Transcript No Slide Title

Summer school
Jukka Heikkilä
Professor, vice dean
The faculty of Information Technology
University of Jyväskylä
P.O. Box 35
FIN-40351 JYVÄSKYLÄ
FINLAND
tel:+358 50 581 8361
email: [email protected]
Here it is!
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Diffusion of Internet vs. wireless
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Projection of the diffusion
(c.f. Sonera, 2000)
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Diffusion?


Installed base: is huge but the number of WAP,
GPRS, UMTS phones is minimal
Any evidence on the replacements?
– Most Finns/Europeans have got a phone, the lifecycle of
which is getting shorter (3a downto 1a)
– Operators have an incentive to move

UMTS network broadens their operations to content
management
– Technology push
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Better displays?
Fotorealistic, 3D-mobiili-terminal
at a price suitable for consumer
devices:
– HDTV-precision within 2-4 years
(Bruzzoni (Philips) 2001)
– At the limit of eyesight within 8-10
years (ibid.)
– 200dpi full color display introduced
in Winter 2001 by IBM
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Faster transfer rates?
(Buckingham, 2001; c.f. Mobicom 2001)
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Better toolkits?
(c.f. Devine & Holmqvist, 2001)
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Tools?


Development environments
Terminals
– thin


SIM Application Toolkit (SMS, WAP)
WML scripting (WAP)
– thick, or sturdy

Java (MeXE) with classmark compatibility (see Antero’s
presentation)


Brew?
For server side
–
–
–
–
server software
gateways for SMS & WAP variants
filters & adapters for XML/WML
components SSL, payments etc
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Payments?
(as an example of basic services)

Merita-Nordbanken, Nokia and Visa are experimenting with the
EMPS-phone (Electronic Mobile Payment System)
–
–

You can fit on a special 7110 a semi-permanent, minisize smartcard, that can hold
hundreds of payment mechanisms (VISA(!) credit and debit card as well as a Merita
debit card.
Wildest dreams equip it with Bluetooth, for cash payments
The Nordic consumers are anticipated to accept the system as
Merita-Nordbanken on-line banking 1984.
– Merita-Nordbanken has currently 1.1M Internet bankers in Nordic
countries


It announced an expansion into Baltic countries by means of electronic
banking
Available as WAP, too
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Another way - SmartTrust

Based on PKI X.509 std
– currently RSA keys


Utilizes SMS infrastructure
Requires a coprocessor SIM-card (replacement)
– for encryption/decryption
– for authentication
– for signing

Sonera co-operates with
– GTE Cybertrust for PKI
– SETEC manufactures SIM-card

Keep an eye on Radicchio
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Do we need this?
Cybersource Internet Fraud Screening
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Projection from 2G is dangerous
(Kankare, 2001 in Talouselämä)

the introduction of 2G in Finland
– 2G was hoped for by the customers (1.5M in Europe)
– Profit calculations were based on underestimates


e.g. Radiolinja estimate of 1989 wast to have 50-150.000 GSMsubscribers instead of 1.3M in 2000 (Häikiö, 2001)
e.g. Radiolinja estimate on turnover was 0.5bFIM vs. 3.5bFIM in 2001
– Duopoly replaced monopoly

Entrant’s risk was shared with banks, insurance companies, chain
masters and heavy industry
– Monopoly pricing was not limit pricing

i.e., there was 40-50% supernormal profit on calls on NMT networks
– The demand exploded (as expected) after the 20% penetration
rate threshold
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Cellular rates
(OECD, 2000)
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Market structure
(OECD, 2000)
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Operators are pricing new wireless
services high (Finnish Consumer Agency, 2000)
– Tested set of services:

domestic news, business news, sports news, weather forecast,
stock exchange, list of TV-programs, dictionary
– Browsing the services took ~ 13 mins
Radiolinja
Sonera
Telia City
WAP on
GSM
WAP on
Data
SMS
14,81
N/A
27,85
14,33
6,36
N/A
WAP
GSM
SMS
SMS
difference
12,95
14 %
14,33
94 %
13,86
-54 %
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A prerequisite - use

Internet access
– U.S., flat rates


Ahead in Internet connections
Average connection time +1h/day
– EU., time based charges



catching up in the number of connections
Average connection time 1/4h/day!
In mobile environment
– CSD & HSCSD are expensive
– SMS & USSD reasonable
– GPRS/EDGE/3G ?
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Pricing
A seemingly resolved issue ;-)

Basic strategies
– Consumer pays



Connection time - switched network (expensive)
Traffic, I.e., packets - connectionless n. (overhead)
Pay per service - any n. (service & no - in IP n.?)
– premium number
– credit


Fixed price (pre, post) - any n.
Nothing - any n.
– Banners, commercials, donate

The role of operator
– intermediator?
– or a retailer?
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Case iMode

(NTT DoCoMo, 2000;
4/2000: 6+ M tilaajaa (20% äänipuhelujen tilaajista
siirtyi vuodessa)
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Voice 34%, e-mail 42%, Internet 24% of time
connected
(InfoCom Research, Aug. 2000)
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Summer school
Jukka Heikkilä
Professor, vice dean
The faculty of Information Technology
University of Jyväskylä
P.O. Box 35
FIN-40351 JYVÄSKYLÄ
FINLAND
tel:+358 50 581 8361
email: [email protected]
iMode

(Tachikawa, CTIA April 2000)
Content
– 6000 providers, at NTT portal 500 providing customers



Entertainment, 50% of traffic
Transaction and database services next
Revenue structure (and pricing)
Flat fee equivalent to 3USD/month
+ number of inbound/outbound packets (avg. 10USD)
+ increase in voice (avg. 15USD)
NTT earns avg. 25USD per subscriber per month
+ if content providers charge, NTT collects 9% billing fee

Features
– insensitive to transfer rates, good mix, portal-power
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Imode users
(NTT-X & Mitsubishi Institute, 2000)



45% of the users
are students
39% workforce
16% housewives
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The N-Gen is coming!
Managing basic prerequisites (Statistics Finland, 1999)
100
90
80
70
%
60
Can use keyboard
Using mouse is easy
Can cope with English software
Has access to network
Has email address(es)
50
40
30
20
10
0
< 15
15–19
20–29
30–39
Age
40–49
50–59
60+
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Case iMode
(NTT DoCoMo, 2000; Devine & Holmqvist, 2001)

Situation is different compared – especially - to Europe:
– NTT DoCoMo has a very strong position on the market (55%)
– Few internet service providers and connections available (or price is
high)
– Text messaging vs. hand-held e-mail
– Huge variety of light, SIM-free, miniature terminals with color
displays, cameras, recorders, players etc.
– Services tightly coupled with web-servers

Technology – no rocket science
– Circuit switched digital network + on top 9.6kbps digital packet
switched
– cHTML subset

Why not WAP?
– Timing & simple implementation
– Proprietary tech possible thanks to strong market position
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mobile Internet; the market potentiality
* huge Japanese market (potentiality of the market )
- 80 million voice users out of 125
million Japanese population
- 50 million mobile subscriber will
use internet email services
- 40 million mobile subscriber is
the target of mobile information
service
- 30 million mobile users needs
rich contents on the mobile
Internet
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mobile information service business concept
in 2nd Generation
* mass marketing concept
- focusing on consumer market
- make best use of existing html contents (i-mode, J-Sky)
- reasonable charging system; monthly flat price
- reasonable pricing; lower price level as the other info. Media
i.e. monthly magazines (400 .. 1,000 JPY; 20 .. 60 FIM)
* convenience store concept
- mobile information service is “convenience store on the net”
- provide only selected information at anywhere, anytime
- continuous development of “info. site” and quick launching
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Greed or generosity?
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Potential market size of information service
* facts
- at the moment, 30% of i-mode users subscribe 2 toll info.sites
(at least)
- the price of info. service is 100 .. 300 JPY/month
* trial calculation
- total # of subscription to toll info. site; 24million out of 40million users
40M x 30% X 2
- sales of the toll info. site; 2.4 billion JPY/month (133 million FIM/M)
24M x 100
based on the mass marketing concept
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Competition?
operator
service name
function
technology
standard
network
(line speed)
information service
description
picture file
max data size/page
official sites
user information;
content provider can
refer from operator
J-Phone
J-Sky
* access to information site
* send/receive internet mail
KDDI /TU-KA, a.u.(PDC)
EZ web
* access to information site
* send/receive internet mail
* personal digital assist
PDC cellular(1.5GHz)
PDC switching+cntrl channel
(9600bit/s + alpha)
PDC cellular(1.5GHz, 800MHz)cdmaOne(800MHz)
PDC switching
cdmaOne Packet
(9600bit/s)
(14.4kbit/s)
PDC cellular(800MHz)
PDC Packet
(9600bit/s)
MML
PNG (256 color)
6kbite
489 sites
user ID
terminal model code
HDML(WAP based)
BMP(256 color)
1.5kbite
583 sites
user ID
terminal model code
HDML(WAP based)
BMP(256 color)
1.5kbite
583 sites
user ID
terminal model code
compact HTML
GIF(256 color)
5kbite
1,267 sites
user ID
terminal model code
connection pass
HTML version
TX; up to 250 characters
RX; up to 2000 characters
PULL with incoming message
no
TX; up to 250 characters
RX; up to 2000 characters
PULL with incoming message
no
TX; up to 250 characters
RX; up to 250 characters
PUSH
no
standard: 200JPY
premium: 300JPY
3JPY for initial 1minuit, after
init period 10JPY/minuit
(for both info service & Mail)
# 789,300
June./2000
standard: 300JPY
premium: 400JPY
0.27JPY/128Byte
(for both info service & Mail)
300JPY
# 3,788,900
Jan./2000
# 15,410,000
Feb./1999
internet mail service
TX/RX
TX; up to 3000 characters
characters
RX; up to 3000 characters
distribution
PULL with incoming message
attachment
OK (picture/tone)
price (without information charge of toll sites)
monthly charge
250JPY
free of charge for info service
communication fee info service; 2JPY/1request,
mail; 8JPY/1 message TX/RX
subscribers
start of toll service
# 3,968,200
Apr./2000
KDDI /a.u.(cdmaOne)
EZ web
* access to information site
* send/receive internet mail
* personal digital assist
NTT Docomo
i-mode
* access to information site
* send/receive internet mail
0.3JPY/128Byte
(for both info service & Mail)
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Greed or generosity?
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FOMA W-CDMA

Color
 Multimedia
 Heavier
 More
complex




Voice = DoCoMo PDC
Data = 1.8 x voice
Packet comms
0.05JPY/128b packet =
1/6 of iMode
SMS 5/7JPY/msg
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Launching iMode elsewhere

PDC
– propriatory tech
– iMode trials suspended in Europe

UMTS rollout delayed by European and Japanese
teleoperators
– In Europe delayed
– In Japan – test terminals withdrawn
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