During the fever pitch of the bull market, we were
dazzled by the promise of mobile commerce. The crystal
balls at Jupiter Media Metrix, Ovum, and McKinsey
revealed global mobile commerce revenues were to be
somewhere between $22 billion and $200 billion in 2005.
In a world of WAP-enabled handsets and location-aware
mobile networks, mobile commerce took center stage in
the orgy of the New Economy.
The hangover has been painful. WAP failed to deliver
on its promise to make the desktop available on the
mobile device. Beset by painstakingly slow access and
nested menus reminiscent of DOS days, WAP has become
persona non grata among North American and European
wireless consumers. Compounding the problem has been the
failure of carriers to deploy location technology within
the expected timetable. One month shy of the October 1,
2001 E911 Phase II deadline, every major carrier in the
U.S. has requested waivers or extensions. The Public
Safety Answering Point of San Francisco has
conspicuously announced that none of the carriers in its
region are able to provide the level of accuracy
required by the FCC mandate. To make matters worse, one
of the most promising publicly traded firms in the
location technology industry, US Wireless, Inc.,
announced in late August that it would seek bankruptcy
protection under Chapter 11.
With WAP far from consumer consciousness and location
technology beyond the horizon, is mobile commerce dead
on arrival? Yes and no. Mobile commerce will probably
never see $200 billion under the original paradigm where
subscribers use their phones to go shopping on the Web.
On the other hand, mobile commerce may be resurrected
under a different paradigm -- one in which retailers
have the ability to send targeted ads and coupons to
willing subscribers, not using WAP, but rather using
simple text messaging (short message service, or SMS)
and perhaps someday, wireless instant messaging.
You Can't Go Window Shopping With A Cell Phone
If e-commerce is a global shopping center, then mobile
commerce is a corner convenience store. Early returns
from Japan, and to a lesser extent Europe, have shown
that mobile commerce is well-suited to inexpensive,
consumable items: Ring tones, animated figures, virtual
girlfriends, parking meter payments, and sodas. Simply
put, mobile commerce today is superb for impulse
purchases.
And yet, ironically, the WAP experience is anything
but impulsive. To conduct a simple mobile commerce
transaction, a wireless subscriber must: (1) Have a WAP-enabled
cell phone with the WAP service activated, (2) Place the
phone into a WAP session and explicitly agree to pay a
fee, (3) Enter a URL using a torturous keypad entry
scheme, or, if the subscriber is lucky, thumb through
several layers of nested menus and "next" softkeys to
find a bookmarked URL, and (4) Navigate through the
destination WAP site to make a purchase, and on and on.
Even the stalwart early adopter may lose patience, and
that's before the credit card transaction, since there
is still no "wireless wallet." The impulse to buy is
suffocated.
In this paradigm of mobile commerce, who is missing?
The seller! The most savvy retailers will build WAP
sites and register themselves in wireless search
engines, then wait passively for a subscriber to browse
by. The vast majority of retailers don't know what a WAP
is or that they're missing one. And yet, paradoxically,
even the most low-tech retailer would love to attract
wireless phone users, who increasingly represent the
wealthiest half (or more) of the population. Under the
WAP paradigm, retailers are relegated to passive status,
and despite their desire to sell goods and services and
their willingness to pay to promote themselves, they
have no way to access the consumer.
In order to sell, retailers need to be able to reach
consumers and communicate their value propositions.
Merchants and the media have evolved together in
lockstep for a thousand years through print, radio,
television, and the Web. Today, merchants need a way to
advertise on wireless phones, especially to consumers
who are willing to receive their messages. The wireless
Internet paradigm of today -- WAP -- does not fulfill
this basic economic need.
The Dual Myth of E911 and Location Accuracy
The armchair quarterbacks of the wireless Internet
reasoned as follows: Carriers will deploy new location
technology in order to comply with the FCC's E911
mandate for 100-meter caller location accuracy; the same
technology will be used by retailers to bombard
consumers with coupons when they are nearby; and,
retailers (for some reason, Starbucks is always the
marketing example) will profit enormously, sharing their
wealth with the wireless carriers.
This vision is fraught with problems. How does the
retailer know the consumer's mobile phone number? (Does
Starbucks keep a list of names of every customer?) How
does the retailer actually get the location information?
How does the message actually get to the consumer? Must
the consumer enter a WAP session and browse to the
retailer's site in order to see the coupon? What happens
if, heaven forbid, your office is located next to a
Starbucks? Does your phone beep all day long?
Various companies have engineered clever answers to
most of these questions. Their answers call for
investments in IT infrastructure that are formidable in
complexity and cost. Some carriers are even commencing
with these solutions, determined to realize a "dual use"
advantage from their E911 investments and they froth
over mobile commerce revenue projections.
Now step back. Rather than engineering clever
workarounds to the mechanical challenges of mobile
commerce, let's question the fundamental assumptions.
Should the same technology employed for E911 be used for
commercial location services? And, even more
fundamental, how important is location to mobile
commerce?
The system that handles emergency 911 calls, the
Mobile Positioning Center (MPC), has a relatively simple
job, which it must do with high reliability. The mobile
switching center directs 911 calls to the MPC, along
with the identity of the base station, which is hosting
the emergency call. The MPC routes the call to the
Public Safety Answering Point nearest to the base
station, along with the cell phone number and the
location of the base station. Emergency response
vehicles must comb the coverage area of the base
station, hopefully while speaking with the caller on his
or her cell phone. As 911 gives way to Enhanced 911, the
accuracy of the caller's location improves dramatically,
from a radius of several miles to a radius of about 100
meters. Nevertheless, the basic call processing and
response remain unchanged.
While emergency call processing requires that the MPC
must do a basic job over and over again without
variation, like the sorcerer's apprentice, commercial
location services place quite different demands on a MPC.
Notably, the MPC must provide an interface to the
Internet and dozens (or hundreds) of software
applications, which make use of location information.
The MPC must geocode, or translate, geographic
information into street addresses, postal codes, and
neighborhood descriptors, and the MPC must respond to
inquiries outside the wireless network rather than
merely reacting to handset-initiated inquiries. The
unique demands of commercial location services will only
grow, soon adding privacy controls of personal location
data, rich billing system interfaces, and much more.
Left unchecked, the MPC of the near future will
become a "Bride-of-Frankenstein," cobbling together the
essential functions of emergency call processing with
the complex and ever-changing needs of a commercial
location server. The solution is to decouple emergency
call processing and location services processing. Let
the label "MPC" continue to define the emergency call
processing system and assign the new label of "Location
Server" to the commercial location services system. This
simple act of separation removes frighteningly high
processing loads from the emergency call processing
system, while at the same time giving commercial
location services leg room to grow as the industry
evolves. More pragmatically, the dependence of mobile
commerce on E911 compliance is broken -- the two can
proceed with a high degree of independence according to
separate regulatory and market demands.
With the Location Server liberated from the MPC, we
can now address the issue of location accuracy
requirements. Do commercial location services require
100-meter accuracy? In the vast majority of cases, no.
The earliest concoctions of mobile commerce showcased
parlor tricks in which Starbucks sent a "$1 Off" coupon
to the unsuspecting wireless subscriber just as she
rounded the corner near the store. Why was this level of
accuracy written into the script? Because it was
possible with an MPC. But such accuracy may not be
necessary at all. Simply being in the same ZIP code as a
Starbucks is probably enough to merit sending an ad. For
that matter, Starbucks is everywhere -- why does it
matter where the subscriber is? Just send a coupon and
let the consumer go to her favorite Starbucks.
The question of location accuracy is not purely
academic. There are enormous capital consequences for
wireless carriers. Today's digital wireless networks
(2G) already know the identity of the base station and
the orientation of the antenna that is handling a call,
information that can be readily translated into a ZIP
code. Going from ZIP code-level accuracy to city block
level accuracy entails a massive expenditure of funds,
either on network-based location technology or on
GPS-enabled handsets.
A modest proposal: Carriers should completely
decouple E911 compliance from commercial location
services. Location Servers, independent from MPCs,
should provide ZIP code-level location data to retailers
and other commercial software applications. This can be
done today with minimal capital outlay and will serve
the vast majority of mobile commerce needs, which are
impulsive purchases.
The Answer Was Under Our Noses All Along
If in this gedanken experiment* we have
broken the stranglehold of E911 over mobile commerce,
what about the equally tight grip of WAP?
One needs to look no further than the typical junior
high school for the answer. In the U.S., teenagers will
tell you that Internet instant messaging is
indispensable; in Europe and Asia, they will say the
same about SMS. If these two global, and completely
unplanned, phenomena could be merged into wireless
instant messaging, the grip of WAP would be broken. SMS
provides a convenient and scalable mechanism for
retailers to push their ads and coupons to wireless
phones. Instant messaging, through the all-important
buddy list, is the vehicle for a user to specify his or
her availability and to grant permission to specific
vendors to send messages. The buddy list becomes, in
effect, the dashboard by which consumers publish their
availability and interests.
Of course mobile commerce is not dead! Mobile
commerce has been crippled by our overzealous drive to
make it conform to the shape of E911 and WAP. We have
tried to impose particular technical solutions on top of
impulsive human behavior, simply because the technology
was present. Mobile commerce does not require the
accuracy of E911 call processing; it may not require
much location data at all! Nor does mobile commerce
require WAP, the grandly planned flop, when in fact the
brilliantly accidental IM and SMS will do quite nicely.
c
* A
quick visit to www.dictionary.com
yields the following definition:
Gedanken is a German
word for thought. A thought experiment is one you carry
out in your head. In physics, the term "gedanken
experiment" is used to refer to an experiment that is
impractical to carry out, but useful to consider because
it can be reasoned about theoretically. (A classic
gedanken experiment of relativity theory involves
thinking about a man in an elevator accelerating through
space.)
Mark McDowell is the president and COO of Invertix
Corporation, a privately held company headquartered
in Alexandria, VA, with operations in North America and
Europe. Invertix's mission is to enable mobile network
operators to create revenue and customer loyalty by
providing the world's most powerful end-to-end
multimedia messaging solution.
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