Off-deck mobile services: the pitfalls

Always on the look-out for new revenue streams, mobile carriers who are facing the reality that they can’t win the mobile content battle are joining forces with the off-deck providers.

The mobile operators have a very powerful tool, which they use to tempt content providers – mobile payment facilities …..

Do a lucrative revenue sharing deal with me and I will let you charge your customers via the telephone bill.

This powerful tool allows them to force revenue payments of 40% and more from these content providers. These sorts of margins are often only available in the adult entertainment market and in personal services such as horoscopes, games and gambling.

Some of the more financially attractive services are also offered to teenagers – such as ring-tones and music services. These more lucrative markets, in particular, attract their share of cowboys.

Also, there are often additional layers in place between the operator and the actual content providers. These are the content aggregators. Content providers and aggregators can be based in the country where the service is offered, but increasingly they are also located overseas.

All of this makes it even more difficult for the user to obtain a transparent overview of who is delivering the services to them. Trying to ask questions, or lodging a complaint, is a near impossible task for users.

More and more mobile operators are learning this the hard way. An increasing volume of customer complaints are arising around charges on their mobile bills which they haven’t authorised. There are a number of reasons for this:

New customers are sometimes unaware of actually subscribing to a service;
Some customers are under the impression they are making a single purchase, but actually end up with weekly or monthly charges;
Unscrupulous providers are simply misleading customers;
Spammers obtain access through off-deck services to users’ mobile account.

Of course, the mobile operators are going out of their way to catch these unscrupulous or careless content and service providers, since these practices place a key future revenue stream at risk. In the USA and Europe some of these cases have been widely reported in the media and can cause serious harm to the business of the mobile operators.

While the culprits are often caught and banned from access to the mobile operators’ billing systems, in the end the mobile operators are blamed for the problems. In the courts they are often told in no uncertain terms that they have a responsibility to protect their customers, as it is their customers who are being ripped off through their mobile services.

More often the courts also cite the poor customer service offered by the operators as a key reason for the problems. Operators are making it very difficult for customers to complain, via hour-long waiting times at call centres, lack of toll-free complaint numbers, lack of detailed billing information and so on. And, more problematic still, sometimes the operator blames the off-deck content provider and/or the aggregators, and vice versa, leaving the customer stranded in the middle.

As we reported recently, increasingly sophisticated software is becoming available to both the operators and the customers to better protect themselves from mobile fraud and mobile SPAM.

It would not be too difficult to clean up this market:

Make it financially more attractive for more content providers to participate;
Implement more robust and secure billing and transaction platforms;
Provide a charter of customer rights;
Provide customers with full details of the off-deck transactions;
Provide transparency regarding who is the content or service provider;
Give automatic refunds within a cooling-off period;
Minimise the complexity of the service and the complaint procedures.

In the end, the buck stops with the mobile operator.

We are currently assisting a customer in Australia who is facing problems along the lines mentioned above. I will report on the outcome in due course.

Paul Budde