Mobile Operators Keep Mum on Lost Revenue

By Guy Kewney  |  Posted 2005-12-15 Print this article Print

Opinion: The future of mobile data is being held back by unacknowledged problems, including serious billing failures.

Its traditional for the mobile operators to stay away from Barcelona. Well, it may become traditional; this is, after all, the first time we have had a 3GSM Congress that wasnt in Cannes, France. But they certainly did stay away from Cannes, so its a safe bet that the new tradition will catch on. 3GSM is a handset show, and a network show, not an operator-fest. Heres a really strange tradition for you: not getting paid. Its one of the oldest scams in the confidence tricksters armory: Send bills to a large list of corporate companies, and bank the checks. An incredible number will pay up.
Well, the phone networks have a better one: Dont send the bills, and dont get paid.
To read about Ericssons suit against Sendo over GSM cell phone patents, click here. They manage to lose somewhere between 3 and 10 percent "officially" like that. The real figure is probably more than twice that. For a company like Britains O2, now being swallowed up by Telefonica, were looking at a shortfall of at least $300 million a year; my sources say it could easily be much, much more. A nice new tradition would be for the industry to discuss this openly—and theres a good reason why we can be sure this wont be a tradition of Barcelona: Nobody dares. My good friends at Comverse and Amdocs will be upset with me for saying this, but the problem is that they have got the mobile industry addicted to "revenue assurance" on voice—and as a result, they cant switch to other billing systems. Because if you think Comverse and Amdocs would be upset with me, thats nothing compared to how upset theyd be with the first mobile operator to make negative comments about the service. Do GSM operators threaten mobile music? Click here to read more. Its all to do with mobile data, not voice. Voice is fine; revenues reflect, pretty well, the way the market goes. But if you talk to people like Olista, who call themselves "service experience assurance"—making sure you know what you delivered, and sending out the bills—youll quickly understand just how awful the problems are with data. The operators are prepared to admit to some problems in this area. The "official" figures are provided by revenue assurance specialists, Accipia, who recently pulled aside the curtain of shame—halfway. Andy Humphries, Technical Director at Accipia, issued a study: "By industry consensus up to 7 percent of revenues get lost, he said. "Some hope that 3G subscription-based services will ease the revenue assurance headache. Their hopes are misplaced." So, if 3G isnt the solution, what is? Frankly, Im not expecting to hear of one. There are some projects—like the "Companion" billing integration project that IBM is now bailing out of inside O2, and leaving to Accenture to pick up the pieces—which simply look like they will cost money, but never produce revenue. There are others—like the bewildering takeover by Vodafone of the No.2 network in Turkey, spending $5 billion or so buying Telsim—which quite literally make my mouth gape. The takeover is an ego buy, say insiders. Its one of those things you buy because you cant bear to see your rival buy it. Getting the Telsim billing system integrated into the Vodafone network is one of those things I simply dont believe can be done inside three years. And getting that billing system to cope with mobile data—other than text—is a dream. Informas survey, Mobile Messaging - 2005, emphasizes that for the next year or two, its peer to peer that will generate revenue. It will be SMS (Short Message Service) texts that will provide the jelly in the donut, not multimedia messages, not A2P (application to person) and not any other fancy ideas. Informas Dan Winterbottom said, "We believe the messaging market has great potential" but spoiled this optimism by announcing that mobile e-mail was one of his great hopes—right in the middle of the unveiling—finally!—of Vistos long-awaited lawsuit against Microsoft. You may remember my warning that this was the cloud hanging over Windows Mobile 5.0 and the new Exchange technology for push e-mail, back in the spring—well, the storms finally broken, and its not going to go away quickly. The sad truth is, even in the analyst community, awareness of the depth of the billing problem is poor. Ive sat through 3-hour presentations from places like Informa, talking about the future of the data business, which simply didnt mention the revenue shortfall problems, the inadequate transaction tracking, and the failure to pay content providers—all problems which are strangling the nascent business even more than the clumsiness of the delivery mechanism. Its not all bad news. Last week, I received my very first-ever MMS (Multimedia Messaging Service) image. Admittedly, it was from a seriously competent consultant who makes it his study ... but maybe, its the first leaf to fall, in a season which may, just, start to herald a new era of openness, visibility and honesty, where the industry puts its cards on the table and says "We have to deal with this!" and things move steadily forward into a new spring. And perhaps Im Marie of Roumania. Contributing columnist Guy Kewney has been irritating the complacent in high tech since 1974. Previously with PC Mag UK and ZDNet UK, Guy helped found InfoWorld, Personal Computer World, MicroScope, PC Dealer, AFAICS Research and NewsWireless. And he only commits one blog—forgiveable, surely? He can be reached at Check out eWEEK.coms for the latest news, reviews and analysis on mobile and wireless computing.

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