Rebuilding the "mobile Internet" business around 'Identity'
I was having a Groundhog Day moment yesterday as an executive from a fixed operator was telling us how urgent is was for telcos to find new ways to create and capture value as an adjunct or alternative to offering "dumb pipe " connectivity. Just a few weeks earlier we played out the same "hunt the value" game with a client around the "mobile Internet". The winner is the one who finds the most latent assets that can be woven in with new capabilities, partners and channels to create new profit centres.
The mobile Internet has only really created significant returns to operators in markets where fixed Internet access is weak or absent, or where you have a large, homogenous, rich technophile audience. Oh, or where you can use the Internet to bypass operator voice and messaging charges, as has happened in South Africa with MXit.
So, if you're head of "data services" at an operator, what's on your to do list?
Trifurcating the business model
"Mobile Internet" is really about three different business models:
- Evolving the business model for data in mature markets for mobile services (other than voice and SMS -- see below). This is done by moving from a product-centric to a platform-centric (and sometimes pipe-centric) worldview.
- Extending the initial (vertically integrated, controlled, walled-in) business model to new emerging markets -- taking Internet access to new people and places, but packaging it in accessible ways.
- Identifying opportunities and challenges to the core voice and SMS businesses, which needs to be considered independently of the browser/Flash/Java "mobile Internet" world.
Let's just consider the first of these. And rather than start from the position of "hey, we've got a lot of underused 3G spectrum, and depreciating network kit, how do we flog it cheaply?", let's for once start with the person who really matters: the user.
Small buttons, small screen, big problem
The bottleneck in today's mobile internet is usability -- as opposed to the other parts of the value chain such as discovery (portals), payments, provisioning, technology, support, etc. Unless the bottleneck is addressed, effort in other areas is likely to be wasted.
The tactile UI of devices is naturally an area of change and innovation (think: iPhone), and the software UI (browsers, Flash, etc.) remain in a state of technical flux. That's not the place to focus one's effort if you're an operator. Nokia, Apple and Adobe will always run rings round you. The presentation layer part of the interaction usability puzzle will have to work itself out in the marketplace. Definitely no "Web 2.0" initiative for most operators!
However, there are two other coupled areas that are more amenable to collective action and solutions. These are user data and privacy/permissions to access that data. The common theme is "identity", which has been a great operator strength in the vertically integrated world. You don't need a new phone number each time you add a new service (SMS, MMS, Push-to-talk, etc.) You also don't need to send in a notarised copy of your passport and electricity bill either, just in case you abuse the service and someone wants to punish you: the operator knows enough about each user to make most people think twice before placing a prank or abusive call.
Connecting many users to many services = opportunity for intermediaries
This platform will need to enable not just purely mobile applications, but also help users take their PC experience with them -- "Internet to go". What operators need to do is expose good old-fashioned AAA functions outside the enterprise firewall and integrate them with third parties in a common manner. Very few operators have the scale for unilateral action.
Perhaps it's as simple as agreeing that OpenID (or some other technology -- I don't care which) is the preferred means of extending carrier identity and authentication. OpenID is a very "Telco 2.0" type technology, as it decouples identity from services, and puts control of identity in the user's hands. The inaccurately summarised nutshell version of OpenID is this: you use a special URL as your user ID (e.g. "http://www.a-telco.com/MYPHONENUMBER") at any OpenID-enabled web site (there are quite a lot). The user then gets re-directed to that URL to authenticate themselves. The website trusts the authentication by a third party because of some crytographic magic in the background.
What does this mean in practice?
You could be the trusted identity provider to the user. Every web site and interaction, online and offline, could be anchored off their personal (i.e. mobile) identity. You could be presenting your logo, brand, promotional message at every authentication point. You are the VISA and the Verisign joining the experience together with a fabric of trust.
But only if the user decides it's easy and beneficial. And the place to start is to make the identity experience of the mobile Internet work.
Technically, it's really simple. One easy API. Since not all operators will move at the same speed, they also need to have a common web services directory or discovery mechanism where application providers can discover what identity services each carrier offers.
As a business innovation, it's a big jump.
Connectivity is cheap, identity is not
The existing vertical products like SMS and telephony have some very subtle protections on identity, privacy and permissions. For example, why does nobody call an 0800 freephone number all day and night as a prank and run up huge bills for you? Because it means their phone won't ring if there are any inbound calls, since it's tied up. That's a by-product of circuit voice, which looks like a restriction, but turns out to be a feature.
As connectivity becomes ever cheaper, the value is going to come from elsewhere.
If operators don't seize the identity issue and make it theirs, the users will ultimately gravitate towards platforms like Google's -- even if these are deficient in many other areas where operators have competitive advantage. You will own neither the service nor the anchoring identity and user data. All further upstream opportunities, such as advertising, are then potentially lost.
The profit from "mobile data" will come from the origination and organisation of data, not its carriage.
The next step after identity in solving usability is context, such as location, "in a call", "in a meeting", etc. -- but you have to solve the identity problem first.
Take the pain out of payments
The last area of relieving usability concerns is payment. The obvious success is premium SMS, and the obvious failure is entering your credit card details on a mobile. Today, I might have various payment instruments registered with my operator (credit card, bank account #, Paypal ID). It's hard or impossible for partners to interact with that data, with the carrier as interlocutor, without going indirectly via premium rate SMS or voice. This direct interaction has been the holy grail of m-commerce for some time, and it will be harder to solve than the identity part because of the additional business processes, security, regulation and market inertia.
Solving identity will help solve payments.
Many pieces of the puzzle all need to come together
To make "mobile Internet" work, operators need to help solve a raft of interlinked problems:
- Easier to use applications (usability via identity, context)
- More applications (APIs)
- Better and more useful applications (PC "to go", extending existing activities)
- More economic applications (wholesale markets for access, as opposed to metered data ISP plans)
- Greater mass market reach of applications (work to extend voice and SMS ecosystems)
Success in these will come from focusing on the user's problems, not those of the operator; focus on usability as the user's key concern; and within that focus on identity as a common enabler.