A group of major U.S. wireless carriers are apparently rethinking a highly ambitious plan to create their own network for mobile transactions.
Verizon, AT&T (News 
- Alert) and T-Mobile are scaling back the joint venture because it would be too difficult and time consuming, the Wall Street Journal reported on Tuesday, citing two sources close to the situation.
The alliance, known as Isis, was formed back in November of last year to build a network that would charge fees on purchases that consumers make using their mobile handsets. The accounts would have been maintained by the carriers themselves, eliminating credit card companies entirely. By creating their own payment network, Verizon, AT&T and T-Mobile would have put themselves in direct competition with credit card giants MasterCard (News - Alert) and Visa.
Isis will now work to achieve a much more moderate goal. The three companies will look to create a “mobile wallet” that stores users’ existing credit card information, according to the Journal. The group will now look to partner with Visa and MasterCard, rather than view them as competitors.
The unnamed sources told the Journal that Verizon (News - Alert), AT&T and T-Mobile needed to partner with the likes of MasterCard and Visa to ensure that they don’t fall further behind competitors like Google and Research in Motion (News - Alert), which are each working on similar services that utilize near-field communications, or NFC.
“The carriers have to include MasterCard and Visa,” Drew Sievers (News - Alert), cofounder and chief executive of mFoundry, a provider of mobile banking technology, told the news source. “Not including the 800 pound gorillas of the industry will make it very hard to succeed.”
It is still unclear how the three carriers would look to monetize the potential offering. The sources speculated on a few different options, including “pay-to-play” program where credit card companies would compensate the carriers for the ability to utilize the technology. A second plan could involve taking a cut of the revenue generated from coupons and special deals, the sources told the Journal.
Discover Financial Services, a smaller credit card provider that agreed to provide the venture’s payment network, is still said to be part of Isis, although the group is looking for other alliances.
Beecher Tuttle is a TMCnet contributor. He has extensive experience writing and editing for print publications and online news websites. He has specialized in a variety of industries, including health care technology, politics and education. To read more of his articles, please visit his columnist page.
Edited by Jennifer Russell
