Telco Dilemma Musing: Should carriers move into banking?

There’s two reasons I ask this, because of the talk about selling laptops that I read about and an experience I had yesterday.

The selling laptops is interesting and broadband providers did it recently so it’s not a new model. TalkTalk and Orange offered either free or extremely cheap laptops if you signed up to their broadband packages for, I think, two years. intomobile‘s thinking is that carriers should subsidise not only handsets but just about any data enabled device to drive data usage.

Subsidising handsets is fine if the voice and data packages aren’t capped as you’ll get substantial revenue from the heavy users. Once the cap comes in, subsidising mobile data devices loses it’s sheen quickly as all costs to the users are capped and so is the carriers income for those product.

So I can’t see carriers moving into the adjacent market of high tech goods retailing just yet, even with the buying power of the carriers.

Moving into banking maybe a little too ambitious, what I actually mean is payments. With the Telco Dilemma series it’s becoming clear that looking at adjacent markets is one for the carriers to grow revenue. This Telco2.0 post indicates that Services as an adjacent market is growing, but payment is failing to gain any traction.

Key trend: Beyond IT services, nothing else does – entertainment, healthcare, education, mobile payments, e-commerce all fail to gain significant traction as stand-alone lines of business

I’m struggling to understand why payments aren’t taking off, why is there such reluctance, does someone else have a strangle hold on this area of business and not interested in playing, the banks maybe? My experience yesterday morning was as I do when I’m at home, is leave the house around 8am with the girls taking them to nursery. On the trip home I decided to call into Sainsbury’s and pickup some more coffee. Now most mornings like millions of people I leave the house with my keys and my phone, I can get back in or I can call for help, but I left my wallet on the shelf.

So I walk around the store pick up the coffee and some fresh bread and walk to the checkout, when I realise I don’t have my wallet. But I have my phone, I can pay for ringtones with my phone, via SMS, I can donate to charity via SMS, why can’t I pay for my coffee via SMS?

This payment method could be used in just about any situation, Starbucks, text your order, pay, get text when it’s ready for collection. The carries who provide the network infrastructure take a tiny cut, that’s a tiny cut of every single business transaction that takes place, don’t forget the revenue for the SMS too.

Your mobile phone bill will look a lot like your credit card bill and then we move into interest on balance if you don’t want or can’t pay for all your purchases in one go, looks like banking to me and I want the convenience it brings. You can delve into this model in a lot more detail, the security is there for example, pin numbers in the SMS, but we’ll stop there.

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