EU comes up with freeG
By Steve Wallage, Thu Feb 27 14:00:00 GMT 2003
The EU is funding work to offer subsidized airtime on GPRS and 3G networks.
The EU has been scratching its collective heads on what could possibly hold up the success of m-commerce, and GPRS and 3G? Having presumably discounted the idea of asking member states (particularly the UK and Germany) to return license fees, it went to a tender process on ideas that would 'stimulate investment and market development in mobility and mobile applications'. The winning proposal (of 70 submitted) was from SchlumbergerSema and MobileEconomy.
The idea is called 'freeG' - and is a very interesting one. The premise is that, of the many possible obstacles to m-commerce, cost to the consumer tends to be ignored. This is partly because it is such a sensitive area and is so closely linked to commercial interest.
However, there is no doubt it is a key barrier. The Electronic Competence Center in Austria (EC3) conducted a small survey (27 participants) of m-commerce specialists in Austria in November. One question was what are the main barriers to the rapid take-up of m-commerce. The key barrier was considered to be 'no real value in application'. But the second and third most popular responses were 'high operating costs' and 'high initial costs' for consumers and corporates.
FreeG, which is not being provided for GSM, works by using a billing solution called mi800. This has been developed by Israeli company, MobileEconomy. This sits on top of existing billing systems, with the systems integration skills provided by SchlumbergerSema. As with freephone numbering, the mi800 software allows free air access for consumers. Consumers will see a 'FreeG icon' to show they are receiving free access. On their monthly bill, a line will show the amount of free access and the sponsoring company.
The aim of the project is to show how such a service will work in practice, both in terms of demand, and in areas such as reliability and functionality including such problem issues as interoperability and roaming. Trialling companies include: Stocknet (stock trading) and FilmWeb (cinema ticketing) in Norway; Greek operator Telestet with AEDA (Athens council) and the National Bank of Greece; Israeli operator Cellcom with El Al, and UK operator O2 with British Airways. FreeG programme manager, Charles Pangrazi, hopes that there will be at least two other triallists by the end of the year.
The timeline is that internal trials will start around now, with commercial deployment from July 1. As ever with the EU, things then seem to drag on, with the full assessment of the trials not expected to finish until March 2004.
The Commercial Aims
The strategies of the commercial partners paint a positive picture for m-commerce. They show how non-mobile companies can see the advantages of mobile applications, and can create innovative services.
The AEDA application is primarily for the 2004 Olympic Games. They believe that they can find a commercial sponsor (probably an Olympic sponsor) who would want to fund a mi800 service to provide directions and information for the event.
The BA involvement is part of a longer term aim to encourage mobile airport check-in, with all the associated cost savings for the airline. In the short term, they see the mi800 service as a way of promoting loyalty among their Gold Card holders.
For the National Bank of Greece, they see mobile applications as a great way to attract the elusive youth audience, who (like their parents) continue to show tremendous resistance to change banks.
The mi800 software can allow consumers to trial GPRS surfing 'for free', and provide tracking information for all the sponsors. Another application which Pangrazi sees as important is free Intranet access for mobile employees and partners.
The Fixed Example
In the mid-1990s, a number of European fixed telecom providers started offering 'free' telephone calls subsidized by advertisements.
A pioneer in the space was Swedish firm, Gratistelefon. Callers in Sweden would hear a ten second commercial after the first minute and a different one every three minutes until the end of the call. The company was able to attract more than 100,000 customers in Sweden, and expand into more than 20 countries. The model was rather overtaken by the intense competition in fixed telecoms and the competition from Internet telephony.
However, two interesting points emerge from the Gratistelefon example. First, the demand from users. To the surprise of Gratistelefon, many of its customers were relative wealthy and had an average age of nearer 30 than 20. Second, the interest from advertisers. A lot of major brand names are looking at the mobile space, and a subsidized service could be an attractive proposition.
The Next Steps
The FreeG project will throw up some interesting applications. There is no doubt that cost will be a key barrier for many potential m-commerce users. The mi800 software allows users to trial services, and encourage enterprises to develop innovative services both internally and externally.
The FreeG project itself will have its own challenges. It is a shame that GSM is excluded, particularly as research shows that this would encourage users to migrate to m-commerce on a 3G network. Pangrazi claims that, "operators are interested in the service", and, "they are not competing with billing system vendors" with their only 'competition' coming from a DIY operator approach. However, commercial realities will ensure vendor and operator suspicion. It is also a pity that the project will not be reporting results until 2004.
Nevertheless, it would be great for the development of 3G if the freeG icon could become recognized throughout Europe as a symbol of subsidized airtime. There is already 90%+ recognition of fixed 0800. It won't be called FreeG but mobile 0800 has real appeal.
Steve Wallage works and writes for the451. Steve has more than 13 years of experience as a technology analyst specializing in telecommunications.