Submitted by Mike Grenville on Mon, 18 Feb 2008 17:35

Carrier off-portal revenues could double in three years to make operators $8 billion from off portal content in 2011 suggests research by mBlox.

Mobile content players have been struggling to get a viable revenue and access deal from mobile operators. Part of the challenge has been that operators have seen themselves as the sole conduit of content and services to 'their' customers and had little interest in supporting the delivery of content from other sources. Now some research by mBlox, conducted in conjunction with Cambridge University's Judge Business School, should be a help in raising their profile within mobile operators. The research found that new revenue will principally come from three newly emerging areas: WAP billing, sender pays data and handset/subscriber data. These services will help off-portal content and service providers to meet growing consumer demand for rich mobile entertainment on the mobile internet. It examines the revenue flows through the various payment mechanisms (including mobile advertising) to the content publishers, and then looked at how they spend their revenue on various costs including advertising, consumer data, SMS for service messages.

It found that carrier revenues will grow to US$8 billion by 2011 compared to US$3 billion in 2007 from providing value added and enabling services to off-portal publishers. Currently, the majority of carriers' off-portal content revenue comes from premium SMS, SMS and short code rental.

The main revenue and drivers the study found were:

• WAP billing - $2.5 billion: Using the power of the mobile internet, WAP billing will create a universal two-click charging model with transparency, which protects the consumer and enables business models for a wide range of content including video, music, games and advertisements.

• Sender-pays data - $1.7 billion: Sender-pays data is the key to unlocking the mass market for rich media to the mobile phone. This allows for revenues to be distributed throughout the value chain while protecting the consumer from unintentional bill shock. By increasing consumer trust through transparent pricing of downloadable content, the market will unlock additional revenues for the industry.

• Handset and subscriber data - $1.5 billion: Handset and subscriber insight information will provide a series of data look-up services that will provide insight into the handset and its owner. These new services are crucial for the effective distribution of content and the development of many applications, including mobile advertising and location-based services. Carriers either have already or can infer these data, and can charge for them thanks to their indubitable value to content providers. The key to making these services available will be a suitable approach to privacy, which of course, will vary from country to country.

"The off-portal community is looking for enablers to help make their services richer, more personal and easier to use" said Andrew Bud, executive chairman of mBlox. "Carriers can make significant revenues from these services, as this study shows. It is essential that carriers are a part of this value chain to allow for continued investment into mobile infrastructure and new services."

Carriers have not always been comfortable with facilitating off-portal content and these findings highlight the growing value of the off-portal community to mobile carriers.

One of the challenges these off-portal players have had is that there has been little recognition of the role that these players can have in delivering value to mobile consumers but also of the revenue they bring. While in the scheme of things the revenue they bring make not be big bucks to operators, it has high margins attached to it and deserves more attention and support from operators. It's time for operators to recognise the value to them of off-portal suppliers and to provide a framework for them to flourish.