Off-deck content represents an increasingly greater percentage of mobile operators’ revenue per user. The key to its success, however, is simplicity and ease of use. If subscribers can’t pay for a service easily and feel they have no control over the cost, they won’t buy. This makes direct-to-bill charging critical for mobile operators looking to compete in the growing content market.
The continued rise in demand for off-deck content — digital content, such as a video or audio file, purchased from a third-party provider but delivered over a service provider’s network — is promoting mobile providers to seek solutions that allow consumers to purchase a variety of digital services more easily. Off-deck sales already are dominating European mobile commerce, and North America quickly is catching up. A recent Frost & Sullivan study indicates that mobile content accounted for about 30 percent of total U.S. mobile revenue and predicts this figure will grow to 40 percent by 2010. Informa Telecoms & Media forecasts 70 percent of content revenue will come from off-deck platforms within five years. Operators no longer can limit themselves to offering content through their own portals because demand for third-party content continuously is increasing.
In an off-deck setting, operators face the business and technical challenges inherent in incorporating third-party content and providing transaction services outside their existing billing systems. Support for business processes, such as payment processing, customer care, fulfillment, exception handling and settlement, are vital components to bridging on-deck and off-deck business strategies. Carriers need to examine their existing systems closely and implement a more robust payment mechanism, including direct-to-bill charging, to support their evolving content strategies successfully.
FROM PREMIUM SMS TO DIRECT-TO-BILL CHARGING
There has been a lot of talk recently about the drawbacks and limitations of using Premium SMS (PSMS) as a charging mechanism. While it has its limitations, PSMS still remains the most popular charging mechanism in the U.S. market. As successful as PSMS has been, it does not provide a reliable transactional mechanism for authorizing and capturing payment requests. The SMS short-code system is a messaging platform and was not created as a financial processing engine. Despite the lack of transactional reliability and a significant amount of revenue leakage, carriers still see it as a very simple means of charging users for mobile content off-deck.
In addition to PSMS, direct-to-bill and WAP billing services are beginning to take shape in the United States. These services provide more robust payment mechanisms than PSMS. A direct-to-bill model requires additional infrastructure to complement existing operator billing systems. This infrastructure allows aggregators and content providers to connect to operator billing systems through a payments-oriented interface while providing protection for operators and subscribers. A direct-to-bill system includes key features, such as spending controls or limits, and an advice-of-charge payment panel that provides customers with a clear understanding of what is being charged to their bills. In addition, the system offers comprehensive revenue-settlement capabilities to ensure correct settlement for initial payments and also subsequent post-payment events, such as refunds and chargebacks.
REVENUE SHARING
As operators create more innovative marketing solutions involving multiple parties, they experience a direct impact on the revenue-sharing contracts they hold with content providers and other parties, like advertisers. With multiparty offerings, the terms become more complex and operators struggle with the financial implications. This creates the need for operators to have a system capable of providing revenue assurance and proper settlement capabilities to all parties involved in the transaction.
For a successful revenue-sharing model, mobile operators and content providers need the freedom to define their contracts without being constrained by a technology’s ability to support them. A payment platform with revenue-sharing technology will enable service and content providers to guarantee accurate and timely transaction settlements that support contract terms for payments, payment schedules, discount sponsorships, subscriptions, promotions and liability for exceptions, refunds, non-payments, cancellation fees, and fraud. Such a platform ensures the revenue and costs are distributed to the correct parties according to specific contractual arrangements.
DIRECT-TO-BILL-CHARGING
With the continued rise in demand for off-deck content, carriers worldwide are looking for more flexible billing and payment systems, such as direct-to-bill charging, to support their strategies. A number of global carriers have pursued this strategy and are seeing distinct benefits as a result (see sidebar below).
As the premium mobile content market continues to grow, a more collaborative payment mechanism is needed to enable content innovation and offer new opportunities for promotional programs, joint discounts and loyalty programs. Similar to an e-commerce platform, mobile operators need to connect their offerings with the generation of accounts receivable, accounts payable and settlement for multiple parties. To do so, operators need a comprehensive and flexible platform that provides a variety of payment mechanisms, including direct-to-bill charging, to support their on-deck and off-deck businesses.
Flexible payment platforms provide the key technology that allows mobile, broadband and cable operators and aggregators to work together to exploit on-deck and off-deck markets. The successful and proper deployment of payment solutions helps operators, aggregators and content providers grow while still focusing on their core competencies. With the appropriate billing and payment platform, content providers and operators have the opportunity to increase revenue by providing more choices for the consumer.
Evanna Kearins is director of marketing for Valista Ltd.
CASE IN POINT
Cricket Communications Inc., for example, pioneered unlimited minutes with no long-term commitments or credit checks — offering customers a flat-rate unlimited service in more than 50 markets serving more than 2 million users across the United States. To address the dynamic and highly competitive U.S. mobile market, Cricket Communications (offered through Leap Wireless) needed flexible yet secure access to premium off-deck content and services with a scalable solution that can support future services.
Cricket is using Valista Ltd.’s next-generation Operator Payments Service to enable its off-deck mobile content business. The operator allows customers to purchase and access a variety of premium content and services using either PSMS or WAP billing. The payment service ensures consumers are aware of exactly what they are paying for when purchasing content off-deck and charging it to their monthly bill. The service provides a bridge connecting external aggregators, content providers and Cricket’s internal billing infrastructure. It adds real-time authentication and authorization, which prevents unsolicited charging and provides transaction management, high-throughput support and accurate partner settlement.
Vodafone UK, part of the world’s largest mobile community, is another case in point. The mobile operator needed to create a flexible payment solution that would allow consumers to make purchases from Vodafone and third parties without requiring a credit card. The company selected Valista to provide the payment platform behind its new m-pay service, and subscribers now are able to make online purchases safely and securely over the Internet, WAP or 3G, adding the charge to their monthly bill.
Vodafone UK customers can shop online for a variety of digital content provided by Vodafone on-deck or from off-deck content providers. The customer selects the content they want and indicates m-pay bill as a payment method. This method encourages mobile users to use their mobile Internet because of its convenience — no additional payment methods are necessary. In addition, Valista’s revenue-settlement solution calculates the revenue due to each participant — Vodafone and the various content providers — and generates aggregated settlement reports for Vodafone’s financial operations.
France Telecom’s subsidiary, w-HA, faced the challenge of creating an e-commerce service enabling purchase of goods and services via mobile, fixed-line and Internet connections. Working with Valista, the company built a virtual shopping mall that allows third-party content providers to go to market under their own brands and connect with active WAP users via any French mobile phone. Users can purchase content per event and per download; buy concert, movie and sports tickets; and purchase browsing access by the hour, day or month.
The network quickly gained traction and now is an interoperable payment network with more than 1,500 merchants. w-HA has more than 13.5 million active users and processes more than 450,000 transactions per day. w-HA is the first interoperable, multicarrier, multichannel, multicurrency electronic mobile payment community. France Telecom profits from increasing sales of its own branded services, commissions from third-party sales and additional transaction processing fees.
