Mobile Entertainment

My biological children would recognise the pattern. “Can we go swimming then Dad?” “No.” “But you promised us three times!” “Yes, but that was before I found out I had to go to a mobile billing conference.” “Will you discuss the problem of operator legacy systems there, Dad?” “Don’t be so precocious. And get back to toiling in those salt mines.”

So which promise am I breaking to you this week, dear readers? It’s the one about iPhone, I’m afraid. I said I wouldn’t broach the subject again for a while, but after this week, I’m going to have to.

So, Steve Jobs sailed into Europe and sailed out again (laughing, I’m sure) with deals from O2 UK and T-Mobile. We had our ME Awards on the same day the O2 announcement was made, and the room was buzzing with it.

I won’t rehash everything that was said. Instead, allow me to link a few conversations I had this week back to the Apple debate. Earlier this week I spoke on the phone to mobile payments company Javien about the ‘off portal’ market in the US. Now, as many of you will know, it’s not truly off-portal at all.

D2C companies can’t function without the say-so of the operators – and there’s no hope of content providers offering their customers any alternative to operator billing such as PayPal or Visa. Then I spoke to Netsize about the cross-operator storefronts like Gallery (France), Plazzza (Belgium) and Dimo (Portugal) that offer a shopping mall experience which, again, is off-portal in a sense but also relies on carrier billing channels.

The message? Operators may be opening up their walled gardens, but they desperately want to stay involved. And then along comes iPhone and we find that the only content store you can visit is iTunes. Even the sign-up for your operator contract is done via the store.

So Apple will have all your credit card details and will be able to sell you songs, games and videos. Will O2 and T-Mobile get a cut? Mmm, I don’t think so. To me this looks like another fantastic bit of business by Steve Jobs. He’s worth his $1 salary.

Now, you could argue that the business model still works for O2 because the iPhone will grab subscribers from other networks and will comprise an affluent, high tariff niche. But what about in three years’ time when the iPhone goes mass market (as it surely must) with 20 different iPhone models for all market sectors?

The day the O2 deal was done I chatted to an industry mate, who slagged the whole thing off viciously. He works for O2, by the way.