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Mobile Commerce in the Czech Republic
Ondřej Částek castek@econ.muni.cz
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What can you expect
1.
1.What is m-commerce and why should it be important
2.
2.M-commerce applications
3.
3.Trends in m-commerce
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Terms
nLandline,
n- main line or fixed-line - a telephone line which travels through a solid medium, either metal
wire or optical fibre
nMobile network carrier
n- mobile network operator (MNO), also known as carrier service provider (CSP), wireless service
provider, wireless carrier, mobile phone operator, or cellular company, is a telephone company that
provides services for mobile phone subscribers
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Terms
nPostpaid
n- on plan, tariff, tariff plan – use and than pay model. Usually period of one month and at least
„base“ fee has to be paid.
nPrepaid
n- pay and than use model. Doesn‘t involve obligation to pay if you don‘t use the service, usually
doesn‘t require a contract.
nMobile technologies
nInfrastructure operated by mobile network carriers
n
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M-commerce: definition
nSet of processes which result in financial obligation and where at least one part is executed via
mobile technologies
n
nor
n
nThe delivery of electronic commerce capabilities directly into the consumer’s hand, anywhere, via
wireless technology
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Importance of m-commerce
nFor economy (in 2011 in Czech Republic)
nExpenses on mobile services (70 bil. CZK)
nInvestments into mobile infrastructure (4.7 bil. CZK)
nEmployment (20 thousand employees in this sector)
n
nFor businesses and individuals
nOptimization of processes
nNew applications (new services)
n
n
n
n
n
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Data for 2011
Optimization: ČEZ in Romania (largest elektricity producer), data collection from 1 370 000 places,
maintained by 181 employees. Proposed savings: 34 employees and 7 mil. CZK per year.

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Importance for the economy
nExample: Marketing spendings by mobile network operators
n
n1992: Czech telecomunications to SPT Telecom 10 mil. CZK
n2000: SPT Telecom to Czech Telecom     250 mil. CZK
n2002: Czech Telecom to Telefonica O2     500 mil. CZK
n2002: Paegas to T-mobile        500-600 mil. CZK
n2005/6: Oskar to Vodafone     500 mil. CZK
n
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The classic way of obtaining insurance:
Customer – broker – insurance company

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On-line:
Brooker – customer – insurance company

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Text message:
Customer – insurance company

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Applications in m-commerce


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M-commerce applications (characteristics)
1.Low initial costs
2.Easy of use
3.Immediate use
4.Clear identification
5.Localization
6.Penetration
7.Display
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1.Price of mobile phone is much cheaper than of a PC
2.Intuitive and simple use
3.Can be used immediately after switching on
4.SIM card is usually used by one user only
5.Mobile phone (or other end devices) can be localized
6.Much higher penetration of mobile phones than of PCs
7.Many times smaller displays are limiting
As for we will go through particular applications in the part about Czech Republic, we will mention
only two significant subsets of m-commerce now: m-business and m-marketing.

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M-commerce applications
nContent services (sending of messages, dictionaries, …)
nMessaging – sending SMS/MMS to customers
nRemote Access/Mobile Office (access to company´s intranet)
nEmergency Services (112, 911)
nVideo and audio data – usually by 3G services
nEntertainment – games, competitions, ringtones
nTailing – purchasing or reservation of tickets (Mobitickets)
nFinancial Services – banking and broking
nPayment – m-payments
nNavigation – Global positioning system
nTelemetry – automatic sending of data between machines
nMarketing services – SMS inquiries, company´s logos, collecting of loyalty bonuses via mobile
phone
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M-business applications
nm-Presence
nm-Payment
nm-Banking
nm-Purchasing
nm-Procurement
nm-Shop
nm-Auction
nm-Care
nm-Marketing
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1.Ususally presentation of a business on WAP pages
2.Payments via Mobile phones. These have 2 advantages: a) user is not dependent on place, b) SIM
cards provide good autentification options and security level
•One of the most succesful applications of m-payments is m-banking (operating bank account via
mobile phone)
3.B2B transaction, usually single
4.B2B purchases, but businesses are more interconnected
5.B2C, usually Logos, Ringtones, Software, Music, Videos
6.Auctions available via mobile phone
7.Call centers available from mobile phones

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M-marketing (characteristics)
nForm of direct marketing
nStill in its beginning
nAny form of marketing activity via mobile phone
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1.Addresses directly particular users
2.Reaches response rate approx. 15 % (almost three times more, than traditional telemarketing or
direct mail)
3.Cheaper than traditional forms
4.Around 94 % of information is actually read and 23 % is forwarded to friends

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M-marketing (forms)
1.SMS messages
2.SMS competitions, voting, inquiries
3.Advergaming (via SMS, WAP, Java games)
4.Logos, ringtones
5.Bluecasting, cell  broadcasting
6.Mobile tagging
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1.Most used kind of M-marketing, for some time also the only kind. Nowadays not so favoured though,
their similarity to spam on the side of addressee is too high, while on the side of sender too low:
they cost much more than e-mails. Beside common advertising SMS can be found sponsored SMS and SMS,
which reception is paid (In CR by Vodafone)
2.Premium SMS – common form, how users pay for their participating. But can be free (because of
marketing purposes)
3.Can be used to introduce products
4.
5. Providing the content mentioned above via bluetooth or via push messages (typically in
restaurants, shops or other business places)

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Mobile Tagging
nA product bears a tagg
nUser takes a picture of the tagg by mobile phone
nApplication in mobile phone translates the picture into unique ID code, connects to server and
provides link to webpages (or wappages) of product in question
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Subset of QR – Quick response codes – QR are subset of bar codes
originated 1994, 2000 standardized as ISO norm
high capacity, up to 30 % of its surface can be damaged without losing the information

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Mobile tagging – 2D code
beetaggexamplestreamer
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In this example (BeeTagg) the „scanning“ with camera can be replaced by submitting the text and
number to the software. The rest of process would be the same.

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http://is.muni.cz/
n
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Mobile payments (forms)
1.Premium SMS/MMS
nMost known, most used, most expensive
nMobile originated, mobile terminated
2.M-payment
nThrough gateway like with credit card on internet, but phone number instead of cc number
3.M-purse (M-wallet)
nConnected to bank account, credit card or prepaid amount.
4.NFC (near field communication)
nNon contact short distance payment
5.M-banking
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1.Tickets (parking, cinema), visits at doctor´s office
Price is deducted from prepaid credit or added to monthly bill.
Commission for operator up to 50 %.
2.Commission for operator 10 – 40 %.
3.Commission similar to credit cards 1,5 % - 3,5 %
4.Instead of a credit card. Might be linked to prepaid credit or monthly bill, but does not have
to.

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Mobile payments (comparison)
Method
Cash
Credit/debit card
Non contact card
Non contact sticker
NFC SIM
Time (s)
29
26
5
5
0,1
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Trends in m-commerce


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Current trends
1.Penetration
2.Technologies (high-performance devices, faster data transmissions)
3.Changes in value chain in mobile telecommunications
4.Sociological changes – use of mobile phones
5.
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Trends in m-commerce: penetration
nPenetration CZ: 128.5 %, developed nations 117.8 %,  Europe 119.5 %.
nReal penetration: CZ in 2005: 76 %, 2008: 87.9 %
mobilni telefony-pohlavi,vek
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How can penetration exceed 100%?
Penetration in 2011
Penetration in CZ according to EC method (SIM cards used in last 3 months)

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Penetration
n
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Penetration
n
Student
Employed
Unemployed
Student
Retired
Mobile phones penetration according to economical activity
(16yrs and older)
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Penetration
n
University
High school
Vocational training
Primary education
Mobile phones penetration according to education
(16yrs and older)
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Penetration: results
1.Virtual operators
2.Structure of the customers: prepaid vs. postpaid
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Trends in m-commerce: prepaid vs. postpaid
nPostpaid customers are much more profitable
n- In 2008 Vodafone had about 50% customers on plans (= postpaid) and the ARPU of them was 966 CZK
monthly. Compare to ARPU of prepaid customers 342 CZK
nCustomers on plan are more likely to be loyal
n- That is
important
because full
portability of
phone numbers
was introduced
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Another point is, that low-income groups use rather postpaids, so for example in Australia mobile
users were always likely to be on postpaid, but as the market is becoming more and more saturated,
the providers are trying to get additional customers and these are mostly from the low-income group
=> so targeting to postpaid customers si the dominant strategy on Australian market nowadays.
In 2007 was O2 overall ARPU 551 CZK and that was 989  CZK by customers on plan and 239 CZK by
customers on prepaid.

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Trends in m-commerce: data services
n
Standard
Download speed theoretical
Download speed real
GSM
14,4 kbit/s
14,4 kbit/s
HSCSD
115,2 kbit/s
43,2 kbit/s
ISDN
1920 kbit/s
128 kbit/s
GPRS
171,2 kbit/s
85,6 kbit/s
EDGE
236,8 kbit/s
150 kbit/s
CDMA2000
2457,6 kbit/s
300 – 1500 kbit/s
UMTS
384 – 10 Mb/s
200 – 1800 kbit/s
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UMTS now faster

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Expected services in 3G networks
(Milvard Brown survey, CR 2005)
0
10
20
30
40
50
60
70
Portable travel guide
Internet connectivity
Mobile office
Video call
Push to talk
File sharing
Audio/video file download
Push services
Instant messaging/Chat
Mobile (interactive) gaming
Consumers
Businesses
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The informants said, that they are willing to spend for these new services in average 480 Czech
crowns monthly (which was quite optimistic, if you take into account that time spendings for voice
and minimum data transfers (current monthly ARPU).
3G content (offered since 12/2005 in ČR)
•Big brother type of entertainment
•TV news
•Traffic cameras
•Music downloads
•Online games

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Data services: actually used services
n
Web pages browsing
E-mail
Social networks (Facebook)
Large data downloads
On line radio or TV
On line gaming
VoIP calls
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Data services: results
nAccesses to the internet from mobile network account for higher and higher percentage (cca 20 % in
CZ in 2011)
nThere are more and more services based on fast internet connection offered for mobile phones
nCoverage with fast networks (3G) grows steadily
n
nBUT
n
nUncertainty of „killer application“
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Trends in m-commerce: Value chain today
MNO
Content provider
Application platform
Mobile portal providers
Customers
Online financial services
Mobile equipment vendors
Technology platform vendors
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Value chain without fast data transmissions
Applications
Content provider
MNO
Customers
Mobile equipment vendors
Technology platform vendors
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Trends in m-commerce: Use of mobile phones
nThe start of use of mobile phones
Age
Cumulative frequency (%)
13
10,5
14
52,6
15
92,1
16
98,7
17
99
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Why and how do people use mobile phones:
Social connectivity (Morley, 2003)
nMobile phone (MP) intensifies the social connectivity of the owner. To have MP means to be
connected, to be a part of social network, to be available everywhere by everybody.
When do I switch MP off
(%)
Never
69,9
Night
17,8
Other
6,8
Night + school
1,4
76 respondents between 17- 18, 2007
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Half of the budget spent on using MP (students, 2007)

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Why and how do people use mobile phones:
Attitude toward MP
1.If others had not have it, I would not have it too
n The determinant here is the social network, social connectivity
2.I am addicted to MP
n Saves time, is personal, not to have it is boring
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Why and how do people use mobile phones:
MP – strongly personal thing
nIshii, 2006: MP is not as much issue of mobility as issue of personalization and localization.
n
n 50 % of calls are made from home, 40 % from work and only 10 % outside these places
n
n Mobility is matter of place, time, and context
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Mobility – sign of a social status. However, owning and using MP is not explained only by greater
mobility, but more importantly by greater personification, adjustment, adaption.

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Why and how do people use mobile phones:
Mobility: place
nPhysical motion from place to place
Mobility: time
nResults from physical mobility, means accelerating of processes, saving time, flexibility.
nMicro-coordination,  softening of time
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space and time dimensions

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Why and how do people use mobile phones:
Mobility: context
nCommunication face to face has to comply with context: environment, particular situation, mood.
Mobile communication frees the participants of this.
n Case: SMS vs videocalls
n
nDoes m-communication mean greater or lesser freedom?
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Situation: MP also creates the illusion of a private area in public space (calling or listening
music in public transport)
Freedom: matter of control

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Why and how do people use mobile phones:
Mobility
nDisconnectivity anxiety (Jim Taylor)
nFeel of safety if in reach of own mobile phone
nOwn world in the pocket
n
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own world: social networks, contacts, pictures

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Why and how do people use mobile phones:
Domestication of MP (Silverstone, Silverstone & Haddon)
nInnovation is a process, not a single event
nAssumptions:
nlook behind function
n(1) imaginativeness, (2) acquiring,
n (3) materialization, (4) transformation
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Not only function matters, but also what is the symbolic meaning (social status?), how it changes
identity of the owner/user
1.first news about the technology – we imagine, what is it, how to use, what the advantages might
be
2.buying the technology, owning it for the first time
3.using and adjusting functions to the users’ needs
4.the technology becomes a part of users’ identity (pink laptop, hi-tech MP)
5.user becomes part of the technology? The technology changes the user?
The landline: first in a hallway, than in other rooms and finally in bedroom.
The way people use their MP matters: most SMS are sent at the beginning and at the end of working
hours, than about 10:30 PM

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Thanks for attention