Restoring sanity in mobile value added services

Telco based mobile value added services, while still relatively young have matured with pioneers targeting the mass market having started on the local opportunity about 15 years ago. The industry has had to learn and adapt on the fly as the uptake of mobile communication services saw hockey stick growth with the value of mobility becoming apparent and the cost of access dropping. The total addressable market for mobile value added services has grown in equal measure.

In the recent past, there have been complaints, mainly on the interwebs about how companies invested in the space in apparent collusion with mobile operators have siphoned millions from the mobile subscribers by way of premium services that deduct value from preloaded airtime, or sneaked onto postpaid bills. This would probably hold true about a decade ago when the industry was still finding its feet and the opportunity brought in both the good and the rouge operatives.

The rouges

Mobile number prefixes issues to mobile operators by the Communication Authority of Kenya can hold one million users and it is child’s play to generate a list of possible active subscriber phone numbers. The practice of list purchasing was also rife and considered “legitimate” business riding on the back of zero legislation and controls. In the past there was no “gatekeeping” and connecting to the operators was based on a valid license and active contract with the operator. SMPP – Short Message Peer to Peer, the standard industry protocol used to connect to operators for high volume messaging could then be exploited to send messages to unsuspecting consumers ether directly via operators or through grey routes that were available through cheap offshore connections mostly out of India. A curious mobile consumer would probably respond to the received message that was linked to a premium number, get charged and probably bundled into a subscription service. In the very early days, these premium bills would accrue and any mobile airtime top-up done would first be used to settle these bills and it was not uncommon to have your entire top-up consumed this way, leaving many a frustrated consumer whether or not they had requested the service in the right way or had been onboarded wrongly.

Checks and Balances
Faced with consumer backlash, certain things had to change. The accrued billing model was stopped and the mobile subscriber would now get a message alerting them that they had insufficient airtime to consume the service with the third party also duly notified of the subscriber status with a failed billing notification.

The operators introduced service delivery platform from telecom vendors Huawei and IBM. The service delivery platforms broker the communication between third party systems and core mobile operator infrastructure. The two key functions performed here are; first, to ensure double opt-in to subscription services; this is where a subscriber would be prompted to confirm that they are activating a service fully cognizant of the billing mechanics and frequency. Second is to ensure that third party providers only communicate back to subscribers who seeded the interaction.

Subscribers also have a part to play and a good starting point would be to engage service providers who adhere to standards as informed by the codes of conduct by industry bodies such as the global Mobile Marketing Association. As always do give the terms and conditions a quick read even with the checks in place.

Compliant service providers are able to provide end to end visibility on your interactions with them, with reporting to the mobile network operators and the regulator should the need arise.

Where to play in the mobile value added services ecosystem

It is always interesting to hear discussions around emerging technologies or industries that seem to capture the minds of everyone; from your barber to the executive at a FMCG company. More often than not, if the discussion is based on mobile technology, a lot of assumptions are made as to who plays what role and where the opportunity lies.

At the very top of the mobile ecosystem is the regulator CCK – Communications Commission of Kenya who are in charge of issuing licenses to mobile network operators, premium rate service providers – PRSP’s and content providers. The different tiers of licensing attract varied fees with the current cost of the PRSP and content provider license standing at Ksh 100,000, on top of an application fee of Ksh.10, 000. The license fee is annual and from year two, it  is based on a percentage of revenue generated by your firm with the lower limit of Ksh.100,000. Continue reading Where to play in the mobile value added services ecosystem

Understanding revenue generation for value added services on mobile

The fact that mobile is big in Africa is undeniable with more people seeking to understand how to  derive maximum value from this channel. What most seek to know is how to generate revenue from the various services that they can offer. To generate revenue, one must have the ability to bill for services and there are various ways of doing this.

Shortcodes are 3-4 digit numbers that are availed by Mobile Network Operators (MNO’s) to Premium Rate Service Providers (PRSP’s) for purposes of setting up services.  At the time of setup, shortcodes are assigned billing bands which range from normal sms rates to premium rates of up to 100 shillings. Shortcodes don’t offer flexible billing and you must choose the best fit for your service. Shortcodes attract a monthly rental fee from the operators and may attract a premium one-off fee if the code is considered “golden”, such as an easy to remember 5544 for example.

Mobile operators usually reserve the use of 3 digit short-codes for network centric services. Continue reading Understanding revenue generation for value added services on mobile