Mobile Charging · •Call data records ... Japan (DoCoMo 3G) Non-voice ARPU (USD) ... •Charging model where subscriber is getting benefit without any fee

T-110.5120 Next generation wireless networks, 2005

Mobile ChargingEmphasis on Business and Subscriber Aspects


ContentContent•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


IntroductionIntroduction

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 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 Different Subscription Set-ups

Source: Nokia Corporation


Prepaid & Postpaid 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 Prepaid Charging

Content delivery

Prepaid reservation request

Balance check &

reservation

Charging Center

User Account

Content/Delivery Server

User mobile

Reservation committed

Delivery conformation

Service authentication

User initiates event-based

service


Postpaid Charging Postpaid Charging

Content delivery Usage

Data (CDR) Mediated

CDR

Charging Mediatio

n

Rating & Billing

Content/Delivery Server

User mobile


Postpaid vs. Prepaid 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 Facts of Postpaid vs. Prepaid

0 500 1000 1500 2000

Italy

Ireland

Portugal

UK

Netherlands

Spain

Germany

Sweden

Annual ARPU (USD)

Prepaid Contract Blended

Source: Analysys research limited

Prepaid marketARPU


Offline and Online Charging Offline and Online Charging


•Offline = Charging mechanism where charging does not affect in real-time to the service

•Online = Charging mechanism where charging can affect in real-time to the service


Mobile Content Business Prospects Mobile Content Business Prospects

0 50 100 150 200 250 300 350 400

Ireland (O2)

UK

Germany

Italy

Spain

USA

Japan (Vodafone 2G)

Japan (DoCoMo 2G)

Japan (DoCoMo 3G)

Non-voice ARPU (USD)

Messaging Other data

Messaging and other non-voice ARPU of selected mobile operators

Relative duration of use of mobile phones, Internet, radio and TV by UK consumers

1%4%

44%51%

Use mobile phone Use Internet at homeListen to radio Watch TV

Source: Analysys research limitedSource: Analysys research limited


Mobile Content Value Chain Mobile Content Value Chain

Non digital Content & Intellectual

propertyApplications Aggregation/

PublishingApplication

Service Provisioning

Online Portal Provisioning

Mobile Delivery Service

End-user device

Revenue Sharing

Subscription

Usage

Licensing

•Business models complex

•Industry in constant change

•Dominated by mobile operators

•Virtual network operators play increasingly important role (Brand!!)

MVNO


Role of MVNO Role of MVNO

•Current mobile operators need money to cover 3G investments=> Opening network infrastructure to 3rd parties?

•Currently mobile operators don’t have strong brands=> Can virtual operators use their existing brands? (e.g. internet

portals)



Barriers for Mobile Content BreakthroughBarriers for Mobile Content Breakthrough

•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)

(Related to charging)


Importance of TransparencyImportance of Transparency

1. Bundled voice tariffs Sprint PCS (USA)

2. ThreePay prepaid tariffs 3 (UK)

8. Ringtone downloads Xing (Japan)

9. Games downloads IN-FUSIO (worldwide)

10. Genion HomeZone tariff O2 (Germany)

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. TM3 integrated 2.5G/3G/PWLAN T-Mobile (Germany)

The World’s Top Ten Wireless Services

Source: Analysys research limited

•Customers need simple and transparent charging models

•Operators moving away from event and transaction based charging

•Guess what is common aspect with these Top Ten Wireless Services?


Challenges with Content Charging 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 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 3rd party operated

Source: First Hop


Content Charging in FutureContent Charging in FutureCould 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 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 References 1.Unstrung Insider Vol.4 No.9 September 20052.Baskerville, Global Mobile Prepaid Strategies vol.20043.ARC Group, Mobile Business Models Industry Survey4.Nokia, Service Charging in Mobile Internet5.Research International Finland, Finnish Mobile TV Pilot results6.Infroma Telecoms & Media, Mobile Content and Services 7. Sudhir Dixit, Tao Wu, Content Networking in the Mobile Internet8. Wireless World Forum, MobileYouth 2005 9. Analysys, Charging and Revenue Sharing for Mobile Content10.Analysys, TV and Video Services On a Mobile Phone

Documents

Mobile Charging · •Call data records ... Japan (DoCoMo 3G) Non-voice ARPU (USD) ... •Charging model where subscriber is getting benefit without any fee