Wholesale Mobile Data - UK Cross-Carrier Trial

We're delighted to be welcoming back Andrew Bud to stimulate the 6th Telco 2.0 Executive Brainstorm in May. Andrew is Chairman of a large transaction network (mBlox) - important players in future Telco 2.0 ecosystems - and also Chairman of the Mobile Entertainment Forum.

He is currently in the middle of a cross-carrier trial in the UK on a 'sender pays data' concept (you'll here more about this at Mobile World Congress in a few weeks). In May he'll be exclusively sharing some of the results, to stimulate the debate on new telco wholesale services, a key plank of the Telco 2.0 growth opportunity.

To understand what 'sender pays data' means and why it's important, here is a video of Andrew's presentation from the last Telco 2.0 event in November 08, modestly entitled "Saving the Mobile Internet". Below that a summary:

Sender-Pays Data: Saving the Mobile Internet - Summary of Andrew's presentation:

We're looking for the next wave of mobile content; it's the post-ringtone world.

There's a world-wide customer dread of data charges - it essentially throttles all forms of content, including advertising. Explaining operator data charges as part of a product promotion is extremely difficult; you have a choice between waffle and dishonesty. The length of the warnings required makes them extremely user-hostile, too.

But this is before we reach the broadband incentive problem; traffic overtaking revenue, with the added twist that the ringtone business, once a $12bn cash cow, is collapsing. Worse still, although some services hit physical limits in terms of consumption quite quickly, Internet access isn't like that. And mobile networks have fairly hard limits on maximum bandwidth.

Is the answer sender-pays data? This has a long history - Rowland Hill invented it to create the penny post in the nineteenth century in the UK. Before Hill, post was paid for by the recipient, and people hated the uncertainty this created. There were also great opportunities for fraud. Hill's simple idea was for the sender to pay, with one price, using a stamp on the envelope.

This spread - in 1865, the ITU was created and with it the termination regime, a sender-pays system. Amazon.com has done this twice now - with its products, at launch, and later with the Kindle. In the UK, broadcasting became sender-pays in 1991 with the privatisation of the IBA and in 1997 with the sale of the BBC transmitter network.

Upstream content providers would buy data from the operator for their content, which would then be exempt from charges to the customer. Revenue therefore scales with demand; users are reassured. The iPlayer crisis has awoken us to the problem; in 2009 there's a major trial of sender pays data with four networks in the UK. Can you afford not to do sender-pays?