said that we’re working with them, but you’d be hard-pressed to find another company that offers our level of ad-blocking services,” Carthy said. Wink.

Will that wink extend stateside?

Although it would seem like an odd move for a company like Verizon to sign itself up for ad blocking at the network level considering the serious cash it just sunk into ad tech with its $4.4 billion acquisition of AOL, it's conceivable that the practice might appeal to a carrier like T-Mobile, for example. Telcos are in constant battle to steal each other's customers.

Although T-Mobile, which refers to itself in its marketing as the "un-carrier," declined to comment, it's plausible that carrier-level ad blocking could be used viewed by some as a competitive advantage.

Speaking of T-Mobile, Shine announced Monday that telecom titan Philipp Humm – outgoing CEO of Vodafone Europe and previously the chief exec of T-Mobile in the US – would be joining its board.

“If anyone thinks this is going to go away because they haven’t seen it happen in America yet, they have their head in the sand,” Carthy said. “A year ago when we said ad blocking was coming, everyone shrugged it off as crazy talk, but carriers are embracing this, regardless of what some people might have imagined.”

There are some who still view it as crazy talk, though.

“It doesn’t even come close to passing the smell test from a net neutrality perspective,” Zaneis said. “To have a carrier block an entire swath of content – and that’s what advertising is, content – has been completely rejected by the FCC in the US.”

But that isn’t stopping carriers from talking.

“Anyone who thinks the ad-blocking topic is not being explored in the US is wrong,” said Carthy, pointing anecdotally to a closed-door wireless carrier conference held near Los Angeles every October.

When Shine attended last year, the telco executives in attendance were highly skeptical. This year, there wasn’t a panel during which ad blocking didn’t come up, even if that particular panel had nothing much to do with ad blocking. It was in the ether. While that doesn’t mean anyone’s on board, it does mean that ad blocking is on the collective mind.

“Even ‘South Park’ unbelievably just did an episode about ad blocking,” Carthy said. “If you want an example of something that’s becoming a mainstream cultural issue, here you are.”

CX BS?

But Zaneis isn’t convinced, as some claim, that carriers are considering ad blocking to protect the customer experience and cut down on data-heavy ad loads.

“Obviously, the stuff about customer experience is just window dressing, and this is really about revenue, blocking ads and then letting the ads through when people pay,” said Zaneis, drawing a comparison with Adblock Plus’ practice of charging companies to let their ads pass through its filter.

O2 hasn’t made an official decision one way or the other, but a spokesperson from the carrier told AdExchanger that although O2 believes in a “predominantly ad-funded Internet, we see ad blocking as a call to the industry to raise the bar in terms of the quality of the advertising it delivers.”

blankadphone“Ad blocking has been happening for years and feels like it is gaining momentum,” the O2 spokesperson said. “There are privacy concerns generally around many ad tech businesses, as well as privacy concerns with many ad-blocking businesses. Our primary priority will always be to O2 customers and protecting their data.”

For its part, Digicel would demur that customer experience was at the heart of its decision. According to John Delves, chief commercial officer at Digicel Group, within the first 60 days after turning on Shine, the carrier had already intercepted roughly 180 million ads that would have otherwise made it onto the phones of its 2.2 million customers in Jamaica, the first market to receive the Shine treatment.

“This is about giving customers the best experience and about getting access to broadband to the unconnected and allowing them to benefit from the opportunity it affords,” said Delves, noting that ads can suck up as much as 10% of a customer’s data plan allowance. “In our markets, where customer access is limited by how much they have to spend, it will allow them to access 10% more of the content they actually want to see.”

Back To The Garden?

But Rob Griffin, EVP of media futures and innovation at Havas Media Group, can envision a far less rosy future, one that harks back to the early days of America Online in the years before it acquired web browser Netscape. Back then, subscribers paid to access a closed network of content and products – games, fiction, chat functionality and the like – along with limited additional content through agreements with publishers like The New York Times, NBC and others.

“If walled gardens shut off the ads, publishers might not be able to afford to create their content, and in that case, the question becomes, does the carrier have to pay the publisher?” said Griffin. “If that happens and I’m a publisher, then I have to ask myself, do I offer my content across all carrier decks or do I get paid more if I only make content available on, say, Verizon and AT&T?”

Thorny hypotheticals aside, there’s also the question of consumer choice. Is there choice when blocking is automatic?

“If a carrier is really, truly focusing on customer experience, then this wouldn’t be about shutting ads off, it would be about giving consumers control to manage it better themselves,” Griffin said.

That will be de rigeur in Western markets, and freshly former Vodafone Europe CEO Humm, the newest member of Shine’s board, would seem to agree, noting in a recent interview with Business Insider that ad blocking needs to be offered as a choice rather than by default.

“In particular, in a European or US context, offering it as an opt-out … will not work. It needs to be an opt-in service,” he said. In that case, “it doesn’t contradict the net neutrality issue – a customer saying [they] do or don’t want … advertising,” Humm went on. “From that point of view, legally it is fine.”

But the ethics are still blurry. Part of Digicel’s ultimate goal is to enter into rev-share agreements with large digital players like Google, Yahoo and Facebook, all companies that make a healthy portion of their revenue from advertising, in exchange for letting their traffic through.

Zaneis views that strategy as a shakedown. “I’m not sure what the agenda is here other than profiteering,” he said, “looking for some of the ad revenue they were not able to generate themselves.”

Carthy, however, sees it as one potential way for the current model to “correct” itself.

“It doesn’t matter who pays for [ad delivery] as long as it’s not the consumer,” Carthy said. “The business players can decide between themselves."

 

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