Designing Roadmaps for the Galileo Commercial Service Platform

Mark de Reuver Faculty of Technology, Policy and Management

Delft University of Technology Delft, The Netherlands

G.A.deReuver@tudelft.nl

Danai Skournetou and Elena-Simona Lohan Dept. of Communications Engineering

Tampere University of Technology Tampere, Finland

Danai.Skournetou@tut.fi, Elena-Simona.Lohan@tut.fi

Abstract—Unlike existing Global Navigation Satellite Systems, future Galileo is envisioned to provide a Commercial Service (CS) with improved as well as new characteristics. However, as yet, it is still highly unclear whether Location Based Service (LBS) providers are in fact interested to pay for accessing CS signals. The purpose of this paper is two-fold: First, to show how business model roadmapping can be used for analyzing the impact of a new service offering on customer and second, to demonstrate the steps and activities that have to be done in order to create a business model for Galileo CS. The roadmap-based study identified three crucial points that the European Commission and the future Galileo operating company should take into account in their planning for the future: First, the creation of awareness on Galileo CS platform at an early stage, second, getting LBS providers on board by applying progressive pricing schemes or choosing non-discriminatory pricing schemes and third, getting governments on board to create trust and reputation for the platform or focusing attention on LBS providers directly.

Keywords-Galileo; Commercial Service; roadmaps; Location Based Services

I. INTRODUCTION Nowadays, Location Based Services (LBSs) are

omnipresent both in the consumer and in the professional market. The business of LBS providers largely depends on the Global Positioning System (GPS) and recently also on the Global Navigation Satellite System (GLONASS). Not only are GPS and GLONASS operated under the discretion of the US and Russian military, respectively, but they also give only best effort guarantees on accuracy and availability. The European Union (EU) in collaboration with the European Space Agency (ESA) is preparing the launch Europe’s own Global Navigation Satellite System (GNSS) platform, Galileo, which is expected to be fully operational around 2020 [1]. Galileo will provide five service types among which a basic, free-access service called Open Service (OS), which may yield better performance in certain environments due to the improved signal characteristics.

Still, accuracy of Galileo OS will not be a major improvement compared to GPS standard positioning service. Because of this and given that LBS providers increasingly rely on positioning information, EU proposes to offer a premium-

rate version of Galileo OS called Galileo Commercial Service (CS). This premium-rate service will enable (1) higher positioning accuracy and (2) signal authentication. The latter is regarded as a security measure against malicious attacks in the form of intentional misguiding (commonly known as spoofing). In addition, it is envisaged that CS will offer (3) service guarantee [2].

CS signals will only be available to those service providers who decide to purchase a license from the future Galileo Operating Company (GOC). We argue that the viability of the Galileo CS platform can only be understood by exploring how the secure, reliable and more accurate positioning information may impact the business model and service portfolio of current providers of location-based services. To study this issue, we conducted 14 semi-structured, in-depth interviews with key stakeholders as well as analyzed secondary data through desk research. Interviews were analyzed using Atlas TI the results of which were presented in authors’ earlier work [3]. Starting from these earlier results, we analyzed possible business model roadmaps, both for LBS providers and for the Galileo CS operating company.

II. METHODOLOGY In this paper, we apply the method of business model

roadmapping to explicate the steps and activities that have to be done in order to create a business model for Galileo CS. The method of business model roadmapping is recently developed by De Reuver et al. in [4] and extends upon methods in business model design (e.g., [5]) and roadmapping principles (e.g., [6]).

We define a business model as the way a company or network of companies intends to create and capture value from technological innovation [5]. Designing and testing a new business model is challenging in itself, but how to make the transition to that new business model in reality? When to start investing in new technologies? When to attract that new type of employees that are capable of dealing with new services? Until when to postpone decisions to see how the market is developing, and what are points of no return? A business model roadmap is a plan with intermediate steps to achieve a desired business model B starting from a business model A. It describes what intermediate steps and critical decisions have to

978-1-4673-2343-7/12/$31.00 ©2012 IEEE

-----------------------------------------------------------------

Figure 1: Business model roadmap for LBS providers that switch to Galileo CS platform via a wait-and-see approach (top plot) or via an assertive approach (bottom plot).

be taken to achieve a desired business model. A business model roadmap is defined on two levels of analysis:

Business model changes. This layer includes changes in the service, technological, organizational or financial domain of the organization or value network required to realize the desired business model.

Activities. This layer includes practical actions that need to be carried out to enable the changes in the business model layer.

Business model roadmapping comprises four main steps:

1. Identify desired change in the business model

2. Analyze the impact of that desired change on other business model domains

3. Translate business model changes into specific activities

4. Back-casting of ideal transition path

In reality, often multiple desired business models are considered as alternatives, and there may not be one ideal path. In this paper, we specifically zoom in on the trade-offs between the sequencing of activities that would enable the roadmap towards a business model for Galileo CS.

III. BUSINESS MODEL ROADMAPS FOR LBS PROVIDERS Of course, for LBS providers, a core question is whether

they should adopt Galileo CS at all, and if so, how and when. Interviewees agreed that the improved signal would mainly add value for business users (e.g., fleet managers, logistics providers) and governments (e.g., road pricing), as such enabling new target groups and/or offering price discrimination. On the other hand, for mass market (consumer) applications, the possibility to authenticate the signal would bring little if no benefit at all. The signal authentication would open the potential for new service concepts that rely on secure and always-available signals (e.g., road tolling, tracking of valuable/dangerous goods, land/offshore construction, rail track

Figure 2: Business model roadmap for LBS providers that are forced to switch to Galileo CS platform due to issues with GPS.

and road lane sensitivity, inland and harbor shipping, maintenance of road infrastructure, fleet management, security services, financial transactions, logistics, etc.). It is thus clear that the Galileo CS signal will probably not be enticing for every LBS provider.

Regarding the activities that need to be done, it is clear that contracting with the Galileo CS operator is an important issue, especially as any service guarantees are only worthwhile if liability is defined in a formal contract. Other activity is developing new service concepts that are enabled by the more accurate, reliable and secure signal. But given that clients of LBS services now more or less take GPS for granted and are possibly not very aware of its downsides like best-effort which may cause spoofing and its military nature which may cause interrupted provisioning, it will be important to create awareness of reliability and security issues with clients before they would be willing to pay a premium fee for the CS-enabled service. TABLE I. summarizes the activities in the business model roadmap.

TABLE I. BUSINESS MODEL ROADMAP FOR LBS PROVIDERS THAT ADOPT GALILEO CS

Business model change Impact on other business model

components

Activities required to enable the changes

Service domain: New service concepts New service

development

Technology domain: Adoption of Galileo CS signal

Organization domain:

Relationship Galileo operator

Contracting with Galileo CS operator

Finance domain: Price discrimination

Service domain: More professional

users

Creating awareness of reliability and security

issues with clients

The core question in this business model roadmap is how to sequence the activities mentioned, especially as Galileo CS will not be offered until 2020 or even later. The legal, financial and technical conditions that the EU will impose on using the CS signal are yet to be defined, thus adding even more uncertainty for LBS providers. LBS providers could adopt a wait-and-see strategy, but on the other hand they could also be more assertive to get a perhaps temporary competitive advantage over other LBS providers. So, a core question is: When should LBS providers start to think about Galileo CS? Specifically, this involves the mentioned activities of new service development, including service design but also developing a business model involving the target group and a revenue model, but also creating awareness among their existing and future clients about the security, accuracy and reliability issues pertaining current GPS and future free-access Galileo signals. How to deal with uncertainty about when it will be launched? Should LBS providers already start to make customers aware of issues with unguaranteed GPS first, or should they wait until they have moved to Galileo CS? This trade-off is illustrated in Figure 1, whereas the first plot shows the business model roadmap assuming that the LBS provider waits until the system is launched and contracts are assured before developing new services and creating awareness in the market. The second roadmap already starts developing new services before even the system is launched. Of course, these

two are extremes and merely serve to illustrate the criticality of the issue when to start planning and developing when relying on uncertain external platform.

The previous two roadmaps assume that the decision will mainly be driven by opportunities for new services, new target groups and/or new price differentiation options. The roadmap may also be triggered by issues with GPS that may unfold in the future, like outages, hacking, spoofing, wars and other unforeseen problems (see Figure 2).

IV. BUSINESS MODEL ROADMAP FOR GALILEO CS OPERATING COMPANY

We also give attention to the business model roadmap of the company that would operate the Galileo CS platform. Also there, various activities still have to be undertaken. Of course, the satellites largely have to be launched and made operational, although this is probably not within direct scope of the operating company. But also marketing and promotion among LBS providers still has to be done, as several of them are not aware of the improvements made in the new CS signal. And contracting with LBS providers (including financial, legal and technical conditions) has to be done as well.

TABLE II. BUSINESS MODEL ROADMAP FOR GALILEO CS OPERATOR

Business model change

Impact on other business model components

Activities required to enable the changes

Service domain: Adoption by LBS providers / governments

Service domain: Trust in Galileo CS operator

Creating buzz and awareness among LBS

providers Technology domain:

Launch of Galileo system Investing and launching

satellites Financial domain: Pricing

model

-----------------------------------------------------------------

Figure 3: Business model roadmap for Galileo CS operator via a technology push approach (top plot) or via an assertive approach (bottom plot).

Crucial business model issues are the trust in the Galileo CS operator, as our interviews show that the LBS providers are skeptical, for example on trustworthiness of EU decision making processes and the reliability of the offering. Moreover, the pricing model still has to be defined at some point in the future. Those things should ultimately lead to adoption of the CS signal by LBS providers and governments. See TABLE II. for an overview of the business model roadmap activities.

Also here, one issue is how far ahead the operating company should start to create awareness, to settle contracts and to define pricing model prior to the launch of the system. Should this already be done at this point in time? This trade-off is illustrated in two alternative business model roadmaps in the top and bottom plots of Figure 3, respectively.

V. INTEGRATING THE BUSINESS MODEL ROADMAP OF LBS PROVIDERS AND GALILEO CS OPERATING COMPANY

The business model roadmaps of the CS operator and LBS providers are not independent from each other, obviously. Given that we focus on the CS operator as a problem owner, it

is interesting to see how that operator could adapt its business model roadmap to indirectly steer the business model roadmap of the LBS provider, thus enforcing the adoption of the platform.

In our interviews, one thing that became clear is that if a competitor moves to better signal, the LBS provider may have no choice but to also move to that signal to remain competitive. The reason for LBS providers to switch is then not an issue of

new service opportunities or new target groups but more about staying competitive and being forced to upgrade. This is visualized in the Figure 4, where the thick arrow indicates interaction between the roadmaps. The CS operator may thus try to get LBS providers on board quickly in order to create a critical mass of competing LBS providers that have switched, and thus get the others on board as well. One could think of seed type of pricing schemes, where early adopters get discounts or even for-free pricing deals just to get them on board early-on. While such a progressive pricing scheme may conflict with core values of EU policy like non-discriminatory principles, this is at least a design issue that needs to be discussed while defining the business model roadmap.

Figure 4: Integrating the business model roadmaps for LBS providers and Galileo CS operator (progressive pricing to get LBS providers on board).

Another driving force, according to the interviewees, is the adoption by government institutions, for example for road tolling applications. If governments adopt the CS platform, this creates trust in the Galileo CS platform but also leads to buzz

and reputation that may foster the adoption by LBS providers of the platform. As such, getting government agencies on board is a second way for the CS operating company to influence the business model roadmap of LBS providers, see Figure 5.

VI. CONCLUSIONS In this business model roadmapping exercise, we were less

interested in the exact activities that need to be done, but more on how to integrate business model roadmaps of a platform provider and multiple service providers that might adopt that platform. We also tried to apply business model roadmapping with a very long time horizon of 10-15 years with many uncertainties on the way. We found that external factors like security issues that may emerge regarding GPS or GLONASS systems will influence the roadmap. As such, we suggest making the step the first step from business model roadmapping to business model stress-testing.

In this specific case, business model roadmapping elicited three crucial trade-offs that the EC and the future Galileo operating company should take into account in their planning for the future:

Create buzz and awareness around the Galileo CS platform early-on, or only once the platform is operational.

Getting LBS providers on board by applying progressive pricing schemes or choosing non-discriminatory pricing schemes.

Focusing attention on getting governments on board to create trust and reputation for the platform or focusing attention on LBS providers directly.

This case shows how business model roadmapping can be done to analyze the impact of a new service offering on clients. Specifically, we attempted to give advice to Galileo CS operating company on how to position their CS service platform and whom to target with it first. The case also reveals need for business model roadmap alignment across organizations: the roadmaps of the operating company and the LBS providers are interdependent. We show that there are various control points in the operating company business

Figure 5: Integrating the business model roadmaps for LBS providers and Galileo CS operator (targeting governments to get LBS providers on board).

model roadmap that may be utilized to trigger changes in the business model roadmaps of potential adopters of the platform. Focusing on such control points may thus be an addition to the business model roadmapping approach that was developed earlier in this report.

REFERENCES [1] Crop, O. “The European GNSS programs: Galileo program status”,

tech. rep., European Commission, February 2011. [2] European Space Agency. www.esa.int/esaNA/galileo.html

[3] D. Skournetou, M. De Reuver, and E.-S. Lohan, "Has the Time to Commercialize Satellite Navigation Signals Come? Business model viability of a Galileo Commercial Service platform", in the IEEE Proc. of the Third International Workshop on Business Models for Mobile Platforms (BMMP) - Access and Competitiveness in Multi-Sided Markets, pp. 301-306, Berlin, Germany, October 2011.

[4] M. De Reuver, H. Bouwman, and T. Haaker, “Conceptualization of business model roadmapping”, Report SI-I program, 2011.

[5] H. Bouwman, T. Haaker, and H. De Vos, “Mobile service innovation and business models”, Springer, 2008.

[6] R. Phaal, C. J. P. Farrukh, and D. R. Probert, “Technology roadmapping-A planning framework for evolution and revolution”. Technological Forecasting and Social Change, 71(1-2), 5-26, 2004.