Japanese experience in the mobile Internet (i-mode) im- plies that successful launch of the third generation service will depend on the content transferred through terminals.53 Certainly, the next growth sector within the global ICT market will be the content industry.
Consequently, favorable development and global compe- tence of the Finnish digital content industry have high rankings on the government agenda. In 1999, the govern- ment initiated the Content Finland Programme, an inter-ministerial agenda for the period 2000–2003 to im- prove the preconditions of Finland to develop into a lead- ing country in providing – in addition to ICT –industrial content products.54
The history of the Finnish ICT cluster has a chance to re- peat itself: In the building project of the Information Soci- ety, interaction between the industry and the public sector as a demanding customer has every opportunity to generate content innovations reproducible to export markets.
Recent breakthroughs of the Finnish music industry and cinema indicate a sudden positive change in the tradition of domestic entertainment production, and it has conse- quently created a new atmosphere of enthusiasm and im- proved self-esteem in the ‘traditional’ content industry.
However, ‘content’ needs to be understood extensively, beyond traditional definitions limited mostly to media, au- dio/video production and suchlike. Virtually, content can be regarded to encompass anything that provides value- added to the ICT terminal user.55In this respect, the oppor- tunities are limitless for Finnish firms to enter the digital content market, in which innovation and advanced technol- ogy environment may outweigh tradition.
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53 See e.g. several articles in the TIME Magazine in November 27, 2000.
54 The programme contains eight ministries under which new content products for a wide range of application areas will be developed in cooperation with businesses and financiers.
55 Iobox, one of the early mover start-ups, offers an extreme example of a content provider that refined consumer communications
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4
Trends in wireless services and products
Jarmo Karesto, Finpro
Need for services is the driving force of the computer hard- ware business; the same is true for the wireless telecom business. Innovative services and service content will play critical roles in third generation service take-off and in the wireless hardware business.
Figure 4.1 illustrates one example of the possible business models in the third generation mobile environment. There will be several players and functions in the model, each de- pendent on the other. In order to work properly, the value chain of the business model must be well in balance.
Network operators will be facing new challenges. The old business models do not work anymore. It is not feasible for subscribers alone to pay back the huge investments that have been put into operating licenses and network build- ing. The operator business will be even more downsized when they change from time-based invoicing to pack-
age-based invoicing in data transfer. New business models are needed. The operators can create new value-added ser- vices, they can cooperate with service content providers and they can take a dominant role in m-business transaction management. The network operation will probably be sep- arated from the mobile service business and function within its own business area.
The focus of this study is wireless technology develop- ment, not service development; however, as stated previ- ously, these two issues can not be separated. Service devel- opment is the driving force of technology development. In practice, however, this concept is not at all so simple. All the elements in the value chain must be in balance before the business model works properly.
The following diagram (Figure 4.2) shows the complexity of the third generation mobile business. Terminal sale de- pends on terminal prices and service take-up. If the new services are not attractive or they are high-priced, or the prices of new terminals are high compared to existing prices, the majority of subscribers will be satisfied with the
Network Operators and Service Management
Service Management
(e.g. ISP or Corporate Network)Subscriber/
User
UMTS
Access
Network
Operator
Core
network
operator
Value Added
Service
Providers
Content
Providers
Communications
Service
Broker
Billing
AccountingPayment
Home Environment
existing services. This is considered to be a risk especially in the case of UMTS. High prices paid for UMTS licenses will slow down the service take-up by keeping the service prices high. The majority of subscribers will wait for prices to come down and this will cause financial problems for operators. The counter-statement from the operator side is that this will not happen because they can keep the basic service fees low in a number of ways; for instance, by mov- ing the cost burden from subscribers to content providers and to the prices of new sophisticated services, and by im- plementing new earning models like selling advertising
space etc. The business logic mirrors that of the Internet. The competition, by improving the services of existing op- erators and challenging technologies like wireless local networks, cause sleepless nights for UMTS investors.
What will the services of the future actually be? Figure 4.3 provides a useful classification of different wireless ser- vices. Service provision depends on the target customer, whether it is a consumer or business user. Regardless of customer, the service can be either transaction-based or it facilitates a process. Service attractiveness Service prices Entry of service providers Service take-up Terminal prices Terminal volume Cost of network access Technology Global standards Service usability (interfaces) Access network regulation Technology Regulation Service variety Service utility
Figure 4.2. Market dynamics model of UMTS.Source: UMTS Forum.
Personal life management Mobile office Transactions Consumer Business Process facilitation B2C/C2C m-transactions
Personal life management/ Mobile office
Services providing true mobility of everyday activities: Wireless PDA Voice mail Entertainment Remote operation E-mail Instant messaging Access to databases ● ● ● ● ● ● ● B2B m-transactions
Services aimed at businesses to do B2B m-transactions:
Access to existing B2B e-commerce market places Business versions of current B2C m-commerce services e.g. Banking services, real-time trading Fully wireless B2B market places e.g. wireless portal for a big construction project ●
●
●
Business process enhancement
Supporting services to improve business process efficiency and effectiveness:
Sales force support Field service management Fleet management Remote monitoring ● ● ● ● B2C/C2C m-transactions Business process enhancement B2B m-transactions Mobile transaction services
aimed at consumers: Stock trading Mobile banking Location-based advertising M-tailing M-wallet Micro payments ● ● ● ● ● ●
DoCoMo’s i-mode service has set trends in third genera- tion mobile services. The huge success of i-mode has been a very positive sign for other operators. The whole i-mode value chain is managed, however, entirely by DoCoMO. The company’s strategy has been to keep the basic service fees and terminal prices at the same level as ordinary mo- bile service to guarantee fast service take-off. For subscrib- ers this means enormous improvements to services at a low price. Outside Japan, DoCoMo’s model does not apply be- cause the players in the value chain are independent com- panies. There is no one to manage the entire value chain. In some markets the terminal prices can be subsidized by op- erators, but as is the case in Finland, this is not possible ev- erywhere.
4.1
Drivers in wireless content
There are hundreds of different estimations available in lit- erature and studies about the major applications of wireless networks. It is important to understand what those applica- tions are to understand their implications to terminal de- sign. The following list is a basic summary of the most common services and service content for consumers.
M-Commerce and services
• Shopping
• Banking
• Other financial services Entertainment • Music • Films • Games • Sports • Chatting Information • News • Traffic Information • Weather information • Health information • Databases
Mobile office, group management
• Communication services (voice, SMS, E-mail, video conferencing, access to Internet)
• Group management services (shared calendars, group management tools etc)
• Remote control
It is noteworthy, but not surprising, that the above list is al- most identical with the list of current Internet content. Mo- bility, however, will provide important additional factors to the content. The most important mobility-specific fac- tors are location identity and personality. The location of the user determines what services are useful for her or him at that moment. The mobile terminal is a personal thing and is basically available all the time. In terms of service and content provision, this marks the difference between the mobile terminal and the Internet. These factors are dis- cussed in more detail in the following chapters.