Categories: Opinion, Reader Forum

Reader Forum: Will NUVO providers disrupt m-commerce?

Editor’s Note: Welcome to our weekly Reader Forum section. In an attempt to broaden our interaction with our readers we have created this forum for those with something meaningful to say to the wireless industry. We want to keep this as open as possible, but we maintain some editorial control to keep it free of commercials or attacks. Please send along submissions for this section to our editors at: [email protected]

A new, potentially disruptive phenomenon called network unaffiliated virtual operators, or NUVOs, has emerged in the North American e-commerce marketplace. NUVOs – unlike mobile network operators, which provide services on specific mobile operators’ networks – are not affiliated with any specific mobile network operator. Instead, the service runs “over the top” of an existing broadband service.

These OTT service providers, using smart applications on smartphones, tablets, iPod touches and even personal computers and other connected devices, are providing traditional person-to-person services such as voice and mobile messaging. The mobile messaging applications use traditional SMS to interoperate with the existing mobile SMS ecosystem, as well as provide advanced options for app-to-app capabilities. Users of these new services can have a messaging app with little to no costs, compared to paying for messaging bundles or per message from mobile network operators.

The NUVO phenomenon is disruptive to mobile operator services, as they are offering alternative voice and messaging options to subscribers. But will they become a similar disruptive force for mobile commerce and even payments?

Consumer interest

NUVOs are tremendously appealing to a variety of subscriber demographics. Most NUVOs offer a basic or complete service for free, subsidized by targeted advertising within the app. This model has worked quite well, as many NUVOs are profitable or close to being profitable. Still, the NUVO and OTT communities want to boost revenue by offering in-app purchasing options to a somewhat “captive” audience.

In-app purchasing capabilities are device or operating system specific, leading to a more fragmented implementation strategy for service providers that offer their services on different platforms. Most multi-device offers present a single, unified offering to their subscribers, instead of offers based on the subscriber’s platform.

Austin Murray, co-founder and president of Gogii, which offers the TextPlus brand of services stated: “TextPlus is primarily a ‘freemium’ app, whereby we give away the core experience for free, subsidized by advertising. We use in-app commerce to sell our users different products such as alert sounds, ad-free, premium phone numbers. We will also use in-app commerce to allow users to purchase voice minutes, and in some territories, messages. In-app commerce tools and solutions are at different stages of maturity on different platforms. As with anything unique to a platform, we have to design and code for it appropriately, which adds to fragmentation and complexity for us.” The TextPlus subscriber gets a unified experience, regardless of whether the platform is iOS, Android or something else.

The TextPlus options illustrate what can be the beginning of other mobile commerce and customer relationship options for NUVOs. NUVOs may provide further access to loyalty and other customer engagement capabilities through the subscriber applications. Texting is still an extremely engaging activity, so if NUVOs can keep subscribers happy with high-quality service and interoperability, then they have a strong audience.

A NUVO and its subscribers are somewhat like a social network. Within this network of users is a common platform – the app that each subscriber uses to engage with other NUVO subscribers or subscribers of other entities, through standard messaging, such as SMS. Given that this is a common platform for potentially millions of subscribers, it is also a unique opportunity for the NUVO to offer value adds – including loyalty and customer outreach for third parties, as well as a platform to provide monetization of goods and services – to their subscriber base. Think about it: A NUVO with 10 million subscribers, all using the same app for messaging and voice or other P2P services can lead to an almost unlimited number of creative capabilities. NUVOs have taken the first step, simply by selling ads to third parties with fairly accurate demographics. Consequently, the ads can be specifically targeted.

One potential next step is to engage these users further with loyalty programs or couponing – directly through the app. Again, NUVOs have the advantage of known demographics and usage patterns. Some even know subscriber locations (if the subscribers have allowed it). The possibilities of how this might work are limitless. Enabling subscribers to connect their NUVO accounts with some payment mechanism should be relatively easy. That combination would create a powerful customer engagement device – armed with millions of subscribers who have buying power.

Murray of Gogii also noted: “Subscribers appear to like in-app commerce very much. Many, if not most, of the highest grossing apps on iOS today are freemium – the app is free but customers pay for premium features, using in-app commerce. Remember that most mobile users are already in the mindset of being accustomed to paying for things on mobile – and very often for the same things they would not pay for on the desktop Web. Furthermore, with carrier billing and many of the in-app commerce platforms, their billing credentials are already submitted and it is a simple click to get the content or experience they want. Typically, the cost of these clicks to consumers is pennies to a few dollars, so the barrier to buying is fairly low for most consumers.”

Gene Lew, CTO of MediaFriends echoes these sentiments, “Other [NUVO subscribers] seem to really like having options available to them. Others would actually like more stuff that could be done through the in-app model.”

MediaFriends and Gogii subscribers like having in-app purchasing options and these opinions are reflective of other NUVO subscribers. Today, these purchases are for advanced app features or additional service capabilities. In a way, it is similar to how premium SMS was used to purchase mobile content such as screen savers and ringtones. Certainly, it is common to see in-app purchases unlock new capabilities like those within mobile games, as well as other capabilities through different mobile apps. In most cases, this purchase is still limited to some virtual capability or enhancements of the mobile service, through the various apps the consumer uses.

Where to?

When comparing the NUVO model’s impact on mobile commerce and P2P communications ecosystem, it is less disruptive to mobile commerce. The model is, though, a great vehicle for customer engagement and loyalty, as are many social networks. In fact, leveraging NUVO services for customer engagement is still in its infancy.

True (some say “ultimate”) mobile commerce or mobile payments involve using the mobile device to pay for tangible goods and services. A NUVO app or service is really not designed for that, nor is it the optimal mechanism to do so. But as a mechanism to buy communications features – app customizations, minutes for voice or video calls, or even international messages – it is a wonderful fit. Today’s independent NUVOs are just beginning to explore what they can offer their subscribers. They are truly a disruptive force in P2P communications and provide a needed boost of innovation to how people can communicate. Will they be a force in m-commerce? Probably not. But they could find a role with mobile customer retention management.

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