Mobile Commerce In The Czech Republic Ondřej Částek castek@econ.muni.cz 2 n 3 n 4 n 5 In 1991 was the mobile telecommunication revenue approximately 1.5 % of GDP, in 2005 about 4,5 %. The slight rise of revenues per subscriber in 2003 is ascribed to new services (MMS for example). Significance for the economy nimproves employment nimproves GDP n nExample: Marketing spendings by mobile network operators 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 6 7 Content of the presentation 1.Terms/definitions 2.What is mobile commerce 3.Determinants of m-commerce 4.Technologies (history, overview) 5.Sociological implications 6.M-commerce applications 7.M-business 8.M-marketing 9.M-tagging 10.User acceptance 11.Penetration in the Czech Republic 12.Market structure in the Czech Republic 13.M-commerce in the Czech Republic 8 Terms nLandline, n- main line or fixed-line - a telephone line which travels through a solid medium, either metal wire or optical fibre n n 9 Terms 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 10 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. 11 Mobile commerce - definition nSet of processes which result in financial obligation and where at least one part is executed via mobile technologies Mobile technologies nInfrastructure operated by mobile network carriers 12 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 13 Determinants of m-commerce volume nTechnlogies implemented n nMobile phones penetration n nServices offered n n 14 Technology - development nZero generation nFirst generation (NMT) nSecond generation (GSM) nThird generation (UMTS) nFourth generation n nDisplayes: get larger and full-colour, resolution grows nProcesors: get more powerful nCapacity: increases nStand by time is counted in days n n n 0 gen.: no international standard, low security 1st gen.: still analogue 2nd gen.: calls and sms still account for most of the m-commerce volume, data available 3rd gen.: applications based on data transmissions prevail 15 Third generation n nMuch faster data transmission than before nTherefore new services possible nDevices of higher performance nNew services involve multiple parties n It is estimated that there are about 70 3G networks in 25 countries around the world. The most significant features offered by third generation (3G) mobile technologies are the momentous capacity and broadband capabilities to support greater numbers of voice and data customers - especially in urban centres - plus higher data rates at lower incremental cost than 2G. 16 Third generation deployment problems nHigh price for licences nLow range (frequency usually 2100 MHz) nHigh initial costs nUncertainty of consumer acceptance nUncertainty of killer applications The first 3G network was launched in Japan (2001). Video calls were expected to be the most sought after application. In reality, it were data downloads. 17 Technologies available in CR 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 NMT 1991 - 2006 GSM since 1995 UMTS since 2005 18 Penetration n nPenetration is one of three determinants of m-commerce nTogether with density of population number of customers determine ratio: infrastructure costs The higher the ratio is, the better for network carriers and other m-commerce participants. Penetration in the CZ nSIM cards in the CZ in thousands 19 Penetration in the CZ nActive SIM cards and mobile phone users per 100 inhabitants in the CZ 20 Penetration in the CZ 21 nRed: fixed lines nBlue: active SIM cards n(in thousands) One fixed line serves whole household or office One mobile phone serves one person Market structure in CZ 22 nActive SIM cards in milions Market structure in CZ n 23 Quarterly changes in active SIM cards Postpaid vs Prepaid in CZ n 24 Customers on prepaid and on postpaid services prepaid on plan At the end of 2010: 43 % prepaid, 57 % postpaid 25 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 for full portability of phone numbers was introduced 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. Penetration in CZ n 26 Mobile phone users according to education (16yrs and older) University High school Vocational training Primary education Penetration in CZ n 27 Mobile phone users according to economical activity (16yrs and older) Student Employed Unemployed Retired 28 mobilni telefony-pohlavi,vek Real penetration According to research „Czech Kids“ Millward Brown accomplished in 2004, 47 % of Czech childern in the age of 7 to 14 have a mobile phone. Compare to 14% in USA and 52% in Germany. Penetration in CZ (2008) nReal penetration above 16 yrs: 87,9 % n16 – 54 yrs: 96 – 98 % n55 – 64 yrs: 87 % n65+ : 45 % women, 62 % men 29 30 The start of use of mobile phones Age Cumulative frequency (%) 13 10,5 14 52,6 15 92,1 16 98,7 17 99 How do we use MP? nSpendings on fixed lines are decreasing, on MP increasing nwhile prices of calls and SMS are decreasing nnumber of minutes used increases each year (2010: 15 bil. minutes) but revenues from calls in 2008 and 2009 decreased, 2010 increased (45.2 bil. CZK) nnumber of SMS used increases each year (2010: 8.1 bil.) but revenues go up and down (2010: 8.5 bil. CZK) nwhich means that operators yield more and more from data services 31 How do we use MP 32 Network Carrier ARPU 2009 ARPU 2010 % of post paid customers Telefonica O2 515 459 56,9 Vodafone 529 514 52,1 T–Mobile 464 415 48,7 n2010: average spendings for defined consumption basket in EU 16 E/month, in the CZ around 27 E/month (for basket of 65 calls and 50 SMS and a few MMS) in CZ lower purchasing power than in EU Average price per minute in CZK nlight blue: per minute charged ndark blue: per real minute 33 Average ARPU for calls per year in CZK n 34 Average price per SMS sent in CZK n 35 Average overall revenue per user in CZK n 36 37 Country 1994 1999 2003 Country 1994 1999 2003 Australia 881 594 429 Luxembourg 960 387 359 Austria .. 515 646 Mexico 1570 199 197 Belgium 1932 502 460 Netherlands 1543 380 463 Canada 703 466 432 New Zealand 412 312 332 Czech Republic 2965 437 227 Norway 488 277 381 Denmark 462 378 371 Poland .. 363 208 Finland 2995 485 533 Portugal 1176 332 395 France 875 310 358 Slovak Republic .. 19 195 Germany 1129 701 353 Spain 842 423 384 Greece 215 402 392 Sweden 407 299 285 Hungary 1021 477 254 Switzerland 1007 546 535 Iceland 428 267 402 Turkey 353 86 114 Ireland .. 486 458 United Kingdom 0 328 319 Italy 886 292 331 United States 630 583 554 Japan 3132 1056 932 OECD 917 537 454 Korea 1232 311 396 Yearly revenue per subscriber in OECD in years stated. Notice Japan with its hith figures and compare Czech republic to France, Finland or Norway for example. 38 Why do people use mobile phones? n 39 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 Half of the budget spent on using MP (students, 2007) 40 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 41 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 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. 42 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 space and time dimensions 43 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? Situation: MP also creates the illusion of a private area in public space (calling or listening music in public transport) Freedom: matter of control 44 Mobility nDisconnectivity anxiety (Jim Taylor) nFeel of safety if in reach of own mobile phone nOwn world in the pocket n own world: social networks, contacts, pictures 45 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 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 46 M-commerce applications (characteristics compared to PC) 1.Low initial costs 2.Easy of use 3.Immediate use 4.Clear identification 5.Localization 6.Penetration 7.Display 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. 47 M-business applications (forms) 1.m-Presence 2.m-Payment nm-Banking 3.m-Purchasing 4.m-Procurement 5.m-Shop 6.m-Auction 7.m-Care 8.m-Marketing 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 48 M-marketing (characteristics) nForm of direct marketing nStill in its beginning nAny form of marketing activity via mobile phone 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 49 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 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) 50 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 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 51 Mobile tagging – 2D code beetaggexamplestreamer 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. 52 http://is.muni.cz/ n 53 User Acceptance nSurveys nSimple statistical methods (frequencies) nStructural modelling 54 Nokia´s survey (2002) n88% stated that they would be receptive to vouchers (for nearby shop) via push messages n31% would welcome such voucher n76% would find it acceptable if the programs they viewed were punctuated with very short ads n51% would not see advertising as an intrusion if it were presented to them in the same way as on television n86% agreed that m-marketing would be even more widely embraced if seen as beneficial to the end user 55 Nokia´s survey - conclusion nChoice - being able to decide whether or not to receive messages nControl - being able to bypass sale messages easily nCustomization - being able to filter the types of messages received nMutual benefit - getting something back in return, i.e., a reduction in the cost of services 56 User acceptance of m-marketing (structural modelling) nStudied with the use of Theory of Reasoned Action 57 TRA model in use n 58 TRA model in use n 59 How to get new customers while the real penetration is 85 % nIn some countries (Germany) start up of virtual providers focused on special segments (elders, low spending customers) nAnother way is a deal with resellers (Australia) nThe fastest and cheapest is to make new plans/tariffs. Its side effect is also that the prices are hard to compare, so the customer is not so price sensitive Data services, 3G n 60 Number of accesses to internet according to the technology used n 61 Mobile networks account for cca 20 % of accesses In 2005: about 5 % of accesses Internet access via MP n 62 Web pages browsing E-mail Social networks (Facebook) Large data downloads On line radio or TV On line gaming VoIP calls 63 Data services nRecent way, how to squeeze more money out of mobile network users n nFaster data transmitting enables to provide new services n nLack broadband internet connection in CR 64 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 Consumer Business People inquired claimed they would be spending approx. 480 CZK monthly for these new services) 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 current spendings for voice and minimum data transfers (current monthly ARPU). 65 What services do you plan to use in next 12 months? Asia Pacific (%) Europe (%) North America (%) South America (%) Games 49 15 11 30 Ring tones 73 20 27 25 Music 55 15 13 28 News 31 15 15 23 Sports clips 29 12 10 13 Multimedia images (images, screen savers) 56 16 13 13 Video clips or movie previews 25 7 7 10 Full feature films 11 8 3 8 This research was undertaken in June – July 2005 in teritories stated. 66 What are the most important factors for you, when you are downloading content to your mobile phone? Asia Pacific (%) Europe (%) North America (%) South America (%) Ease of payment 54 39 31 64 Quick to download 58 30 30 15 Immediate/timely content delivery 46 30 23 22 Ability to share content with friends 60 44 17 38 Ability to store content on the network 25 12 14 24 Ability to store content on mobile phone 38 26 11 44 67 What services of m-communication do you use? n payment for services or products personal navigation games music, radio GSM banking sending MMS or video to other phone uploading MMS or video to websites acquiring pre-paid information web surfing e-mail 68 What services do you use, 2009, 996 participants 69 Tendency to buy via mobile phone, 2009 70 Internet access August 2009 Pages viewed Unique accesses Vodafone 12,667,104 34% 3,583,589 39% T-Mobile 9,169,329 25% 1,558,107 17% O2 14,905,582 41% 4,154,464 45% Total 36,742,015 9,296,160 71 3G content (offered since 12/2005 in ČR) nBig brother type of entertainment nTV news nTraffic cameras nMusic downloads nOnline games 72 Thank you for your attention