session 8a, 11 june 2008 ict-mobilesummit 2008 copyright 2008 e3 revenue sharing models for dynamic...

Session 8a, 11 June 2008 ICT-MobileSummit 2008 Copyright 2008 E3

Revenue sharing models for dynamic telecommunications services using a Cognitive Pilot Channel

Simon Delaere & Pieter Ballon

IBBT-SMIT, Vrije Universiteit Brussel

Belgium


Motivation, problem area

• Cognitive Pilot Channel: promising concept to enable DSA, increase spectrum flexibility and efficiency

• Business perspective: different ways to set up CPC different business models with different revenue sharing agreements

• This paper: conceptual, exploratory analysis of CPC revenue sharing models– Four possible ways of deployment– Nine possible revenue sharing agreements– Exploratory scoring on four crucial variables– Four revenue sharing options retained


Cognitive Pilot Channel concept

Operator 1UMTS

?

2 Ghz

Operator 2WiFi2.5 Ghz

CPC

Operator 1WiMAX2 Ghz

Operator 3WiFi2.5 Ghz

O1-GSM-1500O2-WiMAX-2000O3-WiFi-2500

Connect CPC 450 Mhz

O1-GSM-1500

O2-WiMAX-2000

O3-WiFi-2500

Connect O3 WiFi 2.5 Ghz

Operator 1GSM1800 Mhz




1

2

3

4

FSM may invoke a particular information deficit E2RII/E3 proposes Cognitive Pilot Channel as a solution


Research approach, Methodology

Business Model MatrixCrucial elements of any business modelControl and Value parametersViable business models present a strategic fit between control and value

parametersAllows for simulation & business analysis of different deployment scenarios

Ballon, P. (2007). Business Modeling: the reconfiguration of control and value, Info, vol. 9, n° 5, pp. 59-67


Results of initial analysis

User 1 Device

Operator 1 CPC Operator 2 CPC

User 2 Device

RAT 1 RAT 2 RAT 3 RAT 4

I. Operator-based system


II. Intermediary-based system

User 1 Device

Reg./Interm. CPC

User 2 Device

III. Hierarchical system

Operator 1 CPC Operator 2 CPC


Intermediary 2 CPC

User 1 Device

Reg./Interm. CPC

User 2 Device

Intermediary 2 CPC

Table 1: Overview of CPC domains of analysis

domain of analysis domain aspects operator intermediary hierarchical

1. control value network control high low medium

customer control high low medium

2. cost and revenue structure cost distribution centralised centralised both

revenue distribution concentrated both both

3. user value product positioning complement substitute both

intended value type intimacy mix mix

Delaere, S. & Ballon, P. (2007). The business model impact of flexible spectrum management and cognitive networks. Info, Vol. 9, N° 5, pp. 57-69


Refined typology for revenue sharing analysis


Definition of revenue sharing models


The nine models


• Balance of control versus revenue, in casu– Alignment of gateway (CPC) and core assets (RATs) ownership

• Assumption: for revenues to be fairly distributed, there should be alignment between gateway and core assets ownership

• Assumption: independent CPC operators gaining revenue not likely to be supported– Alignment of value production and core asset (RAT) ownership

• Assumption: primary contribution to value proposition should be aligned with ownership of underlying core assets

• Assumption: asset owners will not support gateways taking up customer ownership and value guarantor roles without owning the RATs

• User value proposition of Flexible Spectrum constellation, in casu– Billing complexity

• Assumption: customer will not accept double billing relationship– Supply diversity

• Assumption: customer prefers choice between multiple operators• Assumption: CPC models with a lock-in to a specific operator less likely to be

accepted

Parameters for analysis


Results


Conclusions and caveats

Revenue sharing models analysis• Pure association models feasible (I and III)

• Hierarchical and intermediary models with RAT CO feasible (VI and IX)

• CPC = thin intermediary, possibly run by consortium or regulator

• Costs borne by operators, justified by cost savings for underlying RATs and new services

• Mixed CO and CPC CO, multiple independent CPC scenarios less likely

General conclusions• Limited possibility for standalone CPC

• Primary aims: reduce harmonization and implementation complexity, gain stakeholder support

• Little opportunity for competitive, cross-operator CPC market

• More chances for association or consortium platforms

• RATs remain core asset core source of revenue

Caveats• Not all variables checked• Scored in explorative way (limited validation)• Positive scores do not guarantee viability

session 8a, 11 june 2008 ict-mobilesummit 2008 copyright 2008 e3 revenue sharing models for dynamic...

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