Issue 56 • NOV 2014
Carrier billing in Germany set for massive growth
News
THIS MONTH...
• Londoners lead way in willingness to share location data 2 • Brazil, India, China, Mexico: the next app hot spots, says MEF 4 • Brand loyalty “dead on mobile web” warns Netbiscuits study 5 • CIAmedia rolls out post call ads for Android apps and games 6 • Samsung teams up with Bango to offer one click billing 7 • mGage rolls out global mobile CRM platform 8 • MNOs missing A2P SMS market, report warns 8
Analysis EDITORIAL Too much to lose? The judicial review of the regulation of affiliate marketing and PRS is due to be read next week. And it is a pivotal moment for the industry, writes Paul Skeldon 9 ANALYSIS Driving the carrier billing boom Rimma Perelmuter, CEO, MEF takes a look at how the carrier billing boom has gone global and outlines what is driving this sudden interest in telemedia 10
THE GERMAN DIRECT carrier billing market is set for staggering growth and offers enormous potential, suggests the latest country focus from B2B carrier billing company DIMOCO. As one of the biggest economies in Europe and with a mobile handset penetration of 119.9% – in comparison to 35.7% credit card ownership – Germany shows a huge potential in billing digital content via direct carrier billing. According to the white paper on direct carrier billing in Europe, published by DIMOCO in collaboration with market research partner Juniper Research, conversion rates up to 70% at the first transaction and 60% at the second transaction can be achieved with direct carrier billing. The countries 115.2 million mobile subscribers are shared among the four big German mobile network operators Telefonica Germany (O2 Brand, market share 16.6%), E-Plus Group (market share 21.9%), Telekom Germany (33.7% market share) and Vodafone (market share 27.8%). As the worldwide trend shows, the smartphone penetration rate is also increasing in Germany and is currently at 33.9% compared to 66.1% legacy handsets available on the market. The wider content market is also increasingly ripe for the picking too, suggests another study. The Price Waterhouse Coopers “Entertainment and Media Outlook 2014 – 2018” report shows real development in the digital content industry: The
continued page 3>>>
ANALYSIS Making operators trustworthy John Strand takes a look at why no one trusts network operators any more and offers some sage advice as to how they can win back public trust 12 TELEMEDIA TV Tune in, Turn on, Pay out This month Telemedia TV – our very own Youtube Channel – offers you the chance to relive World Telemedia Marbella’s highlights with the full conference sessions online and ready for your delectation 14
DIRECTORY
The leading industry directory of services 18
Latest news at www.telemedia-news.com Catch our blog at www.telemedia360.blogspot.com
NEWS #MARKETING Londoners lead the way in a UK that is learning to love to share its location data A UK-WIDE survey of 2,000 people has found Londoners are the happiest to share their location data with brands, as long as they receive relevant deals in return. The capital’s consumers came out on top, according to the Location Data Index from digital financial services provider Intelligent Environments. Over half (55%) of Londoners said they were happy for brands like banks and retailers to use location data from their smartphones to send them exclusive location-relevant offers. Second and third in Intelligent Environments’ Location Data Index were Birmingham and Manchester with 44% and 43% respectively. According to Intelligent Environments, one theory why Londoners are the most accepting of location-based services is that they understand its benefits after taking part in numerous city-wide trials. For example, hundreds of retailers are now using iBeacons, the Apple location-based service, in Brixton as a way to facilitate
customer payments. Brands, banks and retailers across the world are now capitalising on the benefits location-based marketing provide. For example, St. George Bank in Sydney announced its trial of iBeacons earlier this year. The bank plans to use the iBeacons to detect when a customer walks into a branch, then send a welcome message and tailored information to their smartphone. David Webber, managing director at Intelligent Environments, said: “Contrary to recent reports in the media around consumer sensitivity to data sharing, our Location Data Index clearly shows that people are, in fact, increasingly happy to share location data with brands – and many are happy to share their locations to a wide arena of businesses – whether they’re retailers or banks. This presents financial services providers with a huge opportunity to improve targeting and send offers that are relevant to specific locations. Consequently we’ll soon see
widespread use of location data for enhanced targeting, including identifying when customers are in an airport and sending them a targeted offer on travel money, for example.” The use of data location services like iBeacons could hold significant benefit for financial services providers to differentiate their service. Location data can be used to identify the type of services a customer is signed up to when they enter a branch, directing them to the relevant part of the business without needing to go through the preliminary steps and ultimately reducing waiting time. Other uses for location data include improvements on authentication methods. Financial services providers can use location data to show where the customer is when they’re purchasing an item. By locating the customer at the point of purchase, financial services providers can help reduce card-present fraud and increase customer security.
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NEWS >>>from page 1 Carrier billing in Germany ePublishing segment, the area with the biggest growth, will grow from $655 million in 2012 to $2,287 million revenue in 2017. The home video market is set to grow from $162 million revenue in 2012 to $674 million in 2017, and the eMusic market from $387 million in 2012 to $620 million revenue in 2017. Another huge market is the eGames segment. The revenue growth rate shows a development from $889 million in 2012 to $1,589 million in 2017. And this is where the opportunity lies. To tap into this enormous digital content potential, carrier billing is starting to offer a really viable alternative to other payment tools. It is quick and convenient and starting to see consumer interest. “Direct carrier billing is an additional payment method to credit card billing and gives digital content providers the chance to maximize revenues and to reach their entire target group”, says Gerald Tauchner, DIMOCO CEO, adding: “The sales potential in big economies like Germany is tremendous, as this study by Price Waterhouse Coopers confirms”. Starting next year, O2 users in Germany will be able to use carrier billing to pay for goods on Amazon following a deal between the retailer, Telefonica Deutschland and UK billing company Bango. The news comes a month after Bango announced that it
was set to power a range of carrier billing based payment services for Deutsche Telekom across a range of apps stores and content services on mobile. The move marks a sudden shift in the balance of power in European m-commerce, with Germany taking an unexpected lead in proceedings and showcasing the power of carrier billing for driving impulse purchases of not just digital, but physical goods too. Bango signed a deal with Deutsche Telekom in August for the use of carrier billing in Apps Stores. The partnership enables Deutsche Telekom to accelerate DOB deployment, bringing frictionless ‘one click’ payment for apps, music, games and other digital content, to its subscribers across Germany and other European markets. DIMOCO offers companies a variety of mobile payment products. Depending on the business customers’ needs and the mobile network operators’ capabilities, digital content on the web can easily be billed as one-off or subscription service between a tariff range of 0.19 and 30 EUR at Vodafone, Telekom, E-Plus, O2 plus the virtual mobile network operator Mobilcom Debitel. “As DIMOCO we provide the technical hub between all the mobile network operators on the one hand and the business customers on the other hand. The main advantage for digital content providers is that they only need to integrate one connection and technical interface into their infrastructure”, explains Tauchner.
NEWS #APPS Brazil, Indonesia, Mexico, Turkey and India are the next wave of growth for apps BRAZIL, INDONESIA, Mexico, Turkey and India are the next growth marketsto-watch for players in the mobile app industry. This is according to App Annie, the industry standard in app market insight, and MEF, the global community for mobile content and commerce. In a new report, based on App Annie’s Intelligence data – which analyses app downloads and revenues across Google Play and the iOS app store – China is highlighted as the largest of the growth markets as identified by MEF; Its downloads growing 10% in the last year, second only to the US. However, this growth was overshadowed by Brazil whose app downloads doubled between Q3 2013 and Q3 2014. Outstanding growth was also seen in Indonesia, Mexico, Turkey and India within the same period, where downloads increased by 70%, 60%, 60% and 30%, respectively. This remarkable rise of apps usage in emerging markets
was a key contributor to Google Play’s impressive global download growth over the past year, which is currently 60% higher than the iOS app store. “Emerging markets offer a huge opportunity for app publishers. However, moving into new markets is not always as simple as translating an app,” explains Olivier Bernard, VP EMEA at App Annie. “As different cultures may respond differently to different monetization models or feature updates, local content and an understanding of the local app market, local competitors and local expectations is key to making the most of these rapidly growing opportunities.” MEF’s CEO, Rimma Perelmuter adds: “Through our global community and ongoing commitment to market analytics, MEF has identified key growth markets across the globe that are driving both mobile innovation and mass-market consumer adoption.
“The findings of this joint report show how the dominant App Stores are mirroring these market trends and present real opportunities for all stakeholders. As highlighted in App Annie’s Q3 2014 Market Index, the growing popularity of Google Play in these emerging markets exerted a strong influence on the countries’ download rates. Brazil and India trailed only the United States in Google Play downloads in Q3 2014. WhatsApp Messenger was a notable example of a top messaging app that gained the majority of its downloads on Google Play from emerging markets. In regards to revenue, the emerging markets featured in the report also experienced strong gains between Q3 2013 and Q3 2014. However, they remain small relative to more established markets while their download growth continues to outpace revenue growth.
NEWS #COMMERCE Brand loyalty ‘dead’ on the mobile web, warns Netbiscuits People’s Web Report ONLINE BRAND LOYALTY is a dead concept, according to a global report released by Netbiscuits, detailing the behaviours and attitudes of more than 6,000 consumers towards mobile. Fuelled by increased mobile engagement and the rise of ecommerce, 91% of expectant consumers, particularly across the 18-34 age range have turned to a competitor site if they are left wanting from their mobile experience. In fact, over one third of all respondents said they often or very often head elsewhere if the experience is not what they are looking for. Featuring respondents from the UK, US, Brazil, China, Germany and India, the report found that brands are still failing their customers via mobile channels, with more than 96% of consumers claiming they had abandoned a mobile website because of a poor experience. The report also
uncovered some interesting consumer perspectives on brand personality personas, attitudes and awareness of emerging technologies and the blurring of the lines between the digital and real worlds. The research, commissioned by Netbiscuits and conducted by Populus, highlights an increasingly demanding and frustrated mobile user base, as consumers seek to do more with their mobile devices. The major reasons for mobile web disappointment, include websites being too slow (96%), with 95% claiming it was too difficult to enter information and the same number claiming they could not find what they were looking for on mobile websites. The visitors that are most often unable to complete the tasks they wanted are in India, where 34% say that this is a regular occurrence. In Brazil, it is 29% and in the UK it is one quarter.
Overall, the USA is delivering the best experiences to its visitors, but still 92% of mobile web users have at some stage not been able to complete what they wanted to on their mobile device. As concerns continue to reverberate from the EU Data Protection directive, Netbiscuits found that consumers also often had conflicting views on privacy and permission. Interestingly, 79% of users said they would be happy to share personal data, such as location, if it was for a specific purpose that would boost their online experience. Alternatively, 91% said they had deleted an app that they believed had become intrusive. Similarly, 40% of people in the survey said that they abandon a site if it asks for their location, placing pressure on marketers to ensure they are adding value by understanding a user’s context when asking for personal information.
Your trusted mobile payment and messaging provider. • • • • • •
Direct carrier billing Mobile payments Payforit enhanced single click Mobile messaging International messaging routes In-App payments
Tom Broadfoot | Head of Payments | +44 7500 700 665 | tom.broadfoot@imimobile.com
NEWS #MARKETING Post-call advertising for Android apps and games, launched by CIAmedia CIAMEDIA, the company behind the hugely popular Caller Identification App ‘CIA’ has launched Calldorado, an SDK for Android app developers that monetizes incoming and outgoing phone calls with Post Call Ads. With up to 70 per cent of all apps monetized by in-app advertising, intrusive ad-units are one of the most popular revenue models. Yet with typical app usage declining over time and consumers only regularly using as few as five apps in any given week this leaves 60 per cent of app developers operating below the theoretical app poverty line – that means earning less than $500 per app per month. In-app ad revenues only really reward apps with a user-base in the millions. Calldorado provides a direct incremental revenue stream by serving Post Call Ads - the new out-
of-app advertising unit that unlike conventional industry practice, serves non-intrusive banner and native ads at the end of a phone call, together with caller ID information. This new way of advertising simultaneously enhances the user experience to any app, by combining additional app features (caller ID) with targeted advertising. The ad that is served is relevant to the user’s call and always shown in connection with caller ID information – such as identifying an unknown caller and an option for the user to save, rate or call back with one click. As phone calls are still among the top user activities on smartphones (source: GSMA intelligence, Zokem), the opportunity to display contextually relevant Post Call Ads is enormous. With an average of 150 Post Call Ad impressions per-user per-month, Post Call Ads will be adding substantially
to the existing ad-impressions that an app may already generate. Developers can forecast their Post Call Ad revenue by simply inserting the number of their current installs in the Calldorado revenue calculator. Moreover, the Calldorado SDK works, regardless of whether or not the host app is open or closed. This way even inactive users who have stopped using the app, or rarely use it, can be monetized. Prompting the user with caller ID in the look and feel of the host app stimulates user engagement of the app at the same time. A number of established apps including CIA – Caller Identification App, Das Telefonbuch, Herold, and 11833 CallerID have already joined the Calldorado network and are running the Calldorado SDK, benefiting from incremental Post Call Ad revenue as well as an enhanced user experience through caller ID.
NEWS #PAYMENTS Samsung teams up with Bango to build in one-click m-payments SAMSUNG, one of the world’s largest technology companies and the world’s leading smartphone manufacturer has signed a deal with Bango, which will see hundreds of millions of consumers using Samsung devices gain access to frictionless payment for digital goods – apps, music, games and more – charging the cost to their phone bill in one click. Bango will provide carrier billing, collection and settlement for digital content purchased through Samsung’s app store, named Samsung Galaxy Apps. The roll-out begins immediately. Samsung Galaxy Apps is focused on exclusive content, discounts and promotional offers. Taking a curated approach, apps in the store have been extensively tested and reviewed to ensure that only the very best make it to the device. Carrier billing is emerging as a vital enabler of mobile commerce,
superseding credit and debit cards, and instead using the mass market of phone and phone bill to democratize access to the universe of digital content. The world’s app stores, with one notable exception, are racing to embrace carrier billing, recognizing its transformative effect on digital sales. Samsung today joins Amazon, BlackBerry World, Facebook, Firefox Marketplace, Google Play and Windows Phone Store in choosing Bango to power their carrier billing capability. Analysis of Bango’s own payment
data shows this effect. Where consumers are only presented with a credit/debit card payment option, conversion rates can be as low as 0.5% in developing markets, and rarely exceed 40% even in developed markets where card penetration is high. From January 1st 2014 to August 31st 2014, the average conversion rate for carrier billing in app stores using the Bango Payments Platform was 82.4% (based on a sample of five app store integrations, excludes integrations with a monthly spend cap in place).
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NEWS #MARKETING mGage rolls out global mobile CRM platform MGAGE HAS launched a new suite of tools that enables brands to create true one-to-one conversations with their customers through an enterprise-grade mobile Customer Relationship Management (mCRM) platform backed by a global delivery network. The mCRM suite is currently focused on key verticals such as consumer products, retail, financial services, media and gaming where the growing need for data analytics is coupled with an ever changing mobile communications environment. The Company intends to release a number of enhancements and new applications to the mCRM product family over the coming year to support its global customer base. mGage partners include Fortune 500 companies, email service providers, emergency alert networks and VARs. “Effectively personalizing marketing efforts and engaging customers one-on-one is one the single biggest opportunities for enterprises today,” said Jay Sheth, mGage Chief Executive Officer. “Brands today need a comprehensive mobile engagement strategy well beyond the traditional email
and SMS messaging channels. Our mCRM suite provides data analytics combined with a multi-channel software platform, allowing brands to engage in one-on-one dialogue with customers on the device and channel of their preference.” mGage launched earlier this year to capitalize on the rapidly growing opportunity in the mobile CRM sector. The newly formed mGage was created leveraging assets and companies that have more than 15 years of experience providing technology and communications’ solutions to global brands over their world-class carrier grade network. It’s SaaS, cloud-based technology enables brands to intelligently personalize mobile communications for the omnichannel consumer, across marketing and customer care interactions. Through a single, easy-to-use campaign and analytics platform, mGage provides an intuitive campaign management user interface and a robust set of open APIs that offer reach across all critical mobile touchpoints, including OTT messaging apps, app push notification, voice, social as well as SMS/MMS messaging.
#MESSAGING Mobile network operators missing A2P SMS opportunity GLOBAL research from analyst mobilesquared, sponsored by tyntec, highlights that four in five (81% ) mobile network operators (MNOs) cite decreasing revenues on traditional telecom offerings such as P2P (Person-to-Person) SMS as their most pressing concern. The survey of more than 50 international MNOs showed that one in three (32 per cent) respondents have seen a reduction in P2P traffic over the last 12 months whilst half (50 per cent) who have seen an increase in Application-to-Person (A2P) messaging. One in three MNOs (32 per cent) reported at least a 6% growth in A2P traffic over the last year while - in contrast almost one in five MNOs (18 per cent) have seen P2P traffic decline by more than 5%. This clearly indicates growth in the A2P
sector but, given the difference in scale between P2P and A2P, greater focus will be needed on driving growth and monetisation if A2P messaging is to fill the revenue gap left by the decline of P2P SMS. A2P SMS is a crucial revenue opportunity for mobile network operators. Worldwide A2P messages are expected to increase to 2.19 trillion by 2018 and A2P revenues will grow to US$60 billion by 2018. The decline of P2P SMS is being attributed to the surge in over-the-top (OTT) services like WhatsApp, Skype and Facebook Messenger. The latest research by mobilesquared reveals uptake of these services is rising rapidly, with half of MNOs (50 per cent) expecting at least half (50 per cent) of their customers to be using OTT services in 2015.
OPINION
FROM THE EDITOR
Too much to lose? NEXT WEEK, THE HIGH COURT in London will pronounce its Judicial Review into one company’s case against fines generated through rogue affiliate marketing. The result is anticipated with bated breath, as it not only starts the process of clearing up the mess left by this affiliate marketing ‘scandal’, but also calls into question where PPP sits in all this. While it would be wrong for me to comment here about the contents of the review – Lord Justice Charles will make his thinking clear on 17 and 18 November at the High Court, and Telemedia-news will be there – the case does throw up some interesting points. But first a re-cap. While out looking for dodgy software, PPP detected some ransomware, which wouldn’t let users access websites unless they used a PRS service. This is clearly very bad. But PPP then essentially fined the companies who’s adverts the ransomware operator had hijacked. First of all, the companies fined – 10 in all – by PPP were totally unaware that this was happening. A swift phone call to the companies and the services could have been shut down immediately. Secondly, fining them could be seen as a very ham-fisted way of dealing with the problem. Sure, some people go out of their way to cause harm, but this was not one of those cases. The ransomware operator did, but the 10 companies involved had no knowledge of this. It smacks of unfairness. The upshot has however been largely positive. Two of the companies involved in the fining – Ordanduu GmbH and Optimus GmbH, both German – have taken a stand and won a judicial review. The outcome could be quite far reaching for the industry. I am not going to second guess it, but we will be analysing this in full next week after the hearing and in next month’s newsletter out in early December. The other positive is that it has totally reshaped how the industry and PPP interface with one another. The fact that a judicial review was won has sharpened everyone’s approach to stopping this sort of thing in future. Consultation on the 13th Code has been radically overhauled. AIME has managed to get PPP to form a cross-industry working group to talk about affiliate marketing – and one suspects Co-Reg, which has the potential to also blow up in someone’s face – and things are looking more fair than ever. While the actual details of the Judicial Review could cover all sorts of things, the fact that we have moved in this direction is very hopeful. It comes at a time when the telemedia industry stands poised to start to really regain much of its mainstream media and payments footing. It does not need a scandal right now. These are interesting times and there is much to be lost if we get it wrong. So join us on the 17 and 18 November as we Tweet live from the High Court in London.
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Editorial Editor Paul Skeldon paulskeldon@me.com | Sales & Marketing info@telemediamagazine.com | Production Director Annika Micheli annika@telemediamagazine.com | Publisher Jarvis Todd jarvis@telemediamagazine.com To subscribe, please go to www.telemedia-news.com What we’ve been listening to Temples| What we’ve been amused by Monty Python’s best bits | Who we’ve been following @Interstella | What we’ve been reading about Time travel| NOVEMBER 2014 will bring... The start of Christmas drinks
ANALYSIS
PAYMENTS
What’s driving the
BILLING BOOM?
Carrier billing is starting to garner a lot of attention. Across the world it is being seen as having plenty to offer a world hungry for mobile payments. Here Rimma Perelmuter, CEO, MEF, explains what is driving this world wide interest in carrier billing
FROM ITS EARLY beginnings as a convenient way to purchase a ringtone or game with a premium rate SMS message, paying with your mobile bill has come a long way. Today, Direct Operator Billing (DOB) also known as direct carrier billing is recognised globally as a highly convenient way to pay for all kinds of digital goods and services. At the same time, the plethora of mobile payment wallets which have been launched over the last year and the global consumers’ increasing appetite to pay for physical goods over their mobile presents a challenge to existing incumbents. So what does the future of DOB hold and how will the business transition as consumers expect to pay for a wider array of physical goods and services? Analyst firm, Analysys Mason predicts that DOB will grow to provide Telcos with more than $12 billion in revenue by 2022. Elsewhere Juniper Research pegs the value of digital content billed via direct operator billing will reach more than 5.2 billion Euros (US$7.1 billion) in Europe by 2017. What’s fuelling this growth? A key goal for mobile payments has to shift towards payment simplicity. DOB certainly makes payment over the mobile a nearly frictionless and uniquitous experience. There’s no need to register personal details to complete a transaction and requirement to key in lengthy credit card details and some providers
are now able to identify a repeat user and reduce their purchase path to a single click. DOB is especially compelling in growth markets where feature phones are still popular and smartphones are not yet dominant. Fadi V. Maalouf, chief commercial officer at MENA DOB provider Mobile Technology Tomorrow (MT2Pay) explains: “The mobile has become the FIRST screen where customers are in a relationship with the Telco operators and find this the most convenient method of payment over credit/debit and cash payments.” Champions of the DOB payment channel also point out that it vastly improves conversion rates – completed digital content purchases – which can be six to ten times higher than by offering other mobile payment options. Or put another way, around 35% of customers abandon payment during checkout in mobile and online environments due to the cumbersome process of entering payment information and lengthy card numbers whilst with DOB, the volume of digital goods that achieve a completed transaction up-weights the payment made to the content developer or publisher. Bango, points out that in a scenario where 1000 customers are each buying a $10 item under DOB, the transaction fee (charged by the mobile operator) would typically be 20% yet since the conversion rate is an expected 60%, the developer would achieve $4,200. Compared to a credit card the transaction fee
ANALYSIS PAYMENTS
would typically be 1% but the conversion rate shrinks to just 10% with the developer achieving $980.* Hence, developers, content aggregators and operators benefit from the revenue options available under DOB. For this reason, DOB fits neatly alongside all kinds of digital content services that require a transaction. German based, InternetQ has established a global DOB payment business with Kanzaroo. Marco Priewe, Managing Director explains: “Typically any kind of digital good may be sold using kanzaroo. Today, the main areas are gaming, video on demand, streaming, music, dating, file sharing and news.” Within the app economy all app stores apart from Apple (Firefox, Google and Microsoft) are now accepting DOB as a payment option too. And, since most developers and publishers of mobile content operate within the narrow margins in the freemium model, it’s also a simple way of introducing in-app purchases for unlocking new game levels or renewing a subscription. The same is true for the new wave of OTT providers like WhatsApp which on one hand have cannibalised operator voice and messaging revenues but ironically give back by charging for their services via the DOB model (albeit generating much smaller revenues). DOB is also particularly appealing to the unbanked and underbanked social segments that aren’t likely to have access to credit cards and financial services. This includes younger mobile users (who may not have a bank account) and to the pre-paid sector as well as large sections of the population in growth markets where mobile devices have a much more comprehensive distribution compared to that segment’s financial access. MT2’s Fadi V. Maalouf continues: “Credit cards in this region [MENA] have a very low penetration among certain segments and people are not comfortable using cards for purchases digitally, cards are also not the preferred choice for smaller transactions in a region where credit fraud has very serious implications for people. Operators are now seamlessly integrating mobile payments as part of the value chain and are the first point of contact in the transactions, thereby being able to offer the customer a hassle free payment option and one that can be validated, verified and tracked easier than the credit card cycle.” The question remains whether direct carrier billing is ready for the physical point of sale and whether it can compete with mobile wallets? Since mobile operators take a significant slice of the revenue generated within the DOB channel it’s hard to imagine
how it could compete with credit cards or more recently, NFC payments at the till in a shop. However, DOB payment providers are bringing products to market that enable mobile payments beyond the purchase of digital goods are making progress. Until now, in Europe, what has restricted DOB is the regulatory framework under the European Union’s Payment Services Directive (PSD), limiting the channel to the purchase of digital goods. Whilst it’s important to protect consumers with the PSD, this regulatory framework was largely established to deal with the purchase of ringtones and wallpapers. Now that it’s possible for DOB providers to apply for an e-money licence, enabling them to become the transaction mechanic in the world of physical purchases there is a new opportunity. Boku is one such company partnering with mobile operators to offer DOB as an option for low-cost convenience related purchases like bus and train tickets or to pay-ahead for a coffee as ‘a click-and-collect item.’ Boku estimates that 25% of click-and-collect transactions come via the mobile (rather than from within an ecommerce environment) so there is a good fit with DOB. Outside the US and Europe, there are also plenty of examples of how DOB is changing into a channel for the purchase of items that fall in to the physical / digital hybrid. Recently Turkish mobile operator, Turkcell worked with Neomobile’s DOB service, Onebip, to enable mobile ticketing for three Turkish international football matches. Marco Priewe, Managing Director at InternetQ continues: “We see tremendous potential for DCB for ticketing services, such as buying a ticket for public transportation or parking.” Whilst DOB has huge potential for growth it does have limitations. Today, the type and value of goods that can be purchased is typically restricted to micropayments for purchases under $20 and the transaction fee charged by the mobile operator makes it hard to compete against an established and trusted credit card payment infrastructure or indeed a mobile wallet option. Whilst payment simplicity is highly appealing to consumers, the success of DOB for digital goods and services as well as some physical items like tickets, parking fees and click-pay-and-collect goods rests on the intersection between local regulation, mobile device penetration and access (or lack of it) to financial services. Clearly, if DOB is to grow beyond these segments to offer a convenient payment for physical goods, a more compelling business model must be evolved by regulators, operators and payment providers who increasingly compete against a wealth of mobile wallet players.
ANALYSIS
TELECOMS
How can operators regain
TRUST?
Operators provide such a great connection between people and each other and people and the world –yet they are awful at communicating themselves. John Strand explains how this is causing them huge problems in the age of net neutrality and general distrust of “the man” IT’S AN IRONY that the world’s operators, which provide communication services, should frequently do such a poor job at communicating. There are few services in the world more demanded than mobility and connectivity and yet operators who provide these essential capabilities are maligned. Given that people love to communicate, they should love their mobile operator, the same way they love their phones, cars and other personal devices. So what of these challenges operators face and how they could address them? Operators have lost customers’ trust because of the proliferation of misguided regulation that drives a wedge between operators and their customers and because of a lack of leadership in the policy dialogue. There is no doubt that misguided regulation distorts reality and creates perverse incentives for operators. Around the world, Strand Consult sees a number of countries where only few network operators can get a business case. Most lack the right strategy. When a market is driven primarily by price, there is a race to the bottom. For example, regulation on the wholesale wireless market may encourage service-based competition at the expense of operators that build networks. Large players may use wholesale regulation to support service-based competitors, making it more difficult for fledging network operators to get a business case. When operators compete on price, this tends to strengthen the position of the incumbent or the player that with the largest network, the opposite outcome of what regulators intend. Adding insult to injury, a number of regulators, goaded by so-called consumer advocacy groups, restrict the ways operators can compete by prohibiting creative marketing and partnerships, particularly zero rated programs. Again, this move tends to strengthen the position of the large and incumbent players at the expense of upstarts, because it’s generally smaller providers that need creative marketing in order to appeal to an audience. Defenders declare zero rated programs as discriminatory, but on the other hand, consumers love lower
prices and expect zero rating across a range of products and service they consume, whether it’s buy-one-get-one free offers, rebates, free trials, discounts, early-bird specials, free Fridays, and the like. Indeed advertising in Google enables the zero rating of search. Premium SMS was such a model that allowed content providers to earn billions of euros by partnering with operators. Moreover operator partnerships with application and service providers are key to help startups make their innovation known. Operators can help startups improve distribution, lower marketing costs, eliminate billing costs, and increase acquisition. Consider the case of Spotify. By partnering with an operator, it can save on expensive marketing and advertising costs. Spotify need not maintain an expensive and cumbersome billing system, which the operator can provide instead. Spotify’s conversion rate is higher when users automatically pay through their mobile bill. Because the operator does the heavy lifting, Spotify can concentrate on providing a cool service and conserving cash to pay artists. Few things are more powerful than communication, and in this regard, anti-telco and anti-corporate advocacy organizations create marketing and storytelling that appeal to people’s fears and emotions. These highly organized, well-funded, and networked organizations have succeeded create a potent but false picture of operators on a number of issues. Storytelling can endure even in the face of contrary fact and evidence. Though a year long EU investigation of the internet content and transit market yielded no evidence of abuse, many still believe that net neutrality violations are rampant and that strict controls on needed on operators. It’s too bad that operators didn’t coin the term “Open Internet” themselves. It a key failing of the various trade associations and PR organizations that have not been able to communicate the value operators provide to society with an accessible turn of phrase. The fact of the matter is that operators enable the open internet every day and increasingly so. The growth of net neutrality as a glob-
ANALYSIS TELECOMS
al policy issue and the ability of groups to create international campaigns against operators reflects that there is increasing connectivity, not the opposite. A case in point is the Council of Europe, the body charging with enforcing human rights for the EU. In 2008 it noted, “ISPs in providing the basic infrastructure and basic services that allow users access and use the Internet and thereby exercise their rights to benefit from the information society,
deliver services with a significant public service value to society”. But just a few years later, the organization became is a key actor to punish telcos through net neutrality rulemaking. Operators have failed to frame the issues, and as such, are in a defensive position when it comes to debate. This makes them increasingly risk-averse and unwilling to engage in meaningful dialogue, a vicious cycle of lack of leadership and lack of decision making.
Four ways operators can get the trust back There are many strategies operators can take to communicate, however some may require specialized skills. A number of operators are reluctant to engage with customers, politicians, and regulators because they fear conflict and controversy. However these things can be managed constructively, and controversy, as a foundation of innovation, propels society forward. 1. Operator-led Dialogue In Denmark, the operators association took the proactive step to start their own dialogue on net neutrality, inviting the regulator, content providers and consumer groups to the table. This approach has kept rulemaking at bay, and no net neutrality violations are on record since the process started four years ago. Denmark had been spared the debate that has consumed other countries, and energies can be directed instead to a conversation about broadband enabling health, education, employment and other desirable goals. 2. SMS Voting There has been media buzz about the 4 million responses submitted to the FCC on net neutrality rulemaking. However few have been critical of the content or quality of the responses, perhaps three-quarters of which are from letters and petitions curated by advocacy groups. Many comments are obscene or unrelated. At best there are a few hundred substantive responses. Rather than leave important discussions to self-interested advocacy and lobby groups, operators should engage directly with their customers. Operators can gather votes and feedback from their customers via SMS. Questions might include: Would you approve of a price increase across the board so that
providers such as Netflix can get free transit? Should pricing be dependent on usage, for example should grandmothers and gamers pay the same even if they consume different amounts of data? Should the FCC regulate the internet? Should VOIP providers be required to support 911 emergency calling? Should internet platforms such as Google and Facebook maintain the same standards for data protection and privacy as telecom operators? 3. Transparency Reports NSA and surveillance has created global controversy. However many governments, while overtly condemning the activities of the NSA, may explore their own means to monitor citizens and networks. Long term this is a dangerous development for operators. They do not want to become the pawns of government nor to act in ways that run counter to the interests of their customers and shareholders. Operators are in a difficult position because on the one hand, their rights to operate are granted by the state, and on the other hand, consumers may hold operators responsible for governments’ activities, however unfair. A number of operators now produce transparency reports, disclosing the information that governments’ demand. This provides a valuable way for an operator to demonstrate its stewardship for consumers and society. 4. Community-based frameworks for mobile infrastructure Given the importance of telecom infrastructure in society, it would seem that governments and regulators would take proactive steps to facilitate operators’ deployment of networks. The reality is the opposite. In fact it has become increasingly difficult, expensive, and time-consuming. To erect a single mobile mast can take 12-18 months and cost operators more than €200,000.
ANALYSIS
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WORLD TELEMEDIA MARBELLA 2014 Relive the highlights of the industry’s number one conference through our Telemedia TV youtube Channel WHAT A SHOW THAT WAS. The great and good from the telemedia industry and, more importantly, many of its customer industries came along and joined the debate that covered all the main issues affecting the industry right now – from the 13th Code, to affiliate marketing, to co-reg, to payments and a raft of technologies and services out there. And if you missed any of it – or weren’t able to come – we have reignited our TelemediaTV channel and filled it with videos of all the sessions from the conference.
There are also a load of interesting pre-show interviews and we will be adding more interesting stuff through the year as we do our interviews and get out and about in the business. So go to any of the links below or: visit our channel here https://www.youtube.com/channel/UC7Tjo2afHOwY1jGAuWFd-uQ/videos
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13TH CODE DEBATE Mark Collins from PPP and Rory Maguire from AIME open the World Telemedia conference in Marbella with an in depth look at the development of the 13th code of practice and what it means for the industry
THE PAYMENT SERVICES DIRECTIVE Boring but important: the PSD (and PSD2) could put a great big dent in the nascent charge to mobile world and cause all sorts of problems for PRS. Rory Maguire from AIME and James Patmore from Boku take a look at what PSD is, where it is heading and offer some practical advice as to how to work within it
THE CO-REG ISSUE Rory Maguire from AIME gives us a whistle stop tour through what co-reg is and why you need to know about it, then he, James Macfarlane from PM connect and Mark Birkett from Square 1 are quizzed on what it means in the real world by telemedia editor Paul Skeldon
IS AFFILIATE MARKETING FIXED? With a best practice guide in place and an Early Warning System set up, is it safe to return to using affiliate marketing? Our expert panel to laid out the issues and took your questions and reached some surprising conclusions. PANEL: Eric Feltin ,Safari Mobile; Brian Gliseman, Zamano; Bart de Ruiter, Creative Clicks; Mark Collins, PhonePay Plus; Jonny Brown, SP7 Mobile; CHAIR: Jeremy Flynn, Empello
ANALYSIS TELEMEDIA TV
THE DIRECT OPERATOR BILLING CHALLENGE Mobile payments are flavour of the month, and that is presenting a massive opportunity for carrier billing services. In the first of our two part look at the carrier billing landscape we hear from leading service providers and aggregators about the challenges of moving operator billing into the mainstream. PANEL Chris Newell, ImpulsePay Rory Maguire, MD, AIME Kevin Dawson, Oxygen8 Ben Doonan. Square1 Communications Tom Broadfoot, IMI Mobile CHAIR: Paul Skeldon, Telemedia-news.com
IMPULSEPAY: PAYFORIT5 AND QUASI-PHYSICAL GOODS Chris Newell of ImpulsePay outlines how Payforit5 is now starting to gain momentum in the nascent m-payments space and the world of quasi-physical goods is about to start to open up to carrier billing
FONIX – KEEP IT FRESH Rob Weisz from Fonix outlines how telemedia services such as PRS and PSMS are still relevant and offers some insights into what the broadcast media wants – and what the telemedia industry needs to do to get them there
IMI – KEEP IT DIGITAL Adam Maxted from IMI Mobile shares his tales from the trenches of working with media companies, broadcasters and social media companies in how to monetise digital content and interaction
TRENDS IN PRINT MEDIA INMA VP Mark Challinor outlines how print media is becoming a truly multimedia affair and how it could well be down to telemedia companies to be the way to monetise it through carrier billing
BOKU: GOING PHYSICAL James Patmore from Boku explains how the company has taken a different path through carrier billing and, with an e-money licence and some hard work has got itself in the position to use carrier billing for physical goods
ANALYSIS
TELEMEDIA TV
OXYGEN 8: PAYMENT OPPORTUNITIES IN AFRICA Gary Corbett from Oxygen8 outlines the opportunities for carrier billing payments across Africa and looks at what Oxygen8 has done in this burgeoning market
TXTNATION – TRENDS IN PSMS Ana Reed Davies from txtNation outlines the latest trends, developments and flows in PSMS globally – and finds a sector still booming
MGAGE AND THE ART OF SMS RETARGETING Martin Bolster from mGage regales the World Telemedia audience with how SMS is now a vital part of mainstream media and branding engagement thanks to its use in retargeting
SQUARE 1: THE FUTURE OF IVR With the growth in mobile has come a growth in voice traffic and with it a growth in IVR. Mark Birkett from Square 1 Communications outlines how in the era of Skype and FaceTime, in-app calling and more, IVR still has a huge roll to play
IMI: SOCIAL INTERACTION TRENDS Beverly brooks from IMI Mobile takes a look at the trends for social mobile interaction with media and where it can be monetised
CRAZY4MEDIA: TRENDS IN MOBILE ADVERTISING Tom Horsey from Crazy4Media outlines the global trends in mobile advertising and where the telemedia advantage lies
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