The four biggest UK Mobile Networks have announced their intention to form a Joint Venture (subject to European Competition Commission approval) to run both mobile advertising and Near Field Communications. (Please note mobile = cellphone in this blog).

The announcement has been taken up by the press as being about mobile advertising … partly because to most journalists on this side of the pond NFC still sounds like a northern rival to a southern fried chicken joint.

This is not new territory for the UK mobile networks – many with jaundiced minds will remember the attempt at a payment scheme known as Simpay, but I think the lessons have been learnt from Simpay and here is why.

The intervening five years is a long time for the market to mature and it is now a given that mobile commerce will be the way of the future. Back in the Simpay days, it was by no means a given that mobiles would get smart enough, fast enough or that batteries would last long enough.

Simpay made the classic, big-company JV mistake of spending too much time thinking, talking and agreeing and not enough doing. Simpay was proof that committees are dark cul-de-sacs down which bright ideas are lured to be quietly strangled. They forgot the mantra of every developer “Better is a good enough solution, but if we wait for the best, we will be too late.”

In the end the scheme lost momentum and fell appart as the political pressures within the main players got too high. It was an odd implosion — from what could be told on the outside, it seemed that a number of networks were in it to make sure the others did not steal a lead but weren’t fully engaged. Those that were engaged suddenly fell out of love. Years of delays meant the smart internal managers started saying, “well, I never thought it would work,” and once too many were saying it, the demise was sudden and brutal for those involved.

The new NFC joint venture feels different.  The networks learnt a lot from Simpay. Direct network billing quietly became a reality for them all (strangely without anything like the fuss of Simpay) and finally because this time it is just the UK networks.

Simpay was dragged down by trying to be the universal European/global solution. A UK-centric solution allows other European nations to club together look at what the UK has done and adapt it for their needs. A do-then-follow model works better than a theorize-then-ask-for-comment.

The fact is that the UK is the most developed card payment market in Europe and also with 91% mobile phone ownership and a deep passionate love of all things mobile, it is the one most likely to move from traditional forms of payment to mobile. One should not ignore the opportunity to capitalise upon the Olympics in London in 2012. The chance to show case NFC will be too good to miss.

How Barclaycard and Orange will continue to work together will be interesting. They have a live NFC service running and through control of Oyster the London Transport NFC system they potentially could be the winners.

The problem for the banks is that the mobile networks apparently continue to see NFC security as being resident on the SIM card. Whilst Over The Air configuration makes the possibility of SIM real estate sharing a potential reality, the optimum solution for the banking sector must surely not involve going to the mobile networks to get their security tokens put on the SIM. Visa always talk in a somewhat nebulous way about NFC tokens being on the handset, SIM and even on secure memory cards. The problem is that the card schemes approach may begin to sound like Simpay did in 2005: lots of nice theory, but late on delivery. The mobile networks approach may solve enough of the pain so as not to need phone resident or memory card resident solutions. In which case, “will the banks please form an orderly queue at the door of the mobile networks and bring your cheque books with you. … Oh no! You’ve phased out cheque books? …”

The press announcement is below:

042%20-%202011%20Mobile%20Marketing%20and%20Payment%20JV%20Announcement.docx