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The Universal Mobile Telecommunications System (UMTS) Forum’s Market
Aspects Group (MAG) has developed a methodology for evaluating the likely
relative success of future UMTS services and applications.
Today, market researchers are seeking the ‘killer applications’ that will
win in the competitive arena of service offering. Disappointments are likely to
occur. Nevertheless, it’s necessary to work out methodologies for assessing
the degree of success of services or applications in the future 3G mass markets.
With enormous revenues at stake for operators, service providers, manufacturers
and content providers, the entire mobile industry is eagerly seeking the service
and applications that will ensure mass market acceptance for UMTS/3G–anticipated
by the UMTS forum and other observers to exceed 2 billion users globally within
the next decade.
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The
New Knowledge Worker
In the world of desktop computing and fixed Internet, it is office and
personal productivity applications like word processors, spreadsheets, e-mail
and Web-browsing clients that have become dominant fixtures for virtually every
PC user. In the mobile world, the situation becomes more complex. With today’s
circuit-switched 2G networks, the ‘killer application’ is voice, augmented
by a small but growing volume of non-voice traffic from applications like short
messaging service and access via wireless application protocol to information
services like sports results and weather information. Add 3G to the equation and
high-speed connectivity to mobile and fixed networks creates a totally new
category of knowledge worker, unconstrained by geographical limitations and able
to access content-based services anywhere, anytime.
With UMTS/3G networks, the limits of current GSM connection speeds disappear,
delivering an ‘always on’ user experience where the 3G terminal becomes not
just a phone, but a thin client device capable of accessing and interacting with
a whole world of high-value services, characterized by personalization,
customization and location-based features. With a 3G terminal in the pocket,
there is no need to go travelling with local maps for a dozen European cities
stored in the handset–for a small fee one can simply download and view a color
map of the appropriate city center. While there, one can also download a local
language translator module and view menus and prices of local restaurants in one’s
own language and currency.
It is a scenario not dissimilar to the applications service provider model,
where services and applications are hosted centrally and users access these
services whenever and wherever they want to. The difference in the mobile arena
is that there is an increased focus on network intelligence to deliver services
that are relevant to user’s personalized service profile and location at that
moment.
The Search for Killer Apps
As the emphasis shifts with 3G away from the width and cost of the ‘pipe’
itself to other factors like network intelligence and richness of services,
network operators, service providers and equipment manufacturers are reassessing
their own market models to understand where the revenue generating opportunities
in this new mobile multimedia value chain will lie.
While the 2G mobile market has been dominated so far now by voice, with 3G
the importance of non-voice services will soon dominate, incorporating
technologies like streaming audio and video, along with business-to-business and
consumer applications from mobile banking and m-commerce to multiplayer gaming,
and ‘online experts’, offering specialist information and advice on hundreds
of topics.
Which of these new-generation services and applications will drive
mass-market uptake of 3G in the same way that the World Wide Web has driven PC
penetration in the home? The UMTS Forum opines that the 3G business will be
driven by a mixture of applications rather than a single killer application.
With regard to this, MAG group has developed a methodology for evaluating which
services are likely to figure highly in the future
The approach taken has been to examine some of the most likely candidate
applications already under development by operators and service providers or
high on end-users’ wish lists and scrutinizing the appeal of each according to
a scoring system developed by the group. Plotting the results of this analysis
reveals that it is a mix of ‘business’ and ‘consumer’ services that are
likely to drive traffic over tomorrow’s 3G networks. Moreover, as distinct
from today’s voice-oriented market, tomorrow’s mobile end-users will be
enjoying and paying for a far richer array of value-added services, courtesy
operators and service providers.
Selection Methodology
MAG’s methodology first classifies each considered service into groups of
services, with each service described by fields representing service
identification features (SIFs). The various SIF fields are then grouped into
service feature classes (SFCs) of homogeneous features. For each SIF, a range of
values is defined with scores provided by a representative sample of people with
similar backgrounds and cultures. SIFs are then evaluated to provide a service
value (SV) for each service considered. Results can be plotted graphically to
show the relative success of services according to that particular sample of
voters.
It is important to note that the scoring system employed in the experiment is
purely arbitrary and based on the subjective inputs of MAG members. However,
this methodology has provided qualitative answers in a relatively short period
without having to undertake lengthy market research or interviews–providing
some quick pointers to likely market developments.
Applying the Methodology
MAG’s study listed services that would be most valuable on 3G mobile
networks. For each service, a score between one (least likely) and five (most
likely) was assigned, based on the subjective inputs of MAG members.
First Stage
In the first stage, SIFs were grouped into the following six SFCs:
n Service-related:
Interactivity degree, service portability, virtual home environment, value of
mobility, location dependency importance, global coverage, grade of service, and
cost per session versus 2G
n Traffic-related: Peak
bit rate, sporadic traffic, symmetry of information flow, average number of
sessions, duration of each session, and data bulk per session
n Market-related: Market
segment, likely acceptance in different regions, penetration within the target
segment, alternatives provided by other networks, etc.
n Timeline-related: Launch
year, maturity year
n Players-related: Advertising
potential, content value, m-commerce potential
n Device-related: User
interface medium, processing power requirement, device type.
Services were scored according to these criteria to provide a
description of each service using the same scoring system.
Second Stage
In the second stage, the group focused on two particular SVs, namely:
n 3G versus 2G
service value perspective, and
n End-user value perspective
SIFs were then combined with evaluation criteria of
importance to the relevant SVs with a score ranging from one (low importance) to
five (high importance).
Evaluation criteria for the 3G versus 2G service value
included cost per session versus 2G, peak bit rate, traffic symmetry and
sporadic characteristics, service portability (virtual home environment),
advertising and m-commerce potential and device type.
Evaluation criteria for the end-user service value included
content value, user interface medium, maturity year, service portability, global
coverage, value of mobility, replacements of human/machines and m-commerce
potential.
Results and Validity of Observations
Over 30 services were assessed, spanning consumer and business services.
From these, 18 of the most ‘interesting’ services were plotted according to
the criteria discussed earlier. It is important to note that ‘usefulness’
from the end-user’s perspective does not automatically correlate with a ‘high
level of acceptance’ for a particular service. For example, interactive gaming
may rate as ‘not useful’ with business users, but is likely to be among the
most ‘valuable’ services for a teenager.
The likelihood of acceptance of a 3G applications will also
depend on the specific situation in which the end-user is likely to make use of
it. A ‘situational analysis’ is very complex, but it could shed more light
on the potential of specific applications.
Another important issue for which there is no clear answer is
the user’s willingness to pay for 3G services. Knowledge of this information
could help assess the true value of 3G services and indicate which services
operators should best focus in order to ensure an early success of UMTS.
Olivier Burois
Former chairman, Market Aspects Group, UMTS Forum