Everyone in the U.S. off-deck mobile content space wants the fledgling industry to grow. But the industry has to figure how to do so while weeding out the bad actors before federal regulators step in.

In 1971, the Osmonds hit No. 1 on the music charts with a Rick Hall-produced song whose refrain suggested  that “one bad apple don’t spoil the whole bunch.” Wireless industry professionals want to make sure a few bad apples don’t spoil the off-deck content world and all of the revenue opportunities it represents.

Time is of the essence. Carriers and sometimes their aggregators are getting slapped with lawsuits filed by consumers steamed over getting charged for unauthorized third-party content. Federal Trade Commissioner Jon Leibowitz signaled loud and clear this past spring that the FTC is watching closely. “We strongly believe in self-regulation, but we are also going to police the wireless space,” he said at an FTC Town Hall meeting.

CALLS FOR ACTION
Such actions are prompting members of the off-deck mobile content industry to re-evaluate how processes work within the industry – and how they can be improved. In a June 19 Wireless Week Webcast sponsored by mBlox, a majority of respondents to an electronic poll said the system needs to change. Now for the real work: agreeing on how to change it.

U.S. carriers require their content partners to follow Mobile Marketing Association (MMA) guidelines, which are designed to look out for consumers. In addition, carriers add their own rules for content providers. They even use outside auditing firms to make sure the guidelines are followed. Still, violations creep through. Sprint Nextel, for one, is using a carrot-and-stick approach, implementing stronger penalties for those who don’t follow the rules and hitting them where it really hurts – their pocketbooks – when content providers fail to play by the rules.

Livingston – mBlox

Meanwhile, aggregator mBlox is one of the firms leading the call for change. With MMA and carrier guidelines, as well as auditors minding the store, why are problems still cropping up? Steve Livingston, director of marketing at mBlox, said it comes down to enforcement and consequences for the wrong-doers. A content provider might violate the guidelines for any number of reasons, not necessarily due to unscrupulous motives. Maybe it’s a technical error on their part or something didn’t get implemented correctly. But who’s going to do the enforcement? One logical place is CTIA, he said.

“I think the carriers are independently coming up with their solutions and I think that’s necessary now in the absence of an industry solution,” Livingston said. Yet the current strategy is adding more costs to the entire ecosystem; one way to reduce that cost is to implement more standardization, so that content providers aren’t moving with every punch the carriers throw at them.

CTIA spokesman Joe Farren said talks about doing something in the area of enforcement – around auditing and monitoring – are in the “very, very” early stages, and it’s not clear what form that might take. Most likely such discussions will take place in CTIA’s Wireless Internet Caucus (WIC) headed by Mark Desautels. “I’m sure there will be a number of issues to discuss,” Farren said.

Kusel – Accenture

OTHER VIEWS
Not everyone is convinced the industry needs to standardize or even create a new enforcement arm. The guidelines already exist today via the MMA, which has done a “fantastic” job of creating a set of guidelines that periodically get updated, said Dan Kusel, who leads Accenture’s Content Quality Services operation. But requiring one set of rules across carriers threatens the entire wireless ecosystem, he said, adding that his opinions are based on more than 14 years in the industry rather than as a partner at Accenture.

Part of what drives innovation and competition today is carriers pursue different strategies. One carrier might be happy to serve up R-rated content, while another’s corporate policies call for nothing beyond G-rated content. Right now, the MMA guidelines are general enough that the carriers can tweak them to their needs. “I don’t think an industry organization should be enforcing one way or another,” Kusel said.

As one of a handful of companies that provides content auditing services for carriers, Accenture uses four scoring categories: red, orange, yellow and green. Content providers consistently in the yellow or orange get audited more frequently than those consistently turning up green. Occasionally, carriers will shut off short codes and/or content providers for violations. But there are also re-audits, and Accenture makes recommendations; it doesn’t tell its carrier customers whether to end a short code campaign or not.

The off-deck content space is still in its infancy, and the industry can’t get lazy; it must constantly stay ahead of the curve, Kusel said. But you can expect consolidation and some “settling.” Today, about 400 or so off-deck content providers exist; a few years ago, only about 150 were in the business. With consolidation, the time may come when five or 10 top content providers dominate – but the industry always must make sure the ecosystem provides for the smaller ones, as that’s where some of the most phenomenal products emerge, he said.

Macilveen – OpenMarket

PAYMENT PRACTICES
At least one contingent of the industry has been sounding the horn for some time now about how better payment schemes could go a long way toward solving a lot of the problems in the off-deck world. They say part of the problem is SMS is used as a payment mechanism, something it wasn’t designed to do. The more sensible approach, from OpenMarket’s perspective, is to use WAP billing, also referred to as billing on behalf of or direct billing. “We think it’s an exciting time for off-portal,” said Nick Macilveen, an MMA board member and senior director of carrier and industry relations at OpenMarket, which focuses on billing and settlement for off-deck services. WAP billing “will, I think, change the nature of off-portal commerce today.” 

While SMS and MMS are not going away, WAP billing in general presents a significant opportunity to lower the transaction failure rate, as well as the refund rate, he said. It also gives content providers better data about the handsets that are downloading content.  

Of a similar mind is Valista. With premium SMS, it’s difficult for carriers to block messages if they find out someone wants to cancel a service. In a direct-to-bill environment, carriers can see if someone has opted out of a service and it’s easier to enforce. “A proper charging mechanism is what the industry needs,” said Fran Heeran, chief technology officer at Valista.

While CTIA and others try to figure out the best plan of attack, the situation remains frustrating for a lot of content providers that are following the rules. “We work really hard to make this something people find relevant and something they want,” said Lon Otremba, CEO of Access 360 Media, which facilitates ads in the mobile, online and retail environments. “We personify permission-based marketing. It’s the only way that’s going to win.”

But he understands the challenge for carriers because they’re the ones end-users are turning to when their content doesn’t meet expectations. “I feel their pain. The guys who really get it are the aggregators. They’re in between. They’re not creating content,” yet they’re not the carrier delivering it, either. “They’re trying to do a valuable service between the carriers.”

With more conversations getting started and regulators nipping at the heels of the industry, it’s likely something will happen sooner rather than later. That would please mBlox. “It’s not tomorrow,” Livingston said. “It’s now.”