The rush to offer zero-rated data offerings has slowed as carriers have moved aggressively to offer unlimited-data plans.

But analysts say zero-rated services might be more important than ever in the era of unlimited.

Zero-rated data, which enables users to consume wireless data without taking a hit on their monthly allotments, became a key strategy for all four major U.S. carriers last year. T-Mobile was the first U.S. carrier to try to leverage zero-rated data in a significant way, first with its Music Freedom offering in 2014 and then a year later with Binge On for video, which has seen significant success.

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“T-Mobile’s Un-Carrier strategy has had a significant and lasting impact on the U.S. wireless market, with many of its features, which have enhanced customer value, adopted by rivals,” Susan Welsh De Grimaldo of Strategy Analytics wrote in a recent report on unlimited data and zero-rated offerings. “Despite this replication, T-Mobile has managed to sustain growth through regular innovations, with Binge On one of the more significant Un-Carrier initiatives over the last two years. Since the Un-Carrier launch, T-Mobile has added nearly 14 million new postpaid phone subscriptions, while the rest of the market has declined by 5 million.”

Following T-Mobile’s lead

Indeed, the other major network operators were quick to follow T-Mobile’s lead with their own zero-rated offerings. Verizon last year brought zero-rated content to its homegrown Go90 mobile video service, then built on that model with streaming content in its NFL Mobile app.

Sprint took a more modest tack, enabling its customers to watch every match of the summer’s Copa América Centenario soccer tournament on their phones data-free. And AT&T was perhaps the most aggressive of them all in 2016, extending zero-rated data from DirecTV to its wireless customers, then doing the same with DirecTV Now.

Smaller service providers got in on the action as well, with the MVNO FreedomPop—to name just one—offering data-free WhatsApp service in the U.S.

The trend attracted the attention of the FCC, which issued a report in January saying that while zero-rated offerings don’t necessarily run afoul of net neutrality rules “per se,” DirecTV and Go90 violate them because they enable carriers to deliver their own content without having an impact on customers’ wireless data charges. That gives the carriers an edge over other video providers, because viewing content from third parties takes a toll on users’ monthly data allotments.

The agency reversed itself under Ajit Pai, though, the current chairman of the agency appointed after Donald Trump's inauguration. And that move paved the way for carriers to move forward with their zero-rated initiatives.

“I expect to see growing attention around zero-rated services given the change in the FCC’s stance on net neutrality,” Geoff Blaber, vice president of research for the Americas at CCS Insight, said via email.

Addressing the limits of unlimited

The buzz surrounding zero-rated offerings has quieted with the emergence of unlimited-data plans by all four major U.S. operators. But while unlimited is clearly a huge trend, all-you-can-eat plans aren’t for everyone, Strategy Analytics’ Welsh De Grimaldo noted.

“Zero-rated data is not obsolete,” she told FierceWireless via email. “Heading into 2018, nearly half the U.S. postpaid subscriber base will be on unlimited plans. For the other half, while some will move into unlimited, there are certainly segments of users that would be attracted to more targeted zero-rating options. For example, we have seen good success in multiple markets where operators offer more affordable options for mid- to low-use customers as an ‘on-ramp’ to mobile video use, in the form of ‘snacking’ options that could include time-limited options, zero-rated plans or sponsored data. Another target opportunity is zero-rated social networking bundles to hone in on specific user needs.”

And while it may seem counterintuitive, zero-rated data could appeal to customers with unlimited plans as well. Nearly every so-called “unlimited” plan has restrictions of some sort—from degraded video to tethering limitations to slowed speeds once certain caps are met—so carriers could leverage zero-rated content to enable customers to avoid those restrictions, Blaber said. The key for carriers will be in developing services that that can entice new customers and reduce churn as they benefit the bottom line.

“I’d argue that Unlimited puts zero-rated data into even sharper focus,” Blaber said. “(F)or the carriers it provides a means to promote their own services or those of others where there’s a business case … The move to unlimited basically created a new basis for service and business model innovation. We’re only at the start of that—part of it will be from new services, be it video, advertising, IoT, etc., but I suspect we’ll also see partnerships with those who have an interest in ensuring seamless access to content without restrictions—that list is endless. Obvious examples are Amazon, Netflix, Microsoft (Office 365 and OneDrive), Google … the list goes on and on.” — Colin | @colin_gibbs