Telecommunications, Automotive and Market Research

More than 15 years in the mobile telecommunications industry and an industry analyst since 1998.

Tuesday, November 30, 2010

Mobile Payments vulnerable to hackers?

The excitement has been building in the community of mobile banking, payment technologies and near-field communication (NFC) after major announcements a couple weeks ago supporting mobile payments.
However, that excitement must be tempered by warnings about hackers attempting to get at personal information in smartphones… phones that don’t yet support mobile payments! What will happen when they try to attack phones that are also linked directly to your bank account, credit card or – God forbid – your Starbucks card?

Well, you’ll probably lose some money. But there’s one important thing that will prevent those losses, and this remedy has nothing to do with technology or smartphones or NFC.   Get a pencil and write this down, because it’s important: “Don’t be stupid.” 


Here’s what the hackers are doing to get your banking information, according to the FBI’s Internet Crime Complaint Center (also called “IC3,” which sounds so much better than “complaint center”)
“[C]riminals set up an automated dialing system to text or call people in a particular region or area code (or sometimes they use stolen customer phone numbers from banks or credit unions). The victims receive messages like: “There’s a problem with your account,” or “Your ATM card needs to be reactivated,” and are directed to a phone number or website asking for personal information. Armed with that information, criminals can steal from victims’ bank accounts, charge purchases on their charge cards, create a phony ATM card, etc. 
Sometimes, if a victim logs onto one of the phony websites with a smartphone, they could also end up downloading malicious software that could give criminals access to anything on the phone. With the growth of mobile banking and the ability to conduct financial transactions online… attacks may become even more attractive and lucrative for cyber criminals.

IC3 gives a couple examples of how these scams have been working recently: 
Account holders at one particular credit union, after receiving a text about an account problem, called the phone number in the text, gave out their personal information, and had money withdrawn from their bank accounts within 10 minutes of their calls.
Customers at a bank received a text saying they needed to reactivate their ATM card. Some called the phone number in the text and were prompted to provide their ATM card number, PIN, and expiration date. Thousands of fraudulent withdrawals followed.
So if you get a message requesting personal information, the smartest thing would be to not give away your personal information. See? No technology involved other than the Human Brain.  YOUR human brain.

And thank goodness that the FBI is looking out for us and sounding a warning. However, could they find agents that are a little better at naming these scams? The FBI is calling them “Smishing” and “Vishing” for SMS phishing and Voicemail phishing. “Smishing?” Really, FBI? Surely you can do better than that.

Should this keep us from using mobile payments? Personally, I don't think so. We can't protect everybody from themselves. If you're the kind of person who gives your ATM personal identification number to strangers, well, everybody needs to learn that lesson. Some people will just have to pay more for tuition than others. 

But even if you never give out banking information and don't follow unknown web links, you could still misplace your phone in a taxi, restaurant, or anywhere else, just the same as you could lose your leather wallet full of cash and credit cards.  In that case, you might, indeed be able to rely on technology: Make a phone call to your bank and you can shut down all financial functions automatically. 

By the way, here are some other tips from IC3
  • Don’t respond to text messages or automated voice messages from unknown or blocked numbers on your mobile phone. 
  • Treat your mobile phone like you would your computer…don’t download anything unless you trust the source.
  • When buying online, use a legitimate payment service and always use a credit card because charges can be disputed if you don’t receive what you ordered or find unauthorized charges on your card. 
  • Check each seller’s rating and feedback along with the dates the feedback was posted. Be wary of a seller with a 100 percent positive feedback score, with a low number of feedback postings, or with all feedback posted around the same date. 
  • Don’t respond to unsolicited e-mails (or texts or phone calls, for that matter) requesting personal information, and never click on links or attachments contained within unsolicited e-mails. If you want to go to a merchant’s website, type their URL directly into your browser’s address bar.

Tuesday, November 23, 2010

Two Worlds: Netheads and Bellheads creating our future.

In a previous post, I alluded to what I consider to be two different worlds in the mobile payments space. In reality, those two worlds are facing off in almost everything mobile.  I call people from those two worlds "Bellheads" and "Netheads."

Bellheads, as you might guess, are people who work for the phone companies. Call them what you like... telcos, telecom carriers, incumbents. Their business has always been to connect two phones and make one of them ring. And, of course, keep meticulous records so they can charge for every minute of use. All of the US telephone companies and cellular operators are run by Bellheads

Netheads, on the other hand, come from Silicon Valley and are wrap their businesses around computers and communication via the Internet. You know the Netheads by name: Apple, Google, Microsoft, Dell, Yahoo!

Bellheads are network builders. Netheads are network users.

Bellheads want the meter running for everything. Netheads prefer unlimited bandwidth.

Even though they'd been eying each other warily for years, the real collision came in 2007 with the release of the iPhone when the Netheads showed the Bellheads their best. And, because of their success, the Netheads got to dictate some of their own terms.

However, despite the fantastic hardware and all the App Store applications, there's still one place where the Bellheads have the upper hand: Capitol Hill.  Their influence is strong, they are savvy and they know how to make legislation and FCC rulings go the right way.

Friday, November 19, 2010

"Inevitable:" New way to describe Mobile DTV in the US. 40% of population to have MDTV before 2012

I've been party to discussions on several public forums and in person regarding mobile digital TV (MDTV).  Many of them seem to pit people from the cellular world against the broadcast world.  The arguments from the cellular side, if I could be so bold to summarize are: "you will fail if you don't make the end user pay for every bit that goes through your network." 

The broadcast-based proponents are saying, "the free-to-air/advertiser supported business model has been pretty successful for nearly a century. MDTV is just a little more of the same."


Who knows? The cellular guys could be absolutely right. But that doesn't seem to actually make a difference to the broadcasters, who seem to be pressing on, regardless.  The latest news is from the Mobile Content Venture (MCV) is a commitment to turn on 40 MDTV stations in 20 markets by the end of 2011. The announcement promised:
"...a commitment to upgrade TV stations in 20 DMAs in order to deliver live video to portable devices.  By late 2011, the venture will deliver mobile video service in markets representing more than 40% of the US population.  The service will initially consist of at least two ad-supported free-to-consumer [emphasis added] channels in each market. Additional channels and markets are expected to be added over time.
In 2011, MCV expects to offer the mobile video service in the following markets: New York, Los Angeles, Chicago, Philadelphia, San Francisco, Dallas, Washington D.C., Atlanta, Houston, Detroit, Tampa, Phoenix, Minneapolis, Orlando, Portland, Cincinnati, Greenville, West Palm Beach, Birmingham, and Knoxville.

MCV looks like some heavy hitters to me.  It's a joint venture of  12 major broadcasters and network owned-and-operated (O&O) stations that includes Fox, ION Television, NBC and Pearl Mobile DTV, LLC. The Pearl member companies include: Belo Corp., Cox Media Group, E.W. Scripps Co., Gannett Broadcasting, Hearst Television Inc., Media General Inc., Meredith Corp., Post-Newsweek Stations Inc. and Raycom Media.

In an article in TVNewsCheck.com, author Harry A. Jessel quotes Salil Dalvi, co-general manager of MCV:
"A free service would speed consumer acceptance and encourage the manufacture of devices able to receive the service, Dalvi said. “We recognize that this is a product that is going to have zero subscribers, zero users on day one.
“One of the key elements of the ecosystem is to get going with devices,” said Dalvi. “The best catalyst for doing that was to make content available at no direct cost to the consumer other than the device itself… so that [they] have that opportunity…to sample the product and get accustomed to consuming the content on the platform.”
What does this mean? Exactly what I've been saying here: Consumers are ready for the ad-supported free-to-air business model and broadcasters (and advertisers and program producers) all understand how it works. All the same people who've been working together for years continue working together in exactly the same way they're accustomed to.

Just as important as consumers getting a taste of the service is the clear signal to semiconductor and consumer products vendors to start making a variety of equipment. And with players like FOX and NBC, those vendors will start noticing.


Tuesday, November 16, 2010

Back from the dead... NFC shows up in cell operators' plans

I had all but given up on near-field communication (NFC) for financial transactions in the US. It's extremely popular in Japan, but I've been pessimistic about the ability of diverse companies to put aside their competitive differences and pull together behind a single standard.

And yet, here's news from two different fronts that suggests that a technology I've been trying to champion for the past four years may actually be gaining a foothold. In one corner is Google. In the other corner is a consortium of rivals from the cellular and financial industries.

First, there's this New York Times article by Claire Cain Miller about Google's new phone including an NFC chip. Google's CEO, Eric Schmidt, was quoted in the article saying:

Phones will know when someone walks into a store and can provide relevant information, he said. The technology reduces the risk of fraud, he said, because the person and their phone must be present at the point of payment, and could be connected to a person’s credit card number.
“This could replace your credit card,” he said. “The reason this N.F.C. chip is so interesting is because the credit card industry thinks the loss rate is going to be much better, they’re just more secure.”
Sounds a lot like something I'd said a couple weeks ago.

Isis
Second, there's ISIS, a consortium of AT&T, Verizon Wireless (it's hard to picture them in the same room) and T-Mobile along with Discover Card said:

Isis is working with Discover Financial Services' payment network ... to develop an extensive mobile payment infrastructure for the joint venture.  Barclaycard US, part of Barclays PLC, is expected to be the first issuer on the network, offering multiple mobile payment products to meet the needs of every customer.
Realistically, what does this mean? Unless your favorite color is purple, don't hold your breath while you wait for ISIS to allow you to make payments from your cellphone.  Here's what will need to happen before the first card swipe (or phone tap) happens:

  •  Develop and distribute NFC-compatible card terminals to millions of retail locations (somehow, convincing those retailers that they need to purchase the new terminals, with are exactly like existing credit card readers, but also have a touch-and-go capability)
  • Arrange with credit card companies, retailers, banks and other financial institutions to accept this new technology
  • Convince cell phone vendors that there are enough compatible card terminals at retailers to spark demand for the phone
  • Convince wireless subscribers to buy an NFC-equipped smartphone
  • Convince owners of NFC-equipped smartphones that they are safe and secure enough to use them as a credit or debit card
That looks daunting, almost impossible. Yet, I'm really optimistic about mobile payments, much more than I have been for several years.  First of all, these three mobile operators have access to about 200 million US mobile users. That covers it from the telco side.  Plus, Google, and its incredibly successful Android smartphone operating system are pushing from the other direction. If the mobile operators don't get there first, they're going to have to cede yet another battle to the Internet companies.

But if these diverse groups are willing to cooperate on the telco side and compete with the Internet world, I'm suddenly full of hope that you'll see this soon. My guess is that it will be routine within five years... call it 2015.

Go back and read my pessimistic post about the leather wallet vs. the smartphone from only two weeks ago. That vision is not likely to happen without NFC, and NFC wasn't likely to happen in the US before these announcements.

(But what do we know about ISIS? Well, according to Wikipedia, Isis is "also known as the goddess of simplicity, protector of the dead and goddess of children from whom all beginnings arose." She also had a baby with her brother Osiris, which would pretty well disqualify her from, say, being a Supreme Court justice or holding any other public office.  

Tuesday, November 9, 2010

Video services come to smartphones, and vice-versa. AT&T U-Verse on Windows Phone 7

Now that they are delivering Windows Phone 7 smartphones, AT&T has decided to include their U-Verse application, which is already available on Android and BlackBerry phones (U-Verse is AT&T's home video service that delivers tv programming over a broadband connection.)

If I look through the press release for the exciting parts, it seems to be two-fold: First, Windows Phone 7 users can get U-Verse applications even if they're not current U-Verse customers.  Second, you can use it for an entire month at no charge! After that, it's 10 bucks a month for non-subscribers and U-Verse customers who pay more than $80/month get it for free.

So what does the U-Verse mobile application do, exactly?  I'm sure it makes a lot of sense when you're using it, but it's kind of hard to describe.

  • Program the digital video recorder remotely to record new programs or delete recorded shows
  • View the channel guide and program descriptions
  • Download and view popular TV programs

About that last item... yes, you can download TV programs to your Windows Phone 7, iPhone, Android or BlackBerry phone... with some limitations.  First of all, it's not the entire U-Verse channel lineup that's available, it's a smattering of popular network shows. And second,  you have to download the shows over Wi-Fi, even though the phone is also connected to AT&T's fast 3G network. After that, you can watch the episode for about two weeks, whereupon it will "expire" and be deleted from your device.

The content is fairly limited, with episodes from about 50 shows from ABC, Disney Channel, ESPN, Disney, Animal Planet, TLC, and Discovery Channel. You can see Grey's Anatomy, Ugly Betty, Desperate Housewives, Cougar Town, Scrubs, Lost plus other shows like Phineas & Ferb, Whale Wars, and Mythbusters.

What does it all mean? What comes through loud and clear is that even the mobile operators are considering TV viewing a routine part of the cellphone experience. Obviously, there are cross-marketing opportunities for AT&T to push U-Verse to mobile users who aren't getting it yet. Plus there's the upsell to existing consumers ("The application is free if you upgrade to the U300 level").

It's vaguely disappointing, though. I'd rather see something like "view every U-Verse channel you have now from any location at any time over any network."

It's not that.

But it's a step in the right direction.

Monday, November 8, 2010

Mobile DTV prospects improve: people remember commercials (plus: video of actual Mobile DTV receivers)

OK, who doesn't love their TiVo or other Digital Video Recorder (DVR) that allows them to skip past all the commercials.  Or watching online? When you can go do something else until the commercial is over? One of the greatest inventions besides the television, right?  All it takes is a huge hard disk drive to store up all your favorite TV shows and let you skip forward and back through them.

Well, digital video recorders are great inventions unless you're an advertiser who wants you to watch their commercials or you run a TV station that relies on the money from those (increasingly less-effective) advertisements.

Now comes Mobile DTV, which is designed to go into a small package that operates from a battery like the Samsung Moment below.

It has a receiver, it has a screen, it has an antenna and a channel selector. But it doesn't have a giant hard drive, and, therefore, it doesn't let you skip the commercials or record your programs for later.  Mobile DTV is, at this point, back-to-the-50s TV that runs program in specified time slots and if you miss it you miss it. And if you want to watch, you have to watch the commercials, too.

Which is, I suspect, why advertisements on Mobile DTV devices are so effective, according to this article by Joe Mandese from Media Daily News. The article says the TV Bureau of Advertising ran several public service announcement commercials during the DTV Showcase in Washington DC.  Commercials were shown as 30-second anti-drunk driving PSAs, along with banner ads on the channel selection page and during the few seconds of dead air while the channel changes.

And the exciting news from this test is... PEOPLE REMEMBER SEEING THE ADVERTISEMENTS! Which is a really big deal if you are buying or selling advertising.

Recall of anti-drunk driving advertising by mobile phone users in the Showcase more than doubled, from 15% prior to the launch of the campaign to 34% post-campaign. 
The majority of users who recalled seeing the ads saw them while they were out of home (69%). 

A large number also recalled that they'd seen the ads when away from their homes.  According to the article, here's what this all means for Mobile DTV:
Abby Auerbach -- the executive vice president and CMO of the TVB, who oversaw the bureau's participation in the project -- said that the fact that more than two-thirds of viewers said they saw the spots while they were out-of-home was especially encouraging for advertisers and local TV broadcasters, because it means mobile may actually extend the reach of local television to places and at times when viewers aren't otherwise able to watch it. In essence, she said, the digital platform is a net positive for local broadcasters and advertisers, not a negative.
She said more research needs to be done on when, where and how consumers utilize mobile digital TV, but that the initial finds are very encouraging for the broadcast TV industry, which is working with the OMVC to try to convince consumer electronics manufacturers -- especially cell phone, smartphone and hand-held computing device manufacturers -- to install special chips and receivers into their devices that will enable the mass market to access digital mobile TV signals.

Some of the people who were watching those ads were were using a Samsung Moment smartphone that was specially equipped to receive the signals.  Here's a YouTube YouTube video from Samsung that shows the Moment in use.  Most interesting to me is the external antenna.

Wednesday, November 3, 2010

Hey, I like being an "AlphaBoomer." Marketers may discover life doesn't end at age 54

When Nielsen Research set up its age categories for TV market research nearly 50 years ago, the edge of the earth was age 54. Nobody paid much attention to those in the 55-64 group. If you were running a TV network, all you wanted was 25-54-year-olds and you didn't really care about the older group who (as we all know)  favored reruns of The Lawrence Welk Show, Matlock and Murder She Wrote.

According to NBC Universal, there's a new demographic to be reckoned with, which they dubbed "AlphaBoomers." An article by John Consoli in MediaWeek, points out that, in the US, someone turns age 55 every seven seconds and these 35 million people control nearly $2 trillion in annual spending.  The article also says there are severe misperceptions about the 55-64 age group.

NBC research and a survey it commissioned of people in the 55-64 demo counters common perceptions that they make less of an income and spend less on advertised products; are technophobic and brand loyal, and therefore, cannot be motivated to switch brands.


NBC Universal, of course, has some powerful self-interest here.  Programming like NBC Nightly News and CNBC tend to attract these older viewers but don't necessarily attract enough advertising income. By expanding the definition and emphasis on the 55-65 demographic, NBCU is trying to bring more advertisers to these stalwart properties.

More good news about Alpha Boomers:

...AlphaBoomers have a median household income of  $69,000, dwarfing that of those under 25 ($27,000), 25-34 ($58,000) and close to those 35-44 ($75,000).
 
* AphaBoomers spend more on home improvement products, home furnishing, large appliances, beauty and cosmetics and casual dining than adults 18-49.

* A similar percentage of AlphaBoomers have high-definition TVs, use DVRs and broadband as adults 18-34

* 70 percent of AlphaBoomers buy at least one product a month online

* 59 percent of AlphaBoomers send text messages via their cell phones 

“This is not something that is just going to affect NBCU,” Wurtzel said. “Down the road as more people leave the 25-54 demo, it will affect every network.” 

Tuesday, November 2, 2010

Soap Operas? Yes, I think so. NBC Launches Mobile TV Channel with Unilever

If you remember your broadcasting history, the term "soap opera" came about because soap manufacturers produced the dramas that aired on the radio during the day... the time that housewives -- the target demographic -- were home listening to the programs and the soap commercials.

In that grand old tradition, NBC and Unilever are setting up a one-year mobile video "channel" called "Dove Good2Go. Accessible by cellphone, the channel will provide clips from 30 Rock, America's Got Talent, Friday Night Lights, Parks and Recreation, and the traditional soap opera, Days of our Lives.

Does history repeat itself?  In this case, if you point your mobile phone browser to m.nbc.com/good2go you will be stepping back to the 1920s, just like the radio listeners of yesteryear.

The most important thing about this is that it is clear that the brand-name companies such as Unilever, are jumping on board the TV bandwagon, just the same as the soap companies did years ago.

It has always been my contention that mobile TV would take off when its business model matched the one that has been working quite well for the past 70 years or so. It's tough to make it work when you demand consumers pay for individual programs or spend a high percentage of their monthly bill on limited program options.  However, when you offer ad-supported content at no charge to the audience, things will start to take off.

Monday, November 1, 2010

Mobile payments take a tottering first step: Starbucks

It's the dream of mobile payments: Walk into a store, make a purchase and wave your cellphone over a reader at the register. You don't have to get your wallet out of your pocket, count out the change, enter your PIN or anything! And you can even do that right now! How great, right? It is buying physical goods from a mobile application.

OK, perhaps we need something of a reality check here.  There are some restrictions on being able to do this. It's an application called Starbucks Card Mobile

  • The application works only with BlackBerry and iPhone
  • The only store accepting the mobile payment is Starbucks
  • The Starbucks stores are all in New York, Seattle or the San Francisco Bay area and many of them are inside Target stores
So that's pretty restrictive. But the basics are there and really hold the promise of much greater capabilities.



The way it works is that you keep your balance information on your smartphone, where you can add money from the application. When you order your frappuccino, you start the payment application, which generates a bar code that's displayed on your phone's screen. The barista scans the bar code and all the magic happens online, debiting your card and updating your balance. 

When will this make more sense and be used by more people? It'll take a while, but when we see more more merchants, more phones and more ways to pay. Ultimately, rather than "stored value cards," you could access your debit card or credit card this way and use it at any store. How soon will that be? Hmmmm. Probably not this year, but this is sufficiently high-profile that it will probably get this ball rolling. 

Cellphone vs. leather wallet: How long before it happens?

I have long believed that the cellphone will eventually replace the what I describe as the "leather wallet."  I mean, think of everything you carry in your wallet that could someday be handled, in some way by your cellphone.

  • Photos of family and loved ones (bet your wallet doesn't include videos!)
  • Identification such as driver's license, gym membership, library, warehouse club
  • Loyalty cards to get a discount at supermarkets and other stores
  • Phone numbers, notes and other things of value you've written on slips of paper
  • Business cards
  • Payment cards including debit and credit cards
  • Cash
  • Spare key for your car or front door
These are all functions that can be (or are already being) accomplished using the electronics in cellphones.

Mobile operators and cellphone vendors in Japan have done a great job in building the complete ecosystem to accept payments and identification using Near Field Communication (NFC), a technology that will have a hard time gaining a foothold in the US. Why? Because, in Japan, everybody cooperated to get it launched.  All three of the big mobile operators made a decision to support the same technology and support the ecosystem (one mobile operator, DoCoMo, invested millions in a chain of convenience stores in order to install NFC readers at cash registers).

In the US, mobile payments are important but will have to take a much different path. Some day, though, we could see most of the functions of a leather wallet being handled by our cellphones. It's going to be slow, there will probably be several dead ends, but, I believe, the interest is there, and the technology is available. It's just a matter of building up to the critical mass required.