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Summer school

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: jups@cc.jyu.fi. Here it is!. Diffusion of Internet vs. wireless.

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Summer school

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  1. 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: jups@cc.jyu.fi

  2. Here it is!

  3. Diffusion of Internet vs. wireless

  4. Projection of the diffusion (c.f. Sonera, 2000)

  5. 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

  6. 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

  7. Faster transfer rates?(Buckingham, 2001; c.f. Mobicom 2001)

  8. Better toolkits?(c.f. Devine & Holmqvist, 2001)

  9. 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

  10. 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

  11. 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

  12. Do we need this? Cybersource Internet Fraud Screening

  13. 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 GSM-subscribers 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

  14. Cellular rates(OECD, 2000)

  15. Market structure(OECD, 2000)

  16. 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

  17. 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 ?

  18. PricingA 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?

  19. Case iMode (NTT DoCoMo, 2000; • 4/2000: 6+ M tilaajaa (20% äänipuhelujen tilaajista siirtyi vuodessa)

  20. Voice 34%, e-mail 42%, Internet 24% of time connected(InfoCom Research, Aug. 2000)

  21. 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: jups@cc.jyu.fi

  22. 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

  23. Imode users(NTT-X & Mitsubishi Institute, 2000) • 45% of the users are students • 39% workforce • 16% housewives

  24. The N-Gen is coming!

  25. 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

  26. 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

  27. 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

  28. Greed or generosity?

  29. 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

  30. Competition?

  31. Greed or generosity?

  32. FOMA W-CDMA • Voice = DoCoMo PDC • Data = 1.8 x voice • Packet comms 0.05JPY/128b packet = 1/6 of iMode • SMS 5/7JPY/msg • Color • Multimedia • Heavier • More complex

  33. 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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