Telefónica + Samsung: Digital Dream Team?
I've been at Management World 2013 in Nice, France, this week, where the industry, realizing that voice and mobile text messaging will not sustain the sector for much longer, was trying to figure out how to generate new revenues in a digital world.
As the event closed down and more than 3,000 people wondered whether they would get through customs without having to declare the Microsoft Corp. Surface RT tablet they'd picked up gratis at the show, Telefónica SA and Samsung Electronics Co. Ltd. reminded everyone that there's still hope for the telcos. (See MW13: QUICK – FREE STUFF!!)
That hope springs from the strategic development and deployment of Service Provider Information Technology (SPIT) capabilities and is based around a combination of the new -- the development of APIs that hook up telecom operator assets to third-party partners -- and the old, the carrier billing system.
In a nutshell, Samsung has agreed to integrate the BlueVia payments applications developed by Telefónica Digital in its smartphones and tablets. The BlueVia API (application programming interface) creates a link between the devices and Telefónica's billing system, enabling Samsung device users to add the cost of buying mobile apps and services to their mobile bills, without the need to enter any credit card details or hook up manually to an external payment platform. (And if it all works OK, then Telefónica gets a cut of the transaction along with increased customer satisfaction.)
That's a relationship known as "direct carrier billing." It's not new and we've already highlighted the potential of developing such relationships. (See How Telcos Can Deal With OTT and Telefónica, Telenor Team on APIs.)
But direct carrier billing is gaining momentum and this new relationship marks a significant step in the adoption of such relationships because it brings together one of the world's largest telecom operators, with about 250 million mobile customers in Europe and Latin America, and the world's biggest mobile device manufacturer. (See Smartphones Outpace Feature Phones, Samsung Leads.)
Now, this isn't going to change the market overnight. Samsung has to integrate the BlueVia API and Telefónica needs to update its billing platform: The direct carrier billing capability will be launched first in Germany "in the coming months."
But in time I expect this will make a difference to Telefónica, not only in generating additional revenues but also in attracting other key partners and in holding on to its most valuable mobile customers. I'll be very surprised if this relationship isn't getting a name-check in Telefónica's quarterly earnings reports in 2014.
— Ray Le Maistre, Editor-in-Chief, Light Reading