If 2.5 and 3G data services take off there will be literally billions of pieces of data flying around the airwaves, but where will they be stored? Catherine Haslam explains the options.

According to the ARC group, in excess of 20% of mobile data users will be using MMS by 2007. And after 2007, ARC’s research suggests MMS usage will grow exponentially with 50% of all usage being content-to-person, although early growth will be driven by person-to-person messaging. This equates to just over 2 billion messages a month and 25 billion a year, a considerable percentage of which will need to be stored somewhere. Even if the take-up is slower  — 200 million messages per month in 2004 — as suggested by World Wireless Forum, the need for users to have a mechanism to save and store messages is clear. Add to this demand the requirement to store other information such as games and MP3, not to mention email, and the need to sort out storage for wireless generated and terminated content becomes pressing.
There are three main options to storing content in the wireless world — embedded storage in the handset; external memory card and servers in the network — and a case can be made for all.

Embedded storage

Mobile handsets have traditionally been stand-alone units and as such there is a user and operator expectation that the handset will be able to support all the functions of the terminal. Users may be willing to accept that text messages are transitory, but the personal and evocative nature of picture messages will inevitably lead to a demand to be able to store them somewhere.
As has happened in the PC market, memory capabilities for mobiles are improving. However, the memory capacity of any terminal is the result of a delicate balancing act based on such things as capacity, power consumption, size and cost. Up until recently, the principle requisite was for the phone to operate effectively and provide comparatively little in the way of data storage.
According to Mary Curtis, 2G/2.5G international product marketing manager baseband at Philips semiconductors, 4MB of S-RAM  combined with up to 16MB of Nor Flash used primarily to run communications aspects, are supported in the volume phones of today. In contrast, newer developments, SDRAM which offers a much higher RAM capability in excess of 256MB, and Nand Flash which was developed specifically for data storage and is much more effective for larger sizes of Flash memory, have yet to be seen being contemplated for anything but the high-end phones. Indeed, although high-end products including these are expected by the end of the year according to Curtis, there are few signs of these capabilities being included in mass market products for some time.

Balancing act

The reason that such functionality remains the domain of the high-end feature phones is basically down to price pressure. However, behind this is a complicated balancing act which means that if other savings can be made which reduce the demands of other essential elements of a chipset, more can be invested in memory; more in terms of power, space and money. As Curtis explains, “Everything comes down to system design.” (The trends of the chipset market will be examined in detail in the May edition of Mobile Europe). 
In addition, there is the question of what happens to the data if something happens to the phone — it breaks, is lost or stolen? The personal and therefore valuable nature of the data  stored on the device means its loss will create animosity that will directed at the handset manufacturer, the operator, or both.
Another option is therefore to store data on an external resource as is used for other electronic goods such as digital cameras. Indeed, a number of existing and soon-to-be-released mobile terminals already have external memory slots. This option overcomes several problems of the embedded memory. Firstly, the resources required to support the slot are fixed, while the memory capability is limited only by the user. This leads us to the second benefit (for the handset manufacturer and operator at least), the cost falls on the user.  The handset manufacturer and/or operator is then also provided with the flexibility to offer additional functionality which will only work when additional memory is added through the expansion slot.
Obviously, such an approach has appeal but it does have a down side. Firstly, it puts a cost barrier in the way of certain applications and/or storage and secondly, it could tie users to specific handset models as the memory card market is proprietary. Currently, there are three main players — Multimedia Cards (MMCs); SD Cards and Sony Memory Sticks.
MMCs can be used in: Nokia’s 9110, 9210, 3300 and 3560; Siemens’ SL442, SL45 and CL35; Palm’s M130 and Handspring’s Treo 90. SD Cards are usable in the Nokia 9210i, Orange Microsoft SPV, Palm M130, Treo 90 and Siemens s55, while, not surprisingly, the Sony Memory Stick Duo is the sole preserve of Sony Ericsson’s P600 and P800 terminals, although it is transferable to any Sony product.  Although not equivalent to the cost of upgrading a handset, the cost is not insignificant if you believe that the target is teenagers. The MMC and SD cards weigh in at around UKP25 (â‚-36.50) for 64MB, while the Sony Ericsson Memory Stick is virtually double the price for the same storage.
Even if the price and multiple standards are not enough to stifle usage, the question remains as to whether even these external memory extensions provide enough storage. Obviously, data can be transferred to a PC (or Mac) and that will be useful as a back-up but if, as is expected, much of the data is to be used with the mobile device, it will need to be kept in a way hat it can be used when mobile. If you consider that a 64KB card stores around one hour of MP3, then it will get pretty expensive to store music downloads in this way, although it may be more suitable for games.
The final option is to store data on the network and provide users with access to it, preferably via fixed and mobile devices. Vodafone is set to provide its Live! subscribers with space free in the form of a message library and others will follow this model. It has the advantage for the subscriber of minimising the hardware costs, while for the operator, it is hoped it will drive traffic as data is accessed and transferred. The downside is that it requires an investment from the already over-stretched resources of mobile operators. However, Mirapoint for one, is offering storage as part of its overall MMS solution.
The Mirapoint storage platform is MMSC agnostic and comes complete with an application which triggers an SMS that contains a URL to identify where the recipient can locate the MMS that was intended for them, providing some form of legacy support. It is also possible that such functionality will encourage the purchase of MMS-capable handsets as those without such handsets will get a taste of the application.
According to Mirapoint’s EMEA sales director, Steve Ashmore, “MMS storage is just the beginning as operators begin to offer storage services for all forms of messaging — SMS, EMS, MMS, voicemail and e-mail.”

Free from ties

Mirapoint is not the only provider of storage systems, but, according to Ashmore it has two USPs which set it apart from the competition. Firstly, its storage system is not tied to a particular MMSC. He explains, “Openwave ties MMSC with storage and while this is open to some extent, they interface together better than with third party options.” Secondly, Mirapoint has adopted what Ashmore describes as the “Cisco IP routing model.” This means that those elements of the system which are mature have been built in hardware rather than software. This both increases processing capabilities and also massively reduces the levels of integration required. “Anything that is part of the hardware is obviously pre-integrated and therefore we offer an out-of-the-box solution.”
Intuwave has also included a data storage offering as part of a larger middleware platform and its co-founder, Jeremy Burton believes that the company’s msafetynet service, which represents over-the-air back-up of data provides an “attractive value proposition for the user and for the operator which can use it as a mechanism to reduce churn.”
Ultimately, there is no simple or single answer to the storage question. The need will inevitably be met by a combination of the available  memory resources. Burton believes that the applications will dictate the storage mechanism used. He says, “For extremely private data that the user wants to keep close to them, the terminal is the obvious choice but for volatile information that is constantly changing such as stock prices, it doesn’t make sense to cache or store that locally.”
For Curtis this then correlates to the well-defined segments of the handset market, “The amount of data storage is based on the target segment of the handset. At the high end, performance is everything and therefore storage capabilities will be included sooner rather than later, at the low end cost is key,” she says. For this lower cost but mass market, at least, it would seem that operators face little option but to offer storage facilities as a service. The only question is whether or not to charge for it as an entity in itself?

M-commerce has long been talked about as a cornerstone of next generation services but is still to make an impact. Anjum Sawhney of Convergys explains why and looks at what still has to be done.

Although there seems to be no agreed absolute definition of mobile commerce, or m-commerce — some people think of it as a service, others as an application — it can be usefully characterised as a multi-facetted entity, comprising a number of products and services. Services can range from buying physical goods in a retail store (using the mobile phone as a payment tool), to the purchase of financial services (using the mobile device as a communication tool) and the downloading of software or content that has a transactional value.
Precise definitions aside, many would agree with the assertion that m-commerce is a logical step in the emergent age of cashless transactions and electronic money flows. Even the most casual of observers is familiar with recent technological advances that enable mobile users to subscribe to simple information-based services. Many too will be aware of more advanced SMS-based developments, such as the ability to order and pay for drinks from a vending machine. These developments hint at the potential of m-commerce, but the real revolution will only come about when it is embraced by the high street.
This is contingent on a number of factors, not least the development of proven user-friendly technologies, common payment standards and effective regulation. Above all, the introduction of adequate transaction security and data privacy safeguards will be essential to build consumer confidence. After all, the initial failure of e-commerce to live up to forecasts was not simply due to an overestimation of the significance of the dotcom economy, it was also due to an underestimation of the importance of security.

 Market Growth

Growth in m-commerce across Europe has been steady rather than spectacular. Whilst there appears to be a consensus amongst analysts that m-commerce has much potential and will grow, there is less certainty regarding the rate of growth or the total value of the market two years hence. Analysts’ forecasts for the total value of m-commerce transactions in 2005 range from â‚-7bn to â‚-24bn. Sceptics may argue that such divergence renders forecasts meaningless, but that is not to deny the vast potential m-commerce has to create new revenue stream.
It is, however, unlikely that the market for m-commerce services will really take off until the end 2004 — companies need to build and install new systems and it takes time for a critical mass of people to learn about and accept new ways of buying. In addition, the penetration of m-commerce at a European level is critically dependent upon the harmonisation of certain regulatory and business protocols. At present, payment systems and business models vary considerably between countries, reflecting different cultural and economic structures. However, the challenge to develop common standards is being taken up by a number of industry consortia and forums, mostly led by mobile network operators or financial service providers.
On the plus side, there already exists a very high mobile penetration across Europe, which will act as a driver for the take-up of m-commerce. This is particularly the case in Scandinavia, for example, where extremely high mobile penetration is catalysing the development of pioneering mobile commerce. Further, m-commerce is not wholly reliant on 3G, and much of the necessary technology is already in place: as well as the wide proliferation of 2G handsets, there is an increasing number of GPRS users, benefiting from higher speed, always on mobile connectivity.
Assuming that the technical, logistical and political hurdles are overcome by 2005, what will the m-commerce market look like? As the market matures, so the variety of goods and services on offer will grow from in-band content to include out-of-band soft goods, hard goods and one off or repeating services.
In-band m-commerce refers to the purchase of content that is downloaded to a mobile handset (e.g. ring-tones, news headlines, sports results). Conversely, out-of-band m-commerce involves the purchase of any goods and services that are delivered by all other methods (e.g. by post or by the customer in person in a traditional high street retail environment). From shopping, ticket booking and personalised information services to banking and insurance, the range of potential services is vast.
The increasing variety of ways that individual consumers and businesses can buy and pay for goods and services will by itself act as a driver of growth in m-commerce. Just as transactions can be made on the mobile or fixed Internet, at real world shops and vending machines, and as person-to-person payments, so payment can be made by credit or debit cards, bank accounts, mobile bills, and other rechargeable or anonymous cards and stored value accounts. New payment systems such as Vodafone m-pay cards, Mobipay and Paybox promise to make payment even more convenient and consumer friendly.
At a macro economic level, however, the impact of a system that enables people to make large or small, explicit or implicit purchases, anytime, anywhere, is likely to be a concern to agencies involved in the collection of tax and settlement revenues.
Ultimately, the full potential of m-commerce will only be realised once high street merchants have adopted it, which means overcoming the virtuous circle of merchant and customer adoption: merchants will adopt when they perceive there is a large customer base, while customers will adopt when they perceive there is a substantial merchant base. Proponents of m-commerce would no doubt point out that this is a conundrum faced by any new investment-driven retail venture, and there are more practical issues that need addressing first. For instance, high street merchants are likely to place a premium on convenience and simplicity, requiring a quick and easy to implement mobile commerce process.
Business opportunities look inviting on paper, but selling the concept to profit-sensitive high street merchants in the real world will rest on the availability of proven new technology, stable mobile payment standards and guaranteed revenue streams. Mobile operators and other parties in the m-commerce industry will need to market the benefits of this new approach to both large and small merchants, and these two constituencies may have different priorities. Most commerce actually takes place in small, local outlets, but attracting a critical mass of such small players will rely on convincing individual businesses that enough new custom will be secured through m-commerce to warrant investing. The entry into m-commerce of large corporations such as supermarkets and banks raises different issues. It is unlikely, for instance, that such organisations would accept a structure that is predicated on separate agreements with multiple providers. Moreover, the entry of such large corporations threatens to re-shape the balance of power in an area traditionally dominated by telcos.
Whilst the growth of m-commerce and content-driven services will give rise to new business models, many of these will involve much more complex value-chains comprising numerous parties, such as network operators, content providers, advertisers and retailers to name but a few. M-commerce has the potential to blur distinctions between business sectors and providers more than ever, and whilst many parties can share in revenues from a single transaction, there will be competition amongst parties to ‘own’ the customer. The concept of loyalty is far more slippery in the world of electronic commerce than in traditional bricks and mortar business, and network operators, credit card companies, banks, and a whole range of other businesses will need to develop new strategies and business models in order to compete effectively.
The onus will be on operators to develop value-added services if they are to retain their central position vis-Ã -vis customers. Networks will need to act as more than transportation conduits for information; instead operators need to participate actively in the financial transactions that their networks carry by offering value-added services.

Central systems

Competing effectively in an m-commerce environment is contingent upon business systems as well as strategy. Depending upon their current infrastructure, operators may need to replace or augment legacy systems to ensure that they have m-commerce-ready OSS. An effective end-to-end m-commerce platform needs to support key processes such as payment acquisition, retail billing and partner settlement.
Billing is a crucial component of an m-commerce system. Those companies that manage to secure the optimum position in the m-commerce value-chain will be ideally placed to exploit the opportunities that arise. To do this they require advanced billing systems that can bill for, and on behalf of, multiple parties. Operators can make money from payment services by billing for their own value-added services and content, or on behalf of content providers and retailers of real or virtual goods and services.
As the variety of m-commerce scenarios increases, so too will the need for a truly convergent and flexible billing system that can support any pricing models and provide sophisticated discounting functionality. Such capabilities will be essential tools for reducing churn, building customer loyalty and increasing ARPU. M-commerce revolves around real-time transactions and companies will need systems that support pre-advice of charge and pre-authorisation so that customers can obtain information — for example about the cost of a transaction — before deciding whether or not to proceed. Customers will expect to be offered the choice of paying before or after a given transaction, and companies will need a strategic billing system that can integrate pre- and post-paid accounts. It will be essential for operators competing in m-commerce to be capable of offering the same tariffs, discounts and bundles irrespective of payment method. Systems that enable customers to switch between the two payment methods will become the norm, not least as the drive to capture pre-paid customer details intensifies.
In addition, operators will need conditional settlement in order to minimise exposure to risk and fraud. Conditional settlement is a way to achieve this without forcing financial losses on partner merchants. In order to manage conditional settlement with thousands of partner merchants cost-effectively, operators will need closely coupled retail billing and partner settlement systems that support the tracking of retail bill payments and due partner payments on a transaction by transaction basis.
Perceived concerns over fraud, privacy and security have long plagued e-commerce, and customers need to be assured that mobile commerce transactions are subject to rigorous checks and safeguards. Consumer confidence will also depend on the reliability of m-commerce, and it is incumbent on the industry to ensure, not only that regulations and safe settlement procedures are established, but also that they are adequately policed and supported.

Fulfilling potential

The potential of m-commerce is considerable, but its realisation rests much on the quality and timeliness of preparatory work at both micro and macro levels. Organisations will need to upgrade IT infrastructure and review business strategies, addressing key issues, such as: where in the value-chain should the business sit; how to integrate m-commerce with existing distribution channels; what partnerships and alliances will best deliver new revenue streams; what marketing strategy will work in this new environment? At a more prosaic but no less critical level, is the need for operators to unlock the real value of pre-paid users. This is contingent on capturing pre-paid customers’ details and records of their transactions, without which it is very difficult to sell additional services and increase ARPU for this type of customer. And the issue of ‘pricing’ per se is one that will have to be resolved, though what consumers are prepared to pay for m-commerce services will only become apparent over time as the market matures.
At an industry level, there needs to be agreed, stable and secure mobile payment systems and high merchant penetration to make conversion from old to new payment methods worthwhile. Once these are in place, and user-friendly handsets and handset applications are widely available, then it is down to organisational strategies and market forces to decide the winners and losers. M-commerce is unique in many ways, but ultimately, success will rest on a tried and trusted recipe — giving consumers what they want, when they want it, and at a price they are willing to pay.

At a time when every penny of expenditure has to be signed off in triplicate it is strange to think that mobile operators are losing billions of euros through fraud and leakage but that is what’s happening. Alun Lewis reports on the problems and some ways to counteract them.

The old adage that any chain is only as strong as its weakest link has a particular relevance in mobile communications these days. Making the move towards higher value content and application services may bring with it higher revenues, but it also increases a service provider’s vulnerabilities to fraud and revenue leakage. On top of that, and given the far more complex value chains that are growing out there, any revenue assurance problems that a service provider may have will soon reverberate across that value chain, impacting content providers, mobile commerce merchants and, of course, the paying customer.
While fraud has always been with us — from those now almost nostalgic days of phone phreakers using children’s toy whistles to control the international PSTN during the 1960s — these days it truly has become big business, both for crooks and for those companies seeking to eliminate it. On top of that, the introduction of choice and competition into the telecoms space in the late 1990s brought a far more open and far more complex interconnection environment that was prone to both billing inaccuracies that could add up to millions and to outright fraudulent practice from the telecommunications equivalent of ‘fly by night’ companies

Direct challenge

Taking direct fraud first, much work to combat it is distributed across a number of different bodies such as the international GSMA Fraud Forum and regional bodies such as the Telecommunications UK Fraud Forum (www.tuff.co.uk) and the USA’s Communications Fraud Control Association (www.cfca.org). Many of these organisations reflect particular concerns in different countries, as well as the differences that occur in legislation and approaches to fraud and, for the time being at least, there is little in the way of truly coordinated formal activity between different countries — despite the fact that frauds are increasingly international in focus.
The whole interconnect regime in particular can be vulnerable to both outright fraud, as well as what might more charitably be called ‘creative billing’, as Martin Brown, ceo of Azure, BT’s specialist revenue assurance company, explains, “Revenue assurance is an extremely broad discipline and can cover everything from the efficient management of least cost routing to actual criminal fraud. While telecom-munications fraud has traditionally concentrated on the retail end of things, over the last few years there’s been an increase in companies looking to exploit weaknesses in the intercon-nect environment to make more money than they should.
“For example, a service provider in one country might set up a dialling scheme so that extra digits are added when dialling into another country. The call is received and then trans-ferred — but is billed back at local rates. Similarly, an element of ‘spoofing’ can be invoked so that they’re actually presented to billing systems as being mobile to mobile, for example, when in fact they are mobile to fixed or vice versa and involve a premium charge.
The implications of interconnect are also highlighted by Graham Coffey, wireless solutions manager at Agilent, “While the quality of radio links can lead to a lot of retransmits and longer time on-line, the interconnect regimes behind these services — the GRXs involve a lot more complexity — and vulnerability, especially when roaming is involved.”
The move towards added value and more advanced services also carries direct fraud risks — even in what are known as ‘developing countries’. Azure’s Brown continues, “In many regions in the world, the mobile infrastructure is the only public service that actually works. In South Africa, for example, the lack of ATMs and banks means that many poor people use their phones to transfer money to friends and family and there have been many cases of fraud exploiting this opportunity.”
Pat MaCarthy of ADC believes that we need new approaches to fraud, “Traditional fraud management focuses on detection and action follow up, analysing large electronic data record files and transactions to identify unusual activity. What we need now are fraud provisioning strategies that can identify some of the more common issues in real time and, using ‘Pay Now’ mechanisms, get the user, via their device, to authorise large transactions.”
In many cases however, revenues aren’t being collected because of the inefficiency of the service providers’ own infrastructure. Doug Carr, managing director of mediation company Narus sets out the issues, “It is no secret that many carriers have yet to address the problems of revenue leakage. But even when carriers are aware of the problem, they may well be unaware of its full extent, as fraudulent usage goes undetected.”
This point is echoed by Chris Merrick, wireless director at billing company Convergys, “While most operators have woken up to the importance of revenue services for voice only services, recent figures from Chorleywood Consulting seem incredible given that profitability has been pushed to the top of the operators’ agendas. Chorleywood estimate that operators are currently failing to capture up to 15% of all possible revenues — for an operator with a turnover of £20million, that could add up to an annual loss of £3m (â‚-4.36m). Acquisitions and mergers are a particular headache in this area. In the fixed service environment, for example, UK cable and telecoms operator Telewest inherited 63 switches and 15 billing systems when it acquired or absorbed other licensees. By putting in place a multi-disciplinary team to address revenue assurance they produced additional revenues of UKP3m (â‚-4.36m) per year.”
While these figures are impressive, they in reality reflect the past — and not the future. If the marketeers’ plans come to fruition, we’ll be spending far more on multimedia messaging, content and other entertainment services than we currently do on voice alone. Andrew Rodaway, corporate communications director at Intec raises some interesting caveats, “For a long time now, every year has been going to be the year of revenue assurance. Faced with a variety of challenges, operators now aren’t so much looking to invest in entirely new systems to combat fraud and leakage — what they are doing instead is looking to make far better use of the data that they have available at the moment. It’s important to realise that like many engineering and design problems, there’s a law of diminishing returns on investment,” he says.

Squaring the circle

“When you start adding premium content-based services to the equation, what was a trickle of billing or Quality of Service data can turn into a flood and it can be difficult to correlate and manage this effectively to get meaningful results. Squaring the revenue assurance circle in the 2.5 and 3G world now necessarily involves mediation companies like us interworking with other parts of the value chain, such as media or location-based services servers — which may be owned by entirely separate companies from the mobile operator,” Rodaway concludes.
Before looking at advanced services, we need to establish where we are with current services. Revenue assurance here already has an impact on nascent relationships being formed between operators and content providers. “30% of premium SMS is bad debt,” is the blunt comment of Rob Ellis, MD of iTouch. “The question is who covers this debt? While it is currently met by the operators, they effectively pass it on to content suppliers — bad debt is their argument for keeping out-payments to content partners low. We believe that this is a serious problem, as low out payments are stifling the m-Commerce industry by failing to incentivise content developers to produce compelling content.”
The length and multi-dimensional complexity of this service cycle also create what Frederick Aries, EMEA managing director of Kabira calls ‘pinch points’ in the flow of data — much of which has to be processed in real time to support pre-paid services, “Engineers sometimes get too focused on individual issues when what the ceo wants is an efficient return on investment. When you look at all the problems that can, and do, cause leakage, it’s essential to take as wide a view as possible across the multiple systems involved. Causes, for example, can involve data collection failures, data parsing failures, error log overruns, poor data correlation, time-expired matching, CDR rejections and data source identification errors. Ideally, you need to be able to touch multiple systems at different points if you’re to get a clear view of what’s going wrong and correct it accordingly.”
The other revenue assurance issue closely allied with next generation services involves Quality of Service and how this relates to billing and customer satisfaction. Paul Bassa of Tertio Telecoms says, “Elements of QoS may have been lurking in the revenue assurance toolbox for some time, but when will they really be put to use ? The answer inevitably depends on a combination of evolving technological capabilities and the benefits they could offer users. If a user decides to upgrade from silver to gold service on the spot, will they then be told on completion that they got the service and what the charge was?”
Bill Branagh EMEA vice president of Watchmark believes that there’s a crucial relationship between revenue assurance and QoS, “If you dropped the occasional voice call, the customer might have been unhappy for a short time. Drop an expensive multimedia transaction however and you’ll lose the money as well as the customer’s trust. Unless a mobile service provider is going to waste money over-provisioning, they’ll need to balance QoS and revenues in near real time.”
“Ultimately, revenue assurance in a world of advanced mobile devices and services is going to involve a far closer control of the handset environment,” comments Stephen Artim ceo of device management specialists DoOnGo. “That involves being able to do a lot more to the handset remotely than has previously been possible, in order to block or enable services and updates as the customer relationship changes.”
So, all in all, a longer and potentially more vulnerable chain, but one that has opportunities for everyone involved, but with hopefully smaller chances for crooks to exploit any inherent weaknesses.