Consumers should try to stay away from app ecosystems created by their ISPs until they learn about some important details.
I learned today that Alfa and Touch are launching app stores to give Lebanese users “more options” in their mobile lives. The idea is that when you want to pay for an app (or presumably for an in-app purchase), you don’t have to use a credit card. The payment is simply added to your cell phone bill at the end of the month. This is called Mobile payment or Direct Carrier Billing, and it’s a huge thing especially in the developing world.
You can see how this is appealing to potential app developers; many people in Lebanon don’t use credit cards for online payments, so carrier billing is a big opportunity to get money from just about every person who has a sim card. This means that if a Lebanese software developer writes an app to rate and review your favorite man2ouch corner store, she can theoretically charge 0.99$ for that app and hope that users won’t mind paying because they trust the payment system. Even users find this appealing because of its relative ease and security.
What can go wrong?
To understand the potential for mischief by Alfa and Touch, we have to take a step back and see the larger picture.
- The Telecom sector in Lebanon is the government’s largest source of income and its lack of competitiveness is by design to maximize said income.
- Telecoms are being disrupted all over the world. People are using VoIP (like Skype) and data messaging (like WhatsApp) instead of services that brought serious money to the Telcos like long distance calls and SMS
- The government once felt so threatened by the loss of income from VoIP that it tried to ban it outright
In other words, if you understand the incentive structure behind the telecoms and the government, incentives that made cell bills in Lebanon one of the highest in the world and made internet access artificially scarce, it wouldn’t be too paranoid to be concerned about the kind of power that an app store could give your mobile internet provider. Imagine for example if users started getting bribed with cheaper 3G if they used their app stores exclusively. Or imagine if the government mandates that all online payments should be made through “trusted” stores, like say, Alfa and Touch. Maybe the local app stores become so dominant that the government feels it can get away with banning other stores, and then lo-and-behold apps like WhatsApp and Skype disappear from the official app store.
Luckily, this is a far off prospect, chiefly because of the dominance of iOS and Android and because technology advances faster than governments. But that doesn’t mean we shouldn’t be prepared.
How local app “stores” can be done well
Let’s be reasonable. The carriers (and the government) should be able to make some money from the apps craze. It will help them survive and it will help our economy a bit. But that doesn’t mean that they should control or trap us. There’s a better way.
App stores provide three services: Curation (choosing which apps are featured), Payment channels (how you pay for apps) and Account Management (which person bought which app). The local telecom operators can provide curation by setting up websites with links to cool Lebanese apps, possibly powered by social media voting. They could also create a payment gateway, a profitable paypal alternative that is powered by direct carrier billing (through an independent cloud service that links your mobile number to a username and password).
But do they have to have an “app store” where they sell us the apps themselves? I don’t want that service from my mobile internet provider, it doesn’t make me feel comfortable and it can be a scary prospect.