Direct carrier billing has the potential to replace the revenue that premium
SMS provides and become an alternative to credit cards and bank-based payment
methods.
Consumers are increasingly purchasing mobile content and apps, but most of
this spending is with non-operators. This report discusses the potential that
direct carrier billing (DCB) has to enable operators to insert themselves into
the value chain and capture a significant proportion of this revenue.
This report provides:
- analysis of the mobile payments ecosystem, and the role played by DCB
- forecasts of DCB revenue for operators worldwide from 2012-2023
- data from Analysys Mason's report The Connected Consumer Survey
2013:mobile content and applications
- discussion of factors that drive demand for DCB including consumer app
usage trends
- an overview of the challenges that inhibit the growth of the DCB market
- use cases of companies that have implemented DCB.
COMPANY COVERAGE
Case studies of the following companies and their DCB deployments are included
in this report.
About the authors
John Abraham (Analyst) is a member of Analysys Mason's Telecoms
Software Research team and contributes to the Revenue Management, Service
Fulfilment and Customer Care programmes. He has more than 5 years' experience
in the telecoms industry. He has worked for a global OSS vendor and
implemented revenue management solutions for Tier 1 telecoms operators in
Europe, India and the Middle East. John joined Analysys Mason in early 2012.
He holds a bachelors degree in computer science from Anna University (India)
and an MBA from Bradford University School of Management (UK).
Justin van der Lande (Senior analyst) leads the Revenue Management
programme (formerly Billing), which is part of Analysys Mason's Telecoms
Software research stream. He specialises in business intelligence and
analytics tools, the functionality of which cuts across all of the research
programmes in this area. He also provides project management for large-scale
projects within our Telecoms Software research. Justin has more than 20 years'
experience in the communications industry in software development, marketing
and research. He has held senior positions at NCR/AT&T, Micromuse (IBM),
Granite Systems (Telcordia) and at the TM Forum. Justin holds a BSc in
Management Science and Computer Studies from the University of Wales.
Ronan de Renesse (Principal Analyst) is the lead analyst for Analysys
Mason's Mobile Content and Applications and Mobile Broadband and Devices
programmes. His primary areas of specialisation include rich media
applications and services on mobile, application store forecasting, mobile
broadband, tablets and smartphone adoption. Ronan has been analysing the
telecoms and media industry since 2003. Prior to joining Analysys Mason, Ronan
was a Senior Analyst and the Head of Mobile at IHS Screen Digest, where he had
overall responsibility for the Mobile Media Intelligence service and all
related activities. For the past 5 years, Ronan has led the conception and
development of various mobile media and technology forecasts, including those
for mobile video, mobile music, mobile games, mobile apps, mobile broadband
and smartphones. Before becoming an industry analyst, Ronan was an academic
researcher at the Centre for Telecommunications Research at King's College
London. He holds a PhD in Telecommunications from King's College London.
Table of Contents
- 5.Executive summary
- 6.Executive summary [1]
- 7.Executive summary [2]
- 8.Recommendations
- 9.Recommendations [1]
- 10.Recommendations [2]
- 11.Market definition
- 12.Direct carrier billing is only one of many mobile payment options but
offers the best opportunity for operators to generate mobile revenue
- 13.Direct carrier billing provides another payment option at checkout
- 14.Process flow between the entities involved in direct carrier billing
- 15.DCB has to support a multi-channel delivery ecosystem that is changing
rapidly driven by technology, economics and regulations
- 16.Business environment
- 17.The business environment in 2013 is encouraging mobile operators to
develop new value-added service revenue
- 18.Mobile payments are set to grow as the world continues to move to
mobile devices - 400 million European users will pay for mobile content in 2016
- 19.In developed markets, operator revenue from voice and messaging is
declining, as is their share of revenue from mobile content and apps
- 20.The potential market for DCB addresses not only the ‘unbanked',
but all users of smartphones worldwide
- 21.Half of respondents aged 18-34 spend money on apps, of which 28% spend
more than LCU5 per month
- 22.Operators should initially target contract customers because they are
more likely to have smartphones and margins are better
- 23.More than half of respondents with a smartphone have never bought an app
- 24.DCB has much lower drop-out rates than other payment methods, so
although settlement rates are lower, overall revenue can be higher
- 25.Direct carrier billing opportunity outlook
- 26.Unlike traditional payment methods, DCB allows operators to capture a
proportion of customer spend
- 27.Different national regulations present challenges to DCB implementation
- 28.Operators' DCB revenue will grow significantly during the next 10 years
and will replace PSMS as the payment option for operators
- 29.Market drivers and inhibitors
- 30.Slow growth in mobile revenue increases the need for operators to
access OTT markets - and DCB can help
- 31.DCB alleviates consumers' concerns about the security of payment
systems, while addressing their preference for a single bill
- 32.Difficult economic conditions, the prevalence of credit cards and
online banking, and the limitations of DCB offerings hinder growth...
- 33.... as do the cost, lack of awareness among consumers, lack of
standardisation, and policy and legal challenges
- 34.Use cases
- 35.Virgin Media offers direct carrier billing as a means to pay for
digital content
- 36.SFR implements direct carrier billing as a means to generate revenue
from the burgeoning mobile apps market
- 37.Non-operators such as Facebook and Skype also offer direct carrier
billing as a payment option
- 38.About the authors and Analysys Mason
- 39.About the authors
- 40.About Analysys Mason
- 41.Research from Analysys Mason
- 42.Consulting from Analysys Mason
List of figures
- Figure 1: Operator revenue for direct carrier billing, worldwide, 2012-2023
- Figure 2: The mobile payment ecosystem
- Figure 3: Segmenting mobile money
- Figure 4: The entities involved in DCB process flow
- Figure 5: Typical DCB process flow
- Figure 6: DCB ecosystem relationship
- Figure 7: Mobile handset content and apps subscribers by region, Europe,
2011-2016
- Figure 8: Messaging revenue by type and its share of total mobile revenue,
Western Europe, 2009-2017
- Figure 9: Monthly app spend and number of apps bought per respondent by
age group
- Figure 10: Smartphone ownership by pricing model
- Figure 11: Monthly app spend
- Figure 12: Share of respondents who purchased an app, by level of monthly
spend
- Figure 13: Publisher revenue, credits cards versus direct carrier billing
- Figure 14: Revenue splits for direct carrier billing
- Figure 15: Revenue splits for traditional payment methods
- Figure 16: Operator revenue for direct carrier billing, worldwide,
2012-2023
- Figure 17a: Direct carrier billing market drivers
- Figure 17b: Direct carrier billing market drivers
- Figure 18a: Direct carrier billing market inhibitors
- Figure 28b: Direct carrier billing market inhibitors
