Provision of mobile data services: portfolio analysis

1. Provision of mobile data services: portfolio analysis Alexei A. Gaivoronski Norwegian University of Science and Technology, Trondheim, Norway Alexei.Gaivoronski@iot.ntnu.no IKT Økonomi

2. Design of composite service • Telecommunications • IT services • .... IKT Økonomi

3. Example of structural description of service provision IKT Økonomi

4. Different constellations of roles IKT Økonomi

5. Service architecture IKT Økonomi

6. Services, roles and actors services Components, enablers, roles users actors SPICE IKT Økonomi

7. Economic requirements • Platform should be attractive for all actors • Actors should feel incentive to join service provision, that is they should want to join cooperative effort because they will benefit from it • Services should provide to actors a competitive source of profit • Risk/return considerations: risk that users will not accept the service as expected, cannibalizing, etc IKT Økonomi

8. Approach of modern financial theory • Actors participate in service(s) provision assuming roles and providing components for services • Quantify cash flow, profits and risks • Each actor will select tradeoff between profit and risk exposure according to its preferences • This will result in service portfolio for each actor • Coordination tools should assure that the actors will select on their own accord participation in service provision in required proportion IKT Økonomi

9. Risk/return tradeoff IKT Økonomi

10. Quantitative modelDescription of service • Services consist of components which my be provided by different actors N components indexed by i and M services indexed by j lij - share of component i in service j. Description of service through components: • Service generate revenue vj • Revenue sharing coefficients • Actor who contribures with component i recieves revenue IKT Økonomi

11. Description of actors • Actors assume roles by providing service components • This incurs costs and brings revenue K actors indexed by k cik – unit provision costs for actor k providing component i Wik – provision capability of component i by actor k xijk – the portion of provision capability for component i of actor k dedicated to participation in provision of service j. Profit model for actor k xijkWik - the volume of provision of component i dedicated by actor k to service j IKT Økonomi

12. Profit model for actor k • xijkWik/λij- volume of service j in which the actor k participates • vjxijkWki/λij - the total revenue from this service • vjxijkWkiγij/λij - the part of the revenue which goes to actor k • Profit of actor k: IKT Økonomi

13. Profit model for actor k • Basic case: an actor provides only one component • Profit • Return • Portfolio viewpoint: an actor chooses portfolio of services to which contribute IKT Økonomi

14. Portfolio viewpoint • Return coefficients associated with participation in each service • expected return coefficients • expected return • Risk that actual return will be different from expected return or even become loss IKT Økonomi

15. Efficient service portfolios • Problem to solve for computing eficient frontier IKT Økonomi

16. Next level: quantitative coordination • What is necessary is that the whole service provision platform functions properly • And this means that different actors should independently make decisions to participate in different services which nevetherless will provide coordinated result. • Revenue sharing coefficients should be chosen in order to achieve this IKT Økonomi

17. Coordinator (service provider) problem Paper is available on Edition 1 of the model set IKT Økonomi

18. Architecture of the DSS prototype IKT Økonomi

19. Screenshot 1 of demo of DSS prototype IKT Økonomi

20. Screenshot 2 of demo of DSS prototype IKT Økonomi

21. Example: business person on the move IKT Økonomi

22. Risk/performance preferences IKT Økonomi

23. Market shares IKT Økonomi

24. Price competition IKT Økonomi

25. Summary • Service design and planning constitutes a rich source of optimization problems under uncertainty • They are not necessarily linear but they are worth solving IKT Økonomi