Google is apparently in talks with Bharti Airtel to allow purchase of goods and services from the Google Play store using carrier billing, reports The Economic Times. This is not surprising, but this is also not new. Back in 2012, K Srinivas, President (B2C) for Airtel, had told MediaNama that the company, which had partnered with what was then called Nokia, for what was then called the Ovi Store, was “…talking to Android, and whenever Apple wants to come around…” Talks, it would appear, have progressed at the speed of a stationary Formula 1 car.

Srinivas was clear then that Airtel was more open to partnering with app stores than opening up its API to individual developers to integrate with. Airtel’s stance on carrier billing might have changed since, especially since the relationship between Google and Airtel appears to have become stronger. Airtel, the most charitable among telecom operators, recently offered Google’s Android One customers “100 MB of data per month for 6 months for software updates and 200 MB per month for 6 months for app downloads and updates on the first prepaid active Airtel SIM inserted in the Android One device.” Airtel’s Wynk app/service has carrier billing integrated for in-app purchases, even though Play store guidelines prohibit third party billing.

But things change. In December last year, Airtel CEO Gopal Vittal had said the company would open up location and billing API in 3-5 months, in an “entrepreneur friendly way”. In the meantime, India has seen a number of carrier billing operators set up: Boku entered the country by acquiring Qubecell. Fortumo* has expanded its operations in India, recently funded NewsHunt has iPayy, and a few months ago, Mopay launched operations in India.

This is a good time to revisit how we think things should be. In 2011, responding to a Mobile VAS consultation in India, we had put forth the following recommendations, for opening up Mobile VAS. Our recommendations were related to making Mobile VAS open, fair and competitive, and to make telecom operators transparent, given the apparently massive fraud taking place when it came to billing for MVAS services. Our recommendations:

1. Take carrier billing out of the mandate of telecom license fees, and treat them as pass through revenue: One key failing of the telecom licensing in India is that license fees are charged as a function of telecom operator gross revenue. Because of this, telecom operators first deduct what they call WPCcharges from what customers get billed. This means that either merchants and app developers get paid less, or customers are charged extra for purchasing digital content and services on mobile, as opposed to other platforms like the Internet, or physical retail. In a future-ready, ubiquitous regime, the access (carriage) business needs to be treated separately from content and VAS. This change is necessary in the licensing conditions to create the basis for separation of billing of access from billing of content and services.

2. Kill the revenue share, enforce a transaction fee: The “revenue share” mechanism creates an unholy marriage between telecom operators and content and service providers. Lack of transparency and standardization leads to arbitrariness in partnership decisions, which has, in the past, led to corruption in VAS departments. Give content and service providers independence from the “Supply Chain” heads of telecom operator VAS departments, to make access and billing to content and services ubiquitous. Thus there are different revenue shares for different types of content from different content providers, instead of having an access charge, a transaction fee for billing and finally, a content/service fee for the content/service purchased. This lack of standardization and transparency in transaction fees and content/service fee will prevent the growth of mobile commerce through telecom operator billing mechanism.

Mandate the communication of the following to customers: access fee, service/content price and transaction charge, with each transaction. The transaction fee should be similar to a banking transaction fee for all purchases of content/services, and like in case of all payment gateways, money should be transferred to merchants within a few days.

3. Enforce verification of billing: This provisioning of independent mechanism for verification of billing, in order to address MIS issues, and bring billing for content and services in line with Mobile and Online Banking guidelines from the Reserve Bank of India. The two step verification process (which, incidentally, has since been mandated by the TRAI), will ensure that customers are not unfairly billed. Note that MediaNama had then recommended an IVR based verification system, with customers being called back and asked to press 1 for confirmation and 0 for cancellation. Other methods now exist, including a missed call for confirmation.

Benefits of this switch

– By separating billing for content and commerce services from access (voice and non-voice) services, you would end up giving the customer a single content/service price across multiple payment options and (hopefully) ensure that the revenue earned by the merchant post transaction remains the same, across platforms. This will encourage more content and service providers to look at mobile as an option.
– By separating the cost of access from cost of service/content, you can ensure that the access service provider gets paid a standard amount for the access service (as per a fixed-line-broadband or a pay-per-use-3G-data plan), and the content owner/service provider gets paid separately for the service/content. This leads to a separation and independence of the services business from the access business even for telecom operators.
– Allow customers to pay for services according to multiple billing options also allows for increased competition in billing, instead of the mini-monopoly /cartel situation that currently exists on mobile, where primarily telecom operator billing exists. Separating billing from access may allow a customer to access a service on mobile, but pay using (for example) a credit card, an independent cash card or fixed-line telephone bill.

View our submission to the TRAI here.

Disclosure: Fortumo is currently an advertiser with MediaNama