About Mobile Futures Heikki Hämmäinen HIIT Haukilampi May 19, 2005

Visions of media convergence Big Pipe Single channel Unified value nets E.g. Internet Big Box Single terminal Several channels Smart or dumb E.g. Linux/Java Big Company Global company Single ecosystem E.g. Vodafone, MS Big Pipe may happen as Internet evolution Big Box may result from the operating system battle Big Company may get control of Big Pipe and/or Big Box Ecosystems grow and die slowly Governments may interfere Technical development has enabled the convergence of different types of networks and terminals. When and how this will happen is an open question. Big Pipe vision denotes the all-IP evolution which may attract broadcasting and telephony traffic to Internet. Big Box vision highlights the integration of all terminal functions (phone, TV, PC) into a single platform, e.g. a pocket terminal. At least initially, a Big Box gets connected to different channels for voice (GSM), data (IP/GPRS), and video (DVB-H). Multiple operating system platforms (e.g. Windows, Mac OS X, Linux, Symbian) are implementing the Big Box, but the number of different platforms may decrease as the technology matures. Big Company vision observes that the ICT industry involves strong network externalities visible as “winner takes it all”. A Big Company controlling major parts of the communications value net may emerge from the Big Box scenario (e.g. Microsoft, Nokia) or from the Big Pipe scenario (e.g. Vodafone, NTT DoCoMo). Governments are not likely to allow the dominance of Big Company. They may interfere using regulatory measures to adjust competition. Source: P Longstaff, 2003

Usage Goes Wireless Wireless hotspots turning fixed networks into mobile Handsets connecting to hotspots (e.g. WLAN, BT, UWB) Wireless laptops replacing desktop PCs Mobile handsets expanding to multimedia services This year’s high-end handset becomes next year’s low-end New consumption of pictures, video, music New production of pictures and video Internet becoming accessible via mobile handsets

Adoption of New Handset Functions Case Finland Source: LEAD project, 2004

Personal profiles managed in the handset? Usage Goes Personal Personal wireless laptop Personal mobile handset New personal usage Interactive TV (traditional TV “group terminal” losing) Location-based information Networked person-to-person (games, chat, presence) Micro-payments in the real world Personal profiles managed in the handset?

How do I manage my world? WWW Browse My bookmarks My phonebook My landmarks Communicate Track

Case Japan Daily Mobile Internet Usage Time Minutes/day Female Male Overall <5 48.28 56.07 53.85 5-10 22.06 19.86 20.49 10-20 13.78 9.88 10.99 20-30 8.20 5.74 6.44 30-60 4.68 4.25 4.37 60-90 1.27 1.44 1.38 >90 1.72 2.76 2.46 More than 50% of users use less than 5 min per day No clear correlation between time of day and content between amount of usage and content Source: MoCoBe.com survey, 2003

Case Japan Daily Mobile Internet Usage (%) by Location Usage follows the duration of presence (except commute) No clear correlation between usage location and content Source: MoCoBe.com survey, 2003

Household spending Communication as % of household consumption (OECD average) 4% Content? 3% Internet 2% Mobile 1% 1970 1980 1990 2000 Source: OECD

Complexity of Buying GSM business model for person-to-person services has been stable and understandable to consumers Market for mobile content is still fragmented technically and business-wise Open issues End-to-end harmonization of the service architecture End-to-and harmonization of the value network Harmonization of micro-payments (e.g. authentication)

Consumer’s Confusion Terrestrial operator Service providers Local teleoperator Satellite operator Cellular operator Content operator CATV operator ISP Legend Core business Likely expansion Possible expansion Services Home telephone service Broadband Internet access Value-added Internet services Terrestrial TV broadcast Cable TV broadcast Satellite TV broadcast Cellular service Multimedia content

Traditional Payment Systems Case Finland Value(€)/ Transaction Nordea Internet bank (c. 300€, 4trs/month) 50 VISA credit card (45 €, 6trs) 5 Cash Mobile handset (0.3 €, 50trs) 0.5 15 30 Transactions/Month Role of cash decreasing very slowly Mass of micropayments to be optimized

E-Commerce U.S. on-line payment market –merchants view VISA has over 50% marketshare of all Internet payments (ref. ”Verified by VISA”) Source: Gartner Group, 2002

E-Commerce vs. Digital Content Japanese on-line market – wired vs E-Commerce vs. Digital Content Japanese on-line market – wired vs. mobile in 2001 Mobile content market ¥110B Wired e-commerce market ¥706B Wired content market ¥32B Mobile e-commerce market ¥115B Mobile Internet 23% Wired Internet 77% Mobile content much bigger than wired content ! Source: ECOM, Natsuno, 2003

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