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Wednesday, August 1, 2007

The WAP Solution

Due to the Wells Fargo product launch, there have recently been a tremendous number of articles written about the WAP solution. Most of us know the standard pro’s and con’s:

Pro’s –
* Relatively inexpensive
* Quick to implement
* Perception of technologically advanced
(i.e. for having a live mobile offering)

Con’s –
Dependent upon phone browser
Difficulty in consistent rendering to thousands of different handsets

However, there is potentially another negative aspect that is not as well known – carrier fees. In the June 2007 issue of US Banker John Engen discusses the WAP solution with a number of subject matter experts including Bob Egan (chief analyst at Tower Group) and Dan Schatt (analyst at Celent.) In the article, which I highly recommend reading, Engen writes, “even so, Egan says he knows of at least one situation where a carrier is threatening to block access to a bank’s mobile site, because of no financial agreement. ‘At the end of the day, the carrier can control and block domain addresses,’ Schatt says. ‘They might not want to exercise that power, but that’s the reality.’”

Now, obviously a carrier blocking a bank’s domain would be aggressive, but it’s not out of the realm of possibility. Also, isn’t this similar to the topic of net neutrality? (learn more: savetheinternet.com) I’d love to hear what others think about this topic.


The Doc said...

In the words of Chester A. Riley, "What a revoltin development this is."

I've finally decided that the future of mobile everything is a full browser (like Safari on the iPhone). The new phones are rapidly becoming computers that, oh incidently, can also make a telephone call.

It seems to me that as things stand right now, evryone gets a reasonable share of the pie, the Telco gets the data package or SMS revenue, the banks get an additional electronic hook into the customer and if Vsa, MC, Amex, etc. get wise they will continue to dominate, if not, look out here comes Pay Pal and more pretnders than we could possibly need.

Anonymous said...

There is also the same issue with downloadable applications. I have heard that there is one telco that has refused to approve a short code for a bank that is using the downloadable application run by a company partnered with another telco. They will not allow that downloadable application on their customers' mobile devices.

The Doc said...

Perhaps, if we just sit back and watch the Telcos will eat each other alive. How they see themselves as anything more than an ISP I don't understand.

Tom said...

Data cost can be a significant drawback to wap approaches - you might be interested to look at an analysis I did recently which used a bank site as a case study for the various methods of implementing a mobile client: http://blog.masabi.com/2007/08/thick-vs-thin-clients-in-mobile-today.html

I think it shows the disadvantage of using the full-browser approach, at least in Europe, quite succinctly. This really hilights a big difference in the approach of American and European operators/carriers, though - for various reasons in the US mobile flat rate data tariffs have been a reality for a while, but the operators have made it difficult to actually use them for much (presumably as there's no profit margin in saturating the network); European operators impose limits as well but as they charge per Mb they appear to be more open to allowing customers to use those Mbs. This is also the case in Java where the US operators are far more keen on cutting off access to APIs (Forum Nokia's wiki lists some of their policies in this regard).

Doc - the reason operators see themselves as more than a bitpipe is the fact that they have made pretty vast margins on voice calls after some very large infrastructure costs (not to mention handset subsidies), and they'd see their share prices collapse through the floor if they just opened the network to unrestricted use. I think they could make money with much more liberal usage policies and still retain the voice revenues, but it is easy to understand where they are coming from.