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User Rank: Light Beer
11/13/2014 | 2:34:49 PM
I agree with Gerri!
The remarkable reality of carrier billing of eCommerce is that the fundamental topics covered by Gerri have been getting debated since near the dawn of monetizing the internet in the mid-90's.  Natural attrition of telecom leadership over the years ranks high on the short list of factors that have brought about increasing adoption of carrier billing.  Of course back then carriers were dominated by network-centric thinking leaders who viewed those facilities as their crown jewels and billing as a bothersome back office function to possibly outsource.  Commoditization of the crown jewels was inconceivable (not that many years after leadership at AT&T and McKinsey Consulting virtually dismissed the promise of wireless as a niche opportunity mostly limited to aspects of the construction industry).

As some relented on the vision of carrier billing of eCommerce (both inside carriers and outside via partner-suppliers), proof-of-concept began to take hold as beta and pilot initiatives between carriers and web merchants validated that a lift in merchants revenues of 10-30%+ could be realized, albeit with less margins as Gerri discussed (interestingly, if carriers back then applied the same math they used to determine the cost for supporting line item billing of 3rd party VAS with the costs for supporting line item billing of every single call a customer made each month, their business would be unsustainable).

Factoring in that credit card penetration varies by market, as do regulations vary by market (with laws governing what can and cannot be billed, as well as generous laws that empower consumers to deny knowledge of transactions), there still remains the undeniable truths that:

- Carriers can help web merchants/online retailers reach larger addressable markets,

- Carriers can help bring sizable numbers of people off the sidelines of eCommerce,

- Carriers can unleash incremental revenues from transactions increasingly riding their rails,

- Carriers can create stickier customers (residential and businesses) by fully leveraging their core competency of direct billing,

- Carriers can continue to follow the trails blazed by South Korea and Japan where the bounds of carrier billing continue to be expanded and validated.

Carrier billing absolutely can support billing of physical goods, as well as various models of in-store shopping in the brick and mortar world.  Carrier billing can lead the ever evolving payments industry by morphing pre-paid models into their carrier billing offers, including with sub-account billing that could have pre or post-pay variable limits.  Rather than argue about whether or not customers will or will not accept 'big' bill on their monthly phone bill, develop models that empower each customer to earn and advance to the monthly billing limit they are comfortable with.

There remains so much exciting upside to the carrier billing space that IMO it is without a doubt one of the most exciting spaces in the global economy.
User Rank: Light Sabre
9/15/2014 | 12:21:47 PM
Re: Carriers Need to Rejoin Didgital Value Chain
StephenCNorth, I fully agree with you on the distinct and separate business models.  As we have all noted, the space is yet unfilled. 

I tend to agree with the view that the opportunities for the carriers, in building a network, will offer the earliest market entry points and can "claim" space in this new opportunity.  I don't know that they will, but the "real estate" in creating the networks, would offer them a shot at defining the new markets.
User Rank: Light Beer
9/12/2014 | 9:41:31 PM
Re: Carriers Need to Rejoin Digital Value Chain
The article is interesting, but maybe not that realistic. Carriers invest almost incomprehensible levels of capital to deploy vast physical networks with huge operations staff and large consumer marketing organizations, with the relatively thin margins characteristic of most operating companies.

Companies at the top of the stack (like Google, Netflix, Facebook, etc.) operate in a much different financial model. They focus on creating intellectual property and software services with a smaller number of more highly paid employees, and operating much less capital-intensive services. They have attractive margins and P/E ratios.

It appears it is difficult to blend these financial models and there may be economic forces that promote their disaggregation.

Obviously, each side covets the apparent advantages of the other, but can't take on their liabilities and the investment community does not support it.

It will be interesting, therefore, to see whether carriers or Internet companies will own the "connected home."  If you believe this is a software/data analysis/integration/user interface problem, you get one answer. If you think this is a truck roll/operations problem, you get another. Interesting to ponder the consequences.

User Rank: Light Sabre
9/11/2014 | 2:55:16 PM
The real value
As someone who has been in the payment and carrier space for over a decade, this argument sounds like something along the lines of the "how do we fight the OTT's" approach, and while it has merit it is really just about recapturing a market that was always theirs in its smaller form.

I would argue that the carriers have an opportunity to create a real micro-transaction network for small transaction amounts that crosses the physical interfaces of mobile, web and real world. The best example of the real world value is something that combines Hong Kong's Octopus with the EZPass (and its counterparts) in the US, along with in-app mobile purchasing.
User Rank: Light Sabre
9/10/2014 | 9:59:00 PM
Re: Carriers Need to Rejoin Digital Value Chain
@Gerri, great strategy and positioning for the carriers.  I think developing the advantage they have with their end-relationships and developing POS capabilities makes sense.

That space will be filled by someone - they should follow your advice and get on board!

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