Three has announced plans to become the first European mobile operator to block advertisements on its network, setting the stage for conflict with the media and marketing industries.
The company, which has 30m subscribers worldwide, said it had successfully tested the technology to block ads in the UK and Italy and would expand the scheme internationally.
“Irrelevant and excessive mobile ads annoy customers and affect their overall network experience. We don’t believe customers should have to pay for data usage driven by mobile ads,” said Tom Malleschitz, chief marketing officer of Three UK.
Three’s plan will increase the pressure on media companies, whose revenues have already been hit by the widespread installation of adblocking software by consumers on their PCs and mobile phones.
The mobile operator is working with Shine, an Israeli start-up whose software works in the data centres of telecoms companies and can thereby block ads in apps as well as those on the web.
Li Ka-shing, the Hong Kong billionaire owner of CK Hutchison, the company behind Three, is an investor in Shine.
Marketers will spend $100bn this year on mobile ads, according to research group eMarketer. Google, Facebook and countless other online media companies could be hit by Shine’s plan.
Alex Kozloff of the Internet Advertising Bureau, a trade body, said that the move to implement adblocking more widely could have deeper consequences for how the internet is used by companies and consumers.
“An ad-funded internet is essential in providing revenue to publishers so they can continue to make their content, services and applications widely available at little, or no cost,” she said.
“Adblocking undermines this approach and could mean consumers have to pay for content they currently get for free.”
Three plans to start offering adblocking to consumers at some point this year. The company said it would not block ads for all customers en masse, but would instead give each user the option to opt in to the service.
By offering the technology on an opt-in basis, the mobile operator is confident it will avoid breaking European rules on net neutrality — the principle that no internet traffic should be favoured.
“Our objective in working with Shine is not to eliminate mobile advertising, which is often interesting and beneficial to our customers, but to give customers more control, choice and greater transparency over what they receive,” Three said.
The company added that one of its main goals in deploying ad blocking was that customers should not pay data charges to receive adverts — which can consume up to a fifth of a mobile data allowance. Instead, it said that these costs should be borne by the advertiser. Three also said that protecting user privacy and security from advertising companies was a priority.
Shine said that Three was its “European beachhead” and that other carriers in the region would also implement its technology this year.
The rollout of adblocking technology by mobile operators is likely to provoke retaliation from online media groups. In particular, app owners are likely to increasingly use encryption and other technologies to scramble their data traffic and prevent Shine from discriminating between ads and content.
Digicel, the Caribbean mobile operator, in 2015 started to block ads across its entire network of 14m customers.
Dean Bubley, a telecoms analyst, said that Three “will get some good publicity out of this” because some forms of advertising irritate consumers.
But he warned that the unintended consequences of blocking mobile data traffic could lead to regulatory and reputational risks for the company. Three could also be drawn into an arms race to combat countermeasures from the online media industry.
“Unless Three is in this for a long battle, it’s liable to get hit in the crossfire,” he said.
Source: FT
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