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Carrier billing: where are the hotspots?

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Carrier billing is gaining traction around the world, but where are the growth hotspots and what sorts of services are using it? Paul Skeldon takes a look

Carrier billing is starting to gain some mainstream traction in Europe, but that belies how it is already a force to be reckoned with out in the wider world. Research by Juniper Research shows that, in 2018, total value of digital content paid for via DCB was $27.7 billion worldwide, 38% higher than 2017.

The Indian Subcontinent will account for 44% of this, principal analyst Elson Sutanto says, dwarfing Western Europe’s 19% by 2023. LatAm will account for 35% and, in China, DCB will account for 26% of the total.

Similarly, Juniper has found that games dominate where carrier billing is being used, along with video content, something that will be even more prevalent by 2024. According to Juniper, the total spend of $89.9bn globally using carrier billing will be possible by 2024, with $41.8bn spent on games, $22bn on video – including OTT TV – $3.9bn on physical goods and $2.2bn on tickets.

Operator revenues from DCB are likely to reach $13.8bn globally on the back of this, says Sutanto.

So what is driving these numbers in these regions and is growth going to carry on, or are there drags on its seeming unstoppable success?

The main drivers lie in monetising the unbanked and underbanked, as well as tapping into younger demographics. Much of this will be around capitalising on consumer impulse purchases and micropayments in emerging markets.

While 5G will give a boost to DCB, says Sutanto, monetising content beyond mobile will be key, especially in new markets and new verticals.

According to Sutanto, OTT groups, such as FAANG – Facebook, Apple, Amazon, Netflix & Google – and BAT – Baidu, Alibaba and Tencent – are aggressively dominating the streaming content landscape with the breadth and depth of their respective offerings across a range of regions and markets.

“Netflix and Amazon typically dominate OTT TV, but Hulu, Facebook, YouTube, Facebook and Twitter have challenged them by launching monetised video streaming services,” says Sutanto (See panel).

For FAANG, China’s 1 billion-plus population is profitable, but highly difficult, to enter due to regulation. Instead, the opportunity here lies in BAT, the expansion of which is being driven by strong growth in the country’s GDP capital since 2000, a lack of sufficient fixed Internet capability (enabling mobile-first players to flourish online), and a regulatory environment that has stopped FAANG members from entering.

“BAT has grown bottom-up in China and competes against FAANG in international markets, such as developing markets – for example, India – and high value markets such as Australia and in South East Asia,” says Sutanto.

“Non-FAANG US companies, like technology start-ups, outnumber non-BAT Chinese companies,” he adds. “Competition between both Non-FAANG US companies and non-BAT Chinese companies is disrupting the established business models of BAT and FAANG globally.”

Challenges facing DCB

While there are plenty of drivers to DCB, it isn’t going to have an smooth ride in its growth, with a number of challenges facing the roll out of broad DCB services across the world.

According to Sutanto, fraud and security of consumer data – that is personal data compromised by click jacking or iframe masking.

Credit card billing verses DCB for high value transactions in prepaid-centric markets is also a problem, he warns, as is tackling challenges in developing markets around high taxes and the need for billing aggregators and MNOs to collaborate. There is also an issue with driving increasing customer awareness of DCB services, warns Sutanto.

OTT TV a key driver

One of the key drivers globally of DCB is going to be the rise of the adoption of OTT (Over The Top) TV video streaming services is increasing greatly worldwide.

According to Juniper Research’s principal analyst Elson Sutanto, OTT TV content providers are developing quality and region-specific content to compete in the growing content market.

“The increasing demand for OTT TV content is propelling the adoption of DCB as a payment method,” he says. “OTT TV players are offering bundles to increase user spend, reduce churn and increase market share.”

However, OTTs rely heavily on card payments to monetise consumers, which is challenging when launching in emerging markets with low credit/debit card penetration.

With network operators and carrier billing providers, OTT  players reduce marketing costs, leverage the brand name, and subscriber base, of local operators while monetising content via DCB.

HEAR JUNIPER RESEARCH’S ELSON SUTANTO TALK ABOUT GLOBAL DCB IN THIS EXCLUSIVE VIDEO

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