Yesterday, I participated in an Emerging Issues Forum at the Federal Reserve Board of Governors—they called it “Protecting Consumers in a Mobile Finance World”. Easier said then done. Granted,  the Federal Reserve is trying to focus on the future technological trends impacting consumers, and not just the current issues we face on a daily basis. They are looking for the balance to ensure consumer protection while not stifling innovation—a lofty goal. Let’s hope they are up to the challenge.

While the day was primarily focused on identifying ways to ensure that consumer protection must keep pace with technological change, I wanted to share some interesting data points presented throughout the day.
•    USAA: A strong 14% mobile banking adoption from its 7.4M members which is considerably higher than the largest US banks; $250M deposited through their Remote Deposit Capture application between August 2009 and Jan 1, 2010.
•    E-Bay: $600M processed over the mobile channel in 2009 showing the great opportunity to come from mobile payments
•    Telekom Austria Group: 50% of parking meters are paid in Austria using the mobile channel, 1,700 merchants accept the A1 payments brand run by a consortium of mobile operators
•    Center for Financial Services Innovation: 21M Americans are underbanked according to a 2009 FDIC survey, 64% of underbanked consumers rate location “extremely important” when choosing a financial institution

These statistics highlight the growing presence of mobile banking and payments as well as the opportunity to expand financial services to more segments of the US population.

But the key question of the day was “What should policy makers look for?”

My answer:
Consumers cannot be left unprotected when we are seeing hockey stick growth in mobile banking, and mounting expectations for mobile payments over the next few years. Not only will security and phishing concerns exist, unscrupulous people will try to steal personal information from consumers. All of this points to the need for consumer regulatory protections.

Past experiences in the prepaid card world and the limitations of Reg E and Reg Z have taught policy makers valuable lessons.  In the vain of a great boxer that bobs and weaves, they must be nimble enough to update regulations quickly on both sides of the innovation versus consumer protection equation. Although Washington is not always known for moving quickly, the Federal Reserve should first tackle authentication and security concerns. Regulators should also start by simplifying the state by state licensing requirements, which create difficult environments for start-ups to launch nationwide services and take advantage of economies of scale.

I got a rude awakening early this morning: the ice and snowstorm that blew through Massachusetts last night knocked out our power. That meant we had no lights, no heat, and no running water (darn those electric well pumps!).

But, like in Emerging Anywhere countries, even though we didn’t have power, we did have Internet access via our mobile phones. And that strange disparity—the ability to call people and access information from the rest of the world when we didn’t have basic infrastructure services—provided personal emphasis to stories I’d recently read in the news over the weekend.

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The earthquake which struck Haiti on Tuesday has wrought an unimaginable human toll. As the devastation is made plain on our TV screens — and in our browsers — our charitable instincts are awakened and long for an outlet.

Text HAITI to 90999 and a donation of $10 will be given to the Red Cross to help with relief efforts in #Haiti.

So tweeted @mGive on Tuesday evening, and so began a sea change in digital fund raising.

Quick and easy: Text HAITI to 90999 to donate $10

In the three days since, more than one million such text messages have been sent, bringing in over $10 million to help Haiti’s earthquake victims. Haitian musician Wyclef Jean’s YELE/501501 campaign had collected over $1 million in $5 donations by Thursday. Similar SMS campaigns are underway by International Medical Corps, International Rescue, the Salvation Army, and the William J. Clinton foundation, but it is the “HAITI/90999″ campaign which caught the attention of the Obama administration and was promoted on the White House blog on Wednesday.

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Farewell to the Noughties, a decade sandwiched between two crises: The dotcom bust and the current – but sputtering – downturn.  In that time, Europe accomplished much: The Euro was adopted, DSL went mainstream and telcos went NGN.

Not least, consumers woke up to the pleasures of mobile content, although it’s questionable whether MNOs will ever see a fair return for their expensive 3G licenses. Roaming charge crackdowns and market saturation haven’t helped financials either.

Time again to put a nebudchadnezzar on ice? There’s plenty under the tree for 2010:

1. Ethernet will be everywhere. Ethernet is in the LAN, it’s in the WAN, it’s transforming mobile backhaul economics, and it’s converging the datacenter. Fiber remains best, but clever vendors (see Hatteras, Actelis) are delivering copper-bonded Ethernet in the first mile. And new Ethernet exchanges (see CENX and Equinix) aim to speed order to cash with their interconnect services. Want a unifying communications fabric? Well duh!

2. The CDN bubble will burst. Telco CDNs can offer compelling features, but how many service providers can the market sustain, even if video traffic is exploding? Many partnerships are already in place: Tata Communications with BitGravity, Verizon with Velocix, Deutsche Telekom with EdgeCast and Global Crossing with Limelight Networks and EdgeCast. If you’re not in the game now, you’ll need deep pockets to buy in.

3. The cloud’s hot air will expand. Resilient, liquid (and probably Ethernet-based) connectivity is going to save the outage-prone cloud. To invest in cloud services enterprises require robust network as well as applications-specific SLAs, as well as network redundancy, say Yankee Group enterprise surveys. Offering on-demand VPN connectivity to cloud services (on a wholesale or retail basis) could help defuse concerns about their security and resilience.

4. Equipment vendors will want to be your new best friend. The ratio of CAPEX to revenue currently stands at 12.6 percent among European operators, according to Yankee Group analysis. It’s not going to recover much. That’s why European equipment vendors like Alcatel Lucent, Ericsson and Nokia Siemens Networks are on a charm offensive with managed services propositions and aims to transform telco business models. Listen to their pitch. And talk to Huawei:  With a new SDP partner program and growing software division, it’s got more in its arsenal than cheap kit.

5. Smart wholesale will become sexier than dumb wholesale. Get big, get niche or get out. Embrace revenue-sharing models with non-traditional partners. And work mobile angles: International remittances, GRX to IPX interconnect, content transcoding, white-label mobile UC and M2M are among many rich avenues of investigation.

Best wishes for the New Year – and decade – look forward to continuing the conversation!

Ubiquitous connectivity beckons this holiday season, bringing with it a new wave of Mobile Commerce (M-Commerce). Consumers can soon expect SMS and MMS coupons, the ability to run price comparisons in real time while at the store and even mobile phone shopping from the comfort of home.

According to a recent Yankee Group survey, 14 percent of consumers are interested in mobile transactions, and an additional 18 percent say they may be interested. Yankee Group predicts the mobile coupon market will reach 2.5 million North American consumers by 2013, ballooning the dollar-amount of the market to $2.3 billion.

Today, Andy Castonguay and I hosted a webinar where we dove into trends from our consumer surveys and explored the devices, conveniences and challenges of M-Commerce as mobile is integrated into the retail shopping experience this holiday season.

The webinar runs about an hour: audio (mp3) and slides (pdf).

Hundreds of nerds converged at the San Francisco Blackberry Developer Conference today to listen and learn about new capabilities within Blackberry’s App World. Given the audience, I’ve never felt cooler than I do right now. OK – I’m just kidding about the nerds, but developer jokes are too easy to pass-up. Based on RIM’s announcements I would say the main thrust of the conference is monetization. I have also come away impressed with RIM’c commitment to growing App World.

Monetization:

The four announcements made by co-CEO Jim Balsillie were around the following topics:

1. Ad APIs: RIM aggregated a variety of add platforms so developers can simply insert adds into your application using a new SDK
2. Payment service APIs: A new payment service SDK makes it quick and easy to enable click to purchase capabilities through virtually any platform (e.g. Paypal, credit card, carrier billing).
3. Cell site geo-location APIs: RIM added cell tower triangulation APIs to offer easy access to always on location services.
4. Push APIs: for alerts and content on widgets: Can push alerts. Efficiency for network and battery life

The first two of their four main announcements were directly targeted at helping developers do something novel in the mobile app world – make money. However, even the geo-location offers big revenue opportunities. In fact, Yahoo Mobile demonstrated a widget based location aware search app that seemed to marry Yelp’s crowd sourcing capability, with Yahoo mobile search and Blackberry’s new geo-location engine. I know similar capabilities are offered on the iPhone, but I thought the always on capability was a pretty cool added feature. The net-net, this is a developer conference for grown-ups. Show me the money!

Commitment to App World Growth:

This issue may have been less interesting the many of the developers in the audience but it impressed me. RIM talked about its newly announced App World developer training that will take place around the globe in the native language of the country. For those young aspiring developers RIM talked about their its academic developer program that trains college aged kids how to develop for App World. Lastly, all the training material that already resides in App World was moved to YouTube so anyone doing a general web search can find the training materials they need.

All and all the news is a very well balanced mix of improved developer toolkits, initiatives to help continue fueling growth and tactical App World improvements that ease the logistics of development (e.g. persistent log-in for developers, leaving the simulator running while updating applications). The net net is it seems RIM is listening to its developer community and the developers are pleased.

Yankee Group analysts write prolifically about how connectivity transforms businesses and yesterday Bank of America provided a proof point. Ken Lewis, the CEO from B of A, announced that after more than a decade of rapid branch expansion the company will reduce the number of branches by 10%. The reason given by Bank of America – “changing customer preferences.” Customers’ increasingly prefer online and mobile banking to branch visits. This is only possible because 1) consumers in the US have nearly ubiquitous access to high speed internet connections 2) Bank of America was at the forefront of leveraging that platform with its online and mobile storefronts.

Some will argue the bank is simply using changing customer preferences as cover for a cost cutting maneuver at a time when the bank is struggling to regain its composure after the economic meltdown and disastrous Merrill acquisition (thank you Mr. Paulson and Bernanke). Maybe so – but no one can deny that after years of investing in online services customers have finally caught on and consumer behavior has truly shifted. Upwards of 60 million US households now bank online. According to Yankee Group research the number of Americans who use their mobile device for online banking will grow from 4.1 million in 2008 to 38 million in 2013! By 2013 nearly 15% people with a bank account will use their mobile phone to execute banking transactions!

Today, B of A is the largest US bank (as measured by assets) despite having nearly 600 fewer branches than it nearest rival JP Morgan Chase. If B of A can maintain its lead over JPM (that’s a big if) with 1,200 few branches (assuming it sheds 600) it will be a testament to the power of connectivity. Simply put – B of A will be a more efficient retail banking organization because of the connected experience it offers customers.

We’re pleased to announce new forecasts in our Market Adoption Monitors and Forecast data suites. In June, we added new forecasts including:

Near field communications. Jon Paisner is building out a regional m-commerce forecast and has built an NFC forecast, shortly to be followed by contactless payments, mobile couponing, mobile banking and P2P. Jon’s NFC forecast charts this nascent market from 2009 including NFC-enabled phones, active users and transaction volumes and values. Volumes and values are segmented by denomination because the competitive behavior of transactions under $5 differs from those over $5. Jon shows rapid growth in this market, predicting 4.7 billion transactions globally in the 5 years from 2009-2013. Nearly 9 in 10 of these transactions will be low denomination by volume, but the value of high denomination transactions is 62.4% of the $28 billion that will be transacted globally over NFC over the next 5 years, predominantly in Asia.

IPTV. Vince Vittore has completed his work on IPTV forecasts by touching all 55 countries in our forecast. With 21 million global subscribers in 2008, he shows nearly 80 million IPTV subscribers in 2013, an increase of 58.8 million new subscribers during 2009 through 2013. The most new subs are in Asia, adding 27.9m followed by Western Europe (adding 17.6m), and North America (10.2m). Latin America, Eastern Europe and MEA are only 3.1m new subs. The country view gives us household penetration, and although Hong Kong leads now at 49.7% forecast for 2009, followed by France at 35.7%, in 2013 five countries will have penetration over 30% (France, Hong Kong, Taiwan, Switzerland and South Korea in descending order).

Digital advertising forecast. Carl Howe is leading an integrated digital advertising forecast that includes TV, Internet and Mobile advertising revenues, complementing the carrier mobile advertising forecast that we have had for some time. Mobile advertising in this new forecast defines the entire market for mobile advertising, rather than the piece seen by the carrier. As a share of all advertising, mobile is small, remaining under 1% throughout the 5-year forecast to 2013, but in North America it jumps the half-billion dollar mark in 2013 from a lowly $185m expected in 2009. Set against the $79.3 billion total North American digital advertising market in 2008, which we see rising to nearly $100 billion in 2013 through modest growth in TV and (moreso) Internet advertising, though, and mobile advertising is perhaps not a big play. Carl is currently working on expanding the digital TV forecast into other regions and countries.

Expansion of Middle East and African forecasts: Wally Swain has been spending time focusing on Africa and the Middle East and completed the range of fixed-line forecasts in that region to add to the mobile-related forecasts already available.

With the NFC market still as dormant as Jefferson Airplane (talked about for years, still kicking around and never sure when they’ll make another appearance), recent announcements about turning a mobile device into a credit card terminal using applications got me thinking. Will SMB’s lay the groundwork to mobile payments success? The two announcements I’m referring to are from a start-up named Innerfence and the well known developers of Quicken; Intuit. With both of these services, SMB’s will be equipped to type a credit card number, securely transmit the payment details for processing and email or SMS the receipt to a customer.

Initially, I began wondering whether SMB demand even existed for these merchant solutions. After speaking with fellow YG analyst Steve Hilton, the answer was yes and the discussion moved beyond SMB demand. Although these solutions have too many fees (interchange fees, monthly account fees, and setup fees) the fact that a field service worker does not invest in an expensive network connected payment terminal will force SMB’s to consider this solution. Assuming that these services fulfill all PCI compliance regulations, our discussion quickly evolved into one of consumer interest in this solution. While the merchants certainly would see the benefit of a portable credit card solution, would a consumer feel comfortable handling a credit card over to an electrician they found on Craigslist?

This issue of consumer acceptance will plague the usage of these solutions. Although an SMB can launch a credit card transaction service for a nominal cost (Intuit charges $59.95 setup + $19.95 monthly fee and Innerfence charges $49.99 to download the mobile application and $25 monthly fee), a large amount of consumer education is required to ease concerns about the security of these services. Although handing someone your credit card at a restaurant and having them disappear for a few minutes or having a shopkeeper without a broadband or dial-up connection take a paper imprint of your credit card has risks, consumers are conditioned that this is acceptable. It will require years to change those beliefs in the minds of consumers and will limit the acceptance of portable credit card services for the SMB channel.

When we get to NFC, which Yankee Group’s soon to be released forecast expects only 13 million NFC enabled devices in North America by 2013, NFC processes will ease some of the consumer hesitancy in handing over a credit card to a cell-phone-wielding electrician. Having an electrician type your credit card digits into his cell phone feels a lot more risky than the electrician tapping his cell phone against your credit card. Consumers will be able to tap a device against a merchants phone to pay for a service and although it will not eliminate the security concerns, it will eliminate the need to manually type credit card details.

Remember that scene in the The Graduate, where the older guy whispers in Dustin Hoffman’s ear? He’s revealing where future riches lie. What he says is: “Plastics.” Not a bad steer in 1967.

Today, the word in your ear is – wait for it – interconnect. Wikipedia claims that interconnect is the “physical linking of a carrier’s network with equipment or facilities not belonging to that network.” Oh yawn, right?

In fact – as a raft of CTIA Wireless and VoiceCon-linked announcements from Cisco, GSMA, Telcordia and others underscore – our industry’s current and future revenues critically depend on supply-side ‘interconnect’ mechanisms that go far beyond physical network infrastructure.

Although superficially fragmented, the crowded landscape below needs to merge fast to monetize the much-touted benefits of hyper-connectivity.

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