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The Wrath of the Carrier—Off-Deck Providers Beware Print E-mail

SCOTTSDALE, Ariz., May 20, 2008- Overly aggressive off-deck mobile content providers have once again caused consternation among carriers. In this latest chapter, T-Mobile has been sued regarding subscription charges for Flycell, a division of Acotel Group S.p.A.

 

The T-Mobile suit follows a similar recent suit against AT&T Mobility (Cingular), and a series of off-deck subscription quagmires in Europe. As carriers get burned by these eruptions, they are taking aim at unscrupulous or just careless content providers. And the consequences can be severe, including exclusion from carrier’s off-deck programs. Fortunately for carriers and content providers alike, the latest generation of competitive mobile content enablement platforms mitigates operator risks.

According to the suit, "Defendant T-Mobile caused plaintiff Moore’s cellular phone to include the unauthorized charge of $9.99 per month for Ringazza, and similarly caused plaintiff Butler’s cellular phone bill to include the unauthorized charge of $9.99 for Flycell. In doing so, defendant T-Mobile omitted necessary information from plaintiffs’ cellular phone bills that was required by [California statute], including the means to contact the offending third-party company, such as a toll free number.

In a similar situation, AT&T Mobility settled in February with the Florida Attorney General regarding third-party services such as ringtones and text messaging that were advertised as free. The settlement involved thousands of Florida consumers and could result in refunds of more than $10 million, depending on how many consumers seek compensation.

AT&T and T-Mobile are hardly alone. Most major carriers have seen suits filed against them stemming from the unscrupulous activities of rogue off-deck providers.

Law suits are not the significant issue, though we do not mean to trivialize them. The impact on the subscriber is a greater issue. Customer retention, satisfaction and customer acquisition are significant carrier issues. Sprint had selling, general and administrative expenses of $2.78 billion last quarter. The last thing a carrier wants or needs is someone undermining those investments.

The Response

Questionable and unprofessional market activity by select off-deck providers is drawing a response from the carriers. Sprint Nextel recently enacted strict guidelines and is enforcing them with penalties for content partners. According to a confidential five-page memo to aggregators, “Non-compliant short code campaigns will receive penalties up to and including program termination from Sprint Nextel Boost networks. Conversely, revenue share incentives may be applied for programs performing well on policy compliance.”

AT&T Mobility took a different approach. It requires all subscription-type relationships to be processed and controlled via its Billing Support System (BSS).

MultiMedia Intelligence sees other carriers following suit. The carriers will get aggressive in forcing providers to follow Mobile Marketing Association (MMA) guidelines. This will not only happen in the US but in Europe as well. The hope is to clean-up rogue off-deck providers.

Contributory Negligence?

The carriers in these instances were clearly not at fault. However, there were steps that could have been taken to mitigate the problems. In both the T-Mobile suit and the AT&T suit, there were comments that stood out as being indicative of this issue:

  • In the case of T-Mobile, ". . . defendant T-Mobile omitted necessary information from plaintiffs’ cellular phone bills that was required by [California statute], including the means to contact the offending third-party company, such as a toll free number."
  • In the case of AT&T, the Attorney General of Florida indicated that although AT&T was not at fault, they were not blameless. "They did have misleading billing." McCollum said. He also noted that AT&T got about 40 percent of the charges for third-party services billed to their customers.

With a robust content enablement platform, these issues could have been greatly mitigated by creating transaction transparency, providing all records of what was purchased, the purchase date, the transaction amount, the use-rights, etc. Robust platforms stand-out against the "me-too" platforms here.

The platform manager, be it an operator or an off-deck provider, needs management tools to facilitate oversight. Refunds need to include complete information records and automated refunds that reverse the charge and charge back the revenue from the content provider. Minimizing complexity and maximizing accuracy decreases cost. Also, automated and accurate processes for customer service must minimize service call response time. Finally, automated, accurate and robust reporting systems minimize bad debt and fraud. Problems that can be prevented include incorrect billing, insufficient sales confirmation, or failure to validate that a subscriber has the proper funds to pay or has a handset that can properly use the content.

In the end, the carrier is held responsible for the customer experience, regardless of fault. With high customer acquisition costs, they often fix an issue at their own expense to make the customer happy. This MultiMedia Intelligence Brief comes from MMI’s mobile content platform research. The research, “Mobile Content Platforms: Mobile 2.0 and Advertising Join the Party,” covers software platforms that deliver & monetize content to mobile handsets. The report is available for sale immediately. For more information contact:

Rick Sizemore

(480) 213-4151

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ReportMobile Content Platforms: Mobile 2.0 and Advertising Join the Party
# of Pages132
# of Tables96
# of Figures7
Market Forecasts

· Mobile premium content revenue by geography for Mono and Polyphonic Ringtones, Music Ringtones, Music Ringback Tones, Music Full Track Downloads, Music Streaming, Mobile Games, Adult Content, Graphics, Mobile TV, and Mobile Video

· Advertising Revenue in Premium Mobile Video, with segmentation for Agency, Ad Network, Ad Server and Technology, and Content Providers

· Mobile TV Advertising Market Revenue

· On-Deck and Off-Deck content revenue by geography and content types

· Revenue share by content type for Content Providers, Operators, Digital Commerce Services Providers and Platform Companies

· Company profiles of 130 market participants

· Market trends and analysis

RegionsUS, Canada, North America, Latin America, Western Europe, EEMEA, Asia
# Companies Profiled137
About MultiMedia Intelligence

MultiMedia Intelligence provides actionable intelligence on the markets and technologies for delivering IP video to the Nth screen. With a broad "ecosystem-based" perspective that moves beyond the classic 'three screens' of TVs, mobile handsets, and computers, we identify the opportunities in enabling and monetizing digital media on a multi-platform, multi-network basis.