New Telco Business Model
In my last post I tossed out the option for Telcos to consider getting into identity management as a service to their customers. After a number of water cooler discussions about the possibilities it does seem to make a whole lot of sense. However, when was the last time we equated Telcos with having any sense? The concept would center on Telcos facilitating authentication through a mobile device. This is not a new idea; people with mobile devices are probably the same people with credit cards so why not use mobile devices as credit transactors.
How would this work? Bill Gates almost controlled the world with his goal to capture a fraction of a cent for every e-commerce transaction carried out with the help of Microsoft software. Unfortunately for Bill he did not equate the importance of controlling access to the Internet in the e-commerce process. The credit card business is based on a service fee of 2-3% of every transaction. That represents a significant cost of doing business. I would assume maybe 1% is needed to cover losses due to fraud. So why can’t the Telcos offer an authentication service to the credit card industry that justifies say 1% that is built on real authentication confirmed through their mobile networks. We’ll let the experts work out the economics, but the technology is already in place. Mobile devices are sophisticated enough to create any authentication scheme we want. We just need an authoritative confirmation from the network. And what better way to build that kind of trust then through a strong Telco customer relationship. Providing identity services that would justify a customer for life and allow for unlimited marketing possibilities. Of course all the customers want is an iPhone and with a Telco business model based on customer services the Telcos would not be opposed to standardizing on the network and device.