Less than six months after AT&T Mobility (NYSE:T), Verizon Wireless (NYSE:VZ) and T-Mobile USA announced their mobile commerce initiative, called Isis, it appears that these major players are already starting to rethink their ambitious plans (see related story).
Today the Wall Street Journal is reporting that the operators are scaling back Isis, which they had originally hoped would compete with Visa and MasterCard and instead have decided to set up a mobile wallet.
Interestingly, this new mobile wallet plan sounds very similar to what Sprint Nextel (NYSE:S) has been doing. If you recall, Sprint was noticeably absent from the Isis joint venture. The operator said at the time that it was not interested in competing with the credit card companies and didn't want to be part of a proprietary system. Instead, the company unveiled a mobile wallet solution in November that enables customers to use buy physical and digital products directly from their phones, entering a universal PIN code and billing purchases to their existing Visa, MasterCard and Amazon Payments accounts. Sprint's Mobile Wallet is not a carrier billing mechanism, instead the company calls it a "container" for on-the-go customers to leverage traditional payment methods.
It appears that AT&T, T-Mobile and Verizon Wireless are taking a cue from Sprint. The WSJ article says that Isis is in talks with Visa and MasterCard and others to see if they will participate in this mobile wallet initiative.
While it's commendable that these three Tier 1 operators tried to combine forces to deal with the fragmentation in the mobile commerce space and resolve the conflicting interests of banks, mobile operators and handset makers, it's also clear that even the fire power of these three major operators wasn't enough to combat these problems.
In an in-depth report on mobile payments, Portio Research suggested the best scenario for success in mobile payments is one where the mobile operators and the banks join forces to provide mobile payment service to users.
While Isis did enlist the help of Discover Financial Services to build its mobile payment structure, the joint venture must collaborate more closely with all the major credit card companies and the handset OEMs if it truly wants to succeed in this venture. Perhaps Isis should continue to look at Sprint for guidance since that operator seems to have the best understanding of this complex area. --Sue