The SIM card has been an inherent part of GSM systems from the beginning. However, according to Mark Melling of Intuwave, thinking laterally about the SIM as a smartcard adds utility and value to the mobile proposition, especially when it comes to securing data.

Mobile operators seeking to increase mobile data revenues by simply perpetuating PC-based usage models, rather than exploiting the intrinsic capabilities of the mobile device, are missing a trick. For example, if the SIM is viewed as a smartcard, it opens up security possibilities that resonate far beyond the mobile world. However, operators will have to change their approach in order to take full advantage.

The fixed-line Internet is often regarded as the model for how mobile data services should develop. In this scenario, the mobile handset is seen as a PC replacement and simply providing the same kind of enterprise access that a laptop might need is key to success. However, Intuwave has always argued that the ‘always with you’, ‘always on’ and ‘intermittently connected’ nature of the mobile device means that usage patterns are sufficiently dissimilar from those of the PC, to require new revenue models to be developed if full advantage of its capabilities is to be made.

An excellent example of the kind of thinking that is required concerns the SIM card. It is becoming clear that the SIM — a feature unique to the mobile world — has applications far beyond those for which it was originally designed. The clue is in the name — Subscriber Identity Module. It was created to remotely authenticate users to the network and to the billing systems that allow operators to generate revenues from voice traffic.

In practice, however, the SIM is effectively a mass-market smartcard. By combining stored evidence of identity (such as a key) with personal information only the user will know (a password, for example), it offers the same two-tier authorisation provided by smartcards. This ability of the SIM card to hold personal data that can authenticate users to a variety of systems is an ideal solution for enterprises and content developers grappling with the exploding issues of digital rights management (DRM).

Built-in benefits

As a smartcard, the SIM’s mobile heritage has many advantages. Firstly, SIM cards can be remotely configured to enable deployment of security keys and to ease blocking of transactions in the event of loss or theft. They also offer secure storage of sensitive data and keys in a way that PCs do not. And crucially, the SIM is tied directly to billing mechanisms for the purposes of micropayments.

The mobile phone is also the one device that we take with us wherever we go and its small size and sheer portability means that locating a smartcard on this device is a practical step. In essence, the SIM is a smartcard to which we have all ‘opted in.’ As operators and financial services organisations now see the combination of simple security devices (passwords) and a smartcard as acceptable security, there is no reason why the SIM cannot gain wider acceptance as an authentication tool, irrespective of the actual device (PC, kiosk, etc) used to access information.

Intuwave believes that the most immediate impact of the mobile phone as smartcard will be in the implementation of effective DRM for the mobile world with a business usage case revolving around access to corporate data and a consumer scenario around intellectual property, access to which incurs royalty payments.

In the business world, the smartcard might be used to encrypt and decrypt information enclosed in e-mails. Today, there is virtually no way of controlling access to information once it is sent out via e-mail: the sender merely hopes it reaches only the addressee to which it has been sent and is not forwarded to any other parties. If access rights to that e-mail can be tied to the user information contained on a SIM card, then a higher level of security is achieved. Also, it would be possible to freeze access to information on a PC if users left their desks, meaning that even an open email system would still be protected. The SIM might also authenticate access to a whole host of enterprise systems.

In a broader sense, there are a number of initiatives, particularly to do with recorded music, where intellectual property is openly available on a commercial basis over the internet. Again, the issue is how to control the onward distribution of this content. Using the SIM card as a basis of authenticating content to individual users might be an effective way of tackling this problem. Currently, this usage case is about controlling illegal distribution — in the medium term, the automatic link between the SIM card and the operator’s billing system might authenticate onward recipients to access the intellectual property by adding any due royalties to their mobile phone bill.

There are, of course, a variety of security initiatives currently underway but, far from being at odds with these, the approach outlined is complementary to many of the solutions now being advanced. For example, the Open Mobile Alliance is implementing a mobile DRM solution that doesn’t exploit the smartcard capabilities of the SIM — but its efforts would be significantly enhanced by doing so.

Reality not fiction

At the moment, the SIM as smartcard scenario might sound like science fiction but Intuwave is working with a variety of different organisations that have the experience and industry weight to usher such solutions into being. However, while we believe the technical challenges can be solved, there is one issue that will need to be resolved if the SIM is to become an effective smartcard solution.

At the moment, the SIM card is owned by the mobile operator that issues it with the phone and its ownership rights are set out in the small print of every service contract. While this remains the case, there are limited incentives for other parties, particularly corporate entities, to invest resources in a solution that remains the property of another. After all, any enterprise wishing to download sensitive security keys to a SIM card will want the security of knowing that they can assert some claims over its ownership.

Concrete steps

Some steps are already being taken to address this. For example, the EC’s Trusted Transaction Roaming (T2R) project brings together operators Orange and Vodafone, technology providers Gemplus, SmartTrust, and Ubizen and wireless trust organisation Radicchio. It aims to leverage the available GSM infrastructure, particularly the SIM card, to provide mass-market authentication and end-user consent services. This will allow third parties, such as governments, financial institutions and businesses, to use mobile handset as a complementary authentication and consent channel.
In the same way that an individual with a private car can be insured to carry commercial property belonging to his company or a physical property is bought by one party to be leased to another, so we believe operators can find some way for another’s intellectual property to be carried on its SIM cards without compromising the latter’s rights. Initiatives such as T2P are an important step in the process towards that.

Overall, mobile operators looking only at PC usage models for inspiration will short-change themselves and Intuwave believes that the SIM card is an excellent case in point. Its utility and value as a smartcard solution has no parallel in the PC world and is an essential feature of its ‘mobileness’. However, its ubiquity, portability and convenience together with its ability to store key personal data and link to billing systems means it might have been specifically designed to function as a smartcard. Moreover, as it already exists in the mobile handsets carried by all of us, it minimises many of the barriers to adoption of smartcards. In the creation of mobile data service revenues, it’s time to think out of the (PC) box.

Location based services were once touted as the ‘killer ap’ for mobile network operators. Location awareness was a facility that only the mobile Internet could offer — opening up whole new revenue streams which were denied to the fixed Internet.  Yet this revolution hasn’t really materialised. Tony Dennis asks whether location still has a role to play in the services of the future.

The first thing to say is that expectations for location-based services (LBS) have changed noticeably. In 2001 Analysys forecast that location services revenues will grow from just over USD2billion at the end of 2002 to more than USD18.5bn by the end of 2006.  Yet by 2002, the ARC Group said that the location-based services market will grow from around USD1bn worldwide in 2002 to an estimated USD15bn worldwide by 2007.

Part of the problem derives from the multiplicity of LBS technology solutions and legislative uncertainties. In the USA, there are three different technologies certified for the E-911 initiative for emergency services, while in Europe the E-OTD (Enhanced Observed Time Difference), TDOA (Time Difference Of Arrival), A-GPS (Assisted GPS) and Enhanced Cell-ID location technologies, were all considered for the equivalent E112 legislation. The decision by the EU to simply specify the technology which is ‘feasible,’ means that the ball is once again firmly back in the operator’s court when it comes to deriving revenue from LBS.

Direction suggestions

To offer some guidance, analysts, Global Information, drew up four scenarios of how European operators might benefit from LBS. In Scenario 1, it cited a French operator deploying A-GPS in 2004. The prediction was that the expected capital expenditure over five years would be USD100.6million (assuming 15% subsidisation and 25% A-GPS handset migration rate). This, they claim would result in annual LBS revenues of USD213.1m. Scenario 2 sees a German operator relying on Enhanced Cell ID technology installed in 2001. Here, the expected capital expenditure over five years would be USD36.4m, while the resulting annual LBS revenues would be USD52.1m. Scenario 3 moves to Italy where an operator deploys E-OTD in 2004. The expected capital expenditure over the same five year period would be USD60m, resulting in annual revenues of USD251.5m. In the final scenario, a UK operator deploying TDOA in 2004, could expect capital expenditure over five years of USD81.6m and annual LBS revenues of USD291.5m.

Overall the returns aren’t exactly suggesting that location technology will set the mobile world on fire. However, this does not necessarily mean that there is no market for LBS. It is more that the technology and applications are yet to truly converge into compelling services.

Successful alternatives

A good illustration of the difficulties operators are encountering when providing location based services is provided by examining the rival systems aimed at a core market — transport. In central London. identifying the exact location of customers phoning for taxis is a major problem. However, rather than relying on just one technology to provide location information, taxi companies are using multiple technologies to create a service.

For example, taxi cab manufacturer, Manganese Bronze Holdings, is offering Zingo which enable the consumer to call a national rate number from a mobile phone. Using cellular-based location technology to identify where the customer is, the system then switches to GPS satellite technology to identify Zingo taxis in the vicinity. The customer is then connected to the nearest cab driver by voice to provide more precise location information. In effect Zingo uses two LBS services plus voice to do the job.

In partnership with The Location Network, Netsize is offering the alternative London Taxi Point service by installing physical signs at popular locations in the capital. Customers text the numbers written on the signs and this correlates to their exact location. The system then once again takes advantage of GPS terminals fitted to the taxi cabs to send the nearest taxi. It may not be that advanced technically but it does meet the market demand.

 “Many existing location based systems use Cell ID technology to locate an individual based on the position of the handset against base stations. However, many of these systems can be inherently flawed,” argues Craig Barrack, UK manager with Netsize. “In a highly dense urban environment such as Central London, a single cell can cover many buildings and may not be accurate enough for a [location based] service.”

Location Network’s CEO Davis Ward-Perkins, agrees adding, ” For those location-based services that rely on accuracy, many look to user-input as a means of fixing an individual’s position. This may come in the form of entering a postcode, or in the case of London Taxi Point, referencing a four-digit code that is unique to a designated location.” With regard to Cell ID technology, Ward-Perkins says, “It certainly has its applications and in time, when the accuracy improves, we will see a great deal more services that rely on its ability to fix an individual’s position. In the meantime, a positive user-experience is vital to the continued success of [LBS]. For London Taxi Point, there is no room for error. The taxi either arrives in the correct location or it doesn’t. If it doesn’t, then the chances of the customer using the service again are minimal. With physical signs and location codes the element of doubt has been removed.”

Matching the technology with a user benefit is vital to generate revenue and, according to Joe Barrett, director for industry marketing with Nokia Networks, this can be achieved by operators staying closer to their natural environment. He argues that network operators will employ LBS in the battle to capture voice minutes from the fixed line operators.
In Germany, for example, mmO2 has employed 1800MHz technology to offer its Genion service which provides GSM handset users with cheaper voice calls when they are within their ‘home zone.’ Barrett argues that by taking this principle and enhancing it with location technology, operators can offer a really valuable service. The handset would automatically recognise it is within a ‘home zone’, but it will not merely offer lower cost calls but will change a whole variety of parameters. Vitally, these would include its advertised presence so that the user is only visible to friends, family etc. Indeed, the use of presence will mean that as soon as a user looks at the handset’s address book, it will be possible to tell whether a particular contact is at home, work or travelling.

However, according to some, mobile operators have already missed the LBS boat. Ann-Louise Palm, CEO with Appear Networks suggests that the real opportunity can be found in the already location-specific environment of WLAN hotpots, “The numbers of [Wi-Fi] locations and connected users are growing daily.” she states and this provides a good base. However, she is well aware that it is services that count, “I’m not talking about PDA users being bombarded with advertising as they walk into shops…In reality, really useful contextual geo-localised services should be available for professionals. “Imagine a machine in front of you, capable of instructing you how to operate it, even able to transfer an educational video to your mobile terminal. Or imagine walking into a conference and having instant access to the floor plan of the conference venue, the conference programme and speaker presentation files. Well, this is not science fiction,  Appear Networks made this possible [via Wi-Fi] last year [2202] at the Stockholm Challenge held in Stockholm City Hall.”

User appeal

Appear also believes that LBS is relevant for other kinds of workers besides travelling executives and office clerks. “This is also useful for blue collars — a maintenance worker, for example, can plan where to lay cables on a building site. A security guard can locate video cameras in his/her field of surveillance. Appear Networks’ technology today makes it possible to tune positioning within a radius of a couple of metres,” Palm claimed. “As transport workers, security guards and hotel personnel don’t all require instant access to the same kind of information, it is vital to know a person’s specific profile. It’s about services. Users are not buying the technology (GPRS, UMTS, Wi-Fi), they are buying functionality.”

One of the greatest drawbacks to any LBS offering is consumer concern over privacy — a fear that ‘Big Brother is watching You’ through such facilities.  An excellent example of this kind of reaction was provided in the Iraq war where US military authorities demanded that journalists surrender their Thuraya handsets through a fear they were transmitting vital location information to the enemy. Of course this was only a remote danger even if the GPS capability was switched on (and it defaulted to off). This incident illustrates just how vital it is for users to be able to understand how they can disable positioning services or severely restrict how much information is revealed.

“The industry has done well to push location-based services and I don’t think we have been victims of too much hype. It certainly isn’t letting the user down in the same way that WAP did in its infancy,” commented Ward-Perkins. “The technology is maturing daily, but until location-signalling phones are used by the bulk of the population and the accuracy increases there will be a place for user-input based services particularly for applications that want to pinpoint a user down to an exact building.”

Early indications from the mobile data arena may not be giving any definitive messages about which applications will drive the market but one theme can be heard loud and clear — users want content related, value-based billing that is easy to understand and above all predictable. Catherine Haslam talked to  Dr Jens Trötscher, vice president of SchlumbergerSema Business Support Systems unit, about how this can best be achieved.

Mobile Europe:  A number of operators have been running high profile data services for over six months now, what are the early lessons being learned about billing for data services?

Dr Trötscher: Operators are beginning to get feedback from their users and this is clearly showing that billing rationales impact on the user’s willingness to use services. Firstly, the majority of services are billed on a byte basis and customers are simply not interested in this. They want a billing structure that is relevant to them and that means relevant to content.

Looking at it from the other side, the operators want to encourage data usage. However, the open-ended nature of charging for each event is putting people off exploring new services, while price advice delivered prior to every action merely acts as a reminder of the cost and as such creates a barrier to further use.

Mobile Europe:  There are clearly problems with the functionality that many billing systems currently offer but is there a better option?

Dr Trötscher: Billing must be for content with a clearly defined price and no separate charge for traffic — furthermore we believe that these content services will need to be bundled together and offered simultaneously as packages. These would comprise a number of music downloads, picture messages, location-based services, or whatever else operators believe will appeal to their customer bases. Customers would be able to pre-subscribe to the package, know what they are getting and understand what they are paying for without being constantly reminded that they are spending money. Some data bundling is done now but it is byte based and therefore difficult for users to understand.

Mobile Europe:  There may be benefits for the customers but what about the operators?

Dr Trötscher: All operators are looking to increase ARPU and they are looking to data services to do this. What bundling does is provide the customer with a clear and predictable view of what they receive for their money. It removes the cost barriers perceived by the user when they are charged for each and every transaction and therefore also encourages a certain level of usage.

Furthermore, in addition to driving data usage and ARPU up bundling also has advantages for an operators internal processes. Service and tariff definition processes were built for people with high levels of technical expertise. But with the introduction of many more and new data-based services, this has to change as it needs to be easier for marketing departments to access and create pricing definitions.

Mobile Europe:  Does this mean that marketing is taking over the billing function?

Dr Trötscher: Absolutely not. It is still necessary for the billing systems as a whole to capture the traffic levels and meter the transport layer but this needs to be de-coupled from the marketing functions.
It’s about building in a layer of abstraction which allows marketing departments to work from the functionality that exists in the network and use pre-defined tariffing and service building blocks to create compelling service bundles. This is something we are providing via the Product Center function of our  Business Support and Control System (BSCS) which provides the flexibility to deliver new, innovative bundles quickly and effectively. If the content already exists in the operator’s portfolio, it can take as little as a day to set up.
In effect the marketing department will have the freedom to create new bundles, run promotions etc but within strict boundaries; they will operate within their own sandbox. The technical divisions will still be responsible for the system configuration which must remain separate, as well as collecting information from all the network elements and the reconciliation of that data.

Mobile Europe:  This all sounds sensible and simple in concept but how easy is it to implement?

Dr Trötscher: The simplicity is created at the end for the customer because it needs to be that way but, as is often the case, the simpler it looks in the end, the more complicated it is early on. Information necessary for billing has to be gathered from the operator and partner network elements and this is far more complicated than it has been in the past.
To this end, we have now included an end-to-end content charging capability in version 8 of our BSCS product which interfaces with the billing system and partner settlement processes.

Mobile Europe: Is this not the job that rating and billing systems have always done? How does it differ?

Dr Trötscher: The strict definition between the responsibilities of the rating engine and the billing system is softening. A lot of things previously done by billing are now done by the real time rating engine that is part of our BSCS. This moves things like taxation into the rating engine and processes them in real time.
We also have to work with what already exists and this means pre and post-paid billing systems and often a number of different rating engines. We need to get these back together and our central balance manager does this in BSCS 8.
There is now another process that needs to take place which translates the traditional billing mechanism into a form users can understand and that is not billing for the byte. In effect, there are now two billing requirements. The first identifies the cost to the  operator and presents it to an internal cost centre, the second creates a bill that is both understandable and relevant for the customer. We believe that this can best be achieved through bundling.
However, this in turn requires not just real time billing but real time balance management. This real time balance management capability is what sets BSCS 8 apart as a real solution to the needs of mobile operators today.

Mobile Europe: Can you explain the difference between real-time rating and balance management?

Dr Trötscher: For most operators now the ability to rate in real time is not enough by itself. Those rated events must themselves be accumulated in the form of defineable bundles in real-time. With this it is possible to manage accounts appropriately — to authorise transactions, trigger discounts or to trigger alerts if the limits included in bundles are being reached.
However, this requires a powerful tool. In online charging mode, BSCS 8 is designed to support an average latency of 10ms. This means that it can process 20 million single event or 60 million bundled events per hour on a 32 CPU server, while in near real-time post event mode, it can rate 200 million transactions per hour. It’s a powerful solution which has been benchmarked on a number of different platforms aimed at all sizes of operators from Linux systems for smaller operations to more familiar HP and Sun platforms.

Mobile Europe: Isn’t this being unnecessarily complicated? If predictability of cost and value for money are the driving factors for consumers, why can’t operators just offer flat rate, all-you-can eat bundles as have been supplied in the US for fixed line customers?

Dr Trötscher: The bottom line is that mobile capacity is too expensive to offer such options. Operators need to control the usage but there also has to be a correlation between usage levels and the value customers associate with particular content. Identifying this could take years but operators already know that open-ended, unpredictable pricing options will not fly. That is why bundling meets the needs of both operators and consumers today.

Mobile Europe: Can bundled services be offered to all customers or is it just for post-paid account holders?

Dr Trötscher: To maximise the opportunity, operators needs to offer new services to all their customers but they can’t do this without first ensuring that they have full control over the authorisation of transactions. We address this with the concept of real-time rating and balance management which bring pre-and post-paid systems together. It can work in real-time for post-paid if necessary and manage new services for pre-paid and therefore the appropriate payment method can be deployed.
We employ a consulting methodology to the issue of pre and post-paid convergence based on what operators want to achieve. Some want to migrate pre-paid to post paid, others want to increase the value of pre-paid by offering higher value services. We have a generic model of six degrees of convergence moving from CRM only to full system integration, BSCS 8 is part of this with its real-time balance management provides the ability to offer the same products and services to both forms of account.

Mobile Europe: How does the bundling concept work with roaming?

Dr Trötscher: It remains to be seen if there is a valid case for roaming bundles of content. In the future when large operators span the world with a global presence then from a business viewpoint a unified offering may be more realistic.
Technically it is possible today. BSCS 8 supports TAP3.9 and therefore can be used to various business models for the reconciliation and settlement of content-based transactions both with content providers and other operators.

Contact: bssmarketing@slb.com

Although ticketing will lead the way, the mobile commerce report also establishes that the rapid adoption of mobile devices for commerce related applications is by no means limited to ticketing. All segments — money transfers, banking, payments and coupons — are forecast to see significant growth rates.

Report author Howard Wilcox said, “Our report demonstrates the spectacular growth that we forecast across all the segments of mobile commerce. Four of these segments (Ticketing, Money Transfers, Physical Goods and NFC) will more than double in transaction value over the next two years, whilst Digital Goods, Banking and Coupons will still post very healthy growth of 30% to 50% over the two years.”

The Juniper report, however, stressed that commerce providers need to keep users top of mind when developing their applications. If the initial user experience is poor for mobile payment methods — either based on cost, security, reliability or ease of use — then customers will reject them.

Further findings include:

• Mobile banking is becoming a must-have channel for banks;
• The mobile coupons market will approach $6bn by 2014;
• Mobile payments for physical goods will treble within three years as sites such as eBay Mobile and Amazon Mobile are used increasingly.

The new Juniper report features segment level assessments of mobile payments for digital and physical goods, NFC, mobile money transfer and remittances, mobile ticketing, mobile coupons, smart posters and mobile banking. The study pinpoints the key market drivers and constraints and sizes all seven mobile commerce market segments through global five year forecasts of gross transaction values.

After five and a half years of using this column to vent my personal opinions on the state of our industry, it is with some regret that I have to inform you that this is my last such rant.  As such it would seem appropriate to take stock and look at just what has been achieved by the mobile communications industry in that time.

There is little doubt that this has been the most turbulent of times: a period, particularly in the last 24 months, when failure and struggle have been as common as were the rampant stories of success in earlier years. However, as is often the case, the industry is all the stronger for the struggle. Indeed, I believe that despite share values suggesting the contrary, the mobile industry is now in a healthier position than it has been in at any other time in these five fascinating years.

As an interested, and I hope not completely uniformed observer, I have watched the highs and lows with equal excitement. The razzmatazz of the great satellite communications revolution fizzled out with all the impact of damp fireworks, while the hype of WAP was enough to make even the most optimistic supporter cringe at the credibility gap that it created. On the other hand, SMS has smashed every expectation, prediction or indeed anyone’s wildest dreams. It has set new levels of success to which we can aspire and left us with a number of key lessons particularly about the necessity for predictable and consistent pricing policies.

It is, however, easy to forget that in the relatively short time I have been with Mobile Europe, the mobile phone has gone from being a status symbol for the young and upwardly mobile (Yuppies, remember them?) to an essential part of daily life for everyone. It is a remarkable achievement which should not be underestimated, nor should it be allowed to be tarnished by the teething problems that have hit the introduction of packet data.

The mobile communications industry had an incredible childhood; it’s adolescence has been suitably turbulent but now as I hand over the reigns of the magazine, it is about to enter what I believe will be an incredibly rewarding adulthood.

I hope that in my new role with the GSM Association I will be able to help the Association as it strives to lead the industry to that future.  As for Mobile Europe, I know that it will only go from strength to strength under the guidance of the new editor, Keith Dyer. For the last three years Keith has been editing Communications News, a UK magazine which targets information about voice and data communications at enterprises and prior to this he spent a year as Deputy Editor on Mobile Europe. I could not wish to leave the magazine in safer hands and I’m sure that he can look forward to enjoying the same levels of help and support that I have received from everyone involved in the mobile industry.