MOBILE E-COMMERCE: e-Anytime e-Anywhere

E-commerce can be explained as an electronic exchange of information,
including financial transactions over a computer network — not necessarily the
Internet. It can encompass all stages of a business process, including
marketing, sales, procurement, payment, delivery and customer care, where the
payment function is central.

Mobile e-commerce allows users to conduct e-commerce on their mobile devices.
It involves the delivery of trusted transaction services over mobile devices for
the exchange of goods and services between consumers, merchants and financial
institutions.

What’s New?

Initially, e-commerce transactions were restricted to point-to-point phone
network connections. However, the market has been quick to see the wider
potential for e-commerce, with the rise in Internet access and easy-to-use
browsers. Some major services it offers to consumers are:

More than web shopping

Mobile commerce is an entirely new sales and promotion channel, and is the
enabler for an entire range of mobile Internet services — allowing payment for
telecom, information, media and entertainment services. It is available to
consumers anywhere, anytime.

Empowering
the consumer

Mobile e-commerce empowers consumers through freedom of choice, simplicity
and convenience. Mobile devices provide simple, user-friendly and "pocketable"
access to the global digital economy. With mobile e-commerce, consumers have
"anytime, anywhere" access to the services, applications, information
and entertainment they want. Purchases can be made on impulse. Business
decisions can be acted on instantly.

Market Potential Overview

Everyone agrees that on-line, Internet-based shopping or e-commerce is going
to be big. Now, the market has started recognizing the enormous potential of
adding mobility to the world of e-commerce. Here are some of the predictions:

• By 2004, there will be around one
  billion users of mobile telephony and almost one billion users of the
  Internet worldwide.

• By 2005, one-quarter of all data
  will be transmitted over mobile devices (compared with less than 2.5 percent
  at the end of 1999).

• Over the next five years, more
  than 600 million Internet-enabled mobile phones would have been shipped.

• By 2002, over ten percent of
  e-commerce transactions will be through mobile devices.

• The European
  mobile e-commerce market will be worth US$ 23 billion by 2003.

• It has been
  predicted that the mobile e-commerce market will take off by 2001.

The success of the mobile e-commerce market is closely
coupled with that of "traditional" Internet e-commerce, the evolution
of the mobile Internet and the availability of Internet-capable handsets. All
the three form an integral part of mobile commerce. The existing e-commerce
forms the base for mobile commerce, with the infrastructure and services in this
segment used to a large extent for m-commerce. For example, the existing network
for e-commerce can be used for the mobile segment as well.

We are witnessing an explosion in trading over the Internet,
with rapidly growing subscriber numbers and big investments being made by
suppliers of all kinds. The time is right for mobile operators, service
providers and content providers to stake a claim in the mobile e-commerce
market.

An ideal market for mobile e-commerce could have the
following characteristics:

• Relatively high penetration of
  mobile users

• High Internet awareness

• Relatively high e-commerce
  maturity

• General consumer demand for new
  services

• A high proportion of early
  adopters, with a willingness to pay

Certain content providers can benefit quicker from mobile
e-commerce than others and they are likely to drive its introduction. Bank and
finance, travel and transport, media and entertainment, and retail are some of
them.

In general, business has been a driver of mobile telephony
but the mass-market is also in place and is rapidly taking up services, such as
home banking and other personal financial services. The USA is leading the way
in e-commerce, with Europe and Asia following close behind.

New Business Opportunity for Operators and Service Providers

It is believed that mobile e-commerce is the key to a vast
new business opportunity for mobile operators, ISPs, ASPs and brand driven
Service Providers. With standard telephony services now a commodity, mobile
e-commerce opens up new channels for operators to offer a new class of services,
with mobility as a fundamental feature. Many of these services will build and
maintain customer loyalty in the long term.

There are several new sources of revenue opened up by mobile
e-commerce:

• Subscription charges: A
  regular subscription for access to stock trading online services.

• Connection charges: The
  user pays for actual use of mobile e-commerce services.

• Transaction charges: If
  the mobile operator, ISP or ASP acts as a payment provider to a service or
  content provider, there is an opportunity to take a cut of the transaction
  fee.

• Traffic charges: These
  will increase in total value, even if the unit price is lower, because of
  the growth in volume generated by new mobile Internet services.

Being able to reach customers, or potential customers, in
this way is extremely valuable for some content and service providers. For
example, those with a time-limited value on their goods or services — such as
hotels, restaurants, cinemas and stockbrokers — can reach the customer at the
right time, to make their services especially useful or attractive. Transactions
over the mobile network are automated and can be highly focused on the intended
target audience. Services in areas such as banking, trading, ticketing,
shopping, entertainment, etc., will dominate over other services. Mobile devices
can be used to receive real-time financial news and information, and to confirm
orders and manage a share portfolio on-line in a secure way. Entertainment
benefits in a large way from mobile commerce. Users can now listen to music on
radio, they can order, download and pay for a particular track on their mobile
devices.

Building Real Mobile e-commerce Businesses

Delivering mobile e-commerce services to the end-user
requires:

• Access to the service from the mobile device

• Handling of financial transactions

• Security

Depending on each business model that mobile services
provide, banks, application service providers, etc.; and the requirements of the
end-user applications for payment flexibility and security, different solutions
can be built. For example: In Mobile banking and trading, trusted user
authentication signed transactions, data integrity and encryption features
provide end-to-end or two-zone security for end-user transactions between the
mobile device and the bank or merchant’s back-end system.

New Technologies

Several recent technologies, industry and standards
developments are enabling the mobile e-commerce market. Cross-industry alliances
include the WAP Forum, Bluetooth, Symbian, Radicchio and the GPRS Applications
Alliance.

Wireless Application Protocol (WAP)

One of the most important developments for mobile e-commerce — and mobile
Internet services in general — is WAP. WAP is the de facto world standard for
wireless information and telephony services. It provides the medium to connect
in a fast, secure, on-line and interactive way.

General Packet Radio Service (GPRS)

GPRS provides mobile users with data rates of up to 115 Kbps (twice as fast as
the typical fixed line modem). As GPRS is packet-based, users can always be
connected and are always on-line.

Bluetooth

Bluetooth is a low-cost, low-power radio technology that allows mobile phones,
PCs, PDAs, laptops, printers and other devices, up to 10 meters apart, to
communicate without wires. For example, it allows payments to be made from a
mobile phone to a vending machine, and is a key enabler for the wireless wallet.

Mobile Positioning Systems (MPS)

One key application area for mobile e-commerce is in location-based services,
such as local news, advertisements, travel and weather information.
Opportunities for promoting local services, hotels or restaurants are also
opened up. MPS allows the location of mobile devices to be determined without
modification to the terminals themselves.

How Secure is it?

Security is a key issue for mobile e-commerce. The system’s
end-to-end security means that the user’s PIN code used to generate a digital
signature offers the necessary authentication and data integrity required to
verify banking transactions. Each authentication is unique and does not rely on
any intermediary network functionality. The system also supports the established
techniques for data integrity and encryption — including WPKI —and so can be
integrated with existing IT infrastructure and security features.

WPKI is an application-independent security infrastructure
based on public key cryptography services for data integrity, confidentiality,
authentication and non-repudiation. It is intended to enable the implementation
of scalable applications, network, and supplier-independent security solutions
in mobile networks and terminals.

Wireless technology has provided a completely new media for
service providers to build new applications upon the Internet and an information
channel for consumers to access content over the Internet. An ever-increasing
number of Internet-enabled portable phones has created a mass market for service
providers to bring out new mobile applications that serve content on the
Internet. The figures and predictions clearly indicate that m-commerce is coming
in a big way. The only obstacle is pre-determining consumer reaction. A lot
remains to be seen.

L Ravichandran,
executive vice-president, Software Techbology Group, HCL Perot Systems.