"Telcos will Compete with Banks"?

Smartphones using encryption and biometrics will enable telecom companies to compete with banks and credit card companies for retail payment transactions, argues Futurist Patrick Dixon. That might not seem to be the way providers of mobile wallet services such as Google, Isis and PayPal are heading. In most cases, all of those providers require the existing payment providers to provide a complete solution. 


But there might be a difference between the ways new contestants side step into a market, and the efforts such firms might make in the future. As many strategists could argue, a common way new firms get into a market is by starting at the "low end," and then, over time, adding more and more capabilities until, at some point, full head to head competition is feasible. 


Rogers, in Canada, provides an example. Rogers is becoming a "bank," though it likely will confine its early efforts only to some highly-focused applications related to its current customer base. But it would require little imagination to suggest that, once successful, additional functions would become attractive. 


With the caveat that predicting the future is an often-perilous undertaking, and that predictions about the future are more often wrong than right, Dixon thinks big things can happen in mobile commerce, mobile payments and shopping. 


Mobile payments could generate commissions of up to EU2 billion a year in countries like France, Germany, Italy and the UK, he says.  Mobile Payments Future

Rogers Communications Seeks Bank Status

Rogers Communications has applied to become a bank under the Canadian federal Bank Act. If approved, the proposed "Rogers Bank" will focus mainly on credit, payment and charge card services. In one sense, the move is similar to any other large retail brand creating a branded charge card.

In other ways the move is more significant. Large tier-one service providers might start to find they cannot gain significant revenue growth without moving into adjacent businesses of some size and scope, already dominated by other providers. To be sure, Rogers is proceeding carefully.

"We have no plans to become a full-service deposit-taking financial institution," Rogers Public Affairs Manager Carly Suppa said. "The license, if granted, would give us the flexibility to pursue a niche credit card opportunity to our customers should this make sense at a future date."

In other words, Rogers doesn't want to become a full-fledged retail bank. But becoming a credit card issuer does set Rogers up for a smooth transition to becoming a mobile payments provider in the future.
Credit cards present a distinct opportunity for Rogers to expand its reach, as the media, cable and wireless giant also owns the Toronto Blue Jays and has direct relationships with millions of customers, including many who pay bills using credit or direct-deposit accounts. So there is an incremental opportunity to capture some of the current transaction revenue, at the very least.

Beyond that, analysts say the company can build a broader card business by leveraging those relationships to market its brand of cards, especially by reaching out to customers who have good credit standing in its database. That would create a new revenue stream for the broader number of retail transactions for which its customers use credit cards. Rogers to become a bank

The move by Rogers is highly significant, as it illustrates an important point about where large tier-one providers must look for revenue growth. For an organization such as Rogers, which might book $12 billion in 2011 revenue, even interesting new lines of business that produce scores of millions to hundreds of millions worth of new revenue are too small to "move the needle" overall.

The problem is even worse for organizations such as AT&T or Verizon that book $30 billion to $40 billion a year in revenue. Simply put, there are few realistic new lines of business large enough to matter. That is why you hear so much about machine-to-machine communications, mobile advertising, mobile banking and enterprise-oriented cloud services. Each of those businesses could, in principle, produce $1 billion a year in incremental revenue for any single contestant in a national market.

Keep in mind the scale requirements. A business has to be big enough to produce $1 billion in incremental revenue for each contestant that wishes to compete in the business. By definition, any new line of business must be capable of generating global revenue in the scores of billions of dollars.

To repeat, Rogers will become a bank. It will do so because even "mobile payments" might not produce enough incremental revenue to be interesting. Instead, Rogers will have to explore ways to earn incremental revenue in a range of traditional banking services that match its capabilities in mobile services.

There are some obvious implications. Isis, the joint venture between AT&T, Verizon Wireless and T-Mobile USA, has shifted from a "mobile payments" to a "mobile wallet" focus. The implication is that Isis has decided it does not have time nor money to challenge Visa and MasterCard directly, which it was its original plan.

Even though that is an arguably wise move, the point remains that even a mobile wallet model might not produce revenue large enough to matter. That is not to say a wallet effort could not do so, but that it would have to create a huge advertising ecosystem.

At some point, even Isis might have to consider whether it must become a bank, or that its partners separately might have to become banks. That would still leave them as partners with Visa and MasterCard. But it would not allow Isis to completely avoid all conflict with banks.

Many service providers outside the United States probably are "running the numbers" and coming to similar conclusions.

Rogers applies to become a bank

Will Rogers Introduce Bundled Mobile Broadband Plans?

Canadian wireless provider Rogers apparently is considering giving customers a data plan that would let them use an iPad (or other similar devices) plus mobile phones, on a single access plan,  according to Electronista.

That's the sort of innovation in pricing plans and packaging that seems almost inevitable as people start using multiple wireless devices, and start to rebel against paying separate access fees for every single device they use, especially when some of those devices might not require much bandwidth, while others are used often enough to justify a typical $30 a month plan.

Observers often criticize mobile and other service providers for unimaginative thinking on such matters. Fair or not, one wonders what changes might be in store when fourth-generation Long Term Evolution networks start to enter their marketing phases.

So far, Clearwire has been more experimental than other leading mobile providers. To be fair, it isn't clear how much creativity actually can be brought to bear on the basic access service. But we ought to expect some changes as the types of devices benefiting from mobile access proliferate, and people start using multiple devices.

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New Yahoo! Mail Launches

Yahoo! Mail has launched in the U.S. market. The updated former email client expands the Web mail service into a "social communication" tool, adding the ability to send text messages to cellphones directly from e-mail. The latest update also illustrates a trend: "communication" and "content" apps are blurring and blending. At the same time, communications are shifting, in part, into the context of social networking sites, where communications is a "background" feature always available, and where the current willingness and ability to communicate is known to each social network "buddy."

Yahoo! also has tweaked the interface to make it easier for people to go back and forth between email, instant messaging and text messaging, and to access content from inside the client itself.

The new service includes two real-time communication features that are the first of their kind from a leading Web mail service. These include the ability to send free text messages from Yahoo! Mail to mobile phone numbers in the US, Canada, India, and the Philippines, and the ability to send instant messages (IM) from Yahoo! Mail to members of the world's largest combined IM community, including users of Yahoo! Messenger and Windows Live Messenger2.

The new Yahoo! Mail enables people to select how they want to communicate with their online contacts: by e-mail, instant message or text message to a mobile phone number.

U.S. users now can right click on underlined dates, names and keywords within messages and take additional action, such as adding events directly to their Yahoo! Calendars, adding friends to their Contacts, immediately viewing a Yahoo! Map of an address or performing a Web search on a keyword.

Yahoo! says the client will operate with the speed and responsiveness of a desktop application. A co-branded version of the new Yahoo! Mail will also be available in the fall to customers using the following broadband Internet services: AT&T Yahoo! High Speed Internet, Verizon Yahoo! and Rogers Yahoo! Hi-Speed Internet. The new Yahoo! Mail will be available this fall to Yahoo! Small Business Mail users as well.

BitTorrent Throttled by Comcast

Internet Service Providers don't like BitTorrent because it basically destroys their business model (flat rate access) and stresses the very part of their network most vulnerable to high usage (the upstream). Many ISPs simply limit the available bandwidth for BitTorrent traffic. Cable operators that now seem to include Comcast go a bit further and disupt the "seeding" process that allows BitTorrent peers to act as better upload nodes. In Canada, Cogeco and Rogers Cablesystems also "step on" BitTorrent traffic.

If P2P traffic keeps growing the way Cisco predicts, and if no changes are made in the dominant retail pricing model, throttling of P2P applications will happen on a wider scale. P2P attacks network capacity at its weakest link.