Operators to generate $9 bn revenue from carrier billing

Mobile operators are expected to generate $9 billion revenue annually by 2022 from carrier billing that allows wireless subscribers to make purchases by charging payments to their phone bill.

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The 3-fold increase in carrier billing revenue from the estimated $2.9 billion in 2017, as per Juniper Research, is driven by bundled content such as Spotify across Europe and Netflix in markets including the Philippines and Mexico.

OTT content providers can reduce marketing costs by leveraging the brand name of local mobile operators by using carrier billing for acquisition.

There will be new business opportunities for carrier billing in sectors such as ticketing and physical goods purchases. Amazon Japan’s decision to opt for carrier billing is a potential game-changer.

The strategy for operators in order to compete effectively with card payments and players such as PayPal would be the acceptance of a lower revenue share, reducing their cut from 15 percent or more to the single digit range.

Business decision makers at telecom operators should be more proactive in promoting carrier billing. Telcos have limited resource in their marketing departments.

Usage was often constrained by low spending limits designed to limit exposure to fraudulent purchases, an issue that could be addressed by implementing improved reporting platforms, said the report.

Carrier billing is the most significant underdeveloped revenue stream for operators, said  research author Windsor Holden.

“The customer billing relationship is one of the mobile operator’s greatest assets, but consumers are often unaware they can use their phone bill to pay for a wide range of goods and services,” Windsor Holden said.