The service won’t be SMS based, as has been reported by some media sources. According to the press release issued by the Payments Council, the service will allow users to pay friends or businesses via their mobile “as easily as sending a text” – which is not the same as saying via SMS. The payments will be made via internet connection from, mostly, mobile banking apps downloaded on users’ phones. It is also be able to make payments from online banking sites on the mobile browser.

Banks representing 90 per cent of UK current accounts are already on board and each bank will be encouraging their customers to register for the service. To register, users will just need to go online, put in their mobile number and specify which account they want to make payments from. An industry-wide registration drive is planned when the service launches.

Essentially, users’ mobile numbers will act as a proxy for bank account numbers and sort codes. Once set up, users will just need to key in the mobile number of the person they wish to pay to make a transfer. The idea is that most people tend to know their mobile number by heart but struggle to remember their account number and sort code. And when paying family, friends and acquaintances, users will more likely than not have these people’s mobile numbers stored in their mobile phonebook.

Who needs mobile wallets?
It’s a simple idea – reminiscent of the Pingit app launched by Barclays last year, which also enables person-to-person money transfers using mobile numbers as identifiers. There is no need for phones to be especially equipped with secure elements or NFC antennas; or for users to set up a separate mobile-wallet account; or for complex, long-drawn out negotiations to take place between a long cast of would-be value-chain members, including mobile operators, handset makers, OS providers, banking and payment entities, and retailers.

The service will be pretty much universally available to any mobile user with a bank account (which in the UK is the vast majority of the adult population) – although take-up will inevitably be skewed towards smartphone owners (which are also rapidly becoming a majority of the UK population). One in three smartphone users surveyed as part of the market research for the service said they were either definitely or extremely likely to sign up to the service at launch.

Although transactions will be initiated from mobile phones, all of the authentication and processing will happen remotely in the cloud within the existing banking and payments realm – without the need to get players involved from the telco and consumer electronics worlds.

In December, the Payments Council completed the creation of a central database where banks will be able to store their customers’ mobile numbers and link them to their corresponding bank account details. When the service is up and running, the transfers made from one bank account to another will be handled by established payment schemes – by Faster Payments, which last year processed more than 800 million online and phone banking payments, and the Link network, which also last year processed 3.1 billion real-time ATM transactions.

The project has now entered its final phase before commercial launch, which includes testing; setting service standards and parameters, such as a cap on the amount of money that users will be able to transfer per transaction; and getting the banks that haven’t yet signed up to the scheme to do so.

A threat to operator schemes?
So what does the new service mean for other mobile payment schemes in the market? The Payments Council, a body set up by the UK payments industry to decide on the national strategy for payments, says it is not aiming to replace other schemes with its service. The mobile wallets being rolled out by operators are ultimately primarily aimed at enabling physical-good purchases in brick-and-mortar stores, via NFC.

The Payments Council-driven service could in theory be used for such purchases if retailers register their “mobile number” on the scheme. But retail payments are not what the service is primarily targeting.

The service is aimed at enabling payments between individuals, for things like splitting a bill between friends at a restaurant or lending some money to friends or family. It is also aimed at person-to-business or business-to-person transactions, such as a paying an electrician or plumber, or receiving a payout or refund from an insurance company, say – to use the example given to me by a Payments Council spokesman.

Similar mobile money transfer services are ubiquitous in parts of the developing world, especially Africa, where the most famous, and successful example, is M-Pesa in Kenya. These largely mobile operator-led services started out solely focused on P2P payments but quickly spread to other kinds of transactions, such as utility-bill and salary payments. But they are filling a much bigger void than the UK scheme will be – since most people in Africa are unbanked and have no credit/debit cards.

Where’s the clarity?
Project Oscar, a joint initiative unveiled in June 2011 by UK cellcos Everything Everywhere (Orange, T-Mobile), O2 (Telefonica) and Vodafone, was placed on hold for over a year whilst it was investigated by EU antitrust authorities. It got the all clear in September, but it is still unclear what shape its mobile wallet plans will take and when they will come to fruition. So far, the initiative has spawned a mobile advertising joint venture between all three operators called Weve. Meanwhile, the initiative’s members have been rolling out their own individual mobile wallets, such as Orange’s Quick Tap and the O2 Wallet.

The words and actions surrounding Project Oscar lack the clarity and simplicity of the Payments Council scheme. And when Project Oscar does eventually spawn its joint mobile wallet platform – or whatever it is it wants to roll out – it might very well find itself overshadowed by the alternative mobile payments service that the banks and the Payments Council are putting together.

Most of the discussions at the conference left me with a tremendous sense of déjà vu. Although the pace of NFC-handset launches has really picked up over the past 12 months, progress in other areas remains slow. And the same old questions that have plagued mobile NFC for years remain stubbornly in place: Is there much user demand for mobile contactless payments? Is there much of a business case? How should contactless payments on phones be secured? Who should play that pivotal role? Can a premium be charged for mobile NFC?

Perhaps more worryingly, a new question is looming like a black cloud over the nascent mobile NFC industry: Why are there still no convincing examples of enthusiastic user adoption of mobile contactless payments, even in countries such as Japan and South Korea where the technology has reached significant penetration? Could it be that, going back full circle to the first question above, NFC payments don’t meet any fundamental consumer need?

Where’s the user demand?
In Japan, where handsets featuring Felica contactless technology two years ago already accounted for 60 per cent of the total number of handsets, take up of the technology is relatively low – reportedly around 15 per cent of users – and is largely confined to public transport. It is not used much to pay for goods in shops – even though leading Japanese carrier NTT DoCoMo made a huge investment in helping retailers pay for the rollout of Felica-enabled payment terminals. And when the iPhone and other smartphones started flooding into the Japanese market, many users dumped their Felica feature phones for these new handsets, casting doubt on the stickiness that the Felica mobile wallet was meant to provide.

In South Korea, where 20 million NFC-enabled phones are expected to be in circulation by yearend – amounting to around 40 per cent penetration – both take-up and awareness of the technology remain poor. Only one in ten NFC-phone users are using the technology; many can’t see that it adds much value to what can already be done with plastic NFC cards (which are widely deployed in Korea); and around 50 per cent of Korean consumers still don’t know what is NFC.

A big barrier in South Korea – and one that it shares with the vast majority of other countries in the world – is a scarcity of NFC-enabled payment machines in shops. Only around four per cent of South Korean retailers have deployed NFC point-of-sale (POS) terminals – even though these are widely deployed in public transport and taxis.

Retailer doubts
Getting retailers to adopt of NFC is proving to be the hardest technical challenge in enabling contactless mobile payments. And what makes it a particularly hard challenge is that it is prey to the horribly tricky “chicken-and-egg” dilemma that has undermined so many other handset-dependent mobile technology initiatives, such as broadcast mobile TV and push-to-talk. Retailers won’t invest in NFC payment terminals until there are more mobile NFC users out there, and users won’t buy NFC handsets or start using the technology (if already incorporated into their handsets) until there are more NFC payment terminals out there.

From talking to retailers, it is clear that most are unsure about the business case for NFC. They are worried about the cost of implementation; about whether mobile NFC payments will end up being costlier than card payments; and about whether the faster transactions that NFC supposedly enables will end up making a big difference to their bottom line. The result is that most are taking a wait-and-see attitude.

The good news for NFC is that some of the big vendors supplying payment terminals to retailers have embraced the technology and are making it a default feature in their new products. One of the biggest of them all, VeriFone, says that 80 per cent of the terminals it ships now come equipped with NFC.

However, even if all POS-equipment manufacturers were to follow VeriFone’s example, it would not mean that all payment terminals in shops would be NFC-enabled in the immediate future. That’s because the lifecycle of payment terminals tends to be between five and seven years (although some heavy-footfall retailers say that it can be as short as three years). And big retail chains with hundreds or thousands of outlets can spend two years updating their POS infrastructure.

POS deployment costs
Also, plugging in a new POS terminal is not the only thing retailers need to do to enable NFC – especially if it’s not just contactless payments they want to enable.

Even mobile-contactless-payment enthusiasts will admit that payments alone are not enough to make a success of mobile NFC. From a user perspective, mobile brings few added advantages over cards. And from the perspective of the companies that will be delivering mobile NFC services, payments are a low-margins business with little room for feeding revenue to extra hungry mouths.

There are numerous other services that can be enabled in a retail environment using NFC handsets that are far more compelling for users and more lucrative for service providers. These include collecting and redeeming loyalty points and offers; connecting to additional product info; and comparing prices.

The biggest NFC POS deployment so far in Europe, by French retail giant Carrefour, was primarily driven by the supermarket chain’s desire to make its loyalty-points scheme more interactive. And in South Korea, the numerous mobile wallets launched by retailers there are primarily focused on loyalty points.

But although the way of accepting payments on POS terminals from NFC cards or devices has been standardized, the same cannot be said for loyalty points and vouchers. Each NFC POS deployment requires adapting the software on each payment terminal and integrating each terminal with the retailer’s backend loyalty-scheme, offers and CRM systems. This is not only time-consuming but costly.

Whilst the cost to retailers of upgrading to NFC is normally framed in the context of changing payment terminals, most retailers will wait until they have to change these anyway before introducing NFC, and the price of NFC POS terminals is typically only around 15 per cent dearer than non-NFC terminals. The real cost lies in backend integration.

Handset availability
What about NFC handsets? Are there enough of these in circulation? The short answer is no, but momentum behind NFC-handset launches had really picked up over the past year or so.

Nine out of the top ten handset makers are now churning out NFC-enabled phones and, in the case of the Android operating system alone, around 1 million NFC handsets are shipping out every week. There are currently around 85 NFC handset models on sale globally – out of a total of nearly 4,000.

The big gaping hole in NFC-handset availability remains the iPhone. For a second year running, Apple disappointed NFC enthusiasts by not including NFC into its latest iPhone model. It has left some big retailers such as Tesco questioning how soon NFC will gain traction amongst mass-market handsets.

Also, many of the NFC handsets that have been rolled out by the likes of Nokia and BlackBerry-maker RIM are not, on face value, enabled for payments, but rather for activities such as content sharing (by tapping phones against each other) or accessing web sites and offers (by tapping on NFC tags in posters and other physical-world objects).

What about the secure element?
Yet, although these phones might not have launched with the “secure element” necessary for authenticating NFC payments, many do come wired with a connection between the NFC chip and the SIM card called Single Wire Protocol (SWP), allowing especially-adapted SIM cards to be loaded on the phone which can act as a secure element. According to the GSMA, there are 53 such SWP-enabled phones commercially available today.

SWP is key to the operators’ ambitions of securing a place in the mobile NFC payments value chain, since SIM cards are the only piece of handset real estate over which they still have control. By controlling the authentication of contactless payments on phones, they aim to get a slice of the revenue generated by these payments. And they plan to do that by charging SIM-space rental fees to NFC app providers, such as banks, retailers and transport companies. But it’s yet not clear how operators will price these fees and whether app providers will be willing to pay them, regardless of price.

A representative of French bank BNP Paribas who spoke at last week’s summit referred to a recent survey that found that French consumers would be willing to pay a premium of up to €2 a month for mobile NFC services. The implication there is that app providers could pass on the cost of SIM-rental fees to customers. In China, meanwhile, leading operator China Mobile, which is rolling out mobile NFC payments with local card-payment network China UnionPay across 50 cities, plans to charge both app providers and users.

But surveys in most other countries have consistently shown that consumers would be unwilling to pay a premium for the convenience of tapping their phone to make instant payments. And most banks will tell you that they are not prepared to pay SIM-rental fees that exceed their current card-issuing costs. Retailers, meanwhile, are unlikely to want to pay any fees at all.

And, of course, operators are competing with rival visions on how to secure mobile NFC transactions. Smartphone OS and hardware providers that have built mobile app ecosystems around their brands, such as Google, RIM, Nokia and Samsung, are pushing for secure elements embedded in phones to roll out services independently from operators. Meanwhile, banks have been trialling secure elements in microSD cards or smart stickers to roll out services without relying on either operators or handset/OS providers.

Cloud vs. NFC payments
Furthermore, NFC is competing with other more readily deployable methods of enabling physical-world payments on phones. These methods, employed by the likes of Starbucks and PayPal, have come to be referred to as cloud-based payments – that’s because payments are authenticated with account information held in a remote server, rather than locally on the phone. The user experience is usually clunkier than with NFC – involving things like scanning QR codes and keying in PIN codes in response to a notification received on the phone.

But Starbucks is now piloting a new method with mobile-payments rising star Square which beats NFC in terms of convenience, since users don’t even have to take their phone out of their pocket to make a payment. Using the GPS in the handset, the system alerts the POS screen in the coffee shop of the user’s presence and the person at the till just taps on the screen to debit the payment from the user’s account, after checking that the user matches the ID photo displayed on the screen.

The advantage of cloud-based systems is that they are pretty much handset agnostic and at most only require downloading an app to get them up and running on phones.

In Hungary, a cloud-based service launched by mobile payments specialist Cellum in partnership with MasterCard is handling one million transactions per month. Users scan QR codes to make payments authenticated with a PIN which matches info locally stored on the handset in an app with info remotely stored in a server.

In the Czech Republic, meanwhile, the three mobile network operators there, together with the top four banks, have launched a mobile-wallet service called Mobito whereby retailers key in the user’s mobile number or ID code on their POS device and users receive a notification via either USSD or a downloaded app, which they authenticate with a PIN.

Mobito has NFC enablement on its roadmap, but has kicked off with this cloud-based solution because NFC is not yet a mass-market proposition. Likewise, when Telefonica-owned UK carrier O2 launched its mobile wallet six months ago, it did so without NFC – even though it too has NFC on its roadmap.

Early-to-market mobile NFC payment services such as Google Wallet and UK carrier Orange’s Quick Tap, both of which were launched last year, have suffered from poor take-up – largely due to limited handset choice and limited payment-acceptance points.

Conclusions
There is an unstoppable momentum behind the roll out of NFC. It’s already widespread as a payment method on public transport systems around the world, and the weight of Visa, MasterCard, banks, POS vendors, mobile operators and some major retailers is slowly but surely pushing the technology to shops – regardless of whether ordinary retailers and shoppers want it or not. A few years down the line it will most likely have become a standard option with which to pay at shop tills – certainly via credit or debit card, and via mobile for those who for one reason or another will have started using a mobile wallet.

But that is still a long way away. NFC is just a technology, an enabler – and just one of many at that. Yet the mobile industry has for far too long made mobile payments synonymous with NFC. And, by the same token, mobile NFC has been made synonymous with payments – even though it can be used for many other potentially more compelling and lucrative services. This has retarded the development of both mobile payments and mobile NFC. Mobile wallets should enable different ways of making payments. And operators should not skew the development of the mobile payments market towards SIM-based transactions, just based on their narrow interests.

Facebook doesn’t “directly generate any meaningful revenue” from its mobile products

Concerns about Facebook’s ability to monetize its growing mobile traffic have resurfaced following its first earnings report since its IPO in May. The social media giant posted a 2Q12 loss of $157m, sending its stock price tumbling to $24 a share – which means its shares are now trading at two-thirds of the value they sold for during the IPO.

At the same time, the growth of mobile users on Facebook’s network continued to outstrip overall user growth. Whilst overall monthly active users registered 29 per cent year-on-year growth, to 955 million, mobile monthly active users grew by 67 per cent, to 543 million – more than half its user base. Yet, as Facebook admitted ahead of its IPO, it doesn’t “directly generate any meaningful revenue” from its mobile products and its ability to do so successfully is “unproven” – although it did say in its earnings call yesterday that it had seen some good results from the mobile ads it has been experimenting with lately.

But Facebook is not alone among the big online brands to have disrupted the mobile space in recent years that are coming up short in terms of extracting advertising dollars from their mobile traffic.

Google’s declining CPC
The biggest online advertising brand of all, Google, also published its 2Q12 results in recent days and, although its overall numbers look very healthy, this was the third-time running that it posted a year-on-year drop in its average cost-per-click (CPC) – the money bid by advertisers to place ads on its search results. Its CPC was down by 16 per cent, an accelerating trend that started in 4Q11 with an eight per cent YoY drop.

There are various potential reasons for Google’s diminishing CPC – potential, because Google hasn’t given a satisfactory explanation, leaving analysts like me to speculate. But mobile is definitely a factor.

Like Facebook, Google is seeing the share of mobile traffic on its Web search service skyrocket – doubling year-on-year. But, according to numerous digital marketing sources, the CPC paid for Google’s mobile search ads tends to be much lower – up to less than 50 per cent lower – than for its desktop search ads.

Apple’s iAd woes
Apple is yet another big over-the-top brand – the biggest mobile disruptor of recent years – that is struggling on the mobile advertising front. Thankfully for Apple, advertising revenue is not its core business model, but unusually for a company that has very sleekly engineered one successful mobile launch after another since rolling out the iPhone in 2007, it’s ended up with egg on its face with its mobile app advertising offering, iAd.

In February, Apple for the third-time running cut the minimum spend it requires for advertisers to book campaigns on iAd, from a rather forbidding $1 million when the service launched in 2010 to a much more affordable $100,000 now. The reason being that take-up of the service has been disappointingly low.

The reasons for these leading OTT brands falling short on mobile ad revenue differ from case to case.

Conversion rates on mobile search advertising are much lower than on desktop, despite generally higher click-through rates – hence Google’s relatively low mobile revenue. Poor cellular network connectivity, accidental click-throughs and difficult-to-navigate websites all conspire to keep conversion rates down.

Apple was expecting too much of an upfront commitment from advertisers relative to their expected return from iAd. And Facebook, to its credit, has prioritised user experience over monetization, and mobile’s small screen presents a particularly tough user-experience challenge when it comes to cramming in ads.

Lack of advertisers
Underlying these different factors is the perennial problem of advertisers under-spending on mobile. Whilst mobile is taking an ever increasing share of media consumption time, its share of advertising spending remains obstinately low.

This was well illustrated recently by venture capital firm KPCB, which estimated that, compared to print, radio, TV and the Internet, mobile now captures ten per cent of media consumers’ time in the US but only one per cent of ad dollars. That translates into a shortfall of $14bn annually in the US alone!

Although lack of awareness is still a problem, one of the biggest barriers to mobile advertising adoption is all the complexities that go with it. It’s not enough for advertisers to tick the mobile box and extend their advertising to mobile phones. There are many additional steps they must take to ensure their mobile advertising campaigns are successful – such as building mobile-optimized sites and adapting campaigns to better target mobile users’ needs and the unique capabilities of mobile devices.

The mobile optimization challenge
For example, advertisers navigating to the information page of Google’s AdWords platform for mobile are advised to do the above, as well as rethink the keywords they normally target (because mobile users tend to key in shorter words and phrases in the search box on their phone). Although all this is excellent advice to improve campaign performance, it must also put off time-poor and cost-averse business owners, especially among the “long tail” of mom-and-pop businesses that Google has so successfully exploited in its desktop paid search business.

The question of how to mobilize one’s Web presence is a daunting one. It’s hard to know who to turn to, and how and what to mobilize. The bill for building a mobile site can run to hundreds of thousands of dollars. That’s why most businesses online have yet to mobilize. Yet landing from a mobile ad to a desktop site is almost guaranteed to reduce that ad’s chances of conversion.

Google has woken up to the need to help advertisers gear up for mobile, recently launching the GoMo and GetMo initiatives designed to hook up advertisers with mobile-optimization firms catering for all budgets and needs.

Meanwhile, Facebook has to figure out how best to monetize its traffic, both on desktop and mobile. Having ruled out display ads on mobile, it is banking on less intrusive monetization initiatives such as sponsored stories to extract advertising dollars from its mobile inventory.

Twitter’s success story
Maybe it should be taking a leaf out of Twitter’s book. In June Twitter announced that on some days it makes more ad revenue from mobile than desktop.

Twitter’s secret seems to be that its service is naturally suited to mobile. After all, the idea that Tweets should be limited to 140 characters is inspired by SMS and its traditional 160-character limit. And ads on Twitter come in the form of Tweets, so there are no issues with them disrupting crammed mobile screens.

Challenges ahead
OTT players have found it easy to conquer real estate on people’s mobile screens as handsets increasingly become extensions of the internet. But those who depend on advertising for their revenue are finding that extracting ad dollars from mobile screens is not as easy as on the desktop. And that is a big problem going forward, as mobile continues to take an ever bigger slice of digital traffic.

Mobile will no doubt eventually catch up with other advertising media in terms of remuneration. But before that can happen, the businesses and individuals whose ad dollars will fill that gap need to do a lot of preparation work. At the same time, mobile ads need to become cleverer about how they adapt to the limitations of mobile screens. The killer ad format for mobile has probably yet to be found.

At the same time, the growth of mobile users on Facebook’s network continued to outstrip overall user growth. Whilst overall monthly active users registered 29 per cent year-on-year growth, to 955 million, mobile monthly active users grew by 67 per cent, to 543 million – more than half its user base. Yet, as Facebook admitted ahead of its IPO, it doesn’t “directly generate any meaningful revenue” from its mobile products and its ability to do so successfully is “unproven” – although it did say in its earnings call yesterday that it had seen some good results from the mobile ads it has been experimenting with lately.

But Facebook is not alone among the big online brands to have disrupted the mobile space in recent years that are coming up short in terms of extracting advertising dollars from their mobile traffic.

Google’s declining CPC
The biggest online advertising brand of all, Google, also published its 2Q12 results in recent days and, although its overall numbers look very healthy, this was the third-time running that it posted a year-on-year drop in its average cost-per-click (CPC) – the money bid by advertisers to place ads on its search results. Its CPC was down by 16 per cent, an accelerating trend that started in 4Q11 with an 8 per cent YoY drop.

There are various potential reasons for Google’s diminishing CPC – potential, because Google hasn’t given a satisfactory explanation, leaving analysts like me to speculate. But mobile is definitely a factor.

Like Facebook, Google is seeing the share of mobile traffic on its Web search service skyrocket – doubling year-on-year. But, according to numerous digital marketing sources, the CPC paid for Google’s mobile search ads tends to be much lower – up to less than 50 per cent lower – than for its desktop search ads.

Apple’s iAd woes
Apple is yet another big over-the-top brand – the biggest mobile disruptor of recent years – that is struggling on the mobile advertising front. Thankfully for Apple, advertising revenue is not its core business model, but unusually for a company that has very sleekly engineered one successful mobile launch after another since rolling out the iPhone in 2007, it’s ended up with egg on its face with its mobile app advertising offering, iAd.

In February, Apple for the third-time running cut the minimum spend it requires for advertisers to book campaigns on iAd, from a rather forbidding $1m when the service launched in 2010 to a much more affordable $100,000 now. The reason being that take-up of the service has been disappointingly low.

The reasons for these leading OTT brands falling short on mobile ad revenue differ from case to case.

Conversion rates on mobile search advertising are much lower than on desktop, despite generally higher click-through rates – hence Google’s relatively low mobile revenue. Poor cellular network connectivity, accidental click-throughs and difficult-to-navigate websites all conspire to keep conversion rates down.

Apple was expecting too much of an upfront commitment from advertisers relative to their expected return from iAd. And Facebook, to its credit, has prioritised user experience over monetization, and mobile’s small screen presents a particularly tough user-experience challenge when it comes to cramming in ads.

Lack of advertisers
Underlying these different factors is the perennial problem of advertisers under-spending on mobile. Whilst mobile is taking an ever increasing share of media consumption time, its share of advertising spending remains obstinately low.

This was well illustrated recently by venture capital firm KPCB, which estimated that, compared to print, radio, TV and the Internet, mobile now captures 10% of media consumers’ time in the US but only 1per cent of ad dollars. That translates into a shortfall of $14bn annually in the US alone!

Although lack of awareness is still a problem, one of the biggest barriers to mobile advertising adoption is all the complexities that go with it. It’s not enough for advertisers to tick the mobile box and extend their advertising to mobile phones. There are many additional steps they must take to ensure their mobile advertising campaigns are successful – such as building mobile-optimized sites and adapting campaigns to better target mobile users’ needs and the unique capabilities of mobile devices.

The mobile optimization challenge
For example, advertisers navigating to the information page of Google’s AdWords platform for mobile are advised to do the above, as well as rethink the keywords they normally target (because mobile users tend to key in shorter words and phrases in the search box on their phone). Although all this is excellent advice to improve campaign performance, it must also put off time-poor and cost-averse business owners, especially among the “long tail” of mom-and-pop businesses that Google has so successfully exploited in its desktop paid search business.

The question of how to mobilize one’s Web presence is a daunting one. It’s hard to know who to turn to, and how and what to mobilize. The bill for building a mobile site can run to hundreds of thousands of dollars. That’s why most businesses online have yet to mobilize. Yet landing from a mobile ad to a desktop site is almost guaranteed to reduce that ad’s chances of conversion.

Google has woken up to the need to help advertisers gear up for mobile, recently launching the GoMo and GetMo initiatives designed to hook up advertisers with mobile-optimization firms catering for all budgets and needs.

Meanwhile, Facebook has to figure out how best to monetize its traffic, both on desktop and mobile. Having ruled out display ads on mobile, it is banking on less intrusive monetization initiatives such as sponsored stories to extract advertising dollars from its mobile inventory.

Twitter’s success story
Maybe it should be taking a leaf out of Twitter’s book. In June Twitter announced that on some days it makes more ad revenue from mobile than desktop.

Twitter’s secret seems to be that its service is naturally suited to mobile. After all, the idea that Tweets should be limited to 140 characters is inspired by SMS and its traditional 140-character limit. And ads on Twitter come in the form of Tweets, so there are no issues with them disrupting crammed mobile screens.

Challenges ahead
OTT players have found it easy to conquer real estate on people’s mobile screens as handsets increasingly become extensions of the Internet. But those who depend on advertising for their revenue are finding that extracting ad dollars from mobile screens is not as easy as on the desktop. And that is a big problem going forward, as mobile continues to take an ever bigger slice of digital traffic.

Mobile will no doubt eventually catch up with other advertising media in terms of remuneration. But before that can happen, the businesses and individuals whose ad dollars will fill that gap need to do a lot of preparation work. At the same time, mobile ads need to become cleverer about how they adapt to the limitations of mobile screens. The killer ad format for mobile has probably yet to be found.

The German incumbent has partnered with MasterCard

Deutsche Telekom (DT) has followed in the footsteps of other major European carrier groups in unveiling plans to launch a prepaid card in association with one of the big card-payment networks. The German incumbent – which has 90 million mobile subscribers in Europe through its T-Mobile subsidiary – has partnered with MasterCard to enable payments from a stored-value account linked to both a mobile wallet and a plastic card.

Unlike most of its competitors, DT is able to launch a payment product without the need to partner with a banking intermediary that will cream off most or all transaction revenue. That’s because DT owns an e-money license it acquired with the purchase in March 2010 of internet payments service provider ClickandBuy – which now operates as a DT subsidiary.

As with the other major European carrier groups – namely Orange, Telefonica and Vodafone – DT’s ultimate aim is to play a key enabling role in mobile contactless payments, by authenticating payments through SIM cards and turning its mobile wallet into the must-be place for third parties wanting to target mobile users with NFC services. And like the other carriers, its business model will be to charge third parties a monthly fee per user for each application placed in its wallet and SIM cards. Additionally, it will earn transaction-fee revenue in its capacity as an e-money-license holder.

But the margin made from prepaid-money transactions tends to be small. And there is the risk that such transactions will cannibalise operators’ much higher margin carrier-billing business. DT is aware of that threat, but sees much more market potential in m-wallets than carrier billing – not only because m-wallets can enable much more than just micropayments, but also because they offer a much better user experience.

DT is not making NFC the be all and end all of its m-wallet service. It recognises that conditions are still not ripe in most markets for the widespread adoption of NFC services, so in many places it will be launching with alternative “bridging technologies”, such as QR codes, that also provide a link between mobile phones and the physical world.

Nevertheless, its m-wallet will be debuting in Poland this year because Poland is the country within its footprint where there is the highest penetration of NFC-enabled payment terminals in shops. Together with the wallet, DT will also be issuing stickers incorporating NFC antennae to NFC-enable phones that do not come with the contactless technology preinstalled – which is the majority.

DT will also be targeting another missing piece in the NFC payments ecosystem – contactless-enabled point-of-sale terminals in brick-and-mortar stores. It will be supplying such terminals to retailers on either a rental or purchase basis. But, unlike Japanese carrier NTT DoCoMo, it won’t be subsidising their cost. No Western operator has committed to such a move.

Peter Vesco, senior vice president of DT’s payments business unit, told Informa Telecoms & Media that there is no point in subsidising NFC POS terminals for retailers who are not sufficiently convinced of the business case for contactless payments and buying the necessary infrastructure.

Facebook has yet to properly enable its mobile properties with advertising

Facebook has been at the forefront of the growth in mobile data usage in recent years. It is indisputably one of the big stars of mobile; one that most operators have wanted to ally themselves with to drive the sale of data plans on their networks.

Yet, by Facebook’s own admission, mobile could be its Achilles heel. That’s because, although more and more of its traffic is derived from mobile phones, it has yet to properly enable its mobile properties with advertising – Facebook’s main revenue stream. As it said in a revision of its S-1 filing with the US Securities and Exchange Commission, ahead of the its IPO this week, “We do not currently directly generate any meaningful revenue from the use of Facebook mobile products, and our ability to do so successfully is unproven.”

More than half of Facebook’s users (488 million as of March) are already accessing the social network via mobile and that proportion is constantly growing, especially now that most of its new members are coming from emerging markets, where PC penetration is low. And the more traffic gets diverted to mobile the fewer Facebook’s chances of monetizing its service. As it reported in its filing, its daily active users have been increasing recently at a faster rate than the number of ads delivered on its network, a trend it blames on the increased usage of Facebook on mobile devices.

“If users increasingly access Facebook mobile products as a substitute for access through personal computers, and if we are unable to successfully implement monetization strategies for our mobile users, or if we incur excessive expenses in this effort, our financial performance and ability to grow revenue would be negatively affected,” Facebook said in its revised filing last week.

And Facebook is not alone in finding that mobile can hold back its revenue-earning potential. The biggest online advertising business of all, Google, has seen its ad rates go down as more and more of its traffic goes mobile. In 1Q12 the search giant reported slower than expected revenue growth. Although paid clicks on its network had grown by 39 per cent, the average cost per click had fallen by 12 per cent. That’s because the huge growth in the number of ads being served on mobile browsers and apps is pushing down mobile-ad prices. Also, there are simply more advertisers bidding to get their sponsored links on PC screens than on mobile screens.

Mobile is adding to the overall digital pie, but is also increasingly cannibalizing other digital channels. And whilst advertising is a well established medium on PCs, it has still a long way to go to find its full potential on mobile.

Facebook has been in mobile for much of its existence – it launched its Platform for Mobile in 2007, a year after it opened up its membership beyond university campuses – but, to its credit, it hasn’t wanted to rush the introduction of ads on its mobile sites and apps for fear of ruining the user experience. The same fear stopped the social network from switching on ads on its fixed-Internet site until relatively late. But on mobile, ads can be far more disruptive because content has to be cramped into a far smaller screen.

Facebook’s monetization efforts on mobile are currently focused on its “sponsored stories” service, which it extended to mobile in March. This is where advertisers pay to insert posts from friends or Facebook Pages into users’ news feeds. Sponsored stories are still an unproven advertising medium, but they are less intrusive and therefore more suited to mobile than display ads.

Beforehand, it was Facebook’s answer to Foursquare, Facebook Places, that seemed to offer the social network the best chance of monetizing mobile. Through Places, Facebook wanted to exploit the unique ability of phones to pinpoint users’ location to get users to interact with places in the physical world and accept deals from retailers.

But take up for Places was poor and Facebook pulled the plug on it last year. The Check-In Deals that accompanied Places still survive, reportedly, but it’s not clear what new vehicle will be found for them. Meanwhile, Facebook also pulled the plug on its Groupon-like Deals offering (confusing, I know!), again because of lack of take up, which doesn’t necessarily bode well for the future of Check-In Deals or other offers-style services on the social network.

There’s no reason why Facebook cannot start enabling its sponsored stories with mobile location and presence data, subject to user consent of course. Facebook should continue to look for ways of exploiting the unique advantages brought by mobile to target sponsored content, ads or whatever if might be more accurately with users’ needs and wants.

Mobile will undoubtedly become the main access channel to Facebook before too long, as smartphones continue to drive the online world into people’s palms and as Facebook’s membership is increasingly drawn from emerging markets, where mobile phones are the main or only channel to digital content for most people.

Mobile is Facebook’s future. Facebook has to make sure it doesn’t also become its undoing.

Currently, it looks more like it’s trying to compete with the Pingit mobile money transfer service that UK bank Barclays launched in February. O2 Wallet is also an evolution of the O2 Money prepaid card launched in 2009 – which is now incorporated into the new service.

Will O2 Wallet be successful? It has a greater chance of success than mobile payment services solely focused on NFC. But O2 faces the same challenges that all other telcos face when competing against so-called over-the-top players – global online companies such as PayPal and Google that have greater geographic reach, brand appeal and agility.

O2 is part of an alliance with other UK operators – Vodafone and Everything Everywhere (Orange and T-Mobile) – to set up a joint m-commerce offering in the UK, to more effectively compete against OTT players. But the alliance has already ran into regulatory resistance, highlighting the difficulties that telcos face in trying to band together without appearing to be anti-competitive.

The event attracted a good mix of delegates from the operator, developer and vendor communities, making for a lively and, at times, heated debate. Developers did the usual thing they do at such events: Pummel operators for what they see as their clumsy efforts to compete with the big over-the-top players on the content-and-applications front. Even the WAC spokespeople who were there to drum up support for the initiative sounded less than convincing when answering questions about the initiative’s chances of success.

Although WAC started off competently enough, diligently meeting the deadlines it imposed on itself through its strict rollout timetable, its hardest challenges are still ahead of it:

• Attracting developer interest.
• Getting handset makers to support WAC applications.
• Getting member operators to move fast enough with its implementation.

All of these are huge challenges – and, many would argue, beyond WAC’s means to overcome.

Describing WAC

But before I continue I should explain what WAC is. And therein lies one of WAC’s problems: WAC is not easy to explain, since it’s trying to be more than one thing at once – and has probably bitten off more than it can chew. It essentially has three roles:

• It is the inheritor of the JIL initiative started in 2008 by operators China Mobile, SoftBank Mobile, Vodafone and Verizon Wireless to offer developers a Web-runtime environment and retail channel for widgets capable of working across a wide range of devices and mobile networks. The underlying aim was to take some developer attention away from the native-app ecosystems, principally iOS and Android, which have become the focus of mobile-app activity and innovation.
• It has also taken the baton from OneAPI, another cross-operator initiative, launched several years ago by the GSMA to get carriers to expose network APIs in a standardized way and provide developers with a single point of access to the network capabilities of numerous carriers at once – and eventually all carriers globally. WAC’s role is to provide that single point of access.
• It is also meant to act as a wholesale channel for content and applications, supplying these to the retail storefronts of individual operators around the world. WAC widgets are not necessarily the only content that could be distributed through it.

Attracting developers

All this is a complex message to put across. But without a clear message of what WAC is about, it will be difficult for it to grab developers’ attention. And if it can’t attract developers – and significant numbers of developers at that – there won’t be any point in it.

It is hard enough for any operator-led initiative to attract the attention of developers – or, if it does get noticed, to be taken seriously. This is something operators that embarked a few years ago on ambitious plans to build developer communities around their brands have found out the hard way. If you attend any of the big developer get-togethers, the operators are hardly ever mentioned – they are not on the developers’ radar. And if they are mentioned, it is with contempt and derision.

Few developers are aware of WAC, and most of those who are, are unconvinced by it. WAC spokespeople say they are waiting until WAC can offer developers a fair crack at monetization before they launch a big outreach campaign to attract them.

Progress so far

WAC, which was unveiled by operator club the GSMA in February 2010 and constituted into a separate non-for-profit entity in July 2010, launched its first commercial service in February 2011, dubbed WAC 2.0 – a developer platform for HTML5 Web apps linked to the storefronts of eight major operators (China Mobile, MTS, Orange, Telefonica, Telenor, Smart, Verizon and Vodafone). Eight other operators were expected to hook up to WAC’s wholesale-applications offering in 2011.

But it is unclear how things have progressed since the commercial launch. There is no information on the number of developers that have signed up to the widgets platform – the vast majority are likely to have hailed from the JIL program – or on the number of widgets developed, placed on the storefronts of affiliate operators or downloaded/sold. And there has been no update on how many operators have joined the initial eight as WAC members.

Nor is there information on the number of handset models that have been launched this year supporting the WAC 2.0 Web runtime. Five major handset makers – LG, Huawei, Samsung, Sony Ericsson and ZTE – are signed up to WAC, but they have all been quiet about their WAC implementation plans. The handset makers will only bother preinstalling the Web runtime if operators placing large handset orders make WAC 2.0 a specification. But, with the exception of South Korean operators, there isn’t much evidence that operators are making a special point of demanding WAC 2.0 support on new handsets.

WAC is planning to give an update to journalists and analysts soon, so maybe we’ll find out the answers to these questions then. But that information was lacking at the WAC Focus Day.

And the fact that WAC doesn’t yet feel that it has a good monetization story to tell developers shows that it hasn’t met with much commercial success.

What’s coming up

WAC is now saying that the first commercial release of WAC 2.0 will happen this month in South Korea, where the three main operators will start offering WAC widgets to their subscribers – free at first and with a paid-for offering as of December.

On the network-APIs front, WAC is gearing up to launch an in-app payments API linked to the billing systems of several member operators, as part of its WAC 3.0 release. The API, which will be the first to be launched by WAC, is in a beta trial with a small set of developers and is expected to launch commercially by year-end or at February’s Mobile World Congress.

Some of the first operators to hook up to the WAC in-app billing API are likely to be Deutsche Telekom, Telefonica, Telekom Austria and Telenor, though it won’t be at group level. For example, Martin Prosek, manager of VAS-platform development O2 Czech Republic, part of the Telefonica group, told delegates that it would probably take the Czech carrier another year or two to roll out WAC APIs.

Sorting out priorities

There is much more enthusiasm among Western operators for WAC’s network-API offering than for its widgets offering. Speaking off the record with operator representatives at the show, it became clear that most don’t see much point in persisting with the Web runtime – or, at least, don’t think that the Web runtime should precede everything else in WAC’s rollout schedule, as it has until now.

WAC’s original vision was that the network APIs would primarily be used to enrich the widgets being created on its platform. But it doesn’t necessarily have to be that way. The APIs can be a separate offering in their own right and be offered to the far-more-sizable community of native-app developers out there. Furthermore, the operators see a much greater chance of monetization through the APIs than the widgets.

But, of course, reorienting WAC toward serving the native-app-developer community goes against one of the fundamental ideas behind the initiative – that of establishing an alternative apps ecosystem to iOS, Android and other native-app platforms. So it’s not an easy mind shift for WAC to make. Yet it is a shift that has already been made by many of the operators signed up to WAC. These operators will tell you – at least off the record – that there isn’t much point in trying to establish such alternative app ecosystems. They’ve tried to do that themselves and failed. Instead, they are now trying to piggyback on existing ecosystems – just as Telefonica is doing with its open-API program, BlueVia, which partnered with Microsoft’s developer community, for example; or just as Vodafone is doing with Android, offering carrier billing and its own content channels on the Android Market store.

Piggybacking on other communities

In off-the-record conversations, operator execs involved with WAC admit that the initiative doesn’t have much of a chance of directly attracting a large and diverse mass of developers. And they add that, although WAC might not be saying so in so many words, it too is aware of the problem. Therefore, WAC’s main strategy will be to go to existing developer communities, such as Android’s, and offer them its SDK. And, in this context, the network APIs will be the WAC asset most likely to be of interest to developers – as something they can mash up with the applications they are already creating within those communities.

Officially, WAC says it will be taking a two-pronged approach: It will try to recruit developers directly and will try to hook up with developer communities.

Network APIs

Although network APIs appear to be WAC’s trump card, there are doubts about the usefulness to developers of most of the network capabilities that operators are busily exposing through open APIs. There is high demand among developers and app-store owners for carrier billing. In a commercial trial conducted in Canada last year for the OneAPI initiative, involving all three main MNOs there, billing was by far the most requested API of the three that were offered to developers. The others were SMS and location.

When you speak to developers in developed markets, many don’t see much point in being able to add network-positioning (cell-ID) and SMS/MMS capabilities to their applications, because most smartphones – the handsets for which most developers want to develop apps – now come with GPS, offering free and far-more-accurate positioning than cell-ID, and because there are numerous IP-based messaging services available for mobile phones that offer far greater capabilities than SMS/MMS, also free (as long as the data consumed is covered by a flat-rate data plan, which almost all smartphone users have anyway).

The picture is different in emerging markets, where smartphones are still scarce and the vast majority of people wanting to engage in messaging or location-based services on mobile phones have to do so via SMS and cell-ID, respectively.

Telefonica, whose mobile-messaging APIs are central to the novel business model of its BlueVia program, in which developers get a share of what their application users spend on SMS/MMS via the BlueVia APIs, would argue that there is demand everywhere for mashing up SMS and MMS into mobile apps. Hence its alliance with Twitter in the UK, in which Twitter has hooked up to BlueVia’s MMS API to allow Telefonica (O2) subscribers to share photos on Twitter via picture messaging.

Operator curse

But, ultimately, it is the fact that WAC is primarily made up of operators that most conspires against its chances of success. And that’s for two reasons: the natural rivalry and distrust between operators, and antitrust regulations.

Although most operators have come to realize that their biggest competitors on the services front are no longer fellow operators but OTT players, such as Apple and Google, it is in their DNA to want to differentiate from their fellow operators – and to hold things back from them and strike out on their own – even when they put their signatures to multilateral initiatives such as WAC and pay lip service to the need to work together for the common good.

And even when there is a desire to do things together, it is often prevented by regulation. A big handicap for WAC is that it cannot go to developers with a clear message on the revenue-share/pricing model they can expect from selling widgets through operator storefronts or from hooking up to network APIs, because antitrust laws prevent operators from agreeing on common prices. That means that behind the common interface provided by WAC, developers will be offered different terms by different operators. But in the current app-store climate, developers have gotten used to, and demand, transparency on the business model being offered by store owners. So they are likely to view with suspicion any app-ecosystem proposition that doesn’t offer clear revenue-share terms.

In the OneAPI Canadian trial, pricing was one of the stumbling blocks. Developers that hooked up to the joint SMS API offered by the three Canadian operators found that the wholesale price charged per SMS was higher than the price offered by traditional SMS aggregators! That is absolutely crazy and another example of operators shooting themselves in the foot. After all, one of the main ideas behind OneAPI is that you cut out or reduce aggregator-middlemen fees, turning cross-network access to APIs into a more affordable, self-service activity.

Most valuable role

WAC has, potentially, a valuable role to play as an aggregator of OneAPI APIs. It is a not-for-profit organization and will be taking a small share – it won’t say how much exactly – of the revenue made through the network APIs and applications sold through it, just to cover costs. It will levy its share from the operators, not developers – though it will be up to operators to decide whether to make up for that cost in the wholesale price charged to developers for hooking up to the APIs or in the retail price charged to users for purchasing apps.

OneAPI desperately needs a global aggregator like WAC for it to start making progress and avoid ending up in the scrapheap of failed multilateral operator initiatives. Going about it on a country-by-country basis – where all the operators in each territory aggregate their APIs with the help of specialized third parties, as was done in Canada – is just not going to work. From what I’ve been able to find out, there is still no other country following in Canada’s footsteps on OneAPI. And it’s not even clear whether the service set up in Canada will persist.

The reasons for creating WAC, and for that matter OneAPI, were good. Operators desperately need to aggregate their offerings to have any chance of competing against the global reach of OTT players. But the clock is ticking, progress is slow and there is still a huge mountain to climb.

In July we heard that Vodafone was launching its own content channel within Android Market in the UK, Germany, Italy, the Netherlands and Spain, with Greece, Ireland and Portugal following later. Then in August, Vodafone announced that it would be enabling payments on Android Market across its European footprint, starting with the UK and Germany.

Vodafone is not alone. US carriers Verizon and T-Mobile and South Korean carrier SK Telecom are all offering both payments and their own storefront on Android Market. Others are offering just payments, including the US’ AT&T Mobility and Sprint and Japan’s KDDI and Softbank, and others, such as Australia’s Telstra, just a storefront. Japanese carrier NTT DoCoMo, meanwhile, is offering payments and has its own separate Android apps store.

Open door for carriers

The open-source nature of Google’s Android ecosystem means that operators have always had a greater chance of playing a role than in Apple’s walled-garden iOS ecosystem. Operators have been able to order own-brand, custom-made Android handsets from manufacturers and launch their own Android application offerings. They either launch a separate Android apps store, parallel to Google’s Android Market, the way many Android-handset makers have done (see for example Samsung’s launch this week of its Premium Samsung Apps Store for Android in the UK). Or they launch a storefront within Android Market itself.

The latter is only possible on Android handsets distributed by operators. Usually, the way it works is that the “My Apps” tab that appears on Android Market’s user interface is replaced with the operator’s storefront tab – or “content channel” tab, to use the Android parlance.

Operators believe that their channel adds value by offering a more select set of apps, tested for quality and adapted to local needs – rather than what they would describe as the daunting and hit-and-miss choice available in the main store, which is crammed with hundreds of thousands of apps. In other words, they see themselves as offering quality over quantity.

Compared to Apple’s App Store, Android Market does relatively little to localize content according to which country the store is being accessed from. And it’s seen by many as a bit of a Wild West, with loads of underrate, malfunctioning apps and a growing piracy problem. One might argue, therefore, that there is a need for someone to step in with a more “curated” offering.

User rejection

But judging by comments posted online, users are not that chuffed by the operator-branded tabs that have suddenly appeared on their screen. Many see it as patronizing and dumb of operators to narrow down choice on behalf of users – especially since operators have a terrible track record of delivering what users want on the content and apps front.

The views of these outspoken users might not be representative of the whole. There might be a silent majority of occasional app users who feel less strongly about these things and might welcome some handholding by operators. But there is no getting away from the fact that operators do tend to mess things up when they try to take ownership of what content and apps are offered to end users.

Still, you can’t blame operators for wanting to retain relevance in the content and apps market by exploiting the opportunities that the Android platform offers them to wheel out their own offerings. After all, they have seen the power of their once mighty mobile content portals rapidly dwindle over the past three years with the phenomenal takeoff of over-the-top, native-app stores.

But where the operators are likely to make the greatest difference is with billing.

The carrier billing opportunity

I’ve been harping on for years about the huge asset that billing represents for carriers. In my view, it is the most realistic chance operators have of securing a role in the mobile content and applications value chain. Partly because there are a lot of people out there who could become buyers of digital goods but have no remote means of paying for them, either because they are underage or live in the larger part of the world where credit cards and bank accounts are rare. And partly because keying in one’s credit- or debit-card details on a phone, no matter how “smart” that phone may be and how big its screen may be, is a pain – and in most cases kills the moment of the “impulse buy.” Most users simply don’t bother or give up half way through, and the piece of content or application they were about to buy does not get bought.

This is the problem that has been hampering sales on the Android Market. Very few Android-handset users get round to registering their credit/debit card details with the Android Market’s payments platform, Google Checkout – partly because users are not used to the idea of entering into a billing relationship with Google and partly because registering with Google Checkout is not usually part-and-parcel of the procedure that users have to go through to set up a new Android phone (unlike with the iPhone, whose users are required to register with iTunes when turning the phone on for the first time).

Monetization problem

So, although developers love the greater creative freedom that the Android ecosystem gives them – compared to Apple’s rule-ridden iOS ecosystem – as well as its pole position in smartphone sales, they deplore the small chance it offers them to make money from applications posted on Android Market.

Most other companies that launched application stores in competition to Apple’s pioneering App Store understood early on the need to embrace carrier billing to increase paid-app downloads. The likes of Microsoft, Nokia, RIM and Samsung understood that it was hard to compete with the huge head-start that Apple had in the field of paid downloads – after all iTunes, of which the App Store is an extension, has for years been the world’s leading online store for premium digital media content, especially music. There was already a precedent for people, in their hundreds of millions, of entering into a direct billing relationship with Apple for the purchase of digital goods.

Google has been slower to embrace carrier billing – either because it thought that the strength of its brand would drive enough momentum behind Google Checkout, or because as a company whose business model is fundamentally free ad-funded content it wasn’t too bothered about the issue of paid downloads.

Yet Google had apparently looked into carrier billing quite a few years ago, before the advent of the app stores even. Contacts in the mobile-content aggregation business tell me that around four to five years ago Google was planning to launch some kind of mobile content service linked to its search engine that would be enabled with carrier billing – but it gave up on the idea after it found the task of connecting globally to carrier billing too onerous.

Progress so far

Also, carrier billing has been present in the Android apps ecosystem for some while – even though rather quietly and very much as the exception to the rule. In late 2009 it became available initially among subscribers to T-Mobile USA, the first operator to debut an Android phone; and to Verizon subscribers too, but only for the carrier’s own content channel within Android Market. Over the next two years, the US’ two other national carriers, AT&T and Sprint, joined in. And so did Japan’s three main carriers and South Korea’s top carrier. In Europe, as far as we know, Vodafone’s announcement last month is the first and only carrier billing deal struck by Google for Android Market.

But that still only adds up to five carrier-billing-enabled countries out of a total, at last count, of 52 countries where Android Market has a paid-downloads presence – and most of the five (Germany, South Korea and UK) are only partially enabled.

Contrast that with Nokia’s Ovi Store, which back in April boasted of billing connections with 112 operators in 36 countries. Or with RIM’s BlackBerry App World, which has enabled carrier billing through billing aggregator Bango across the US, Canada and Europe – the latter both in the UK and Euro-zone countries – and also struck a deal with Telefonica to connect to the billing systems of all of the carrier group’s mobile networks, spread around Europe and Latin America.

In its press release for the Android apps store it’s unveiled in the UK this week, Samsung highlights the fact that the store will soon be enabled for carrier billing – saying, almost apologetically, that it will initially offer only credit-card payments as an option.

Carrier billing momentum

Yet, one gets the feeling that Google has other carrier-group billing deals in the pipeline which might come to light shortly (beyond the one announced with Vodafone), and that Google is now fully behind enabling carrier billing throughout its Android Market footprint.

August was a busy time for carrier billing announcements. Beyond Vodafone’s tie-up with Android Market, rival carrier group Telefonica’s BlueVia developer program added API access to the carrier-billing-aggregation service offered by online and in-app mobile payments provider Boku; Boku also struck direct billing deals with French operators Bouygues Telecom and SFR, in addition to its existing deal with Orange France; and rival billing aggregator, PaymentOne, established a direct billing relationship with German operator O2 Telefonica.

Earlier in the summer another carrier-billing aggregator of online and in-app payments fame, Zong, was acquired by e-commerce brand eBay to integrate with online payments platform PayPal. Yet another aggregator, Bango, signed an agreement with mobile-browser maker Opera Software to enable carrier billing on the Opera App Store. Meanwhile, US carrier Verizon teamed up with aggregator Payfone to enable its subscribers to purchase digital goods online via their mobile bill.

There is definite momentum there, and a mutual interest among carriers and iOS ecosystem competitors to keep that momentum going.

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