First published in 2011
BillingViews had the opportunity to catch up with a communications professional that has experience of billing vendor, media and service provider environments. He was involved in conversations some years ago about how to monetise new services. We started talking about advertising – an area that he is currently focused on.
It seems strange that service providers should have advertising teams – good but strange.
That’s true, but nowadays communications companies are moving towards having a portfolio of services, media channels and companies that together provide great scope for generating revenue from advertising.
Is that true across all the businesses, mobile and fixed line communications as well as TV etc?
Absolutely, and if the revenues are not there yet, the potential is huge and service providers need to figure out how they will make money out of, say, mobile.
Advertising is the answer?
One of them, for sure. One problem that advertising agencies have is that as they see new threats and opportunities they develop new teams to look at them and they therefore create an old fashioned problem – silos. It is difficult for agencies to deal with and understand all the channels at the moment and a quad or multi play service provider can make it much simpler for them. It is also worth service providers’ while independently working with big brands to experiment with new ideas and concepts across different channels.
The other thing to remember is that there are more sources of research than just billing data – our industry gets very focused on how important our billing data is, but if you overlay quite simple billing data with other data you can create compelling stories for advertisers. For example, if your billing data provides the postcode of someone clicking on a page, then government information can provide the average revenue of that area and from there where they shop, what they like to do and so on.
How is advertising and mobile panning out?
It is still very young but we are beginning to see how some of the opportunities will take shape. I think that mobile search will be prevalent in the short term, with paid results. I also think that the interactive element will become very important.
You remember the conversations about location based services becoming the killer application for mobile, but we really did not know?
Absolutely. And the practicality is that interactivity, plus a reasonable knowledge of whether the customer is likely to be receptive to offers – say by being a visitor in a city around dinner time will definitely be valuable. Just as we said all those years ago. We can also be sure that once the technology becomes easy enough to work with, entrepreneurs and businesses will surprise us with what is possible. In some areas emergency services’ regulation says that location based servers should be in the network, so the potential and flexibility is greater than we thought.
The other area we discussed was ‘billing for content’ – is that going to be the way forward.
It will be one of the ways forward, for sure. However, I think that people will pay for internet access through whatever device – based on speed and the amount of data they use and there will also be room for premium based content on top of that.
The amount of data being moved, mainly as a result of iPhones, has taken a few people by surprise…
It certainly has. Who knew? Actually what is interesting about Apple and the networks is that they have a real head start over other smartphones. They probably already have your credit card details because of iTunes and so they have the critical billing relationship with the customer. This means that buying an app for a dollar or two is not a big deal and is easy for the customer. I think others are trying to build PayPal and so on into their initial set up with a customer, but that will and is delaying take up because it is an extra, ‘difficult’, time consuming step.
This actually is a great opportunity for service providers – to offer that billing relationship, that ease of doing things, to device manufacturers.
What about mobile payments – particularly in mature markets?
I think that the potential is there but there are some practicalities that will mean that proper roll out is slower than some people predict. For instance in a lot of places in North America ‘chip and pin’ is only now being rolled out properly. In Europe it is well established, but what it means is that merchants are being driven to implementing the chip and pin system – the credit card companies are going to make them liable for fraud unless they do and that means another major upgrade, such as Near Field Communications, is going to be a few years away.
OK and what about whether service providers are turning networks into platforms or whether they will be the dumb pipes that we talk about?
We research what other service providers are doing –everyone does. What we have found is that some are going one way and some are going the other. On the one hand some companies are saying ‘we are going to be the best dumb pipe in the world’ on the other companies are heading up the ‘value stack’ and create the value.
My own view is that if you go down the ‘dumb pipe’ route you end up investing money in speed in order to become a commodity and I do not think that there is enough return in that model.
I do think that service providers need to follow the ‘open’ path. If a network, or platform, is easy to develop cool apps on, people will develop cool apps. If it is closed or difficult they will not. Simple. I think that the GSMA’s OneAPI initiative is really interesting and supports that whole model. Remember our discussions about open APIs all those years ago?
I do. OK – one last question: what is Google going to do – you are laughing!
I am. If I knew that I would not be here, I would be making a fortune telling people.
Fair enough. I know that you have to go but it was good to catch up. Many thanks for your time.