Off-deck moves beyond premium SMS to wireless Web

SAN FRANCISCO — The world of off-deck content may be moving away from premium SMS and onto the wireless Web.
Bango this week said it has seen its WAP transactions in the United States increase fourfold in the last three months as carriers increasingly look for more efficient ways to conduct business with third-party content partners. The off-deck transaction company – which, obviously, has a dog in this fight – said WAP billing is gaining traction versus premium SMS as content providers and other players come to realize the platform “delivers a superior and safer consumer experience,” eliminating many of the pitfalls that have plagued SMS-enabled purchases for years.
“To be honest with you, it’s a relatively clunky process, it’s not a particular good user experience, and it’s really built on a platform that wasn’t designed for billing hundreds of billions of dollars with huge volumes of transactions,” said Adam Kerr, Bango’s VP of Web sales. “More and more of the big content providers and carriers are starting to move to mobile Web billing. It’s a much more familiar experience for the user.”
Indeed, while premium SMS was a necessary step in the early days of the wireless Web (when few phones were Internet-enabled and far fewer people know how to use them), the back-and-forth system of using short codes to access content is fraught with shortcomings. The process not only is time-consuming (requiring users to request content, send a confirmation and then download the stuff), it often fails to deliver the goods once they’ve been ordered.
Analysts say premium SMS is a major factor in leakage – the massive amount of money left on the table when off-deck transactions fall through – and often results in costly customer-service calls to the carrier, whom subscribers are sure to hold accountable. WAP billing refund levels are typically less than .1%, said Kerr, citing research from iGillottResearch Inc., whereas premium SPS levels often fall between 10% and 20%.
“(Content) providers are highly motivated to have the system work efficiently, as there is considerable revenue to be had,” Frank Dickson of MultiMedia Intelligence wrote in a white paper on leakage two months ago. “The operators are often held responsible for the consumer experience, even when the problems of others in the delivery chain.”
Which is not to say that WAP billing – generally defined as Internet-based transactions where the carrier bills on behalf of its content partners and takes a share of the revenue – is a panacea in a space where countless dollars fall through the cracks. Not only is a Web-based billing system vulnerable to some of the same perils that have hindered off-deck content – namely, fraudulent marketing practices and a lack of safeguards in the overall industry – the WAP billing world is a very small one in the United States, carriers are just beginning to embrace it.
“Anything that’s an increase (in WAP billing activity), it’s a small number still,” said Steve Livingston, CMO of mBlox Inc., a Silicon Valley-based messaging and transaction company that supports both premium SMS and WAP billing. “But we think WAP billing, as adoption (of the mobile Web) increases, will increasingly be the way users discover and purchase content.” Premium SMS will continue to be a good fit for some mobile transactions, Livingston said, such as polling and some other kinds of interactive activity, while Internet-based billing will naturally ramp up as traffic on the mobile Web increases.
Regardless of the platform, though, the off-deck world remains an amazingly inefficient space. Content providers and transaction companies are increasingly feeling the pinch as carriers are taking industry guidelines – such as those provided by the Mobile Marketing Association – and tightening them to their own likings, requiring partners to tweak their campaigns for each operator. So while WAP billing may address some of the issues that hamper off-deck revenues, what’s really needed is for operators and their partners to embrace a standardized format such as PayForIt, a U.K.-wide payment platform, Livingston said.
“WAP billing does solve some of these challenges, but really we should focus on the end-user experience,” said Livingston. “We need all the carriers to adopt a system (like PayForIt). …I think within the next 24 months we could see that.”