July/August 2001

BY MIKE OZBURN

This new service creation platform will allow carriers to control access to premium data services, personalize services, and implement new pricing and service models that will make carriers more competitive today -- and which will be required to be successful when third-generation mobile networks (3G) become a reality. Today, most carriers employ usage-based plans in which customers pay a set fee for airtime of up to a certain number of minutes per month, with additional fees for use above the plan. This model works well for basic wireless services, but not for WAP services, an area in which most carriers are struggling. The integration barrier has prevented carriers from moving to provide add-on WAP services that could increase their revenue and make them more profitable.

Some observers contend that the lack of quality premium service offerings is the real barrier to their acceptance, and subsequently the success of wireless carriers. They say that current WAP offerings aren't compelling enough to transfix users. But without incoming revenue to support those services, carriers can't justify putting more money into development to create better quality offerings.

PREMIUM EXAMPLES
So what premium services might be attractive to subscribers? Carriers have already begun offering or have discussed offering 411 telephone directory lookups, stolen vehicle research checks, driving directions/traffic alerts, gaming applications, and others. Consider a game that is simple enough to play on a mobile device with limited display and input facilities, but addictive enough to keep users coming back. It might take the form of a character, role-playing, or simulation-type game. All are strong candidates to make the successful transition to mobile. And a premium plan for frequent travelers might alert them to highway traffic or flight delays. Related driving direction applications may enable travelers to reroute their trips if they face long road delays.

But as noted, even if wireless carriers market compelling WAP applications, they will be hard pressed to turn a profit unless they can implement effective pricing models that will guarantee extra revenue. Meanwhile, many are dealing with large fixed licensing or development costs associated with those applications.

A BETTER APPROACH
Market conditions demand a "time-plus model," where premium services are available and priced separately from the monthly plan -- either in a pre-packaged bundled plan or on an ad hoc basis. In this way, carriers would be automatically compensated for premium plan use. For most carriers, though, the time-plus model isn't feasible given their Internet infrastructures. Most don't have a point of control between their network gateways, billing systems, and premium application services to enable required service and billing processes. Without integration, they would have no way to know when or how much to bill their customers for specific services.

The issues related to integrating these three elements are fairly straightforward.
First, WAP optimizes the markup language, scripting language, and the transmission protocols for wireless services. These optimized wireless protocols are translated to HTTP Internet protocols by WAP gateways so that WAP phones can act as Web browsers. With today's minute-based services, there is no need for a link between a WAP gateway and billing systems. But when consumers of WAP services access premium services, those same WAP gateways are required to enable billing information to be sent to carriers' billing systems. A number of factors complicate this. First, there are scores of existing billing systems utilizing a variety of formats, making simple integration impractical. Next, consider the hundreds of independent WAP services all trying to feed into disparate billing systems.

For now, there is often only a rudimentary link between WAP gateways and application services. That's barely enough to enable low-level data to flow between them -- providing very little in the way of billable information. The lack of this information means that carriers can't charge customers for specific services without integrating those services with their billing systems. This is a very difficult proposition as it means carriers must open up their closed billing systems to outside companies. This loss of control is unacceptable to most carriers, which much prefer to keep complete control of their billing functions while maintaining a rich and meaningful data flow.

SOLUTION
The key to overcoming this issue is to bridge the gap between WAP gateways, application services, and billing systems through a centralized point of control. This infrastructure software would control where subscribers could go and how much it would cost to go there. Such a system would enable carriers to track and bill for services on a group or user-by-user basis. How might this work? After marking specific applications as chargeable and assigning a price (per use or time period), carriers would then ask subscribers who arrived at a premium site whether they wanted to access the service. After accepting the charge by marking "yes," the central point of control sitting between the WAP server, billing system, and application services would generate the relevant record and send it to the billing system. To obtain these premium services, wireless users would subscribe at an additional monthly fee for unlimited use or pay individually for services, much like the pay-for-view cable TV model.

Different services may charge different rates for various subscribers, depending on which level of service they had signed up for. In such cases, basic subscribers might be charged 25 cents, while those paying premium rates might receive a given service at no additional charge. Profiles would enable carriers to intelligently bill based upon those levels, and carriers could create bundled subscriptions to address interests such as sports. One bundled plan might include all sports scores and headline news, while a separate baseball package might address only information related to that sport. Administrators would be able to use a system integrated with the billing system to configure service ratings on an individual basis. Then, based on a user's subscription level and individual choices, the point of control would be able to make appropriate charging decisions.

Integrating WAP gateways, billing systems, and service applications to enable the creation of time-plus services offers carriers and their users multiple advantages. Users can pre-subscribe to a bundled service or pay on an ad hoc usage basis. It also obviates the need for users to sign up for services via a separate Web site or phone in to a call center (as some do today). Carriers would benefit because they don't need to reconfigure their billing services for each new application, and are guaranteed revenue from each subscriber regardless of how much use they've made of their current billing plan minutes.

The lack of integration is no longer a technology issue -- it becomes a competitive issue. Those service providers that can move to the new revenue generation model are likely to be the winners. And those winners won't be waiting around for the evolution from 2G to 3G.

Mike Ozburn is president and CEO of Bridgewater Systems, a provider of Internet access management software. Bridgewater offers profile and policy-based management and resource control software that authenticates network users to grant access to applications and data network services.

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