MODEL FOR MOBILE BROADCAST BUSINESS SYSTEM

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1 MODEL FOR MOBILE BROADCAST BUSINESS SYSTEM Toni Paila Helsinki University of Technology Abstract The recent technical advances have enabled the reception of digital broadcast with handheld terminals, such as mobile phones. The DVB-H standard makes it possible to have high bit rate reception with low power consumption. This together with current trends of increasing memory capacity and advanced displays in mobile terminals make mobile broadcast services a new and interesting content and service delivery channel of a wide array of digital content to mobile terminals. An example of such service is digital TV in the mobile phone. In this paper we study the business models that may emerge to provide mobile broadcast services. We assume that the terminal becomes the point of convergence, combining both mobile cellular communications and broadcast receiver. We also assume that there will be an evolution among the existing players in traditional broadcast and mobile cellular business to provide the mobile broadcast services. Based on the exiting value chains in these industries, we define a generic model for mobile broadcast business system. Using two envisioned cases, we demonstrate the applicability of the defined model. Key Words mobile, data, broadcast, business, system, model 1. Introduction Analog terrestrial television transmission is currently in progress of giving way for digital technologies. The transition phase that started in the late 90 s will eventually free up considerable amounts of radio spectrum. Not only are these bands of spectrum optimal considering mobile reception characteristics, but also they are allocated from spectrum administration perspective exclusively for broadcast services. Recent developments in the area of digital broadcasting and audio-visual source coding will enable the reception of broadcast data services by small handheld, mobile devices, such as mobile phones or personal digital assistants. A fundamental new enabling technology in this area is Digital Video Broadcasting Handheld (DVB-H), which has recently been standardized. To set the ground for the rest of the paper, we will start this report by briefly introducing DVB-H. A mobile terminal that can be used to access broadcast services in addition to traditional cellular services naturally becomes a focal point of convergence. Technical and business legacy from the worlds of telecommunications and broadcast will have a great impact on the outcome of this convergence. To understand better the business system of mobile broadcast, we briefly review the existing value chains for mobile cellular services and traditional broadcast services. As the main contribution of the report we will introduce a generic business system model that can be used to describe a wide array of mobile data broadcast business scenarios. The model is based on independent functional business roles, each of which can be allocated to one or several firms in an actual business configuration. We will also demonstrate the general model by applying it on two envisioned, quite different, business scenarios of mobile broadcast. In this paper we will assume that suitable regulation and frequencies for mobile data broadcast are available. Also, we will assume that the licensing models are in place and supportive of flexible business configurations for providing broadcast services. 2. Mobile Broadcast Services and DVB-H The concept of mobility has a different meaning in telecommunications world compared to the one in broadcast world. In the former, the term mobile covers cases where the end user accesses the communications services with a small, resource-limited handheld device, connected to one or more cells at a time. The location of the user changes as a function of time. Reception conditions cover both pedestrian and vehicular speeds as well as both indoor and outdoor radio conditions. Since the cell size is moderate, the mobility of user possibly causes the terminal to traverse the coverage area of a set of cells and perform hand-offs between those (Nokia 2004a). In the area of broadcasting, mobility has historically had a different meaning. Mobile reception has been synonymous to vehicular reception. Typical example is a receiver mounted in a car, with two antennas for efficient diversity reception even at high speeds, and, a continuous power supply provided by the car. Thus, there has been no need to pay special attention to concerns on terminal antenna size, indoor reception capabilities and power consumption. However, when the broadcast community started to address the reception cases and the concept of mobility as perceived in the telecommunications domain, exactly these concerns became critical (Henriksson 2004). The standardization work of DVB Handheld was started in DVB to address these concerns in 2002.

2 Power consumption should be minimized while the data rate for the link should still be at least 11Mbps, and, the reception capabilities with a small single inbuilt antenna should match to those of cellular system (signal quality, interference, indoor/outdoor environment). By the early 2004 the standardization work was finished. The solution, new DVB-H standard, not only fulfilled the above requirements but also was fully compliant with DVB-T on radio and link layers, a feature that enables incremental roll-out of DVB-H by allowing transmissions of type DVB-T and DVB-H to share a single multiplex (frequency band used by a transmitter). Two major types of services are envisioned for mobile broadcast (Henriksson 2004, Paila 2003, Sonera Medialab 2003, Cosmas 2002): purely unidirectional services and services that utilize the end user interaction via the cellular return channel. An example of the first type is traditional free-to-air TV broadcast service, which is only reformatted for better suitability for use with mobile terminal having a small screen and low resolution. Further, the service could be repurposed (condensed or shortened) for the mobile user watching the broadcast while on the move in a sporadic and irregular manner. Another example is a broadcast service that either consists solely of data content (web pages, music files, images, software, etc.), or enhances the audio-visual programming with the data content. Unidirectional does not necessarily imply that the service needs to be free-to-air. For example, the purely unidirectional service could be encrypted so that only a user with pre-purchased decryption token would be allowed to receive the service. Mobile broadcast services that make use of available interaction channel vary in terms of how tightly interaction is coupled with the service. In the minimum case the interaction channel is used only for purchasing rights to receive and consume the protected broadcast services and content. In this case, the purchasable item can be a broadcast programme, a data item (a file) related to the broadcast, or a mixed bundle of programmes and content items that together make up the mobile broadcast service. In the other end of the spectrum we have cases where the interaction channel is highly bundled to the mobile broadcast service. Examples of those are fully interactive broadcast quiz shows, broadcast group games, voting within the broadcast, etc. From the perspective of applicable business scenarios these two types of mobile broadcast services differ significantly. In this paper we focus on services that assume the availability of cellular return channel. 3. Existing Value Chains Mobile broadcast services involve two different worlds of business with their established value chains: mobile cellular business and traditional broadcast business. Therefore, in the following, we will provide an overview of existing value chains to identify their main functional and business roles. For the sake of clarity, both cases are deliberately simplified to reveal the commonalities. In both cases we will identify elements on similar level: providing content, providing core service, providing bearer, and, the end user terminal Mobile Cellular Services Figure 1 below depicts the value chain of mobile cellular services: voice, mobile data, SMS-based content services, portals, etc. The illustration consists of three rows of elements: the top row depicts the value chain main functions; the row in the middle describes the elements in more detail; the bottom row gives examples of current firms operating the role. Info.services, Ticketing, Ringing tones, Portals, e.g. Iltalehti, HKL Core service Voice calls, Packet data, Subscriber management, Charging, Bearer Cellular network coverage (GSM, GPRS) Figure 1: Mobile Cellular Services End user terminal Leftmost in the Figure 1 we have the provisioning of content. Examples are selling ringing tones and maintaining mobile portals. In some cases this function can actually be considered as a complete service by itself. Examples of that are content services, such as afternoon magazine Iltalehti and ticketing services (e.g. metro ticket purchase by SMS in Helsinki via HKL). In some cases this role can be missing altogether, for example, when speaking of voice calls. The next element to the right is provisioning of core service mobile cellular service in this case. Typically these are voice communication and packet data. It should be noted that this role includes also subscriber management and charging. A cellular service provider usually captures this role. The services described above are carried over cellular network (e.g. GSM, GPRS). This is the function of the next element to the right, typically provided by the cellular network operator. Finally, rightmost we have the end-user accessing and consuming the mobile cellular services with a mobile phone Traditional Broadcast Services Mobile phone e.g. Saunalahti e.g. Radiolinja e.g. Siemens In the Figure 2 below we depict the value chain of traditional broadcast services (Hoikkanen 2001) in a same way we did for mobile cellular services in the previous section. These services include TV broadcast

3 and radio. More comprehensive set can be found in (Reimers 2001). Again, leftmost in the Figure 2 we have the provisioning of content. Examples are providing TV / radio programmes, music, movies and other types of mass-targeted media. In the broadcast environment, the content plays a significantly more important role than in the cellular business today. Large media companies normally take this role. provisioning aggregation Provisioning of mobile broadcast service Interaction, purchase, billing Provisioning of e-commerce service and charging Core service Bearer End user terminal Operation of broadcast network Operation of cellular network TV / Radio programmes, Music, Movies, TV channel, Radio channel, Broadcast network coverage (DVB-T) Television, Set-top-box e.g. Fremantle e.g. MTV3 e.g. Digita e.g. Philips Figure 2: Traditional Broadcast Services The next element to the right is the provisioning of the broadcast service. In practice this role is about selecting, bundling and scheduling the content to get the maximum exposure for the content among potential viewers. Broadcast companies operate this role. The broadcast service is delivered over a distribution network, possibly spanning a nation, and finally transmitted over the broadcast signal (e.g. DVB-T). Operating such network means maintaining the distribution system and selling the capacity to broadcast service providers (i.e. broadcast companies). Broadcast network operators normally take this role, which is quite similar to cellular network operation. Finally the end-user receives and consumes the broadcast signal with terminal, which in the case of traditional broadcast services is either a fixed or automotive receiver: digital TV or a Set-top-Box. 4. Model for Mobile Broadcast Services A commonly shared view is that the business system and value chain for mobile broadcast services evolves from existing businesses in the area of mobile cellular services and traditional broadcast services (Berg 2003, Owens and Dosch 2004, Pauchon and Nieminen 2004, Sattler 2004). Therefore, we consequently assume that the systems already in place for cellular and broadcast will be used to provide mobile broadcast services. In this chapter we capture this thinking into a generic model. User with convergence terminal Figure 3: Generic Model We propose a generic model of provisioning the mobile broadcast services as depicted in Figure 3 above. In the model, each box presents a functional role rather than a separate business. In an actual realization of the model a firm can occupy several functional roles. In the illustration, the thick hollow arrows illustrate the flow of content while the narrow arrows indicate service interaction, service/content purchase and billing-related transfers. The functional roles of existing broadcast channel are used for content delivery and the ones in the cellular network for service interaction, connectivity and charging. Thus, the generic model of Figure 3 illustrates how the functional roles from both the cellular and broadcast business come together. In the model, the mobile terminal becomes the focal point of convergence, integrating both the cellular access and broadcast receiver (Aaltonen 2003, Nokia 2004b). In the following, we provide the definition of each of the role depicted in Figure 3. We also indicate possible new opportunities. provisioning. The role for content provisioning in this new business system remains much like the current role in traditional broadcasting. However, since the receiving end device is a mobile terminal instead of fixed TV set, the use scenarios will be somewhat different. Mobile broadcast presents a number of new business opportunities for the companies in the content provisioning role. The mobile broadcast offers a new distribution channel for existing or re-purposed content and provides access to new, mobile audiences. Mobile broadcast also reaches current customers in new ways. Consider the case of TV services when the end users are not at home in front of traditional TV, they will still have access to broadcast content. This may result in a new, additional prime time or in new types of TV shows, tailored for mobile users.

4 aggregation. The function of content aggregation is similar to existing role that TV broadcasters occupy in traditional broadcast model purchasing content from content providers, packaging it and distributing to mass audiences. Businesses in content aggregation sell content through various channels, based on the distribution rights. Eventually, the content is delivered to consumers based on their subscriptions. Provisioning of mobile broadcast service. The mobile broadcast service provision function controls the broadcast distribution capacity available on digital broadcast networks. It can sell this capacity directly to content aggregators. The arrangements between the company operating mobile broadcast service and content aggregators may vary from selling an amount of raw capacity to customized delivery of a particular content at agreed times with the necessary content protection, e-commerce, billing and refunding services. The second crucial function of this role is to provide the Electronic Service Guide of the mobile broadcasts on air or scheduled later. The guide is broadcast alongside the content and contains information on the available services and content and at what time they are offered. For the consumer, this guide is the key to accessing the mobile broadcast services. Last, this central role includes the function of protecting the broadcast content, the transmission of services, or both. Thus, a mobile broadcast service provider shall take care of ensuring the protection of the broadcasted content against illegal or unauthorized viewing. Operation of broadcast network. This role includes the owning and operating the digital broadcast infrastructure such as, transmitters, mast sites and the necessary connections to the site. The holder of this role may also be the frequency license holder. Consequently, a broadcast network operator sells broadcast capacity and coverage to those companies operating mobile broadcast services. The system is cost efficient as several mobile broadcast service operators can buy capacity from the same broadcast network operator. Companies currently operating terrestrial broadcast networks for digital TV operation can use their existing infrastructure and competencies to implement broadcast networks for mobile broadcast services. Provisioning of e-commerce services and charging. This role includes operating an electronic shop that the mobile user can access and from which he can buy subscriptions for mobile broadcast services and/or DRM-protected content delivered within the services. The subscriptions may be for a longer period of time, e.g. one month, or of a pay-per-view nature. Consumer purchases are recorded in a customer database and fed into a billing system for collecting the content-related revenues. The provider of e-commerce services reimburses content aggregators their share of the revenue and provides data on content usage. Operation of cellular network. The cellular network service offers a two-way access necessary for content purchase and the use of other interactive services related to the mobile broadcast service. Beyond connections, an operator of a cellular service can offer much more in the form of consumer authentication, advanced and costefficient billing services, and customer relationship management and support. User with convergence terminal. Digital convergence is already underway in handsets, as evidenced by the number of non-voice features available today on mobile devices: radio, digital cameras, multimedia messaging and Internet connectivity. But facilities to receive and process broadcast content (for example TV) are still missing. General industry developments are driving up the memory and processor capacity of mobile phones, and at the same time receiver technology is advancing, making broadcast reception with handheld terminals possible. 5. Applying the Generic Model To demonstrate the use of the generic model of mobile broadcast service provisioning, we apply it on two envisioned business scenarios. In both cases we allocate the roles of the generic model to established firms in a different way. Then, in the context of new definition and roles of the firms, we then analyze the benefits and opportunities as well as potential problems resulting from the scenarios Mobile Operator Driven Scenario In the first scenario we have a cellular service provider (a mobile operator) that already operates its own cellular network and provides traditional mobile cellular services. However, in this case we assume that the mobile operator additionally captures also the roles of mobile broadcast service provisioning and content aggregation. There are some benefits to the mobile operator extending in this manner. First, mobile broadcast services for example TV programming to mobile phones will present mobile cellular service provider with the possibility of offering new services to their customers and thus differentiating from other mobile cellular operators. It has been reported that some of the service differentiation strategies fail because of high investments and consequently high end user prices involved (Kiiski 2004). However, in the case of mobile broadcast, a single transmission covers a fixed geographical area. That means the new differentiating service can be provided at a constant fixed costs, virtually independent of possible end users. Second, it has been envisioned that future (mobile) broadcast services contain an increasing deal of interactivity. Examples of today are text message based chat shows as well as quiz shows and other games in TV. All forms of interactivity with broadcast services

5 can easily be implemented with the mobile terminal as the return channel is in the same device. Depending on the adaptation of interactive services, this may drive up additional mobile traffic and therefore also revenues resulting from users interacting with services. Additionally, this scenario creates an opportunity for a mobile cellular service provider to leverage the use of the existing subscriber base and the existing customer management interface. This is something that traditional broadcasters usually do not have at least in the same scale. The same applies for the charging and billing system in use. Besides the benefits listed above, there is at least one big potential challenge for mobile cellular service provider in this scenario. A traditional operator may find content business challenging, compared to broadcasters who have a long history in the area. The broadcasters have an extensive set of content distribution agreements in place. We assume that negotiating new rules for existing agreements will be easier than starting new agreements from scratch, which is likely the case for many cellular service providers. Let us assume that besides the mobile operator there will be a traditional broadcaster providing mobile broadcast service. In this case the content provider of this scenario will be the winner. First, there are alternative ways to distribute the content to maximize the reach. Second, since usually content distribution agreements are exclusive, there will be competition between mobile broadcast providers for attractive content this will show as higher bids towards the content provider. Terminal vendors will benefit from this situation as well. In many countries around the world operators subsidize the terminals to lower the price experienced by end users and therefore to enable a more rapid adoption of new services. For terminal vendors this means bigger sales. Since the broadcast functionality would be perceived as a higher-end feature, the terminal vendors would be able to maintain reasonable margins on their products Broadcaster Driven Scenario In the second scenario, we present a more balanced case than the first one. In this scenario all the functional roles are occupied by the same existing businesses they have used to be. There are two exceptions: 1) In addition to operating the broadcast network, the existing broadcast network operator captures the role of mobile broadcast services provider; 2) The broadcaster runs its own e- commerce and billing services in addition to handling the existing content aggregation business. In this scenario there are several benefits to broadcaster. The existing content aggregation role means that the broadcaster has the contacts and agreements in place with content providers regarding content distribution rights. Mobile broadcast offers an additional delivery channel that can capture new audiences or new prime time as described above. Although some agreements may need to be renegotiated, many broadcasters have in-house content production where they own the rights to the content. These pieces of content are available for mobile broadcast immediately; only trans-coding to smaller screen size is required. From the viewpoint of broadcaster, another benefit of this scenario is independency from mobile operator billing and e-commerce solutions. Since there would not be mobile operator taking its share of purchases, the price for end user may go down while maintaining the revenues of the broadcaster. There are two ways to achieve this kind of independency. Firstly, the broadcaster may decide to set up its own mobile service by becoming a mobile virtual network operator. This means that the broadcaster would either need to set up its own cellular home registry and charging system or buy that service from outside. In both cases a moderate investment is required. Secondly, the broadcaster may decide to set up a web-based shop that can be accessed with any packet data bearer, for example GPRS. The above benefit has a downside, as well. Providing subscription-based mobile broadcast services requires a crucial function of customer interface (help-desk). When the broadcaster becomes independent from mobile operator charging system it also becomes separated from the help-desk functionality associated with it. Therefore the broadcaster must either provide the customer interface function by itself or outsource it. Another problem is that many broadcasters not necessarily have a similar customer base than mobile operators. Exceptions are pay-tv broadcasters. The broadcast driven scenario brings benefits to the mobile operator, also. Related to many mobile broadcast services there will be user interaction of some kind. Examples of interaction are: Service/content subscriptions or purchases; Interaction with the actual service by sending data, for example in broadcast quiz shows; and; Fetching additional information from Internet as referenced in the broadcast content itself, like a link in a web page that was broadcasted. Such interactions result in data transfer through the interaction channel, which in turn drive up the traffic and revenues of mobile operator. For terminal vendors the same benefits that were mentioned in the mobile operator driven scenario apply also in the broadcaster driven scenario. An additional benefit is increased bargaining power. Notably, in the broadcast driven scenario the terminal still has the mobile cellular communications part. Therefore two separate business systems (broadcast and mobile cellular) become dependent of the terminal. 6. Conclusion Mobile broadcast services bring together two worlds communications technology: mobile cellular systems and digital broadcast. In this paper we briefly introduced DVB-H, a transmission standard designed

6 for mobile broadcast. We also presented envisioned services for a converged cellular and broadcast terminal. Following our assumption that mobile broadcast convergence is about evolution of existing business roles rather than revolution, we reviewed the existing value chains in mobile cellular and traditional broadcasting. Consequently, we defined a generic business model that can be applied to a number of actual instantiations of business case. We then studied two cases in the context of the generic model: mobile operator driven and broadcaster driven. The advantage of the generic model is that it is flexible and takes the existing businesses as the starting point. However, we did not study or validate the model with the scenario where mobile operator and broadcaster are co-operating for a mutual benefit. Related to that there is the question of overlapping infrastructure and how to optimise the system for cost-efficiency. These we propose as items for further studies within the generic model. Another interesting topic along a different track is to study the how the broadcast distribution affects the physical distribution of, for example, music. Lastly, a shortcoming of our study is the lack of empirical material. Since the mobile broadcast services are still in initial trial/pilot stage, no real commercial mobile broadcast business systems exist yet. Nokia Corporation (b). IP Datacasting Bringing TV to the Mobile Phone. White Paper. (referenced: March 18, 2004) Owens, T., Dosch, C IP-Based Networks, Services and Terminals for Converging Systems (INSTINCT), Presentation in DVB World 2004, Dublin, March 3-5, 2004 Paila, T Mobile Internet over IP Data Broadcast. Proceedings of International Conference on Telecommunications 2003, Papeete, French Polynesia Pauchon, B., Nieminen, S. 2004, TDF Group Activities in the area of Collaboration between Broadcast and Mobile Networks. Presentation in DVB World 2004, Dublin, March 3-5, 2004 Reimers, U Digital Video Broadcasting: The International Standard for Digital Television. Springer- Verlag. Sattler, C Broadcast Mobile Convergence: The BMCO Project in Berlin. Presentation in DVB World 2004, Dublin, March 3-5, 2004 Sonera Medialab IP Datacasting Services. White Paper. References Aaltonen, J Distribution Using Wireless Broadcast and Multicast Communication Networks. Doctoral dissertation, Tampere University of Technology, pp , 139 Berg, M. et al CISMUNDUS: Convergence of Digital Broadcast and Mobile Telecommunications. Proceedings of IBC 2003, September 2003, Amsterdam. Cosmas, J. et al. 2002, System Concept of a Novel Converging DVB-T and UMTS Mobile System. London Communications Symposium 2002 Henriksson, J DVB-H TV on the move? Presentation in DVB World 2004, Dublin, March 3-5, 2004 Hoikkanen, A Economic feasibility of DVB-T for interactive data access. Master s Thesis, Helsinki University of Technology, pp Kiiski, A Mobile Virtual Network Operators, Research Report, Research Seminar on Telecommunications Business II, Spring 2004, Helsinki University of Technology Nokia Corporation (a). IP Datacast Terminals Description of Implementation Principles. White Paper. (referenced: March 18, 2004)

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