This Aussie startup could be the next big thing in the telco market, but it still has a few roadblocks

Unlockd in action.

Australian telco startup Unlockd recently announced that it would be expanding its operations to the US, signing on US mobile carrier Sprint to offer its service.

Unlockd works by offering a discount or bonuses in exchange for ads. In Australia with its partnership with Lebrara Mobile, you can receive 2GB of extra data a month in exchange for watching ads or special deals. Sprint in the US offers a $5 monthly discount in exchange for the same thing.

The potential for Unlockd was examined through independent Roy Morgan research and showed that nearly 40% of Australians would be interested in receiving ads on their mobile phone if it reduced their bill. All up, this would amount to around 5.5 million Australians.

If those numbers were reflective overseas in the US market and the UK market, where CEO Matt Berriman says Unlockd is very close to securing a big deal, the potential could be huge.

However, the research revealed a few problems the startup will have to overcome first when looking to grow. The biggest is the quality of customers that would be interested, which Michele Levine, CEO of Roy Morgan research, points out.

“Dodo’s smartphone customers are the most likely to be interested in opening up their phones to ads in exchange for a discount but, like Lebara, this would equate to only a tiny overall reach for Unlockd and their future advertisers,” she said.

Another potential problem in the Australian market for Unlockd is the increased competition between traditional telcos, with the likes of Optus and Vodafone offering all-time best deals in the sim-only plan deals.

Berriman doesn’t seem to think the competition will make things harder for Unlockd, telling Business Insider:

“We think consumers will always seek value, hence the competition in the telco space and their continual attempts to drive new customer acquisition and retention strategies.”

He could be right, although for reference, Optus is currently offering 3GB of data on its $30 a month prepaid plan and a massive 10GB on its $50 per month sim-only plan. Likewise, Vodafone will give you 10GB of data on its $50 per month deal.

Unlockd’s potential is certainly there, but it has a long way to go to convince users that giving up their phone’s personal information for ads, and seeing those ads is worth extra data or a monthly discount.

But if it does succeed, there’s a $100 billion annual mobile advertising pot to tap into.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.