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PREMIUM SMS - Payment by SMS for Content Providers by Rudolf Bäumer, Bernd Mielke

| Scope of study | Table of contents | Table of figures | About the authors |
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Scope of study

We have published this report with the intention of providing the content provider community, e.g. Premium Rate Service Provider, Web-Portals, Online-Services, Media-Partners, Mobile Content Providers and others with practical information for implementing Premium SMS in the workflow of content billing. In this context many issues have been discussed during practical day-to-day work with Mobile Network Operators, Wireless Application Service Providers and Content Providers. Many questions have been raised by Content Providers which are summarized and answered in this report - overall it is a guideline for Content Providers.

A central part of the report comprises implementation and workflow models for P-SMS services/applications. The second focus of the report provides helpful information about conditions and revenue share models at different mobile network operators and WASP's in Europe and compares the results with other payment models. The examples shown and the market outlook describe the manifold business opportunities to generate sound revenues with the new micropayment tool of Premium SMS.


Before implementing P-SMS in the workflow of content billing, several strategic and technical questions have to be answered. Following are some questions which are addressed in this report:


Table of contents

EXECUTIVE SUMMARY AND OUTLOOK 7
SCOPE OF STUDY17
DEFINITION OF ACTORS AND ELEMENTS IN THE P-SMS VALUE CHAIN18
SERVICES AND CONTENT BILLING BY PREMIUM SMS21
MOBILE SM SERVICES21
SM CHAT22
SM BETTING / QUIZ / MULTIPLE CHOICE24
SM VOTING26
SM DATING26
WEB CONTENT BILLING VIA P-SMS27
ACCESS TO DATA SERVICES: WLAN BILLING27
JAVA DOWNLOAD BILLING27
VENDING MACHINES28
WORKFLOW MODELS FOR MOBILE SM SERVICES AND WEB-CONTENT BILLING29
WORKFLOW MODEL FOR MOBILE SM SERVICES (P-MO/P-MT)29
WORKFLOW MODELS FOR WEB CONTENT BILLING VIA P-SMS32
PREMIUM MO MODEL32
PREMIUM MT MODEL36
PREMIUM MO / PREMIUM MT MODEL WITH ACCESS CODE40
WEB CONTENT BILLING - SECURITY ASPECTS44
SUMMARY45
PAID CONTENT- A MARKET OUTLOOK46
SMS IN THE USA52
IMPLEMENTING PREMIUM SMS IN THE WORKFLOW OF CONTENT DELIVERY55
REGULATORY EFFORTS BY MOBILE NETWORK OPERATORS AND REGULATION AUTHORITES55
GUIDELINES59
COMBINATION WITH MOBILE MARKETING AND CRM61
SHORT CODE ALLOCATION AND ORDERING61
USAGE OF DEDICATED SHORT CODES66
SHARED CODE CONCEPT AND REFERENCE CODES66
P-MT WITH DIFFERENT TARIFF RATES ON ONE SHORT CODE68
FIXED NETWORK PREMIUM SMS69
INTERNATIONAL P-SMS MODELS69
MOBILE NETWORK OPERATORS AND WASP TARIFF STRUCTURES AND REVENUE MODELS IN EUROPE71
MOBILE NETWORK OPERATORS TARIFF RATES AND UNDERLYING P-SMS MODELS72
BASIC FEES FOR P-SMS SHORT CODES75
CONTENT PROVIDER REVENUE SHARES77
MT-COSTS80
PAYMENT CONDITIONS80
WASP PRICE MODELS82
CONNECTION TO MNO VERSUS CONNECTION TO WASP83
CONNECTING TO P-SMS NETWORKS86
CONNECTING TO MOBILE NETWORK OPERATORS86
CONNECTING VIA WASP AND INTERNATIONAL CONNECTION89
THE CONSUMER AND THE SHORT MESSAGE SERVICE CENTER NUMBER93
CASE STUDY: VIA VODAFONE94
CASE STUDY: IMPLEMENTING PREMIUM SMS ON MOBILE STREAMS' WEBSITE95
OTHER MICROPAYMENT METHODS IN COMPARISON WITH P-SMS100
BASIC STRUCTURE OF MICROPAYMENT SYSTEMS100
MOBILE- AND MICROPAYMENT SYSTEMS IN EUROPE104
PREMIUM RATE CALL BILLING (0900) - MANUAL DIAL-UP104
NET 900105
M-PAY (VODAFONE)107
I-MODE108
FIRSTGATE CLICK&BUY110
PAYSAFECARD111
MOBIPAY112
PRO AND CONS OF P-SMS115
APPENDIX118
SMS TECHNOLOGY118
SHORT MESSAGES118
SUBSCRIBER SERVICES119
SMS NETWORKS - THE BACKBONE OF PREMIUM SMS121
ROUTING OF MESSAGES VIA SHORT CODES FROM SMSC TO APPLICATIONS123
SENDING AND RECEIVING MESSAGES ON A MOBILE PHONE123
SENDING A MESSAGE123
MOBILE-ORIGINATED SHORT MESSAGE EXAMPLE123
RECEIVING A MESSAGE125
MOBILE-TERMINATED SHORT MESSAGE EXAMPLE125
SMS PARAMETERS127
SMS NETWORK ACCESS SCENARIOS129
SIM TOOLKIT133
WIRELESS APPLICATION SERVICE PROVIDERS IN EUROPE134
AKUMIITTI136
APOLLIS INTERACTIVE136
ASKU WIRELESS137
ASPIRO138
ATOBE MOBILE SOLUTIONS138
AU-SYSTEM139
BEAMGATE139
BRODOS AG139
BRUNET140
CODETOYS140
CONVISUAL141
CRITICAL PATH142
DIALOGS142
DIGITAL BRIDGES143
DJUICE143
DTMS144
EDIS144
EMEXUS144
E-PROMOTIONS145
GLOBAL NETWORKS INC146
GOLDEN-BYTES146
HANDY.DE148
IC3S148
INFOSPACE150
INPHOMATCH150
IOBOX151
JAMBA!152
LEGION152
MATERNA GMBH INFORMATION & COMMUNICATIONS152
MINDMATICS153
MINICK (FORMERLY DISTEFORA MOBILE)154
MOBILEWAY155
MOTOROLA156
MULTICHART156
NET-MOBILE AG157
NETS AG157
NETSIZE158
QPASS158
QUIOS SOLUTIONS159
SMSWORX.DE159
SONERA ZED159
TELECA160
TELECOMMUNICATION SYSTEMS (TCS)161
UCP AG161
VODAFONE GLOBAL CONTENT SERVICES (FORMERLY VIZZAVI)162
V-TEX163
WAP3163
WAPME SYSTEMS AG164
WCL165
XIAM165
YAHOO!166
YOC AG166
12SNAP167
LINKS TO P-SMS RELATED INTERNET SITES168
ABBREVIATIONS170
TABLE OF FIGURES174
ABOUT THE AUTHORS176

Table of figures

Actors and duties in the P-SMS value chain20
Mobile SM Service Model (P-MO/P-MT)31
P-MO Web Content Billing, Screenshot, CeBIT Demo 2002, MATERNA Information & Communications34
P-MO Web Content Billing Model35
P-MT Web Content Billing, Screenshot, CeBIT Demo 2002, MATERNA Information & Communications38
P-MT Web Content Billing Model39
P-MO/P-MT Web Content Billing with access code, Screenshot, CeBIT Demo 2002, MATERNA Information & Communications42
P-MT/P-MO Web Content Billing Model with access code43
Properties of different P-SMS web content billing mechanisms45
Consumer Spending on Content 2001 - 2006, Jupiter MMXI, January 200246
Western European SMS Value and Volume 1999 - 2006, Frost & Sullivan, April 200247
Proposed number ranges and tariff bands, ODTR, January 200262
Example for Correlation of Short Codes and Tariff Rates66
SM routing by short code and by reference code (Shared Code concept)67
Example for Shared Code Concept67
P-SMS Consumer prices in € (incl. VAT) for selected MNOs in the Netherlands (July 2002)72
P-SMS Consumer prices in € (incl. VAT) for selected MNOs in France (July 2002)73
P-SMS Consumer prices in € (incl. VAT) for selected MNOs in Belgium (July 2002)73
P-SMS Consumer prices in € (incl. VAT) for selected MNOs and GSM Service providers in Germany (E-Plus Tariff rates 1,20, 1,40, 1,60, 1,80, 2,20, 2,40, 2,60, and 2,80 are not enclosed in this Figure). (July 2002)73
P-SMS Consumer prices in € (incl. VAT) for selected MNOs in UK (July 2002)74
P-SMS Consumer prices in € (incl. VAT) for Vodafone Omnitel in Italy (July 2002)74
P-SMS Consumer prices in € (incl. VAT) for selected MNOs in Spain (July 2002)74
Revenue shares in NOK for content provider with direct connection to Telenor Mobil AS (October 2002)78
Revenue share in £ (pence) for content provider with connection via E-Promotions/Teleca Ltd (September 2002)82
P-SMS traffic for dedicated short code in August, screenshot customer service web portal, MATERNA Information & Communications, 200284
Direct connections between Content Providers and Mobile Network Operators87
Connection to SMSC via X.25 or TCP/IP88
The WASP acting as mediator between Content Providers and Mobile Network Operators90
Anny Way SMS Service Platform Interfaces - an example for a WASP92
The structure of micropayments101
Network Elements and Architecture of SMS121
SM-MO scenario124
SM-MT Scenario126
Schematic of SMS Access Scenario 1 - Connection to several MNOs131
Schematic of SMS Access Scenario 2 - Connection via one MNO132

About the authors

Dipl.-Ing. Rudolf Bäumer,
born 1967, has graduated in civil engineering at the Royal Institute of Technology in Stockholm and at the University Dortmund in 1994. During his studies he focused on infrastructure planning (industry,traffic, energy, telecommunication). He stated his career in Stockholm and Göteborg. At first at the German-Swedish Chamber of Commerce responsible for business cooperation and following as project manager for the establishment of business units in Germany and Spain at Prosolvia AB.
1999 he joined TÜV Informationstechnik GmbH in Essen as sales and marketing manager for IT security solutions on the European and Japanese market.
Since 2001 Rudolf Bäumer is responsible at MATERNA GmbH Information & Communications for the development, product management, rollout and operation of mobile telecommunication services in general and SMS in particular. Micropayment is of his main concern for many years.

e-mail: rudolf.baeumer@sellitmobile.de


Dipl.-Inf. Bernd Mielke,
born 1961, studied in the 80´s computer science at the RWTH in Aachen, Germany. Emphasis was on algebra, combinational optimisation, cryptography and graph theory. After this, he worked for more than 10 years in the support department of the notebook manufacturer Toshiba. There he occupied himself with wireless data from 1993 on, when Toshiba produced a notebook with an integrated modem for the German "Modacom" network. In 1993 he wrote a book on this packet data network. Since 1998 his web site on wireless data, www.dafu.de, is online. In the end of 1998 he published a CD-ROM on wireless data by himself.

In 2000 and 2001 he worked as product marketing manager at MATERNA. Among his projects were SMS games, logo- & ringtone services, WAP gateway and MMS products. Since April 2002 he is employed by Vodafone Global as Roadmap Coordinator MMS.

e-mail: bernd.mielke@dafu.de