tech tuesday:carrier billing

Once upon a time, unsuspecting consumers were tricked into paying for services they hardly used by companies peddling ringtones, wall papers, SMS alerts and other digital toys. The invoices showed up buried under complexly detailed phone bills looking like regular service charges rather than add-on features by third parties. The carriers loved the incremental revenues these services provided. They could take a cut of the billing on the service and then charge extra for the delivery of the SMS and the data access for the WAP transfers and whatever else they could tack on. Since, consumers already generally have less than happy relationships with their service provider (akin to Cable companies and dentists, lets say) and carriers often shrugged off the billing situations, or deflected back to the billing service who was less-than-customer service oriented to begin with.

The advent of feature phones and then smart phones changed consumers attitudes about what they used their phones for. Suddenly, the phone wasn’t just for a vehicle for displaying your lack of musical taste based on a custom ring tone, it was the fashion itself and the bling to it became the app.

App stores brought with them more familiar payment practices, including credit card billing. There were, of course, customers who still felt used when purchases totaled more than they anticipated or they didn’t recall the one-click to purchase they made in-app, etc., but by-in-large it took little time for consumers to catch onto this purchase pattern.

The carriers love(d) the revenues generated by this new level of engagement by the consumer (apart from how it is taxing their data network bandwidth) but feel left out of the business model as iTunes, Amazon, Android Market, etc. became the face of mobile commerce. Threatened by the prospect of becoming dumb-pipes, carriers have been trying to reintroduce themselves to the mobile community as more than just data connections. Some of their schemes are more serviceable then others, but none has really vaulted them into a new revenue model quite yet.

Re-enter carrier based billing…

Opens the playing field

It is notable there are currently only a few mobile “retaliers” in which to sell one’s good or service through when collecting mobile payments if you are on the supply side and only a few choices for purchasing if you’re on the demand side because the ecosystems are all very insular and to this point the technology was focused on early adopters. These walled gardens worked great for generating the initial behavioral pattern of purchasing with one’s mobile device, but limit the actual mCommerce activity because of their barriers to entry. Carrier involvement potentially widens the mCommerce net and should spur grown.

There’s a lot of bad-blood between consumers and carriers historically, but the increased options for consumers and will push all the existing players in the marketplace to be better, particularly with the right partners.

At this week’s Mobile World Congress a number of announcements demonstrate just such attempts. Facebook is partnering with AT&T, Deutsche Telekom, Orange, Telefonica, T-Mobile USA, Verizon, Vodafone, KDDI, and Softbank Mobile Corp to roll out a new mobile billing service which will allow users to make charges via the Facebook platform as long as their phones are covered by one of the partner networks. Wholesale Applications Community (WAC) also announced in-application billing Network API with AT&T, Deutsche Telekom, KT, LG U+, Telefonica Group, Telenor Group, Telekom Austria Group, SKT and SMART Communications by allowing a single point-of-service for carrier based billing to developers. Sony’s FeliCa contactless payment technology is being partnered with Gemalto’s UpTeq NFC SIM product lineup to create a mobile payment infrastructure that already is compatible with NTT Docomo, Metro PCS and Verizon Wireless.

Not quite carrier based billing, but still a non-traditional offering, Opera Software also launched the Opera Payment Exchange (OPX) that will enable the global user base of Opera Mini browsers to make mobile payments and is partnered with including InMobi SmartPay, Yandex.Money and Bango (all of which offer carrier billing options in addition to traditional credit card.

And, finally, J.P. Morgan Chase & Co., Capital One Financial Corp. and Barclays PLC all announced they will let their customers use a mobile-payments service being developed by wireless carriers as part of the digital wallet according wot Wireless Week.

With these kind of partnership announcements, Carriers are being provided with a foundation to mend the bridge between

The Carriers real competitor

Apps being all the rage obviously make Carriers, among other competitors, salivate. Everyone wants to get in on the action now that platform manufacturers have demonstrated their feasibility and new app retailers are starting to appear tackling niches in Android, via HTML5 non-native apps and so on. Carriers believe apps may provide another level of differentiation between their services and tout their promotional reach in being able to distribute them.

However, Carriers already don’t have a great reputation with apps among consumers. Pre-loading phones with apps constitutes bloatware and locking phones down in how they handle apps (such as barring third-party apps) undermines the customizable nature of many smartphones and feels a bit draconian. Furthermore, as Carriers already experienced in other attempts at content delivery, retailing in this space is not among their strengths either for consumers or for content providers.

If carriers are successful in becoming mCommerce clearing houses they will be more akin to Visa or MasterCard who handle the transactions between merchant and customer than say Google, Amazon or Apple who operate as the merchant itself. Carriers have the mechanisms in place and the experience using them to leverage facilitating payments and the experience managing such relationships with merchants to be able to monitize the feature. They also have a very valuable, already captive audience for use in their post-paid subscribers as well as the experience selling added value packages to pre-paid.

Even as the economy gets better, consumers are still in a credit crunch. Allowing them to pay for services via their phone rather than through a bank issued credit card opens a whole new way to secure purchasing power for consumers which might even facilitate the adoption despite the poor experience some had in the past with it.

The question is if this is enough for the carriers egos, as well as their revenue streams.


About thedoormouse

I am I. That’s all that i am. my little mousehole in cyberspace of fiction, recipes, sacrasm, op-ed on music, sports, and other notations both grand and tiny:
This entry was posted in business commentary, Opinion. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s