Leveraging assets

Operators must leverage their customer relationships and billing systems to tap emerging opportunities.

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Leveraging assets Franco Bernabe believes operators stand to benefit from new technologies and services such as Near Field Communications tech (NFC). (Getty Images)
By  Roger Field Published  March 16, 2011

It is easy to understand why telcos sometimes feel like they have been squeezed out of the picture, particularly during events such as Mobile World Congress where device manufacturers tend to steal the show with bright displays of the latest and greatest smart phones and tablets.

When attention is not on the actual devices, it often turns to the applications that run on them, and the application stores that channel those apps to market. And again, the operator appears to be missing from the picture.

When it comes to the lucrative world of apps, operators are generally perceived to have left it too late to really take a slice of the pie. Apple dominates, and Google’s Android Market is growing rapidly.

While operators often discuss strategies to create new revenue streams to avoid becoming a ‘bit pipe’, specific details about how they will achieve this are usually lacking. But as is apparent from developments over the past month, there are plenty of ways operators can become involved with parts of the wider telecoms sector that they are generally perceived to have already missed out on.

Gaming is just one example. While it would easy to assume that most revenues from mobile games go to the games developers and the stores they are downloaded from, many industry insiders are convinced telecom operators have a role to play via their billing platforms.

Indeed, as Mevlut Dinc, CEO of Turkish games developer Sobee says (see Game On feature), some operators have started to generate revenue through mobile payments attached to online games, while online gaming companies are incorporating various payment methods into their games.

Many people prefer to pay for items such as game downloads on their telephone bill rather than a credit card, as the customer already has an established relationship with the operator, which generates trust.

But there is also much potential for operators to leverage their existing billing systems and platforms, and customer relationships, in a much broader way, and an initiative spearheaded by the GSMA last month could put operators on the right path to achieve this.

Many of the world’s leading operators, including Qtel Group, Orange, Bharti Aitel, América Móvil, China Unicom, and Vodafone Vodafone, have voiced their commitment to implementing Near Field Communications (NFC) technology, and intend to launch commercial NFC services in select markets by 2012.

Franco Bernabè, chairman, GSMA and CEO, Telecom Italia, said that NFC is perhaps best known for its role in enabling mobile payments, but its applications also go far beyond that.

 “NFC represents an important innovation opportunity, and will facilitate a wide range of interesting services and applications for consumers, such as mobile ticketing, mobile couponing, the exchange of information and content, control access to cars, homes, hotels, offices car parks and much more.”

Indeed, the market potential for NFC is significant. According to Frost & Sullivan, the total payment value for NFC globally will reach more than EUR110 billion ($151bn) in 2015, and momentum behind the technology is growing rapidly.

 To address this opportunity and to provide valuable new services to mobile users worldwide, the operator community is focused on driving the standardised deployment of mobile NFC, using the SIM as the secure element to provide authentication, security and portability.

To achieve this, the GSMA will develop the necessary certification and testing standards to ensure global interoperability of NFC services. This interoperability is critical to the widespread adoption of NFC, enabling users to benefit from NFC services around the world, regardless of operator network or device type.

“As we have seen, the adoption of different approaches to NFC will only serve to fragment the market,” Bernabè said. “By uniting around a single standardised approach to mobile NFC and by collaborating across the entire ecosystem, our industry will continue to develop the compelling services that customers demand.”

One of the reasons that Apple and Google have managed to prosper in the applications arena is that operators failed to create a single standard system, leaving other players in the broader telecoms ecosystem to dominate.

Operators should embrace NFC and throw their weight behind the GSMA’s initiative, as the potential opportunity is to great to miss.

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