"Project Oscar" U.K. Mobile Wallet, Mobile Payments Effort Could be Approved Soon

Vodafone, Telefonica (O2) and Everything Everywhere (Deutsche Telekom and France Télécom have been waiting for approval from the European Commission to launch a mobile wallet and mobile payments business in the United Kingdom, and approval is expected 2012, but most likely not in time for the London Olympics.


Project Oscar would provide a single platform that could be used by retailers, banks and other financial services groups, allowing mobile devices to store cash in the form of linked accounts to credit and debit card accounts, for example. 


Project Oscar also would support mobile payments using near field communications. The difference between a mobile wallet and mobile payments sometimes is subtle, but generally, a mobile wallet stores credentials, which might include loyalty program details.


A mobile payment service allows those credentials to be used at retail point of sale terminals or for online purchases. Business models also can differ. Some mobile wallet systems intend to make money supporting advertising, promotion or other marketing and loyalty programs, but not actual payment transactions, which will be handled by business partners.


Mobile payment systems generally involve a provider in the actual process of transactions, with the revenue earned from that role as a transaction provider. 


Both Isis and Google Wallet have opted for the mobile wallet approach, neither intending to be a direct payment brand, but only supporting transactions cleared by card issuers. 

One More Reason Why Phone Calls are Dropping: Companies Discourage Them

Customer service practices and attitudes might be changing in ways that actually encourage some enterprises to discourage customers or users from "calling" those enterprises. 


In fact, some might argue, when customers or users want to communicate with an enterprise, they often are discouraged from "calling," since there now is a preference for text-based messages, use of help sites or other methods that are viewed as more efficient because common questions can be handled in an automated, self service manner.


That might especially be the case for application providers. It isn't so much that phone systems cost money; it is that they are not seen as being as efficient as other forms of providing answers.  


An answer to a truly "frequently asked question" only has to be "answered" once. All subsequent "answers" are simply instances where a user reads or hears the original answer, so there are clear workforce implications. So long as nearly all questions can be answered using some "one to many" mechanism, the need for one-to-one mechanisms is reduced. 


Also, since it is easier to turn a one-to-one session into a one-to-many FAQ, phone communications do not scale, many might argue.


Of course, there are some salient reasons why such attitudes would persist, aside from the age demographics of the firms. Enterprises that try and deflect calls have indirect revenue models. 


There are, in other words, few incentives to deal with "users" who actually are not revenue producers. Advertisers are the revenue producers, and you can be sure those partners do have voice access. 


To the extent that use of indirect revenue models is growing, you can assume that the number of enterprises discouraging voice communications will grow. 

Net Subscriber Growth Falls 36% at Major U.S. Service Providers in First Quarter 2012

The largest U.S. mobile service providers experienced a 36 percent year-over-year fall-off of wireless net additions, causing a 32 percent decline in revenue-generating unit (RGU) additions during the first quarter of 2012, according to Fitch Ratings.

Some would argue that points to the maturation or saturation of the U.S. mobile market. 


The largest telecommunication service providers added approximately 2.7 million RGUs during
the first quarter of 2012, led by approximately 2.5 million wireless subscriber additions, according to Fitch Ratings.


Fitch estimates the largest wireless service providers activated approximately 6.8 million smart phones during the first quarter of 2012, reflecting a 19 percent decline relative to the smart phone activation activity during the year earlier period.

1Q 12 Subscriber Analysis	Contract	No contract	Wholesale and Connected Devices	Total
AT&T	187,000 -530,000	125,000 -34,000	414,000 -1,207,000	726,000 -1,771,000
Sprint	(192,000) -353,000	489,000 -18,000	785,000 -169,000	1,082,000
T-Mobile	(510,000) +196,000	249,000 +29,000	448,000 +487,000	187,000 +713,000
Verizon Wireless	501,000 -706,000	223,000 -29,000	*	724,000*
Leap Wireless		258,000 +79,000		258,000 +79,000
Metro PCS		131,000 -66,000		131,000 -66,000
US Cellular	(38,000) -18,000	4,000 -3,000		(34,000) -21,000
Clearwire *		49,000 +18,000	537,000 -367,000	586,000 -287,000
Tracfone * (MVNO)		369,000 -124,000		369,000 -124,000
Total	(52,000) -1,711,000	1,897,000 -86,000	1,815,000 -266,000	4,029,000 -1,694,000

source

Apple Hasn't Yet Chosen its Mobile Payments Strategy

Apple hasn't made a move yet, in mobile payments, though its Passbook mobile app does provide the "wallet" or "credentials storing" function of a mobile wallet service. Whether mobile payments will be a feature or the foundation for a new category of devices is a reasonable question. 


Apple historically has done best when it creates a new device category, or at least transforms an existing category. So far, it does not appear Apple is satisfied it can do either of those things in the mobile payments space, yet. But expect Apple to move, sooner or later. 


But only after it has figured out the value proposition, revenue model and business approach.

Prepaid Business is Shifting

According to NPD's Mobile Phone Track, 33 percent of phones bought are for no contract plans. And though much of that demand is driven by cost-conscious consumers, a new segment seems to be growing, namely purchases by consumers who simply do not want service contracts, though they otherwise could afford a post-paid plan. 


You might argue there now is a growing "pay as you go" segment, in addition to the traditional prepaid customers. 


Most larger mobile service providers are not especially fond of prepaid retail plans, for the simple reason that postpaid average revenue per user is higher. On the other hand, many mobile service providers who have targeted cost-conscious customers, and most mobile virtual network operators, tend to rely on prepaid packaging.


The latest wrinkle is a growing willingness on the part of service providers to consider ways of reducing handset subsidies. One way to accomplish that objective is to sell phones at full retail, without contract. 

And if that sounds like the "prepaid" model, it is. In fact, some believe a growing number of consumers are going to opt for "bringing their own phones" and buying service without need of a contract. 

But it is complicated. Carriers might not like paying handset subsidies, but they do like the churn-reducing contracts. Carriers might prefer the higher operating income from lower subsidies, but they also like the greater predictability of contract revenue.

In fact, AT&T Mobility and Consumer Markets President CEO Ralph de la Vega has said the growth opportunity in this country is in postpaid data, not in prepaid voice. AT&T's revenue growth of over $1.2 billion in 2010 for example, was more than twice the revenue growth for the entire U.S. prepaid industry. 

But consumer demand for prepaid continues to grow. In the U.S. wireless market, mobile service providers appear to have lost subscribers from contract-based plans for the first time in the first quarter of 2012.

That doesn't mean demand for mobile service is declining, only that demand is shifting towards prepaid plans.

The seven largest U.S. phone companies, representing more than 95 percent of the market, lost a combined 52,000 subscribers from contract-based plans in the January to March period, according to a tally by the Associated Press.

According to The NPD Group, prepaid now is a major reason even smart phones are gaining traction.

Top U.S. Smartphone Manufacturers	Q1'12
Apple	29%
Samsung	24%
HTC	15%
Motorola	10%
LG	7%
RIM Blackberry	5%

The rise of the pre-paid market contributed to Samsung’s growth in the first quarter of 2012. Android devices accounted for 79 percent of the prepaid smartphone market in the first quarter of 2012, for example.


NPD analysts have compared the end user cost of a a Virgin Mobile prepaid account and a similar contract-based offering from parent Sprint. The no contract solution shows a consumer cost saving starting in the 11^th month, NPD argues. 

NPD data also shows a steady growth in prepaid plan purchases, with a drop in indivisual postpaid plans. 

Verizon Filing Highlights Regulatory Chaos

It has been obvious for some decades that traditional methods of "regulating" distinct industries was going to become complicated as virtually all services and media could be carried over a single infrastructure, by firms that once were in distinct businesses, with different regulatory frameworks.

Verizon now is testing those frameworks, as it argues that network neutrality rules violate its free speech rights under the First Amendment to the U.S. Constitution.

In the past, newspapers and other media have been essentially "unregulated." TV and radio broadcasters have had more regulation, as have video service providers, while telecom companies have had the most extensive regulation.

So Verizon now argues that broadband providers have "editorial discretion" to give priority to their own Web content, and the U.S. Federal Communications Commission's net neutrality rules limiting that discretion is a violation of providers' free speech rights.

That is the same framework that governs cable TV and other video service provider services, so the argument is not unusual.

"Just as a newspaper is entitled to decide which content to publish and where, broadband providers may feature some content over others," Verizon argues.

The debate is not likely to end there, though, no matter what the courts rule. Today, contestants that provide identical services, such as cable TV and telco entities, are regulated under distinct and different frameworks. Beyond that "unfair" treatment, there is the broader issue of how to reconcile the "media" model of "no regulation" with the common carrier "heavy regulation" models, when a single company provides services in virtually every regulatory bucket.

When Will Amazon Become a Service Provider?

Some think it’s just a matter of time before Amazon starts reselling wireless data services on its own, under its own brand name.


Offering prepaid cellular service wouldn’t be a huge stretch for Amazon. The company has offered its “WhisperNet” service since the very first Kindle, which uses Sprint’s EVDO network to offer anytime data connectivity to its e-readers, some would argue.


The objective likely would be to encourage more users to buy Amazon-branded tablets and smart phones, growing the potential audience for sales of Amazon digital and offline products.


The notion that Amazon will become a service provider seems less and less unusual.