BILLING FEATURE
no involvement from anyone else would be forced to evolve. And in assessing its defences ahead of the internet services onslaught, the operator community always sought to reas- sure itself with the fact that it owned three key assets; the delivery mechanism, the billing relationship with the end user and a wealth of unique and varied information on those end users. These were the fortress walls of the operator business model; its certificates of relevance in the face of change. In the event, though—as is the case more often than not in this industry—it’s proving a little more complicated than that. Owning the network is all well and good
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but that simply means that the operator also owns the responsibility of providing service to an increasingly bandwidth-hungry user base. In the last issue of MCI we looked at the explosion in data usage triggered by the introduction of flat-rate charging policies and the availability of the iPhone3GS and the wave of smart devices it has influenced. That boom may well have answered opera- tors’ prayers for data uptake, but it hasn’t brought with it sufficient revenue to cover the cost of service provision. Flat-rate bill- ing for data, it is widely agreed, has had its time in the sun. And all of those iPhone users, to take the
most high profile example, are just exploiting cheap access to the operators’ networks so they can spend money with somebody else. The operators’ impregnable billing relation- ship was breached by the iTunes credit card model. Now users are spending their money on applications and the revenue is going to the developer and the application store owner. Meanwhile the operators are footing the bill for the transport and—in the case of Apple, if industry lore is to be believed—kicking back a levy for the privilege. It’s perhaps no wonder that carriers have
therefore guarded their highly prized cus- tomer data with such jealousy. An asset is no good unless it is made to work, however, and this last prong in the operators’ defen- sive trident has been under used, according to some. Dan Ford, VP of product marketing at Oracle Communications is one of those people: “Unfortunately the operators have squandered that information,” says Ford. “They really haven’t taken advantage of it as well as they could have and they have not
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t has long been clear that the traditional mobile model which has seen carriers sell services to end users with little or
done a good job of making it easy for third party software developers or content owners to get access to it.” So how potent is the threat? At Mobile
World Congress in February, Google CEO Eric Schmidt’s keynote was possibly the most hotly anticipated, eagerly attended and thoroughly dissected event of the show. He spoke warmly of operators’ strengths in billing and customer awareness, describing them as, “the most efficient billers by far. From the standpoint of selling applications and services, operators should be by far the best, and we’re happy to help.” Schmidt was certainly a polite guest but,
even as he paid his hosts these compliments he was hinting at change. In five years’ time, he said, Google will know a lot more about the customer, because it will benefit the cus- tomer to volunteer the information. Operator exclusivity on this data will not be around forever and, shortly after his speech, Google announced that it had hired Stephanie Tile- nius, the driving force behind the growth of eBay and PayPal. As Garrett Johnston, group strategic marketing director at Russian car- rier MTS points out in our interview on page 20, this hire is probably not designed to help Google interface better with operator billing systems. The Google CEO was hardly throwing down
the gauntlet, but his prediction added to the pressure on operators to start finding new revenue streams, through new ways to bill and new things to bill for. That pressure is certainly justified, but
operators need not man the panic stations just yet, at least according to Patrick Mork, vice president for marketing at application store Getjar. The credit card sales model that has seen Apple cut operators out of the application revenue loop is not without drawbacks of its own, Mork says, suggesting that the entire issue might be “overblown”. He has reassuring words for operators: “The
carrier billing relationship with the customer is not going away any time soon,” he says. “The Apple billing relationship is a legacy of the iTunes era and the iTunes database. That’s a massive database and you can’t deny Ap- ple’s success in building a direct consumer relationship on billing but it does have severe limitations. You have a lot of people in emerg- ing markets who do not and will never use credit cards. For Getjar the best case scenario is still for the content to be reflected on users’ phone bills,” he says. »
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