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Giga mobile d13

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Giga mobile d13

  1. 1. Business models for next-generation wireless services GigaMobile 2001 - Work package 1.3
  2. 2. Colophon Date : 7 November 2001 Version : 1.0 Project reference : GigaMobile/D1.3 Editor : P. Ballon Company : TNO-STB Author(s) : P. Ballon, S. Helmus, R. van de Pas COPYRIGHT © 2001 TELEMATICA INSTITUUT, SURFNET PERSONAL USE OF THIS MATERIAL IS PERMITTED. HOWEVER, PERMISSION TO REPRINT/REPUBLISH THIS MATERIAL FOR ADVERTISING OR PROMOTIONAL PURPOSES OR FOR CREATING NEW COLLECTIVE WORKS FOR RESALE OR REDISTRIBUTION TO SERVERS OR LISTS, OR TO REUSE ANY COPYRIGHTED COMPONENT OF THIS WORK IN OTHER WORKS MUST BE OBTAINED FROM OR VIA TELEMATICA INSTITUUT (HTTP://WWW.TELIN.NL).
  3. 3. Table of Contents 1 Introduction 7 2 Business models: a framework 8 2.1 Typology of business models 8 2.2 Construction of business models 9 3 Current and emerging wireless business models 12 3.1 The wireless value system 12 3.2 Wireless services in 2 and 2,5G 13 3.2.1 The wireless migration path 13 3.2.2 From e-business to m-business models 15 3.2.3 Service characteristics 16 3.3 Wireless value networks in the Netherlands 19 3.3.1 Actors and activities in the Dutch market 19 3.3.2 Interactions and hierarchies 22 3.4 Current and emerging wireless business models 23 4 Towards business models for UMTS services 28 4.1 UMTS characteristics 28 4.2 UMTS service scenarios 31 4.3 Conclusion 34 References 35 G I G A M O B I L E / D 1 . 3 V
  4. 4. 1 Introduction Mobile Internet has been a buzzword for the last couple of years. However, due to the problems facing telecom operators today, the uncertainty and anxiety about the advent and success of mobile Internet have grown considerably. This paper argues that the main causes for this are the uncertainties surrounding the business models for 2,5 and 3G mobile services. In response to this, this paper presents the findings of research by TNO-STB on emerging 1 and future business models for mobile voice and data services . The paper starts with a concise discussion of recent theory about business models, showing which approach to business models may be fruitful in order to respond to the uncertainties mentioned above. Next, it presents an analysis of current and emerging voice and data services and their underlying business models. This analysis is based on the situation in the Dutch market. It shows the most prominent business models for 2 and 2,5G services and outlines their main characteristics. Finally, the last part of this paper sketches a number of 3G service scenarios and assesses to which extent 3G business models might differ from present and emerging models. 1 The authors acknowledge the input of Henk-Jan van de Meeberg, who, at the time of writing this paper, was finishing a traineeship at TNO-STB. 7
  5. 5. 2 Business models: a framework In current literature and practice, there are various ways in which business models are defined and used. Traditionally, a business model describes the external organisation of commercial transactions between organisations. Transactions include the exchange of information, goods, services, money, contracts, and knowledge. Such activities are described in a business model. In recent years, the concept of a business model has developed and has been used in a wider sense to encompass all the mechanisms involved in the generation of revenues from the sale of goods and services. The business model has become a means of structuring various cost and revenue streams so that business becomes viable, usually, but not necessarily, in the sense of being able to sustain itself on the basis of the income it generates (Hawkins, 2001). So, business models are not only used to describe external transactions, but also internal processes concerning the production of a good or service and the various business roles the actors play in this process. In fact the whole value chain of a good or service is described in a business model, combined with the revenue streams that make the business viable. In this paper, we will use the following definition of a business model: a description of how a company or set of companies intend to create value in the marketplace. A business model describes the architecture for a product or service and the related information flows, including a description of the various business activities and roles. Besides this, a business model defines the potential benefits for the various business actors and the sources of revenues (Timmers, 1998). 2.1 Typology of business models There are several types of business models, depending for instance on their focus or range, their function or goal. First of all, a distinction can be made between business models that describe the business activities of a firm or a group of firms, and business models that concentrate on one specific product or service. Secondly, a distinction can be made between business models describing the roles of various actors involved in a business process, and on the other hand business models that focus on a calculation of costs and revenues. The latter are usually referred to as revenue models. They include assumptions about financial gains and expenditure and will often aim at establishing the profitability and the break-even point of products or services. Another distinction is the one between business models and business cases, where the business case is the specific application of a business model for an individual company in a specific situation. 8 G I G A P O R T
  6. 6. Finally, a distinction can be made between strict business models and business scenarios. In this view, business models provide a more or less static representation of a specific configuration of a value network and the corresponding revenue streams. Business scenarios are more dynamic and forward-looking, concerning themselves with the potential impact of trends on different business models. Business models can also be characterised by their function or goal. In economic literature the following functions of business models are mentioned: · To articulate the value proposition: the value created for users by the offering based on the technology · To identify the market segment: the users to whom the technology is useful and for what purpose · To define the structure of the value chain within the firm required to create and distribute the offering · To estimate the cost structure and profit potential of producing the offering · To describe the position of the firm within the value network linking suppliers and customers including identification of potential complementors and competitors · To formulate the competitive strategy by which the innovating firm will gain and hold advantage over rivals. Currently, there is great uncertainty about the value proposition behind next-generation mobile services, not only regarding user adoption or revenues for a specific service, but even about which services to offer, which networks to form, and which activities and roles to perform or to outsource. Therefore, a general approach, outlining potential business roles, relationships and hierarchies in networks, is in order. Rather than on specific firms, the business models presented here focus on general services. Rather than on quantitative models, they aim at making structures apparent, and adopt a scenario approach. The next paragraph looks at the components of such business models and presents a framework for constructing and analysing them. 2.2 Construction of business models A first step in constructing a framework for business models is to examine the creation and exchange of value in more detail. Traditional economics considered tangible production factors such as land, capital, and labour to be the main assets for value creation. However, during the last decades, the importance attached to intangible assets such as knowledge, trust relationships, intellectual property, and leadership has risen considerably. These intangibles are more and more being incorporated into business models (Boulton, Libert & Samek, 2000). 9
  7. 7. Also, in the past, it was customary to think of the process of creating and exchanging value as a linear process. This idea has largely been abandoned, resulting in a shift in terminology from value chains to value networks. The traditional value chain is focused at the level of the firm with the objective of linking business strategies to the characteristics of actual products. It describes the activities connecting a company’s supply side (raw materials, inbound logistics, and production process) with its demand side (outbound logistics, marketing and sales) in a linear way (Timmers, 1998). With the growing use of ICT in production and business processes, interdependence between firms has become an important factor, leading to the rise of the so-called network economy. As a result, the value chain concept is focussing more and more on the value-added relationship between the different participants involved in the process of production and consumption. Moreover, this relationship has in many ways become more dynamic and flexible. As the Internet, along with other digital information and communication means, allows production and business processes to become faster, more flexible and more transparent, this has rendered possible a higher complexity and flexibility of linkages between firms. Also, virtual organisation structures have appeared which are characterised by flatter hierarchies and a more flexible, team-based work organisation in order to respond quickly to changes in the business environment and customer demands. Finally, there has been a shift from supply-side thinking to a more demand-side oriented approach all the more because of the interactive possibilities of new ICT. For all these reasons, the value-chain concept has been gradually replaced by the concept of value ‘networks’ or value ‘systems’ (Bovel & Martha, 2000). Such a value network describes the creation and exchange of value through the interaction between actors, characterised by different relationships and hierarchies, within a networked environment. These elements provide the main components for the construction and analysis of a business model as it is conceived in this paper: · Actors in a value network can be suppliers, producers, intermediaries or users of a certain good or service. They can be independent entities as well as business units within a firm. · The interaction between the originator and the user (organisation or consumer) of specific goods or services can be conceptualised as a direct or an indirect transaction (by means of intermediation). The interaction can exist of the exchange of information or trust as well as of economic transactions. · If these interactions are repeated and become recurrent, relationships and linkages are formed. These relationships allow the different actors to combine their productive and innovative potential. They shape the value network and constitute the setting for the business models that originate in these networks. · The relationships between actors are not power-neutral. Assets are not evenly spread over all players in a value network. This unbalance has even become more important than before, as it potentially effects a much larger number of players. This means that the analysis of hierarchies and power relationships remains vital in understanding the 10 G I G A P O R T
  8. 8. business process. According to Håkansson & Johansson (1992), the elements defining relationships and hierarchies between actors are functional dependencies, power structures, knowledge structures, and time dependent structures. These elements need to be considered when constructing a business model. Business models are created by stepping back from the business activity itself to look at the underlying structures that make the product or service commercially viable. They are important in understanding the context and strategies of the different players in a market. A systematic approach for identifying architectures for business models can be value chain (or network) de- construction and re-construction (Timmers, 1998). In order to assess the viability of potential business models for future 3G services, this is to be complemented with a scenario approach. Not only a calculation of revenues and expenses is needed, but even more so an assessment of present strategic, technological and consumer trends. The approach of this paper is as follows: · Value chain or value network deconstruction: identifying the different elements of the value chain or network involved in the production and consumption of certain goods and services. · Identification of services and their characteristics. · Identification of actors, interaction patterns, and hierarchies. · Value chain or value network reconstruction: the integration of the different actors and interaction patterns to form a commercially viable business model. · Assessing the impact of future trends and developments on the business models. 11
  9. 9. 3 Current and emerging wireless business models This chapter explores the current and emerging business models for wireless services in the Netherlands. In the first paragraph, the wireless value network is deconstructed into its different functional chains. The next two paragraphs examine the main influencing factors on current business models. In the second paragraph, some characteristics of 2 and 2,5G services are analysed. The third paragraph provides an overview of the relevant actors, their interactions and relationships in the Dutch mobile market. Finally, the main business models behind wireless services today are reconstructed. 3.1 The wireless value system A report by the Yankee Group (2000) provides a basis for deconstructing the value network for wireless services. This report describes a value network existing of five major value chains. These refer to: · Network Transport. Traditionally, network operators have integrated the whole network operating value chain, consisting of spectrum brokerage, mobile network transport, and mobile service provisioning. They are often labelled as gatekeepers, both in terms of customer ownership and in terms of ownership of limited resources such as spectrum and operating licenses. · Applications Operation. The application environment includes application developers, systems integrators, and applications operators. Companies that bundle these activities are also labelled wireless application service providers (WASPs). · Content Provisioning. This value chain consists of content providers, content aggregators and portals. Portals also serve as wireless Internet service providers (WISPs), as they become the gateway to Internet content. · Payment Processing. Traditionally, network operators have had the only billing relationship with the client. · Providing Device Solutions. Handset vendors are a well established part of the mobile value system. They provide hardware as well as software solutions. In addition, there are two ‘enabling’ value chains involved: · Network Equipment Provisioning. Companies providing network equipment are e.g. Ericsson, Nokia, Motorola, Alcatel, Nortel. Traditionally, infrastructure vendors provide a relatively standardised product. · Middleware/Platform Provisioning. Examples are WAP gateways, SMS gateways, mobile portal platforms, mobile commerce platforms, and other applications platforms. 12 G I G A P O R T
  10. 10. The resulting value network is portrayed in figure 2-1. Conten t Provid er Conten t Aggr egator M obile P WISP ortal / Ne me two nt rk Ve Eq nd uip Payment Processor ors - Potential / End-user Consumer Integration Mobile Network Mobile Service Spectrum Broker Transport Provider Provider by Customer / Device Solutions / Carrier - Providers HW/SW are dors lew n Facing idd m Ve M for l at Operator P ion licat App ator or Oper grat s Inte tem Sys ons cati Appli per elo Dev Figure 3-1 Wireless Value System Source: TNO-STB, based on The Yankee Group (2000) This schematic representation will be used throughout this paper in order to describe the different roles performed by the players active on the Dutch market, as well as the business models they use. Companies determine their business model by bundling different elements of these value chains and by (re)designing their interactions with other parties in the wireless access value system, including the customers. Shaping these business models are the characteristics of current and emerging wireless services, as well as the relevant actors, their interactions and relationships. These are examined in the following paragraphs. 3.2 Wireless services in 2 and 2,5G 3.2.1 The wireless migration path After the introduction of Global System for Mobile communications (GSM), a tremendous growth in the area of wireless communication took place in Europe. During the second half of the nineties, data services based on the Internet protocol have turned out to be another very successful innovation in the field of communication and information. Increasingly, new mobile data services are merging mobile telecommunications and data communications. However, data services in cellular systems have traditionally been secondary services. As a result, 13
  11. 11. existing GSM data services are piggy-backing on the existing circuit switched mobile network with a maximum speed of 9.6 kbps. The first major move towards “mobile Internet” is labelled General Packet Radio Service (GPRS), introducing packet switching as an overlay to the circuit switched GSM networks by introducing new elements in the GSM-infrastructure, as well as new software in some existing elements. The packet switched nature of GPRS doesn’t only increase the capacity for data transmissions but also makes possible an immediate and constant connectivity to external networks such as Internet and Intranet, without repeatedly having to carry out a time consuming setup procedure. Furthermore, the GPRS system incorporates new billing concepts, such as paying for the volume of transmitted data, rather than for the time of the data-connection. 2001 is the year of the introduction of GPRS services on the Dutch market. Three out of the five mobile operators have announced concrete plans for this, i.e. Telfort (O2), Libertel-Vodaphone, and KPN Mobile. A second technology for upgrading GSM networks is EDGE (Enhanced Data rate for GSM Evolution). Both GPRS and EDGE offer a more cost-effective approach to accessing data networks, such as IP-based networks. A second advantage is that EDGE offers an IP platform independent of communication standards. Today’s second and the second and a half generation mobile network standards will be gradually replaced by the third generation Universal Mobile Telecommunications System (UMTS). The UMTS standard is intended to enable multimedia services, as well as to unify the disparate standards of today’s wireless networks. However, due to amongst others the blocked 3G spectrum in North America, it isn’t possible to upgrade to a uniform 3G-network on a worldwide scale right now. There is not one fixed standard of UMTS but there are several releases, each introducing an improvement to its predecessor. For example, UMTS release 4 (99) offers an option to use either IPv4 or IPv6 as transport protocol and specifies that either permanent or temporary allocation may be used. In UMTS release 5 the most important change is that network elements for the IP multimedia services are exclusively based on IPv6. The future use of IPv6 has some advantage like more addressing space and better equipped to handle mobile IP multimedia services. UMTS will offer high speed access rates, which depend on radio conditions as well as the network environment (pico/ micro-cells), by using expanded bands of wireless spectrum at 2 GHz. This requires a new air interface meaning investments in completely new basestations, which is a lot costlier than the upgrades to GPRS and EDGE. The higher transmission rates of UMTS are meant to enable access to voice, graphic, multimedia, and video-based information and communication services, regardless of the kind of underlying network. It is also intended to enable customers to choose the desired quality of services by offering differentiation in tariffs. UMTS will support the following bit rates: up to 144 kbps in macro-cellular environments (e.g. in moving vehicle or train), up to 384 kbps in 14 G I G A P O R T
  12. 12. micor-cellular environments (e.g. walking pedestrian) and up to 2 Mbps in indoor/ pico-cellular environments (e.g. in office buildings). 3.2.2 From e-business to m-business models The migration towards increased bandwidth and reliance on internet protocols mean that wireless internet is slowly becoming a reality. This could mean that internet business models, or e-business models, become feasible in the wireless environment too. The main reason why business models have become the object of wide interest is precisely because of a number of highly visible companies which, over the past few years, have developed business over the Internet. Holland a.o. (2001) provide the following examples of e-business models: · Advertising model: in this case a website provides room for advertising messages in the form of banner ads, pop-ups etc. Advertisers pay for exposure (‘eye-balls’). Portals are the most important exponents of the advertising model. · Brokerage model: brokers are ‘market-makers’. They offer a platform where supply and demand can meet. This kind of transactions facilitation is relatively easy to do in an electronic environment because of the low marginal costs involved. · Infomediary model: in this case value is created by collecting, processing and exploiting information about consumers and users. The activities of infomediaries are often related to the idea of ‘mass customisation’. · ASP model: application service providers host and provide access to applications over a network. The ASP model is based on the (thin) client / server – model. Value is created by giving users the possibility to outsource a number of activities and services. · Subscription model: this model is based on charging subscription fees for access to infrastructure, to services or to content. · Floatmodel: this is based on exploiting the time gap between payment by the customers and payment to the suppliers. This is basically a matter of logistics, facilitated by the use of digital networks. · ISP’s: internet service providers provide access to the Internet along with some supporting services such as hosting. · Licensing model: this is based on the patenting of new ideas or technologies. What’s new to the electronic environment is the patenting of new ways of interacting with the customer and of the resulting new business models. · E-tail model: this model consists of wholesale and retail via the Internet, either by ‘completely’ virtual enterprises or by ‘brick-and-mortar’ companies expanding their outlets. 15
  13. 13. · Utility models: this is based on a pay-per-use or a pay-per-view model. Customers are charged per time unit or per bit used. As Hawkins (2001) observes, most of such on-line business models emulate off-line models. In these cases, the novelty of e-commerce or e-business is simply that commerce or business is taking place in a new, electronic environment. However, some qualitative changes caused by the advent of the Internet can be observed. For instance, there is evidence that this environment favours more complex business models and more freedom of choice from existing business models. If there are indeed entirely new business models to be found on the internet, these usually refer to new forms of dis- and reintermediation. This already provides a clue as to which business models might be developed in a wireless Internet environment. However, the mobile environment creates specific problems and opportunities for creating value. The next paragraph explores some of the typical characteristics of 2G and 2,5G services that are influencing mobile business models. 3.2.3 Service characteristics So what are the characteristics of current and emerging services in the Dutch market? Most observers will agree that the main 2G services are voice communications, short messaging service (SMS), and WAP services. Among these, one-to-one communications (i.e. voice and messaging) are by far the most popular. WAP information services attract far less users. Reasons commonly cited for this are the long connection times, limitations imposed on content and interactivity by screen size and data rates, a lack of attractive content, and a failed management of expectations. 2,5G (GPRS) technology has brought the promise of new services to the Dutch market. GPRS can be seen as a stepping stone in the wireless migration path towards more bandwidth and more reliance on internet-based transport. Additional services which are theoretically possible with GPRS, are a.o. mobile office services, mobile commerce services, enhanced mobile information, communication and entertainment services. In 2001, three out of the five Dutch mobile operators, i.e. Libertel-Vodaphone, Telfort/O2 and KPN Mobile, completed the upgrading of their networks to 2,5G and began to develop GPRS services. Currently, all three of these operators have started by offering one type of GPRS service: mobile office services. The most important traits of these services are the fact that users are constantly on-line, have access to the company intranet and other applications, and have access to the Internet. Libertel-Vodaphone has introduced Libertel Corporate GPRS Access, a business service allowing the customer to have mobile access to corporate networks and systems on their mobile phone, laptop or PDA. Telfort/O2 has followed this with the implementation of the same kind of service named Telfort Mobile Office, while KPN Mobile also has a service called Mobile Office Online. The three operators all have their own third parties with whom they co-operate and develop new applications and services. 16 G I G A P O R T
  14. 14. The extent to which these services will be successful and to which other GPRS services will be introduced to the market, will in the first place be determined by two basic characteristics: transmission speed and transmission costs. Speed Theoretically, GPRS can deliver a maximum speed of 171,2 Kbit/sec. Transmission rates that are mentioned in literature vary from 115 Kbit/sec to 170 Kbit/sec. However, in practice, maximum data speeds are more likely to approach 56 Kbit/sec, because at this stage of developments there are still a lot of unsolved problems in the network, the handsets and the software, all of which cause restrictions to the transmission rate. For instance, the GPRS phones launched by Nokia in March 2001 have a maximum transmission rate of 40 Kbit/sec. According to Nokia, as GPRS networks are upgraded and expanded, new handset models will be able to support around a transfer rate of around 60 Kbit/sec. Motorola, the world's number two mobile phone maker, offers 30 Kbit/sec rates for data transmission at this moment, while Ericsson phones can manage 43 Kbit/sec (Reuters, 2001). These rates are effectively much slower than those promised by telecom operators. The effective transmission rates will also be restricted because of the limited capacity, which is measured in time slots, that is available. GPRS can use several timeslots to send packages of data very quickly one behind the other. However, in practice, the operators have only reserved one time slot for sending data. This means that as the number of users in one cell grows, transmission rates will drop very fast. Table 3-1 Transmission speeds In theory (Kbit/s) In practice Top rate In practiceNormal (Kbit/s) rate (Kbit/s) GSM ? 14,4 9,6-10 GPRS 170 40-50 25-30 EDGE 384 ? Approx. 56 UMTS 2000 384 ? As for the impact on services, this means that GPRS is not suited for multimedia services or streaming services, but rather for asynchronous communication and data transmission. The fact that only one out of eight time slots in a GPRS cell is reserved for data traffic, indicates that voice is expected to remain the most important service. Costs 17
  15. 15. Another important issue is the cost of making use of GPRS. The expectation is that the Dutch mobile operators will charge a subscription fee of around 30 per month. In exchange, the customer is getting an 'always-on' access to the GPRS network plus a ‘free’ amount of transferable data. What does this mean for the services people will use on their GPRS phones? As a reference, a typical email without attachment is somewhere between 1-10 KB. This means that 1 MB of data includes on the average about 200 emails without attachments. A WAP-page is between 0,5 and 1,5 KB. So 1 MB of data is good for 1000 WAP pages. An internet-page is on the average about 80 KB, which means that for 1 MB one can only view 12 pages. The table below provides an overview of tariffs as they are known at this point in time for Telfort/O2, which has released the most comprehensive list of tariffs as yet. Table 3-2 Costs of GPRS: Telfort/O2 Amount Price in euro Average Average Average price per e- price per price per mail web page WAP page 1 MB 30 per month + 0,15 2,5 0,03 2,50 per extra MB 20 MB 75 +2 per extra 0,02 0,31 0,004 MB 40 MB 115 + 1,50 per 0,015 0,24 0,003 extra MB Sources: TNO-STB; Houtman (2001) Telfort/O2 is planning to introduce three subscriptions: including 1 MB, 20 MB, and 40 MB. This would mean that with a 1 MB subscription, the downloading of 1 MB of web pages will cost 2,5 per web page visited. The downloading of 2 MB of web pages results in a cost of 1,35 per web page, and the downloading of 5 MB results in a cost of 0,66 per page. So, when using 5 MB of data per month, the costs per page are sharply reduced, but it still costs about 1,5 Dutch guilders to view one web page. This also means that it will be very costly to send movies and audio documents by mobile phone. With a 20 MB subscription, one web page costs 0,31 or less. With a 40 MB subscription, a web page costs 0,24 or less. All of this means that a monthly fee of at least 40-45 is necessary to arrive at an acceptable price for downloading a web page; while the use of e-mail or WAP pages for that price becomes almost unlimited. Telfort/O2 also plans to introduce the BlackBerry, a messaging and agenda device, to the Dutch corporate market. Its server software costs at least 3000 . The device will cost approx. 18 G I G A P O R T
  16. 16. 700 a piece. Subscription costs will be 62,5 a month including a 5 MB data limit. The main feature is its permanently on-line status, keeping e-mail and agenda status constantly up-to- date. For the consumer market, Telfort/O2 has more distant plans to launch the xda, a combination of palmtop and mobile phone, which uses MS PocketPC 2002, Microsofts new operating system for mobile devices. Adding to this the limited availability and high cost of GPRS phones, which is somewhere around 500 at this moment, all of this points to corporate users as the initial target user group. It is still an open question to operators whether private consumers will want to visit web pages and send e-mail enough in order to justify getting a GPRS subscription. So, while GPRS renders possible a whole range of rich voice and data services, and the associated range of business models, today’s GPRS implementations mainly point towards already existing communication services as the wireless services of the short term future, complemented with some specific services targeted at the corporate world. 3.3 Wireless value networks in the Netherlands The previous paragraph looked at some characteristics of GPRS services as an indication of which m-business models may be expected in the short term future. This paragraph examines the value networks formed by actors in the Dutch market in order to develop these wireless services in the Netherlands. In 2001, Libertel-Vodaphone, Telfort/O2 and KPN Mobile began to develop GPRS services for the business market. Yet, by the end of the year, the operators are still running pilots in order to test the GPRS network, the software and the currently available mobile phones. Although problems in all of these fields still seem to be abundant, the main reason behind the delay seems to be the lack of business models supporting GPRS services. Operators are starting to admit that, in the race towards mobile data services, strategic and emotional considerations have guided investments rather than business cases, which were (and are still) considered as too uncertain (see e.g. Buitelaar, 2001). Also, there is great uncertainty over which collaborative networks have to be formed in order to put wireless services on the market. This is caused by the crisis facing network operators as well as the failure of an array of on-line content models. The next paragraph takes a look at which networks currently exist in the Netherlands, in connection with the introduction of new (GPRS) services to the market. 3.3.1 Actors and activities in the Dutch market Table 2.5 provides an overview of KPN Mobile’s main strategic partners for GPRS services in the Dutch market. In 2000, KPN Mobile and NTT DoCoMo closed a strategic co-operation agreement that was topped off by a 15% participation of NTT DoCoMo in KPN Mobile. KPN Mobile and NTT DoCoMo have also announced plans to start up a new company aimed solely at mobile data, in particular I-mode services, which were introduced successfully by NTT in 19
  17. 17. Japan. KPN Mobile has vowed to invest 90 million in the new company, and to incorporate its mobile portals and platforms M-info and E-plus online in it. NTT DoCoMo will invest 50 million , thereby taking a 25% stake, and will make its knowledge on mobile data available. As the following overview shows, the main actors in KPN Mobile’s network are either linked to its strategic partner NTT Docomo, or consist of wholly owned subsidiaries acting as service providers to KPN Mobile. In addition, there are some links with equipment and handset manufacturers, which are actively participating in content provision and piloting. Table 3-3 Overview of Actors and Activities for KPN Mobile GPRS services (* Not specific for GPRS) Main actor Secondary actor Activities KPN (85%) NTT DoCoMo (15%) KPN Mobile is developing new mobile services for GPRS together with its Japanese partner, who has made I-mode, a system including several interactive mobile services, into a big success in Japan. KPN Mobile RAM Mobile Data 100% subsidiary of KPN Mobile. Exploits the Mobitex datanetwork. Is now working together with KPN Mobile to develop GPRS-services for vertical markets. RAM is turning into a service provider for hosting and WASP services. KPN Mobile TIM Joint venture to develop an Internet portal based on i-mode* KPN Mobile Interpay, Nokia Pilot WAP payments* KPN Mobile Toshiba Producer of the Snapcam which is further developed by KPN Mobile and NTT DoCoMo* KPN Mobile Ericsson, Nokia Suppliers of the GPRS network KPN Mobile IBM, Interpolis Pilot clients/partners GPRS service Mobile Office Online KPN Mobile M-info, XS4All GPRS portals/ WISPs 20 G I G A P O R T
  18. 18. As for Libertel-Vodaphone, based on the publicly accessible data shown in table 3-4, it can be said that this company mainly has built relationships with a large array of pilot partners including equipment manufacturers, applications developers, and the research and consultancy world. Table 3-4 Overview of actors and activities for the development of Libertel-Vodaphone GPRS services (* Not specific for GPRS) Main actor Secondary actor Activities Libertel-Vodaphone Ericsson Supplier of the GPRS network. Ericsson also supplies the Ericsson Virtual Office, a set of applications in order to improve the speed, security and accessibility of the Libertel Corporate GPRS Access services. Libertel-Vodaphone Cisco system Pilot client Libertel Corporate GPRS Access Libertel-Vodaphone Ernst & Young Mobile workspace pilot development Libertel-Vodaphone PinkRoccade Pilot client Libertel Corporate GPRS Access Libertel-Vodaphone KPMG Pilot client Libertel Corporate GPRS Access Libertel-Vodaphone GigaPort, TU/e, Pilot GPRS user possibilities Ericsson Libertel-Vodaphone Libertel-Vodaphone, Joint venture Syntrack to develop a test Ericsson, Industriebank environment for new network technologies* LIOF Telfort/O2 closely cooperates with its mother company British Telecom. BT Cellnet, its UK counterpart, launched its first set of GPRS services in june 2000. By the end of 2001, Telfort will undergo a name change to O2, as will all mobile daughters of BT Wireless. Table 3-5 Overview of actors and activities for the development of Telfort/O2 GPRS services (* Not specific for GPRS) Main actor Secondary actor Activities Telfort/O2 Ericsson Supplier of the GPRS network and pilot client 21
  19. 19. Telfort/O2 Ernst & Young Interim Implementation of Multi Access Portal. Ernst & Management, Netlink Young is pilot client and will market the system in Framfab & Oracle a later stage, Netlink Framfab is system integrator, Oracle is the software supplier. Telfort/O2 RIM Introduction BlackBerry (messaging hardware and software) for GPRS network Telfort/O2 Compaq, Microsoft Co-organisers of a forum for applications for vertical markets, based on Windows CE * Telfort/O2 Siemens Pilot client for Telfort/O2 Mobile Office Judging from these data, Telfort/O2 has mainly established partnerships with applications developers and equipment and handset developers. 3.3.2 Interactions and hierarchies Regarding the interactions and relationships between the actors described in the paragraph above, it has been stated that the network operators remain pivotal actors in the value networks, although the linkages and interdependencies increase. All three operators have sought to create partnerships with pilot partners, who often act both as launching customers and co-developers. These pilot partners are usually systems solutions and applications providers, participating in the setting up of GPRS service pilots. There are few initiatives in the content provisioning sphere, and rather more in the applications, equipment and handset providers, and business consultancy sphere. While Libertel-Vodaphone and Telfort/O2 may rely on their international parent companies for working out a number of general solutions, KPN Mobile has looked for a strategic partnership with NTT DoCoMo for this. Also, KPN Mobile, in connection with its own subsidiaries, is developing a number of solutions itself. Regarding hierarchies and power relationships, this means that: Network operators such as KPN Mobile, Vodaphone or Telfort/O2 have traditionally integrated the whole network operating value chain. They are still in a strong position because of their access to the customer (in terms of billing relationships, but also in terms of trust). In general, though, they are retreating to their core activities because of their huge investments in the recent past and limited outlook on short or middle term profitability. · Network equipment vendors traditionally provide a relatively standardised product. However, this is changing as new applications and middleware are being developed by these companies. As these vendors are now often the same companies as the ones providing platforms and device solutions, their position in the value network has become 22 G I G A P O R T
  20. 20. of much greater importance. This has also happened because of increasing financial dependencies of operators on equipment vendors through all kinds of equipment subsidies. · Wireless application service providers (WASPs) may develop and host applications for end-users, but they may also concentrate on providing solutions for mobile network operators. This means that there are strong links with middleware/platform providers. · Handset vendors are a well established part of the mobile value system. As they provide hardware as well as software solutions, they not only have access to the user because of the direct buying relationship, but they can also preset the operating and browser systems running on the handsets to their own advantage. · Payment processing is no longer the exclusive domain of operators. With the possible advent of mobile commerce, requiring a number of mobile financial services, other parties, such as banks, specialised billing companies, and mobile commerce platform vendors, have opportunities to get involved in this activity. · Middleware/Platform Provisioning is becoming an ever more important part of the wireless value system. Examples are WAP gateways, SMS gateways, mobile portal platforms, mobile commerce platforms, and other applications platforms. The implications of these developments are reflected in the business models behind wireless services, which are reconstructed in the next paragraph. 3.4 Current and emerging wireless business models As was mentioned earlier, four main types of services with their accompanying business models can be observed in the Dutch mobile market today. Among these are three existing services: voice communication, messaging, and WAP services. However, the business models behind these services are likely to change, taking into consideration the characteristics of GPRS as outlined previously. The fourth type of services has been introduced by the network operators that have implemented GPRS in their networks, i.e. mobile office services. Figure 3-2 reconstructs the typical business model behind voice services. This is a very simple model, with the mobile operator as the central actor. However, with the subdivision of telecom groups into fixed and wireless operators, and the advent of so-called mobile virtual network operators (MVNOs), some fragmentation of this model can be expected. In the case of MVNOs, these companies take over the billing relationship with the customer. 23
  21. 21. p, x = subscription fee Consumer Business v, y = conversation cost Market Market o = cost of capacity w = equipment cost Market z = equipment subsidy p+v x+y Mobile Service MVNO Provider o o Middleware w platform Mobile Network Provider Infrastructure equipment z Mobile Operator Vendor Figure 3-2 Voice service business model Figure 3-3 represents a simplified model of (short) messaging services. Traditionally, these are one-to-one services. However, the huge popularity of these services has lead to the development of all kinds of content services delivered by SMS. In this figure, this is represented by the SMS content provider. Apart from the mobile operators, it is the platform providers, which are providing the SMS servers, that are the most important actors in this business model. As mentioned before, these platform providers are often the same parties as the equipment vendors. 24 G I G A P O R T
  22. 22. o = interconnection tariff (if applicable) Consumer Business p = cost of infrastructure Market Market w = cost of SMS-server x = subscription fee Market y = cost of SMS-message x+y z = equipment subsidy Mobile Service w Provider Platformprovider % of y Contentprovider p SMS-service Network Service Provider Infrastructure equipment vendor z o Mobile Operator X Figure 3-3 SMS service business model Figure 3-4 reconstructs a WAP service business model. This is a more complex business model, which is a.o. due to the many different forms of paying for content. There is no fixed content model yet. The actual form and direction of the revenue streams for content provisioning depend upon the premium value of the content and on the strength of the gatekeeper’s role of the network provider vis-à-vis the role of the content aggregator. Also, there are different forms of service provisioning. These affect the relationship between the platform provider, the network operator, the mobile service provider, and the content aggregator. Alternatively to the model presented here, the mobile service provider may be, instead of being integrated with the mobile network operator, bundled with the role of content aggregator. In this case, an integrated WAP service provider exists, which serves both as portal as well as wireless Internet service provider (WISPs). In this model, the customer only has a billing relationship with the operator. Alternatively, though far less common, the customer may also have a billing relationship with the content provider or content aggregator. Under GPRS, the cost of time on-line (factor y) will be replaced by the cost of data transport. This is also true for the model represented in figure 3-5. 25
  23. 23. h = hosting cost k = cost of content Contentprovider m = income generated by traffic n = % of income Contentprovider Consumer Business o = cost of being Market Market selected for portal o p = infrastructure cost Contentprovider w = cost of WAP- o n Market gateway x+y k x = subscription fee % of m y = cost of time on-line Contentaggregator Mobile Service z = equipment subsidy Provider % of m Contentaggregator/ contentprovider w Platformprovider h Mobile Network Provider p Infrastructure Contentaggregator/ equipment vendor contentprovider k Mobile z Operator Figure 3-4 WAP service business model with integrated mobile operator Finally, figure 3-5 represents a simplified and still more or less hypothetical mobile office business model. In this model, the customer not only pays the network operator, but he or she also pays an independent platform provider for the use of the required applications and gateway. This platform provider may serve as a WASP, either supporting the end-user, or delivering to the network operator. p = infrastructure cost w = cost gateway and applications Business Market x = subscription fee w y = cost of time on-line x+y z = equipment subsidy Mobile Service Provider Platformprovider p Infrastructure equipment Mobile Network vendor Provider z Mobile Operator 26 G I G A P O R T
  24. 24. Figure 3-5 Mobile office service business model From these wireless business models, which were derived from the situation in the Dutch market today, it can be concluded that, in general, · platform/middleware providers have gained a relatively strong position in the value network, even more so as they are often linked with handset and network vendors. It can be said that the ‘enablers’ are moving into the core of the wireless business model. · the billing relationship with the customer, however, is still largely held by the mobile operator, although it is no longer restricted to them. · there is no definite content model yet. 27
  25. 25. 4 Towards business models for UMTS services This chapter briefly introduces a number of characteristics of UMTS which might alter or reinforce the present wireless business models. It looks at a set of scenarios and forecasts for UMTS services and draws some conclusions about their implications for next-generation business models. 4.1 UMTS characteristics As was mentioned before, UMTS represents a next step in the wireless migration path. Table 4-1 provides an overview of the main differences between UMTS and GPRS. These can be traced back to the service environment, the network design, and cost structure of UMTS. The UMTS service environment can be characterised as an always-on data environment. This means that data services and enhanced voice services become dominant. In this environment, voice becomes an application. Mobility of services in this environment is enhanced, for instance, by the different way of naming in UMTS. While GSM and GPRS together have four different names (numeric strings), each assigned to a specific service, UMTS users can use many Ids to access different services in different virtual environments. Under the latest version of UMTS, the network migrates from a circuit switched network with an additional packet core network to a multiservice IP-based network. This will be based on IP version 6, allowing more security, increased mobility, a reduction in costs because of increased efficiency, and different pricing options. By adopting Wideband-CDMA as its operational mode, UMTS networks will offer more capacity and quality. Also, the cells in a UMTS network are smaller than in a GPRS network, which means higher deployment costs but also more possibilities for location based services. Table 4-1 Characteristics UMTS versus GPRS GPRS UMTS Release 5 (December 2001) Environment Close to voice-centric environment Always-on data environment Dominant services Voice services Data services; rich voice services. Rich Voice is the enhancement of voice services to include advance voice capabilities such as Voice over IP and multimedia elements. Mobile network 28 G I G A P O R T
  26. 26. Circuit switched network. Multiservice IP based network. GPRS will provide an additional packet core UMTS (Release 99) will introduce the new UMTS network to the circuit switched phase 2 GSM. radio interface known as UTRAN (UMTS Terrestrial The function of GPRS is to provide IP access Radio Access Network). The basic structure of the via pipes (tunnels) from the mobile terminal to core networks will not change much from that of an ISP or corporate network at the edge of the GSM with its overlay of GPRS. The core network will mobile networks. The ISPs or corporate have IP based transport for the IP part and circuit networks may be attached to either the visited switched transport for the circuit switched part. or home network. GPRS will use the existing UMTS also provides a 64kbit/s circuit feature which radio interface structure so that mobile can be used to carry IP traffic. terminals with GPRS are compatible with GSM. UMTS Release 5 (formerly known as Release 2000 - Voice services are still circuit switched via the All IP network) will migrate the core network to a existing GSM network. single IP network and add multimedia services based on IP. Release 5 networks shall use the Packet Switched (PS) domain and the IP Multimedia (IM) domain to provide IP multimedia service support, such as voice, video etc. Consequences for services Cost for the services can be divided between Cost depends on the kind of IP service offered, e.g. non voice (amount of data, flat rate) and voice real time or not. services (time, location based). Choice of IP version IPv4 (32-bit address size). In the absence of any other reason to start earlier, UMTS operators will have to start to introduce IPv6 (128-bit address size) in the IP Multimedia domain when they start to implement services based on Release 5 of the UMTS. Consequences for services Renumbering is a serious issue in IPv4 e.g. a Some of the advantages of IPv6 which are relevant site has to give back its address space to the to the mobile environment are: ISP when it changes to another ISP. This is · Ipv6 supports mobility much better than Ipv4 handled by Network Address Translators · Ipv6 reduces administrative and management (NATs). One of the biggest problems is that overhead (and costs) by autoconfiguration NATs affect the transparency of the end-to-end (Plug&Play). connectivity, a fundamental assumption in the · Ipv6 will provide means for privacy and security Internet design. Loss of transparency: as an integral part of the standard rather than as · Disables a whole set services like IP a separate protocol. security. · Ipv6 has an enlarged address space enabling all · Introduces a single point of failure, and terminals to have a globally unique IP address makes the network less robust because in for the duration that they are connected to the a failure situation the state values stored in network. This will enable services and the NAT will be lost making recovery in applications to be developed without having to most cases impossible. take into consideration network issues like NAT Creates problems when two companies with (Network Address Translator) etc. “uncoordinated” private addresses merge. Naming GSM users have three different E.164 names Names are related to services and each service (numeric strings) for voice, fax, and data must specify the form of name to be used. Third services on GSM. GPRS will add names of the generation technology is designed to support form “user@domain”. multiple services and hence more than one type of name. Consequences for services Voice services are telephone-based using a Voice service will be IP based so a numeric string is numeric string. Other services can be accessed not necessary or used. Users can use many Ids in similar to WAP or Internet. The provision of different virtual environments accessing different information can limit portability. services. Support of mobility Mobility is supported by providing a virtual Mobility for IP multimedia may be different because connection between the terminal and a it will be based on IPv6. There is a mobility Gateway GPRS Support Node (GGSN) in enhancement of IPv6 which can create an either the visited or home network. This virtual association of: connection is provided in two segments: · A static IPv6 address for the mobile terminal · Between the mobile and the visited assigned by the home network Serving GPRS Support Node (SGSN) by · A dynamic “care of” IP address assigned by the 29
  27. 27. the procedures used for the air interface foreign agent (visited SGSN) · Between the visited SGSN and the GGSN Both addresses are used in communications and by the GPRS Tunnelling Protocol (GTP) this association allows packets to be routed to and This virtual connection is maintained as long as from the mobile without having to pass through the the mobile remains “on” and the mobile end of home network, providing more efficient routing. At the GTP can be moved if the mobile moves the same time the use of the static IPv6 address from the coverage area of one SGSN to enables the other features of IPv6 such as security another. to be used, since they depend on the availability of a Under GPRS and UMTS Releases 3 & 4, the static address. user may select an ISP or Intranet using the It is not yet clear to what extent this feature of Mobile Access Point Name. However, the mobile is Ipv6 will be used in Release 5. assigned the IP address used for external communications by the GGSN and not by the ISP or Intranet. Consequences for services The user has a choice of GGSN (expressed Although there are many uncertainties about Mobility through the Access Point Name) and can either for IP multimedia, it should make open access from log-on to the visited or home GGSN. This mobile terminals to any ISP or Intranet possible. choice may be influenced by the roaming IPv6 provides enhanced mobility in which the mobile agreements between the operators concerned terminal can be assigned by the home network and the home operator can prevent the mobile (static IPv6 address) and by the foreign agent from logging on to the GGSN of another (dynamic “care of” IP address). This makes it more network. This can limit the accessibility of some flexible for the use of services without having to pass services offered. through the home network, providing more efficient routing and services. Location and cells Number of cells 5,000 rising to 7,500 per Number of cells 17,500 cells per operator. Because operator. Cell range (GSM 900 <300m-35 km of the smaller cell sizes of the UMTS network (and and GSM 1800 <100m – 15 km). integration with GPS), more accurate location determination is possible. Consequences for services Relatively low installation costs. Limited Higher installation costs and more hand-over when number of location based services. moving around. Location based services. Satellite component No Yes Consequences for services No satellite services High capacity download possible in remote area’s. Operational modes Time Division Multiple Access (TDMA) is used Two operational modes, Frequency Division Duplex in the GSM standard. GPRS uses a maximum (FDD) and Time Division Duplex (TDD), in parallel of eight time-slots for a single user. However, provide the end-user with the benefits of both radio initial GPRS equipment will not support the use access principles in either overlapping or distinct of that much time-slots, otherwise this would environments. Both will use Wideband Code Division decrease speech capacity, as GSM and GPRS Multiple Access (W-CDMA). Some of the share the same timeslots. advantages of using CDMA are that there is no need for transmission synchronisation, or spread spectrum transmission, which offers useful protection against interference, multiple paths, other systems and enables satellite communication with mobiles. Consequences for services In theory, GPRS will enable service like web In theory, UMTS will enable video and audio, either Web Browsing, Document Sharing/ real-time, near real-time or download. Examples are Collaborative Working, Audio, Home two-way video conferencing with audio, video Automation, Remote LAN Access, Electronic streaming, hi-fi music streaming, Voice over IP Agents, Dynamic Authoring, Job Dispatch, Still (VoI,), Moving Images, File Transfer, Downloading Images and Information Services- Qualitative. Software, Virtual Home Environment and Interactive Multimedia IP services that are video based will Games. The speed and quality of the service will not be possible with GPRS because of its enable new presentation formats, such as ultra high limited bandwidth (amongst others caused by voice clarity and mobile multimedia applications. the sharing of timeslots and less efficient use of the frequency band). 30 G I G A P O R T
  28. 28. Sources: http://www.umts-forum.org/; Gudding, 1999 and 2000; K. Hoogervorst, 2001, EHPT, 2000, K. Jedeloo, 2001; Ponsioen & Van Staalduinen, 2001 As for the costs of UMTS services, these are still very unclear. It seems certain that transmission will become less costly as efficiency increases. However, this doesn’t mean that, for instance, streaming video will become feasible over UMTS. On the contrary, some research indicates that the efficiency gains associated with UMTS might sooner be used to diminish the costs of (voice) communications than to develop all sorts of new enriched services. As GSM networks are becoming increasingly clogged up, the additional UMTS spectrum may serve as a way out. However, there is the question of how to raise enough average return per user (ARPU) to justify the high cost for operators of deploying UMTS. According to recent calculations, even with an ARPU of between 40 and 55 per month and with high penetration rates, it will still take operators between 10 and 15 years to reach payoff time (Bohlin & Björkdahl, 2001). Some researchers are speculating about flat fee or very low communication prices under UMTS causing a quantum leap in (mainly voice) communications (Odlyzko, 2001). In any case, this dilemma will require extensive experimentation with different pricing and business models in order to be overcome. 4.2 UMTS service scenarios What, finally, does UMTS mean for future services and their underlying business models? In addition to the general observations made above, a number of scenarios is feasible (see also Ballon a.o., 2000). This paragraph describes four different scenarios concerning future UMTS services. They are differentiated by using the following uncertainties surrounding UMTS services: · What kind of Quality of Service (QoS) will be offered to end-users? Will QoS be best-effort (the “internet model”) or managed (the “telecom model”)? · Will there be any integration of functions into one handset? Will consumers use a single handset (an “all singing and dancing machine”) or will they have a multitude of interconnected devices (“pervasive connectivity”)? On the basis of these uncertainties, four different user contexts, corresponding with four types of services and business models, have been constructed. The four service scenarios are depicted in figure 4-1. 31
  29. 29. Internetmodel Cellular Mobile acces W ebbrowser device Single Pervasive terminal connectivity Office on the Cellular move W allet Managed model Figure 4-1. UMTS service scenarios This paragraph describes these service scenarios and assesses their implications for next- generation business models. The Cellular Webbrowser In this scenario, the mobile handset remains more or less the same as today, i.e. it doesn’t communicate with other types of devices, but it is enhanced with some standard mobile internet functionalities. It is used for personal communication and information searches on the internet. There is a huge increase in the quantity of information (and transport), rather than in quality. There is a big heterogeneity in handsets, which vary from very cheap internet enabled terminals to integrated walkmans, cellular phones and gameboys. In general, the content and the intelligence are located in the network with the providers and the network operator. The main types of services are : voice communications, e-mail, WAP/internet browsing, directory services, advertisements, personal instant messaging. Impact on business models: Mobile internet is a mass market. There are few added value services. The end user pays for communication and/or access. Content provider generally don’t get paid to display their content. There is hardly any direct m-commerce. Few paid added value services are successful. There are some portals for directory-type services, mainly deriving revenues from content providers. Operator revenues stem from voice and e-mail traffic and from flat rate subscription fees. Mobile payment services do not develop, a.o. because of security hazards and low accuracy of location determination. The operator integrates the roles of service manager and transport provider. The first priority for the operator is the fast roll out of a mobile broadband network, rather than the provision of services. There are a lot of content providers and packagers, but only few of them make money. 32 G I G A P O R T
  30. 30. The Office on the Move There are a lot of functionalities and intelligence integrated into one handset. The mobile phone is a PDA, laptop and cellular phone all in one. A lot of data is stored in the handset itself. The managed Quality of Service makes it possible to have services tailored to the needs of specific (mainly business) users. There is room for personalised, added value services such as unified messaging, productivity services and personalised services. The main types of services are: especially business and productivity services, some local m- commerce applications. Impact on business models: Vulnerability of data is an acute problem, for which specific security services are offered by operators and/or service managers. The end user pays the operator and also pays a service provider offering a service platform and a number of added value services. There are different quality of service (and price) categories. There are good opportunities for rather closed and managed platforms delivering specifically tailored services. These are offered by players closely connected with the network operators. Maintenance and upgrading of the office-on- the-move happens with software that is downloadable from the WASP or WISP that the user (or his operator) has a contract with. There are good opportunities for WASPs or WISPs, possibly delivering their services as a white brand to the operator. The Mobile Access Device The handset is primarily a tool for connecting to the internet. It sends the information it receives to other terminals such as laptops, car computers and PDAs using Bluetooth. There is little intelligence residing in the handset, which can be further miniaturised and integrated in e.g. a wrist watch. Users have a large number of devices, each with very different product life cycles and functionalities. Communication and connectivity services are most used. The biggest problems lie in the field of interoperability. The handset is context aware rather than personalised. The user can however indicate a number of preferences. There are few location-based services. The main types of services are: communication services, alert services, push services, downloading of applications and content. Impact on business models: The end user is paying the telecom operator for transport and access, and he is paying some content providers on the net for a number of services. There are few players involved in the packaging of content, which may be mainly distributed on a peer-to-peer basis. Handset vendors and application developers have good opportunities. The Cellular Wallet The handset is the central hub in a standardised set of devices. There is a lot of intelligence residing in the terminal, but it is not used to store a lot of information. This is an advantage for 33
  31. 31. mobile payments and the storage of key personal data. The handset functions as an electronic passport, a credit card and a purse. It communicates with other devices on the basis of a general standard. The user is constantly on-line. In general, content is transferred to other devices. Added value is a.o. to be found in the fields of security and payment. Robustness and security are important issues. Personalisation is very high. Location- dependence is quite big because of the payment and identification functions. The main types of services are: m-commerce, identification and access services, travel services, connectivity. Impact on business models: The user pays a fixed subscription fee and, possibly, additional fees for services delivered to him by the operator/service provider/bank of his choice. In this scenario, there are good opportunities for application/service providers, that function as middlemen and are able to send an integrated bill. They can enter into partnerships with specific operators or operate independently over an open service platform. 4.3 Conclusion This paper set out to find a useful approach to constructing a framework for the analysis of business models, to provide an overview of present wireless business models, and to give some indications of what next-generation mobile business models might look like. In doing this, it stressed the continuity in value networks and business models from 2G over 2,5G into 3G, which is partly reflected by the ever prominent place of communication services. However, a number of potentially far-reaching developments were signalled, such as the increasingly strong role of application and platform providers in wireless value networks. Also, the role of operators is undergoing change. If one thing at this point is clear, this is that extensive experimentation with different business models for 3G services will be necessary for these operators to survive. 34 G I G A P O R T
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  33. 33. Odlyzko, A. (2001) Talk, Talk, Talk: So who needs streaming video on a phone? The killer app for 3G may turn out to be – surprise – voice calls. (http://www.dtc.umn.edu/~odlyzko/doc/3g.accidental.success.txt) Ponsioen, C. & K. Van Staalduinen (2001) Ontwikkeling van tweede naar derde generatie mobiele communicatie. TNO-FEL report. Reuters (2001). Nokia GPRS phones to be four times faster than GSM. (http://www.reuters.com) The Yankee Group (2000) The Wireless Access Report. Timmers, P. (1998). Business models for electronic markets. In: The International journal on Media Management, 8, 2, pp.3-8. Wieland, K. (2000). Who is making money out of mobile data? (http://www.telecommagazine.com/issues/200007/tci/who.html) http://www.3gnewsroom.com/ http://www.emerce.nl/ http://www.ericsson.com/ http://www.gprsworld.nl/ http://www.libertel-vodaphone.nl/ http://www.siemens.nl/ http://www.telecomwereld.nl/ http://www.telfort.nl/ http://www.tinac.com/ http://www.umts-forum.org/ 36 G I G A P O R T

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