Research Notes

A Paradigm shift in the Service Platform Environment

will change the market for mobile services
The Service Platform Environment market will undergo radical changes the day it is no longer the mobile operators that implement and use service platform environments. Instead mobile operators will allow all service platform environments access to their mobile customers and this will mean a services market that is much more dynamic and with a much bigger competition between service platform environments – all very positive for the end-users and the operators’ turnover.

Instead mobile operators will focus on network-centric platforms where they have a competitive advantage, as services will be dependent on the operators’ systems or on the network, e.g. these services will not function without using the network or they could be services with such large data volume that the price of the data traffic will exceed the value of the services and thereby require very special business models.

The current services platform market is characterised by many mobile operators having chosen to develop or purchase and market their own service platform environments in order to be able to differentiate themselves to their competitors. The mobile operators’ choice of using different service platforms to present, distribute and sell services to their customers has an enormous influence on the mobile industry and its players, as the mobile operators become a kind of taste arbiter, by being able to choose the mobile services that can be sold via the platform.

Many mobile operators have chosen to only install one service platform environment, but over time we will see an increasing number of mobile operators allowing other players like content providers to use their own service platform environments to market, distribute and sell mobile services to end-users.

There are very few examples of mobile operators using a shared service platform environment across different mobile networks. In Korea, mobile operators have been required by the regulative authorities to use a shared service platform environment standard, to remove the barriers for end-users and content providers that occur when using different service platform environments.

For content providers, using a service platform environment across mobile operators’ networks will reduce costs, as they will only have to market an individual mobile service via one specific service platform environment and then the service can be purchased by all end-users, regardless of which mobile operator they use. Only having to market a mobile service via one service platform environment, gives content providers an incentive to contribute to marketing their mobile services, which they have not had up to now as they have had to market each individual mobile operators platform to be able to sell their services.

For the Korean mobile users, the authority’s decision of using the service platform environment WIPI, meant that users had easy and simple access to all services across all mobile operators in Korea and users could thereby freely change operator without the fear of losing access to certain services. In this way the barrier for customers to churn between operators decreased and the market became more competitive and dynamic.

For the mobile operators to not necessarily have to purchase and implement service platform environments themselves will require a change in attitude among the European mobile operators, as the mobile operators in Europe have tried to differentiate themselves by investing many millions of Euro on unique service platform environments that they either have developed themselves or purchased. The mobile operators will have to avoid their current strategy of being in the centre of the value chain for sales of mobile services by investing in unique service platform environments and differentiating themselves on mobile services. If the mobile operators give this up and instead let the different service platform environment providers offer their products to the end-users on the market, this will significantly change how business is done in the mobile services area.

There is an increasing tendency for many mobile operators to choose a more open approach to how they handle sales of mobile services. In just a few years it will not necessarily be the mobile operators that are using service platform environments and this will mean that content providers can use a single service platform environment to distribute services to end-users.

This less restrictive approach will mean that the mobile operators will no longer decide which mobile services end-users have the possibility to purchase. However mobile operators will still in the future play a central role in the services delivery process, as the services and platform providers will use the mobile operators billing systems in exchange for a share of the generated revenue.

In Strand Consults report – ”How to get succes in the 3. generation VAS market” – we have thoroughly analysed 12 of the existing service platform environments. Of the 12 environments, two have been developed by the mobile operators Vodafone and NTT DoCoMo. The analysis describes the different advantages and disadvantages of the various service platform environments and their importance to the content providers, mobile operators, handset manufacturers and end-users. 

the 3. Generation Value Added Service Market

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