Operators stymie mobile commerce, Valista claims

21 Sep 2006

Mobile operators are charging merchants up to 40-50pc of transactions for content and services and practitioners believe this could impede the growth of digital commerce, Irish m-commerce firm Valista has claimed.

New research the firm carried out at this year’s Mobile Content World in London found that nearly two thirds of respondents felt that the cut taken by mobile operators is too high.

Roughly the same number of respondents (58pc) believe that in three years’ time less than 25pc of total operator revenues will come from mobile content.

Over 65pc of merchants and content providers believe that direct-to-bill charging will replace premium SMS in the short term.

“Currently, operators take the greatest share of mobile content revenue but the distribution of power could shift, particularly when the major media moguls secure their foothold in the marketplace,” said Arlene Adams, vice-president of Valista.

“Consolidation and the entrance of major consumer brands will shape the future value chain and operators need to balance recouping revenues with the desire to maximise their share in the long run. In this regard, operators need to look at more innovative merchandising and marketing tools to encourage their consumers to buy more.

“In addition, a payments model which lowers or eliminates revenue leakage and allows end-to-end traceability for transactions and the parties involved will allow operators to look at lowering their fees while encouraging growth in the content market,” Adams said.

Good news for the industry came in the finding that mobile TV and video downloads will be the most popular forms of content over the next few years, an opinion that mirrors recent analyst predictions.

Broadcasting rich content will see a move from lower-value payments to higher-value transactions.

In this regard, operators need to protect their brand and look at personalised and compelling content to grow average revenue per user (ARPU) and drive off competition from more traditional payment schemes.

Less positive for operators was the finding that only 15pc of content purchased will be part of an ongoing subscription model.

What may make uncomfortable reading is the fact that, according to the survey’s respondents, mobile operators will not see content purchases making up for falling revenues.

More than half of those who contributed (58pc) believe that in three years’ time, less than 25pc of total operator revenue will come from mobile content and 15pc believe that it might drop as low as 10pc.

This figure is interesting given that the mobile content and entertainment services market accounted for less than 4pc of total mobile service revenue and less than 19pc of non-voice revenue in 2005, according to research firm Analysys.

Another figure quoted by iGillott Research predicts that mobile content will account for 40pc of operators’ revenue by 2009.

By John Kennedy