That’s ISP as in integrated service provider.
In a passionate speech that woke up the post-prandial audience at MEM in London yesterday, MBlox’s executive chairman Andrew Bud desribed a vision of how all might live in harmony, or something approaching it, in the direct to consumer value chain for mobile content.
The existing chain has grown up, he said, with aggregators and ISPs linking between content and media owners and carriers, because, from the content providers’ point of view “dealing with carriers is a nightmare”. Whilst the carriers decided “long ago” that they hated dealing with content providers. This chain would increasingly include entities he terms “mobile impressarios”, bringing the major brands back to the mobile market. Examples of these impressarios are New Visions (which works with transaction engine mBlox and Bluestar Mobile).
Bud said that Premium SMS was an “absolutely absurd” solution for mobile content that has “succeeded brilliantly”. PSMS is now responsible for a $4billion business in Europe and is “single-handedly” powering the US’ content market. Its relative simplicity and micro-scale have made it a winner, he said.
However, it has drawbacks. In some pre-pay markets, billing success for PSMS is as low as 25%. Mainly because users are buying content with SIMs that don’t have enough credit on them to complete the transaction, and getting away with it before the operator catches on to what’s going on.
There’s also a problem with bill accountability, he said. With a lack of a “bill narrative” for any PSMS purchases – just a single entry in a bill for all premium services.
But PSMS had the virtue of showing mobile operators that if you have a good enough billing mechanism you don’t have to vertically integrate (ie play at all levels of the value chain) to extract value. It also showed that the higher the net revenue share an operator gives back, the higher the ARPU from content, Bud claimed.
“This means it’s in a carrier’s self-interest to increase revenue share, because the market grows faster than the associated loss of revenues [ie the money they have given away]”
The new content billing, he said, puts a box in front of the operators’ billing system, giving separate APIs (rather than APIs directly into the operator’s own billing platform) to content partners.
Calling for a new model for “content billing”, Bud said the industry needed a mechanism that included control over the user interaction (including accountability and corroboration between parties so there was a data trail as to who had actually bought what), as well as over the relationship between carriers and the content ISPs and providers. One without the other, he said, was useless, and indeed open to fraud.
Germany is one example where the market has a fully framed billing system, incorporating controls both on the user side and on the carrier/ merchant side.
The other aspect of this new content billing will be wholesale data – allowing partners to resell data services to the market. Vodafone, with mBlox’s transaction engine and New Visions as the content partner,has the only example globally of wholesale data, Bud said.
Wholesale data is important because it takes (or rather hides) away the “unknown” in the user’s bill – the cost of the data transfer.
“When that comes together it will open up a whole new market. It’s not going to (just) be a ringtones and sex market any more,” Bud said.
And with this new market will come power to a new specialist, the impressario, and to the brands and media companies themselves.
“At the moment the power is with the specialist mobile ISPS, but power will migrate to brands and impressarios and the ISPs will vapourise.”