Tee

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The mobile internet in Europe and Japan. is Europe trailing? Presentation for “O2 Mobile Communications – The present and future seminar”. Brussels, 15 Oct 2003 Richard Tee, researcher EC/DC – Infonomics

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Overview 1. Introduction 2. Developments 3. Japan 4. Europe 5. Conclusion 1. Introduction 1.1 Examples of the mobile internet 1.2 Introduction to the mobile internet 2. Developments in Mobile Telephony 3. Mobile internet services in Japan 3.1 Explanations for success 3.2 Problems and interests 4. The mobile internet in Europe 4.1 Protocol based approach 4.2 Service based approach 4.3 Platform based approach 5. Conclusion

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Examples: i-mode, Vodafone Live, Microsoft Smartphone; SMS, WAP, MMS 1. Introduction 2. Developments 3. Japan 4. Europe 5. Conclusion What is the Mobile Internet

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Mobile is not wireless (e.g. desktop PC with WiFi is wireless internet, not mobile internet) Other examples mobile internet devices: PDAs with WiFi connection. Current focus is on “phone-type” devices Main research goal: To map current mobile internet developments in Europe and Japan Method - Literature study - Interviews with people from mobile operators, content providers, software developers, researchers, analysts, venture capitalists, consultants (interviewed in Japan and Europe) - Interviews with mobile internet users 1. Introduction 2. Developments 3. Japan 4. Europe 5. Conclusion Introduction to the Mobile Internet

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1. Introduction 2. Developments 3. Japan 4. Europe 5. Conclusion Changes in Network types 2G -> 2.5G -> 3G Europe: GSM to GPRS to EDGE/UMTS Japan: PDC (or CDMA) to W-CDMA (or CDMA2000) Changes in Usage: Shift from voice-only to Voice/SMS. New initiatives: WAP, EMS, MMS, i-mode, Vodafone live, 3, T-Zones and more Changes in Devices: Emergence of new types of devices. E.g. camera phones, color screens, expansion cards, new types of phones such as Microsoft Smartphone, Nokia N-Gage, Smartphones/PDAs such as Sony Ericsson P800 Developments in Mobile Telephony

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Three mobile operators, three mobile internet services Mobile internet services in Japan 1. Introduction 2. Developments 3. Japan 4. Europe 5. Conclusion Main applications: Email, ringtones, screensavers, games and horoscopes, information browsing Price example i-mode: Monthly fee 300 yen ( = 3 euros). Use of service range from 0 to 300 yen per month. Users pay for data sent and received (0.3 yen per packet (= 128 bytes). This equals approx 2 eurocents per kilobyte Mobile services successful, especially when looking at number of active users

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Why did these services take off? Several types of explanations: - Technical differences - Cultural differences - Market Structure differences Mobile internet services in Japan 1. Introduction 2. Developments 3. Japan 4. Europe 5. Conclusion

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Network types Packet switched vs. Circuit Switched (packet switched networks allow for easier per packet billing. Circuit switched easier to bill by time) Docomo and KDDI use packet switched, J-Phone initially used circuit switched. -> Rather than packet network: packet billing as key factor Markup languages HTML based vs. WAP based languages Docomo and J-Phone used HTML based languages, KDDI used HDML, which is WAP based Technical explanations 1. Introduction 2. Developments 3. Japan 4. Europe 5. Conclusion

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Japanese more sensitive to technological gadgets? Some examples (e.g. Tamagotchi, Sony Aibo robot dog, pre warmed electronic toilet seats) Key question: is the mobile internet an example of this? -> Given popularity of ringtones, downloadable screensavers and other SMS applications no reason to assume European market (esp. young people) is fundamentally different Differences in commuting habits? Cultural differences 1. Introduction 2. Developments 3. Japan 4. Europe 5. Conclusion Source: Ministries of Transport

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Low PC internet diffusion? Also: supposed inverse relation fixed/mobile internet in itself disputable Market Structure differences 1. Introduction 2. Developments 3. Japan 4. Europe 5. Conclusion Source International Telecommunications Union, 2000

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Micro-payment system & revenue sharing model Central billing platform created by operator. User receives monthly bill from operator 91% of subscription fee goes to content provider, 9% to the operator. All traffic revenues go to operator Originator mobile phone specifications - Operator releases and brands the phones, not handset makers - Operator is able to set technical requirements and can coordinate these with the service - Operator sets maximum fees for content providers and controls the contents of the portal Conclusion: mainly market structure differences, rather than technical difference have played key role in success of mobile internet Market Structure differences 1. Introduction 2. Developments 3. Japan 4. Europe 5. Conclusion

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Problems and interests 1. Introduction 2. Developments 3. Japan 4. Europe 5. Conclusion Role of the operator: coordinating, controlling or dictating? Operator decides on: Phones - technical requirements - screen type, size - other issues, e.g. antenna Content - official/unofficial - maximum fee For handset makers profits not primary issue Also: few content providers are profitable (except for top tier)

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First mobile internet developments: all based on protocols rather than Japanese service-based approach - SMS - EMS, Smart Messaging - WAP Main developers of protocols have been handset and equipment manufacturers (e.g. Nokia, Ericsson, Siemens, Motorola) Only ubiquitous protocol has been SMS European operator point of view: Lack of coordination/control? The Mobile Internet in Europe 1. Introduction 2. Developments 3. Japan 4. Europe 5. Conclusion

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Three types of initiatives: - Protocol based: MMS - Service based: i-mode, Vodafone Live, T-zones, “3” - Platform based: Microsoft Smartphone, Symbian/Series60, others (Linux, Openwave, SavaJe) (NB: categories not necessarily mutually exclusive)       New mobile internet initiatives 1. Introduction 2. Developments 3. Japan 4. Europe 5. Conclusion

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MMS (Multimedia Messaging Service) allows users to send and receive messages using various media formats such as text, images, audio and video (Marketed as follow up to SMS) Advantages: Featured on most newer handsets Relatively easy for users to understand Disadvantages: Like SMS, possibly lack of coordination, in principle designed as user to user system (ad hoc browsing) Possible solution: standardization through eg Open Mobile Alliance Difficulty: very large consortium, with many parties with a variety of interests (including Microsoft, NTT DoCoMo, Vodafone, Nokia, Qualcomm, Sun and many more) Protocol Based Initiative: MMS 1. Introduction 2. Developments 3. Japan 4. Europe 5. Conclusion

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Initiated by European operators, using a ‘Japanese’ approach Examples: i-mode Europe (released in NL, Belgium, Germany, France and Spain) Vodafone live (released in several countries in Europe) T-zones by T-mobile (in several countries) “3”, the 3G from Hutchison (UK, Italy) O2 Active (UK, Germany) Difficulty: coordination with major handset makers. Also: branding issues (handset brand v.s. network brand) Service based solutions: i-mode, Vodafone Live, T-zones, “3” 1. Introduction 2. Developments 3. Japan 4. Europe 5. Conclusion

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Microsoft Smartphone: Generic name for any phone equipped with Microsoft operating system. First Smartphone released by mobile operator Orange (called SPV). Other operators and vendors have pulled out at the last minute (e.g. T-Mobile, Samsung) Difficulty: few major handset maker have announced to support Microsoft (fear of Microsoft dominance). Exception: Motorola Response -> Handset makers joined under the Symbian platform (est. 1998) UPDATE: Microsoft agreement to work with Vodafone on mobile web services Platform based initiatives: Smartphone 1. Introduction 2. Developments 3. Japan 4. Europe 5. Conclusion

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Symbian: alliance of all major handset makers, led by Nokia (Motorola recently pulled out) Symbian’s goal: to provide a generic operating system based on open standards that can be adjusted by individual handset makers (basically a long term solution that might benefit all vendors) Thus far only one open platform released, Series 60 (from Nokia). Also licensed by Siemens and Ericsson Difficulty: operators are competing outside Symbian but are forced to cooperate to compete against Microsoft Platform based : Symbian/Series 60 1. Introduction 2. Developments 3. Japan 4. Europe 5. Conclusion

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Is Europe trailing? -> Not necessarily. However, it cannot be denied the level of service in Japan is much higher than elsewhere. The European approach is can be regarded as more open (or: less coordinated) and therefore more dispersed Main challenge for Europe: Find ways to generate sustainable, data-intensive, content creation Possible solutions: - More cooperation between mobile operators (alliances already forming) - Emergence of significantly dominant platform(s). E.g. Microsoft, Series60, Vodafone Live, i-mode - In addition: need to increase brand awareness of operators’ services (will be challenge with one dominant vendor in particular) Conclusion 1. Introduction 2. Developments 3. Japan 4. Europe 5. Conclusion

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Thank you Questions and Comments? Contact E-mail: Richard.Tee@infonomics.nl Report “Contextualizing the Mobile Internet” available at (via Publications) http://www.ecdc.info 1. Introduction 2. Developments 3. Japan 4. Europe 5. Conclusion