European mobile operators are reportedly plotting to block advertising on their networks in a move that would give it firmer footing in the tussle for mobile revenues with technology companies such as Google and Facebook.
The Financial Times reports that one European operator has already installed the software needed to quash ads and will set it live before the end of the year.
The operator will offer it as an opt-in ad free service initially ahead of a widespread block on ads. It uses software that blocks most types of advertising from popping up on web pages and within apps but would have no impact on 'in-feed' ads used by Facebook and Twitter.
An unammed executive at the European carrier said that several of its peers would also block ads this year.
The so-called “bomb”, as described by one unmanned executive close to the issue in the Financial Times’ report, would act as a riposte from the mobile networks to the aggressive plays for the mobile space from the technology firms such as Google and Facebook.
Google and Facebook combined accounted for 50 per cent of mobile ad revenues in 2014, according to emarketer.
The blocking technology is provided by Israeli start-up Shine, the shareholders of which include Horizon Ventures, the investment fund of Asia’s richest person Li Ka-shing. Ka-shing is the chairman of Hutchison Whampoa, one of the world’s biggest telecommunications groups.
“Tens of millions of mobile subscribers around the world will be opting in to ad blocking by the end of the year,” said Roi Carthy, chief marketing officer of Shine. “If this scales, it could have a devastating impact on the online advertising.”
He told Business Insider earlier this week that another major carrier would reveal their ad blocking plans in the next couple of months. Shine has previously said that at least one US carrier plans to use the technology to block ads but Verizon, AT&T, Sprint and T-Mobile did not respond to The Wall Street Journal’s requests for comment back in October.
Telefonica said it was not one of the operators installing the Shine software. Daniel Rosen, global director of advertising at Telefonica, said: "“We are always exploring new ways to give our customers a better mobile experience and Shine has an interesting model that could give people more choice over the advertising they see. However, to date we have not had any conversations with Shine and I recognise there could be issues with a model that takes a wholesale approach to ad blocking across a mobile network.”
The reported push from mobile networks to gain greater control of mobile revenues comes as online media owners such as Google and Facebook reap the financial rewards from hosting content on an infrastructure they have not had to pay for. The issue was brought into sharp focus last month when Google launched its own wireless network, Project Fi, in the US.
The media giant has previously slammed plans from mobile networks to block ads, arguing that: “People pay for mobile internet packages so they can access the apps, video streaming, webmail and other services they love, many of which are funded by ads. Google and other web companies invest heavily in developing these services — and in the behind-the-scenes infrastructure to deliver them.”
If the reports are true, then it will likey stoke the flames around net neutrality. Telecommunications firms in Europe and the US must treat data on their networks fairly and automatically blocking ads could flout those laws.
However, one way round it could be to introduce a paid for ad-blocking service or asking customers to opt-in though that might not be enough to avoid censure from regulators or heed pressure form the advertising industry.