Telemedia Magazine Issue 40

driving value added services for voice and mobile

IN THIS ISSUE

ISSUE 40 | £4.99

8

International

IPRN, once a dirty word in telecoms circles is now the saviour of voice and is also revitalising the economies of developing countries.

Paul Skeldon reports

20

MNO rethink

MNOs are facing a challenging new world, legal expert Reed Smith outlines some strategies for telcos adapting to a brave new OTT and digital world

FEATURING

TELECOMS

‘Revolution’ in handling Charge to Mobile complaints needed to re-vitalise the industry Telemedia industry insiders are calling on MNOs to have a ‘revolutionary rethink’ of how Charge to Mobile is implemented – especially the handling of post sale consumer enquiries – or the UK could lose a £500 miliion industry.

Concerned industry insiders have told Telemedia magazine that unless the network operators radically review how they operate and promote the concept of Charge to Mobile as a viable payment mechanism it could become financially unsustainable.

Access to digital content and services and, in the future, transport and entertainment tickets may disappear, removing the financial inclusion and ease of use for consumers.

A recent study by Deloitte suggested that the UK charge to mobile market could be worth upwards of £500m a year, however

Bango expands carrier billing to all Windows 10 products The rise of carrier billing for Windows 10 services and products continues

>> 12 PSD2

PSD2 moves closer with ‘Treasury Transposition’ The UK Treasury has held a ‘Transposition meeting’ on PSD2 as it seeks to make it law in the UK. Rory Maguire explains what it means for charge to mobile >> 13 C2M

Unlocking the C2M opportunity

>> 5 MEDIA

Bauer Media UK to test out paid online content

Bauer Media Group automotive titles Car and MCN have introduced the concept of premium content on their previously free-to-air websites. Users subscribing to the new Car and MCN Plus services can access full content from the print magazine – online as well as exclusive digital stories and features and a selection of classic articles from archives stretching back 50 years. Existing print subscribers will get access to Plus as part of the archives.

>> 4

More news, views and analysis at www.TelemediaOnline.co.uk

PAYMENTS

Carrier billing could generate $14bn for operators in five years and there’s a huge array of digital content out there waiting to be connected to operator billing systems, says Netsize >> 14 PAYMENTS

Top payments trends for 2016 Ralf Ohlhausen, business development director of the PPRO Group, summarises his predictions for the payments industry in 2016 >> 16

Driving Value Added Services for Voice and Mobile Billing

18-20 October 2016

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18-20 October 2016

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ADULT

UK to implement compulsory age verification for online adult

Driving Value Added Services for Voice and Mobile Billing Join the network of over 400 delegates from 52 countries representing: Merchants & Value Added Service Promoters • Media, Ad Networks, Agencies & Affiliates • Content, Service & App Development Companies • Aggregators, Service Providers & Resellers • Payment Technology & Service Providers • Network Operators, Carriers, Telcos & ISPs And discover how to engage and commercialize “connected consumers” as they interact and respond to premium content and service propositions across an ever expanding range of distribution channels and media platforms.

CONFERENCE FEATURES • Opportunities for Carrier Billing • Strategic Telecoms Forum • Working with MNOs Workshop • International Market Updates • Affiliate Marketing For Premium Services • Legal & Regulatory Clinic • UK Telemedia Workshop • International Voice Forum

NETWORKING HIGHLIGHTS • Telemedia Golf Day • Gala Dinner & Opening Party • Corporate Video Area • Expo & Company Presentation Suites • Speed Networking • VIP Director Lunch • Delegate Working Lunch • Puerto Banus Party

The UK government has confirmed that all pornographic websites will require some form of age verification in the future, preventing children from accessing potentially damaging material – something that the mobile network operators have been doing in mobile very effectively since 2003.

A public consultation has been launched outlining the government’s preferred approach, which puts responsibility squarely on the shoulders of companies who create and profit from online pornography.

Alongside the legal requirement for companies to put in place age verification technology, the government will also establish a new regulatory framework to monitor and enforce compliance, with the ability to impose civil sanctions where breaches are identified.

The move has been

welcomed by many, with AIME MD Rory Maguire saying that it reflects just how well it has worked in the mobile world that the government is finally bringing it to bear online. “MNOs added filters that meant anyone underage couldn’t access adult content.

Those who were old enough and had a contract could. It works well, even now with online access via mobile, the networks still look for AV.” But the governments proposals in AV for online content not viewed on a mobile is flawed.

As one telemedia insider points out, it only targets charged for adult content, and does nothing to combat child access to free porn on sites such as tumblr and others.

That aside, the consultation – which will run until April 12 – will allow the government to formulate its preferred approach, which it is now consulting on and seeking views.

Under the proposals set out in the consultation, the government will establish a new requirement in law

for commercial providers to have in place robust age verification controls for online pornographic content in the UK. It will also legislate to establish a new regulatory framework, underpinned by civil sanctions.

And under the proposals, the new regulatory framework and civil regime will: Involve giving a regulator or regulators powers to enforce the new law, supported by a sufficiently flexible enforcement regime.

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3

TELECOMS

Revolution

<< 1 it is currently heading in the opposite direction from that figure as competing payment interfaces such as Amazon, Paypal, Apple Pay, Android Wallet and the like make it easy for merchants to implement, are consistent with their rules and have a defined process for the handling of consumers after a sale.

The key issue that MNOs have is that, as the company that billed the consumer, they tend to be the first port of call for buyers when they don’t understand the entry on the bill, get a dose of ‘buyer’s remorse’, or are in denial despite the robustness of the payment interface.

The MNOs claim that, in some cases, to placate their own customers, they have to refund the callers. This costs them money they haven’t earned as refusal to do so may cause them brand damage.

The networks also insist that politely telling the caller that the issue they have is with the merchant who sold the goods and passing them on will also

cause brand damage – despite this being precisely how every other billing mechanic works.

Proposals from within the telemedia industry that the telemedia industry itself can operate a complaints centre to handle all this for the MNOs – even offering to answer specific calls as if they were that MNO under the MNOs own high standards – has elicited concerns from the networks again over brand damage and poor consumer experience.

It is the consumer handling issue though that is generating more rules for merchants, changing payment flows to have too many clicks and constraining the length of time consumers can stay with any merchant product.

As one industry insider pointed out, this is ridiculous: the amount of calls about charge to mobile billing is pretty small relative to all the other calls networks receive about network, billing and handset issues.

One anonymous source told us: “My network seems to operate a policy of cutting off

all my calls mid stream and deactivating my visual voicemail and this is way more damaging to their brand than charge to mobile issues”. Indeed mid-call terminations, slow data speeds, and high access charges to low cost 08 numbers are surely all more damaging and effect more people?

Currently, the Charge to Mobile merchants receive about 20% of the consumer complaints and enquiries associated with transactions. They are happy to fund a call centre taking all of them and making sure that callers get speedy, and proper ,resolution.

tools it needs to find the best model for each title. According to Chris Gadsby, Bauer’s Commercial Marketing Director, this was a key consideration in adopting ADvance.

Chris Gadsby, Commercial Marketing Director at Bauer Media UK, explains: ’’We wanted to find a partner to work with on developing paid access models on two of our market leading specialist brands. By working with Abacus, we have been able to quickly test and learn around content mix, thresholds, pricing and communications. Their ADvance system excellently supports our iterative approach, allow-

ing us to respond quickly by making changes through their easily adaptable gating & paywall technology.’’

The move comes as many publishers look at how to generarte revenue online. Adfunding models are failing to garner traction as consumers look to consume content on small screens where display advertising doesn’t offer a good experience.

A new study exploring the mobile behaviours and preferences of consumers in the UK, France, and Germany highlights the pressing need for advertisers to deliver more creative and relevant mobile

FROM THE EDITOR

As Telemedia magazine went to press it is understood that there are rumblings from at least one MNO that there is a need to rethink how Charge to Mobile is promoted and operated, not least because it is ‘now or never’ in terms of getting it into the segments that are crying out to use it.

Print media companies, for example, are seeing ad revenue funding of their digital offerings plummet and the idea of a paywalls is seeing a renaissance: Charge to Mobile would be ideal here. Similarly, games companies, app developers and ticketing companies are ripe for adding Charge to Mobile to their services. There is a window of opportunity here to tap into these new markets.

These opportunities are already seeing Charge to Mobile gain significant interest in Europe (see page 14 of this issue), with Juniper Research predicting that carrier billing could generate some $14billion annually by 2020.

For more see Editor’s comment right

THE BIG GUY Paul Skeldon paul@telemedia-news.com ART DIRECTOR Victoria Wren victoria@wr3n.com CONTRIBUTORS & CONSULTANTS Rory Maguire, Toby Padgham, Chris Newell, Edward Boddington, John Strand, Peggy Ann Salz, Bruce Pharoah, Paul Dunone, Jarvis Todd, Sheldon Johns, Mark Birkett, Eric Feltin, Tim Green SALES & MARKETING info@telemedia-news.com PRODUCTION DIRECTOR Annika Micheli annika@telemedia-news.com PUBLISHER Jarvis Todd jarvis@telemedia-news.com TO SUBSCRIBE www.telemedia-news.com CIRCULATION ENQUIRIES Ellie Gold ellie@telemedia-news.com WHAT WE’VE BEEN LISTENING TO Planet Sizes, Steve Mason Homeward Bound, Argy Bargy WHAT WE’VE BEEN AMUSED BY Sanjay & Craig WHO WE’VE BEEN FOLLOWING @etail_Paul WHAT WE’VE BEEN READING ABOUT The Krays MARCH 2016 WILL BRING...

A change of approach by MNOs to C2M TELEMEDIA MAGAZINE is published five times a year and circulated in print to qualified readers and downloaded in digital format to 12,000+ requested readers.

BUSINESS ADDRESS: Ground Floor, Virginia Cottage, Nash Lane, Scaynes Hill, West Sussex, RH17 7NJ, UK. Web: www.telemedia-news.com Overseas subscriptions and non qualified readers can obtain Telemedia Magazine with an annual subscription rate of £15 / 20. Refunds on cancelled subscriptions will be provided at the publisher’s discretion, unless specifically guaranteed within the term of subscription. © World Telemedia Ltd. All rights reserved. No part of Telemedia Magazine may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording on any information storage or retrieval system without the written consent of the publisher. The contents of Telemedia Magazine are subject to reproduction in information storage and retrieval systems.

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The world of telecoms is changing – OTT services really are going to make MNOs dumb pipes, voice and SMS revenues are collapsing, and the UK mobile industry has done its level best to destroy the Charge to Mobile opportunity that so could have saved its bacon.

So it comes as no surprise that, as we exclusively reveal on page 1, UK operators are secretly making moves to work out how to really push charge to mobile and make it work.

But this is only part of the rethink that MNOs need to focus on – and what this whole issue of Telemedia magazine is pretty much focused on too – total telco transformation.

As we reveal in our features on international services starting on page 8, the industry has

to embrace IPRN as a legitimate way to make money as it is one of the few places where telcos will get margin. The fact that it also bolsters economies in developing countries and pays for education and other GDP-backed state projects is just the cherry on the cake.

But there are much bigger strategic and attitudinal changes that are needed within the mobile sector – particularly in the UK – as we discuss starting on page 18.

Telecoms is no longer a licence to print money: there are too many new entrants with new products that are pushing cashcow services towards being free.

Understanding what these are and how to counter them – or embrace them – is going to be crucial going forward.

And, as our exclusive interview with David Edmonds CBE, incoming chairman of the soon to be renamed Phonepay Plus reveals on page 6, even the regulator now gets that things have to be rethought quite dramatically across the industry to make it work.

If Edmonds is as good as his word, then much of what the industry needs to achieve – and more importantly what it needs the mobile carrier networks to achieve – is at least going to be aided by a much more positive regulator. www.telemediaonline.co.uk @telemediaTweets @MrSkeldon

Paul Skeldon. editor

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Bauer chose ADvance because it allows different access and gating rules to be tested very easily and rapidly, alongside flexible data capture forms. ADvance also supports all the e-commerce functions required to establish a paid subscription service including continuous card payments.

This flexibility gives Bauer the

Need for MNO rethink has never been more crucial

advertising or risk losing consumer engagement entirely.

The ‘Mobile & Me – The Remodelled Brand Opportunity’ report, commissioned by Quantcast, reveals that 37% of consumers expect adverts received on their mobile phones to be more relevant than on other devices; while 40% say that they wish mobile advertising was more creative.

While among the much sought after 16-34 year old age range, expectations on both relevancy and creativity are even higher with 47% and 51% demanding more relevancy and creativity respectively.

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Driving value added services for voice and mobile

5

THE INTERVIEW

Helping hands:

meet the new face of PPP As the telemedia industry undergoes some seismic shifts and attention, as ever is the issue is on how to regulate it in a changing world, Paul Skeldon meets David Edmonds CBE the new Chairman of the soon to be renamed PhonepayPlus to see where he is planning to take both the regulator and the industry The telemedia and PRS industry in the UK has never had an easy life: there is always a crisis of one kind or another, but in the 20 years that I have covered it, it has always managed to carry on. It may get into trouble – not always of its own making – but it always comes out the other side.

But right now it faces perhaps its biggest set challenges to date. And the challenges aren’t regulatory, criminal, or related to bad apples: this time the industry faces a raft of problems from technology, and how consumers use it.

Into this maelstrom steps David Edmonds CBE as the new chairman on Phonepay Plus, who comes to the organisation at a time when the industry needs a total rethink in terms of not only how it is regulated, but also what its regulator should regulate. He also takes the helm as the organisation reels from that Judicial Review.

Does he have the toughest job in telecoms?

“It is a market in decline and has been for five years – my view is that we need to address this: to encourage new business, encourage competition and simulate activity. That is my personal agenda,” Edmonds says. “To this end I see PPP’s role very much to work with all levels

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of the PRS sector to develop.

I don’t start with ‘let’s restart’ but taking the industry on from here.”

Edmonds role as chairman is to, in his words, “run an effective board”, and one of his first moves has been to clear out some board members and bring in some fresh blood. He also made acting chief executive Jo Prowse permanent.

regulations in place to protect them if it does go wrong,” he says.

In his view, PPP is almost like a kite mark: it’s approved and the service is safe to use. A much more refreshing approach to the one we have had in the run up to the Judicial Review, where one felt that the organisation was sitting waiting to pounce on anyone who may (or may not in

16.5million people use PRS and enjoy it, I don’t want to get in the way of that, we just don’t want anyone getting ripped off And this partnership is key to where PPP goes next. Edmonds is striking in his ‘can do attitude’ and, having met PPP chairmen before, one of the few that seems to actually want to promote the industry. Edmonds’ attitude also chimes with that of Prowse (who I interviewed in Telemedia magazine back in July 2015 in Telemedia magazine issue #38). Both seem to be fixed on making it work both for industry and the consumer.

“The consumer needs protecting, there is no doubt about that, but I believe they are best served by having access to a range of good services that are current and economic and they can feel assured that they can use them because there are

some cases) have done something wrong.

This air of being more in tune with the industry and inclined to helping the business to do business – while also protecting consumers – has led to Edmonds ruminating on the Code of Practice. “We need to look at the Code and appraise whether we need so much complexity and detail,” he says. “I would like to simplify the code in context of industry saying what it does and doesn’t need.”

Edmonds cites his extensive experience in the regulation of telecoms – he oversaw unbundling – and in regulating the legal industry where he says common sense tends to rule in regulation. “It isn’t about pro-

More news, views and analysis at www.TelemediaOnline.co.uk

tecting the consumer at all costs no matter what,” he emphasises. “We have to adjudicate around what make sense. We need to perhaps look at Rapid Reaction Teams to stop things going wrong early, rather than focus on lengthy investigations to fine people and put them out of business.”

Instead he stresses that it is all about the users. “16.5million people use PRS and enjoy it, I don’t want to get in the way of that, we just don’t want anyone getting ripped off.”

Edmonds has a refreshingly simple view of PPP’s role and, if he can take it forward in his role, then it could be a real boon for the industry at a crucial point in its evolution.

The arrival of PSD2 (see page 13) and the mooted idea that network operators are thinking about how to promote Charge to Mobile more effectively (see page 1) all mean that things are changing for the industry and the regulator needs a fresh approach.

This is also set to be reflected in a new name for PPP – to be revealed in the Summer – that more accurately shows what the body now does regulating not only PRS, but also charge to mobile and more.

“It’s my role to promote debate and to ask the industry

– all parts of it – how to make it work,” he says. “It is a hard job as we have to pull together our own regulations, Ofcom’s the ASA’s, the FSA’s and each MNO’s rules and try and make it all work. It can be done. We have

already started to reach out to these outside bodies to look at how to work together and, with the MNOs, on perhaps how best to harmonise all their individual rules and ours’ to make this simpler for the value chain.”

It is a tough task indeed, but visiting PPP’s office to talk to Edmonds you get a sense that the air is somehow different: its less combative for starters and there seems to be a real air of wanting to work with industry, rather

than against it, to create services that are what consumers want.

Yes, they have to protect consumers too, but the real emphasis seems to lie on making it work.

Let’s hope it’s a brave new dawn at PPP and for telemedia.

Driving value added services for voice and mobile

7

IPRN

IPRN

Overseas aid:

International to the rescue “I used to have to enter telco offices by the backdoor because no one wanted to be seen with the IPRN guy, now the front doors of them all are wide open to me. Things have really changed.” So says Josef Josef Bruckschloegl, CEO of IPRN company Kwak Telecom.

His experience is symptomatic of how the once dirty world of international premium rates has become a legit part of how telcos make a living.

But more than that, international services in the developing world are also starting to help create a new wave of entrepreneurs, who pay for state education and develop better standards of living for people. It even helps with foreign exchange, allowing once super-poor nations to play in the world’s raw food and materials markets.

So what happened? IPRN, once seen as a raft of dodgy traffic thieves and shady arbitrage deals that no telco – let alone a government – would touch, have become key to how telcos now make money.

There are two things at play: globally call volumes are pretty static, but the margin on ‘ordinary’ voice calls is falling to zero; alongside this, OTT services such as FaceTime and Skype are encouraging consumers to think of calls as free.

8

Together these two things are heavily eroding telco revenues on voice calls and messaging.

IPRN – or premium rate – offers a way to make more money on calls. There is the arbitrage element, where you buy calls at one price and sell them on for another, which is delivering revenues and, increasingly, is not being seen as something to shy away from. Let’s face it, it is how most currency and financial markets work these days.

However, where IPRN really

people will pay for it. It’s a huge opportunity for the industry.”

“What we have and have always had is a payment mechanism connected to an instant response channel [the phone bill and the phone],” says Tim Williams, CEO of Felix Telecom.

“And we can show how this can make money for telcos in both developing and developed markets, if its connected to good content and services.”

HELPING HAND

Where IPRN really comes into its own is in how it can add value to existing services such as media, marketing, conferencing, chat, dating and of course sex comes into its own is in how it can add value to existing services such as media, marketing, conferencing, chat, dating, and, of course, sex. These are the areas where telcos now see a huge upswell in margin and are keen to exploit it.

“Calls to FaceTime, Skype and Google Talk may well be free, but if you can come up with engaging content and voting services around media, and TV people will pay, and this is where you can start to generate revenue again from calls,” says Kwak’s Bruckschloegl. “It has to be good content and services and offer real value, but then

While there are naturally opportunities in the developed world to further exploit this, it is in the developing world where we are seeing it gain real traction. Across Africa, Asia and Latin America there has been a boom in mobile telecoms infrastructure building and this has seen mobile take on an even more central role in consumers lives.

As we have seen from the likes of M-Pesa, mobile as a financial tool for the unbanked has had a huge impact. But while M-Pesa has garnered all the headlines, IPRN services have been slowly starting to

More news, views and analysis at www.TelemediaOnline.co.uk

generate huge revenues for incumbent telcos in these countries and, perhaps more startlingly, given a much needed boost to the economies of these countries.

“In Ghana IPRN revenues that we help deliver as a line item in the country’s budget,” says Eric Pomeroy from Arribacom. “It earns enough money that it can be earmarked, in the Ghananian’s government’s annual budget statement to pay for education.”

Kwak’s Bruckschlogel agrees and points out that IPRN services contribute some 1% of the GDP of Burundi. “And 1% of GDP of any country is significant,” he says.

FAIR PLAY

And this is why the industry has worked hard to weedle out the bad guys. Over the past five years the telemedia industry has worked hard to make IPRN a legitimate business and has managed to cut out many of the fly-by-nights who were stealing traffic and money and not playing fair.

“We had to do this as an industry,” explains Felix Telecoms’s Williams, “so that countries and their telcos can trust IPRN and start to actually benefit from it. Telcos need the revenue thanks to falling call revenues and we knew if we

Folkert Gorter @ superfamous.com

International premium rate number (IPRN) services, once seen as a dirty secret of the telecoms world are now a legitimate business for telecoms – and in developing countries the revenue they generate is crucial to budgets and foreign exchange. Paul Skeldon reports

act together to remove the bad developing world – requires “In 20 years time telcos may GSMA might be looking at how telecoms infrastructure to links in the value chain then not have any traffic at all, so we to ‘ban’ OTT, but we are looking terminate calls in these counthey could start to use these need to help them monetise at how to make money from it. tries. The user doesn’t know it services and everyone benefits what they can and looking at And this is where the industry from them.” can really start to Over the past five years the telemedia industry has worked A lot of this traffic motor. This is the fuhard to make IPRN a legitimate business and has managed to comes these days ture of telecoms and from using IPRN to the IPRN industry is cut out many of the fly-by nights who were steal- ing traffic and carry and terminate making money from money and not playing fair the very services that it. It has gone from is working like this, they think are killing off voice revenues. how to tap into OTT services – the backdoor to leading the The rise of Skype, FaceTime and they are Skyping the world, but especially overseas – is going way in telecoms. A nice turn it uses IPRN. Google Talk – especially in the to be key,” says Williams. “The around.

Driving value added services for voice and mobile

9

IPRN

IPRN

Telemedia Magazine talks to Josef Bruckschloegl, CEO of Kwak Telecom about why IPRN is such a potent force in developing markets

As we have seen, doing international business is great for the telemedia industry, but as with all telecom services, different countries have different regulations. Here Jeremy Flynn takes a look at some of the more unusual rules from around the world

Friends with benefits From a time when IPRN was seen as a dirty secret in telecoms, things have come a long way. Today, IPRN can generate huge revenues for countries that participate in it and operators can make much-needed margin on calls as their traditional revenues fall off.

However, what IPRN brings to the markets where it is operated goes a lot further than just delivering revenues and margins: it has the power to reshape whole countries, bank the unbanked, create entrepreneurs, develop new service and educate children. It can even deliver really fun entertainment services and level the technology playing field between the developed and developing worlds.

Making this happen has become something of a passion for Kwak Telecom. The Austrian telco has been working across numerous IPRN markets including Cyprus, China, Iran and many African states and its CEO Josef Bruckschloegl has become something of an expert on how IPRN services can transform countries and markets.

“IPRN brings huge benefits to developing countries,” says Bruckschloegl. “We put a lot of traffic through these countries and it helps to stabilise the whole telecoms market worldwide, generating margins everywhere. But more than that, it brings huge traffic volumes to the countries we use and this can bring these countries tremendous and significant revenues.”

But more than that, IPRN is creating start-ups and all that

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comes with a digital entrepreneurial environment, says Bruckschloegl. “Typically IPRN

services are used by media companies and some marketing people, even in developing

More news, views and analysis at www.TelemediaOnline.co.uk

markets right now, but we are seeing others starting to see the potential in PRS and developing services around them such as conferencing, chat and dating – and of course arbitrage,” he explains.

This is making not only a raft of new entrepreneurs, but is also revamping media, communications, and marketing across these markets. Print and TV advertising is struggling everywhere, says Bruckschloegl, but IPRN-based services are delivering steady and growing revenue streams for media companies, and around marketing, content and other services.

“Two things happen with IPRN in markets,” he says.

“Firstly, it encourages telcos and all the other players to develop services where they can generate revenue from PRS, which benefits all the players.

Secondly, it makes media and content more entertaining and engaging for the consumers and increases their use. And this too drives revenue and further development.”

And this is the crux of what IPRN is doing in these markets.

It is creating value for consumers and generating much needed revenues for telcos, media companies and everyone else.

“The telecoms industry now really needs this,” says Bruckschloegl. “It needs it badly as it puts much needed revenue on to their balance sheets. We already have two and half times the revenues of Telekom Austria from PRS and we are doing good in these markets. IPRN is here to stay.”

Strange rules in a strange land

Doing international business is a key way to grow a telemedia company, and there are rich pickings out there. However, each country has its own rules and regulations that you have to be aware of – and Empello can help you with the details – but here are some of the more unusual ones from around the world to give you a taste of some of the things you may not have considered.

GERMANY

We all know about CCR, but some German merchants obey the rules to the letter. In the two stage DCB flow the norm for labelling the CTA button is WEITER (Continue) and KAUFEN (Buy). Some merchants mark the second button ZAHLUNGSPFLICHTIG BESTELLEN (Agreement to pay for the order being placed).

The Payforit Management Group would be proud of the number of characters on a button.

MALAYSIA

Recognising the mix of Chinese and Malay Muslims, you won’t be surprised to learn that adver

tising pig products and firecrackers is banned.

MEXICO

Here we find the rules offer an eclectic mix of banned images on banners or within a service. No pictures of eating fruit by either men or women, for instance. No depiction of the Mexican flag are allowed. And, probably because of gang wars, no people with a tattoo are permitted either.

POLAND

Unlike the UK rules on price prominence, proximity and “stand-aloneness”, in Poland the price can be buried in the T&Cs. PPP would have a field day.

IRELAND

Comreg rules are very close to the 13th Code, but added to the list of people who must not be insulted is the Irish traveller community.

AUSTRALIA

Oz is perhaps not the liberal laidback country you’d expect from the expat barmen in Earl’s Court.

It has really prescriptive rules on almost everything, and minor

variants in what Optus expects verses Telstra. Both operators are so concerned about brand association that even a glamour banner on a porn site is a Red Card offence.

FRANCE

From the home of Minitel, (only switched off in 2012) there are some uniquely Gallic approaches to regulation en France. Until very recently, along with DCB and PSMS, there was ISP billing, with a decent flow, that let you charge to your ISP account. Unlike the UK and Australia, where the price needs to be bang slap next to the CTA, you’ll find the price in a band at the top of the page.

BRAZIL

Brazil is home of the “official rule” and the “I’ve got special permission from the carrier” rule. Plus, uniquely, content locking is currently an acceptable starting point to a PRS promotion.

TURKEY

Many political and adult sites are banned and blocked by the

government. However, with a simple proxy, they are easily accessed, and are often used for PRS banners.

STOP COMMAND

First introduced in UK in 2005, STOP, or equivalent pretty much universal way of stopping a subscription service. However in Portugal the only way of exiting a service is to cancel from within the service’s site. In Germany, you click on a link in the sign-up SMS - who knows what happens if the sign-up SMS gets deleted.

ADULT CONTENT

Some markets are, as per the UK, allowing 18+ content to be promoted with hardcore banners in hardcore sites, so long as the purchaser is 18+ – Germany and Netherlands, for example. Other markets accept only softcore or glamour content and it is good to see the WAAT Media matrix is still in use throughout the world 10 years after its development.

It’s often the case that only glamour banners are allowed, even on hardcore tube sites. You can imagine how difficult it is to get affiliates to obey this rule, and can cause merchants real trouble in markets like South Africa.

REGULATORS

The UK is unique in having a 40 person specialist PRS regulator.

In some countries, the de facto regulator is the carrier. Others, such as South Africa and France, are self-regulated markets with WASPA and AFMM respectively.

Jeremy Flynn runs ad monitoring and compliance testing company Empello. www.empello.com

Driving value added services for voice and mobile

11

Direct operator billing in motion

PSD2 comes closer

Rory Maguire explains what the UK treasury’s ‘Transposition meeting’ means for PSD and telemedia’s involvement in C2M

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Unlocking C2M

Netsize explains how the industry can unlock the $14bn opportunity that is charge to mobile across Europe

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Payments trends 2016

Ralf Ohlhausen, business development director of the PPRO Group, summarises his predictions for the payments industry in 2016

The final countdown

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PAYMENTS

The two year countdown to PSD2 has started – Soon it will be law in the UK and across the EU. Rory Maguire explains what this means for the industry

Bango expands collaboration with Microsoft to put carrier billing payments on all Windows 10 devices Mobile payment company Bango has expanded its agreement and integration with Microsoft to deliver carrier-billed payments across Windows 10 devices. As a result, charging payments to the user’s phone bills will become available to Windows Store customers.

With more than 110 million devices running Windows 10, consumers are using the Windows Store to acquire a vast range of applications and entertainment content that can be used across devices.

For the first time, customers running Windows 10 on a PC or tablet will now be able to buy digital content by charging the costs to their mobile phone bill.

Bango is working in collaboration with Microsoft and mobile operator partners globally to ensure maximum coverage for this payment method. Specific operator availability will be announced as they are launched starting in January.

Microsoft first announced that it was using

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carrier billing for Windows 10 purchases back in May at its Build 2015 event.

This again was with Bango but was only on cell-

rates from carrier billing, in some instances by over 70% App stores are seeing the emergence of carrier

280 carrier billing routes live with app stores, with over 40% running through the Bango Platform.

Todd Brix, Windows

phones.

Operators will benefit from unique Bango Boost technology, which analyzes and benchmarks a wide range of KPIs that grow payments success

billing as a vital enabler of mobile commerce globally, generating 3x – 10x increase in conversion rates. In September 2015, Progressive Research reported approximately

Store General Manager says: “This addition to Windows 10 presents a new opportunity for app and game developers to reach millions of unbanked or under-banked

More news, views and analysis at www.telemedia-news.com/c2m

consumers by enabling them to easily bill content to their existing mobile operator accounts. Bango offers our operator partners a sophisticated platform for launching, managing and growing carrier billing business in the Windows Store.”

Commenting on the announcement, Bango CEO Ray Anderson adds: “We have enjoyed our collaboration with Microsoft for the Windows Store, so it is a major milestone that Microsoft is now adopting this payment method across Windows 10. Operators using the Bango Payment Platform will get to market quickly and can then use Bango technology to maximize their Windows 10 revenue.”

In a one year debate on PSD2 between the UK Treasury and their other 27 EU counterparts that would have encouraged most people to vote for a “Brexit” instead, the proposed changes to the so called telecoms exemption that would have seen a 50% collapse in the premium rate industries across EU is now restored after heavy UK negotiation. PSD2 is now ratified and in the process of passing into UK law.

The narrowing of the exemption – for telecoms billed services that pay a third party which includes premium SMS, MMS, voice, video and Direct Operator Billing – was due to issues seen with premium rate services in other EU states and through a basic lack of understanding by other country representatives about the services that consumers use. Thanks to the willingness of our Treasury to be educated in all aspects of consumer telecom products, supply chains and anti money laundering procedures –

often at 7 in the morning prior to EU workshops, the UK position was won on most, but not all of the essential points and thus saved a significant industry across all EU countries.

Payment Services Directive 2 will now transition into UK law ready for December 2017 and will replace PSD1. The exemptions from PSD enable certain types of Payment Services to be operated by parties that are not subjected to Financial Regulation. Most telecoms regulated entities do not wish to be also financially regulated due mainly to the cost vs. benefit, the conflict between the regulations and the cash flow reduction that will be created by pre-pay users topping up eMoney accounts instead of telecom accounts which goes straight to the bottom line.

The exemption (in brief) allows for payment services that are operated as part of a telecoms service for purchasing from third parties: digital content and services, voice ser-

vices, charity donations and tickets. Limitations written in, demand that each transaction does not exceed €50, the cumulative transactions per subscriber are kept to €300 per month and there is no direct conversion into a physical good.

If a telecom operator wanted to take out a PSP licence or subcontract parts of its payment facility to a PSP or eMoney entity, then those limitations go away. On the assumption that this may not happen, where are the opportunities and where are the issues?

The first win for industry and consumers is that the transaction value limit raised from the proposed €10 to €50. Most UK networks limit single charges to £30 per transaction so the limit is only focussed on premium rate voice, recently raised by Ofcom to £45 which will have to be limited to c. £37.50.

The next big win is Tickets, defined as being a digital replacement for a paper based product.

Vagaries around PSD1

wording in 2007 meant that some countries such as Sweden and France put bus and tram tickets onto mobile bills. Other countries hesitated including UK. Now that the vagary of intent has been clarified, the potential for transport and entertainment tickets dropped to the mobile bill will create new opportunities that should not need to wait for Dec 17. While the transaction limit can be restrictive, there is nothing to stop the part-purchase of a ticket with a completion of the transaction later under a normal payment environment. Securing a ticket to a sell-out concert with a £10 deposit via mobile overcomes the inconvenience of paying the balance later.

The critical part will be how the FCA demand that the €300 monthly limit is imposed on consumers. The intent is that the exempted payment mechanism should not become a general payment mechanism. Less that 0.5% of mobile consumers exceed this value on

third party services and do so consciously, either directory enquiry services or on chat products (it’s cheaper than a partner!).

To require a technical stop facility is complex and would cost UK telecom companies £100m in total for zero benefit and will upset the heavy Directory Enquiry users. The preferred solution is a softer option where legislation sets a breach target that telecom providers can stay under.

The option for the Treasury to consider a pragmatic solution is in their hands. They have been on-side so far, with AIME, MBG and PPP pushing for UK businesses and consumers. We just need that final concession.

Rory Maguire is MD of AIME www.aimelink.org

Direct operator billing in motion

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Unlocking opportunity through outsourcing Direct carrier billing could generate $14 billion for operators inside five years, and there’s a huge array of digital content out there waiting to be connected to operator billing systems. In this extract from Netsize’s latest white paper, we take a look at what the opportunity is and how operators can exploit it Today’s mobile content market presents a huge opportunity for mobile operators. The arrival of the smartphone has changed the way consumers get their entertainment. They listen to music, play games, read e-books and watch TV on the go. It’s all very different from the PC-led approach that dominated little more than five years ago.

And there are obvious reasons for the switch.

The first is the emer-

There are security fears, and the user experience can be poor.

Carrier billing presents a compelling alternative - one that can bring vast new revenues to operators, and tremendous brand visibility too.

But delivering it is not straightforward.

To connect (potentially) hundreds of content partners, every operator needs to ask: • Do I have the APIs to connect my network with merchants?

Carrier billing is a compelling alternative to credit card, and can bring vast new revenues to operators, along with tremendous brand visibility too – but delivering it is not straightforward gence of the app store.

This ‘solved’ the distribution problem in mobile content. Suddenly, content makers could reach millions of people from one or two portals.

Then there is 3G/4G and always-on data. As consumers have become used to mobile broadband, they have grown more comfortable with downloading and streaming content on their mobile devices.

One issue remains: how to pay for these services?

Not everyone has a credit card, and even those who do don’t always want to use them.

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• Is every service compliant with local regulations?

• Can I find the best content providers?

• Can I easily on-board many different merchants?

• Can I make sure hundreds of diverse content providers are remunerated fairly and on-time?

• Will I be able to generate accurate real-time activity reports?

• Can I be sure that endcustomers get a good and ethical experience?

These are all time consuming considerations, requiring expert

More news, views and analysis at www.TelemediaOnline.co.uk

knowledge and skills. And it is why more and more operators are discovering the power of managed services using SaaS (software as a service).

Forward-looking carriers are already working with specialist partners like Netsize to speedily enable hundreds of content services for charge-to-bill. But it’s not just about speed and convenience. Outsourcing is also cheaper.

In some cases, it can cost half as much to run (once CAPEX is taken into account) as an in-house solution.

THE $14BN POTENTIAL OF CARRIER BILLING

Much has been written about the benefits of charge to mobile. As a channel it can reach the unbanked and underbanked - and there were an estimated 100million unbanked people in Western Europe alone in 2013 according to MasterCard.

It can also offer a better user experience than card payments. People can make payments merely by entering a mobile number. Indeed, in some instances, the phone can automatically identify the user. This makes it possible to reduce the payment process to a single click.

It can also be very safe, when used in association with a one-time password sent to the user’s phone for verification.

Live services have shown that these benefits can significantly increase paid conversion rates when compared with credit cards. And carrier billing can also support extras like recurring subscription billing.

Thanks to the explosion in app-based services, there’s now a fabulous market opportunity for carriers to make the most of their billing relationships with millions of customers.

THE ACCEPTANCE OF OUTSOURCING

The emergence of the cloud and ‘software as a service’ has transformed the way business works.

Most large organizations do not run their own servers or program their own accounting systems or build their own CRM systems. Instead, they pay modest subscription fees to expert partners.

According to a report

by Markets and Markets, the global managed services market will increase in value from $107.17 billion (£69 billion) in 2014 to $193.34 billion in 2019. In its study, it revealed that managed services can reduce recur-

ring IT costs by between 30 and 40 per cent, while delivering efficiency improvements of 50 to 60 per cent.

Of course, mobile operators are part of this change. Another market analyst, IHS, says worldwide telecom outsourcing revenue stood at $66.6 billion in 2014.

While much of this came at the equipment and infrastructure level, outsourcing applies across all areas of a mobile operator’s business.

That includes value added services, as telcos explore new digital revenue streams.

In every market, operators are waking up to the immense potential of opening up their billing systems to digital merchants.

At the same time, they recognize that it is expensive and complicated to do this in-house.

They are already outsourcing the management of their equipment and infrastructure to expert third partners. Now, they are doing the same for value added services.

Here why: • It’s simple: There’s one connection for hundreds of merchants • It’s affordable: There’s no upfront investment required • It’s uncomplicated: No need for in house technical resources • It’s safe: Services always comply with location regulations • It’s high quality: Instant access to an international array of the best content providers • It’s fast: On-boarding of new merchants takes days or weeks • It’s future proof: Managed services experts stay on top of new market innovations • It’s transparent: Operators and merchants can use dashboards showing real-time activity

GIVING OPERATORS AND MERCHANTS CONTROL

It’s very important that consumers are protected from bad practices. That goes for any market sector - but especially in value added telco services, where rogue

allow operators to retain control of the services using their billing systems. Similarly, they help merchants to police rogue end-users. These controls include: • Consumer fraud checks • Subscription spending limits • Retry thresholds • Consumer blacklisting • Automatic termination of subscriptions after a number of failed retries • MSISDN recycling • Subscription duration limits • Possibility to unsubscribe via MO • Event limit per period traders have generated • SMS notifications of bad publicity in the past. subscription reports.

Managed services To give operators a companies like Netsize single real-time view of stay in constant touch all the activity on their with industry regulators. networks, Netsize created They also perform passive a dashboard: the Netsize and active audits of mer- Business Manager Tool. chants every month.

From one screen, opMore importantly, they erators can instantly see

what’s happening on their network. Every service, every service type, every customer. They can use it to: • Block or unblock merchants • Block or unblock services • Filter, search and terminate subscriptions • See all transactions and traffic • Refund transactions • Create, save and export reports • View user profiles All in all carrier billing offers much and carriers should look at how to partner and offer it to merchants and consumers with the minimum of fuss. Netsize has published an extensive white paper showcasing how to make it work that you can download for free here: www.netsize.com/ourcompany/downloads

Merchant on-boarding explained

At present, Netsize has on-boarded more than 2,000 merchants in over 50 countries to more than 150 operators. This process typically takes from two days to a few weeks for each new partner. Here’s how a merchant signs up to Netsize Operator Services.

• Welcome message • Merchant requests sign-up details. Netsize sends documents, which are completed and returned.

• Security configuration • Netsize reviews the registration of the content provider.

• Technical information • Netsize checks the technical specifications, generates a new account, and registers the merchant on the system.

• Approval • Netsize defines and approves the type of services being offered – as directed by the operator.

• Service provisioning • Netsize defines the name, pricing flow, User Experience, compliance limits etc of the new service.

• Testing • A new test account is created and tested .

• Integration support • At this stage, any issues regarding the billing APIs are addressed.

• User acceptance test • The new service is tested across multiple devices and platforms.

• Service validation and launch into production

Direct operator billing in motion

15

gistics. It’s also vital that merchants offer shoppers their preferred local payment method. Asia, Eastern Europe and Latin America are currently the most interesting markets for European online retailers, and as card penetration tends to be lower there, it’s important that providers know their way around alternative payment methods in these regions. Merchants should consider which markets are particularly suited to international strategies, and simulate potential market launch models with partners such as payment service providers.

Top 5 Payment Trends for 2016

4. REGULATORY CHANGES

The first Payment Services Directive (PSD)

The payment industry will continue to remain dynamic throughout the next year. Ralf Ohlhausen, business development director of the PPRO Group, summarises his predictions for the payments industry in 2016

Payments, especially on mobile, were all the rage last year, but as 2016 dawns, are they still the main play for many telemedia companies? What are the other issues that need to be considered in the charge to mobile world? Here we take a gallop through some of the things that are all businesses involved in payments need to consider.

1. MOBILE PAYMENTS

2016 is set to be a defining year for mobile payment providers. It looks as though Apple Pay is planning a major European launch in 2016; an event which could turn the fragmented mobile payment world upside down. While setting

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up a unified payment system overnight would be virtually impossible, Apple Pay will endeavour to push this forward, especially as its competitor, Google, is also pushing for first place in the mobile payment space. In 2016, we will also see mobile payments become less smartphonedependent. Instead, new technologies including smartwatches, bracelets and even rings will give us the ability to provide payment options.

credit card numbers are substituted by tokens.

While the original number is stored securely on a tokenisation server, only the tokens are used throughout the payment process. This means that no harm can be done if the tokens are stolen, and therefore makes it a secure process.

Due to the lack of widespread tokenisation standards, this technology is still in its infancy, but despite this, we anticipate a shift in the market throughout 2016.

2. SECURITY When it comes to In 2016, tokenisation and authenticating paybiometric authenticament processes, there tion will have a strong are several new inveninfluence on the payment tions in the pipeline for industry. Tokenisation is 2016. The most recently an extremely interestused methods include ing method of securing password, PIN, and credit card data, as the fingerprint, and these

More news, views and analysis at www.TelemediaOnline.co.uk

from 2007 is still in force, and defines the rules for payment services within the EU single market. It stipulates, for example, that payments must be completed no more than one day after a payment order is processed. After a tough two-year negotiation period, the EU has now, finally, agreed on a second payment services directive (PSD2).

The proposed revision defines several priorities, one of which involves strengthening the security requirements for online payments by improving customer authentication in order to combat fraud. PSD2 will also provide a legal framework to stimulate competition. This framework will facilitate market entry for new

providers and allow the development of innovative mobile and Internet payment methods. It will also force banks to grant such providers access to their crown jewels: the accounts. The European Banking Authority (EBA) is set to develop more detailed guidelines and regulatory standards for applying the directive.

Although enshrining these in national legislation in all EU countries will take a further two years, payment industries should begin preparing themselves now for implementation and start taking steps by 2016.

5. CASH ON THE RETREAT

Is the end of cash approaching? Some countries in Europe are

all have one thing in common; they are weak.

So two-factor authentication is increasingly used to improve security.

User-friendly methods— including, for example, new biometric processes like voice recognition, keystroke detection, finger vein scanners and pulse recognition — are set to become increasingly significant and set to increase both security and convenience.

certainly cutting down on the usage of cash. In Sweden for example, it is now almost impossible to use cash to pay for bus tickets. Acceptable payment methods include customer cards, credit cards, and payments via smartphone apps. Even traditional cash-based bakeries no longer exist in Sweden and instead, now display signs requesting that customers use cashless payment methods for even the smallest amounts. The situation in Denmark is similar; there, the government is currently debating whether or not to release smaller retailers from the obligation of having to accept cash as a payment method.

The decline in cashless payments, however,

is currently more of a theory among economists. In Germany, for example, around 80 per cent of retail sales are still transacted in cash. If, however, we look at sales revenue, cash makes up just 53.3 per cent, a figure set to drop further in 2016. Cash is on the retreat, and alternative payment methods are advancing. Among the multitude of technologies (like cards, apps, wearables) available today, cash is, however, still very high on the list. It’s an essential element in the mix and fears that cash is dying out any time soon are therefore (as yet) unfounded.

Ralf Ohlhausen is business development director of the PPRO Group.

We help brands build relationships, not just audiences We empower brands to use mobile to transform their business through truly personalised mobile campaigns. Our cloud-based platform delivers customer interactions for Fortune 1000 companies across the globe.

3. INTERNATIONAL E-COMMERCE

Merchants who are looking for e-commerce success will need to create an international strategy.

Expanding e-commerce activity across borders involves more than translating websites and establishing efficient lo-

We help brands build relationships, SMS | PSMS | MMS | Payforit OTT | Push | IVR | Social

www.mGage.com

Direct operator billing in motion

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TELECOMS

Challenges of the digital age

Regulating the web, telecoms, platforms and everything else that we take for granted as part of the digitisation of the world is a sticky issue, and throws up many questions not just for regulators but for the role of telecos, ISPs, SPs and even Apple and Google. Christoph Steck explains

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The innovation wave that flows from the digital sphere presents companies and policymakers with a series of benefits, but also challenges. It has forced many sectors to innovate in order to better compete worldwide.

The telecommunications sector has been one of the first sectors that has felt the power of digital disruption, but all others will follow sooner or later.

Unquestionably digital competition is improving our companies and our economies, making them more productive and competitive. However, fairly regulating this rapidly evolving sphere and fostering an environment that enables true competition, requires a radical rethinking of approach on behalf of policymakers, in much the same way as also

companies need to fully change its approach.

There is a fundamental policy issue because outdated regulation, or lack of implementation of rules, create a situation in which the same services are not tackled in the same way by regulators. Many of us in the telecoms industry believe that consumers deserve the same protection regardless of the company providing the service, its legal settlement location, or the location where the consumer is accessing the service from.

Today, consumers use Internet services as substitutes for traditional media and communication services. From a user perspective what is the difference between a WhatsApp message and an SMS, or between a Skype call and

More news, views and analysis at www.TelemediaOnline.co.uk

one from a mobile? Nevertheless, the regulations to protect consumers’ data are completely different for both.

For affected businesses to demand an end to such unjustified, asymmetric policies does not equal protectionism. If a taxi driver in Brussels, Madrid or London were to complain that they must pay a huge sum for their licences, while a new digital company’s service has no obligation to do the same and then offers cheaper service, that is a fair complaint which needs to be addressed.

Policymakers need to find the right balance of regulation.

To do so, policymakers should first analyse the new dynamics of the market, and then consider if the existing regulations are still necessary. Do you

still need national quota for television when you can access virtually any movie ever made easily online?

Second, they should design future proofed policies. The digital environment is changing so fast that an attempt to legislate on every aspect of it will create market distortions and negative effects on both consumers and companies.

Policymakers should instead give guidance to markets, set clear borders on what is allowed and what isn’t, and allow the markets to grow and experiment within these parameters.

Whilst the digital economy is global, however the economic or legal culture differs from one region to another. Europeans, for example, determine their

to assume an important position intelligence wired by others. laws on the basis of what they in this realm, we need to adThat is why we should embrace deem permissible in view of dress issues of scale. new tendencies favouring their traditions. These might One of the key reasons this smart solutions and innovations not be exactly the same on isthrough the internet of things. It sues like privacy or competition continent currently lags beis good to see that the Euroas they are in other parts of the hind is that we do not have a common market on the same pean Commission and national world. scale as the US or China where governments are doing a much The litmus test for this might better job now of putting digital prove to be how European poli- services can reach a far greater number of people. education and the fostering of cymakers react to the growing Meanwhile, if you create a entrepreneurial spirit high on dominance and abuse of digital service in German, or Dutch, their agenda. platforms. due to language and regulatory The ‘World Wide Web’ was For companies, this emerrestrictions, you will be far more born European. A British sciengence of platform-based ecolimited in reach. We need to tist created it, Tim Berners-Lee, systems presents perhaps the in Geneva at CERN. However, its biggest challenge. Any company create a bigger scale in Europe commercial power was identican create a mobile application and this can only be done by fied first by US for example, entrepreneurs but there Policymakers and educational organisations and later by are only two should,foster an entrepreneurial environment in Europe Chinese comcompanies in and ensure that European are digitally educated panies. the world with The World the proprietary Wide Web, as platforms it was initially conceived, was a where you can run that applica- creating a common market and place of open standards, interrely more on other mechanism tion on: Android and iOS. to reach scale, like the introduc- connected services, and open This mobile/smartphone enfor all to access. These are not vironment, is markedly different tion of common standards.

Additionally, digital skills are the properties of the increasingto the older internet environly mobile internet we see today, ment of the 1990s, when Google essential for seizing the opportunities that digitisation of our which is based on proprietary was able to found a company societies present. Policymakers platforms, which lock customout of a garage based on an iners in and competitors out, and ternet of open standards, acces- and educational organisations where everything is apparently should, therefore, foster an sible domain names and other free, while users pay with their entrepreneurial environment factors that were favourable to data. in Europe and ensure that scaling a company up quickly.

It is time for Europe, its Europeans are digitally eduToday the environment is companies, policymakers and cated. Silicon Valley, Korea and much less dynamic with just a China among other places, have societies, to embrace the digital few big platform providers that world but to also stay firm on grasped that the digital educahave created whole ecosystems their beliefs, their traditions and and have the financial muscle to tion of the population equals economic power now and in the views. stay ahead, even just by buying future. There is little doubt that And, who knows, this might the smaller, more innovative even bring back some of the and faster growing competitor – software will come to rule the world. original values of openness, like Facebook and WhatsApp. inclusiveness and innovation We are going to live in an WHAT CAN WE DO? the Internet has lost. algorithm-driven economy that We need to be honest in Europe will affect every part of our

and admit we’ve missed the first industry.

This post was first published wave of digitisation. It is highly in June 2015 as part of the Still, there are many thouunlikely that Europe is going to European Council on Foreign sands of talented European create another relevant search Relations´ (ECFR) Digital Power mathematicians coming out of engine, that was yesterday and Series http://www.ecfr.eu/ our universities that have never we must think about the future. learned that algorithms are todebate/digital_agenda3073 We are getting more digital and day steering whole economies. entering into a hyper-connected We need to be conscious that Christoph Steck is Director ‘internet of things’. All industries building a fantastic car is not Public Policy & Internet at are becoming digitalised, so sufficient, soon it will be simply Telefonica S.A. called ‘Industry 4.0’. For Europe a piece of metal driven by the Driving value added services for voice and mobile

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MNOS

Strategies for MNO diversification As consumers become ever-more entwined in their devices, the role of the Mobile Network Operators is shifting. But what are they set to become, can they avoid becoming just dumb pipes or is it best for them to look at diversification? Angus Finnegan, Partner, and Askandar Samad, Partner, of Reed Smith take a look

As mobile devices become more and more intertwined with our daily lives, the mobile ‘ecosystem’ is constantly evolving and increasingly diverse.

Mobile operators, who have experienced a squeeze on margins for core services as a result of regulation and competition, are being challenged by ‘over the top’ (OTT) service providers such as WhatsApp, Skype and Viber, which have been able to gain ground with innovative technology, unencumbered by

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the costs of running a network.

To avoid becoming mere ‘dumb pipes’ – commoditised channels through which younger, nimbler tech companies offer services and deliver content – and maintain their position as key players in the value chain, operators are diversifying into areas such as mobile payments, cloud services, content and ‘internet of things’ (IoT) applications. They can do this in a number of ways.

MNOs are well placed to

launch new mobile enabled services. They have access to valuable data in relation to their subscribers in order to develop focused sales and marketing campaigns. However, this does not mean the network operators should become technology companies, and partnering with technology suppliers will typically enable greater speed to market and innovate.

In some instances, operators are taking the opportunity to diversify through acquisition.

More news, views and analysis at www.TelemediaOnline.co.uk

Earlier this year, U.S. operator Verizon bolstered its digital offering by acquiring AOL, a digital media company and owner of current affairs website Huffington Post, as well as popular tech blogs Engadget and TechCrunch. The US$4.4bn purchase instantly grew Verizon’s online video and content offering.

However, we have seen fierce competition for the acquisition of innovative technology companies, driving valuations

to near giddy heights.

Mobile operators have also established venture capital arms to invest, alongside others, in a diverse range of businesses to complement their own offerings, from infrastructure technologies to taxi apps.

In October, Deutsche Telekom launched a new strategic investment arm with €360m under management, DTSI, aimed at accelerating investment in technology, media and telecoms.

ditional layer of regulation to own cloud infrastructure to In many instances, some deliver third party or operatorform of commercial partnership that which applies to them as operators, through the financial owned Software as a Service represents the best route to services regulation applicable (SaaS) and Platform as a Service market for operators launching (PaaS) offerings or, by develnew innovative services. Whilst to money issuers. This could require authorisation by the oping in house data centres, it inevitably means relinquishfinancial regulators as well as offer Infrastructure as a Service ing some control over developcompliance with capital, fi(IaaS) in the form of hardware ment and sharing the rewards, nancial crime, reporting and en- and computing platforms. partnerships enable operators Despite considerable technoto quickly launch news services forcement regulatory requirements. However, operators may logical advances in recent years, with innovative technology. well qualify from a ‘download’ European data protection laws However, diversification exemption where its service which govern cloud computing introduces further complexity adds value to the transaction have arguably failed to keep up. and risk in an already compliitself, such as the purchase of In 2012 the European Comcated environment (mobile a cinema ticket accessible on a mission therefore proposed operators are already party to mobile device. a comprehensive review of a plethora of wholesale and the legisladistribution tion. The EU arrangements, Despite considerable technological advances in General Data such as MVrecent years, European data protection laws Protection NOs). We which govern cloud computing have arguably Regulaexplore some failed to keep up tion will be of the key legal finalised in and regulatory At a European level, it is exearly 2016, for implementaissues facing operators in three potential growth areas – mobile pected that tighter controls will tion in late 2017 or early 2018. be imposed on providers, such The Regulation will replace the payments, cloud services and 1995 Data Protection Directive content – and how these issues as operators, involved in the payment initiation. A revised – implemented in the UK by the might be dealt with.

Payment Services Directive in Data Protection Act 1998 – and MOBILE PAYMENTS 2017 is also likely to restrict is likely to present new obMobile payments have long the exemptions applicable to stacles to those carriers either been regarded as a growth download purchases. partnering with businesses that area, with mobile applications Where a mobile operator provide cloud services or offerfor peer to peer transfer and works with a financial instituing their own. in-store payment applications. tion in relation to the launch As well as the new RegulaIn relation to the latter, BI of a mobile payment product, tion, a Code of Conduct for Intelligence forecasted that by it may only be the financial Cloud Service Providers is being 2018 in-store mobile payments institution which is subject to drawn up at the European Comin the US would account for financial services regulation. mission by the Cloud Select US$189bn of transactions.

However, such relationships Industry Group in consultaOperators, technology commay introduce additional tion with the Art 29 Working panies and retailers are all com- contractual risk as financial Party. As currently drafted, the peting to establish their roles institutions seek to address Regulation will almost certainly in this growth area. Operators regulatory risk in the partnernecessitate a review of data have had some successes in ship agreement. protection policies for operalaunching peer to peer transfer tors offering cloud services. It services in developing counCLOUD SERVICES is hoped however that before tries, fulfilling a need for basic Consumers and businesses are the Regulation comes into banking services in countries taking advantage of increased force, appropriate concessions, with large proportions of efficiencies, convenience and as were made for ISPs under the population without bank pay-per-use models offered by the E-Commerce Directive, are accounts. M-PESA, the joint cloud based services, and netincorporated for processors venture between Vodafone and work operators are well placed acting as mere intermediaries Kenya’s Safaricom, has been to exploit the cloud as a valuwith no knowledge or control extremely successful. able revenue stream. They can of data content. If not, prices In launching mobile bankoffer reliable connectivity and for cloud services could be set ing products, operators may network performance for other to increase. become subject to an adcloud vendors, invest in their As regulators tighten up Making interactive communications pay

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MNOS

privacy regulations, all providers in cloud ecosystems will likely review their positions on compliance, risk allocation and mitigation in their commercial agreements.

CONTENT

Bolstering content offerings may seem like a logical play for network operators looking to diversify. Operators have an established distribution network and a device through which content can be delivered.

By acquiring content, they have an opportunity to exploit the entire value chain.

The monetisation of content through advertising also presents huge opportunities. Global mobile ad spending is set to reach US$40bn in 2016. Verizon will no doubt look to harness a share of this spend through its acquisition of AOL. Again, there are legal difficulties to contend with. The safe harbour provisions, introduced

NETWORKS

by the European Commission by virtue of the E-Commerce Directive, protect service providers from copyright infringement if they act merely as conduits for the transmission of, or hosts for, infringing content.

in the music industry, for seemingly monetising content with little or no remuneration being passed to rights holders.

As a result, network operators acquiring or partnering with content providers and

Phenomenal growth in mobile services and applications, driven by smartphones and the emerging IoT market, creates an exciting environment for collaboration with mobile operators The provisions were designed to allow technology companies freedom to operate, and to further the functioning of the internet where those companies had no actual knowledge of illegal activity or content.

While the protection afforded to service providers remains intact, there have been a number of US and European cases that have brought the provisions under the scrutiny of the courts.

Service providers face everincreasing pressure, particularly

aggregators, particularly those that harness user-uploaded content, could find it more difficult to satisfy the courts they have done enough to remove or disable access to infringing content i.e. by serving notice and takedown procedures on the user.

Phenomenal growth in mobile services and applications, driven by smartphones and the emerging IoT market, creates an exciting environment for collaboration with mobile opera-

tors, particularly in relation to cloud services, mobile payment and content offerings. As the ecosystem becomes more complex, we expect to see MNOs enter into more commercial partnerships and joint ventures to deliver their diversification strategies.

However, operators should proceed with caution. Complex regulatory and legislative changes can make navigating the telecoms ecosystem challenging. An informed growth strategy and robust contractual provisions which adequately apportion risk will help to sustain profitable diversification strategies, as well as a symbiotic relationship between operator and service provider.

Angus Finnegan and Askandar Samad are partners in the Technology, Media & Telecoms Group of global law firm Reed Smith.

Connected fans have a game to love

Tapping into mass enjoyment at sports stadiums has long been seen as an opportunity for telemedia, but actually making it happen has always eluded the industry as the networking wasn’t in place. Now wifi can deliver, as Gavin Wheeldon explains Whether they go there for sport or entertainment, thousands of people visit stadiums, united by a common interest. Free WiFi can help stadiums reach out to these defined and engaged audiences, enhancing customer experience and fan culture, whilst merchandise and event services become more personalised.

MUTUAL BENEFITS

Everyone stands to gain – from the stadium management seeking increased venue awareness, enhanced sales and higher profit; to the visitors who want to feel a sense of connection with the venue/team/act and the like-minded people they come together with.

Some stadiums, particularly the home grounds of major sports clubs, become a second home to fans. They host a primed audience, which is ready and willing to engage with the venue and is receptive to targeted marketing campaigns.

Providing WiFi is a steppingstone towards more meaningful interaction between stadium

22

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visitors and fans. When visitors access WiFi through their social logins, they opt in to share data such as their name, age, gender, hometown and interests. In this way, stadium managers learn a great deal about their customers.

They can also map visitors’ footfall, which gives them insights into how they move around the venue and engage with retail and hospitality outlets. Informed by these in-depth customer insights, the stadium can send out targeted marketing communications while they are in the venue – and thereafter.

These might include emails, or SMS messages, offering discounts, multi-buys and coupons for food, drinks and merchandise – or advance booking opportunities.

When free WiFi is provided, stadiums also benefit from a spike in social media activity. As visitors check-in to the stadium, and begin sharing updates and pictures, increased social media conversations raise awareness of events.

FOOTBALL FAN EXPERIENCE

Premiership football fans are a good example of a stadium audience that enjoys rich rewards from free WiFi in their club ground. Firstly, they are able to log on quickly and easily – as WiFi is increasingly expected in public venues, this avoids the frustration that can result from it not being available.

In addition, being able to get online means fans can find their friends easily within the ground, communicate with others outside of the ground, and even watch replays. Using social media to interact with the stadium and other fans leads to a richer experience and deeper connection to their club.

From the stadium’s point of view, WiFi enables them to communicate with fans better.

They can develop tailored offers that encourage them to ‘make a day of it’, enjoying pre and post match drinks or meals in the stadium, rather than elsewhere.

By giving fans reasons to extend their stay, sales opportunities grow and any investment in supporting technology can be quickly offset. Furthermore, WiFi enables merchandising outlets, restaurants, bars, stadium tours and corporate hospitality

to be promoted more effectively. For instance, with location based tracking, vouchers can be sent to visitors in a timely way to make them instantly useful.

While there is clearly a commercial motive for football stadiums to provide free, social WiFi to fans, the benefits are far from one-sided. WiFi builds a stronger relationship between the stadium and fans that visit regularly. In the long term, fans benefit from the deeper understanding their home ground develops of the ‘ideal fan experience’.

Interestingly, Roger Goodell, a commissioner for the National Football League in America, said in 2012 that he wanted wireless in all stadiums so fans could stay in touch with news across the league during games, get better concessions and view bigger scoreboards.

With Goodell’s words in mind, it seems that WiFi technology can help to play a role in keeping fans coming to stadiums, rather than watching sports events and concerts from home.

Gavin Wheeldon is CEO of Purple WiFi

Making interactive communications pay

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Each issue we take a look at some of the interesting stats floating around in the telemedia space and associated areas to get a snap shot of what is going on out there. This month we take a look at the UK PRS market as assessed by Mobile Squaredâ&#x20AC;&#x2122;s research for PPP , which shows how even though its in decline, it has vast potential if it can be tapped into and marketed correctly

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