Operators' last stand: payment platforms.

Operators “had high hopes until 2007 or 2008,” said Patrik Karrberg, a researcher in the London School of Economics’ Department of Management. The hopes dimmed after the emergence of iPhones and improved data speeds that made the Internet directly accessible on handsets.

“They gave up the idea of controlling the entry point,” Karrberg said. “That was the death of the portal.”

via Vodafone, France Telecom Push to Regain App Edge From Apple – Bloomberg.

It looks like a payment platform may be one of only a few opportunities remaining.

  • MattF

    No, I don't think so. Try arguing about your mobile bill with your carrier– the payment systems the operators have already designed are famous for their opacity and user-unfriendlyness. Operators would have to start from scratch, they'd have to completely change their attitude toward customer service, -and then- they're competing with, e.g., Apple's effortless payment system, which works identically through iTunes, the App Store, or in-app with a single sign-in.

  • William Beekhuis

    Why can’t operators just focus on their networks and make them the best they can be with regards to coverage and speed? They should also introduce a ‘multiple mobile devices per user’ subscription and/or better tethering options

    • Steven Noyes

      As for the:"introduce multiple devices per user…"

      The simple reason is profit. The operators do not act as a benevolent benefactor but as a business. As such, they desire to make money and giving away that which they can charge for simply makes no sense.

    • unhinged

      Operators are trying to differentiate themselves with add-on services rather than focus on their core business of data delivery. Telstra (Australian telco) has a network with more coverage than any other and have promoted that as their key value proposition, but they also see themselves as content providers and market that angle as well. They are also the most expensive telco for data, although they recently addressed this somewhat.

      Moving data is a commodity, with commodity pricing, and none of the operators are willing to settle for that. It's a shame that returning to the core business would be a key differentiator and none of them recognise it.

  • OpenMind

    I don't understand all these mobile payment platforms push from all parties. It may work for less credit-card saturated countries, but in US? What benefit to customer and vendor has mobile platform over credit card?

    • dchu220

      I'm not an expert, but my first guess would be increased security and less fraud. For consumers, it's one less thing to carry with you.

      But in truth. I think all they see are big dollar signs. There is huge money to be made from transaction fees. Ask any business owner that accepts credit cards.

    • Nate

      Lack of friction – how much easier is it to click "Buy" and enter your password in the App Store on your iPhone, compared with punching in your name, credit card number, expiration date and CVV all on that little keyboard? Same thing with the operators – they can make the purchase easy since they already have you paying them via your monthly bill.

  • Lari

    …and with the NFC technology, they might lose that as well.

    • Danthemason

      Seems like a problem in the # of agreements a retailer must have with the different operators. If Google does it, what will the split be with the operator? That $ handcuff will certainly stop some of the bastardization of the Android system.

      • Matt

        The carriers in the US will form a consortium when it comes to that. So there only needs be one agreement. Carriers are also looking into everything else that comes along with a credit card – for example loyalty/points programs.

  • Marian

    Operators managed to instill a lot of hatred for the additional services they provided.
    They considered that it's their birth right to charge $2.5 a ringtone, that might even get disabled after 6 months.

  • Petteri

    There are some interesting reasons why the operators want to position themselves like this, the most obvious being the demand for higher profits.

    Being a bit pipe is basically a race to the bottom of the price; the operator willing to accept the lowest return on investment on their network will be the one to win the game as connectivity and bandwidth will become a commodity – just look at the development of electricity companies during the last century or so.

    The other reason is actually playing on the strengths of the operators – they have a customer relationship and billing address for everyone (as an industry). Currently doing purchases on the net requires an internationally accepted credit card (or paypal account or similar), something that not everyone in the world possesses, and operators see their possible added value here.

    Finally, operator charging & billing systems are techincally all about managing micropayments, which is again something that operators might be able to provide with as lower transaction costs than the credit card companies.

    But in general – and this really does highlight he fact – the operator segment is an industry in desperate need of a new business model. Until now, they have more or less failed with new every approach tried, and they don’t want to end up as electricity companies. The customers might not care, but the owners do.

  • It's a pity the article didn't look at how Nokia does billing for apps through the Ovi Store.

    It's 70/30 like Apple or Google if you pay via a credit card. Nothing to the operator.

    It's 60/40 if you pay using operator billing with some of that going to the operator and some Nokia. Nokia offers operator billing on over 90 operators. Where they've introduced it, sales have increased 13x according to Nokia.

    People obviously like billing on their phone bill instead of credit cards. I can imagine the operators being happier too. That leaves developers and Nokia splitting the operator profit but if sales do increase, that's maybe not a bad thing for either.