Wireless

August 3, 2004
The currency of content

NEW DELHI -- Mobile users are increasingly becoming reliant on their phones to do more than merely communicate with their family, friends and business associates. Service providers are increasingly engaging mobile users to vote on their favorite TV shows via SMS. Providers and carriers worldwide are realising that sending customised messages, such as an SMS on cricket scores, can build loyal and long-lasting relationships with customers. Being mobile and still staying connected has become of vital importance to the growing consumer base.

As these next-generation services continue to penetrate the market, service providers are asking themselves how they can deliver value to their customers while increasing revenue. With consumers using their mobile accounts as payment instruments, carriers are finding new ways to drive revenue by offering content services. In order to capture these content revenues, mobile operators need to position themselves as the lead partner in the equation.

Carriers are finding that by managing the partnership and revenue, they become more than a delivery channel and instead, a revenue generating partner. By driving agreements with different partners to deliver content, service providers can garner more control of revenues and earn a higher percentage of the profits generated from content they offer their mobile users.

CSG Systems' initial market findings through its mobile operator customers and involvement in industry forums such as PayCircle, the consortium that sets industry standards for mobile payment, indicate that the initial wave of content services are seeing fast adoption rates. Consumers have increased their appetites for downloading ring tones and screen savers, emailing photos to friends and family, and voting via mobile phone. By increasing their interactions with the tools available on today's mobile devices, operators are quick to seize the revenue opportunities associated with these new services.

A recent report by Strategy Analytics notes that with the quick adoption of these content services, the global wireless industry will grow from $46 billion this year to about $114 billion by 2008. In addition, the report predicts that carriers will retain almost 60 percent of the 2008 revenue total as they continue to dominate the value chain.

Content value chain
Content has created a new value chain where content providers, advertisers, clearing houses and network operators all play a role and retain a portion of a single transaction value. As such, a new business model has emerged where the simple "one-to-one" operator-to-customer relationship is now a "many-to-many" relationship. The business model that was based solely on profitably processing customer contracts involving relatively static portfolio tariffs and discounts has been replaced. Business now demands the management of complex multi-party partner agreements with dynamic and partner tailored agreements.

A business solution is needed which can manage these agreements and settlement with the appropriate parties. This emerging business model finds network operators responsible for the distribution of the shared revenue to partners from a content event that occurred using its network. Network operators are partnering with content providers, content aggregators and portals. The portal is most often responsible for creating and managing the agreements with the content providers while the network operator manages the settlements system. If operators do not initiate partnerships and arrange revenue-share agreements with content providers, operators could be cut out of the revenue loop. Managing the end-to-end agreements with all parties is key to the operator's success.

Profitably providing content now requires the successful management of the content value chain of agreements and partner relationships. Where agreements one, are multi-party; and two, are constantly negotiated, re-negotiated, re-calculated and re-settled, and three, must be innovatively crafted to compete for partner accounts with highly partner specific content identification, event correlation, flexible aggregation, multi-part rating and sharing rules where partner relationships demand that one, there is full control of margins, accounts receivables and accounts payables, two, the same level of quality care and services now only demanded by the final consumer.

A real-time solution
Many operators have relied on rudimentary methods such as spreadsheets and to manage a limited number of partner agreements. As the complexity and volume of agreements grows, spreadsheets will no longer be an effective tool to manage such relationships and operators will need to look to purpose-designed high partner revenue settlements solutions.

By using a solution that reflects a real-time, flexible approach, carriers can track revenue and the quality of service delivered to their customers. Revenue-sharing agreements with content partners must be able to take into account ever evolving real-world situations, such as quality of service and track revenue-splits under these scenarios in real-time.

According to industry analyst firm Yankee Group, "Mobile operators can foster a mobile commerce economy by providing a billing and settlement platform for third-party developers, and by creating a clear distinction between free and premium content." To do this, operators must first be able to track, measure and capture the revenue.

Operators require partner relationship management platforms. This concept goes beyond simple revenue sharing, encompassing wider aspects such as partnership agreement management, contracts, service level agreements, margin management, receivables and payable and partner self-care.

The goal is to increase the ARPU and decrease customer churn by assisting the quick development and supply of new products and services to customers. However, operators will not be able to provide market-leading content unless they can successfully, nimbly and profitably compete for partner relationships. This can only be achieved through managing multiple partner relationships and service agreements according to flexible business rules and accepting revenue from new content based services.

The ability to provide tight trace ability of events, such as accurate and detailed profit and loss calculations, will be key to an operator making its content services a profitable business stream and remaining afloat in a maturing market. Reconciliation of financial payment is critical for all partners in the value chain. As MMS and content-based services evolve, the demand to store business agreements electronically and in one place, or on one platform, is essential in enabling all parties involved to dynamically manage usage and payment reconciliation. This will allow mobile operators to exploit possibilities in the new value chain by managing multiple partner relationships and SLAs according to flexible business rules, accepting revenue for new content-based services, and allocating receivables and payments across all partners in a given distribution chain.

A revenue settlement solution determines the correct distribution of payment to the partners that were involved in the end-to-end service. Revenue sharing rules can be applied to the partners based on flat charge per transaction, percentage charge per transaction, volume-over-time based agreements, or a combination of all three. Such a solution enables operators and their partners to view their agreements and apportioned revenue on-line, via the Web. In addition, partners can witness content-based transactions being processed.

As 2.5 and 3G networks carry new services such as MMS, content will become a profitable new revenue stream for mobile carriers. In order for operators to truly capitalise on these revenue-generating services, they must be able to manage these revenue-share partnerships with real-time technology that can move as quickly as consumers make transactions.

The author is the CTO, Asia Pacific & China, CSG Systems.