Just another ad agency?

The three UK operators who want to form a joint venture to provide mobile commerce services to interested parties failed yesterday to come up with a clear answer as to why they pressed ahead with the JV without asking 3 UK to take part. And that’s not the only unanswered question surrounding the venture, despite a lengthy press conference call.

The companies cited scale and reach as the reason for them forming the joint venture, adding that a co-ordinated approach would speed up handset development by demonstrating and providing a clear market need. On a conference call to journalists the three UK CEOs said that banks that want to launch mobile financial services would benefit from having one point of contact where they could mobilise their applications. Similarly, ad agencies and brands could access cross-operator campaigns at a central point.

So if scope and scale are important, why marginalise one the country’s largest players?

Ronan Dunne, CEO of Telefonica UK, said that 3 UK would be able to join as a customer, but all three CEOs could offer little justification for not inviting 3 UK to join as co-owner, beyond saying they wanted to be able to move as quickly as possible. But would the addition of one more operator really have applied such a brake?

“Let’s go and get the business open,” said Tom Alexander, CEO of Everything Everywhere, “and if other partners can bring value to the table and create value to drive this forward then we would consider that.”

Later on, Guy Laurence, Vodafone UK’s CEO, when pressed on the matter said that he thought journalists should “get off the case of the whole entity thing”.

So, getting off the case of the “whole entity thing”, here are some more unanswered questions:

WHAT WILL BE STANDARDISED – AND WHY?
The operators said they wanted to work to a common standard in NFC and payments — to ensure a common consumer experience – so that a bank that wants to create a mobile wallet service, for instance, could approach one entity, and get their app put onto as many phones as possible, in one hit.

But the operators did not say where they see the need for standardisation. There has been, of course, a great deal of standardisation work around NFC. For instance, the GSMA supported ETSI’s adoption of a standard as to how the secure element on the SIM interacts with the NFC chip (Single Wire Protocol) three years ago.

An O2 spokesperson told Mobile Europe:
“Standards have options so a common approach ensures the standards are implemented in a single way.

“The standards that exist for NFC have been standardised in detail for some products and services such as payment cards but less so for others such as coupons and vouchers. By working together the mobile operators aim to progress faster than may arise if solely left to standards bodies.

“A common implementation approach also supports a positive consumer and retailer experience. The cashier’s experience should be the same when handling coupon redemptions for a consumer irrespective of their mobile operator.

“When we talk about wallets, we mean services available online via mobile and pc in addition to NFC. A common approach will ensure we can provide a consistent core consumer experience, whilst maintaining the ability for mobile operators to continue to differentiate from each other.”

And yet… it seems to me that if operators want to commit to a standard, they don’t need to form a JV to do so. They just need to agree to a standard, and specify their needs accordingly to the device manufacturers. I’m sure the GSMA would be more than happy to help.

So my take is that the common platform/standards element of this JV is as a result of the JV, rather than a cause of it. It makes much more sense to view the JV as a commercially driven venture that has been formed to make sure the operators remain present in the commercial interactions between brands, banks, agencies and the mobile customers. And to sell advertising and marketing inventory.

By combining, the operators create a market that is potentially greater than the sum of its parts. So instead of making four deals, a brand makes one. That’s it. But remember, we’re not talking about a single app or service here. There will still be O2 Money and O2 More and all the other operators’ services at the sales end. 

HOW TO SELL?
There’s not a great deal of clarity yet on how the operators will co-opetite with the JV. An O2 spokesperson confirmed to us that the aim of the operators  “is to provide a single contact point for advertisers, media agencies and retailers looking to reach consumers on their mobile phones. What we can say is that the JV will be a full function JV with its own dedicated staff.”

On the call, the CEOs also said that the operators’ individual offerings would compete, but based on a common platform. So how will an O2 More account manager deal with a client? Offer them the O2 inventory for a certain price, or the JV reach for a bit more?

WILL IT GET REGULATORY APPROVAL?
It should do, but annoying one player, 3 UK, that has the resources and the will to make trouble, wasn’t smart.

WILL THE MARKET BUY OPERATORS, OR GOOGLE?
The biggest question of all is will the JV help stave off the increasing, and fast moving, over the top threats in payments and in advertising? It’s not just Google, although of course the company has great potential to tie up the same payments/loyalty/marketing loop as operators, even if it doesn’t have operator inventory, it still has a lot.

This is a positive announcement from the mobile operators. The operators claim that the JV is timed just as phones and the payments infrastructure comes to market. A co-ordinated, open approach stands a chance of creating a bit of “telco-ness”  – scale, consistency, reachy – in a positive manner. But there are still plenty of questions.

Keith Dyer
Editor
Mobile EUrope

 

LINKS:

http://mobileeurope.co.uk/news/news-analysis/8804-neul-launches-m2m-network

http://mobileeurope.co.uk/news/news-analysis/8809-french-government-opens-4g-auction

http://mobileeurope.co.uk/news/press-wire/8805-gsa-reports-40-percent-increase-in-lte-user-devices-in-three-months

http://mobileeurope.co.uk/news/press-wire/8807-ericsson-to-buy-telcordia

http://mobileeurope.co.uk/news/news-analysis/8814-amdocs-takes-out-policy-with-bridgewater

http://mobileeurope.co.uk/news/press-wire/8803-holcombe-steps-upstairs-at-syniverse

http://mobileeurope.co.uk/news/press-wire/8813-vodafone-group-completes-sfr-sale