Bright future for direct carrier billing and service bundling

with Jonathan Kriegel, CEO, DOCOMO Digital

MEF Connects 2021 KEYNOTE: Direct Carrier Billing: a primer

The Mobile Ecosystem Forum, founded in 2000, is a global trade organization that serves as an objective and authoritative advocate for issues affecting the growing mobile ecosystem. They provide a global and cross-sector platform for networking, cooperation, and the advancement of industry solutions for our members.
Jonathan Kriegel, CEO of DOCOMO Digital, shared his thoughts on how the future of direct carrier billing (DCB) fits within the broader payments ecosystem amidst the evolution of mobile carriers underway. In addition, he highlighted some best practices from the most progressive network operators worth emulating and identified some key challenges and opportunities for the industry.

Second wave of convergence is on in the mobile carrier space

With growing revenue declines in the core connectivity services, network operators are facing pressure to play a vital role in the increasingly digital lives of their customers.

The “convergence 2.0” is happening in the categories like fixed mobile bundles, TV and content, automated home, health and wellness, digital commerce. The leaders invest in creating digital ecosystems with digital and physical goods, loyalty programs, a wide range of payment options, all presented to consumers through compelling apps or digital wallets.

The increasing role of direct carrier billing

During the pandemic, as we all sheltered in place, carrier billing revenues experienced a real spike in transaction volumes as existing users purchased more online games and streaming services. And, most importantly, a wave of new users discovered the convenience of DCB for the first time.

And even though today direct carrier billing accounts for less than 5% of network operator revenue, its growth rate is high – and higher than the growth of the core connectivity services.

DCB is predicted to grow at a compound annual rate of just under 7% over the next 5 years, from USD 50B to around USD 80B in 2025. Growth continues to be driven by the leading app stores, games, streaming, entertainment, and bundling.

Read more about direct carrier billing

Bundling as a new growth driver

5G revenues will exceed non-5G revenues by 2025, but the pandemic has already accelerated the erosion of the 5G premiums that operators have earned on the new technology. In this environment, mobile operators are beginning to realise the value of bundling, which, if done well, can drive higher acquisition of new customers and increase customer lifetime value for their existing base through higher average revenue per customer (ARPU) and reduced churn.

This year the telecommunications industry should approach 800m bundled subscriptions globally, with subscription video on demand (SVOD) leading the way. And carrier billing is a natural fit for both hard and soft bundling partnerships between carriers and streaming content providers.

Read more about telco bundling

"Insights from the carrier billing data stream offers attractive monetisation opportunities for operators

One of the most compelling of these is bundling, which leverages an operator’s brand, distribution and billing assets, and OTT merchants gain fast and efficient access to a large untapped customer base.

Carrier billing enabled bundling with OTT merchants also helps operators offset the sooner than expected erosion in 5G premiums brought about by the pandemic. For network operators, these OTT partnerships also provide a compelling alternative to offer cord-cutting consumers.

Research suggests that consumers appreciate the value that bundling gives to them in terms of ease of use and choice as a payment method and the perceived value it brings. But we need to work harder to get the network operator community and the OTT merchants to agree on core marketing programs more quickly.

I remain optimistic about the future of our corner of the payments industry. Carrier billing is growing from a small base, and the future remains bright."


Watch the entire keynote here.

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