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WAC leaving mobile app rev share up to operators

The global wholesale applications initiative chose not to impose a common business framework on apps, leaving developers to negotiate terms individually with each operator.

The Wholesale Application Community will provide a single platform for development, testing and certifying apps to work across dozens of global operators networks. The WAC structure will even allow developers to set their own prices, offer free or "freemium" apps, and eventually in-application micropayment and advertising solutions. But what WAC won’t do is provide a common business framework. WAC developers will still be responsible for negotiating individual distribution contracts with each operator, putting a potential kink in WAC’s build-once-distribute-to-3-billion-customers enticement to developers.

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In a conference call detailing the new organizational structure of the WAC initiative, interim acting CEO Tim Raby said that there was much debate among WAC members over whether a unified revenue sharing structure should be implemented among all participating operators, but the membership ultimately decided to leave the distribution and revenue share agreements in the hands of each operator. “The simplicity of one business model is very attractive,” Raby said, but he added that the WAC didn’t want to implement a “least common denominator system.”

Implementing hard and fast rules about what cut of app revenue a developer takes and what an operator takes would limit the flexibility of the WAC platform and wouldn’t take into account differences between markets and between operators, Raby said. Operators may be exposing different application programming interfaces (APIs) that could make one operator’s network much more valuable to a developer than another’s. Operators and developers could also negotiate different terms depending on placement in the deck, Raby said. An inflexible revenue structure could result in all carrier decks and all app stores looking the same.

Raby said he expected standard frameworks to emerge in specific markets or with specific carriers making distribution agreements an easy process to negotiate, but in the case where an operator is bring more amenities or more promotional might to the table, a custom agreement would then become an option. Ultimately carriers could be prevented from abusing their negotiating position through competition in the market. Developers would be drawn to operators that had the best terms, and if they chose they could bypass the operator entirely. The WAC framework is being extended to all comers, allowing third-party retailers or even existing app stores to distribute WAC apps as well as its carrier membership. “WAC is open,” Raby said. “It’s not closed like the GSM operator stores.”

That framework ensures that the WAC framework doesn’t just recreate the walled garden carrier decks of old. WAC applications could come from any number of sources outside of the operators’ stores, so it's up to the operator to ensure that their stores are the most attractive retail locations. The operators’ biggest weapon in that war is the ability to charge directly to the customer’s bill, but Raby said as operators expose more common APIs to developers, there will be plenty of other incentives for developers to cozy up with the operators. Location, identity, personalization and messaging AIS are just a few of the features an operator can dangle in front of a developer that a generic app store could not, Raby said.

The WAC today announced its official incorporation as a non-profit entity, as well as gave details about its plans going forward. Raby, managing director of the Open Mobile Terminal Platform, is stepping down as acting WAC CEO and will be replaced by Peters Suh, the CEO of the Joint Innovation Lab, which itself will be merged with the larger WAC initiative. WAC also named a 16-member board with representatives from the GSMA and operators around the globe, including Verizon Wireless (NYSE:VZ, NYSE:VOD) chief technology officer Dick Lynch and AT&T (NYSE:T) CTO John Donovan. Vodafone Europe chief executive Michel Combes was elected chairman.

WAC will use the initial work done by JIL and OMTP’s Bondi initiative as a starting point for a development framework, which will initially focus on Web-based applications that can work on any device but eventually produce a run-time environment that can be installed on billions of feature and smartphones. WAC plans to demo the first devices with the run-time at Mobile World Congress next year.

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© 2014 Penton Media Inc.

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