Carrier billing keeps MNOs in the content play
Shelley had it right. “My name is Ozymandias, king of kings: Look on my works, ye Mighty, and despair!" Nothing beside remains. Round the decay Of that colossal wreck, boundless and bare The lone and level sands stretch far away” From the sublime to the, well, less so. Network operator portals never achieved greatness, and if the other Mighty looked on them and despaired, it was generally despair at the fact that they were clunky, and cumbersome, and didn’t stock much content, and what they did stock wasn’t much good; but they represented, collectively, the first real attempt to deliver content to the consumer beyond a few ringtones, and for this they are worthy of note in any history of the mobile industry. And now, with the exception of a handful across Asia and Africa, they are gone. We all know the reasons why: iPhone 3G and App Store, consumer smartphone explosion, OTT storefront explosion, garden walls come tumbling down, end of story. And yet some operators raged against the dying of the light: Vodafone launched 360 in September 2009, Verizon gave us VCAST a year later. Both had shelf lives of approximately two years: nothing beside remains. But as the sun sinks on our content Ozymandias, does that necessarily mean that the MNOs are out of the equation entirely? I would argue: far from it. As we observe in our recent report on content business models, the fact that the operators can offer direct billing to third party storefronts makes them a potent ally in the content monetisation field: Nokia and BlackBerry have stated that the implementation of direct carrier billing results in a 5-6x increase in conversion rates, while Google has seen a marked uplift in revenues from Play in the US since its inception. It offers storefronts the opportunity to monetise customers who are unwilling to register their credit cards online or who simply do not own a credit card (there are rather a lot of unbanked folk – more than 2.5 billion adults worldwide), while the introduction of operator billing also opens up the potential monetisation of those individuals not yet old enough to own credit cards (although see my previous blog entry on the potential pitfalls of this). It is also extremely valuable in securing an uplift in impulse purchases, particularly from individuals who have not pre-registered a credit card. Certainly, as a means of scaling up lower value payments in particular, carrier billing is an attractive proposition. While there can be difficulties – the capabilities of operator systems differ considerably, meaning that integration can be problematic – at least the challenges are perhaps more aligned to operator core competencies than in deciding what games should be on the front page of the portal tomorrow. While the portals have come and gone, the billing mechanisms remain: and they remain exceeding powerful assets. The challenge for the operators is to leverage those asset to their best advantage.