SMS Paving the Way to Mobile Multimedia

While short message service (SMS) represents mobile data in its infancy, it is an important steppingstone toward third-generation wireless data applications. But existing billing systems and data speeds will have to be greatly improved to support those third-generation products.

By 2003, more people could be accessing the Web from mobile devices than from desktop PCs, according to Nigel Deighton, research director, GartnerGroup. GartnerGroup contends there are three times as many mobile phone users as Internet users worldwide.

And according to BT CellNet research, all new mobile phones and other mobile devices will be Internet-enabled within 2 years.

With such auspicious numbers, it’s only natural there will be an explosion of wireless data applications.

The first step in that direction will come by way of short message service.

Growing Pains in United States

As with European, Asian and Scandinavian countries, the United States will have to go through standardization before SMS can really take off. Although U.S. numbers don’t yet mirror those in Europe (see sidebar), the Yankee Group estimates there are approximately 40 million mobile professionals in the United States today. Comparable growth may be possible in the United States as PCS1900 and DCS1800 GSM standards proliferate. Yankee predicts revenue for wireless data in the United States—now under $2 billion—will climb to approximately $13 billion in the next 5 years.

Billing Questions Tough to Answer With such volumes of wireless data expected, carriers will face the next question of how to evolve their billing systems. Without SMS message content standards or carrier-specific interaction, it will be difficult for solutions providers to offer any sophisticated pricing schemes, other than a flat-rate service or per-message charge.

“Billing standards for SMS message content—i.e., Carrier Interconnection Billing Exchange Record standards—do not exist and thus prevent any sophisticated pricing and billing for SMS usage,” says Tom Grant, senior product manager with Alltel Information Services telecommunications division.

SMS record information standards are weak, if not nonexistent. “If my customers are roaming and I get SMS messages from a clearinghouse, I don’t have the flexibility to do special pricing, because there aren’t fields and attributes that I can key in on and do pricing against. Rather, I would have to negotiate on a carrier-by-carrier basis for what SMS content will look like.”

Also making it difficult to gain economies of scale and realize savings with SMS is the fact that traditional cellular providers have embedded home location registers (HLRs) in carriers’ networks. The HLRs—which contain all the administrative information of each subscriber registered in the corresponding GSM network, and location of the mobile device—are becoming internetworked. These could become a good source of information for providing enhanced SMS billing capabilities.

“In a roaming situation, when the home HLR is queried, the response could carry back the home carrier-specific information required to support more sophisticated SMS pricing,” that is, carrier-specific SMS message types, says Grant.

Ultimately, cellular providers will have to make HLR data available to other carriers, as users demand roaming capabilities from one country to the next, across networks. That can be accomplished using the GSM standard, when authentication and HLRs are defined and communicating with each other.

Components of Billing for SMS

As services become distance-independent, as bandwidth grows and as competition drives prices down, future billing systems will need service order management, flexibility in product definition and new settlement processes.

Because today’s billing systems bill by call duration and not in packets, bits and bytes, significant changes in networks will be necessary as data collection and data mediation become more complex. While billing system providers figure out how their systems will evolve, billers have to modify existing systems to provide some basic rating services, essentially tricking existing systems to use incumbent field definitions to process messages.

Because no one out there has a complete billing solution for SMS, billers will go with a best-of-breed approach surrounding their core competencies. Although billing companies like Kenan, CGI, Comptel and EHPT have robust collection systems, operators must stay conscious that “SMS creates a dimensioning issue rather than volume issue, and that is something many billers fail to realize in preparing for SMS,” says Cato Rasmussen, director with Logan-Orviss. The French consultancy reviews payment, collection and account settlements systems for companies like Telenor, DigiPhone and Mercury.

He believes that with traditional IP, billers don’t have a way of collecting packets moving to and from subscribers. “CDRs will have to show how much data passed over the SMS network,” says Kenan’s wireless industry architect, Greg Opie. With the advent of GPRS, he says, “instead of getting one CDR that says there was a 4-minute call, it will say 100 packets were transmitted from this location at this tariff rate, and 30 more packets were sent from location B at an off-peak time at this quality of service, and so on.”

The consensus seems to be that successful billing for wireless data will comprise service order management, robust product definition, customer hierarchies, provisioning and settlement elements.

“The No. 1 shortcoming in billing systems today is the lack of service order management, particularly since SMS requires physical components to function,” Rasmussen says. Service orders will be necessary to keep track of base stations and other equipment necessary for SMS, especially as equipment is moved or modified.

Product Catalogs Are Key Component

The other key component that current systems lack is product catalogs for defining wireless data services and products. Traditional billing systems cannot bill by service component, so if a customer is just using SMS and no voice, it’s difficult to bill accordingly. Billers want reports based on services rather than by customers.

Because billing systems have limited product definition, billers are forced to apply discounts to standard services. But billers should define any service associated with a customer and price it accordingly. Discounts become volume-related rather than a service issue.

“Whenever I create a product, there are certain characteristics like recurring charges or provisioning and equipment characteristics to consider,” says Alltel’s Grant. “Where it used to be a fixed-attribute situation, it is now a one-to-many situation,” he says. “Requirements might dictate that I need to bundle 10 characteristics, like a pricing scheme or message processing scheme, with a new product. You have to be able to take messages in multiple formats and process each of those formats with various units of measure.”

For example, assume that the SMS message content does resembles CIBER or that the HLR internetworking does provide carrier-specific information on the SMS recorded message. With flexible product definition, carriers could create pricing plans that can key off SMS message types to price differently. Carriers could create pricing plans that would charge only $.01 per stock quote message, $.02 per e-mail retrieval, or $.05 per minute for Internet access. In this example, the unique characteristic that is treated differently for each of the price plans mentioned above is the SMS message type.

However, Grant warns that “the more sophisticated you make it, the more confusing it is to the consumer. Let’s move to simpler rating and billing.”

Advanced Provisioning Must Be Considered

Other than learning how to bill for SMS, carriers need to consider more advanced provisioning for subsidized transactions, which will be shared among banks and individuals.

“The first model will be relationships between ATM-type networks where checking and savings accounts are accessed. Then they will move to the Visa and MC space, where retailers will be billed as well,” says Patrick Kane, vice president, Ericsson Messaging Systems.

Most billing systems today, from an engineering viewpoint, can have only one subscriber in mobile applications, so settlement also becomes a challenge with SMS. “Very few systems handle a customer with an account hierarchy” such as customer, sub-customer, a product and product components, Grant says. “From an application standpoint, as a billing provider, I’m not concerned that there will have to be extensive changes to customer care and billing systems. Rather, I need to know what information is needed to capture to provision the service. For example, are there special serial numbers involved? What types of feature sets are offered? Are there directory [phone] numbers required to route the service?” Therefore, in positioning software, billers need to look at vendors that have a flexible approach, so that it doesn’t matter if CDR formats change or provisioning requirements change—those that think with a more tools-based approach.”

“Billers need to think about the mobile customer, who, for instance, reads the New York Times headlines over the phone or buys a book from Amazon.com, or conducts individual stock trades,” Grant says. “You need a convergent bill when there is an external party involved; otherwise, how will you settle for it?”

The Need for Speed Regardless of how robust billers’ systems become, the key to SMS and other wireless data services is speed. For such applications to be possible, more bandwidth is of paramount importance. This need is creating a lot of excitement around the emerging Wireless Application Protocol and standards for general packet radio service (GPRS).

Today, GSM users can send and receive data at rates up to 9600 Kbps to users on publicly switched telephone networks, ISDN, packet-switched public data networks, and circuit-switched public data networks using a variety of access methods and protocols, such as X.25 or X.32.

Radio transmission limitations, in terms of bandwidth and cost, do not make it easy to implement the standard ISDN B-channel bit rate of 64 Kbps.

GPRS Will Bring True Internet Protocol

The implementation of GPRS will bring true Internet Protocol capability to the GSM network, according to Jan Ahrenbring, vice president of marketing and communications at Ericsson Mobile Communications AB.

Rather than sending a continuous stream of data over a permanent connection, packet switching utilizes the network only when there is data to be sent. Because it sends data in packets, users can remain connected to the Internet throughout the day, and send and receive data only when required. This eliminates the need for continuous dialing and redialing into the Internet, and because the network is used only when data is being transmitted, users are no longer paying for silence.

“GPRS supplements circuit-switched data and SMS by enabling bandwidth speeds of 64 Kbps, potentially over 10 times faster that what exists today,” Ahrenbring says.

GPRS represents the first implementation of IP-based packet switching within the digital GSM environment. “We are no longer limited,” says Kenan’s Opie. “If e-mail was feasible at 9600, imagine what is possible once speeds reach a rate of 115,000 and eventually 172,000.” Although the possibility exists, no one has yet gone live at such speeds. Opie believes most will have pilots running at 50 Kbps within the next year.

“Most early adopters of GPRS applications are expected to be business users, with mobile office systems at the forefront, meaning that people can access e-mail and company intranets just as quickly and efficiently while on the move as from their office desk,” says Mike Short, director of international affairs and strategy for BT CellNet. The company recently announced it has started full testing of GPRS applications in its £50 million commitment to be the first UK network to introduce GPRS applications.

The tests are being carried out in conjunction with Motorola and Cisco Systems. To conduct the tests, BT Cellnet took delivery in MONTH of the first GPRS-compatible handsets in the United Kingdom. The Motorola handsets are the first to handle GPRS packet-switched protocols as well as conventional GSM circuit-switched protocols.

BT Cellnet expects to launch the first GPRS applications in the first half of 2000, 2 to 3 years before the first UMTS-based applications are expected to be available.

WAP a Driver for 3G Products

Wireless Application Protocol will be another driver toward third-generation (3G) products, particularly as it becomes more oriented toward XML. WAP is important in that it is an open standard for wireless protocols, independent of vendor and airlinks. It can serve as a standard for mobile phones to communicate with servers installed in mobile phone networks.

WAP is expected to enable wireless data to travel at ISDN speeds up to 2 Mbps—a big improvement over the 9.6 Kbps speeds available now. Standardized protocols like WAP and the introduction of others such as SIM Application Toolkit will encourage messaging usage by providing a standard service development and deployment environment for application developers and business partners. These protocols could make it easier for users to reply to and otherwise access messaging services through the provision of custom menus on the phone. Though the protocols are only a means to an end and not new messaging destinations or services in their own right, they are likely to lead to a 10–15 percent uplift in total SMS volumes.

Once standards are more widely accepted in the United States, there will be a range of applications that SMS can facilitate, including wireless information services, cell broadcast, mobile banking and e-commerce.

As users, operators and carriers become more comfortable with wireless data, SMS will indeed move into second- and third-generation applications. The technology concepts for 3G systems and services are currently under development industry-wide.

Talkin’ ’bout my generation

Although cellular providers don’t exactly know what types of applications will be offered, the sky will be the limit. “Right now, most companies are doing a cost versus benefit analysis before plunging into SMS; they are wary about how it will take off here in the United States,” Grant says.

For the time being, information services, Web browsing and e-mail—all the same applications people use from fixed terminals today—will be the first to break through.

But some are testing the waters as the convergence of wireless telephony and the Internet opens the door to SMS. “Now that you can send wireless data over CDPD, CDMA or TDMA, we expect an explosion of interest from mobile professionals,” says Bell Atlantic Mobile spokesman Howie Waterman. The company in November began offering QualComm PDQ 800 digital wireless phones with built-in Palm Pilots. “We see that e-mail is becoming more popular than voice mail, so if we can enable users to send and receive e-mail through handsets, you will see a boom in wireless data transfer in the United States,” Waterman says.

Wireless Internet access is becoming a pioneering application. “It won’t be unrealistic for a wireless provider to enable someone looking for a car, for instance, within a certain price range or model type, to have a service search for qualifications, and then send an SMS broadcast finding the customer to tell him or her about the car,” Grant says. “With two-way SMS, the customer can order the car via a Web-enabled application on his handset.”

Similar applications will reduce workforce requirements and improve workforce management in utilities, insurance and sales applications. “Wireless workforce management will be possible through dispatch services that download schedules or messages coming in from vending machines to suppliers and distributors,” Grant says.

Advances toward 3G

Although the applications are still on the horizon, there are some pioneers taking steps toward 3G products.

For example, Norwegian and Finnish operators NetCom GSM and Sonera have integrated SMS with the Internet to deliver GSM CompanyText service, which enables wireless use of data systems and provides application integrators with tools to implement SMS-based solutions.

Skynet 2001 is experimenting with SMS to remotely monitor devices, such as cars and vending machines, and Reuters Wireless Services has made use of SMS, via cell broadcast, to bring news to users.

In Norway, the No. 1 PTT, Telenor, offers SMS to university students in Oslo for free. Students buy handsets and Telenor subscriptions to send messages among themselves for free.

Applications for machine-to-machine communication for instant service, stock control and improved quality of service are already being piloted. “Distributors for vending machines, for example, will be notified with a short message by a machine whose supplies have dropped below a certain level,” says Rasmussen. “All that is needed is a radio transceiver and SIM card.”

Things Will Get Personal

Personalization will be the next step. The technology now exists through enabling microbase stations, where microcells can be distributed throughout shopping malls and parking lots. “When a consumer walks into a mall with his or her cell phone, and after reviewing a profile of your shopping habits and demographics, advertising messages will be proactively forwarded to your mobile,” Rasmussen says. He believes the mobile phone will essentially become an electronic purse of the future, enabling mobile users to pay for services directly through POS terminals.

Another phenomenon is the use of ICQ-style instant messaging on PC-based instruments, as Internet Protocol Version 6 becomes more standard and IP addresses are assigned to handsets. The ETSI and the IPv6 Forum, the world-wide consortium of Internet industry players founded to promote the standard, signed an agreement to work together to promote 3G Internet protocols. ETSI and the IPv6 Forum want to develop respective market representation within each other’s organizations, identify and build new markets for non-voice services and promotion of IPv6, and prepare for future IP-based value-added services.

Hack-proof channels?

“This makes for a hack-proof channel, where more high-level financial, banking type data will be sent through SMSC, which is more secured and hack-proof,” says Kane at Ericsson. “Mobile devices will then become like ATM machines for communicating more specialized financial data, like standard transmittals of credit cards.”

The exchange of bank balance information on prepaid accounts gives customers an advantage. “People who historically had problems with credit for age reasons are getting accounts through dial-in IVR over their mobile phones,” Kane says.

The global 3G Partnership Project (3GPP)—a collaboration of organizations committed to bringing third-generation mobile systems—is working hard, too. “3G is a great leveler and will solve problems that are hindering the North American market, such as roaming difficulties and multiple devices,” Kane says. He believes SMS has evolved in GSM through over-the-air teleservices that leverage unique applications by short messaging transport pipes.

As these developments open the door to 3G applications, billers face the most daunting of tasks in moving to wireless data applications: How do you bill for them?

Sidebar

SMS Defined

Short message service is a bidirectional mobile phone service for short alphanumeric messages (up to 160 bytes). These messages are transported in a store-and-forward fashion, turning mobile handsets into multifunctional devices that provide a variety of electronic messaging capabilities—the most compelling of which is Internet access.

SMS integrates valuable features such as electronic messaging, digital paging and voice mail notification with telephony services, and opens the door to subscription information delivery services such as broadcast stock quotes, sports scores or weather updates. It usually operates with GSM, TDMA and CDMA cellular standards.

For the time being, SMS continues to be much more prolific in the Scandinavian countries, the United Kingdom, France and Germany, as it is embedded in the GSM standard that is widely accepted in those countries, with more than 200 GSM networks operational in 110 countries around the world. GSM has since been transferred to the European Telecommunication Standards Institute (ETSI), a nonprofit organization comprising 696 members from 50 countries, representing administrations, network operators, manufacturers, service providers and users.

Finland now leads the SMS explosion with its mobile penetration—the number of mobile subscriptions in proportion to the population—of approximately 69 percent.

An estimated 500 million customers were using SMS as of Nov. 1, with 1 billion messages sent via email. And in the United Kingdom, the SMS user base increased from 6 million in June 1998 to 60 million in June 1999. From June to September 1999 alone, SMS usage increased to 105 million. That figure was expected to reach 120 million by November.

Now that SMS is pervasive throughout Europe, GSM has been developing a pan-European public land mobile system to support international roaming, low terminal and service costs, ISDN compatibility and handheld terminals.