Two years ago, the company quietly launched Twitter Access, a
program that ties with telecom companies to "zero-rate" the
micro-blogging service, subsidizing the data it demands. Much of
Twitter's future user growth is set to arrive from emerging
markets, where most people access the Internet on mobile phones but
face prohibitively high data costs.
In countries like Brazil, Indonesia and India, zero-rating lifts
the biggest obstacle for joining Twitter. And it helps answer the
biggest, nagging question Twitter must answer as a public
"User growth is, far and away, the top issue for Wall Street,"
said Robert Peck, an analyst with SunTrust Robinson Humphrey. "When
you talk to the company, they say the same thing."
Twitter declined to comment on its growth strategy and Twitter
While Twitter nets less revenue-per-user abroad, it can reach
eyeballs much faster. eMarketer expects a bulk of Twitter's future
growth to come from the Asia-Pacific and Brazil.
Analysts and ad-tech executives who track emerging market
wireless carriers say Twitter Access is pivotal to Twitter's
international plans. Twitter has partnered with close to a hundred
carriers thus far and is accelerating the initiative, a person
close to the company said.
"This is the cornerstone of their global expansion strategy,"
said Neha Dharia, telecom analyst at Ovum.
A scorched path
Twitter, however, wasn't first to the strategy -- and the path may
already be scorched.
In 2010, Facebook
unfurled 0.facebook.com -- a stripped-down version of the
social network any phone owner could use. In cahoots with carriers,
the service subsidizes phone data for a period, typically three
months, allowing someone to access Facebook with no charge.
Tencent, the Chinese Internet colossus, began subsidized
offerings for its popular WeChat app in Nigeria in April. Apps like
Kakao Talk and Line have been zero-rated, too. Google has pushed for similar
Like Twitter, Facebook saw its brightest prospects for expansion
in emerging markets and on mobile. And it identified the stumbling
block: costly data. Mobile data prices vary in emerging markets by
country (and often within one), but they are usually substantial.
Typically, phone plans are pre-paid, meaning users buy up data
packages in tiny increments. Ericsson, a telecom provider,
estimated that people who earn less than $3 a day -- a
population of two billion plus -- may spend as much of 10% of their
incomes on phone data.
By covering the data needed to visit its site, Facebook found
its rocket fuel. The arrangement, dubbed 'Facebook Zero,' launched
with 50 telecom operators in 45 different countries, netting
Facebook waves of new users just before its 2012 IPO. Over eight
quarters, Facebook nearly doubled its worldwide users, reaching 955
according to Statista.
Facebook declined to comment on its zero-rate program.
In theory, the deals make everyone a winner: mobile users try
Twitter for free; Twitter gets a user. And the carriers, if they
convert a subscriber to a smartphone or bulk up data packages,
pocket more revenue.
"That gets users interested in -- and then addicted to -- data,"
said Rajeev Chand, managing director of Rutberg & Company.
Globe Telecom, a Philippines operator, began subsidizing
Facebook for its subscribers in November. The company claims it
added 4.2 million mobile customers over two quarters, 11.6% growth,
largely thanks to the Facebook zero-rate offering, according to
Jenny Granada-Echevarria, VP-mobile data services.
Yet the future of the deals remains unclear, particularly after
Facebook has soured several operators on the arrangements. Multiple
people with knowledge of the partnerships said Facebook cut the
deals for subsidized data without paying a cent, often
strong-arming carriers into adopting its conditions and footing the
Three carriers with sizable global reach -- Vodafone,
Telefónica and Singtel -- have staunchly resisted Facebook's
advances. Several others, analysts said, are showing rising
concerns over the bottom line benefits of zero-rating deals.
"The operators are wising up," said one ad-tech executive
familiar with Facebook's arrangements.