As iPhone users download more and more apps from Apple without going through their operators, those operators are striking back, by uniting to create a wholesale market that will enable app developers to reach global users for a share of the revenue
The WAC process: 1 — developer supplies an app to WAC, where it is
tested and certified; 2 — WAC provides access to the app to stores; 3 —
store sells and delivers app to end user; 4 — end user pays for app via
phone bill, credit card or other route; 5 — store pays WAC minus revenue
share and transaction fee; 6 — WAC pays developer minus revenue
share and transaction fee
Tim Raby, WAC: As WAC, we don’t want to dictate the competition model
Michel Combes, Vodafone: WAC is a truly unified and open applications environment
The mobile industry’s project to beat off application competition from Apple, Google and others has joined forces with a laboratory set up by four leading operators as they step up the pace to launch a service in early 2011.
The Wholesale Applications Community, announced by the GSM Association at its Barcelona congress in February 2010, will launch its first services “in advance of Barcelona” 2011, says WAC executive Tim Raby, who has been acting CEO until the appointment in July 2010 of a full-time CEO.
The new head of WAC — pronounced “wack” — is Peters Suh, who has been CEO of the Joint Innovation Lab, a Tokyo-based joint venture between four operators: China Mobile, Japan’s Softbank Mobile, Verizon Wireless of the US and the global Vodafone group.
At the same time JIL is joining forces with WAC, though it is still unclear whether JIL will retain an independent identity. “The transaction is expected to be completed in September 2010,” said a WAC statement.
WAC has been created as an independent company headed by Suh, with its own board. “Our goal is to create a wholesale applications ecosystem that will establish a simple route to market for developers to deliver the latest innovative applications and services to the widest possible base of customers around the world,” says Suh.
“We’re focused on establishing WAC as the first choice for brands and developers in the mobile ecosystem, ultimately delivering greater choice and value for the end user, the consumer.”
Michel Combes, CEO of Vodafone’s European operations, will chair the board. He welcomed the announcement that JIL and WAC will “form a combined entity”, saying that it “marks a great step forward in our goal to provide a truly unified and open applications environment”.
WAC is intended to give application developers a wholesale route to operators, with a flexible system to allow developers to receive a share of end users’ payments. “It is a wholesale platform that will be operated on behalf of the companies,” says Raby: the companies being WAC’s members — two dozen of the most influential mobile operators in the business.
It is a not-for-profit organisation and will receive a small transaction fee for each application to cover its operating costs.
The developer will set application prices and define target stores for distribution. Individual operators will be able to agree how much revenue they will take and how much developers will get.
The current membership includes América Móvil, AT&T, Bharti Airtel, China Mobile, China Unicom, Deutsche Telekom, KT, Mobilkom Austria, MTN, NTT DoCoMo, Orange, Orascom, Softbank Mobile, Telecom Italia, Telefónica, Telenor, TeliaSonera, SingTel, SK Telecom, Sprint, Verizon Wireless, VimpelCom, Vodafone and Wind.
Handset makers
When WAC was launched the GSMA said that three handset vendors were supporting WAC publicly — LG, Samsung and Sony Ericsson. But Raby hints at wider interest: “We have support from many of the major handset vendors,” but he adds: “We’re not listing any vendors at this point. There are no major handset vendors excluded from the conversation. WAC is very, very open.”
Clearly the main target of WAC is Apple’s iPhone and iPad, which many operators see as extracting application revenue from the supply chain that is dominated by the operators that are the GSMA’s members. Apple has showed the way for developers by giving them a single, relatively straightforward interface to its app store.
WAC is learning directly from Apple, aiming at a single interface into the wholesale system, “as easy as possible for the developer”, says Raby. Developers will receive a consolidated payment from WAC for sales of their apps.
WAC will not set prices or set revenue share, because of “local pressures in local markets”, says Raby, and the need to create a market that will work for postpay and prepay.
But it’s clear that WAC is also concerned that it is not later challenged under competition law. Daniel Gurrola, one of the backers of WAC as France Telecom’s vice president for strategy, says: “WAC will have dominance of the market. It is not possible to have a single revenue model as that would be collusion.” Raby adds: “As WAC, we don’t want to dictate the competition model. We’re going to have to support some flexible business models.”
Michael O’Hara, chief marketing officer of the GSMA, says: “We’re striving to create competition.”
The developer will be able to set the wholesale price in any market, and then the retailer — effectively the operator — will be able to charge a higher price to the end user. “We decided it’s much better to let market forces decide,” says Raby. “The retail store can change prices but the developer will get what the asset is worth.”
Credit card payments
At first users will be charged through their phone bills but WAC plans to add other means of payment, including credit cards, and to add advertising-supported models later on. “We are very much looking at advertising and other third-party revenues.”
The project also wants to use “other network assets” such as identity and location, he adds. However WAC has not yet evolved a roaming model: end users will buy apps from their own network service providers, even while they are in a different country. “You will not be connected to a local short as you roam,” says Raby. “This is not day-one stuff.”
Gurrola adds: “WAC is a wholesale applications marketplace. It doesn’t provide service to the end users.” It will create “part of the proposition your own operator is offering to you” as the end user.
WAC though is seeking to extend the range of apps beyond smartphones to include lower-priced devices, says Raby. “There are a lot of devices out there. We are looking to support as large a population as we can.”
But many operators are reporting a steadily higher percentage of smartphones among their new sales, touching 40% in some cases, perhaps reducing the long-term demand for apps on un-smart phones.
Developers will have a website interface to offer an app into a market. “By default you will launch through all retail stores in once country,” says Raby.
WAC will not adjudicate on the ownership of any particular app or the right of any developer to sell it, he adds. “It is the responsibility of the developer to ensure he has the intellectual property.”
WAC is sticking to its planned schedule for introduction of its services, he insists, though it is not yet announcing whether it will be available in only a few countries at first. “We’re not announcing today what the rollout schedule is,” says Raby. Some operators have developed their apps retailing more than others. “This is real technology with servers that have to be serviced. This is the real world.”
So far it is less than six months since WAC was announced at Mobile World Congress in Barcelona, less than half way to the target launch date.
WAC will be in beta form by the fourth quarter of 2010, and the organisation expects devices to be available in May 2011, and “a substantial volume of devices for Christmas 2011”, he says. “We will launch the first commercial service before Barcelona 2011. We hope to overachieve on that target.”
The team behind WAC
CEO
Peters Suh — ex Vodafone executive who has been CEO of Joint Innovation Lab, owned by China Mobile, Softbank Mobile, Verizon Wireless and Vodafone
Board
Chairman: Michel Combes, CEO of Vodafone Europe
Vice chairman: Jean-Philippe Vanot, deputy CEO of France Telecom
Directors:
Hannes Ametsreiter, CEO of Telekom Austria
Olivier Baujard, CTO of Deutsche Telekom
Vivek Dev, group director of global new services at Telefónica
John Donovan, CTO of AT&T
Sung Min Ha, president of SK Telecom’s mobile network operations
Li Zhengmao, VP of China Mobile
Dick Lynch, EVP and CTO of Verizon
Tetsuzo Matsumoto, senior executive vice president at Softbank Mobile
Kiyohito Nagata, SVP of NTT DoCoMo
Napoleon Nazareno, president and CEO of Smart Communications
Marco Patuano, Telecom Italia’s head of domestic market operations
Hyun-Myung Pyo, president of KT’s mobile business group
Alex Sinclair, chief strategy and technology officer of the GSMA
Morten-Karlsen Sorby, EVP and head of corporate development at Telenor