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6 Key Takeaways from the Virtual Global Carrier Billing Summit 2020

On 6th and 7th October we attended Virtual Global Carrier Billing Summit, an event dedicated to carrier billing and connecting the global Direct Carrier Billing ecosystem.

With the most influential players from across the global carrier billing community brought together, from service aggregators, digital merchants and content providers to mobile operators, regulators and tech providers, here are our key takeaways from the event:

1. Developments During the Pandemic

App stores, games and media streaming all still remain the main source of revenue from carrier billing and these services have all boomed under Covid-19 lockdown conditions.

  • The pandemic has brought more urgency to the vision of using DCB to make physical service transactions and public transport authorities are considering it as an option to avoid cash payments
  • Video conferencing and eLearning have become growth areas due to Covid-19, with potential for DCB payments
  • Spikes have been seen in transactional volume with OTT and gaming and these trends may outlive the pandemic
  • New revenue streams have been explored in sports with on-demand video content, player interviews etc. Fans are prepared to pay for high quality content and this has been a driver for DCB

2. Big Opportunities in Bundling

Bundling is one of the biggest opportunities going forward for carrier billing or carrier resold OTT and much of the activity will be driven by 5G.

In the Omdia Update – The Fortunes and Future of Carrier Billing, Principal Analyst Guillermo Escofet stated that from Q2 2019 to Q2 2020 55% of 5G mobile broadband plans were bundled with OTT digital services.

  • 5G bundling revenue is expected to overtake non-5G by 2023
  • 5G opens new possibilities of what operators can bundle with their tariffs beyond music and VOD subscriptions, including cloud gaming, live sports streaming, eSports and immersive experiences via AR & VR
  • Growth in market share of mobile bundling is expected to remain at just under 30% in the next 5 years
  • Video and music are still the top choices for OTT bundled services with 5G tariffs

3. Potential for Cloud Gaming and eSports

Global cloud gaming revenue is forecast to hit $12billion by 2025, a significant jump from an estimated $1.4billion in 2020. The increased adoption of 5G over the next 5 years will correlate with the rise in cloud gaming due to higher speeds and lower latency offered to an engaged gaming audience.

  • Cloud gaming services may have to partner with telcos in order to guarantee a quality service with 5G and operators should offer cloud suitable data packages to consumers
  • There are opportunities for operators to reposition themselves in the age of 5G and grow core revenue streams through cloud gaming and eSports, and these platforms will also encourage uptake of 5G
  • Cloud gaming and eSports have a huge potential for returns with a young demographic prepared to pick up high ARPU tariffs

4. Digital Wallets Filling the Gap

 Digital wallets are beginning to fill the alternative payments gap and take a collaborate approach with carrier billing.

  • Wallets are doing well in markets where overheads of airtime credits are high and are becoming a major channels for airtime top ups, offering a cheaper alternative for carriers than traditional top up agents – this could improve the economics of DCB
  • Digital wallets are far from being able to offer the universality of carrier billing and present merchants with a more fragmented landscape

5. Evolving Operator, Merchant and Consumer Needs 

With the continued decline of core telecoms e.g. traditional voice messaging, operators are looking for new sources of revenue. And merchants are now looking at DCB to drive traffic and accelerate growth, not just as a payment solution.

  • Operators are looking at FinTech, digital payments and OTT services to drive the growth of non-core revenues
  • Operators should consider sharing data analytics and knowledge on users, as this can be very valuable to merchant partnerships for monetisation, retention and promotion purposes
  • Value has shifted when it comes to some premium merchants. For example, gaming platforms that are no longer just offering VAS, may be of equal or higher value to operators, and business models and requests might have to be accommodated that are no longer only favourable to the operator
  • Merchants need new channels on top of the app stores in order to acquire new users and avoid the 30% app store margin, therefore demand for distribution through DCB is growing
  • There is a need for merchants to be educated on carrier billing as a manageable solution and offering enhanced services such as fraud protection, bad dept management and analytics could increase uptake
  • Consumers are buying less airtime for calls and texts, with preference for bundles that provide data. There may be a need for regulators in some markets to look at the rules surrounding billing against data as opposed to airtime

6. The Future of Carrier Billing

By 2024 it is expected that carrier billing will overtake SMS as a contributor to total mobile service revenue. DCB currently accounts for $50billion in transactional value, forecasted to rise to $80billion in 2024.

  • The subscription economy is growing and expanding to gaming and sporting, with services making the move towards ‘all you can eat’ offerings for a fixed low price
  • Opportunities may emerge with FinTech and 5G services e.g. real-time location targeting for travel insurance that can be purchased through DCB
  • Japan and South Korea are leading on diversification, enabling payments for physical goods through DCB and driving higher adoption
  • Emerging markets are attempting to bring in new services for citizens e.g. transport and ticketing innovations through mobile and DCB may be a perfect fit
  • There is a need for operators, merchants and regulars to work together to enable DCB payments for physical goods, ticketing and transports globally

Get in touch with SLA Digital today to discuss direct carrier billing as a mobile payment solution.

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