Inside telecommunications: 3Q 2012 trends

Service innovations in the telecoms sector

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Operator payments partnerships are progressing at different rates according to local market factors.

Mixed progress for mobile operator payment partnerships

In the last two years, operators have been reinforcing their presence in the mobile payments space through national joint ventures. While such moves are seen as vital to securing scalable solutions for contactless mobile payments, regulatory concerns and business model uncertainties have been acting as a counterweight.

In July, the five partners involved in a Dutch mobile payments tie-up announced they were dissolving the joint venture as the model is too complex and time consuming.

More promising is Project Oscar, the consortium of UK mobile operators looking to launch contactless payments and making their prospective payments platform open to all interested parties, from mobile virtual network operators and banks to advertising agencies and retailers.

In other markets, operator-led partnerships have already brought mobile payment services to market. In June, the Swedish joint venture 4T launched WyWallet, while the operator-led ISIS payments platform is expected to launch in the United States in Q4 2012.

While payment joint ventures in Western markets have drawn criticism over launch delays, the appearance of NFC functionality in Singapore is notable for its quick development phase.

Despite moves towards standardized national NFC platforms, device-based technology options for contactless mobile payments technology are proliferating.

Although the proportion of smartphone models with built-in NFC functionality is rising, NFC capability is absent in leading devices such as the latest iPhone. Apple is instead favoring its Passbook application, to which a growing number of third parties are signing up.

Proportion of global smartphone models with NFC capability
NFC-capable devices as % of total smartphone models

Proportion of global smartphone models with NFC capability

Source: Ovum, “Smartphone Capability Analyzer: 3Q11-2Q12,” August 2012.

Retailers are also entering the fray as potentially distinct competitors to other mobile payment platform providers. In August, more than a dozen US retailers, including Best Buy and Walmart, jointly formed the Merchant Customer Exchange (MCE).

While questions of customer ownership and new business models are hallmarks of mobile payments initiatives, customer attitudes themselves require closer attention from service providers. In our recent consumer survey, The mobile maze, we found privacy and security are top concerns for potential mobile money users.

Growing diversity of operator approaches to pay-TV

IPTV services have been vaunted as one of the key services through which operators can gain in the broadband access market, providing new routes to incremental revenue growth and greater customer loyalty.

Such strategies enable established telcos to punch their weight in the triple- and quad-play market, meeting the threat from cable players and over-the-top (OTT) content providers. The third quarter saw operators widen their TV propositions across several domains.

In European markets, operators are pressing ahead with multi-screen strategies. Belgacom launched its TV Everywhere service, allowing users to watch TV on a range of devices, while Deutsche Telekom plans to make its Entertain IPTV service similarly available.

Partnerships are becoming a defining feature of the pay-TV market, and operators without an existing TV foothold are cooperating with pay-TV providers.

At the same time, new combinations of content delivery and access platform are emerging, as highlighted by the partnership between Netflix and Freesat, the free-to-air satellite platform in the UK.

Operator tie-ups with OTT service providers and device manufacturers are vital for operators to offset the potential threat of OTT services.

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