Carriers take joint venture approach to mobile commerce

Three of Canada’s largest wireless carriers Tuesday announced they have jointly created a company to address the elusive mobile commerce market.

The term “m-commerce” was a buzzword a few years ago, but offerings such as micropayments and location-based services failed to materialize as money-earners for the carriers.

“Bell, Rogers and Telus have been looking at the mobile commerce space for some time,” said Robert Blumenthal, vice-president of products and services for Telus. “Largely speaking, it’s been unsuccessful or marginally successful.”

The reason, said Blumenthal, is that each of the carriers attempted their own approach to m-commerce, fragmenting the market. By banding together to create a common company and infrastructure they can all use, the providers can share the burden of costs associated with services and present a united front to cell phone users.

The company, established Tuesday, is called Wireless Payment Services Inc. Its first m-commerce application will allow customers to top up prepaid cellular accounts directly from their phones using a debit or credit card account. That service should be available by this time next year, said Jeff Chorlton, the company’s president, and will be the first of many.

Chorlton said he was approached by the carriers to head up the new company since he has a history of working in financial services. The idea, said Chorlton, is to turn a consumer’s cell phone into a “mobile wallet.”

“Their mobile device will essentially enable them to use debit and credit card facilities. To them, it will appear as a debit or credit card (payment) and to merchant, the same thing. The intent here is to make it as simple as possible,” he said.

The key to making mobile commerce work this time around is co-operation between the carriers, said Roberta Fox, senior partner at Fox Group Consulting, based in Markham, Ont.

“The shift in the mobile market is where you have competitors coming together to some joint investments for things that they all need,” said Fox. “Each one of these companies could probably not afford to put in m-commerce on their own. It took 20 years for the banking industry in Canada and now it’s everywhere and everybody’s making money on it.”

WPS will act as a common infrastructure for the carriers and the company is currently issuing RFPs to various software and hardware providers in order to build the necessary technology backbone, said Chorlton. Those proposals are due back on Dec. 15.

“The way this will work is, we will build the infrastructure and each one of carriers will build their own services that will access WPS,” he said, adding that only Bell, Telus and Rogers are currently involved, but other wireless operators may join at a later date.

The timing is right for a re-emergence of m-commerce, said Fox. Investment capital dried up when the carriers tried it the first time around due to lack of results, but interest has been renewed in the last few months due to the development of technologies like Wi-Fi and various carrier-grade deployments of third-generation (3G) wireless networks. Last week, for example, Bell Canada announced the availability of its EVDO network.

The work around m-commerce is designed to appeal to consumers but also to merchants who would eventually be able to take advantage of the “mobile wallet,” said Blumenthal, and allow their goods and services to be purchased using cell phones. The fact that merchants would be able to use a single interface made available through WPS would allow them to reach a variety of cellular subscribers.

“If every merchant had to connect up to each of the wireless service providers in their own unique way . . . we would again have a very fragmented approach,” he said.

There are successful m-commerce models already working in nations like Finland, said Chorlton. “What we’re hoping to do is take the best of what these other countries have done and combine it.”

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