Mobile Operators: Cut Out Mobile Payments Middlemen

cutting out middlemenIn this first part of a two-part series I take a hard look at the hard reality of how mobile operators must do business in the AA era (After Apple).

Granted the App Store created an exciting (and single) marketplace for developers to create, test and sell apps to consumers. But the model also totally disintermediated operators from app revenues.

Since then mobile operators have sought to reassert themselves in the value chain by offering their own app stores, a me-too strategy borrowed from Apple that has so far failed to pay dividends for a variety of reasons.

But there is one strategy mobile operators would do well to copy down to the letter. (And it isn’t the Apple model!) Instead, operators should borrow a page from eBay, a commerce giant who made the grade by extending an API that allows others to sign up merchants on its platform. The result is a robust business ecosystem with eBay at the center of the action.

Connect the dots, and mobile operators have a lot to gain by opening up their billing capabilities to third-parties (an approach known in the industry as ‘billing on behalf of’ or BOBO).

Some mobile operators recognize the advantages of this approach, but they are not alone in understanding where the real money is.

Mobile payments start-ups and aggregators (such BilltoMobile, a direct carrier billing company with roots in Korea) also sense a business opportunity. BilltoMobile, for example, has direct billing arrangements with Verizon and AT&T — and just added Sprint to the list last week.

Are mobile operators correct in working with aggregators (effectively adding more mouths to feed in a value chain that is already in a huge state of flux?) Would it be better for mobile operators to open up their APIs and asset themselves in the value chain as the true billing experts?

I argue the later. My message to mobile operators: Don’t be a passive payment option. Cut out the middlemen and be the mobile payments platform for all.

Read the rest of my post over at the Amdocs Interactive blog.

Matt Anderson Amdocs InteractiveMatt Anderson is Head of product marketing for Amdocs Interactive, a distinct business within Amdocs focused on Value Added Services, which is the world’s leading provider of digital commerce, Mobile Internet and personalization solutions. Matt has over 13 years experience bringing products to market in the telecommunications industry. Prior to joining Amdocs in 2008, he directed marketing for Nuance’s mobile business unit, focused on market development of speech activation applications in the mobile, navigation and automotive industries. Previously he launched the next generation of T9 at AOL Wireless and was responsible for managing mobile VAS offers at AT&T. Matt also founded a start-up in the telematics business and managed marketing and sales for one of the first wireless data networking companies. Matt has an MBA from the University of Washington. You can follow Matt on Twitter (@matt6156).

Disclaimer: Amdocs Interactive is an MSG client and supporter.

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