I asked IR a question about unlimited plans and Freeway and just got the response so I thought I would share it.
Question:
I am an Australian investor with Syntonic. I would firstly like to say that I think your company has wonderful products and great potential. That said, I am a little concerned about the advent of unlimited data plans on the revenue of the Freeway app. My question is, if data plans become unlimited for the most, probably in a few years, what would compel a user to use Freeway?
I am just wondering if Freeway has a shorter life span than I have envisioned and, if that is the case, how will revenue be generated when 'everyone' is on an unlimited plan?
Response:
Thank you for your question and for being a shareholder in Syntonic.
Nearly all mobile carriers in the US offer unlimited plans nowadays, and they have limits, meaning once a user exceeds a certain data limit, they get throttled speeds. It is still very expensive to subscribe to these plans, hence, much of our technologies are targeting a large segment who cannot afford to be on unlimited plans. There are 2.0 billion prepaid subscribers in APAC, LATAM, Africa, CIS, etc. and 3.7 billion who cannot afford to connect to the internet, therefore when looking at non first-world countries, unlimited is not going to happen for quite some time. These segments are Freeway's target audience with a value proposition that should be relevant for a long time. Regarding Syntonic DataFlex, in the U.S., the CA Court of Appeals has clearly stated that even if the employee has an unlimited plan, the employer is still required by existing labor laws to pay the portion allocated toward business use--hence, no impact to Syntonic DataFlex.
If we restrict the focus to developed markets where we are seeking the re-emergence of unlimited plans (re-emergence as carriers pulled unlimited several years ago), the unlimited plan is primarily focused on the high end of the market. Additionally, unlimited plans have limits and restrictions, e.g. throttling when a data threshold is reached, standard definition video only, etc. Syntonic's solution clearly serves a need for the majority of the mobile subscribers with zero-rate content (video) offers as well as for the operators seeking out new revenue streams whose net ARPU is declining.
In a world where unlimited is ubiquitous, the first question is rather how does the carrier survive a race to the bottom selling an undifferentiated commodity? They will need a new business model, transforming themselves from a network provider to a content services providers. This is detailed in Gary's MWC keynote to be published online shortly where he discusses how the carrier stays relevant in this new wave of mobile innovation defined by mobile services. There is good reason why we are seeing alliances and acquisition of content providers by operators, i.e. AT&T acquisition of DirecTV and Time Warner (Pending); Verizon of AOL and Yahoo!; BT of EE, etc. In this new world, Freeway remains relevant and in the forefront providing "content plans" either sponsored or with subscription.
We hope this helps, and thank you for your support.
Syntonic Investor Relations
Cheers, Rubi1
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