Analysis: OTT players dangling huge carrot; carriers need to grab it -- and bill it
Bogged down in net neutrality legal squabbles, telcos are in danger of blinding themselves to the opportunities of carrier billing as over-the-top players offer them a place in the mobile commerce value chain.
Carrier billing is logical a step towards mobile operators insinuating themselves deeply into the mobile commerce (m-commerce) value chain. Better yet, it is being actively encouraged by the likes of Google, Research in Motion (RIM) and Nokia.
While mobile payments will ultimately include credit and debit cards, bank accounts, alternative payments and non-operator stored value accounts as well, the carrier billing opportunity is staring carriers in the face. Developing these functionalities will bring more revenue opportunities for mobile telcos by building upon existing billing relationships with customers.
The definition of m-commerce, according to the 35 mobile telcos interviewed recently by Informa Telecoms and Media, on behalf of Vesta Corporation, includes local payments (including NFC), remote payments for physical goods and services, mobile money transfers, mobile top-up and mobile banking. Physical goods and services is top of the survey at 86%, with digital good close behind at 80%.
The global market for m-commerce in terms of customer revenues was worth approximately $5.6 billion in 2010 and is expected to grow to $22.5 billion by 2014, according to Informa. A significant part of this was generated from sales of mobile apps in 2010, amounting to $4 billion in revenues.
One barrier to carrier billing is the fact that the fees are still too high, averaging 30% of the transaction. This leaves the door open for credit card providers, which are used to operating on thinner margins, to step into the void.
However, with Nokia’s Ovi Store and Microsoft’s Windows Marketplace enabled with carrier billing in a number of markets, and Google wanting to link Android Market with carriers’ billing systems, the opportunity has come knocking. Nokia alone has billing agreements with 112 mobile telcos in 36 markets.
The Vesta-sponsored paper is cautious on the NFC opportunity, saying that mobile telcos must look more carefully at the real economics before investing in NFC services. NFC will require large upfront investment and take at least three to four years to reach a critical mass of users and transactions.
The other challenge for true take up of NFC is that many different players are involved and all must move in the same direction. Informa believes that a 20% share of handsets – used by customers, not just with NFC functionality – is needed before the technology can become mainstream.
Given that, the current situation represents an open door for telcos. Over the top players are looking to telcos to provide the billing for their customers, and there is an empty chair in the value chain for them to fill. With a trend towards personalization and true customer focus, this position in the value chain can only get stronger – as long as telcos focus on customers rather than court-rooms.
Want to use this article? Click here for options!
© 2013 Penton Media Inc.
In this Webinar you will learn how to create a real-time relationship with your customers, how to proactively improve the customer experience, and how to successfully target and cross-sell services to boost incremental revenue.
- Megabytes to Megabucks, Bandwidth to Business Models: How 4G Is Changing Everything
- How to Unplug Your Redundant Telco Apps To Save Money and Improve Efficiency
- When IaaS Isn't Enough: Service Provider Business Models to Drive Growth and Build Margin
- How to Transform Your Aging Telco Voice Network to Drive New Profits and Revenue
- Creative Licensing Approaches for Telcos & Their Network Equipment Vendors
- Smart Home Opportunity: Balancing Customer Data & Privacy
This paper discusses the rise of Diameter and benefits of Diameter Protocol.
- Conducting The Orchestration – Order Management at the Speed of Business
- Toward a Converged Network Edge
- Beyond Spam – Email Security in the Age of Blended Threats
- 6 Important Steps to Evaluating a Web Filtering Solution
- The Expertise to Protect You from Botnet and DDoS Attacks
- Seeing is Believing – Bridging the Order Visibility Gap
Service providers are under tremendous pressure to turn up new services faster then before and, at the same time,
to do it at less expense - and intra-office fiber is one of the biggest challenges in terms of both cost and service
From the Blog
Join the Discussion
Get more out of Connected Planet by visiting our related resources below:
Connected Planet highlights the next generation of service providers, as well as how their customers use services in new ways.Subscribe Now