Carrier billing — a telco place in the smartphone sun?

Mobile operators, like their wireline brethren beside them, live in fear of one thing: being relegated to network pipes while others — device makers, OS providers, app makers — collect money working “over-the-top.” This certainly appears to be happening in the case of AT&T and Apple with the iPhone, but some interesting research emerged today that could tell a different story on Android devices.


According to research released from app store analytics firm Distimo, only 21 percent of location-based apps — a hot, for-fee category on the iPhone and other devices — are paid. The rest are free.

Says Distimo co-founder and CEO Vincent Hoogstede, one major factor in the relative lack of paid Android apps comes down to a straightforward billing/back-office issue — and perhaps a carrier opportunity:

“The majority of iPhone users have a credit card attached to their iTunes account and are therefore able to buy applications in the Apple App Store with just one click. Users with an Android phone use their regular Google Account, which does not require them to sign up for Google Checkout. The first moment the user is asked to provide his credit card details is after he actually decides to buy a first app in the Android Market.”

Any friction in e-commerce gives users an opportunity to reconsider. This, of course, leaves open a huge opportunity for carriers to be the billing engine for such transactions. For instance, T-Mobile has already started down this path, announcing plans to provide billing for Android phone users on its network.

Will other operators follow?

Turns out that T-Mobile also looks to be providing (possibly extra-cheap) 3G network connections for Google’s rumored NexusOne device (actually, an FCC filing apparently cements the partnership), apparently after Verizon (otherwise a huge Android backer) declined to be the dumb network pipe provider for the so-called “google-phone.”

Are T-Mobile’s two Android moves connected?

Did it trade raw network access in exchange for the right to provide Android carrier billing?

And if it did, did it get a bargain, or get taken, in the exchange?

The answer to that question, likely played out in 2010, will tell a lot about how the smartphone ecosystem ultimately plays out — and who wins and who loses.

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