Mobile Charging Emphasis on Business and Subscriber Aspects
Content Introduction Basic Subscription Models Different subscription set-ups Postpaid & Prepaid charging Offline & online charging Mobile content business prospects Mobile Content Value Chain Barriers for Mobile Content Breakthrough Importance of transparency in charging Challenges with Content Charging Future of content charging Conclusions General charging aspects Business perspective
Introduction What is content charging? Mobile content is something that: Can be delivered trough mobile internet Has measurable value to the participants in the value chain Charging is: Generating, formatting and transferring of an data record Basic data records Call data records (CDR) Usage data records (UDR)
Basic Subscription Models Fixed subscription (all you can eat) Linked subscription (limited all you can eat) Event or transaction based charging Session based charging Sponsorship based charging (company) Loyalty based charging (airline points)
Different Subscription Set-ups Source: Nokia Corporation
Prepaid & Postpaid Most important individual aspect from charging mechanism Postpaid = Charged afterwards Prepaid = Charged against beforehand paid limit Prepaid has been gaining popularity steadily since 1995. 57% share by 2006 Effect of evolving markets
Prepaid Charging User mobile Content/ Delivery Server Charging Center User Account User initiates event-based service Content delivery Prepaid reservation request Service authentication Delivery conformation Balance check & reservation Reservation committed
Postpaid Charging User mobile Content delivery Content/ Delivery Server Usage Data (CDR) Charging Mediatio n Mediated CDR Rating & Billing
Postpaid vs. Prepaid Most important individual aspect from charging mechanism Prepaid has been gaining popularity steadily since 1995. 57% share by 2006 Effect of evolving markets POSTPAID Benefits for subscribers -Easy to use -Convenient for sponsorship charging -Credit aspect Benefits for operators -Subscriber loyalty -Technically easier PREPAID Benefits for subscribers -Freedom -Control -Many choices -No credit aspect Benefits for operators -Fast and simple sign-up -Fraud control -Cost control -More secure (online)
Facts of Postpaid vs. Prepaid ARPU Prepaid market Sweden Germany Spain Netherlands UK Portugal Ireland Italy 0 500 1000 1500 2000 Annual ARPU (USD) Prepaid Contract Blended Source: Analysys research limited
Offline and Online Charging Offline = Charging mechanism where charging does not affect in realtime to the service Online = Charging mechanism where charging can affect in realtime to the service Source: Nokia Corporation
Mobile Content Business Prospects Relative duration of use of mobile phones, Internet, radio and TV by UK consumers Messaging and other non-voice ARPU of selected mobile operators 1% 4% Ireland (O2) Non-voice ARPU (USD) 0 50 100 150 200 250 300 350 400 UK 51% 44% Germany Italy Spain USA Japan (Vodafone 2G) Use mobile phone Listen to radio Use Internet at home Watch TV Japan (DoCoMo 2G) Japan (DoCoMo 3G) Messaging Other data Source: Analysys research limited Source: Analysys research limited
Mobile Content Value Chain Business models complex Industry in constant change Dominated by mobile operators Virtual network operators play increasingly important role (Brand!!) Revenue Sharing Licensing Subscription Non digital Content & Intellectual property Applications Aggregation/ Publishing Application Service Provisioning Online Portal Provisioning Mobile Delivery Service Usage End-user device MVNO
Role of MVNO Current mobile operators need money to cover 3G investments => Opening network infrastructure to 3 rd parties? Currently mobile operators don t have strong brands => Can virtual operators use their existing brands? (e.g. internet portals) Source: Nokia Corporation
Barriers for Mobile Content Breakthrough (Related to charging) Lack of marketing support for content (content providers vs. operators) Operators have very high requirements for content Content providers receive their profit with long lead time Content providers evolving to MVNO -> Operators on the alert Lack of standardization in charging mechanisms (different standards) Network limitations (different networks with different capabilities)
Importance of Transparency Customers need simple and transparent charging models The World s Top Ten Wireless Services 1. Bundled voice tariffs Sprint PCS (USA) 2. ThreePay prepaid tariffs 3 (UK) Operators moving away from event and transaction based charging Guess what is common aspect with these Top Ten Wireless Services? 3. Mobile TV and video 3 (UK) 4. SMS O2 (Ireland) 5. FOMA 3G service bundle NTT DoCoMo (Japan) 6. Vodafone live! service bundle Vodafone (W. Europe) 7. TM 3 integrated 2.5G/3G/PWLAN T-Mobile (Germany) 8. Ringtone downloads Xing (Japan) 9. Games downloads IN-FUSIO (worldwide) 10. Genion HomeZone tariff O2 (Germany) Source: Analysys research limited
Challenges with Content Charging Developed originally for voice communication Complex solutions for content charging Interoperability challenges Flexibility challenges Evolving revenue chain with conflicting interests
Service Delivery Platform Solves some of the content charging challenges SDP designed to Provide abstraction to network layer Provide service execution platform Can be mobile operator own solution or 3 rd party operated Source: First Hop
Content Charging in Future Could the future be? (provocative approach) More simple and flexible charging systems Future role of prepaid unclear Investment oriented when moving to 3G Prepaid subscribers with higher ARPU bring needed cash flow Prepaid offers youth market segment that has high data usage rate Not concentrated to delivered Mbytes but rather the real revenue Charging model where subscriber is getting benefit without any fee Using network for commercial purposes? Usage of Ad-hoc networks? More brand focus in charging and pricing
Conclusions Mobile content is big business Future mobile content business is even bigger opportunity (mobile TV etc.) Mobile content charging is very important aspect of mobile business The content charging infrastructure needs upgrades (partly happening) Mobile content charging is moving away from transaction based charging towards fixed charging Value chain changing and complex Chain currently dominated by operators how about future?
References 1.Unstrung Insider Vol.4 No.9 September 2005 2.Baskerville, Global Mobile Prepaid Strategies vol.2004 3.ARC Group, Mobile Business Models Industry Survey 4.Nokia, Service Charging in Mobile Internet 5.Research International Finland, Finnish Mobile TV Pilot results 6.Infroma Telecoms & Media, Mobile Content and Services 7. Sudhir Dixit, Tao Wu, Content Networking in the Mobile Internet 8. Wireless World Forum, MobileYouth 2005 9. Analysys, Charging and Revenue Sharing for Mobile Content 10.Analysys, TV and Video Services On a Mobile Phone