Billing Revolution Comes Out Of Stealth To Replace Carriers As A Mobile Billing Platform

imageSeattle-based Billing Revolution is coming out of stealth today to unveil a billing platform that’s designed to cut mobile operators out of the revenue stream for both digital and physical goods. The company also has an advertising twist. I got a sneak peak of the company’s plans a couple weeks ago after talking to SVP and co-founder Mike Dulong, who previously co-founded Third Screen Media, the mobile advertising platform bought by AOL (NYSE: TWX). Billing Revolution was also started by CEO Andy Kleitsch, who previously founded and worked at AT&T (NYSE: T) Wireless.

The opportunity: Today, when people buy things on the phone, like ringtones and wallpapers, the charge appears on the phone bill, and the carrier takes a percentage of the revenue. Billing Revolution allows people to use their credit card, cutting the carrier out of the picture. Although the platform works for digital goods, including mobile content or even e-tickets, Billing Revolution also is positioning itself to assist in the sale of physical goods. With more Web-capable phones being adopted, the company believes it’s a matter of time before people find it natural to go to Expedia and buy a $300 plane ticket, or go to (NSDQ: AMZN) and buy a DVD.

The billing platform: Currently, sites like allow you to make purchases from your phone if you enter your username and password, where you’ve previously stored your credit card information from a PC. But you can’t enter your credit card info directly on the phone. Billing Revolution allows users to use their credit card on a WAP site. Once a user enters the correct info, they receive a SMS, which they must click to authorize the purchase. After their first purchase, Billing Revolution stores your credit card information, providing for one-click purchases from there on out without having to enter a username or password. Billing Revolution makes money by charging a percentage of the cost of the transaction, much like the credit card company does.

The advertising component: Dulong provides an example of how advertising plays a role. Without providing names, he said they are currently helping a content company sell their mobile application by negotiating performance-based ads. The content company only pays for the ad if a user clicks on the banner and buys the app using Billing Revolution. Dulong: “The challenge of the ad market is that the audience is growing so quickly and the advertising spend is not growing at the same rate…We are going to try to fill up the remainder with performance-based ads, and at the same time solve the commerce problem.”

Competitors and customers: Dulong said they don’t compete with advertising platforms because they are buying up excess inventory that would otherwise not get sold. Competitive billing systems include the carrier’s networks, which typically impose price maximums of $20, and Bango (AIM: BGO) in some circumstances. The seven-person company has a substantial list of partners and customers, but it’s not naming them just yet. For now, the list includes: JumpTap, Buzzd, Quattro Wireless, Wcities, Ad Infuse, Movaya and Ascendo.