Reader Forum: Overcoming fragmentation in mobile ecosystems

Editor’s Note: Welcome to our weekly Reader Forum section. In an attempt to broaden our interaction with our readers we have created this forum for those with something meaningful to say to the wireless industry. We want to keep this as open as possible, but maintain some editorial control so as to keep it free of commercials or attacks. Please send along submissions for this section to our editors at: dmeyer@ardenmediaco.com or tford@ardenmediaco.com.
Fragmentation has become the defining characteristic of the global mobile ecosystem, and it is certainly the largest challenge. Fragmentation is evident in every facet of the industry: technology, business practices, risk, openness and functionality. And it’s not going away anytime soon.
While this fragmentation is challenging, its severity and cost can be addressed by a business model focused on resolving market inefficiencies. A mobile hub offers a potential solution. Fragmented markets can operate efficiently but they need an intermediary. This company’s main focus is resolving complexity on behalf of its customers. This “hub” model absorbs complexity for both upstream users and downstream suppliers, which translates to a better quality of service at a lower cost.
What is a hub? A hub is an enterprise model that integrates access, standards, and functionality across multiple suppliers which yields a single, rationalized offer. A hub achieves this by aggregating transactions, allocating cost, managing risk, maintaining consistent business process, and handling connectivity management. The hub enables cost-efficiencies and offers customers a higher quality of service for a lower cost than they could achieve independently.
Consumers today demand more from mobile operators for a lower cost. The hub helps operators relieve commercial, credit and fraud risk by allowing thousands of merchants to interact directly with subscribers. For example, a hub could help merchants such as ESPN and Wal-Mart to interact with all of their customers, regardless of their underlying carrier, through a single interface that manages the operator connections. By driving cost and inefficiencies from the system, mobile operators can better support subscribers at a lower cost structure.
For mobile marketers and content providers, the hub reduces cost and complexity of heterogeneous connections, transport types, business processes, reporting, and settlement by creating one place to do business, one set of connections to manage, and one place to settle rules and processes.
Merchants cannot support consumer-level pricing without a hub or hubs to normalize the many business and technical processes required to market and sell directly to mobile subscribers. For example, if a games producer must hire and maintain staff to track the different rules for application stores, carrier portals, and direct distribution; maintain the connections to deliver, monitor, audit, and track mobile content down to the device; and then transact, process, and settle payments and goods according to the different rules of each market, the cost for any one provider can drive consumer prices out of reach.
The hub provides protection for consumers. Consumers do not want to worry about the legality of the content, rights of producers, product functionality, or how disputes about purchasing or usage will be resolved. Much like a credit card allows consumers to purchase almost any item, in any currency, from any vendor, and with the comfort that they’re not being exposed to fraudulent goods or charging, mobile payment hubs can open the floodgates of consumer demand by making it fast, easy, and safe for consumers to purchase goods using their mobile phones. For example, when eBay introduced a PayPal application to enable mobile payments on their auction bidding, they created a hub for mobile auction consumers and reported growth of over 600 percent.
Mobile operators remain the primary gatekeepers to subscribers. As operators come under increasing pressure to become more “open,” hubs must do more to protect operators. Remedying the various technical connections of mobile channels is relatively straightforward. Solving the commercial, credit, and fraud cost and risk is harder. For mobile ecosystems to thrive and grow, hubs must emerge to collect and allocate these costs. Without hubs, risk and cost will land on a single point in the system, creating an impassible bottleneck between demand and supply sides. With a hub, risk and financial upside is distributed consistent with the value-add contribution of a participant.