Competition concerns voiced as operators team for mobile wallet scheme

20th Jun 2011

Attempts by the UK’s largest mobile phone operators to jointly develop a "one-stop-shop" mobile marketing and payment platform for advertisers, retailers and banks is already raising competition concerns.

Vodafone, O2 and Everything Everywhere, the parent of Orange and T-Mobile, plan to set up the first joint venture of its kind in order to try and accelerate the adoption of mobile commerce, and belatedly take on Apple and Google.

The aim is to create a mobile wallet based on ‘wave and pay’ Near Field Communications technology that can be used on all mobile handsets and across all networks in time for the London Olympics in 2012.

Google already launched its own mobile wallet to great fanfare in May and Apple is expected to follow suit later this year. The two US tech giants are currently considered to be in the strongest position to dominate the mobile advertising market which, although small today, is predicted to grow significantly over the next four years.

Although one of the issues holding back growth in the sector is that advertisers currently have to transact with individual operators when targeting their individual customer bases, the joint venture would solve that problem by combining these customer bases together.

Value-add service

Mark Kusionowicz, marketing director at customer interactions specialist The Logic Group is one of many that has hailed the news. "This announcement marks a pivotal moment in evolving how the British public will interact with retailers or indeed any business that supplies goods and services," he said. "This transcends payments; it provides a vehicle for offers and vouchers based on specific consumer requirements and purchasing patterns, it can provide services to help them to make a better informed purchasing decision and it can provide services that help them manage their finances more effectively.

He added: “There has to be an increased benefit to the consumer – there are plenty of payment mechanisms out there already and arguably consumers don’t need another one. What they do need however is a means of managing their finances more successfully while they’re on the move. Today’s consumer will walk into stores, smartphone in hand, in order to source better prices and more detailed information on the internet. Now the way has been paved for a significant value-add service provision for those individuals."
But the deal between the mobile operators, which would need to be approved by the UK’s Competition Commission, has already run into trouble because of a failure to include smaller rival Three in the arrangement. According to the Daily Telegraph, Three is understood to be exploring whether it has grounds to make a formal complaint to the Commission about the matter.

Three chief executive Kevin Russell said that, while "directionally, this is a good move on taking m-commerce forward", he was "more than a little concerned, as a core competitor, that we have been excluded from this joint venture".

James Barford, a mobile analyst at Enders Analysis, said that the joint venture could also spark competition concerns among other businesses. "It’s one thing to be setting technological standards, but it would be another thing setting prices," he said.

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