Operator JVs are necessary to take m-commerce mass-market

The joint venture announcement from the three leading UK operators is an indication that making m-commerce a mass-market proposition is beyond their individual capabilities.

During the announcement, executives from the operators emphasised that the success of this venture was based upon partnering with banks, retailers and technology suppliers in an effort to bring about scale and reduce fragmentation.

Obvious exclusions from this joint venture launch were the UK's fourth operator, 3UK--which has expressed its extreme annoyance at being left out--and key players such as Google and Facebook. In their defence, the three founding members--Everything Everywhere, O2 and Vodafone--were keen to highlight that the platform will be open to all, but just not at this moment.

The creation of scale, or a viable and comprehensive ecosystem, will be the measure of success to this bold venture. Banks and retailers have been reluctant to invest in the NFC readers and back office systems unless they can see the opportunity for widescale adoption and technology interoperability.

Commenting on the move, the research firm Strategy Analytics said that a multi-operator agreement in the UK had the potential to overcome these challenges and allow operators to compete with solutions like Google Wallet, which will initially be limited to only Android smartphones.

But mobile operators have a poor history when it comes to working with each other to build a bigger market. A previous attempt in 2003 to bring m-payments to life failed soon after the Mobile Payment Services Association was formed.

David MacQueen, an analyst at Strategy Analytics, observed that operators were not well known for moving fast. "So, while this joint venture is a positive step we remain cautious about its chance for success," he said in a statement. "In particular we look forward to seeing how the operators differentiate their respective payment offerings."

On the upside, a recent survey of UK consumers conducted by YouGov found that 23 per cent were interested in using their handsets for making small payments. Of particular note, close to 90 per cent of those who plan to use NFC thought that m-payments would be more convenient, while 67 per cent thought it would speed payments and be easier than carrying cash or credit cards.

However, the study found that m-payment security and fraud was a major worry for consumers. additionally, operators and retailers still need to educate potential users about the benefits of paying--particularly for smaller items--by using their NFC-enabled handsets.

But does this sudden move to operator collaboration indicate panic more than their wanting to "benefit the consumer?" The likely prospect of Google and Apple entering the European market with their own m-commence platforms will have triggered alarm and fear in the headquarters of many operators.

In what looks like a rushed scramble to offer a common UK platform for m-commence, the founding operators only have months to start adding credibility to what appears to be little more than an idea today.--Paul