By Aaron Hayes, Product Manager for Mobile Billing & Payments
The commercial focus for most mobile network operators (MNOs) at the moment is equally about mobile broadband deployment and the monetization of mobile data services. In an increasingly commoditized market, providing a compelling mobile purchasing experience presents an opportunity for MNOs to establish both differentiation as well as profitable revenue growth.
Analyst firm, Gartner, forecasts mobile application revenue growth between 2010 and 2015 to be around 1,200%. This impressive growth combines direct spending and associated advertising revenue to create a global market forecast to be worth just over US$52Bn by 2015.[i] With advertising representing only ~10% of the total, this indicates that the revenue opportunity for paid downloads and in-app purchases requires all the more focus.
Purchasing applications via downloads or making in-app purchases can involve various forms of payment, each of which presents varying degrees of convenience and security. Alternative methods include credit cards, premium SMS, mobile wallets and Near Field Communications (NFC), but the convenience of direct operator billing, also known as carrier billing, offers some obvious advantages.
The use of Direct Operator Billing as an integral part of a mobile content monetization strategy provides a variety of benefits for MNOs and MVNOs, the first of which is the critical requirement to increase the profitability of a mobile content business. The flexibility and agility associated with direct operator billing ensures that a range of business models can be supported, including in-app purchases, so-called ‘Freemium’ services and micro-payment transactions. The more flexibility that can be associated with a payment service, the more likely it is that customers will adopt and use the services that are being purchased.
Mobile applications and content represents a significant commercial opportunity for MNOs and MVNOs. To realize this opportunity requires operators to make use of existing billing and charging relationships in order to be able to add value in the purchase process. The rapid expansion of available mobile handsets, applications and services requires payment and settlement solutions that are more sophisticated, more intuitive and more secure than legacy billing technologies such as Premium SMS, WAP Billing and Credit Card payment mechanisms. MNOs can differentiate their service propositions through provision of a more sophisticated, more intuitive and more secure payment mechanism and this is what direct operator billing is all about.
[i] Forecast: Mobile Application Stores, Worldwide, 2008-2015 – pub 18 May 2011, ID:G00212661
