Friday, 29 June 2007

An Enthusiast's Wish List from the 800lb Gorillas

Some time ago now, I wrote a paper for the GSMA outlining 10 areas where co-operation from the operator community would go far in helping third party application developers get to market.

I hear on the grapevine now that the operators are returning to this topic and being pushed - for the first time - by their marketing teams to be pro-app. It's nice but I think with greater browser functionality and the oncoming mobile widget world, they'll be too late.

In an case, I think the list still stands. Comments welcome.

10 Steps to Mobile Data Profitability

This is a brief for the operator community from the third party world designed to improve the mobile data ecosystem and drive revenues and take-up for all parties. The paper is relevant for a number of purposes but does concentrate on the market for on handset applications.

The principle behind these suggestions is that there is a huge potential for the mobile data market, but, that the potential will only be reached if the operators embrace the off portal community. Off portal to date has been starved of investment and has happened often in spite of the operator rather than with operator aid. To use a familiar analogy, while there are many issues with the ringtone market, there is a core truth that the market is so much larger, including the operator share, for the support given third parties to deliver direct to consumer.

It should be noted that this is a paper to highlight potential roadblocks and raise discussion. It is not intended as a paper to resolve all of those issues.

(1) Blocking installation of 3rd party J2ME applications

Some operators require their own certificates for third party Java applications to be installed on their handsets, or for such applications to access key APIs (e.g. Internet connection, file system access...).

The US GSM carriers seem to have this policy across all their phones, whereas in Europe, this rather randomly implemented on certain operator / handset combinations.

There is typically no way to get the required certification without a lengthy process of developing a commercial relationship with each individual operator concerned.

It would help greatly if applications could be certified with a single third party that would enable the application to be installed on all operator handsets.

There is a piece of work here which is also to set the rules and guidelines for a third party to be allowed the privilege of certification. Any reputable third party application provider would support this mechanism. All are currently suffering from the persistence of fallout from ringtone subscription sales – and yet the operators continue to allow this pricing policy to exist in the market. Stronger controls and guidelines are needed.

(2) Inconsistent Set-Up of Internet Settings on the Device

Some operators are sporadic in their deployment of devices with the correct internet settings (and in addition in the case of Sony Ericsson devices in the deployment of the correct java settings).

Without internet settings on the device connected apps such as multiplayer games cannot establish online connection to the detriment of the user experience. The remedy for this is relatively straightforward. However, it is awkward for the customer and creates a bad impression of the application, device and carrier.

Our estimates indicate that 15% of all shipped devices are deployed without the right settings. In the majority of cases these relate to pre-pay customers but not exclusively.

It would be extremely useful if operators were to ship devices with the correct online and java settings – or even better……

(3) Single APN

End users are confused by the need to configure different APNs for different services. It would be much simpler for subscribers to use a single APN to access all services (whether from the operator or from a third party), and for access to this APN to be provisioned automatically for all SIM cards.

This problem can be exacerbated by operator call centre staff, many of whom still don't understand the difference between WAP and Internet access, and insist that the caller has full Internet access if they can use the WAP browser. It is a simpler brief for the operator internally if there is one simple answer.

This would also help avoid the instance when if one application requires the Internet APN and another requires the WAP APN. Users who want to use both applications must go through a complex manual process for switching between the two APNs.

Equally, if operators were to consistently upgrade to WAP2.0 then there would be no need for third parties to search out a different more suitable http APN; they would simply be able to route through the same WAP gateway as for the operator services.

(4) Realistic Pricing for Internet APN access

Some operators charge very high prices for data connections through their Internet APNs, including minimum fees per connection and exorbitant per-MB data rates.

  • The cost of uploading a 200 KB photo to the Internet at using ShoZu on Cingular's $0.01 per KB tariff is over €2.
  • The cost of downloading a 5 MB video on the same tariff would be over $50.
  • The cost of backing up a contact in the phone's address book when roaming on Movistar in Spain would be over €1 (due to minimum connection fees and high roaming rates), even though less than 1 KB of data is transferred.

These data rates discourage any usage of Internet applications. More reasonable data pricing would lead to much higher levels of usage, which would benefit all parties.

In particular, it is worth pointing out the large disparity between pre-pay and post-pay customer tariffs. Open internet access costs Vodafone UK pre-pay customers £7.50 per MB compared to £2.35 per MB for post-pay, meanwhile, O2 aggressively block their prepay customers from open internet access.

The following recommendations are made/requested:

- same pricing for post pay and pre pay

- the existence of an all you can eat bundle on all networks

- lower per MB data run rates (particularly given an actual cost of 4 cents per MB

- implementation a single wholesale data approach as in point below

(5) Standardised Wholesale Approaches – Part One

There is currently no consistency between operators approaches towards wholesaling data to third parties. If we follow the analogy of the ringtone market: the market did not really explode (and the operators did not make any meaningful money) until third parties were provided the tools to structure their own pricing. One might imagine the same will apply to mobile data.

To take the UK as an example:

- Vodafone will provide data on a rate of £3000/10GB to third parties linking in to a zero rated APN

- Orange will not do this but will provide a zero rated APN if there is a revenue share to be gained from the sale of the content being delivered. Revenue share to be negotiated.

- Other operators are willing to discuss and deliver according to bespoke discussions but do not have a standard model.

This structure makes it impossible for a third party to provide a consistent consumer proposition. In the UK alone there are over 30 different potential price point for the data within a connected application.

The recommended route would be to align around the approach from Vodafone UK (even if the wholesale pricing differs per operator), where the incoming internet IP address is dynamically given a zero rating through the existing APN setting.

A further recommendation would be to ensure that the most reputable aggregators are given the ability to establish themselves and create a market for third parties to connect to the zero rated data.

(6) Off Peak Data Rates

A second approach to be standardised amongst operators would be the creation of an off-peak and on-peak data rate for GPRS traffic, ideally both retail and wholesale. Certain connected applications have the ability to download in the background, overnight when the data usage is less than ordinarily the case. This could be used as a means to download chunky data types such as video clips to avoid network congestion- which, while not an issue in the short term, may come to be so at a later stage.

(7) Standardised 3rd party billing solutions

Several operators have expressed interest in billing for connected application usage on a per-event basis or timed basis, rather than per-MB. This is certainly feasible but there is a challenge in that there is no standard approach to how to integrate into an operator.

Each operator requires a custom per-event billing solution to be designed and built. A standardised approach would allow creation of reusable components, making per-event billing solutions much cheaper to design, build and maintain.

(8) Access to Off Portal Sites

There needs to be a consistent approach by operator to supporting discovery of off-portal applications. If we agree that there is a body/bodies which exist to facilitate certification of a connected service, then there should be no restraint on an operator providing a link to that service for the end user.

Ideally, each operator will have a programme to install a selection of apps at point of manufacture but at the very least provide both a web based and mobile based access to available applications for the user to browse.

Some operators are experimenting with adwords type searching of these off portal applications. This is acceptable but a free directory, classified appropriately should also be available to the user.

(9) Age verification and whitelisting

Despite early positive PR for the age verification systems, third party evidence (from those not involved in the porn industry, whose customers will typically be prepared to make a big effort to access content) is that the user experience of age verification varies widely from operator to operator and is often poor, which of course represents a significant barrier to usage.

In addition the practice of whitelisting/blacklisting wap URLs is also not only inconsistent from operator to operator but inconsistently applied within operators: i.e. it is possible to be on a (agreed with operators) non-adult shortcode for payment/provisioning and yet have blacklisting applied to the wap service.

In addition policies appear to change (or perhaps the application of them) and there is no notification of blacklisting to content owners. Finally, blacklisting for no good reason (eg as applied by a robot content reader) can represent a severe restraint on trade about which content suppliers can do little, currently.

Ideally operators should allow content suppliers to police their own age verification (as long it meets operator standards) and create clear lines of communication for the whitelisting process, i.e.: a) tell sites why and when their listing has been applied b) provide an appeal procedure with third party independent involvement in decision making process.

(10) Rendering on device

There should be a consistent standard across devices and operators to allow users to quickly access a customised top menu, configure start page keys or find quick (two click or less) access to a My Own or My Applications folder. Too frequently client applications are lost by users or fall out of favour because they are not visible. This increases the investment in CRM and reduces the revenue to the operator community.