Session 8a, 11 June 2008 ICT-MobileSummit 2008 Copyright 2008 E3 Revenue sharing models for dynamic telecommunications services using a Cognitive Pilot Channel Simon Delaere & Pieter Ballon IBBT-SMIT, Vrije Universiteit Brussel Belgium

Session 8a, 11 June 2008 ICT-MobileSummit 2008 Copyright 2008 E3 Motivation, problem area Cognitive Pilot Channel: promising concept to enable DSA, increase spectrum flexibility and efficiency Business perspective: different ways to set up CPC  different business models with different revenue sharing agreements This paper: conceptual, exploratory analysis of CPC revenue sharing models –Four possible ways of deployment –Nine possible revenue sharing agreements –Exploratory scoring on four crucial variables –Four revenue sharing options retained

Session 8a, 11 June 2008 ICT-MobileSummit 2008 Copyright 2008 E3 Cognitive Pilot Channel concept Operator 1 UMTS ? 2 Ghz Operator 2 WiFi 2.5 Ghz CPC Operator 1 WiMAX 2 Ghz Operator 3 WiFi 2.5 Ghz O1-GSM-1500 O2-WiMAX-2000 O3-WiFi-2500 Connect CPC 450 Mhz O1-GSM-1500 O2-WiMAX-2000 O3-WiFi-2500 Connect O3 WiFi 2.5 Ghz Operator 1 GSM 1800 Mhz Operator 1 GSM 1800 Mhz Operator 1 GSM 1800 Mhz Operator 1 GSM 1500 Mhz  FSM may invoke a particular information deficit  E2RII/E3 proposes Cognitive Pilot Channel as a solution

Session 8a, 11 June 2008 ICT-MobileSummit 2008 Copyright 2008 E3 Research approach, Methodology Business Model Matrix Crucial elements of any business model Control and Value parameters Viable business models present a strategic fit between control and value parameters Allows for simulation & business analysis of different deployment scenarios Ballon, P. (2007). Business Modeling: the reconfiguration of control and value, Info, vol. 9, n° 5, pp

Session 8a, 11 June 2008 ICT-MobileSummit 2008 Copyright 2008 E3 Results of initial analysis User 1 Device Operator 1 CPCOperator 2 CPC User 2 Device RAT 1RAT 2RAT 3RAT 4 I. Operator-based system RAT 1RAT 2RAT 3RAT 4 II. Intermediary-based system User 1 Device Reg./Interm. CPC User 2 Device III. Hierarchical system Operator 1 CPCOperator 2 CPC RAT 1RAT 2RAT 3RAT 4 Intermediary 2 CPC User 1 Device Reg./Interm. CPC User 2 Device Intermediary 2 CPC Delaere, S. & Ballon, P. (2007). The business model impact of flexible spectrum management and cognitive networks. Info, Vol. 9, N° 5, pp

Session 8a, 11 June 2008 ICT-MobileSummit 2008 Copyright 2008 E3 Refined typology for revenue sharing analysis

Session 8a, 11 June 2008 ICT-MobileSummit 2008 Copyright 2008 E3 Definition of revenue sharing models

Session 8a, 11 June 2008 ICT-MobileSummit 2008 Copyright 2008 E3 The nine models

Session 8a, 11 June 2008 ICT-MobileSummit 2008 Copyright 2008 E3 Balance of control versus revenue, in casu –Alignment of gateway (CPC) and core assets (RATs) ownership Assumption: for revenues to be fairly distributed, there should be alignment between gateway and core assets ownership Assumption: independent CPC operators gaining revenue not likely to be supported –Alignment of value production and core asset (RAT) ownership Assumption: primary contribution to value proposition should be aligned with ownership of underlying core assets Assumption: asset owners will not support gateways taking up customer ownership and value guarantor roles without owning the RATs User value proposition of Flexible Spectrum constellation, in casu –Billing complexity Assumption: customer will not accept double billing relationship –Supply diversity Assumption: customer prefers choice between multiple operators Assumption: CPC models with a lock-in to a specific operator less likely to be accepted Parameters for analysis

Session 8a, 11 June 2008 ICT-MobileSummit 2008 Copyright 2008 E3 Results

Session 8a, 11 June 2008 ICT-MobileSummit 2008 Copyright 2008 E3 Conclusions and caveats Revenue sharing models analysis Pure association models feasible (I and III) Hierarchical and intermediary models with RAT CO feasible (VI and IX) CPC = thin intermediary, possibly run by consortium or regulator Costs borne by operators, justified by cost savings for underlying RATs and new services Mixed CO and CPC CO, multiple independent CPC scenarios less likely General conclusions Limited possibility for standalone CPC Primary aims: reduce harmonization and implementation complexity, gain stakeholder support Little opportunity for competitive, cross-operator CPC market More chances for association or consortium platforms RATs remain core asset  core source of revenue Caveats Not all variables checked Scored in explorative way (limited validation) Positive scores do not guarantee viability