PRS booming, but bad news for networks

What did the O2 customer say to his friend? Nothing. Hopefully its a happy Friday for all you O2 users who lost connectivity this week. Hopefully everyone is back on line. What it shows is how reliant we are on mobile networks for our everyday lives. It also doesn’t bode well for O2’s much trumped 4G roll out. The outage comes hot on the heals of a nine hour breakdown of Orange France’s network in France last week. Ho hum.

Askar Sheibani, CEO of IT and telecoms repair company, Comtek, sums it up well: “O2 has failed to deliver a basic service to its customers in the past few no basic call connectivity nor the ability to send text messages. To have an entire network down is a poor show for the company, and does not bode well for an operator who plans to deliver 4G services in a year’s time. Mobile phones are an increasingly essential part of day-to-day life for consumers and businesses alike, and incidents such as this are simply un-acceptable.  This failure to deliver basic 2G and 3G services, indicates that O2 may have taken its eye off the ball – ignoring the maintenance of its existing service in the rush to deliver 4G.

“For too many businesses, simple practices such as repairing and maintaining existing technology gets overlooked, in favour of newer fads.  Unfortunately this ‘throw-away’ culture is not just wasteful and inefficient, but it is also detrimental to the service the consumer receives – as O2 customers have witnessed in the past 24 hours. Investing in innovation and developing new technologies is, of course, worthwhile; but it is absolutely paramount that companies continue to deliver the level of service which existing customers are paying for and relying upon.  Whilst O2 has paid the price this time round, other network providers following a similar path would do well to take heed of the warning signs, and ensure their existing infrastructure is up to scratch.”

Quite. Take note network operators.

But while this is bad news for MNOs, there is better news, however, for the premium rate industry with PhonePay Plus finding that the UK is the hub of the international PRS business, with consumers spending more per head on such services than anywhere else and with many international companies basing themselves here in the UK.

PhonepayPlus’ annual market review – Current & Future Market for PRS 2011 – published this week underlines how sophisticated and successful the UK PRS sector has become.

In its Annual Report 2011/12, PhonepayPlus, UK regulator of PRS, reveals figures for the first ever PRS industry-wide Registration Scheme. Out of almost 4,000 registered providers, 14% have headquarters located overseas, with providers based in 75 countries including Australia, Russia, China, India, Nigeria, Argentina and the USA.

The attractiveness of the UK PRS market for international providers and investment is underlined by research published in 2011 by PhonepayPlus that shows while the average global PRS revenue per capita (based on 20 bench-marked countries) was 4.57USD, in the UK it is 18.70USD. PhonepayPlus’ annual market review, Current & Future Market for PRS 2011, shows that some providers are capitalising on the ‘borderless’ reach of global sites, such as Facebook, by facilitating mobile payments across a range of international markets. In addition, many UK mobile aggregators are now part of international consortia.

And this is not only good news for the telemedia industry, but shows that there is still a great role for PRS to play in consumer’s everyday lives. While the usual premium rate services continue to generate revenues, the growth in digital interaction, entertainment, commerce and retail are all set to drive even more growth in the PRS sector – if we get it right. The borderless nature of mobile payments on sites such as Facebook and other social media is also offering a great and growing opportunity, especially for the youth market.

This growth in spending via global social media sites and the like is seeing mobile payments boom much as online payment tools – and later mobile pSMS did – around online adult services.

But today the opportunity is very much in the global mainstream and, as such, offers a vast potential revenue source. Using mobile as an easy way for the unbanked to buy through social sites – and commerce sites – quickly and easily is one opportunity. Extending this to more traditional retail is very encouraging.

There is no shortage of mobile payment offerings around, but this increasing keenness among consumers to use PRS for digital and entertainment services offers a huge advantage for retail and commerce. While no one technology for mobile payments has moved into poll position, PRS continues to be grow, as witnesses by the PPP study.

And this is something to rejoice. While PRS revenues always go up during a downturn – driven by the desire to be entertained out of the prevailing gloom, but not wanting to spend too much money – the growing use of PRS to pay for everything from entertainment to media, to goods and services, through social media or through ‘normal’ sites shows that the growth is something much more organic and needs to be capitalized on. So, tell your friends in the industry (except those on O2, they won’t get the call or the text) and we can see these PRS figures rise further still.

But with this good news come some words of caution. While an increasingly globalised and digitised mobile market place opens up new opportunities for business, consumers and the UK digital economy, it also poses new challenges for regulation that has to operate across borders. In December 2011, PhonepayPlus launched an investigation into the operation in the UK market of a particular premium rate malware that was active in 18 countries. The regulator subsequently took robust action to ensure that the malware could no longer operate through a premium rate mechanism and that those responsible for the fraud did not profit from UK consumers.

With an increasingly globalised digital market place comes the increased potential for fraud that operates across borders and in a number of countries simultaneously. Acting to understand and pre-empt such activity, PhonepayPlus will lead discussion about regulation in international markets when it hosts a summit of international regulators in October 2012.

Paul Whiteing, PhonepayPlus’ Chief Executive, says: “When we look at the map of PRS providers active in the UK market, we see a picture of a market that is increasingly global. However, this is a picture still in formation and the opportunities for the UK to lead the way in m-commerce and digital micropayments, such as PRS, are significant. To realise this potential, we need to ensure regulation remains fit for purpose, allowing business innovation to flourish while robustly protecting consumers. We need to do this with an eye, not just to the domestic market, but to a digital economy that is global and indifferent towards state borders.”

UK consumers lead the way in smartphone use, but SMEs getting left behind in capitalising on this

The UK is the most advanced nation in world at using smartphones, using it for everything from keeping in touch with family to doing sophisticated price comparisons and buying things when in shops, finds a study by Ghent-based analysts InSites Consulting. And UK consumers are increasingly adept at using their mobiles while doing other things: 68% use their smartphone while shopping, 48% while watching TV and 34% while sitting on the toilet.

The UK leads the pack with 89% of smartphone owners having a data connection (though it does beg the question, what are the other 11% doing with a smartphone?) and this makes the UK the most mature and sophisticated mobile market assessed by InSite.

Elias Veris, Mobile expert at InSites Consulting explains: “Although on the European mainland the Netherlands are often seen as thé example for smartphone usage, we see that on the mobile front the UK is even more advanced. This is reflected in the number of data connections, but also in the fact that the US and the UK make more use of options such as in-store searching for the competitors’ pricing.”

Staying in touch with friends and family is the traditional motive for using a mobile phone (74%). Those remain the main motives for smartphone users, which is also reflected in the high level of usage of social media applications. Added to that are 2 more typical usage motives: first of all 64% of smartphone users admit that a motive is making one’s life easier by having access to information (e.g. online, but also by constantly having access to one’s agenda); and the second motive is entertainment, e.g. at moment when one is waiting for something.

All this – well maybe not the toilet part – shows what a huge opportunity for any business mobile actually is. The fact that using mobile while shopping comes out so high, shows that mobile commerce, and mobile retail in particular, have really grasped the public’s imagination and, with 64% saying they use a phone for all these data apps because it makes their lives easier, it is surprising that more isn’t done to tap into the market.

Another study, by MoPowered, finds that 89% of small retailers really want to get going with mobile to sate this growing need, yet only a quarter of them have done anything about it. Why? Well they are stymied by the lack of knowledge and information around how to actually do it.

While this pertains purely to the retail sector, I think the lessons can be extrapolated back into any vertical market. While the big players get it – and have pockets deep enough to try it and sometimes get it wrong – smaller businesses, which make up the vast majority of commercial organisations, can’t take that risk. And while they are in the dark about how to do it, they are losing business and pissing off all those consumers who want to buy and interact with them (though pissing the ones off that are sitting on the bog is probably not such a big deal, they are after all ideally placed to be pissed off, if I may be so crude).

What the InSite study reveals is that consumers want an easy life, and want to be entertained while they are doing other things. Of course, the telemedia industry – and telemedia-news and all our products – have long recognised this and we spend the vast majority of our time showing businesses how to make this happen. But they are typically the big boys and girls out there. What of the smaller businesses?

As the world moves away from PCs towards smartphones and tablets – which may well happen quicker that we think: Microsoft’s Surface is here, kindle has sold millions of Fires in the US, Google is putting out a £159 7inch tab later this month and now Apple is pretty certain to be launching iPad Mini towards year end – the way consumers interact with businesses is going to be significantly different from the ‘old’ internet model.

In many cases the PC is still the preferred device: for e-mailing, for surfing, for working and for social networking. But this preference is not always reflected by the actual behaviour: in many cases the smartphone is the only available appliance, so that is the one which is used.

“Users estimate that at least 5% of the time they currently spend on computer and laptop will go to smartphones and tablets in the near future,” says Veris. “I personally think it will be a lot more; at home the tablet will claim a lot more time, and on the road the smartphone will do the same.”

But how do businesses that want to engage with consumers this way actually make it happen? Sure much of the back end is the same, but the experience and, moreover, the payment/purchase side is going to be crucial. Making it simple, affordable and easy to do for small commercial entities is where I believe the real telemedia in m-commerce opportunity lies. And the businesses that want it need our help to make it happen.

At a time of economic uncertainty – not to mention a time of crooks being finally unmasked in banks – everyone needs to get on board with m-commerce and it is up to us, as an industry, to make it happen. 

How mobile marketing is going to save m-commerce

According to a study out this month by Affiliate Window, which studies on a monthly basis its traffic figures, retail sales through mobile have slowed their rate of growth for the first month since, well, selling stuff through mobile started to get on analysts radar. Does this mean that the m-retail bubble has burst? Not really. What it shows is, I think, two forces at work.

First up, I think the general parlous state of the economy, the fear surrounding all our financial futures from our chums in the Eurozone and a slight drop off in hype around m-commerce are all playing a part. But perhaps more interestingly, it seems that what consumers are doing with ‘mobile’ is shifting their shopping habits from the mobile phone to tablets.

If you drill down into Affiliate Window’s figures you find that the iPad has increased its share of sales week on week. In week 20 it accounted for 53% of mobile sales, by week 23 this had grown a massive 11% to 64% of all mobile sales. The rise in sales through the iPad has seen the share of sales through both the iPhone and Android devices decrease significantly over this period. The iPhone dropped from 29.61% in week 20 to 22.90% in week 23. During the same period Android dropped from 13.2% to 9.7%

And despite the drop in the share of sales through mobile handsets, the actual volume of sales through each device increased (apart from Blackbery – sorry kids).

But, while this shake up – if you can call a drop in growth from 7.85% from 7.32% in a month a shake up rather than a blip – may worry some, Affiliate Window finds that conversion rates on mobile of any stripe is growing, hitting more than three per cent for the first time since February.

So mobile shoppers are slightly more likely to actually follow through and buy than they were. And this is, in itself, encouraging for the sector and its raft of technology and service providers. Those that do shop on these devices are buyers.

And the figures don’t take into account how many end up doing research on mobile then buying through another channel, such as in-store or online and vice versa.

One thing that all this does point to is that retailers need to continue to take mobile more seriously and to look at how mobile can be used as a marketing tool. A separate study out this week by Velti, which asked 3000 consumers about being marketed to via mobile, finds that 45% are happy for it to happen, but are likely to only let three companies do it to them. This figure rises to 55% (but still wanting a maximum of three brands to contact them through mobile) when you look at trusted brands.

And top of the list of trusted brands are retailers (25.6%), financial services firms (16.9%) and travel companies (16.5%) who are all well positioned to be a ‘trusted’ brand and exploit the mobile opportunity.

This study shows that early adopters of mobile marketing are likely to be the ones that get the cake and that retailers are ideally positioned to be amongst these companies privileged enough to talk direct to consumers via mobile.

These two studies show that retailers need to do more to engage consumers to shop through mobile and their trusted brand status lends them to it exquisitely well.

Has Apple ruled out mobile payments?

The release of iOS 6 for iPhones and iPads has been greeted with the usual fanboy hysteria usually reserved for the Dear Leaders of North Korea – wailing, wild applause, tears… fear – but within it is something that could well set Apple up in role of gatekeeper to m-commerce, m-loyalty and m-payments.

Passbook is a native app that is built into the OS and is designed to take all the user’s boarding passes, tickets, store card apps, loyalty cards and eventually payments cards, wallets and so on and organises them into a single place.

The initial services it offers are around ticketing and loyalty cards and it cleverly uses the GPS to locate you and pop your ticket, boarding pass or loyalty card onto the phone’s lock screen when you are the place you need to use them.

While the app is not a full mobile payments system, like Google Wallet, as it doesn’t store credit card or bank account details, it is a step in the direction of mobile redemption behaviour and might prove to be a smart road to easing consumers past concerns over mobile payment services.

What it does do is position Apple’s OS in line to be the catch-all needed to make the burgeoning world of loyalty and ticketing on mobile simple to use and manage. But will the company ever add payments to this?

One of the biggest bugbear’s with making m-commerce work properly, is that as it becomes more widely spread and apps that help you do it proliferate, managing it all becomes a nightmare.

Mobile payments is heading in this direction as I type. There are now so many different ways to pay, that it presents a massively confused picture to users and merchants alike. I have, because its my job, downloaded many mobile wallets, loyalty cards and ticketing apps and already it is becoming very hard to manage. Much as the early days of trying to download and manage music was 10 or more years ago.

What Apple’s Passbook does is create a single point of entry and control for the user of many of the things that the phone can be used for out there in m-commerce land. And it also looks, possibly, like Apple setting up yet another throttle on a service sector, just has iTunes has done on music, movies and TV shows and Newsstand has done for publishing. Is Apple poised to turn Passbook into the tool for managing payments? Will it integrate it with iTunes and make it a fully fledged payment tool?

The jury’s out on that, but it is very surprising that Apple hasn’t made any foray into mobile payments with the launch of iOS 6. Everyone was expecting something and everyone still thinks NFC will feature in iPhone 5, but I am now not so sure.

Were mobile payments – in the sense of using your phone to pay for things in shops – a real goer, then Apple would be on board with something clever. The fact that the company isn’t makes me start to think that maybe, just maybe, mobile payments isn’t ready to go yet – and may never be.

Consumer opinion – as I have opined here before – is not really behind it, and despite a raft of launches around it over the past few months, no one is really doing mobile payments. Everyone seems happy with cards and phone being very separate. Perhaps we have a solution for a problem that doesn’t yet exist?

What does the age of convenience have in store?

With the Euro 2012 football championships in full swing, it is hardly surprising that sport – particularly the beautiful game – is dominating the telemedia news this week.

O2 Media has found that 79% of sports fans use mobile as their first port of call for keeping up to date with scores, fixtures and team news around the championships and, perhaps unsurprisingly, its mostly men who do it.

What is perhaps surprising is that 73% of these football mad men will be also using their devices to text and call friends while the games are on to talk tactics and share their highs and lows, as well as wading in with their armchair manager input on Twitter and Facebook.

While much attention is focused on how mobile can be used to create in-game betting opportunities and high level apps abound to do everything from watch different camera angles to ordering a pizza while playing a football game, good old texting appears to still be one of the key areas of engagement for fans with each other.

As has been said many times in Telemedia-news, despite all the tech, text is still king. And this is an opportunity that is woefully overlooked by many in the wider mobile industry.

This news is compounded by a study by telco billing company MACH, which has found that more than a third of smartphone users are opting to pay for apps and services within apps – sporting or otherwise – using direct operator billing.

The reason why, despite everything else available that fans are texting and app users are using direct operator billing? Simple: convenience.

And this is something that needs to be capitalized on. The more convenient it is to do something the more likely people will do it. Which means more revenues – even if payouts are higher.

This convenience factor – as well as price issues – is borne out by Orca’s YouGov-conducted poll of consumers who suggest that 08 numbers as a means to contact are damaging brands as the cost of calling them from mobiles in particular, but also landlines, is at best opaque. Orca, naturally, is championing voice short codes as a way around this – much as the wider industry is trying to push Payforit4 for on-bill payments – but there is something in what is being proposed. Even the staid old BBC has used voice short codes to enable mobile voting on its flagship Saturday night talent show The Voice. A ringing endorsement indeed. If that wasn’t enough, Big Brother over on Channel 5 is also now offering voice short code voting too, through Spoke (formerly Telecom Express).

Again, voice short codes play into the need for convenience. Not just that they are short and easy, but the fact that you know what they are going to cost you is itself a convenience.

What all this means is that, after a decade of development of new billing tools, new ways of creating interactivity and in trying to create ways to do in-app billing, the old ways are in fact being looked at by consumers as being the easiest.

So why isn’t more being done to make these things part of the mainstream fabric of the mobile ecosystem? You never hear Apple talk about voice short codes or Payforit4. You never see banks or app developers talking up these tools for purchasing things. Even with retailers bemoaning the fact that one of the biggest limiting factors to getting mobile retail working in store is a lack of a general and easy to use payment mechanism, operators are very slow to react.

But as the MACH, Orca and O2 Media surveys show, consumers are starting to vote with their fingers and seek out the easiest and best ways to do things and woe-be-tied those that don’t start to embrace this groundswell.