Whither mCommerce?

(Via VentureBlog:)

“In Europe or Asia, a smart person with a good idea can have an exciting idea on your phone by nightfall. They just plug into the existing payments infrastructure and receive 90% of the benefits of whatever consumers do (carriers take about 10% for facilitating the transaction). Anything is available — horoscopes, comics, all manner of fads and fashions, shopping, tv, movies, maps, and more. Even adult entertainment is common on the phones.

Consumers accept that carriers are just that “carriers of voice and data”. They’ve been making money by providing the platform upon which all of the applications are built. Unlike the wired world, available radio spectrum means that there will always be a limited number of companies providing service, and they can compete on reliability and data speed.

In the US, by contrast, getting an application on a carrier’s service is like pulling teeth. One of our portfolio companies just went through the process — it took over a year to negotiate the deal and put the right equipment in place. The carrier rolled it out in a controlled and slow manner to test every detail — after all, they don’t want their customers to have a bad experience. They are selling a “complete experience” to their customers, not just a platform for others to provide services.”

That is a view that I cannot really support from a european point of view. Look at Vodafone Live or T-Zones and you’ll know what I mean. Control is the name of the game. Even the phones are being branded to lock customers to the portal, i.e. hardwired buttons to operator portals and operator specific firmwares that don’t allow customers to change the WAP configuration.

Operators are also quite hesitant to let applications into their service – you need to conform to their standards, there are HUGE manuals telling you exactly how to do that.

In the payment space, it’s even worse. With premium SMS payment, carriers take up to 50% of the transaction, and for a small entrepreneur it’s completely commercially unfeasible to use that, as they also ask a high basic fee. “Real” mPayment has been held up by operators for about 4 years now. The technology is here, umpteen consortiums and standards group have been founded, and all the carriers do is announce 10-Euro-payments by end of 2004 (PDF). Great move.

As for operators being data pipes, germany must be one of the most expensive countries. Nearly nobody uses GPRS for data or email, as you just can’t afford it – remember Joi Ito’s phone bill.

So, who’s going to drive mCommerce under those circumstances???


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