UK Telco Tests Network-Level Ad Blocking, As Ad Industry Awaits The Fallout

threeshineimgThe British mobile carrier Three Group on Wednesday began a 24-hour trial of the network-level ad-blocking blueprint it’s been working on since earlier this year.

Three deploys its ad blocking through a partnership with the Israeli startup Shine, which installs ad-block tech on telco networks and facilitates new opt-in advertising arrangements between mobile providers and their subscribers.

“The blackout is running smoothly. Three [Group] UK subscribers that opted into the 24-hour test are enjoying an ad-free experience,” said Shine CMO Roi Carthy.

The subscribers involved in the trial run have all opted in after Three ran advertising and email campaigns directing them to a dedicated page for sign-ups to Shine’s program.

While Shine also is deployed with Digicel, a Caribbean telco with 13.6 million subscribers, the EU test is significant in terms of pushing adoption and establishing global regulatory precedent, said a source with knowledge of Google’s counter-ad-blocking strategy, speaking on background.

“Telco network ad blocking is theoretically a more significant long-term threat (than ad blockers of the browser plug-in or mobile app variety),” he said. But he also doesn’t expect that strategy to gain traction due to regulatory hurdles – notably American net neutrality laws – and consumer blowback if telcos try to control subscribers’ browsing and app experiences.

And Google has good reason to be concerned.

Shine doesn’t think net neutrality laws pose much of a roadblock. “This is particularly true for a third-party service – that is, offered by Shine, rather than by the carrier,” said Carthy.

Net neutrality and US regulatory pushback “has been focused on blocking providers, not blocking particular pieces of content,” said Gary Kibel, a partner at Davis & Gilbert who works on advertising and privacy law.

By handing the reins to a third-party vendor, telcos gain some distance from the regulatory concerns of a carrier stepping between a media supplier and the end user.

Denis O’Brien, the Irish billionaire who owns Digicel through a media holding company, has publicly clashed with Google and said in a written statement that the telco brought on Shine because “companies like Google, Yahoo and Facebook talk a great game and take a lot of credit when it comes to pushing the idea of broadband for all, but they put no money in. Instead they unashamedly trade off the efforts and investments of network operators like Digicel to make money for themselves.”

Adblock Plus and most browser/app ad blockers may have frosty relationships with publishers and ad tech stakeholders, but they don’t share Shine’s philosophical opposition or wade into the macroeconomic positioning of telco giants.

For instance, Hutchison CK, the Hong Kong media holding company which owns Three, also was an early investor in Shine.

It’s still an uphill battle for the telcos, though. Only a month ago EU regulators rejected CK Hutchison’s $12 billion takeover of the UK mobile network O2.

But in terms of Wednesday’s test of the EU’s network-level ad-blocking stance, Carthy said, “Regulators are well aware of it and have not issued any sort of restricting comment or act.”

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