Carrier billing for content fundamentally flawed, says application store CEO

Carrier billing for content services is doomed in advanced markets because of fundamental conflicts of interest, and standalone payment specialists are best placed to handle charging. That’s the view from mobile content entrepreneur Simon Buckingham, whose latest venture Appitalism seeks to combine social networking and the application store model.

Speaking to earlier this week, Buckingham suggested that carrier concerns over the ongoing revenue streams for their core services of voice and data render content based transactions, which are far smaller, less important for operators. If content providers are dependent on carriers to provide billing services for their products, Buckingham said, they will always have to take second place to the carriers’ own plans and promotions.

“I’m trying to get my members to become revenue generating customers. But with carrier billing I have to get carrier approval for all my campaigns, because the carriers are so worried about cannibalising their own projects,” he said. “It’s a fundamental conflict of interest. I think what’s going to happen is that the Paypals and Visas and Mastercards are going to be the billing entities and the telcos are going to do the telecoms services.”

Buckingham suggested that the principal obstacle that needs to be overcome for this evolution to take place is consumer reticence over using their mobile phones to enter credit card details and initiate transactions. Content players are pushing aggressively for this to happen in 2011, or soon thereafter, he said.

He did concede, however, that carrier billing will remain essential in emerging markets where bank and credit card accounts are scarce and mobile operators play a crucial role in bringing digital transactions to consumers. Operators from all markets view their billing relationships with their customers as a vital means to maintaining their relevance in a shifting mobile value chain.

Appitalism is trialling carrier billing in Australia and the UK, but favours direct charging structures. Users can pay with credit cards online or from their mobile and the new venture this week introduced Paypal and ECP/ACH (Electronic Cheque, Processing and Automated Clearing House) options.


One comment

  1. Avatar Lars 14/01/2011 @ 8:50 am

    Hello Simon:

    The certain exception to this would be none other than the original..!?! DoCoMo designed and launched imode in 1999, with a friendly 90/10 rev. share to content providers, and has demonstrated the value proposition to all parties. The model was well copied by Apple and now Google. The discovery method, along with ease of purchase and secure transaction for the customer, remains a critical challenge for alternatives. Agreed that PayPal (etc) see opportunity, wish you all the best going forward!


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