yes 2 prepay

Copyright Gerald T. Christensen www.mobileprepay.com

Copyright 2000 - 2001 Gerry Christensen

Issue Date 1 August 2000, updated 1 March 2001

Published byMobile Lifestreams Limited

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ISBN Hard Copy 192910541XISBN CD-ROM 1929105428

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www.mobilelifestreams.com Copyright Gerald T. Christensen

CONTENTS“Yes 2 Prepay” is divided into the following sections:

Author 6

Publisher 6

Preface 7

Introduction 9

Part 1 – Technical Introduction 11

Background 11

Prepay Becomes a Mainstream Service 13

The Technology Behind Prepay 14

Functional Characteristics of a Mobile Prepay Application 19

Prepay Technology Solutions 20

SIM Based Solutions 21

Prepay Support and Business Processes 26

Prepay Issues 29

Prepay Product and Service Providers 31

Detailed Prepay Company Profiles 33

APPLIED GLOBAL TECHNOLOGIES (AGT) 34

BOSTON COMMUNICATIONS GROUP INC (BCGI) 35

COMVERSE 39

LOGICA 44

NATIONAL TELEMANAGEMENT CORPORATION (NTC) 50

PSINET TRANSACTION SOLUTIONS 55

QCOMM 59

SICAP 61

TELEMAC CORPORATION 63

Prepay Organization Profiles 70

International Telecard Association 70


The Global Billing Association 72

Part 2 – Advanced Concepts and Applications 74

Roaming with Mobile Prepay 75

Architectural Evolution 77

The Impact of Mobile IN on Prepay 80

Mobile IN Technologies 85

Mobile IN Capabilities 89

Mobile IN Support of GPRS 92

Hybrid Mobile IN and Smart Card Based Prepay 94

Target Markets Implications 94

Impact on Strategy 95

Limitations of Mobile IN and Potential Solutions 96

Other Advanced Technologies for Prepay 99

Future of Prepay with Advanced Capabilities 100

Summary 101

Part 3 – Marketing and Business Issues 102

Marketing 102

The Four P’s 102

Consumer Behaviors and Service Expectations 103

Prepay Target Markets 104

Market Segmentation Leads to Product Segmentation 105

Market Demographics and Regional Markets 106

Asia Pacific 107

Europe 107

United Kingdom 108

Middle East 108

Africa 109

Latin America 109

Canada 109


Mexico 110

United States 110

Marketing Strategies 111

Replenishment and Distribution Strategies 112

Recharge Methods 112

Payment Options 114

Strategies for the Prepay Program Implementation Business Issues 116

Technology Issues 119

Commercial Offerings 120

Calling Plans England 121

Calling Plans United States 123

Mobile Market Trends and the Future of Prepay 124

Business Issues 134

Business Case Issues for Prepay 135

Business Strategies for Profitable Business 140

Summary 143

Part 4 – Deployment and Operational Issues 145

Deployment Issues 145

Operational Issues 148

Doing Business on the Web 153

Cost Recovery Issues 154

Disclosure Issues 154

IPCA Phonecard Disclosure Guidelines Adopted by the Board of Directors –June 5, 2000

155

Part 5 - Glossary 214


AUTHORGerry Christensen has over twelve years experience in planning, engineering andproduct management for signaling, intelligent networks and mobile communications. Hisrange of experience spans fixed and mobile network operators, service bureau andvalue-added application provider companies. He is also co-author of the book, “WirelessIntelligent Networking”, (see www.mobilein.com) that provides additional informationabout mobile technology and applications pertinent to prepay and other services.

The author welcomes all comments, clarifications and discussions:[email protected].

PUBLISHERThis report has been edited and published by Mobile Lifestreams Limited(www.mobilelifestreams.com), a Newbury based research company specializing in andfocusing on nonvoice mobile services such as the Short Message Service (SMS), CircuitSwitched Data, Unstructured Supplementary Services Data (USSD), Cell Broadcast andUniversal Mobile Telephone System (UMTS).

Other publications published by Mobile Lifestreams include “Success 4 SMS”, “Yes 2GPRS”, “Success 4 WAP”, “Mobile Positioning” and “Yes 2 3G”.

Mobile Lifestreams maintains a related web site at www.mobileprepay.com to keepreaders up-to-date with the very latest developments in the world of mobile prepaycommunications. This site is intended to supplement the information in this report withupdates including upcoming revisions of the report, news, and information.


PREFACEPrepay or pay-in-advance services are a rapidly growing segment of the mobilecommunications industry, yet not many people have a good understanding of theunderlying technology and/or business issues related to this service alternative.

The main purpose of this report is to provide a working knowledge of the technical andbusiness issues associated with formulating strategy, planning, deploying and operatingmobile prepay communications solutions.

The secondary goal of this report is to prepare the reader for further study. It is beyondthe scope of this report to cover every aspect of mobile prepay or to fully discuss thesupporting technologies and related business issues. As required, the reader isencouraged to pursue supplemental knowledge and information through other reports,consulting, and study of mobile communications standards.

The information in this report has been targeted specifically for technical and businessprofessionals in the field of mobile communications. However, this knowledge isinvaluable for anyone participating or considering involvement in prepay services. Moreadvanced readers will find the material useful as review. Less experienced readers willfind this report to be an instructional resource and basis for further study.

While there have been many industry reports regarding the business opportunities formobile prepay and evaluations of various technical deployments, I am not aware of anyresource that provides instruction as well as technical and business evaluation. This isthe first report of its type to provide all of the following:

§ Information about how mobile prepay communications works, including thetechnologies behind the scenes, technology deployment options specific to mobileprepay, and the basic business issues associated providing mobile prepaycommunications

§ Information about more advanced technology issues associated with mobileprepay deployment options

§ Evaluation of the technical and business aspects of various technologies used inconjunction with operation and support of mobile prepay services

§ Discussion and evaluation of the marketing and business issues associated withsuccessfully deploying mobile prepay


§ Review of the major issues associated with deploying and operating mobileprepay communications

Please let me know how well I have met these goals. My hope is that you will find thisreport to be a valuable resource for your technical and business endeavors.

I appreciate and welcome your comments and feedback.

Gerry [email protected]


INTRODUCTIONMobile prepay communications is no longer an afterthought; it is a crucial component ofa mobile operator’s portfolio of services. It is important to recognize that there aremany choices for the prepay equipment/software and service providers in terms ofprepay system design, deployment, and operation. These choices are often difficult, asprepay product and service providers must consider current needs while positioning forlong-term success.

This report was developed to convey information that would help mobile prepay productand service providers, and those investing in systems/solutions make more informedbusiness decisions.

This report is divided into four sections as follows:

PART 1 - TECHNICAL INTRODUCTIONThe purpose of this part of the report is to provide a working knowledge of the basictechnical and business issues associated with deploying and operating mobile prepaycommunications solutions. More advanced technical and business issues are addressedin subsequent parts of the report.

PART 2 - ADVANCED CONCEPTS AND APPLICATIONSAn architectural evolution is underway that, when finalized, will enable much morerobust prepay service offerings. Mobile intelligent network (IN) technologies are one ofthe drivers for this evolution. Those prepay service providers that leverage advancedcapabilities such as those provided by mobile IN technologies will enjoy long-term costsavings, greater customer loyalty, and increased profits. In this part of the report, wediscuss the technical aspects, differentiating capabilities, and business implications ofthese advanced technologies.

PART 3 - MARKETING AND BUSINESS ISSUESWithstanding patents and trade secrets, technology can ultimately be duplicated.However, sound marketing and business strategy can create success and long standingbarriers to entry against competitors. In this part of the report, we discuss themarketing and business issues that are key to the mobile prepay industry.

PART 4 - DEPLOYMENT AND OPERATIONAL ISSUESThis part of the report provides a review of the major deployment and operational issuesfacing the mobile prepay service provider.


PART 1

TECHNICAL INTRODUCTION

The purpose of this part of the report is to provide a working knowledge of the basictechnical and business issues associated with deploying and operating mobile prepaycommunications solutions.

BACKGROUNDBefore we proceed with this part of the report, it is important for you to be aware of thedifferent radio frequency technologies and have at a basic understanding of the mobilenetwork elements and their functions.

RADIO FREQUENCY TECHNOLOGIESGenerally speaking, many people have heard of major global analog and digital radiofrequency technologies. You are probably aware of the following first generation(analog) and second generation (digital) mobile communications technologies:

ANALOGAdvanced Mobile Phone Service (AMPS), Total Access Communication System (TACS), orNordic Mobile Telecommunications (NMT).

DIGITALGlobal System of Mobility (GSM), Time Division Multiple Access (TDMA) for IS-136(sometimes referred to as D-AMPS), Code Division Multiple Access (CDMA) and PersonalDigital Cellular (PDC).

MOBILE NETWORKINGIt is important to understand the concept of roaming and have a working knowledge ofthe network elements and processes that enable it. You are said to be roaming whenyou utilize your mobile phone in a different serving area than your home service area.Your mobile service provider and your specific communications plan define your homeservice area. Some mobile carriers provide a virtual region-wide, nationwide or globalvirtual footprint. This generally means that, from a billing and/or feature perspective,you will experience consistent service, whether in your hometown or across the country.However, the mobile carrier must still support this roaming capability for purposes ofsystem and account management. This is accomplished through inter-system signaling.

There are two major types of inter-system signaling for mobile communications: GSMMobile Application Part (MAP) and ANSI-41. GSM MAP, as you would expect, is the


standard utilized for GSM networks and ANSI-41 is the inter-system standard for allother networks including CDMA, TDMA (IS-136), and AMPS.

Although the two standards have their differences, both have certain key things incommon. They support three network elements that are required for mobilecommunications: MSCs, HLRs, and VLRs.

MOBILE SWITCHING CENTERA Mobile Switching Center (MSC) is a telecommunications switch deployed in mobilecommunications networks, to provide call control, processing and access to the PublicSwitched Telephone (fixed) Network.

HOME LOCATION REGISTERThe Home Location Register (HLR) is a database that is maintained by a user's homecarrier or the mobile operator from whom the user has initiated service. The HLR storesinformation about the user, including the user profile (preferences), account status,features and capabilities.

VISITING LOCATION REGISTERThe Visiting Location Register (VLR) is another database and is used by the servingcarrier system to manage service requests from mobile users who are away from theirhome system.

The interaction between the MSC, HLR, and VLR is best understood by walking throughthe registration process (see Figure 1 below)

Figure 1: Registration Process

System ASystem B

SS7 Signaling Network

HLR

RegNot (Invoke)

RegNot (Response with profile)

MSC/VLRMSC/VLR

FIGURE 1: REGISTRATION PROCESS


In the Figure 1, the mobile user's home system is depicted as System A and the mobileuser is currently roaming in System B, the visited or serving system. Upon entering thesystem and powering-on the mobile phone, the user is detected by the radio equipmentof the serving system. This information is then passed to the MSC/VLR, whichdetermines that the mobile unit belongs to another system. The VLR invokes aRegistration Notification (RegNot) request message that is sent to the HLR of the uservia the SS7 signaling network. Upon receiving the RegNot from the VLR, the HLR scansits files to extract information about the user. The HLR then responds by sending aRegNot return result message to the VLR via the SS7 network. Upon receiving thereturn result from the HLR, the VLR will utilize the information to establish a roamerprofile for the user. This profile contains information such as allowed calling, capabilitiesand features.

This registration process also serves to help validate the user for purposes of fraudprevention and allows for a process called automatic call delivery (ACD). ACD enablesthe user to automatically receive calls while roaming. A calling party does not need toknow the geographical location of a mobile user to place a call; they just call the(regular) mobile phone number of the user to connect to the roamer in the servingmarket.

It is not important to understand the details of these operations. However, it isimportant to understand these concepts; the existence and purpose of the MSC, HLR,and VLR, and how they relate to mobile prepay communications. This will becomeevident as we proceed throughout this part of the report.

PREPAY BECOMES A MAINSTREAM SERVICEPrepay began in the United States as an alternative service offering for the creditchallenged. Recognizing that up to 30% of all applicants could not meet their stringentcredit requirements, mobile operators began aggressive campaigns to deploy prepayservices around the 1996 timeframe. Today, wireless service providers are enjoyingtremendous growth due to prepay customers. The customer base of some United StatesPCS operators is as much as 50% prepay. Larger, more established cellular operatorshave a much smaller contribution (of prepay versus post-paid). The overall penetrationof prepay customers (as a % of total PCS and cellular customers) in the United States isapproximately 5% and growing. Some experts predict that prepay penetration will reach20% by year-end 2002.

Mobile operators in the United States recognized (as their European counterparts didyears earlier) that there is a larger market segment for prepay services than merely thecredit challenged. Wireless service providers will need to find innovative methods to tapinto the other segments such as cost control. Technology enhancements, including theintroduction of mobile IN, will enable these improvements to happen. However,technology is not the only answer. Improved business processes, enabled by


technology, will make prepay an even more mainstream service in the United States,Europe and the rest of the world.

THE TECHNOLOGY BEHIND PREPAYBefore you can fully appreciate and understand prepay business issues within a coherentcontext, it is important to first comprehend the rudiments of the technology behindprepay. In this section we will discuss some of the major technologies that enableprepay and then compare and contrast various prepay technology solutions. Prepaysupport, business processes and issues will be discussed later in this part of the report.

As you read these sections, it is important for you to note that the particular enablingtechnologies used and the specific prepay technology solution employed will largelydetermine the nature and capabilities of the prepay support systems and businessprocesses.

ENABLING TECHNOLOGIESBefore we discuss the various prepay solution technology types, we must discuss thetechnologies that enable an overall solution. Many functional elements are integrated toform a mobile prepay communications system. These functions include signaling, datacommunications, call control/processing, data administration, storing and retrieval.These functional elements interlink to form an overall solution including business supportprocesses.

SIGNALINGSignaling is the ability to provide messaging between mobile switching systems andprepay systems for purposes of call control and administration. In more advanced orrobust solutions, signaling consists of common channel signaling systems such as SS7 orC7 that provides the inter-network element messaging necessary for intelligent networkcall control. Less robust systems such as “point solutions” will often rely solely on in-band, direct trunk implementations to facilitate call control.

DATA COMMUNICATIONSThe ability to transport data is crucial for prepay system operation and administration.For example, common channel signaling can provide the data communications mediumfor call control and/or administration of customer information via other technologies suchas Short Messaging Service (SMS). Another example is the automatic transportation ofdata between customer provisioning interface points, customer data databases and callprocessing systems.

CALL CONTROL AND PROCESSINGPrepay customer requests (attempting to place a call) for service must be processed inorder to provide prepay communications. Before these requests for service can beprocessed, a request for prepay service must first be detected and control must be


handed over to the call processing function. In advanced systems, call control is basedon intelligent network software logic. This software logic typically resides in a ServiceControl Point (SCP). The SCP is an IN node that is capable of storing IN control logic andperforming signaling operations (via SS7) with the rest of the network to accomplishprepay call processing operations.

In less robust systems, call control is accomplished by virtue of dedicated resourcesapplied to a sub-group of mobile users designated as "prepay". These systems are oftenreferred to as “point solutions” and utilize resources such as dedicated voice facilities(trunks) and/or prepay platforms that can only be utilized by one mobile switch orperhaps one mobile system. Roaming is frequently problematic at best with these typesof arrangements.

Call processing is the function concerned with user authentication, account management,call rating, and call management and administrative intervention. When a prepay userinitiates a prepay service, the call control function will hand the request over to the callprocessing function*. At that point, the next step is to authenticate the user. The callprocessing logic verifies the user as genuine based on the mobile terminal's mobiledirectory (dialable) number (MDN) and other information uniquely identifying the mobileequipment and other information assigned to the user for purposes of roamingfacilitation. The mobile system may also employ other forms of fraud control toauthenticate the user, in many cases prior to the user actually attempting to place a call.

In terms of account management, call rating, call management and administrativeintervention, the call processing function performs the following actions:

§ Tracks the amount of airtime available in the customer account

§ Determines the appropriate rating (charges) for a given call attempt

§ Manages the call in terms of decrementing the account balance based on thecurrent rating and usage during the call in progress

§ Provides appropriate termination treatment when either party ends the call or theprepay customer account balance has been fully depleted by the prepay user

§ Requests call control treatment when appropriate to inform the prepay userconcerning the occurrence of a low account balance threshold.

Note: In many systems, call control and processing occur in the same physical databaseof SCP, but they do not need to. In some scenarios it may be advantageous to distributethese functions as facilitated by mobile IN and SS7.


DATA ADMINISTRATION, STORING AND RETRIEVALPrepay customer data administration, storing and retrieval represent additional criticalcomponents of an overall prepay system. In many cases, the customer data resides in adatabase that is co-resident with the call processing function. In other cases, a "client-server" approach is taken whereby the call processing function acts as the "server"caching data from a subtending "client" database containing the customer data. Ineither case, data administration is accomplished through accessing databases via remoteprovisioning interfaces. These interfaces are used to activate accounts, replenishaccount balances, change customer parameters and preferences as necessary. Thisrequirement for communications between remote interfaces and in some cases betweenclient-server operations, again underscores the importance of data communications inprepay systems.

SS7/C7Although there are other variants throughout the world, Signaling System number Seven(SS7) and C7 are the two predominant telecommunications signaling protocols utilizedprimarily in United States and Europe respectively. Telcordia (then Bellcore) and theInternational Telecommunications Union (then CCITT) standardized SS7 and C7respectively.

Architecturally speaking, these forms of signaling constitute an overlay data network,utilizing what is referred to as “common channel” or “out-of-band” signaling (see Figure2 below).

Figure 2: Common Channel Signaling


Fixed Network SwitchMobile Network Switch

PSTN

As you can see in the simple illustration above, the signaling links (represented asdashed lines) are separated from the voice bearer channels (solid lines) that connect to

FIGURE 2: COMMON CHANNEL SIGNALING


the public switched telecommunications network (PSTN). Whereas with “in-band”signaling methods, signaling messages traverse the same path as the voice bearerchannel, common channel signaling instead utilizes an overlay data network forsignaling, providing a much more efficient method of signaling for the traditional low-bandwidth PSTN.

These technologies foster inter-system signaling between network elements, enablingroaming and service control. In reference to our earlier point regarding roaming, SS7and C7 form the underlying bearer protocol for transport of ANSI-41 and GSM MAPmessages between network elements. In other words, ANSI-41 and GSM MAP are the“payload” that rides on top of an SS7 signaling message for communication betweenHLRs and VLRs. However, these technologies also have some other very important usesin intelligent mobile networks that we shall introduce shortly.

When we mention signaling throughout this part of the report, remember that it is SS7,C7 and related technologies that provide the vital inter-system message communicationfunction between network elements. The Transaction Capabilities Application Part(TCAP) portion of the SS7/C7 protocol is used for database and other connectionlesscommunications such as the HLR/VLR interaction discussed above. This is in contrast tothe ISDN User Part (ISUP) portion of the SS7 protocol that is connection oriented. ISUPis utilized for out-of-band signaling between switches for voice circuit set-up andteardown.

SHORT MESSAGING AND OVER-THE-AIR ACTIVATION/REPLENISHMENTShort Message Service (SMS) is a capability whereby small amounts of text data aredelivered to a mobile terminal by way of the SS7/C7 signaling network. SMS may beused to perform over-the-air activation and/or replenishment. A consumer maypurchase a mobile phone without activating it at the point-of-sale, only to have themobile unit activated for service automatically via SMS. All of the programminginformation necessary to prepare the unit for service is encapsulated in the SMSmessaging and accepted by the mobile unit over the air. This same process may beemployed with handset-based prepay solutions to replenish a prepay account,eliminating the need for the mobile user to replenish only at specific retail locations.

For more information about SMS and its applications, we recommend that you read theMobile Lifestreams report: Success 4 SMS (www.mobilesms.com)

SUBSCRIBER IDENTITY MODULEThe Subscriber Identity Module (SIM) is an example of a smart card, whose role will bediscussed more later in the Advanced Concepts and Applications part of this report.

For now, it is important to note that the SIM is an integral part of certain mobile prepaysystems, providing storage of user data used in conjunction with mobile prepay serversto provide the overall service.


SIM TOOLKITThe SIM Tookit (STK) is an API that allows for secure communication between the SIMand network-based servers for various applications such as prepay. (SeemobileSIMtoolkit.com)

FRAME RELAY OR IPFrame relay and Internet Protocol (IP) represent a data transport mechanism andcommunications protocol (respectively), commonly used for data communications inprepay systems. IP is typically used to communicate between remoteprovisioning/replenishment sites and prepay customer databases. For instance, a mobilecarrier customer care representative may provision requests for establishment of prepayservice via a terminal connected to a database via IP. In addition, a prepay customermay use an IP connection via the Internet to replenish his account. This is in contrast tosome of the point-of-sale configurations at merchant locations that may, based onvolume and cost effectiveness, alternatively use a dial-up-connection to replenish acustomer account. IP may also be employed over frame relay for intra-systemcommunications between prepay customer databases in a client-server typearchitecture.

DATABASEAt the heart of any prepay system is a database used to store, administer, process andretrieve customer information. As discussed earlier, this database may simply act as arepository for customer data in a client-server type arrangement, or fully integrate withthe actual call processing functions such as rating and call intervention.

MOBILE INMobile intelligent network (IN) pertains to the concept of network intelligence. While thenotion of network intelligence is evolving beyond the traditional model of centralizedcontrol and processing, and expanding to network edge devices such as mobile terminalsand servers, the use of the term mobile IN will be used throughout this report to refer tomore traditional centralized network intelligence.

The two recognized global standards for mobile IN are Wireless Intelligent Network(WIN) and Customized Applications for Mobile Enhanced Logic (CAMEL). WIN andCAMEL are the standards used to provide network intelligence in ANSI-41 and GSMnetworks respectively. As WIN standards are introduced, accepted and evolve, they willbecome part of the core ANSI-41 standards. In contrast, the GSM CAMEL ApplicationPart (CAP) represents that portion of the GSM standard that uses CAMEL, and will remaina separate yet associated standard to the core GSM networking standard, GSM MAP.

However, WIN and CAMEL are both derived from the same intelligent network conceptualmodel (INCM), a framework from which the Intelligent Network Application Part (INAP)was spawned. INAP represents the IN architectural model conceived by the EuropeanTelecommunications Standards Institute (ETSI) for use in fixed networks. Evolutionary


stages of INAP are defined by capability sets (CS) that represent continual improvementsin IN functionality. WIN and CAMEL architectures are based on the INCM framework,utilizing many aspects of the INAP capability sets as that standard evolves, but alsoinclude capabilities to address mobility management issues.

WIN and CAMEL also utilize SS7/C7 for intersystem data communications. This includessignaling between and among MSCs, HLRs, VLRs, SCPs, Intelligent Peripherals (IP),Interactive Voice Response Units (IVRU) and other intelligent network nodes.

The term Mobile IN is sometimes associated with some better known centralized,intelligent network type technologies such as SMS and the lesser known technologiessuch as ISUP loop-back, which will be discussed in the section reviewing network basedprepay technology solutions. It is important to note, however, that when most peopleinvolved in mobile network standards mention mobile IN, they are generally referring toWIN, CAMEL, or perhaps proprietary vendor extensions of INAP.

FUNCTIONAL CHARACTERISTICS OF A MOBILE PREPAYAPPLICATIONA mobile prepay application typically resides in either a service node or service controlpoint. While the overall functions and systems-level interactions will vary according towhich type of node and architecture is deployed, all prepay applications have the samethings in common in terms of functionality:

§ A database used to determine if a customer is a valid user and how much credit(typically measured in currency value, but may also be in airtime, number ofbytes for prepay mobile data, and/or number of messages for SMS) they have ontheir account

§ A rating engine used to determine the rating of a call based on a combination ofvarious factors such as incoming or outgoing call, destination number, destinationlocation, calling party location, time of day, day of week, customer’s prepay plan,promotions, whether the call/session is voice or data oriented, and other factors

§ A mechanism for decrementing the customer’s prepay account based on therating of the call

§ An event alerting mechanism for signaling to the mobile network that a pre-determined account threshold has been reached (note: this is problematic in CDRbased systems – thus the problems with fraud/uncollectable revenue). Thiswould allow the user to be alerted during a call (to avoid an unexpecteddisconnection) and to alert the customer regarding the need to recharge prior tomaking a call (so as to avoid the first situation).


§ A mechanism for terminating the call/session if/when necessaryOther functions and system differences will be a factor of which type of mobile prepay isdeployed, network characteristics, vendor and operator deployment, and the type andextent to which value-added services are deployed in conjunction with and/or for prepaycustomers.

PREPAY TECHNOLOGY SOLUTIONSWhile the technologies used in the deployment of prepay are many and varied, onecritical component shared by all prepay solutions is call control and processing. As wediscuss each of the forgoing solutions, we will focus specifically on the manner in whicheach solution deals with call control and processing.

POINT SOLUTIONSPoint solutions involve an adjunct piece of equipment that is used to provide call control,database functions, administrative functions and call processing. These are called"point" solutions as all calls must traverse a single network element or "point" (seeFigure 3 below).

Figure 3: Point Solution

Prepay Point Solution

Mobile Switch

PSTN

1

2

3

In the above diagram, a voice connection is established from the mobile switch througha voice facility to the prepay platform (step 1). The platform processes the call andreroutes the call through another voice circuit on the same facility (trunk group) that thecall originated from (step 2), meaning that a total of two DS-0 channels are required forevery call. Once the mobile-switch receives this incoming voice channel, it routes thecall to the PSTN as normal (step 3).

FIGURE 3: POINT SOLUTION


The advantage of a point solution is that they are typically less expensive to set up foran initial or limited deployment. However, they do not necessarily scale as well as othersolutions when large numbers of prepay customers are added to the system. As thenumber of prepay customers reaches a certain capacity limit, additional point solutionplatforms are needed, requiring additional capital investment and perpetuating theinefficient use of voice facilities.

A significant disadvantage of point solutions is that they typically require dedicated lineranges for prepay customers. This means that the prepay customer cannot choose theirphone number; it must be part of a predetermined line range for call routing purposes.Furthermore, it is problematic to convert prepay customers to post-paid and vice versa,without changing their phone number.

However, the most significant disadvantage is the loss of call control. Call routingthrough the point solution relegates call control to the point solution. There is less of anissue if the point solution is a robust platform capable of providing value-added services.However, the fact remains that the mobile carrier will only be able to offer servicesaccessible via or through the point solution.

HANDSET SOLUTIONSThese methods involve the placement of intelligence in a mobile terminal to determinethe capabilities and account status of the prepay subscriber. Handset solutions fall intotwo broad categories based largely on mobile network standards: Subscriber IdentityModule 1 (SIM) solutions based on GSM and proprietary handset based solutions.

SIM BASED SOLUTIONSSIM based solutions utilize logic programmed into the SIM to determine prepaysubscriber capabilities and account status. The benefit of a SIM based solution is that itmay be used wherever the GSM customer may otherwise roam. However, whenroaming outsides one’s own country, the customer is typically required to dial a shortcode (string of predetermined digits) prior to every call for security and authenticationpurposes.

There are three different types of SIM-based prepay solutions:

NETWORK-BASED SIM SOLUTIONIn this solution, the SIM stores all customer data, but centralized computer processescall data records.

1 A SIM is the smart card you plug into a GSM telephone that stores the personal subscription data, telephonenumbers and the like.


CALL FORWARDING SOLUTIONSThis solution uses a SIM and a personal identification number (PIN). The PIN is stored inthe SIM and is associated with a certain amount of airtime. Calls are routed to a call-forwarding platform in which the SIM is analyzed for the account determination and thePIN for airtime.

SIM CARD ONLY SOLUTIONSIn this solution, the rating engine is in the SIM card itself. This solution requires the SIMto recognize the amount of airtime credit itself and is updated/recharged via SMS.

One disadvantage of the SIM based solution is that it has limited differentiation potential.Without IN capabilities, there is only limited capability to provide value-added servicessuch as location sensitive billing (based on predefined rate zones) which we shall discussin the Advanced Concepts and Applications part of this report.

However, being a smart card, the SIM offers the advantage of lending itself well towardsmobile commerce applications, which we shall discuss in the third part of this report -Marketing and Business issues. SIM based solutions also have the additional advantageof distributed processing.

Additional efforts are underway to provide smart cards for other technologies (other thanGSM) such as CDMA, which will have a Universal Identity Module (UIM), and WirelessApplication Protocol (WAP), which will use a WAP Identity Module (WIM) for storage ofuser data on the mobile unit. Each of these smart cards will likely allow prepay serviceon their respective technologies once the technology is finalized.

PROPRIETARY BASED HANDSET SOLUTIONSProprietary based mobile phones are employed as a handset-based solution for ANSI-41networks. These solutions maintain the same overall advantages and disadvantages ofthe SIM based solution. From the perspective of the ANSI-41 network, the proprietaryprepay user is just another (post-paid) customer. No amendments to existing inter-carrier roaming agreements are necessary. Proprietary handset based prepay users areallowed to register while roaming and make calls at will. The proprietary based logic inthe phone limits calling based on the customer account status.

However, the proprietary based solution typically requires a different means ofreplenishment. Rather than utilizing SMS, the proprietary solutions typically utilize acombination of programming codes (input by the customer from a prepay card orvoucher) and a circuit switch connection to a computer to complete processing. Thecomputer updates the proprietary logic in the mobile terminal to allow it to continue tomake calls.


NETWORK BASED SOLUTIONSNetwork based prepay solutions leverage the use of signaling networks for data capture,transmission and processing. Network based solutions can be broken up into threecategories: ISUP based non-standard, TCAP based non-standard, and TCAP basedstandard.

ISUP BASED NON-STANDARDISUP based non-standard prepay solutions typically utilize an innovative network klugeknown as ISUP-loop back (see Figure 4 below).

Figure 4: ISUP Loop-back


Mobile Switch

PSTN

1

3

4

SCP2

Loop-back Trunk

In the above diagram, intelligence is centralized in a Service Control Point (SCP), withISUP signaling used to evoke call control. With ISUP loop-back signaling, the SCPcontains software logic to “spoof” the mobile switch. The SCP tricks the mobile switch,making it appear to be signaling with another switch for call set-up via ISUP (as normal),when in fact it is performing database operations necessary to process prepay calls.

After receiving the Initial Address Message (IAM) in the ISUP message stream from themobile switch (step 1), the SCP begins prepay call processing including accountverification, dialed digit analysis, and call rating (step 2). Once this process is complete,the SCP returns SS7 signaling information to the mobile switch to indicate a callconnection is complete (step 3), when in fact only signaling has actually occurred at thispoint. The call originating mobile switch receives this signal from the SCP and redirectsthe call to the PSTN as normal (step 4).

FIGURE 4: ISUP LOOP-BACK


One limitation of this arrangement is that the mobile switch must utilize a loop-backvoice trunk for all prepay calls (see diagram). All prepay calls must first route throughthe loop-back voice circuit prior to normal call routing to the PSTN. This method isemployed so that the SCP can "tear-down" the call (via an ISUP call release message)if/when the caller’s account balance reaches zero*. This is an effective albeit crudemethod of limiting unauthorized network use. TCAP based IN solutions improve on thisissue.

ISUP loop-back requires that the mobile switch contain pre-established translations thatforce all prepay customer calls to route (and signal accordingly) over the loop-back voicetrunk. Similar to the point solution this limits customer management and the ability tooffer value added services. Once again, TCAP based IN solutions improve on this issue.

Note: The MSC can also teardown the call (via an ISUP release message) if/when theprepay customer terminates the call.

TCAP BASED NON-STANDARDThe diagram below (Figure 5) depicts the TCAP based non-standard solution.

Figure 5: TCAP based Non-Standard


Mobile Switch

PSTN

1

3

4

SCP2

In the above, the mobile switch contains information in its HLR about all prepaycustomers. When a prepay customer attempts to use the service, proprietary vendorsoftware recognizes the condition as a triggering event and suspends call processingwhile an SCP is queried (via a TCAP message) to gain further instructions (step 1). TheSCP performs call-processing functions (step 2) analogous to the ISUP loop-backexample, (in this case) returning a TCAP response message to the mobile switch (step

FIGURE 5: TCAP BASED NON-STANDARD


3). The mobile switch resumes normal call processing at that point, setting the call up tothe PSTN in the normal way (step 4).

Unlike the ISUP loop-back or the point solution, there are no dedicated resourcerequirements. Additionally, the SCP may contain intermediate or “end-of-call” triggersthat indicate the event in which a prepay customer has reached a pre-determinedaccount threshold or account exhaust. This mechanism can facilitate a more gracefuland customer friendly operation e.g. the prepay user can be bridged (while the originalcall remains intact) to a control circuit for purposes of playing a warning (account low)message (via “whisper tones”). At this point, the prepay customer may be offered theopportunity to recharge (rather than merely being disconnected).

The only major limitation of the TCAP based non-standard method is that, due to itsproprietary (vendor specific) nature, roaming is problematic. Roaming can only occurbetween like switch types that have the same software logic and triggers armed. Thisincludes implementations that utilize proprietary extensions of the INAP standard.Roaming agreements also have to be in place between carriers to support the messaginginteractions between serving and home systems. In the above diagram, the servingsystem must recognize the service profile returned by the home system (during theregistration process) and be able to act on that profile information (via armed switchtriggers) when the prepay user initiates a call attempt.

TCAP BASED STANDARDWIN and CAMEL provide capabilities for TCAP based standard prepay deployment. Theyprovide a major improvement over proprietary TCAP solutions by allowing roaming totake place wherever serving carriers support the necessary triggers and software logic.This means that, in order to provide service to prepay callers, the serving system mustsupport WIN/CAMEL standards, even if the serving market does not support WIN/CAMELbased prepay for its own (home) customers.

HYBRID SOLUTIONSA hybrid solution example would be exemplified by a SIM based solution for basic prepaycall processing with a TCAP based IN complement for value-added services such aslocation sensitive billing. It is likely that many GSM operators will adopt this approach asthey migrate to a full CAMEL based IN architecture over time.

CALL DETAIL RECORD (CDR) BASED SOLUTIONSCDR based solutions utilize a near real-time based process to track mobile usage byprepay customers.


Figure 6: CDR based Solutions


MobileSwitch

PSTN

2

1

HLR3

Prepay DB

The CDR is created in the MSC and includes pertinent information such as type ofservice, user identification, date/time of usage, call destination (if outbound) or callingparty number (if inbound), and location of the prepay customer. The CDR is generatedupon call completion (step 1) and is sent (via an IP connection) to an adjunct prepaydatabase for processing (step 2). When the account reaches zero, the prepay databasesends a message back to the HLR (step 3) to bar the customer from further calling untilrecharge occurs.

This solution has the advantage of low cost compared to other solutions. As CDRs aremonitored after a call is placed, this solution can sometimes allow unbillable usage onthe last call (prior to the system detecting a zero account balance and initiating adisconnection).

PREPAY SUPPORT AND BUSINESS PROCESSESThus far, we have spent considerable effort discussing some of the technological aspectsof prepay. However, in comparison to the business issues, the underlying technology isof minimal importance, and in fact, should be totally transparent to the user. Whileunderstanding the underlying technology enabling overall system capabilities isimportant, the business issues are arguably the most important aspects of a prepayoperation and support.

Apart from patents and trade secrets, technology is ultimately duplicable. Therefore, inorder to focus on product differentiation, there should be a strong focus on businessissues and continuous improvement in the areas of market positioning, product support

FIGURE 6: CDR BASED SOLUTIONS


and business processes. The next section discusses prepay support and businessprocesses while prepay offering strategies will be discussed in a later section.

DISTRIBUTIONThe establishment and support of effective sales channels and points of distribution isvery important to success in the prepay business. This relates to both initial sales fornew prepay customers as well as ongoing customer support including support forcustomer account replenishment.

The foundation of a successful prepay program is built with the establishment of manyand varied merchant locations, supported by effective marketing focused toward each ofthe four respective major target markets: credit challenged, temporary use market,anonymity market and cost control market.

Distribution concerns include both the mobile equipment (phones and accessories) aswell as prepay cards. A successful prepay distribution system includes an expansive andeffective network of both equipment sales channels as well as points-of-sale for cardpurchase and/or prepay account replenishment.

If less traditional means of distribution are employed, such as marketing and sales via a"virtual storefront" on the Internet or direct marketing, fulfillment must be addressed asa separate issue. Arrangements must be made with mobile equipment suppliers and/ordistributors to ensure that equipment and/or prepay cards can be distributed tocustomers as they make purchases. With utilization of the Internet for commerceincreasing rapidly, the need to secure an independent means of fulfillment will increase.

POINT-OF-SALE SUPPORTMerchant point-of-sale locations require support in terms of advertising, communicationsterminals (for activation and replenishment), equipment returns, and technicalassistance. One of the most important items is the point-of-sale activation andreplenishment device. Depending on the type of prepay system these devices willconsist of either a simple electronic keyboard or modem (in the case of a debit cardbased system), or also include a magnetic strip reader (if the system is account based).These devices, ranging in price from a few hundred dollars up to one thousand dollars,must be judiciously located in merchant locations where it is expected that users willreplenish often.

POS activation (POSA) is the operation of activating cards at the point of sale, or in thecase of an account card (permanent card type) system, recharging the card at the pointof sale. POSA is an important issue as it has many benefits. We will discuss POS-basedrecharge and other replenishment issues in Part Three of this report in theReplenishment and Distribution Strategy section.


CUSTOMER CAREWhile mobile prepay service providers continuously strive to automate their operationsto the extent possible, it is likely that there will always be a need for customer carepersonnel. Many operators employ automated equipment such as an interactive voiceresponse unit (IVRU) to handle many routine announcements and customer interactions.In some cases IVRUs are used for the acceptance of payment for replenishment, or atleast account replenishment based on user input of information from a previouslypurchased prepay card or voucher.

REPLENISHMENTWe have previously defined replenishment as the act of updating a mobile prepaycommunications account to include more airtime. Prepay systems are typicallyconfigured (based on operator concerns and user desires) to alert a user when hisaccount reaches a certain threshold. When this threshold is reached, the user will bealerted of the condition and is often offered options for replenishment.

There are many physical means of accomplishing replenishment, but not all of them areavailable to each user. A user who has good credit (perhaps whose motivation for use iscost control) may desire an option to replenish via credit card, either via a customer carerepresentative or an IVRU. Someone in this market segment may even desire automaticreplenishment up to a certain limit.

On the other hand, the credit challenged and the anonymous users are in some casesunable to meet operator criteria for these options and/or prefer to do business with cash.For these users, cash payment at a point-of-sale is the only realistic option. However,some operators, depending on the arrangement with the merchant, will allow credit salesat the point-of-sale.

In debit card systems, a disposable prepay card (or voucher) is purchased at the point-of-sale. In this case, the user's prepay account may be replenished immediately afterthe sale via a point-of-sale terminal device, or the user may subsequently call an IVRUor customer care representative to provide card information for replenishment.

In account-based systems, the user has a non-disposable card that is used toelectronically identify the user's account so that the account may be appropriatelycredited when airtime is purchased at the point-of-sale. In this system, a magnetic stripon the account card is "swiped" at the point of sale device. The device thencommunicates with the prepay customer database to provide the appropriate amount ofcredit purchased.

In handset based prepay systems, either electronic payment is accepted "over the air"through a secured connection, or information is programmed into the phone.


ADMINISTRATIONAll prepay systems require a certain level of administration including provisioningcustomer data, handling replenishment requests or system maintenance. Some prepayplatforms may only be accessed via proprietary interfaces for administration. Othersystems employ open interfaces that allow legacy wireless operator customer caresystems to interface with prepay databases. Regardless of the system deployed,improved administrative efficiency should be the goal as this is an area where thewireless operator can reduce operating costs through effective automation.

PREPAY ISSUESCOST OF ACQUISITIONThe cost of acquiring a prepay customer is generally much lower than acquiring a post-paid customer. A large portion of the acquisition cost for post-pay is sales, dealer, andagent commissions. On the other hand, prepay is typically distributed in a more cost-effective manner. Sales assistance is minimal or non-existent as there is little or nocustomer information required including no credit check. Prepay phones and cards canbe found in low overhead retail locations such as department and convenience stores.

Another cost of customer acquisition is the phone itself. Prepay customers often receiverefurbished or early model phones rather than top-of-the line phones. In contrast, thecost of a more high-end phone for a post-paid customer is subsidized, meaning that thecustomer pays less than the actual retail cost of the phone. The mobile operator usuallypays the difference to the manufacturer. However, as prepay service becomes a morewidely accepted service alternative in the United States, we will likely see more high-endphones used by prepay customers.

Generally speaking, the cost of acquisition for prepay customers is lower, however,churn and/or the lack of replenishment are issues that can drive up the overall cost ofcustomer ownership (acquisition and retention).

ROAMINGThe ability to roam with prepay service is problematic. As we have discussed earlier,handset based solutions allow roaming, but they are besieged with other problems suchas difficult replenishment and little differentiation capability. Point solutions can enableroaming by looping calls from the serving switch back to the home system prepayplatform and then back out to the called area (perhaps the serving area), causingnetwork inefficiencies and higher costs. Proprietary IN solutions do not allow roamingexcept between like switches that have the same software logic. Even standards basedIN solutions are not the answer, as it is likely to be four to five years before there isubiquitous deployment of WIN and CAMEL based triggers. When ubiquitously deployed,however, mobile IN capabilities will offer the best long-term roaming solution.


RATESAs we discussed earlier, rates for prepay service are much higher in the United Statesthan in Europe, however, the trend is leading toward increasingly competitive rates. Asexpectations about prepay service continue to change and network capabilities are putinto place to support those changes, the cost for prepay service will continue to decreaserapidly. Many prepay users really want cost control, but are not willing to pay a largepremium to get it. The deployment of mobile IN will allow better customersegmentation, allowing post-paid users to have cost control at a lower rate than aprepay customer.

CHURN AND REPLENISHMENTCustomer turnover is referred to as churn. In prepay, a customer who has notreplenished (re-charged their account) within a certain period of time is considered tohave churned. The problem with prepay churn (as with post-paid churn) is trying tounderstand why customers churn. This situation is even worse with prepay than withpost-paid. With post-paid, there are at least some statistics that can be gathered aboutthe customer at the point-of-sale. Due to the anonymous nature of prepay (no creditchecks and little or no personal information required), gathering information about thecustomer base is very difficult if not impossible.

Replenishment is an issue in itself. Wireless operators constantly strive to make prepayreplenishment as easy as possible for the customer base. However, many prepayplatform replenishment systems do not provide detailed reports about replenishment.CDRs are always tracked to determine actual usage, but little is done by way of ServiceDetail Records (SDR) which track things such as how often a customer replenishes.Furthermore, even if tracking occurs there are no real-time feedback processes to allowdiscounts at the point of sale. If these systems and processes were in place,loyal/frequent users could be given incentives for replenishment and usage.

SERVICES AND DIFFERENTIATIONAs discussed earlier, non-IN based solutions provide little in the way of differentiation.With prepay penetration growing, and consumer expectations changing, prepay isbecoming increasingly mainstream. As prepay becomes more mainstream, churn willbecome more of a factor if wireless operators are forced to compete on the basis of pricealone. The good news, however, is that they do not have to compete based only onprice.

Mobile IN will allow the deployment of feature enhancements and value-added services.For instance, IN based location technology offers two examples. IN enabled locationquerying can enable a voice response system to direct the prepay user to the closestpoint-of-sale for replenishment when a pre-determined threshold is reached. Anotherexample involves Location Sensitive Billing (LSB). Establishing lower priced usage


“zones” through LSB technology can allow a mobile operator to provide incentives foradditional prepay usage.

PREPAY PRODUCT AND SERVICE PROVIDERSTYPES OF PRODUCTS AND SERVICESWe have already discussed the various types of technology solutions; handset based,point solutions, various network-based solutions, and CDR based solutions.

Another way to characterize products and services is by the extent of outsourcingemployed by the wireless carrier. With prepay service being an immature service in theUnited States, many mobile service providers look to service bureau options for all orpart of the requirements for prepay. You will recall that, in addition to a technologyplatform, an overall prepay solution also requires distribution, point-of-sale support,customer care, replenishment and administration. A service bureau solution can provideany one or all of these business processes and support systems as well as the platformfor processing calls, storing customer data and generating reports.

With the introduction of mobile IN for prepay, we are likely to see an even greaterdependence on service bureaus. However, as prepay becomes a more mainstreamservice in the United States, we will see a migration away from service bureaus. Unlessthe service bureau can provide operating efficiencies based on economies of scale, orprovide unique value-added services, the mobile service provider will want to take onmore responsibility and control with a goal towards lower long-term costs anddifferentiation.

PRODUCT AND SERVICE PROVIDER PROFILESNext, we introduce some of the major players in the prepay product/service industry,indicate their role (such as infrastructure provider, service bureau, software developer,etc.), and characterize their platform technology type.

INFRASTRUCTURE PROVIDERS AND SERVICE BUREAUS§ Alcatel - an infrastructure provider that has devised a pre-standard network

based solution with a migration path to WIN and CAMEL when those standardsare available/deployed by the operator

§ Boston Communications Group Inc. (BCGI) - a service bureau provider,currently employing a point type solution wherein mobile operators must directlytrunk all prepay calls through BCGI’s operations center. As mentioned earlier,BCGI has partnered with AGCS to offer WIN based prepay. BCGI currently hasthe largest prepay market share in the United States, offering a full array ofprepay services and support for the wireless operator. (detailed profile below)


§ Brite - offer service bureau services but also have an integrated platform thatsupports additional features such as single number service and voice activateddialing

§ Compaq - an infrastructure provider that offers a TCAP based network solutionfor proprietary, WIN, or CAMEL interfaces

§ Comverse - an infrastructure provider offering a point solution

§ Cosair - have partnered with Ericsson to offer a solution based on Ericsson’s INcapabilities and interaction with SS7 signaling for real-time routing of callswithout the need for a point solution device

§ Glenarye - an infrastructure provider that promises support for both WIN andCAMEL on the same platform. Glenayre is partnering with AGCS for WIN.

§ GTE Telecommunications Services Inc. - offers a service bureau based INsolution that utilizes ANSI-41 messaging to support prepay in home and visited(roaming) markets

§ HNC Software - provides application fraud management, churn prediction andprepaid services platform

§ Homisco/Voicenet, Inc. - offers an IN based platform utilizing core INAPcapabilities

§ LHS/Priority Call Management - offers a point solution

§ Logica - an infrastructure provider of pre-standard solutions that include acombination of a point solution and an IN solution (detailed profile of Logicabelow)

§ Lucent Technologies develops software for prepay and they have an ISUP-loopback solution. They have also announced that they will offer a WIN basedsolution and are forming partnerships with Boston Communications and Glenayreto bring the WIN based solution to the market. They have also partnered withTeleCommunication Systems (TCS) to incorporate TCS’s prepay softwaresolution into Lucent’s bundled capabilities for multiple services on the sameplatform. The solution supports network based GSM and will support WIN aswell. TCS is also an SMS Center vendor, profiled in "Success 4SMS.


§ National Telemanagement Corporation (NTC) - provides a service bureausolution wherein NTC owned call-processing equipment is located at the wirelessoperator’s location (detailed profile below)

§ Nortel - offers a platform based on WIN triggers

§ Opus Telecom - offers a real-time post-paid service for budget and spendingcontrol

§ SEMA Group - has 200 installations of its prepay solutions with 60 millioncustomers. The largest is Telecom Italia Mobile with 15 million customers. Sema'sacquistion of LHS in 2000 bougt with it Priority Call, an IN based product. Semanow offers IN, service nodes and hot billing solutions in its prepay portfolio

§ Systems Link - offers a service bureau solution based on near real-time CDRanalysis

§ SLP InfoWare - offers a churn manager solution to help predict when prepaysubscribers may be incline to try another service provider or simply not recharge

§ Tecore - offers a point solution

§ VoiceCue Technologies - offers a service bureau point solution that consists ofan integrated system. This system supports additional services such as directoryassistance call completion and voice-activated dialing.

HANDSET BASED§ JRC International, Telemac, Topp Telecom and US/Intellicom - all offer

proprietary based handset solutions for prepay (detailed profile on Telemacbelow)

§ AU-System Mobile, Orga Kartensysteme GmbH, Siemens WirelessTerminals and SwissCom/Gemplus - all offer SIM card based handsetsolutions

DETAILED PREPAY COMPANY PROFILESIn this section we provide a detailed profiles of companies, representing a cross sectionof the types of businesses involved in mobile prepay. In addition to information abouttheir technology approach, this section contains valuable market viewpoints of each ofthese respective companies.


APPLIED GLOBAL TECHNOLOGIES (AGT)www.appliedglobal.com

Applied Global Technologies has been writing software for the Prepay Industry for thesince 1996. AGT worked diligently with AG Communications in the early stages on thedevelopment of its Intelligent Network Solution for prepay cellular. AGT has gone thefull gamut in the prepay cellular industry; from research and development for softwareto implementation, support and consulting.

As the trend for Prepay Cellular continues to grow in the US and around the world, it isof absolute importance that improved accessibility to real-time records and activities ofthe prepay cellular customer, making it easier and more efficient for customer carerepresentatives. There can also be some relief to the customer service representativesby using a browser based interface that will allow the customer to access their ownaccount, look at their call records and balance information. While this is not a widelyused application at this time, it is expected that prepay applications will go that directionin the future.

One of the other applications being used is the Point of Sale (POS) application thatallows customers to walk into a convenience store, gas station or even a pharmacy orfood market and purchase airtime for their telephone. Several large chain stores arealready beginning to make this available to their customers. Using the POS terminalallows the customer to walk into these locations and purchase time on their phones.Instead of a prepay card, the customer receives a receipt with a pin number. In reality,the receipt is just that, a receipt. The purchased airtime amount and the cellular phonenumber has been transmitted to the carrier and added to the customers account via thePOS application. This is a great convenience for the customer, and it allows the cellularcarrier and reseller to be in the prepay business without the liability of have cards thatare equivalent to cash on their shelves.

AGT strives to develop provisioning software with versatility in its’ reporting functionsallowing for customization to the needs of the individual carrier. Having found that everycellular company has their own specific need for certain type customer information; AGThas worked diligently to develop products that can tailor to the carriers need for real-time information. AGT offers training and support on all software.

Applied Global Technologies had provided provisioning software for carriers using pointbased solutions and those using ISUP loop-back with SS7. The provisioning software iscompatible with any North American standard operating system.


BOSTON COMMUNICATIONS GROUP, INC. (BCGI)www.bcgi.net

Boston Communications Group, Inc. (BCGI) is the leading provider of prepay services towireless carriers in America. Founded in 1988, BCGI provides telecommunicationscarriers with a range of resources, support services, and cutting-edge technologytargeted to address the unique needs of the growing prepay, electronic, and mobilecommerce industries. BCGI provides one or more of its services to the top five wirelesscarriers in the United States, plus more than 80 additional carriers worldwide.

THE BCGI C2C SOLUTIONBCGI’s C2C Prepay Wireless Service Bureau has been in operation in North Americasince 1996 and currently handles over 2.3 million prepay subscribers. BCGI’s SystemC2C Prepay Service operates as a standalone system for many Latin and SouthAmerican carriers, as well as many other carriers around the world, with over 2.5 millionsubscribers. BCGI launched its Prepay Connection in late 1999 as a hybrid of the C2Cservice bureau and the System C2C platform to allow small to medium carriers in NorthAmerica to connect to BCGI’s national footprint with a very small capital outlay andminimal recurring costs. These prepay services support AMPS, TDMA, CDMA, and GSMcarriers, interfacing with all major switch types using both SS7/ISUP and MF ModifiedFeature Group D signaling.

The BCGI platforms allow wireless carriers to provide prepay service to subscribers usingtheir existing wireless network. Designed to offer maximum service to both thesubscriber and the carrier to closely mirror all post paid services, the BCGI platform iscustomizable, easy to implement, and fully scalable to meet carrier and reseller needs toimplement a prepay offering.

KEY ADVANTAGES OF BCGI’S PREPAY WIRELESS SOLUTION ARE:§ BCGI's ability to utilize the more than 60 voice nodes to process prepay wireless

roaming calls locally, without having to route these calls back to a central locationvia an 800 number.

§ BCGI’s real-time rating engine debits the user’s account as the calls are made.

§ The C2C network provides economies of scale by combining many carriers’subscribers onto one comprehensive network and database.

§ In addition, BCGI’s extensive experience in prepay allows the company to notonly offer rich and robust features and functionality, but also to provideknowledgeable guidance to carriers to facilitate profitable prepay programs.


A subscriber establishes a prepay account with the wireless carrier by prepaying anydollar amount that is credited toward future service. The C2C network permits a wirelesscarrier to automatically route a prepay subscriber's call to the C2C network whereinformation regarding the status of that subscriber's prepay account is maintained. Eachcall initiated or received by the subscriber rated in real time based on the telephonenumber called, carrier usage charges, taxes, and applicable surcharges. The subscribermay replenish the prepay account by purchasing additional prepay service from thecarrier by credit card through C2C’s automated replenishment feature or by purchasingadditional prepay service at any of the carrier’s affiliated retail outlets. The C2C networkcan complete a call and debit the account automatically without requiring the subscriberto enter a debit card number or other information. As a result, a prepay subscriberreceives service similar to a subscriber using traditional post paid billing arrangements,including the ability to make outgoing calls, receive incoming calls, and roam into othermarkets.

The BCGI network utilizes the SS7 signaling protocol from carriers’ mobile switchingcenters for faster and more reliable call set-up and to enhance digital services such asCaller ID and Voice Mail. BCGI also provides enhanced services like international dialingcapabilities to permit prepay subscribers to make calls from within the United States andCanada to countries around the world. BCGI’s Passport feature allows subscribers to useprepay account balances to make calls from any prepay or traditional post paid mobilephone on a per-call basis. Additional features include prepay roaming, automatedreplenishment options, and credit card address verification.

PRODUCT FLEXIBILITYBCGI understands the prepay market and carriers needs to tailor their prepay programsto meet market demands. BCGI’s solutions offer carriers total flexibility in the design oftheir prepay program. All call rating and debiting, account provisioning, and subscribermessaging features are totally flexible to meet carrier needs.

REVENUE-GENERATING FEATURESBCGI continues to lead the prepay industry by providing additional revenue generatingfeatures; for example Passport customers have pre-call access to prepay accounts.Individual Special Numbers allow subscriber-based private number calling plans.

RESELLER SUPPORTThe BCGI C2C solution fully supports the implementation of resellers on the NorthAmerican network, providing resellers with all of the flexibility and features of the C2Csolution. Currently, resellers are using the C2C network all across North Americareselling prepay for a number of wireless carriers.


BUSINESS SUPPORT SERVICESCarriers who offer prepay to their subscribers can leverage BCGI’s nationwide real-timerating network, our complete range of services and our knowledge of end-user needs.Some of the business support services, offered by BCGI include client and vendoraccount management, 24 x 7 Network Operations Center support, distribution channelinitiatives, churn management programs, and network engineering.

A GROWING FAMILY OF PREPAY WIRELESS SOLUTIONSPREPAY CONNECTIONBCGI continues to expand the features of its prepay wireless services to offer additionalfunctionality to its carriers and their prepay subscribers. Formerly, only the largestwireless carriers could afford to offer prepay services due to the high cost of connectivityor capital investment. BCGI changed all that by introducing Prepay Connection, a newarchitecture that democratizes prepay wireless by making it affordable to even thesmallest carrier. Prepay Connection allows wireless carriers in small to mid size marketsthe benefits of BCGI’s national C2C prepay wireless network without the cost of voicetrunks and large capital investments.

CONVERGED PREPAYRecently, BCGI introduced Converged Prepay, a feature that allows subscribers to makeprepay calls from any wireless or landline phone. BCGI works closely with the carrierson an ongoing basis to develop additional features and functionality to expand thecapabilities and value of prepay wireless services.

DISTRIBUTION TECHNOLOGY PARTNER PROGRAMBCGI created its Distribution Technology Partner program in 1999 to offer expandedprepay distribution to its North American carrier customers. This program enablessubscribers to replenish their prepay service at many more retail locations beyond thecarrier’s retail outlets. Western Union, Radio Shack, Datascape, UPP, and PreNet signedagreements for the program, providing over 75,000 potential points of distribution toBCGI customers. The Company is aggressively pursuing additional partners andarrangements for distribution including online activation and replenishmentopportunities.

WIN-BASED PREPAY SERVICESBCGI signed an agreement with AG Communication Systems (AGCS, a wholly ownedsubsidiary of Lucent Technologies) to jointly develop a Wireless Intelligent Network(WIN) based solution for prepay wireless service, including prepay roaming. This WINsystem will take advantage of the call processing efficiency and enhanced featurecapabilities of WIN Phase II standards, while building on BCGI's existing strengths in allareas of prepay service delivery and back office operation.


While WIN call processing will be the standard used by many prepay providers, BCGIcustomers will benefit greatly by continuing to receive industry-leading services in theareas of rating, reporting, distribution support, customer care, and replenishment.These services will enable BCGI to provide a state-of-the-art, full-featured platform tonew customers while allowing a smooth migration for current customers, includingroaming capability between WIN and non-WIN systems. Carriers will also have theopportunity to upgrade to WIN in certain markets and remain on the current C2Cplatform in other markets. The WIN service logic that BCGI and AGCS are developing isintended to operate on many Service Control Point (SCP) platforms, providing carriersthe flexibility to run WIN service logic on their own SCP platform if they choose.

E-COMMERCE AND M-COMMERCE APPLICATIONSBCGI is currently developing applications to utilize its extensive prepay network andreal-time rating engine for mobile and other electronic commerce opportunities.Because of the scale of its network and access to the largest wireless carriers in NorthAmerica, BCGI will be able to provide many companies the ability to bill users forproducts and services on a real-time, prepay basis, using any method of Web access.BCGI’s expertise in processing micro-payment transactions, currently handling over 50million transactions per month, provides potential customers an extremely cost effectivetransaction model. BCGI also believes that the market for prepay Internet purchaseswill be very attractive to the youth market. BCGI intends to leverage the financialinvestment in its existing technological infrastructure to facilitate mobile commercesolutions for wireless carriers, other telecommunications companies, and onlinemerchants.

BCGI AND THE FUTURE OF PREPAY WIRELESSBoston Communications Group, Inc. has been a leading provider of prepay wirelessapplications since 1995 and understands the case for making prepay wireless a success.A broad mix of consumers is finding prepay cards the simple, convenient way to makewireless calls. According to the Yankee Group, prepay callers will represent about 8% ofwireless users in the United States by the end of 2000.


COMVERSEwww.icomverse.com

OVERVIEWComverse, a unit of Comverse Technology Inc., is a leading provider of software andsystems enabling network-based multimedia enhanced communications services totelephone operators around the world. The company provides a wide range of solutionsincluding 3G-ready multimedia messaging, multi-protocol mobile Internet platforms,wireless data and short messaging services, speech-controlled portal, interactive voiceresponse and other personal communications services.

Comverse has supplied enhanced service solutions to 350 customers in more than 110countries, including many of the world’s largest operators: British Telecom, Cable &Wireless, China Telecom, Deutsche Telekom, MCI WorldCom, NTT, SingTel, Sprint PCS,Telecom Italia and Verizon. The Comverse system is operating in a wide variety ofdifferent network topologies, including several mixed-vendor environments, and inseveral sites is supporting over a million active mobile prepay users.

PRODUCTS AND SERVICESMOBILE PREPAY SERVICESMobile prepay service from Comverse offers a range of features and options, and can betailored to the specific needs of a particular country, region or community. The servicemonitors telephone usage in real-time to ensure that subscribers are never indebted tothe telephone operator. If all available prepaid credit is spent, any active calls aredisconnected. Further calls are barred until additional prepaid credit is purchased andapplied to the account. This principle of “no credit, no service” is applied not only totelephone calls, but to other chargeable services also, such as short message andwireless data activity.

Comverse offers a secure prepay service. Prepay credit and tariff details, rechargevoucher data, and other sensitive information are all stored in a centrally manageddatabase. Access to the system database is strictly controlled. Different types of serviceadministrator can be offered different levels of access, and different security levels canbe defined at each terminal location. All administrative activity is noted by the systemand logged to a secure file. An extensive set of reports and complete set of Call DetailRecords enable accurate accounting and reconciliation practices to be followed.

The Comverse prepay solution is flexible, and can be integrated with a wide variety ofnetwork and operations support environments. The system can inter-work with all majorswitching products, supports administrative interfaces to a variety of HLR products, andcan be managed from existing support systems using a published message-basedinterface. The system is scaleable and the same fundamental architecture can meet


diverse traffic requirements, from thousands to millions of active prepaid users.Redundancy is built into every system component, and no single point of failure willaffect service availability.

The more popular and widely used features of Comverse’ prepay service product include:

§ The construction of tailored tariff plans (from the very simple to the highlycomplex) from a large inventory of individual tariffs

§ Billing based on the location of both the caller and the called party, and hencesupport for distance-based billing

§ Billing based on day and time, including the use of regional or culture-specificcalendars

§ Support for concurrent tariffs, such as independent charging for airtime and long-distance usage

§ Periodic charges posted to a prepaid account

§ Automated support services, such as IVR-based recharging and balance query

§ Notification services, including various mechanisms to alert subscribers to lowbalance and pending account expiration

§ Multiple Classes of Service, allowing prepaid service features to be packageddifferently to different market sectors

Prepay Service can be combined with other multimedia services offered by Comverse,including voicemail, Internet-based messaging and mobile originated short messageservice, to provide an unrivaled degree of service and cost effectiveness.

PREPAID DATA SERVICESComverse has extended the prepaid concept to wireless data services (including GPRS).Comverse’ own data server technology is fully integrated with Comverse’ prepaid systemto allow subscribers to charge calling services, wireless data usage, SMS messages andother telephony services to their prepaid account and hence to just one balance. Onceagain, the underlying principle is “no credit, no service.” Wireless data usage ismonitored and charged in real-time to ensure that subscribers do not become indebted,even temporarily, to the service provider. A sophisticated array of charging options isavailable, including volume-based or content-based billing. Many of the features ofregular prepaid service have been applied to prepaid data services, providing a feature-


rich, flexible and scaleable solution that can be deployed to a variety of different networkenvironments.

TECHNOLOGYThe Comverse prepaid solution is based on the same technology as its successfulmessaging platform. This design choice leverages the flexibility and proven performanceof the Comverse messaging platform, which has been deployed to a large number ofcarriers around the globe. The distributed internal architecture allows additional platformcomponents to be added incrementally as service usage grows. Multiple platforms can becombined together into a single distributed arrangement, offering support for manymillions of prepay subscribers. Since the same underlying technology is used to deliverother enhanced services, it’s possible to deploy several different services at the sameplatform. The platform and services can be managed centrally through the use ofWindows NT-based administrative workstations. Data replication technology is used toensure data integrity and synchronization in a distributed platform configuration.

Of the various prepay system architectures that exist in the market today, Comverse iscommitted to a platform approach where all credit-related information (tariff plans,subscriber balance data, recharge information, etc.) is stored in a central, securedatabase. This approach delivers the level of security required by a system that controlslarge amounts of credit. It also allows the prepaid balance to be used for several types ofservice (prepaid SMS, prepaid data services, m-commerce activity, etc.) and not justvoice calls. This approach offers maximum flexibility and places no restriction on thechoice of handset that can be used by prepaid subscribers. Database information isalways current and information presented to subscribers and administrators is accurateand consistent.

The Comverse system can be configured to inter-work with the telephone network inseveral different ways. A traditional Service Node controls all aspects of a call, and offersthe widest set of features. An IN approach allows application logic to be injected into thecall at discrete points. The Comverse prepay platform can also be configured in pre-INmode, whereby IN features can be delivered using standard ISUP signalling. TheComverse prepaid platform can operate in more than one mode at a time, allowingcarriers to take advantage of the best of each interface or migrate between differentconfigurations with minimal impact on service availability. For example, prepaid servicescan be deployed using a pre-IN configuration with the platform migrating to an IN modeof operation once network switches have been upgraded to support IN triggers. This is aunique benefit of the Comverse prepaid solution, and can be used to mitigate the risksassociated with deploying IN-based services in the network. However, the same prepaidapplication and database are used in each platform configuration, and guarantee aconsistent interface to the prepaid user.


Comverse supports over 30 local variations of the ISUP standard, has adapted INstandards to be compatible with proprietary vendor implementations, has developed anadministrative interface to several HLR products, and offers IVR capabilities in most ofthe world’s major languages. It’s possible to deploy the platform in a mixed vendorenvironment, and even support multiple network technologies using the same platform.

COMVERSE APPROACH TO MOBILE PREPAYIntense competition resulting from a deregulated telecommunications industry hasconsumers shopping around to lower their telephone costs. This means that networkoperators must compete ever more intensely to attract and retain customers. Comverse’prepay solution extends the availability of phone service to new markets, enablinggreater access to communication and information via the Internet, e-mail, corporateIntranets and more. Now, location-dependent information services and mobilecommerce are within everyone’s reach. Comverse’ prepay solution helps networkoperators create unique service offerings while giving subscribers the freedom to controltheir voice and mobile data expenses.

Comverse believes that the long-term success of prepay programs depends less on thespecifics of a particular technology and more on the development of a strong partneringrelationship. To this end, Comverse provides localized product, marketing and servicesupport to its customers. Prepay services can be deployed and implemented via severaltechnologies and architectures. One solution may meet some service needs but notothers. Choosing the right solution requires an examination of technical, provisioning andmarket conditions. Comverse understands the importance of integrating prepaid serviceswith the local network, adapting prepay services to blend with existing supportprocedures, matching service features with changing subscriber expectations, addressingthe needs of multiple market segments, reacting to rapid prepay take-up rates, andleaving room for operator and subscriber creativity.

Comverse further supports its customers through its strong commitment to the prepaidmarket. New features are driven largely by existing customer requests, and Comverse iscontinually investing in new technologies and new services to further enhance its prepaidoffering. Comverse has taken a lead in applying prepay service principles to other areas,such as SMS and wireless data services, and closely monitors the progress of these andother emerging technologies. A Medalist marketing program allows Comverse customersto learn about, and benefit from, successful marketing campaigns from around theworld. These programs help to promote greater success in the deployment and growth ofa new or re-launched prepaid program.

COMVERSE'S VISION FOR PREPAYThere is no doubt that Prepaid Service has been a remarkable success across most of theworld. As service take-up begins to approach saturation levels in the more successfulmarkets, emphasis is shifting to the introduction of more advanced wireless


technologies, and in particular to wireless data services. It is imperative that prepaidservice users continue to be viewed as valuable, ‘main-stream’ customers, and thatadvanced services be offered to them regardless of their method of payment. PrepaidService must be adapted to meet the needs of these new technologies, withoutundermining the basic tenets of the service:

§ Real-time control of service usage§ ‘No credit, no service’§ Accurate and immediate charging for service use§ No indebtedness to the service provider§ Total security of prepaid credit and tariff information.

This is the challenge to the prepaid service industry. Wireless data services require acreative charging approach, one based on the extent of service usage, the content ofdata, the quality of service, and more. Supporting these services in a way that does notcompromise prepaid principles is a challenge that Comverse has already accepted.Prepaid wireless data services are an example of the company’s commitment in thisarea, and prepaid support for other enhanced services will emerge over time.

Comverse has become a leader in the delivery of prepay service around the world, andmaintains a commitment to its strong position in this arena.

For more information:

Comverse100 Quannapowitt ParkwayWakefield, MA 01880Phone: +1 781 246 9000Fax: +! 781 224 8143


LOGICAwww.logica.com/telecoms/products/[email protected]

Logica have established a leading position in the provision of prepay infrastructure andhave been supplying telecommunications operators around the world with prepayservices since 1996.

Logica provide a comprehensive range of pre-paid solutions through its series of AethosIntelligent Network Platforms (INP). The Aethos family will operate in a Service Nodeconfiguration or in an Intelligent Network (IN) configuration or as a hybrid of the twoapproaches. In any of these configurations, the Aethos system provides prepay callingsupport for voice, SMS messaging, GPRS and m-commerce transactions. Also providedis a comprehensive System Management, Administration and Customer Care capabilityvia the optional Aethos Intelligent Network Support System (INSS).

Initial marketing of prepay services was heavily focused on potential users who wereconsidered to have a poor credit history. This was a niche market and resulted in anumber of niche solutions characterized by limited functionality (usually only basic voiceservices) and low subscriber and traffic capacity.

In Europe, Asia Pacific, South Africa and the Australian sub continent, the prepay markethas evolved beyond the early “limited credit” users to become a mainstream serviceoffering targeting the mass market of potential mobile phone users. Marketing tacticssuch as “user control” and “life style” marketing has resulted in explosive take up ofservices. Today, many operators are reporting that prepay sales are outstrippingtraditional sales by a factor of more than two to one.

This change in emphasis puts increased demands on the platforms used to supportprepay services. Users now expect to be offered a full range of service options such asVoice Messaging, Call Diversion, SMS Messaging (both terminating and originatingservices), Data and Fax services – in fact anything that the network operator can supply.Prepay is now considered to be simply a method of payment, not a servicedifferentiation. Additionally, systems must now be able to scale upwards in order tohandle the increases in subscriber base and traffic that result from prepay’s marketingsuccess story. Logica report that their systems are supporting increases in capacity ofover 100 times the initial forecast requirement.

NUMBER OF DEPLOYMENTSLogica state that they have systems deployed in more than 30 networks in all parts ofthe world supporting systems ranging in size from l0,000 subscribers to many millions ofsubscribers and based on Service Node and IN system designs.


Known deployments of Logica systems include:

§ E-Plus in Germany§ Libertel in the Netherlands§ Telstra in Australia§ Vodafone in New Zealand§ Panafon in Greece§ KG Telecom in Taiwan

SYSTEM ARCHITECTURES AND DESIGN BENEFITSLogica’s Aethos INP (Intelligent Network Platform) system comprises a number offunctional elements that can be configured to support either a Service Node or anIntelligent Network (IN) system design.

Service Node implementations have a number of benefits that are important to networkoperators including:

§ Little impact on existing infrastructure

§ Usually faster implementation

§ Often more flexible service design is possible since fewer interactions with othernetwork elements are needed

§ Often lower cost (particularly for networks with less than 500,000 subscribers).

The main disadvantage to a Service Node implementation is the cost associated withrouting calls from the point of call origin within the network, to the Service Node andback again. The Aethos system has a distributed switching architecture that minimizesthese costs for network operators, however once subscriber numbers reach between500,000 and 1 million, an IN based solution is often the better choice. The Aethossystem design provides a seamless transition between these network architectures.

The Aethos INP consists of a number of software and hardware components, each ofwhich can be sized appropriately to meet specific functional and performancerequirements. In addition, system designs can be deployed which consist of differentcombinations of the available components.

THE SIGNALING AND IP SUB-SYSTEMThe signaling and IP sub-system is based on the world's leading programmabletelecommunications switch. Each signaling and IP sub-system is capable of expansion toa maximum capacity of 64 E1/T1 links, 64 C7/SS7 signaling links and, for practicalpurposes, an almost unlimited quantity of voice announcement (IVR) and DSP resources.


Multiple sub-systems can be added to provide higher signaling ad trunk capacity asrequired. This sub-system is also used to implement communications protocol layers andtherefore, most of the time-critical protocol functions do not impose any loading on thecontrolling computer systems.

THE SERVER COMPUTERSThe server computers are high availability business servers from Hewlett Packard.Logica’s Aethos software is supported on the full range of HP servers thereby providingscaleable solutions to meet the needs of the most demanding of applications. Theservers can be deployed in a clustered configuration with the software componentsoperating in a load-sharing mode across the computer cluster. This arrangement allowsfor processing capacity to be added in line with subscriber growth resulting in a cost-effective initial installation and secure expansion.

INP SOFTWARE ARCHITECTUREIn addition to switched call Service Node functionality, the Aethos INP offers thefollowing functions:

Service Control (SCF) - This function is used to control the progress of the call andtherefore the “look and feel” experienced by the prepay caller. The same Service ControlFunction is used with Service Node and with IN implementations so that any existingswitched call based services (SN) can be easily migrated to full IN services.

Service Resource (SRF) - The service resource functions are supported by theswitching sub-system and are accessed via a software layer by the service controlfunctions. Service Control requests the SSP2 to route calls to the SRF using theappropriate IN procedures.

Service Management (SMF) & Service Management Access (SMAF) - The AethosINP provides a range of integrated service management functions and flexible externalinterfaces designed to allow secure access for Network Operator's computer systems andend-users.

STANDARDS COMPLIANCELogica supplies systems that are standards compliant. Wherever applicable, they followthe standards laid down by ANSI, ITU-T and ETSI. However, they also recognize thatprotocol implementations are sometimes non-standard so the system design ensuresthat manufacturer or country specific variants can be implemented with ease.

INP CAPABILITIES§ Implementations using Service Node (switched call) of Intelligent Networking

(IN) call control 2 SSP stands for Service Switching Point


§ INAP protocol and Service Control Functions

§ Integrated Service Resource Functions for in-call announcements, DTMF digitinput etc

§ Service Management capability via optional Aethos INSS or Aethos provisioningprotocol

§ Service Management Access via IVR or WWW

§ Can utilize the services of the SSP

§ Multiple protocol variants in parallel -ISUP, ETSI INAP, WIN

§ Expandable thanks to a distributed system architecture

§ Support for external Intelligent Peripherals (IP)

§ INP will fully support IP functions for external SCPs

§ Configurable Service Management Access Point capabilities

§ Tariffing of voice, data, fax, SMS, GPRS and m-commerce services

§ GSM MAP including USSD

§ Evolution with IN standards (GSM CAMEL Phase 2 and WIN Phase 2)

INTELLIGENT NETWORK SUPPORT SYSTEM (INSS)Logica assert that a prepay service requires more than real time call control and tariffingcapabilities. To address the administration, management and customer care functionsthey offer an optional support system, the INSS.

INSS SYSTEM HARDWAREThe physical configuration of the system consists of HP UNIX servers. The clientcomponent of the support system uses industry standard PCs running Windows® or NT.

INSS APPLICATION SOFTWAREThe Aethos INSS consists of two sub-systems. The Customer Care and ManagementSystem and Recharge Card Management System. Both operate as Client/ServerApplications.


The Recharge Card Management System - is an integrated client/server applicationthat provides extensive capabilities to manage the logistics and inventory controlinvolved in moving recharge cards through a wide distribution network. It enables:

§ Secure generation of recharge card identity numbers§ Encryption of card data files for transmission to manufacturers§ Loading of card data into operational databases§ Tracking of cards in the distribution channels, throughout the card life cycle§ Secure activation/de-activation of recharge cards or vouchers

The Customer Care and Management System - offers the operator fulladministration and customer care facilities. Logica claim that these capabilities areneeded to implement an operational pre-payment service in the shortest possibletimeframe. It enables:

§ Customer maintenance§ Provisioning of subscribers in the Intelligent Network Platform§ Account enquiry and history§ Processing of balance adjustments (charges & credits) and call refund§ CDR/EDR3 processing§ Security/audit§ Optional Management Information System (MIS)§ Optional recharge transactions (for loyalty bonus etc.)§ Optional general charging (for processing and charging of external CDRs).

BENEFITS OF LOGICA’S PREPAID OFFERINGSThe Aethos Intelligent Network Platform is a multi-service platform (it will supportadditional applications such as Call Screening or VPN services as well as prepay). Thecore capabilities include:

§ Flexible service design§ Real-time rating and call control§ Number translation§ DTMF generation / recognition§ Routing based on multiple criteria§ Time of day / date based routing§ Pre/post and in-call announcements and tones§ Multiple services operating concurrently§ Telco standard manageability and reliability

3 CDR stands for Call Detail Record; EDR stands for Event Detail Record


Logica claim that the Aethos Intelligent Network Platform was developed with theunderstanding that Operator’s service requirements evolve with changing marketconditions. The following key advantages are stated:

§ Scalability§ Value for money§ Rapid deployment


NATIONAL TELEMANAGEMENT CORPORATION (NTC)www.ntcworld.com

OVERVIEWNTC develops call processing and billing systems for the communications marketplace.Services include prepay wireless under the brand name SmartPay Wireless, nationwideprepay roaming under the brand name iRoam , and unregistered or default roamingunder the brand name American Roaming Network.

NTC provides services to 13 of the top 20 cellular carriers. NTC has been the first to:

§ Automate credit card roaming and collect calling services§ Develop on-site processing for default roaming§ Implement account based prepay service§ Provide real time, third party nationwide replenishment§ Automatic prepay roaming across carrier networks§ Web reporting

NTC was acquired by Illuminet (www.illuminet.com) in the summer of 2000. NTC willfunction as a wholly owned subsidiary of Illuminet, a provider of SS7 and intelligentnetwork based services in the United States and parts of Asia.

PRODUCTS AND SERVICESSmartPay Wireless was introduced to the industry in February 1996. SmartPay wasdeveloped to meet the needs of NTC’s wireless carrier customers as they addressed thecredit denied market. NTC’s approach to the prepay market however was different fromother existing prepay models. Existing prepay systems treated prepay as a productrather than a means to mitigate the carrier’s exposure.

Existing prepay systems incorporated the use of debit cards or vouchers asreplenishment mechanisms. Debit cards and vouchers were treated as a product in thatthey had SKU codes, required inventory, card maintenance and PIN administration.Commissions ranging from a low of 15% to a high of 35% of the card value were paid tolocations selling the cards/vouchers.The experience of the prepay customer was totally different than that of postpaid. Rateplans were considerably higher, features were not offered and roaming was eitherlimited, or when provided, very expensive. It was truly third class service at a first classprice.

SmartPay was developed to be an alternative, real time billing system that mirrorspostpaid rate plans. Replenishments are treated as financial transactions rather thanretail transactions. The system is account based allowing money in the account to beused for long distance, features, roaming and airtime. Taxes are charged on usage,


rather than up front in the form of a sales tax. Account activity access and reports arereal time and available over the Internet.

American Roaming Network - provides unregistered or default roaming services tocarriers. Carriers route calls that come to their switch as unidentified or denied roamer toARN’s on site processor where the call is processed as either a collect or credit card call.NTC has automated the process by the use of on site processing equipment thatshortens the call processing time resulting in a larger percentage of completed calls. NTChas also automated the billing process that makes calling simpler and faster for the enduser.

IRoam - NTC’s nationwide roaming system, is a joint development effort between NTCand Lucent Technologies to provide real time, nationwide roaming. The crossfunctionality of iRoam will allow service providers the ability to offer prepay wirelesscustomers national, seamless roaming mirroring that of post pay roaming plansregardless if the call is from outside or inside the home network.

TECHNOLOGIESThe current NTC call processing system is based on a loop-around (trombone) andproprietary ISUP RLT technology. The call rating and billing system is based on aleading-edge proprietary database design, which allows for very discreet carrier marketsegregation and extremely fast, real-time call rating. The billing system is a web-baseduser interface that allows for quick and easy access to near-real time billing information.

The nascent prepay industry is and just beginning to accept prepay systems, which arenot mainstream (read non-telco originated).Challenges: Real-time call rating is very processor intensive and requires 100%availability of all data processing systems. To meet this challenge, NTC uses the mostcurrent client-server load-balancing, programming and hardware system designs.Roaming is not ubiquitous due to multiple vendor non-standard prepay solutions. No IS-41 standards exist for prepay or prepay roaming.

The next generation of prepay call processing, which does not require proprietary vendorsolutions, requires the pending TIA PN-4287 WIN standard. The acceptance of thisstandard by major telecom equipment vendors will signal the end of the currentproprietary trombone and RLT designs. There is an industry-wide concern that hardwarevendors may not widely or completely accept the release of the standard. This wouldresult in many non-standard IS-41 prepay implementations and would ultimately delay aubiquitous prepay roaming network. To offset this concern, NTC has developed andimplemented a patented, ANSI-41 standards-based prepay roaming solution callediROAM. This system allows for wireless carriers to integrate their prepay roaming intoone platform. This system operates independently of the WIN standards and wouldeasily integrate multiple carrier-prepay platforms when the WIN standards are complete.


The result of this combination of WIN and patented technology would be a seamlessNorth American prepay solution that supports all existing digital handset features athome and while roaming.

ROAMINGNTC utilizes two methods to provide prepay roaming. The first, or on-net model,incorporates the use of the American Roaming Network. Prepay MINs are unregistered.When a prepay subscriber’s call comes in to a carrier utilizing on-net roaming, the call issent to the on site ARN call processor where the MIN is identified as either anunidentified roamer, or a prepay roamer from another carrier. If the caller is a prepayroamer, an inquiry is made to a database asking 1) is this MIN active, 2) does the callerhave money in the account to cover this call and 3) is this subscriber allowed to roam. Ifthe answer to all three is positive, the call is placed. Any negative responses and the callare not allowed. If the caller’s account runs out of money during the call, the call isdisconnected even while the call is in progress. Net settlement is processed by NTC.

NTC’s iRoam system will allow real time roaming in off-net situations. A subscriber willbe able to place and receive calls anywhere that the home serving carrier has roamingagreements. MINs are registered as are the post-paid subscribers. Call charges arededucted from the caller’s account real time with net settlement processes betweencarriers through the carriers’ current clearinghouse and net settlement processes.

NTC APPROACH TO PREPAYIn the early development stages of SmartPay Wireless, much thought was given to thedefinition of prepay, and what would prepay look and feel like in two years, five yearsand 10 years. The consensus was that prepay wireless service is nothing more than analternative billing method that allows a carrier to mitigate exposure and that in thefuture, real time billing would expand that mitigation of exposure to the broader base ofpost paid service.

NTC also realized that in order for a carrier to be successful with prepay service plans,the sales and marketing personnel had to be convinced that prepay wireless is not justfor the credit challenged but rather for a broad segment of the market. NTC believesoffering prepay rates higher than post pay does not work.

Prepay wireless is the only product available today that penalizes a person for paying inadvance. For prepay to be successful, the treatment of the prepay subscriber must bethe same as post paid. Rate plans with similar calling areas that include features andprovide roaming must be offered.

Sales staff should be compensated fairly. If a sales representative receives $100.00 forselling post pay and $10.00 for selling prepay, it is pretty obvious what will be offeredwhen in fact, studies conducted by successful prepay wireless providers have shown that


prepay is more profitable than postpaid. Considering that there is no phone subsidy andlittle if any incremental sales cost, the sales agent should be paid the same for sellingprepay.

Sales distribution through agent locations has also proven to be very successful,especially when the carrier offers “phone in the box” packaging.

Replenishment must be simple, convenient and available 24 hours a day both in thehome market and while roaming. Multiple replenishment options must be available. TheNTC system does not use debit cards or vouchers that are expensive and difficult totrack. With debit card/vouchers there are commissions to pay, PIN administration costs,loss and theft. NTC uses an account card that has no value but is simply a means ofbranding for the carrier. NTC made the decision early on to find a company that couldprovide nationwide real time replenishment. NTC has an exclusive agreement withTravelers Express to furnish third party replenishment locations nationwide. SmartPayreplenishment can be by cash, credit card or bank draft.

NTC allows the carrier to perform customer service with on-line, real time customerinformation. The NTC system operates with Microsoft’s Windows 95 and 98 and isintegrated with the carrier’s customer service screens. Because most prepay customerservice questions deal with account balance information, which is available to thecarrier’s SmartPay prepay customer through a speed dial number on the handset, thenumber of customer service calls are a fraction of those experienced with post paid.

NTC BUSINESS MODELNTC offers carriers SmartPay in a service bureau business model. NTC receives apercentage of the per minute charge and access fees. The percentage amount is basedon MOUs per month. This partnering approach has been very successful and the carrierrealizes that NTC is successful only if the carrier is successful. Information includingaverage costs per minute, minutes of use, number of calls and average revenue per subis available to help a carrier evaluate rate plans and formulate future sales strategies.Because the NTC database may be partitioned, it is an ideal system for use withresellers. Minutes may be sold in bulk quantities and the reseller may have servicediscontinued when a pre-approved limit is reached just like the individual prepaysubscriber.

NTC VISION FOR PREPAYNTC has from the beginning viewed prepay wireless as nothing more than a billing optionthat mitigates the exposure of the carrier and opens new markets. As prepay developswith rate plans that more closely resemble those of postpaid, the line separating the twowill steadily disappear. Prepay services minutes of use have risen steadily while costs perminute have declined. Rather than a service for the credit challenged, prepay has


moved into the mainstream. Growth rate projections for prepay wireless over the nextseveral years are impressive.

The major switch manufactures have come to the realization that prepay service ismoving into wide acceptance from the marketplace and they have begun to incorporatereal time call tear down into proprietary products that will allow a carrier to offer a“home grown” prepay service. WIN, if and when it is available, will also aid individualcarriers in developing prepay services.

There are a few difficulties that lie ahead for the carriers using switch or WIN solutionshowever. Those difficulties are the inability to provide ubiquitous prepay roaming due tothe lack of inter-operability of proprietary systems, the lack of real time back roomfunctions and real time replenishment outside of the home market.

Carriers now have enough prepay experience to realize that prepayment of servicesreduces exposure, fraud, customer service expense, collection cost and operational cost.Carrier comparisons indicate that net revenue per subscriber on a prepay rate plan isnear or better than the net revenues from the subscriber on a postpaid plan. In thefuture carriers will realize the advantage of offering prepay, or more accurately, realtime billing services, to a broader segment of the market.

CONCLUSIONMobile prepay communications has a bright future due to the capabilities made possiblethrough deployment of advanced technologies. Within the next five years, we willwitness expanded exploitation of mobile IN technology for prepay service.Consequently, we shall also see expansion of services to prepay customers andcorresponding expansion of revenues to mobile operators. The acceleration of thisgrowth will be limited partially by technology availability but perhaps more so byhesitancy on the part of the mobile operator to deploy.

However, as other advanced technologies emerge, and e-commerce becomes morepervasive, telecommunications providers of all types will begin to realize the importanceof prepayment. While much of this prepayment will be over smart cards, all mobiledevices can not use smart cards nor are all consumers accustomed to their use. MobileIN will consequently emerge to both improve traditional voice oriented prepayapplications as well as provide capabilities necessary for many non-voice oriented e-commerce applications. The limitations are only based on the compelling applicationsthat require a mobile phone, prepayment, and network control of resources.


PSINET TRANSACTION [email protected]

PSINet Transaction Solutions is a communications network company specializing in theprovision of global financial transaction solutions, established in 1997. The companystarted trading as PSINet Transaction Solutions, in November 1999, following theacquisition of Transaction Network Services Inc. by PSINet. Transaction NetworkServices Inc. was founded in Virginia, United States in 1990 and, from its inception, itdesigned and implemented the fastest, most reliable, and lowest cost network availablefor the transport of transaction-oriented data. This unique technology is now deployedworldwide by PSINet Transaction Solutions, and has become the preferred networkservice in the card processing and dial-up automated teller machine markets.

Through its global, managed, end-to-end solutions, PSINet Transaction Solutionsdesigns and operates private, secure networks that transport EPOS, ATM, e-commerce, banking, securities and other financial data for business. Working inpartnership with clients and third party suppliers, PSINet Transaction Solutionsprovides bespoke solutions that make transactions faster and more efficient.PSINet Transaction Solutions also provides management facilities such as real-time web based transaction tracking that enable companies’ to enhance theirservice levels and customer service.

With millions of people all over the world each repeatedly using their credit anddebit cards more and more, the number of transactions is growing. It is theprocess behind each of these transactions that PSINet Transaction Solutionssupports by connecting EPOS and ATM terminals to the acquiring bank’s hostcomputer.

TRANSACTION SOLUTIONS PRODUCTS & SERVICESPSINET PRE-PAY SOLUTIONSPSINet Pre-Pay Solutions allows acquirers and mobile phone operators to provide costeffective electronic top-up solutions, replacing the established paper based methodglobally in use at present. PSINet Transaction Solutions can provide an electronicsolution that will reduce cost, combat fraud and provide a convenient channel forcustomers purchasing additional airtime. (For more detailed information, please readon).

PSINET POINT OF SERVICE SYSTEMSPSINet Transaction Solutions is the world leader in providing EPOS transaction systems.Originally designed for credit and debit card services, EPOS technology also transportstransactions for ATMs, electronic benefits, health care, gaming, security alarms,inventory control, order entry, and other transaction-oriented applications. With over


60% dial-up EPOS market share in the UK and over 60% in the US, PSINet TransactionSolutions transports over 32 million transactions per day.

PSINET AUTOMATED TELLER MACHINE SYSTEMSPSINet Transaction Solutions is the leading provider of dial-up ATM networkservices to support the increasing trend of using ATMs in non-bank locations. ThePSINet Transaction Solutions approach enables ATM operators to deploy new ATMsrapidly and to replace the costly leased line networks that historically havesupported ATMs. PSINet Transaction Solutions now handles more dial-up ATMtransactions than any of its competitors.

PSINET PRE-PAY SOLUTIONSCUSTOMERSPSINet Transaction Solutions already supports electronic top-up facilities for Orange, theUK’s fastest growing mobile phone network operator, and Vodafone, operators of theUK’s largest mobile phone network. In addition, top-up communications solutions areprovided to a number of independent service organizations.

GLOBAL, END-TO-END SOLUTIONSPSINet Transaction Solutions has a secure, reliable network, with immediate access tocredit and debit card processors. This technology, which is the market leader in theEPOS environment, is already bringing many benefits to the market for electronic top-ups.

Mobile operators are moving to electronic mechanisms as a means of reducing theadministrative overheads associated with paper-based top-up processes.

The mobile phone operator can simply issue its pre-pay customers with an electronicswipe card containing their account details. This will allow customers to purchaseadditional airtime from an electronic terminal in a retail outlet, using existing EPOS andATM infrastructure.

PSINet Transaction Solutions is supporting the deployment of such schemes withschemes that enable the on-line authorisation of both payment card and the pre-payairtime account. Such on-line solutions are dramatically reducing the potential for fraud.

PSINET'S STATED FEATURES & BENEFITSCheaper – because it’s electronic and not paper-based, administration costs arereduced.

Convenient – utilising existing EPOS and ATM infrastructures, the potential is forcustomers to be able to top-up their phone at any of hundreds of thousands ofconvenient locations.


Faster – this system means customer’s will not need to register their voucher onfrustratingly busy telephone lines. It also means that the mobile phone operator willhave an accurate, real-time view of how much airtime they have sold.

More secure – without the need to distribute and track paper-based vouchers, theservice is more secure. The risk to retailers is also reduced, as they do not have to holdstocks of vouchers, which are essentially virtual cash.

Management information – PSINet Transaction Solutions can provide customisedmanagement information to suit your business needs.

Network Management – a management centre monitors all elements of the network24 x 7 to ensure the highest quality of customer service.

PSINet Transaction Solutions can supply a fully robust network enabling customers totop-up their mobile phones electronically, and enabling us to support your companybetween the terminals in the retail outlet to your host.

PSINET MOBILE OPERATOR PRE-PAY SUPPORTPSINet Transaction Solutions has a dedicated team to provide transaction solutions tohelp enable mobile operators to provide convenient, and cost-effective paymentmechanisms for customers to purchase pre-pay talk time.

PSINet Transaction Solutions is already working with two of Europe’s leading mobileoperators, Orange and Vodafone, to provide transaction solutions for their customers inthe UK, and this new team will enable the company to further develop and providetailored solutions to the pre-pay market as it continues to develop in the coming years.

CASE STUDY 1: ORANGE LAUNCHES NEW PREPAY SYSTEM FORJUST TALK MOBILE CUSTOMERSOn December 5th, 2000, Orange launched a swipe card system to replace its existingpaper vouchers for pre-pay Just Talk customers. Transactions generated by the newsystem are supported by PSINet Transaction Solutions, which processes all transactionsand manage settlement and reconciliation services, leveraging its transaction networkand switching capabilities.

The new system will enable Orange Just Talk customers to purchase talk-time at Orangeshops and approved retail outlets, using existing EPOS terminals, with their ownpersonal swipe card. This eliminates much of the inconvenience that has existed for bothcustomers and retailers with the paper vouchers system.

This Orange payment service will first be available in over 16,000 participating outletswith rapid rollout throughout the rest of the UK over the next twelve months. Orange


Just Talk customers will be able to collect a free account card from participating stores,which can then be registered to their phone with the option of having more than onecard available for use with one phone. Customers can have up to five cards registered totheir phones, enabling family and friends to top up remotely for them.

PSINet Transaction Solutions has provided Orange with a processing service directlyconnected to EPOS host systems that acquire transactions from all those retail outletsauthorised to sell Orange pre-pay talk-time. This new service enables the retailer toprovide instant, effortless Just Talk air-time to the customer who simply hands over theirOrange Just Talk account card and their chosen method of payment - cash ordebit/credit card. The retailer then credits the customer’s pre-pay account with thespecified value, which immediately provides the customer with additional airtime.

CASE STUDY 2: UNIQUE SOLUTION HELPS VODAFONE PROVIDENEW PRE-PAY TOP-UP SERVICEOn February 7th, 2001, PSINet Transaction Solutions, was chosen by Barclays MerchantServices to provide transaction network services for its new electronic top-up service forVodafone’s pre-pay mobile phone customers. Vodafone's new electronic top-up serviceenables its customers to top-up their airtime at participating retail outlets using apersonalised top-up swipe card.

The solution enables the pre-pay customer to simply present their swipe card, along withtheir chosen method of payment such as cash, debit or credit card, to the retailer andtheir pre-pay account is then credited in real-time with the additional airtime purchased.This electronic solution alleviates much of the administration, risk and expenseassociated with the paper voucher system that has been in use since the introduction ofpre-pay mobile phones.

PSINet Transaction Solutions is utilizing its network and host processing solution to linkBMS Point-of-Sale terminals at retail outlets, with the Vodafone host computer. Each ofVodafone’s pre-pay customers will be issued with a top-up swipe card that is unique totheir phone.

PSINet Transaction Solutions also provides Barclays Merchant Services and Vodafonewith management information on all transactions, as well as facilities to monitor the pre-pay transactions in real time.

For further information about any aspect of our products and services, please callPeter Lyster of PSINet Transaction Solutions on +44 (0) 114 292 0143 or [email protected]


Q COMMwww.qcomm.com

Q Comm International, Inc. is a prepaid mobile transaction processor and informationservices company. Q Comm produces a hardware and software system, calledQxpress™, that enables any retailer around the world, including grocery stores, gasstations, and mini-marts, to electronically replenish their customer’s prepaid mobilephones.

Q Comm is based in the United States, has been in the telecom business since 1992, andbecame a public company in 1998.

PRODUCTSimilar in size and appearance to credit card processing terminals, Q Comm’s Qxpress™terminal plugs into a standard phone line and prints prepaid wireless replenishmentvouchers/cards from any operator, in any denomination, on demand. This enablesretailers to eliminate inventory, theft, and stock outages, while providing uniquereporting and inventory management solutions to operators, agents, and retailers.

Only simple programming from Q Comm’s data center is required to add products froman operator throughout Q Comm’s entire retail network. The products offered throughQxpress™ can be customized for each individual retailer.

In addition to prepaid wireless, Q Comm currently delivers long distance (phone cards)and home dial tone service through Qxpress™.

Qxpress™ essentially acts as a conduit through which Q Comm helps operators deliver avirtually unlimited bandwidth of prepaid mobile and other services. This flexibleelectronic platform gives Q Comm, its partner retail sites, agents and operators theability to quickly grow sales at relatively little additional overhead, increasing profitabilityamong all parties.

Qxpress™ units are installed in retail locations by Q Comm and its authorized distributors- usually major telecom agents, food wholesalers, and mobile operators.

Q COMM’S VISION FOR PREPAID MOBILEQ Comm forecasts strong prepaid mobile growth worldwide over the next decade. Whilethe U.S. lags behind Europe and many other places around the world, Q Comm believesthat the U.S. will begin to resemble Europe in terms of the widespread acceptance ofprepaid mobile services in the next few years. This will occur as prepaid pricingcontinues on its trend toward parity with postpaid in the U.S. and as major, trusted


operators such as AT&T and Verizon place their seal of approval on prepaid with theirpromotion and endorsement of the product.

With prepaid mobile being predominantly chosen over postpaid throughout much of theworld and just emerging in the U.S., retailers, agents and operators will boostinvestments in systems that improve product delivery efficiency. This will includeconverting from the traditional vouchers to efficient, electronic replenishment systems toeliminate prohibitive inventory costs, out-of-stocks, and theft, and to achieve improvedinventory reporting and management.


Q Comm International, Inc.1145 South 1680 WestOrem, Utah 84058USAPhone: (801) 226-4222Fax: (801) 222-9555


SICAPwww.sicap.com

SICAP, provides a suite of innovative and secure solutions in mobile telecommunicationsand mobile commerce. SICAP offers a variety of products in the area of prepay & billing,prepay roaming, add-ons for existing prepay systems and mobile commerce.

Through combination and multiplication of flexible software modules, SICAP creates newsolutions with a short time-to-market. In the prepay & billing segments, it providesservices and solutions such as customer loyalty programs, CDR handling, CDR viewing aswell as customer management and GPRS/IN integration. SICAP also offers credit cardreload, information servers as well as over the air solutions.

Several customers have already successfully launched prepay roaming solutions basedon SICAP's prepay roaming platform. Recently, SICAP rolled out a mobile paymentsolution in cooperation with a global softdrink provider which allows a customer topurchase a beverage from a vending machine with a mo-bile phone. Based on itssignificant experience in international mobile communications, SICAP has a strongmarket position. SICAP has customers in Europe, Asia and Latin-America - Operators aswell as service providers.

SICAP PREPAY PRODUCTThe SICAP prepay is a flexible platform, which can be run in various modes includingHot-billing, service node/call forwarding, advice of charge, or in combination with an INplatform. The advantage of the system are low investment costs and clear migrationpath to IN. Therefore if your business strategy demands an Intelligent Network (IN)prepay solution but you are concerned about high up-front investment costs while yourbusiness grows, or you are confused by the lack of IN standardization. SICAP prepayprovides intelligence now in your network for your pre-paid products and allows you tomove your network to IN prepay when the time is right for you.

SICAP claims that their prepay works especially well for:

§ A young network with aggressive expansion plans

§ A small or medium-sized network

§ Need worldwide prepay roaming as a standard part of your national pre-paidproduct

§ A network with plans to move to IN based prepay


ROAMINGThe SICAP platform allows for roaming via USSD and call-back. This methodology isdiscussed in the roaming section of this report.

RECHARGEThe SICAP platform can interface to a pre-existing voucher system and can collectrequests for replenishment via voice response unit, SMS, or USSD. Alternatively, thesystem can be equipped to generate its own vouchers.

REPORTINGThe SICAP prepay platform offers both on-line and off-line detailed statistics includingcustomer data, calling data such as recharge information and calls made, informationabout MSISDN blocks used, information about roaming calls, distributor information(how much income from prepay distributors), and user defined reports.


SICAP LtdBernstrasse 343072 OstermundigenSwitzerland


TELEMAC CORPORATION

Telemac is the global leader in developing and commercializing technology for handset-based billing and accounting solutions, including prepay wireless technology and m-commerce transactions. Telemac Technology™ has been licensed to wireless serviceproviders on five continents (Africa, Asia, Australia, Europe, and North America). Morethan 6,000,000 Telemac-Enabled™ mobile phones have been sold worldwide.Considerably, more consumers use Telemac-Enabled™ mobile prepay phones than usemobile phones configured with all other handset-based prepay technologies combined.

VISIONTelemac’s first product, introduced nearly 10 years ago, provided a mechanism forlimiting the credit balances in traditional post-paid cellular phones. Then, in 1996,Telemac began beta testing the first handset-based accounting software for prepaywireless services. In recognition of its pioneering work, Telemac has received multipleU.S. and international patents for handset-based billing and accounting software, andhas patents pending in over 30 countries.

Now, Telemac continues its pioneering work:

§ Enhancing the functionalities and security of its prepay technology, which hasbecome the global standard for handset-based prepay wireless technology;

§ Commercializing and enhancing SmartUse™, which provides a range of billing andaccounting solutions for traditional post-paid wireless customers;

§ Completing development of content-based billing, and other functions to supportwireless data applications, including m-commerce / e-commerce; and

§ Developing functions for other terminals, such as intelligent personalcommunicators, focusing on wireless secure financial transactions and Bluetooth.

TELEMAC TECHNOLOGY™Telemac’s current product, Telemac Prepay Technology™, is a unique, patented switch-independent, handset-based billing solution for wireless networks. Telemac PrepayTechnology™ is a complete real-time billing system that can be integrated into all digitalformats. The system consists of Telemac’s DAS™, IMA-Modules™, TRAC®, and certaininterfaces. Telemac’s IMA-Modules™ reside in the handset and "enable" the handsets tocommunicate with Telemac's DAS™ software, operated by a wireless service provider.Utilizing TRAC®, a wireless service provider is able to initialize the IMA-Modules™ to lockTelemac-Enabled™ handsets into the selected network. Telemac Prepay Technology™


then uses powerful encryption technology to transfer the user’s credit within thehandset.

Telemac’s technology allows the handset to securely monitor the value of all calls made,and decrement the credit balance, so that the user’s credit level is never exceeded.Telemac Prepay Technology™ has propelled BT Cellnet to more than five million prepaysubscribers in less than two years.

Telemac Prepay Technology™ is the only fully turnkey switch-independent prepaysystem available to wireless service providers. Telemac Prepay Technology™ supportsWAP, complements all wireless intelligent networks, and is compatible with future 3Gtechnologies.

Telemac Prepay Technology™ is licensed to wireless service providers by Telemac in avariety of implementations, ranging from a license from Telemac with on-going technicalsupport, to a technical service bureau with the Telemac Advantage™; to a fully managedservice utilizing the BriteStar™ System from InterVoice-Brite Inc. (“IVB”) With a servicebureau or a managed service, as with any other implementation, each wireless serviceprovider retains full control over every aspect of the service. Not all implementationsare available to all service providers; certain capabilities are planned for introduction in2000 and 2001.

Telemac Advantage™ is a complete end-to-end technology solution for handset-basedprepay, post-paid, and transactional services for digital wireless service providers.Telemac Advantage™ features Telemac Prepay Technology™, Telemac SmartUse™Technology, and sophisticated subscriber and line management technology, including therelated links, protocols, and user interfaces necessary for an end-to-end technologysolution. Not all features of Telemac Advantage are currently available.

The BriteStar™ System, available from IVB, consists of Telemac Prepay Technology™and sophisticated subscriber, line management and financial technology developed byIVB, as well as a state-of-the-art call center and operations managed by IVB, a leader ina wide range of technology services for the global telecommunications industry. Uponrequest, SmartUse™ Technology can also be incorporated into a BriteStar™ System.

Telemac’s SmartUse technology applies Telemac’s unequaled performance in prepaytechnology to traditional post-paid wireless services. With a SmartUse™ system,traditional post-paid subscribers and their employers can monitor call usage,professionals can obtain billing records by client, service providers can control excessusage by subscribers with limited credit, and the mobile phone can be used for a growingrange of data, m-commerce and e-commerce transactions. Not all features ofSmartUse are currently available.Telemac Technology™ is designed so that additional functionalities can be added to theDAS with minimum disruption – generally, a software upgrade is all that may be


required. Thus, a wireless service provider may choose to license both Telemac PrepayTechnology™ and SmartUse™, or to begin with one functionality and later upgrade toadd additional services.

Telemac Technology™ offers full national and international roaming capabilities andsupports a real-time handset display of account data, as well as multiple tariffs forcomplex billing categories, such as local, long distance, international, incoming,operator-assisted, roaming, special numbers, mobile-originated and terminatedmessaging, WAP, and other categories specified by a wireless service provider.

With Telemac Technology™, a wireless service provider is able to directly communicatewith each handset through SMS or other data paths to augment account balances,change rates, offer special promotions, and offer multiple classes of service, includingpeak/off-peak billing. In digital formats and in certain analog formats, no userinteraction is required for the service provider to communicate with the mobile phone.

With the Telemac Advantage™, or BriteStar™, a wireless service provider can alsolicense sophisticated subscriber and line management technology to maximize thefunctionality of Telemac Prepay Technology™. Alternatively, many network operatorsalready own the hardware and most of the software required to implement a prepayprogram using Telemac Prepay Technology™. For those network operators, Telemac’score technology and a limited number of additional interfaces licensed by Telemac or IVBmay be all that is necessary technically to launch a prepay service.

Telemac does not manufacture phones or provide wireless services to consumers.Rather, Telemac licenses handset manufacturers the right to integrate Telemac’spatented IMA-Module™ into mobile phones, and licenses wireless carriers, resellers andother wireless service providers the right to utilize Telemac’s patented DAS™ software,which allows wireless service providers to offer state-of-the-art prepay programs andother billing and transactional services with an initial investment of less than one milliondollars.

Telemac works closely with each of its licensees to integrate Telemac’s technology intothe licensee’s products, and to provide on-going support to enhance and customizeTelemac Technology™ to meet each licensee’s needs. Telemac will also assist inmanaging the technology implementation, if requested to do so by a licensee.

Without using network resources, Telemac Technology™ is easily scalable fromthousands to millions of subscribers. Telemac Technology™ works efficiently within anexisting wireless network, and offers features that are not yet available with intelligentnetwork technology. Due to the efficiency of the design, there is minimal impact on thewireless network as the number of subscriber’s increases.


Telemac was founded in 1990, and commenced limited prepay services in 1996 when thefirst cellular phone incorporating Telemac Prepay Technology™ was introduced in LasVegas. Telemac’s licensees began launching full commercial operations in May 1998.

British Telecom’s BT Cellnet prepay program in the U.K. utilizing Telemac-Enabled™ GSMhandsets is one of the most successful launches of a wireless program in the history ofthe United Kingdom.

In the United States, prepay wireless services utilizing Telemac Prepay Technology™ areoffered by numerous local carriers, and nationally by Shared Technologies Cellular Inc.under its marketing venture with MCI WorldCom Inc. Telemac-Enabled™ handsets aresold in the United States via the Internet, television direct response, and nationalretailers.

Telemac’s licensees also are planning to launch service in Australia, Asia and Africa.

During 1999, total worldwide airtime using Telemac Prepay Technology™ approached$500,000,000.

Telemac’s global handset licensees include Motorola, Royal Philips Electronics, RokCommunications, and Sensei Ltd.

Telemac holds U.S. and international patents and patents-pending covering wirelessphone accounting, programming, distribution, tracking and call accounting controls, aswell as related wireless technology.

TELEMAC’S MISSIONTo develop and market proprietary leading edge handset-based billing and accountingsoftware and systems to create innovative and economical solutions for wireless serviceproviders, handset manufacturers, and their customers. Telemac has an unshakeablecommitment to the needs of our licensees and the public who use Telemac-Enabled™phones.

HANDSETSIn 1997, Telemac entered into a manufacturing agreement with Philips ConsumerCommunications, L.P. (“PCC”), a joint venture of Royal Philips Electronics N.V. (“Philips”)and Lucent Technologies.

At the end of 1998, Philips succeeded to the business previously undertaken by the jointventure. Since that time, PCC has integrated Telemac technology into both analog anddigital handsets, including the ISIS™ (AMPS / N-AMPS), the Diga™ and the Savvy™ (900MHz GSM handsets), and the Genie , a dual band 900 MHz / 1800 MHz handset. Philipsis now integrating Telemac’s technology into the Ozeo™, a TDMA mobile phone.


In January 1999, Telemac licensed Sensei Ltd. to integrate Telemac Prepay Technology™into its GSM handsets. In May 1999, Telemac licensed Motorola to integrate TelemacPrepay Technology into all analog and digital handsets. Motorola’s first Telemac-Enabled handsets are M-Series 900 MHz GSM band and 900 MHz / 1800 MHz dual bandhandsets. Motorola intends to introduce additional Telemac-Enabled™ models in 2000.

In May 1999, Telemac also licensed Rok Communications Ltd. (“Rok”) to customize andmarket Telemac-Enabled™ handsets to be manufactured by licensees selected by Rokand Telemac. Rok is working with Telemac to customize and increase the availability ofTelemac-Enabled™ handsets.

Telemac is now in advanced negotiations with additional handset manufacturers tosignificantly expand the selection of analog and digital Telemac-Enabled™ handsets.

PREPAY SERVICESPrepay wireless programs utilizing Telemac Prepay Technology™ have been licensed inAustralia, Israel, Namibia, Seychelles, South Africa, St. Maarten, the United Kingdom,and the United States.

NORTH AMERICAIn the United States, Telemac’s strategy includes a national program from SharedTechnologies Cellular Inc. (“STC”) and MCI WorldCom Inc., and local carrier programs.

Introduction of a national prepay wireless service utilizing Telemac-Enabled™ PhilipsISIS™ handsets began in May 1998, with STC as Telemac’s national wireless serviceprovider. National advertising began in June 1998, utilizing spokesperson Dick Clark.

STC, a national wireless reseller, provides prepay wireless service through a network ofcarriers covering 98% of the United States. From inception, STC and its affiliatesdistributed Telemac-Enabled™ handsets via national retailers and television directmarketing.

In February 1999, STC entered into a marketing and distribution venture with MCIWorldCom, adding one of the world’s most powerful telephony brands to Telemac’snational prepay program. MCI WorldCom now has joint responsibility with STC fordistribution of Telemac-Enabled™ handsets, and for consumer marketing of MCIWorldCom/STC prepay wireless services.

With the participation of MCI WorldCom, Telemac-Enabled™ handsets are now offeredvia the Internet, national retailers such as KMart, Bradlees and Ames, and by HomeShopping Network.


The analog local carrier program began in 1997, and now includes Cellular One affiliates,as well as numerous other carriers offering Telemac analog prepay services.

At the end of 1999, Telemac began marketing the Telemac Advantage™, a completeend-to-end technology solution for digital prepay and SmartUse™ services. With thisprogram, Telemac has added sophisticated subscriber and line management technologyto its core Telemac Technology™.

Beginning in 2000, InterVoice-Brite Inc. (“InterVoice”) began U.S. marketing for theBriteStar System™, which combines Telemac Prepay Technology™ with hardware andsoftware developed by InterVoice, as well as a fully managed call center and servicebureau operated by InterVoice. The BriteStar System™ was introduced in the U.K. in1998 and has helped propel BT Cellnet to more than 5,000,000 subscribers.

Despite the need to create market acceptance for prepay services in the United States,over 300,000 Telemac-Enabled™ handsets have been activated since June 1998.

EUROPEIn December 1997, Telemac entered into a marketing agreement with Brite VoiceSystems Inc. In mid-1999, Brite merged with InterVoice Inc., creating InterVoice-Brite,Inc. (“InterVoice”), a highly regarded global technology firm. Working together, Telemacand Brite developed the BriteStar System™, which offers compelling advantages,including cost, rapid deployment, and an array of features.

On July 16, 1998, British Telecom's wireless affiliate, BT Cellnet launched service in theU.K. using the BriteStar System™. BT Cellnet committed approximately US$8,000,000in advertising to the launch of its initial Telemac prepay services: “Easy-Life” and “U”,two programs that target different demographics with customized rate plans.

Today, BT Cellnet offers four separate prepay programs using the BriteStar System™,with retail sales through over 20,000 stores and kiosks, and roaming service throughoutEurope. More than 5,000,000 Telemac-Enabled™ mobile phones have been activated inthe U.K. BT Cellnet’s prepay wireless program, one of the most successful wirelessprograms in U.K. history, continues to grow.

To enhance Telemac’s ability to provide resources to its European licensees, inSeptember 1999, Telemac established a U.K. subsidiary and opened a Europeanengineering office in Manchester, England.

InterVoice-Brite is now in advanced negotiations to launch BriteStar™ service inadditional European countries.


AFRICA, ASIA AND AUSTRALIAIn March 1999, Telemac entered into a technology license and development agreementwith GSM Cellular (Pty) Limited, since acquired by Vodacom, an affiliate of Britain’sVodafone Airtouch PLC.

Under the agreement, Vodacom has the right to launch both prepay and SmartUse™services in Australia, Israel, Namibia, Seychelles and South Africa. As a result,Telemac’s technology will be the foundation for prepay programs on every continent,except only Antarctica and South America.

SMARTUSE™ SERVICESAs early as 1990, Telemac’s engineers had developed handset-based applications fortraditional post-pay customers. But, it was not until 1999 that Telemac began licensingthese uses to its customers.

During late 1999, Telemac began licensing SmartUse™ technology, a suite consisting ofvarious cost controls and tracking functions for traditional post-paid customers, as wellas handset-based transactional capabilities.

Telemac’s handset licensees are expected shortly to begin integration of enhanced IMA-Modules incorporating SmartUse™.

In March 1999, Telemac entered into its first license for SmartUse™ technology, when itincluded certain SmartUse™ features in its technology license and developmentagreement with GSM Cellular.


PREPAY ORGANIZATION PROFILES

INTERNATIONAL TELECARD ASSOCIATIONwww.telecard.org

HISTORYIn 1995, a small group of like minded prepaid phonecard leaders gathered with a simplebusiness plan and a grand vision: to develop a trade association representative of therapidly growing and extremely lucrative telecard industry. The association rested on akey operating premise: that there be a unified interest among those involved early inthese efforts. All those employed in the industry, both then and now, have had anardent desire to see the prepaid world prosper and its consumers treated equitably. Inthis way, companies that are in direct competition with one another professionally mayyet join forces for the good of the industry. From that early meeting grew the USTelecard Association, located on Capitol Hill in Washington, DC, and maintained by astaff headed then and now by Howard Segermark, Executive Director. The USTA quicklybecame the unified industry voice on prepaid telecom issues. The founders of the USTAalso had a hand in the formation of the Canadian Telecard Association in 1997. Toreflect the wider scope of the prepaid industry abroad, the association changed its nameto the International Telecard Association soon thereafter and is now in the process oftaking on a more accurate mantle: the International Prepaid CommunicationsAssociation.

MEMBER COMPANIESThis new association name encompasses the wide variety of products and services ourmembers provide to the prepaid telecom arena, among them phonecards, dialtone, longdistance, wireless and VoIP. Members of the association represent an expansive array ofindustry services and products: switched resellers, CLECs, wholesalers, distributors,ISPs, vending machine operators, printers, software developers, service bureaus,wholesale long distance distributors, IXCs, publishers, switchless resellers, legal andregulatory consultants, RBOCs, IP telephony service providers, wireless providers, LECs,brokers, agents, local service providers, promotional card producers, vendors, retailers,professionals, media and dealers.

MEMBERSHIP BENEFITSMembership in the ITA signifies a particular firm’s professional commitment to thepromotion and growth of the prepaid industry and a willingness to put ones business andpractices fully behind that commitment. The ITA has vastly expanded and evolved overthe past five years into an association representative of all aspects of the prepaidmarket, and now speaks as a unified voice for an expansive array of member companies.

Committees of the ITA represent a wide array of industry interests and garner a highlevel of active involvement from our members, and are as follows: Executive, Consumer


Education, Dealers and Collectors, Legal Tax and Regulatory Affairs, Membership andDevelopment, Patent, Standards and Wireless.The mandate and vision of the ITA is as follows:

§ Promote the use of prepaid telecommunications by educating the general public,businesses and public policy officials about industry issues. The ITA has beeninvolved in promoting the prepaid industry via numerous media outlets includingDateline NBC, The Wall Street Journal, 20/20, The Today Show, Money Magazine,Intele-Card News, Telecom Business, Phone + Magazine and Vending Times.

§ Represent the interest of our member companies in particular and of the industryat large, before government agencies, legislatures, regulators and non-governmental groups. This is accomplished via close interaction and networkingwith, among others, state Public Utilities Commissions, Attorneys General, theFederal Communications Commission and the Federal Trade Commission.

§ Speak as a representative on behalf of our members’ interests before legal,regulatory and tax gatherings. The ITA sponsors an annual Tax and RegulatoryForum at which a panel of experts in the regulation and taxation of prepaidtelecom empower the attendees to take a leading role in industry affairs. The ITAis also in the midst of the development of a Regulatory Oversight program whosepurpose is to urge equitable enforcement of all regulations within the prepaidindustry.

§ Develop technical and ethical standards for the prepaid industry and encouragethe upholding thereof. The ITA Phonecard Disclosure Guidelines have beenadopted by numerous regulatory bodies and enforced as the norm for those whooperate in the prepaid industry. The newly formed Committee on PrepaidWireless Affairs is also currently developing comparable industry disclosureguidelines for the cellular segment of the industry.

§ Offer an ombudsman service to consumers with inquiries or concerns. A toll-freehotline manned by ITA staff provides assistance to consumers with prepaidphonecard inquiries. The education and protection of the prepaid consumer is ofparamount importance and of high priority within the vision of the ITA.


International Telecard Association904 Massachusetts Ave NEWashington DC 20002V 202.544.4448F [email protected]


THE GLOBAL BILLING ASSOCIATIONwww.globalbilling.org

With billing increasingly at the forefront of the telecoms debate on new services, theGlobal Billing Association (GBA), formed in 1998, aims to promote a greaterunderstanding and awareness of the importance of billing processes and systems withincompetitive environments.

One of the GBA’s key objectives is to enable operators to react quickly to marketchanges, technological developments and new service offerings. In order to achieve this,an unprecedented spirit of co-operation and mutual benefit is currently being fosteredbetween the demand and supply sides of the industry with a series of ground-breakingdiscussion groups.

DEBATE AND DIRECTIONBy facilitating structured industry debate on key issues, the GBA is in a position tocommunicate the challenges, vision and ideas of the billing community directly on to awider audience. It is through the GBA’s active participation in the emerging network oftrade associations and standards bodies that the billing industry is now acknowledged ashaving a vital role in the delivery of future services.

One major initiative has been the launch of the GBA Operators Focus Group, which hasbeen created to enable the GBA to address the more immediate problems facing BillingManagers. The Group, led by Carl Hassan, Director of International Billing at Level(3)and recently elected President of the GBA, deals with many of the universal issues thatimpact carriers and operators globally, and output from this focus group benefitsmembers worldwide.

Additionally, last year the GBA identified four major themes that have been furtherdefined for 2001. This initiative has been successful in proving that a concentration ofresources and intellectual debate produces genuine results and benefits for members.Workshops, facilitated by the GBA, allow service providers and carriers to exchangeviews and share experience and information within a confidential and structuredenvironment. The findings of these workshops are then channeled back to members.

The focus areas cover:

§ Billing for Content§ Pre-paid§ Quality of Service§ Roaming§ Wholesale§ Electronic Bill Presentment and Payment (EBPP)


§ Interconnect§ Total Quality Billing

BILLING FOR THE HERE AND NOWAs the billing industry matures, and the number of suppliers expands dramatically, so dothe challenges facing the customers - the operators and service providers. The problemsthat are associated with maturing markets, such as proprietary solutions and lack ofresources, are also areas where the GBA can help. Billing managers are facing increasingpressures to deliver a total quality billing solution, and the sharing of best practiceprinciples among members is already proving hugely beneficial.

By providing a focus for the industry, the GBA is ideally placed to direct a channel ofinformation to the industry, and support a lobbying function that can alert other areas ofthe communications world to potential problems before they escalate.

To conclude, the GBA is concerned with promoting the interests of the billing industryworldwide, and ensuring de-regulation expertise and experience of multi-lingual, multi-currency systems are shared as part of the global communications development. Formore information about the GBA and the benefits of membership, visitwww.globalbilling.org or contact the GBA on +44 131 225 7855.


PART TWO

ADVANCED CONCEPTS ANDAPPLICATIONS

An architectural evolution is underway that, when finalized, will enable much morerobust prepay service offerings. Mobile intelligent network (IN) technologies are one ofthe drivers for this evolution. Those prepay service providers that leverage advancedcapabilities such as those provided by mobile IN technologies will enjoy long-term costsavings, greater customer loyalty, and increased profits.

Throughout this part of the report, we will discuss advanced concepts, applications, andassociated technologies relative to mobile prepay communications. Rather than attemptto address each of these in sequence, we will label a discussion item as either a concept,technology, or application as a given subject. We illustration this by the below example.

Example: Concept: Mobile IN

This will enable us to discuss advanced prepay in an order that makes more sense froma content absorption perspective. For reference, the concepts, technologies, andapplications discussed in this section are as follows:

CONCEPTS§ Mobile IN§ Account spending limit§ Location enabled prepay account replenishment systems§ Pseudo Location Register§ Prepay e-commerce applications

TECHNOLOGIES§ Mobile IN standards§ Mid-call control capabilities§ Smart card technologies

APPLICATIONS§ Account spending limit§ Location sensitive billing for mobile prepay communications§ Short messages to inform the customer and provide replenishment


ROAMING WITH MOBILE PREPAYNot all systems allow roaming (such as many point solutions involving service nodes),and for those that do, prepay systems can incur a burden on the part of the customer toinitiate the call.

CALL-BACK BASED ROAMINGSome SIM card based solutions involve the customer dialing a prefix or short code viaUnstructured Supplementary Services Data (USSD) connection (step 1). The prefix isverified by the HLR and a credit check is made by the prepay system server (step 2).The MSC then initiates a call-back to the subscriber while simultaneously connecting tothe dialed number through the PSTN (step 3). The SMSC then sends a short messageback to the customer indicating the amount of time remaining for the call (step 4).Mobile terminated calls do not require the prepay customer to dial a feature code. SMScan alternatively be used as the method for initiating the feature code dialog.

Figure 7: Roaming with SIM based Solution

SS7MobileSwitchVisited

Network

PSTN

2

1HLR

3

Prepay Server

VLR

USSDGateway

SMSC4

SMS

USSD

One of the cumbersome issues associated with both of these methods (USSD and SMS offeature code initiation) is the need for the subscriber to remember the feature code,which often vary in each country visited. SIM Toolkit (STK) enabled phones may beemployed to help alleviate this problem. The STK enables communication between theSIM card (which contains a localized applet identifying the country and associated code)and a database. The STK enabled phone initiates a signal (prior to call set-up) whichupdates the feature code stored in the phone, allowing the user to initiate a call withoutmemorizing codes for each visited country.

FIGURE 7: ROAMING WITH SIM BASED SOLUTION


SERVICE NODE BASED ROAMINGEarlier we discussed the issue of service node (SN) based solutions being a pointsolution. As such, service node solutions will in most cases require either the call and/ormessaging to route back to the home network service node. Unless the roaming iswithin the same mobile operator's network, routing the call back to the home system SNis problematic due to the exposure to lost revenue as a result of non-revenue producingcalls to the service node. The more typical implementation will therefore involvemessaging between two different SN and cooperation between the serving and homemobile network operators.

Figure 8: Roaming with Service Node based Solution

MobileSwitch

PSTN

2

1

3

Visited System

IPNetwork

ServiceNode

ServiceNode

Home System

Roaming in this solution requires signaling between the SN in the visited network andthe service node in the home network. First the mobile prepay customer (that isroaming into the visited network) places a call, which is routed to the visited network SN(step 1). Next, the visited network SN uses (typically an IP based network) to signal tothe home network service node for instructions for call handling (step 2). Once thehome network SN provides instructions back to the visited network SN, the visitednetwork SN routes the call back to the visited MSC for routing to the intendeddestination via the PSTN.

This method of roaming with prepay is rather cumbersome to implement as it requiresboth cooperation between mobile network operators as well as integration between twopotentially different supplier's service nodes. Unlike mobile IN messaging between MSCand SCP, there is no standard messaging between disparate service nodes, making thissolution an integration challenge.

FIGURE 8: ROAMING WITH SERVICE NODE BASED


ARCHITECTURAL EVOLUTIONThere is an architectural evolution underway that will fundamentally affect the waymobile operators deploy and operate prepay and the way that customers use prepayservices. This evolution involves leveraging mobile network intelligence for greateroperational efficiency, greater technical/service flexibility, and a greater breadth anddepth of services. This architectural evolution has to do with advances in the area ofmobile intelligent network (IN) capabilities and technologies.

Concept: Mobile IN

WHAT IS MOBILE INIn the mobile prepay Communications Technical Introduction, we defined mobile IN anddiscussed it at a high level. We will discuss mobile IN at a high level for review. Later inthe section we will discuss specific mobile IN technologies, capabilities, and enabledapplications.

Mobile intelligent network (IN) pertains to the concept of network intelligence. While thenotion of network intelligence is evolving beyond the traditional model of centralizedcontrol and processing, and expanding to network edge devices such as mobile terminalsand servers, the use of the term mobile IN will be used in this report to refer to moretraditional centralized network intelligence. The below illustration depicts a high-levelmobile IN concept.

MobileSwitch

SCP

Figure 9: Mobile Switch Launches IN Message to SCP

SS7

The above diagram depicts a mobile switch that is launching a mobile IN message overSS7 to a SCP. The SCP processes the request and subsequently provides a reply to the

FIGURE 9: MOBILE SWITCH LAUNCHES IN MESSAGE TO SCP


mobile switch. In order for the mobile switch to recognize the need to launch themessage to the SCP, it must have certain capabilities. These capabilities include:

§ Recognize mobile IN based services in the mobile user's profile (through HLR/VLRinteraction)

§ Recognize the point in call in which action must take place

§ Arm a trigger with the appropriate network address of the SCP to launch themessage

By definition, the mobile switch is also known as a service switching point (SSP) inmobile in IN terminology. A mobile switch that is not an SSP, and/or is not equipped thewith specific capabilities to handle messaging for IN based service invocation andcontrol, can not handle mobile IN based prepay.

Before mobile IN came into being, service invocation and control was relegated to theswitch itself and/or adjunct equipment such as a service node (SN). A SN engendersmore of a "point solution" as discussed in the first section of this report. While the SNapproach often provides a fast, low capital expenditure market entry alternative, it is notas robust as mobile IN as all service control and logic is relegated to the SN itself. Thisapproach is also not "standards-based", meaning that SNs from various manufacturerscan not communicate with SNs and switches of other vendors. The SN approach alsodoes not scale as well an mobile IN solutions, meaning that large numbers of prepaycustomers are not as efficiently served in terms of capital costs and equipment required.

Technology: Mobile IN standards

The two recognized global standards for mobile IN are Wireless Intelligent Network(WIN) and Customized Applications for Mobile Enhanced Logic (CAMEL). WIN andCAMEL are the standards used to provide network intelligence in ANSI-41 and GSMnetworks respectively. As WIN standards are introduced, accepted and evolve, they willbecome part of the core ANSI-41 standards. In contrast, the GSM CAMEL ApplicationPart (CAP) represents that portion of the GSM standard that uses CAMEL, and will remaina separate yet associated standard to the core GSM networking standard, GSM MAP.

However, WIN and CAMEL are both derived from the same intelligent network conceptualmodel (INCM), a framework from which the Intelligent Network Application Part (INAP)was spawned. INAP represents the IN architectural model conceived by the EuropeanTelecommunications Standards Institute (ETSI) for use in fixed networks. Evolutionarystages of INAP are defined by capability sets (CS) that represent continual improvementsin IN functionality. WIN and CAMEL architectures are based on the INCM framework,utilizing many aspects of the INAP capability sets as that standard evolves, but alsoinclude capabilities to address mobility management issues.


WIN and CAMEL also utilize SS7/C7 for intersystem data communications. This includessignaling between and among MSCs, HLRs, VLRs, SCPs, Intelligent Peripherals (IP),Interactive Voice Response Units (IVRU) and other intelligent network nodes.

The term Mobile IN is sometimes associated with some better known centralized,intelligent network type technologies such as SMS and the lesser known technologiessuch as ISUP loop-back, which will be discussed in the section reviewing network basedprepay technology solutions. It is important to note, however, that when most peopleinvolved in mobile network standards mention mobile IN, they are generally referring toWIN, CAMEL, or perhaps proprietary vendor extensions of INAP. Unless other wisestated, we refer to standards based mobile IN technologies when we speak of mobile IN.

MOBILE IN AND THE SCOPE OF THIS REPORTLater in this section we will discuss certain mobile IN technologies and capabilitiespertinent to mobile prepay communications technology and applications. It is beyondthe scope of this report to provide a thorough introduction of mobile IN concepts, as wellas overall capabilities, technologies, business issues, and applications. For furtherreading in this area, we recommend the book "Wireless Intelligent Networking" co-authored by Gerry Christensen. More information is available at www.mobilein.com.

MOBILE IN BASED PREPAY ARCHITECTUREThe below illustration depicts the architecture based on WIN/INAP/CAMEL prepaytechnologies.

MobileSwitch

SCP

MobileSwitch

VisitedSystem

HomeSystem

IPIP

Equipped withWIN/INAP/CAMEL

control logic

Figure 10: Mobile IN Architecture

SS7

We see from the above diagram that the mobile switches are logically connected to theSCP via SS7. This enables messaging between the home and serving areas forexchanging information about the prepay customer. We also see that each mobile switch

FIGURE 10: MOBILE IN ARCHITECTURE


is connected to an intelligent peripheral (IP) via T-1/E-1 facilities that at as the bearerchannel for voice communications to the prepay customer relative to account status.When the prepay customer's account reaches a predefined minimum, software logic inthe SCP temporarily connects facilities from the IP to the mobile switch, allowing awarning tone/announcement to be played and the customer to replenish her account.Alternatively, the SCP could simply direct temporary connection to a three portconference circuit in the mobile switch, allowing an announcement to be played that isdiscernable to the prepay customer but inaudible to the other party. This allows theprepay customer to be warned about impending account depletion rather than simplybeing dropped in the middle of a conversation.

THE IMPACT OF MOBILE IN ON PREPAYWe will now discuss some of the positive and negative impacts of mobile IN on prepay.Luckily, the positive impacts far out weigh the negative issues. We will first discussthese issues from a business needs (mobile operator and user) perspective. Thefollowing section, Mobile IN Technologies, will discuss the various technical alternativeswhile putting into perspective differences between technology in United States (primarilyANSI-41) and Europe (primarily GSM MAP). Subsequently, we will profile two significantimprovements in prepay service delivery and operation in the section Mobile INCapabilities.

POSITIVE AND NEGATIVE IMPACTSIt is important to note that there are positive and negative impacts relative toimplementation and operation of mobile IN for mobile prepay communications.

POSITIVE IMPACTSWe will next discuss positive impacts. Many of these impacts are of benefit to the mobileoperator and the prepay customer.

ENHANCED ROAMING WITH MOBILE INWhile there are other methods of providing for roaming as discussed earlier, standardsbased mobile IN technologies such as CAMEL and WIN provide for a completely seamlessroaming experience for the customer. The customer no longer has to input featurecodes and/or initiate call-back in order for roaming to occur. Mobile IN supports thevirtual home environment concept in which the customer experiences service as if shewere in her own market.


Figure 11: Roaming with Mobile IN based Solution


Visited Network

PSTN

SCPMobileSwitch

Home Network

3

1 2

With a mobile IN based solution, triggers are armed in the visiting switch that allow it tolaunch a message to the home network SCP, which contains the mobile prepay call logic.When the mobile prepay customer places a call, the MSC in the visited network launchesa mobile IN message to the SCP (step 1) via the SS7 network. The SCP processes therequest and send a call handling instruction message back to the MSC (step 2). TheMSC then uses that instruction to handle the call (step 3), which is illustrated above asrouting to the PSTN for delivery either to the destination number, or in the event thatthe prepay account has diminished, to a voice response unit for notification and/orrecharge.

Proprietary based mobile IN solutions will prohibit this type of scenario for the samereason as the service node solution - lack of standard messaging. However, standardsbased mobile IN solutions (based on WIN and CAMEL) allow for ease of implementationbetween network operators with disparate MSC and SCP infrastructure.

LOWER ONGOING OPERATING COSTSWhile capital intensive to implement, mobile IN solutions enable lower ongoing costoperations. One cost savings is in the area of trunking. In the first part of this report,we submitted that "tromboning" or "back-hauling" is an inefficiency necessitated by SNbased solutions. Mobile IN does away with this requirement in two ways. First, mobileIN allows post-paid and prepay customers to use the same facilities (trunks). Secondly,mobile IN enables a serving mobile switch (equipped with appropriate software and withbusiness arrangements with the home system) to handle mobile IN based prepay callswithout simply "hot lining" (reverting them) back to the home system.

FIGURE 11: ROAMING WITH MOBILE IN BASED SOLUTION


GREATER FLEXIBILITY TO CHOOSE BETWEEN PREPAY AND POSTPAID SERVICEThis is a benefit to both the customer as well as a differentiater for the mobile operator.In prepay deployments based on point solutions, the mobile operator typically mustassign a dedicated range of mobile phone numbers for prepay customers. This is so thatthe switch can perform translations necessary to route calls to the SN and/or call centerfor processing. While this works satisfactorily from an operational perspective, it makesswitching between post-paid and prepay calling plans difficult at best. The minimumaffect on the customer is a phone number change. The worst effect is that manyservices and features are lost from conversion of post-paid service to non-mobile INbased prepay service.

ABILITY FOR PREPAY TO MORE CLOSELY RESEMBLE POST-PAID SERVICEThis is perhaps one of the biggest issues that mobile IN solves for mobile prepaycommunications. To varying degrees, all non-mobile IN based solutions for prepayservice relegate the customer to less features and fewer service opportunities than post-paid customers enjoy. This is largely because of differences in call control andprocessing.

With non-mobile IN solutions, call control and processing is relegated to static control ofvarious network and/or handset elements such as SN, subscriber identity module (SIM),billing software, and others. On the other hand, mobile IN processes a prepay call andthen provides control back to other elements, taking control again only as necessary foraccount management and/or feature interactions.

This enables the mobile operator to bring to bear a great breadth/depth of capabilities,allowing feature and service opportunities that include:

§ Features and services for prepay customers that match those of post-paidcustomers

§ Additional services on a prepay basis such as wireless data service (example:WAP based services)

§ Ability to easily switch between prepay and post-paid service

§ New service support capabilities for more overall robust prepay service offerings

NEW SERVICE CAPABILITIESMobile IN allows for several capabilities that enhance, differentiate, and/or add value tomobile prepay communications. These improvements include:

§ Roaming capability (ability to use prepay service while outside of home system).Unlike point solutions, standards based mobile IN technologies enable capabilities


for seamless use and operation of prepay services while roaming between mobileoperator systems.

§ Greater mobile operator flexibility in terms of overall solution alternatives.Separation of call control/processing functions from other aspects of prepaysolutions allows for mobile operator flexibility in terms of allocation of variousprepay functions including call control/processing, distribution, point-of-salesupport, customer care, replenishment, and administration. Whereas non-mobileIN solutions often preclude choice, mobile IN solutions allow the mobile operatorto choose which function the mobile operator will perform versus those that maybe outsourced to a third party provider. For example, with mobile IN, the mobileoperator could provide call control/processing, but nothing else (or vice versa, oranything in between). This allows the operator to decide what makes most sensein terms of resource allocation.

§ Deployment of value-added capabilities such as location sensitive billing (LSB).LSB is the ability to bill based on location. This mobile IN enabled capabilityallows the mobile operator to create more flexible and varied calling plans for theprepay customer. The customer will be pleased with greater choice. The mobileoperator receives the benefit of more rapid use of prepay cards/vouchers, drivingup usage and profits.

ABILITY TO OFFER MORE SERVICES TO PREPAY CUSTOMERSAs mentioned earlier, mobile IN allows prepay customers to be treated more likepostpaid customers. In terms of services, this means that there are many more servicesat the disposal of prepay customers than without mobile IN capabilities.

NEGATIVE IMPACTSWe will now discuss negative impacts. While the positive impacts outweigh thenegatives, fair treatment must be given to negative issues. In terms of purely financialissues, business case analysis will suffice. However, technology limitations must bedealt with in a different manner.

CAPITAL INVESTMENT AND OTHER FINANCIAL IMPACTSWhile the ongoing costs are much smaller than other solutions, the initial capitalinvestment for mobile IN infrastructure can be quite substantive. Mobile operators arerequired to deploy switch upgrades, SCPs, intelligent peripherals (IP), and otherequipment. The deployment program can be an expensive process that includesconversion of data and resources. It is important to note that many of theseexpenditures must take place for a mobile operator to mobile IN based prepay service,even if they do not provide mobile IN based prepay to their own (home) customers (butinstead just serve mobile IN based roamers). However, it is highly unlikely that a mobileoperator would make a partial investment (investing in the ability to serve roamerswithout serving its own customers).


Additional financial impacts include potential "write-off" of certain existing networkassets such as SNs. This forces the mobile operator to incur premature depreciationexpense.

TIME TO DEPLOYWhile the above issues are certainly non-trivial, they do not represent significant hurtlesin the long-run business plan. The major issue is timing. Well-developed business planswill clearly indicate the long-term benefit of mobile IN based prepay. However, it islikely that deployment of mobile IN will take a long time. Until sufficient operational andservice benefit economies of scale are reached, mobile IN capabilities will be rolled outinto major metropolitan areas first, with other areas following later to fill-in gaps inservice area. This also means that the largest mobile operators (those with a nationwideand/or international service "footprint") will be the most likely to deploy mobile IN forprepay quickly and extensively.

LIMITATIONS OF TECHNOLOGYMobile IN is not a panacea. Certain limitations exist that limit the benefits of deploymentand operation.

One limitation of mobile IN based solutions is that the processing is all centralized withinthe mobile network. In contrast, SIM based solutions distribute processing requirementsand also lend themselves toward mobile commerce which we shall discuss later.

Another limitation was stated previously: timing/availability of mobile IN. Some mobileoperators may be slow to deploy mobile IN. Fewer still (very small) mobile operatorsmay never deploy mobile IN for prepay service. This limits the ability for those mobileoperators that have deployed mobile IN to fully realize the benefits for prepay services.

Another example involves prepay service resellers. While mobile IN represents asignificant improvement for resellers over other solutions, it will not likely allow resellersof prepay service to enjoy the full benefits.

We will discuss resellers in a later section. We will also discuss a couple of potentialsolutions to both of the above limitations.

OVERALL EFFECTWith mobile IN based prepay, the prepaid monitoring system is no longer in the callpath, and no longer needs to incorporate switching equipment. The overall effect is suchthat mobile prepay communications is more efficient operationally, has less long-termcosts, and has greater opportunity for differentiation through advanced features andadd-on services.

Perhaps the best technical solution, however, will be a hybrid of mobile IN and smartcard based solutions. Mobile IN can be employed for network control of advanced


network-based services while the smart card can be used for distributed processing andmobile commerce.

MOBILE IN TECHNOLOGIESThus far, we have spent considerable effort discussing some of the technological aspectsof prepay. However, in comparison to the business issues, the underlying technology isof minimal importance, and in fact, should be totally transparent to the user. Whileunderstanding the underlying technology enabling overall system capabilities isimportant, the business issues are arguably the most important aspects of a prepayoperation and support.

Apart from patents and trade secrets, technology is ultimately duplicable. Therefore, inorder to focus on product differentiation, there should be a strong focus on businessissues and continuous improvement in the areas of market positioning, product supportand business processes. The next section discusses prepay support and businessprocesses while prepay offering strategies will be discussed in a later section.

TECHNOLOGIESWe will now discuss various mobile IN technologies. While there are several differentmobile IN technologies, all share the fact that they are network based. Network basedprepay solutions leverage the use of signaling networks for data capture, transmissionand processing. Network based solutions can be broken up into three categories: ISUPbased non-standard, TCAP based non-standard, and TCAP based standard.

ISUP BASED NON-STANDARDISUP based non-standard prepay solutions typically utilize an innovative network klugeknown as ISUP-loop back. One limitation of this solution is that the mobile switch mustutilize a loop-back voice trunk for all prepay calls. All prepay calls must first routethrough the loop-back voice circuit prior to normal call routing to the PSTN.

ISUP loop-back also requires that the mobile switch contain pre-established translationsthat force all prepay customer calls to route (and signal accordingly) over the loop-backvoice trunk. Similar to the point solution this limits customer management and theability to offer value added services. TCAP based IN solutions improve on these issues.

This solution was discussed in greater detail in the first part of this report.

TCAP BASED NON-STANDARDVendor specific or proprietary mobile IN solutions fall into this category. The vendormay implement totally unique software or creater proprietary extensions to INAP.

Unlike the ISUP loop-back or the point solution, there are no dedicated resourcerequirements with this solution. The only major limitation of the TCAP based non-


standard method is that, due to its proprietary (vendor specific) nature, roaming isproblematic. Roaming can only occur between like switch types that have the samesoftware logic and triggers armed. This includes implementations that utilize proprietaryextensions of the INAP standard. Roaming agreements also have to be in place betweencarriers to support the messaging interactions between serving and home systems.

This solution was discussed in greater detail in the first part of this report.

TCAP BASED STANDARDWIN and CAMEL provide capabilities for TCAP based standard prepay deployment. Theyprovide a major improvement over proprietary TCAP solutions by allowing roaming totake place wherever serving carriers support the necessary triggers and software logic.This means that, in order to provide service to prepay callers, the serving system mustsupport WIN/CAMEL standards, even if the serving market does not support WIN/CAMELbased prepay for its own (home) customers.

Unless otherwise stated, we mean TCAP based standard solutions (WIN/CAMEL) whenwe speak of mobile IN within this report.

WINAs discussed earlier, Wireless Intelligent Network (WIN) is the standards based solutionfor ANSI-41 based networks. Industry standards organizations have standardized WINbased prepay. IS-826 was established to provide standards based capabilities for ANSI-41 networks. One such capability is the capability to perform mid-call messaging andcontrol of resources. For example, when a prepay caller's account approaches apredetermined level, the SCP can issue a message to play an announcement and evenrelease the call if the account reaches zero (see figure below).

Figure 12: Mobile IN based Call Redirection

MobileSwitch

SCP

IP

SS7

PSTN

FIGURE 12: MOBILE IN BASED CALL REDIRECTION


The above diagram depicts a SCP sending a message to the mobile switch to play a lowbalance warning tone or announcement. Once the prepay customer interacts with the IP(to replenish), the call is redirected back to the PSTN as usual.

Additional capabilities are added with IS-826 to allow the mobile switch to tell prepayaccount databases in the SCP to stop call recording upon disconnection of either thecalled or calling party.

CAMELWhereas WIN is used for ANSI-41 based networks, Customized Applications for MobileEnhanced Logic (CAMEL) is the standards based solution for GSM based networks.However, most mobile IN based prepay solutions for GSM are based on proprietaryextensions of INAP. This is remains the case primarily because the heretofore-availableversion of CAMEL, CAMEL phase I, only has a subset of INAP capability set one (CS-1)capabilities. Capability Sets are defined in the intelligent network call model asfundamental capabilities for intelligent networking. For example, CAMEL phase I islacking in its ability to utilize the specialized resource function (SRF). The SRF functionprovides the ability to utilize adjunct network elements such as the use of IPs for playingannouncements.

CAMEL phase II does allow for the SRF. Many mobile operators will begin to implementCAMEL once phase II is available, providing the advantage of roaming along withcapabilities enjoyed in CS-1 equipped systems.

CAMEL phase II was defined in standards in 1998, but is only now being completed byvendors in terms of development, integration and testing. Hardware and softwaresolutions for CAMEL phase II are in the early stages of implementation with a few mobileoperators across Europe.

One of the significant benefits of CAMEL based roaming versus other methods using SMSis that is does not involve making multiple calls and tying them together. With CAMEL,the switches in the visited network automatically signals a request the prepay applicationin the home network for call-handling instructions.

PRE-CAMEL SOLUTIONSWe earlier discussed USSD and SMS call-back based solutions. These solutionsrepresent one approach as an interim step toward CAMEL for GSM prepay roaming.Several mobile operators have adopted SMS as an interim step because it is relativelysimple, compatible with existing handsets, and available now. There is also an agreedinternational billing standard for SMS (unlike USSD). However, the interface can besomewhat cumbersome as the customer must use a particular menu and there can bedelay in processing due to the store-and-forward nature of SMS.


For these reasons and perhaps others, some vendors such as Logica and Siemens havedeployed call-back solutions for roaming the use USSD. There is no delay in establishingthe connection with USSD and no cumbersome menu to follow. However, it is importantto note again that there is no agreed upon billing standard for USSD, so some mobileoperators may not honor roamer's request to initiate a USSD session.

Alternative migration steps include the use of point solutions, which are typically basedon Service Node implementations in which all calls most be routed through aprogrammable switch.

However, many operators have implemented vendor's applications based on proprietaryextensions to core INAP as discussed earlier. This approach is the most like CAMEL interms of functionality, but does not allow for roaming or very easily provide for the useof mobile IN messaging for other advanced features without intervention on the part ofthe supplying vendor.

DIFFERENT TECHNOLOGY APPROACHES BETWEEN THE UNITED STATES ANDEUROPEIn the United States, most prepay deployments are not mobile IN based, and those thatare utilize proprietary based TCAP technologies. IN Europe, most prepayimplementations are either SN or SIM card based. There are some mobile INimplementations, but most are based on proprietary extensions of core INAP capabilities.

DIFFERENCES IN MOBILE IN TECHNOLOGIESIn the United States, many wireless carriers will eventually migrate to WIN basedprepay. Some ANSI-41 based carriers in other parts of the world will adopt WIN, butlikely not as fast as in the United States. Larger carriers will utilize economies of scale tojustify early deployment.

In Europe and portions of the United States that have GSM, INAP will eventually giveway to CAMEL based mobile IN enabled prepay services. However, the migration will notbe any faster than WIN since many of the INAP based prepay deployments enjoy thecore capabilities of CS-1.

DIFFERENCES IN WHO PAYS FOR INCOMING CALLSWhile Europe it has always been customary that the calling party pays (CPP), UnitedStates based wireless carriers have always charged the mobile user for outgoing andincoming calls. This is potentially one of the key differences in the success of mobileprepay communications in Europe versus the United States. Many experts believe thatCPP would stimulate low usage mobile customers to leave their phone on, driving upairtime. This would be the same or perhaps even more so for prepay customers whotend to be cost conscious.


Unlike the United States, Europe is accustomed to metered service for all calls includinglocal exchange, inter-exchange (long distance), and calls to mobiles. For the UnitedStates to institute CPP, certain technical solutions must be put into place for billing, callcontrol, and announcement. The caller must be informed via VRU and/or recordedannouncement that a call will be a toll call. There must also be new billing and clearingarrangements between wireless and fixed network carriers. The FederalCommunications Commission may rule in favor of CPP for the United States, but notlikely before they hold public forums to discuss the pros and cons of CPP.

MOBILE IN CAPABILITIESWe will now discuss some of the mobile IN capabilities in greater detail. Before wediscuss the first capability we will introduce the account spending limit concept.

Concept: Account spending limit

ACCOUNT SPENDING LIMITATION CAPABILITYMobile IN provides the capability of providing an account spending limit (ASL) serviceversus traditional prepay service, but what is an account spending limit service? ASLrefers to the concept of allowing the mobile service customer to limit spending (controlcosts) without the requirement for prepay service. In other words, a post-paid customercan enjoy the benefits of cost containment without prepayment. This may afford lowercalling rates and/or the ability to consolidate billing and calling plans, while stillbenefiting from the cost control aspect of prepayment.

Application: Account spending limit

Since mobile IN allows for any phone number to be utilized in conjunction with prepaycall processing, a post-paid phone number could be assigned to interact with the SCP toallow only a certain number of calls and/or monetary value per period. The caller couldbe alerted when a predetermined level is reached and afforded the opportunity to extendthe limit (with appropriate permission) or pay for calls based on credit.

One must be careful to recognize that ASL services suffer from the same constraint thatmobile IN based prepay services do: lack of universal deployment. This means that if aserving mobile operator does not have the required capabilities, cost control will not beavailable. In order to have truly robust ASL, all mobile operators most participate. At aminimum, there must be technology put into place and cooperation to warn the ASLcustomer when they roam into an area that does not support ASL.

Technology: Mid-call control capabilities


MID-CALL CONTROL CAPABILITIESThe ability to control a call in progress is key to applying value-added features andservices. As discussed in the previous section, the SCP can launch messages to alert themobile switch (to play a low balance warning) and/or terminate a call upon accountbalance depletion. However, mid-call capabilities can also be utilized to enablereplenishment and value-added services.

Concept: Location enabled prepay account replenishment systems

Figure 13: Location enabled Prepay Account Replenishment

MobileSwitch

SCP

IP

Prepay

LocationApplication

Content: MerchantsSCP

PDE

PSTN

SS7

IPSS7

Internet

When a prepay customer with a low balance initiates a call, a mid-call trigger from theprepay SCP can launch a message to establish a connection with a voice response unit(VRU) in an IP. The VRU can announce the low balance condition and offer options forreplenishing the account. If the caller chooses to replenish, certain advanced capabilitiescan be utilized to inform the caller where the closest replenishment merchant (withprepay cards/vouchers) is located (see figure below).

Through communications from the VRU to the SCP, the SCP is alerted of this request (forreplenishment information). The SCP then launches a message to a location informationplatform that interacts with position determination equipment (PDE) (such as E-OTD,STK, A-GPS, and various network-based means such as TOA and AOA) and merchantdatabases and in turn provides information to the SCP about the closest replenishmentestablishment. The SCP provides this information to the VRU that in turn plays theinformation to the prepay customer.

Note: See Part Five of this report for a discussion of location technology middle-ware andpositioning equipment.

FIGURE 13: LOCATION ENABLED PREPAY ACCOUNT REPLENISHMENT


Application: Location sensitive billing for mobile prepay communications

Another valuable location based application for prepay that also benefits from mid-callcontrol capabilities is location sensitive billing (LSB) (see figure below).

Figure 14: Location Sensitive Billing for Mobile Prepay

MobileSwitch

SCP PrepayLocation

Application(LSB)

SCP

PDE

PSTN

SS7

Upon initiating call processing, the prepay SCP launches a mid-call message to an LSBapplication. The LSB interacts with PDE and also determines whether the prepaycustomer is within or outside a predetermined calling zone. The LSB application returnsthis information to the SCP that in turn utilizes the data to determine the appropriate callrating for that zone and dialed number.

LSB is an important value-added service for prepay service as it drives up usage ofprepay cards/vouchers.

Application: Prepay call re-rating based on location sensitive billing and mid-call controlcapabilities

In the above example of location sensitive billing, it was assumed that the caller was in afixed location. However, mid-call control can be used in conjunction with locationsensitive billing to determine if a prepay customer has left predetermined service zones.Once the mid-call capabilities have determined if the prepay subscriber has left aparticular zone, the location sensitive billing application will alert the prepay system ofthe zone change as indicated in the previous figure. This is a way in which the mobileoperator can protect/control the provision and use of zones in conjunction withdifferentiated rate schemes for prepay service based on location.

FIGURE 14: LOCATION SENSITIVE BILLING FOR MOBILE PREPAY


Determination of the location of the mobile customer during the call requires specifictechnologies.

ANSI-41 TECHNOLOGYThe Position Request (PosReq) message is a Wireless Intelligent Network (WIN) messagethat allows the location sensitive billing application to determine the location of thecustomer. This is facilitated by the location application launching a PosReq to the HLR ofthe subscriber. The HLR in turn determines the appropriate VLR that is serving thecustomer and requests location information, with cell ID being the most commonlyavailable information. Whether the VLR has the most up-to-date information isproblematic due to the fact that the customer may in transit and the VLR will getupdates only when the customer traverses location areas within the RF footprint.Accordingly, additional technologies may need to be employed to extract the cell ID fromthe mobile unit.

GSMIn GSM networks, the SIM Toolkit (STK) provides an API to the SIM for a variety ofapplications including location determination. As in the above example, the locationapplication could launch a location request via a SMS message through the SMSC to theSIM via the STK. At a minimum, cell ID can be extracted from the mobile unit, andperhaps better location such as that provided by the timing advance calculations or thenetwork measurement report algorithms. In any event, STK enables mid-call positioningas well as idle-mode positioning of the mobile unit.

The equivalent of the PosReq in GSM is the GSM Mobile Application Part (MAP) Any TimeInterrogation (ATI). The MAP ATI message also allows the location application to launcha message to the HLR, but has the same issue of not necessarily getting the most up-to-date location information. Additional work will likely be necessary to ensure that locationinformation from the base station subsystem is provided to the network switchingsubsystem for ANSI-41 and GSM based networks that use strictly a mobile IN basedsolution such as PosReq and MAP ATI respectively.

MOBILE IN SUPPORT OF GPRSGPRS as an improved bearer for wireless data applications is an important improvementfor other applications such as WAP in addition to engendering new applications throughthe efficiency and "always-on" capability of the packet connection. Offering prepayGPRS services will be critical to the non-voice product market as it will allow customersto have the convenience of prepay and/or the ability for mobile operators to reach thatspecific target market with GPRS based services.


PREPAY GPRS DEPLOYMENTWhile providing prepay GPRS services can be accomplished based on CDR based prepaymethods, mobile IN is the preferred mechanism as it provides for increased call controland does not expose the network provider to fraud or uncollectable revenues.

However, deploying prepay GPRS services with mobile IN is not without challenges.CAMEL Application Part (CAP) phase 3, which has worked its way through the standardsprocess, but has not yet been commercially deployed. In the below diagram, we indicatethe architecture associated with CAP3 and the support of prepay GPRS.

Figure 17: Mobile IN Support of GPRS

SGSN

gprsSSF

gsmSCF

SCP

CAP3 provides for messaging between the interface of the Serving GPRS Support Node(SGSN) and the SCP. More specifically, these functions are known as the GPRS ServiceSwitching Function (gprsSSF) and the GSM Service Control Function (gprsSCF). ThegprsSCF is where the applications reside – in this case, the mobile prepay application.The gprsSSF is where the triggers reside – in this case, the mobile IN trigger forlaunching the CAP3 message from the SGSN to the SCP.

CAP3 provides messaging between these interfaces to allow for service control. Formobile prepay, this service control means that messaging will occur between thegprsSSF and the gprsSCF. This messaging accomplishes the goal of letting the prepayapplication know that a service event has occurred, just as in a voice call a mobile INmessage is sent to the application to indicate a request for service (either an incoming oroutgoing call attempt). In the case of this non-voice session utilizing GPRS as thebearer, there is not a connection in the same sense. GPRS sessions are associated withattachment or detachment of the GPRS device to the SGSN for purposes ofsending/receiving data and then ending the session. Accordingly, the gprsSSF trigger is

FIGURE 17: MOBILE IN SUPPORT OF GPRS


armed to detect the attach/detach state of the GPRS device rather than a voice call froma GSM phone.

In terms of implementing, mobile IN based prepay GPRS, there are some issues oftechnology availability. GPRS equipment such as Gateway GPRS Support Nodes (GGSN)and SGSN are available and many operators are beginning to deploy. However, theSGSN equipment does not yet support the gprsSSF function. In order to combat thisissue, mobile operators may need to consider forcing all GPRS traffic back to GGSN(which do have gprsSSF) so that they may offer prepay GPRS services. While this wouldbe a drastic move, it is one that would be alleviated once vendors provide gprsSSFfunctionality.

HYBRID MOBILE IN AND SMART CARD BASED PREPAYWhile mobile IN is required for network control of prepay GPRS, its deployment does notpreclude deployment of smart card based prepay. This is one of the reasons why it islikely that hybrid mobile IN/smart card based prepay systems will emerge. A likelydeployment example is one in which the mobile IN system handles the SCF functionwhile the smart card handles the Service Data Function (SDF). The SDF includesfunctions such as amount of credit on the account, rate plan, and other factors. The SCPwould handle SCF functions such as call/session rating, account decrementing, and otherfunctions. Communication between the SCP and the smart card would happen by way ofSMS and/or GPRS. This application would require SIM Toolkit or some other secure APIto ensure secure transactions.

TARGET MARKET IMPLICATIONSIn the next part of this report - Marketing and Business Issues - we discuss the majortarget markets for prepay service, but we discuss the target market implications ofmobile IN here for the sake of continuity in discussing these particular issues. Readahead if you need to do so.

Mobile IN will benefit all of the target markets by virtue of lower cost prepay service dueto operational efficiencies enabled by the mobile IN architecture. We will now discuss theimplications of deploying/operating mobile IN regarding marketing to the above groups.

CREDIT CHALLENGEDMobile IN will benefit the credit challenged by removing some of the sigma associatedwith prepay service. Prepay users will no longer need to be assigned specific numbers(as in a SN based solution) or specific phones (as in many handset-based solutions).The credit challenged will also be availed to many services and features on a prepaybasis that they here-to-fore hand did not have access to use.


TEMPORARY AND INFREQUENT USEThis class of user will benefit from additional access to features. They will no longerhave to put up with a minimal set of capabilities just because they are traveling or insome other temporary situation.

ANONYMITY MARKETThis market will not necessarily benefit as much from mobile IN technologies. In fact,the ability to track usage will improve with mobile IN, something the anonymous userdoes not want. Introduction of mobile IN will perhaps create a new market for non-mobile IN based prepay service at a much higher price to the anonymous user market.If you want "dumb" service that doesn't have records of your location and/or usage, youhave to pay a premium.

COST CONTROLThis market segment may be the biggest beneficiary. As discussed earlier, the ability tooffer ASL services will allow the truly cost control user to have the type of service andsupport they want, without the necessary constraint of prepayment that comes withnon-mobile IN services.

OTHERS (INCLUDING CONVENIENCE PURCHASE, AFFINITY PURCHASE, ANDGIFTS)The major benefit for this market segment is simply more value for the money.

IMPACT ON STRATEGYABILITY TO OFFER MORE CUSTOMIZED OVERALL SERVICE TO PREPAYCUSTOMERSService can be more customized with mobile IN technologies. The prepay customer canchoose which additional services are desired, rather than assuming they are unavailable.This will allow the mobile operator the flexibility to market to groups that werepreviously ignored once the initial sale is made. This also underscores the importance oftracking customer usage and behaviors. We refer back to our discussion in the first partof this report regarding call detail records and service detail records (SDR). Capturingand acting on SDRs will be especially important in terms of target marketing to meet theservice and feature needs of various prepay user groups and sub-groups.

IMPROVED SEGMENTATION CAPABILITIESPer the discussion above, a prepay customer is no longer just that prepay. Instead,prepay becomes truly just an alternative payment method. In fact, with ASLcapabilities, the customer need not be prepay if all they want is cost control.

ACCOUNT SUBSCRIPTION LIMIT STRATEGYWhile some existing prepay customers may want to switch to ASL, the more importantaspect of the successful ASL strategy is to offer ASL as an add-on feature to ALL existing


customers. This will enable the mobile operator to benefit from a new service capability.Many wireless carriers in the United States may fear ASL as they currently charge apremium for prepay over post-paid service. The fact of the matter is that theincremental difference in price between prepay and post-paid will diminish in timeanyway in the United States, reaching more of an equilibrium as it has in Europe. MobileIN will only accelerate this steady state price. Therefore, shrewd United States basedwireless carriers will actually embraced ASL as a valued-added, revenue producingservice instead of a threat.

RESELLER SUPPORT CAPABILITIES ARE IMPROVEDReseller support will be improved with mobile IN. Whereas many mobile operators avoidany form of co-location or "direct connection" (e.g. a "trunked" solution), they will bemuch more willing to allow resale based on logical network element controls. However,they will not allow access and/or control of the mobile IN logic (triggers, translations,etc.). We will discuss this in greater detail in the next section.

ATTACK CHURN THROUGH DEPLOYMENT OF ENHANCED SERVICESThe fact that mobile IN allows greater service variety and robustness bodes well forreduced churn. As prepay service offerings are differentiated through mobile IN,customers will be less likely to leave for other providers. Mobile IN will facilitate SDRsand direct marketing of customized service packages for this differentiation to takeplace.

BUNDLING PREPAY WITH VALUE-ADDED SERVICESWe again state that value-added services such as ASL and LSB are the key to significantdifferentiation and improved average revenue per customer. Mobile IN provides the keyenabler for value-added services as call control and services are no longer relegated tothe capabilities of the prepay platform itself.

LIMITATIONS OF MOBILE IN AND POTENTIAL SOLUTIONSLIMITATIONSFirst we will discuss the limitations of mobile IN and then we will evaluate potentialsolutions.

NON-UBIQUITOUS AVAILABILITY OF MOBILE INAs discussed earlier in this part of the report, mobile IN technologies such as CAMEL andWIN will not be ubiquitously available for a few years based on the development andavailability of standards, development by vendors, and implementation and support bymobile operators. This will leave of gap in the ability of mobile operators who do investearly in mobile IN technology to effectively serve prepay customers. The mobileoperators will not be able to support prepay based roaming with mobile IN until servingcarriers equip their systems with necessary capabilities to support prepay roamers.


MOBILE OPERATORS WILL NOT ALLOW ACCESS TO SCP/HLR BY RESELLERSMobile IN provides a significant incentive for mobile operators to allow resellers to sellprepay service. Without the dedicated trunk-dependent solutions that point solutionsrequire, mobile operators will be much more willing to allow resale of prepay service withmobile IN based architectures. However, mobile operators will likely only establish verybasic triggers for resale providers in their network elements. Mobile operators will alsolikely be very protective of their databases and mobile IN resources. Therefore, resellerswill have only static resources at their disposal, unable to configure triggers and othercapabilities for value-added services and capabilities.

POTENTIAL SOLUTIONSNow we will discuss some potential solutions to the above issues.

OVERLAY APPROACH FOR MIGRATION TO CAMEL FROM INAPOne solution for migration to standards based mobile IN is to implement an overlayarchitecture. In this overlay architecture, CAMEL phase I could be used in the homemarket and to enable roaming between CAMEL enabled serving networks and homenetworks. This network could be over-laid with INAP should a mobile user requirespecific resources that are unavailable without CAMEL phase II support (see figurebelow).

Figure 15: Overlay Mobile IN Architecture: CAMEL with INAP

MobileSwitch

SCP CAMELINAP SCP

IP

PSTN

SS7

Call control could be relinquished to INAP based systems in the event that specializedresources are required as depicted in the above illustration where INAP based SCPsdirect call control to an IP for announcements. However, this does not solve the problemof no mobile IN capability and/or the potential that the serving mobile operator maysimply not wish to participate in mobile IN service interactions.


PSEUDO LOCATION REGISTERWe will now discuss the concept of a Pseudo Location Register (PLR).

Concept: Pseudo Location Register (PLR)

In the first part of this report, we reviewed various network elements such as the HLR,VLR, and MSC. We also discussed the registration process. However, if a servingsystems does not participate in mobile IN based prepay, the prepay customer will beunable to register with a WIN/CAMEL trigger profile and thus be unable to utilize mobileIN based prepay. One solution is to implement a PLR (see figure below).

Figure 16: Psuedo Location Register Architecture

MSC/VLR

PLR SCPSN

Visited System

HomeSystemMSC/HLR

PSTN

SS7

In the above illustration, the PLR (software logic on an SCP) can receive a registrationfrom the serving system MSC/VLR. The response back to the VLR can be to "hotline" allcalls from the mobile customer. These hot-lined calls would be directed to some otherresource such as a SN (typically located in the home system) for processing. While notas efficient (from a trunking perspective) as seamless mobile IN, this architecture allowsthe home system mobile operator to provide relatively consistent and robust prepayservice to its customers (through the capabilities of the SN) even when the servingsystem does not have mobile IN capabilities. While not all of their services wouldnecessarily be available as they roam, customers would at least be assured that theycould use basic prepay services when roaming.

The PLR is also an alternative for resellers who want to offer basic mobile IN basedservices to some customers (with efficient roaming) and perhaps more advancedservices (but yet less efficient due to back-hauling) through the SN.

FIGURE 16: PSUEDO LOCATION REGISTER ARCHITECTURE


OTHER ADVANCED TECHNOLOGIES FOR PREPAYSHORT MESSAGING SERVICE APPLICATIONSShort message service (SMS) is a technology that utilizes SS7 as a delivery vehicle to aShort Message Service Center (SMSC) platform. The SMSC acts as a store-and-forwardrepository for short messages to the mobile phone. For more information about SMS,see the Mobile Lifestreams report Success 4 SMS at www.mobilesms.com.

Application: Short messages to inform the customer and provide replenishment

Through interaction between the mobile IN enabled systems and a short messagingservice center (SMSC), the SMSC could be utilized to send short messages (on aprogrammatic and/or on-demand basis) to inform the prepay customer of accountstatus.

SMS can also be the vehicle to provide the mobile user prepay card/voucher codes forreplenishment of the account via a VRU. In the first part of this report, we discussed theconcept of service detail records (SDR). If an SDR record/trend indicates that a prepaycustomer has not replenished very much (or a long time ago), an SMS message could besent to the user, alerting him that he will have a discount on his next prepay voucher ifhe buys now.

INTERNET AND WIRELESS DATAThe Internet and Internet Protocol technologies are revolutionizing every aspect ofsociety, but especially in the area of telecommunications. Mobile prepaycommunications is no exception. Wireless data services and capabilities will continue toexpand and generate new areas of revenue and differentiation. We will now exploresome of the implications for prepay service.

PREPAY WIRELESS DATA SERVICESAs wireless data services such as those based on WAP, GPRS, and UMTS start to pick upmomentum, these services need a prepay option to fully realize benefits to all potentialcustomers. Mobile IN technologies will need to evolve to meet these needs.

PREPAY AND OTHER TECHNOLOGIESOther technologies are emerging that will affect and be affected by prepay. Forexample, Bluetooth is a technology that enables ad hoc networking to establish apersonal area network between devices and/or to control resources. Bluetooth is oneexample of technologies that will change the way we live and do business. An exampleis the ability to walk up to a Bluetooth enabled soda machine and purchase refreshmentwith a Bluetooth enabled phone. However, how will this be billed and accounted for? Itis likely that many of these e-commerce type applications will need to be on a prepaybasis.


FUTURE OF PREPAY WITH ADVANCED CAPABILITIESIMPROVE RESOURCE EFFICIENCIESIn the beginning of this part of the report, we discussed fundamental changes in prepayservice architecture. Mobile IN technologies are driving these changes, allowing mobileoperators to leverage economies of scale for more efficient use of physical resources aswell as reduced costs. While small at first, these improvements will grow in directproportion to the number of participating mobile operators who use mobile IN for prepayservice.

MORE ROBUST SERVICES AND GREATER VARIETYMobile IN and other advanced technologies will enable much more robust serviceimplementations and greater variety of services. Prepay customers will no longer beconstrained to basic services only but will instead have access to all services available topost-paid customers. Furthermore, many e-commerce applications may requireprepayment, thus making everyone a potential prepay customer.

SUPPORT FOR PREPAY E-COMMERCEMany technologies are evolving to support e-commerce including wireless datainfrastructure and handsets, Bluetooth, location technology and applications, intelligentagent technology, and the use of customer profile databases. Many experts predict thatthe number of wireless data capable phones will outnumber the current number ofpersonal computers by the year 2005 or so. While their numbers are currently small,consumers are becoming increasingly familiar and interested in using their mobilephones for exchanging non-voice based information/content and performingtransactions.

Advanced prepay capabilities are potentially another key element in this chain oftechnologies and business trends. It is likely that many e-commerce applications willeither require prepayment or at least make more sense with it.

Concept: Prepay e-commerce applications

Prepayment of tolls would be popular with commuters wishing to not slow down whilegoing through a toll facility. This could be accomplished with a Bluetooth enabled phone.Prepayment of public transportation could work in the same manner.

Prepayment could be used for many third generation mobile driven services. Examplesinclude prepayment for games, gambling, financial trading, and ad hoc service needssuch as video calling and picture/video recording.

The needs for prepayment for these e-commerce services meet the same target marketsas those for traditional voice oriented prepay services including credit challenged,temporary and infrequent use, anonymity market and cost control. However, the impact


on these target markets may be different between the United States and Europe basedon differences in technology and association adoption.

Technology: Smart card technology

In Europe, consumers are much more accustomed to the use of smart card technologyfor prepayment and debit based purchasing of goods and services. Therefore, many e-commerce services will likely be embraced much more quickly in Europe versus theUnited States. Ironically, however, mobile IN may prove to be even more critical forprepay e-commerce in the United States (where there are few smart cards utilized). Themobile IN platform can provide the prepay account management for non-smart cardbased e-commerce applications.

SUMMARYMobile prepay communications has a bright future due to the capabilities made possiblethrough deployment of advanced technologies. Within the next five years, we willwitness expanded exploitation of mobile IN technology for prepay service.Consequently, we shall also see expansion of services to prepay customers andcorresponding expansion of revenues to mobile operators. The acceleration of thisgrowth will be limited partially by technology availability but perhaps more so byhesitancy on the part of the mobile operator to deploy.

However, as other advanced technologies emerge, and e-commerce becomes morepervasive, telecommunications providers of all types will begin to realize the importanceof prepayment. While much of this prepayment will be over smart cards, not all mobiledevices can currently use smart cards nor are all consumers accustomed to their use.Mobile IN will consequently emerge to both improve traditional voice oriented prepayapplications as well as provide capabilities necessary for many non-voice oriented e-commerce applications. The limitations are only based on the compelling applicationsthat require a mobile phone, prepayment, and network control of resources.


PART THREE

MARKETING AND BUSINESSISSUES

Withstanding patents and trade secrets, technology can ultimately be duplicated.However, sound marketing and business strategy can create success and long standingbarriers to entry against competitors. In this part of the report, we discuss themarketing and business issues that are key to the mobile prepay industry.

MARKETINGWe will begin by discussing the marketing issues associated with mobile prepaycommunications services. As we have discussed in earlier publications, technology is anenabler of business. Withstanding patents and trade secrets, technology can ultimatelybe duplicated. However, sound marketing and business strategy can create success andlong standing barriers to entry against competitors.

THE FOUR P'SNo discussion of marketing would be complete without at least reference to the four P's -product, promotion, place, and price - relative to the subject at hand.

PRODUCTThe product is mobile prepay communications, with a clear need in the marketplace, sothe important point is the manner in which the product is positioned in the marketplace(see target market). Therefore, promotion and place is key to success.

PROMOTIONAn excellent example of the power of promotion (or lack thereof) is the fact that, by andlarge, prepay remains stigmatized as a merely a "credit challenged" service in the UnitedStates. This could not be further from the truth as tremendous the success of prepay inother market segments has been proven in other parts of the world.

PLACEThis P has to do with marketing and distribution. The more that the prepay customerbelieves in the value of the service, the more that she will use it. Convenient rechargewill enable this model to perpetuate.


PRICEWhen everything else considered equal, price can sometimes be the turning pointbetween success and failure. Early prepay deployments in the United States are anexample of pricing set to meet a perceived limited market, which ironically became aself-fulfilling prophesy. A view that prepay will become more main stream, as it has inmany parts of the world, dictates that one should price accordingly.

As technology matures, it will enable new business processes4 that will change the faceof the prepay market. However, careful optimization of the four P's remains afundamental tenant of success.

CONSUMER BEHAVIORS AND SERVICE EXPECTATIONSPrepay customers are not unlike post-paid customers in the sense that they have certainbasic needs and desires. Prepay service providers that meet these requirements will bein the best position to maintain and grow their customer base and unit profits. We willnext explore customer behaviors and expectations.

§ Need for mobility

The increasingly active lifestyle of today dictates the need for anytime, anywherecommunications. This is no less true for prepay customers as they have the need toroam and have the same service as in their home market. Accordingly, serviceproviders must provide seamless service at reasonable rates to prepay customers.

§ Desire for increased control

Prepay service is a perfect illustration of people's desire to have more control overtheir lives - in this case, control over expenditures. A case in point would be thefather who wants to have assurance that his daughter in college can call home whennecessary but have only a limited discretionary calling "budget" thanks to mobileprepay communications. We will expand on this example in the Business Strategiesfor profitable Business section.

§ Ready access to information

The Internet society we live in today has changed and will continue to change ourexpectations of how we share information. Mobile Internet will change ourexpectations further as we will no longer be tethered to a fixed network for access toinformation. Prepay service will play an important role as many people will findprepayment a convenient and in some cases required for transactions. A mobileoperator does not want to send a bill to someone for pizza. However, they can

4 As outlined in the Advanced Prepay Concepts and Applications part of this report


establish a relationship with a financial settlement institution that would gladly clearthe transaction for a fee.

§ Expectations of greater value

The time of when consumers would accept whatever is offered is long gone.Customers are increasingly savvy of technology and its capabilities. Once exposedto technology in one area, it is easy for consumers to assume that it should beavailable via another medium. For example, why shouldn't instant messaging beavailable on mobile phones? Why shouldn't this leverage location technology tolocate friends and co-workers? We will witness the mobile device increasinglybecome a device to make our lives not just easier but higher quality lives. Many ofthese services will be paid for in advance of use.

PREPAY TARGET MARKETS

There are four major market segments for prepay: credit challenged, temporary use,anonymity and cost control. Each of these segments has unique requirements.

CREDIT CHALLENGEDThe credit-challenged segment of the market consists of individuals who have not yetestablished credit or who have impaired credit. In the United States, this marketsegment represents approximately 30% or more of all requests for mobile service.Wireless carriers meet this demand by offering pay-in-advance mobile service, limitingtheir liability and risk of loss.

TEMPORARY AND INFREQUENT USETravelers, temporary users and “glove box” users make up this category. Visitors fromanother country may need to procure prepay service in order to have mobile serviceavailable. A person may not have mobile service in his own country, or if they have ahome mobile service provider, that mobile carrier may not allow or support roaming intothe visited country. This can also happen when roaming within a country.

Temporary users are not travelers. Instead, they seek prepay as a means of short-termmobile communication, allowing them service without the service commitmentagreement that many mobile carriers require for post-paid service.

The glove box user is the term applied to infrequent users. This group has a phoneprimarily for safety and security purposes and is typically located in the glove box oftheir car until needed in an emergency or for road assistance. This group does not needpost-paid service to make emergency calls, as they are free to any caller. Mobile usersin this segment do not want to commit to a post-paid rate either for normal calling.Many post-paid calling plans entail a flat monthly fee for a certain number of minutes.The infrequent user does not use all his minutes, making the effective cost per minute


very high. These users would rather have the option to buy a fixed number of minutesthat can be used (before the credits expire) over a reasonable amount of time.

ANONYMITY MARKETThe anonymity market contains individuals who prefer the discretion of conductingbusiness in a pay-in-advance manner. This group does not consist only of individualswho may be engaged in illegal or immoral activities. In fact, mobile users who regularlycarry and use a business owned phone might find prepay a useful alternative forpersonal calls, rather than carrying a separate phone.

COST CONTROLThis category is the broadest and expected to be potentially the largest growth segmentfor prepay services. This segment includes the cost conscious and family-use consumermarkets as well as the enterprise market for cost control. Examples include mobileservice budget limits for college students and cost control for corporate fleet operationcommunications.

OTHERSWe have discussed the major segments, but there are other potential drivers for prepayusage. For example, a prepay service is sometimes purchased as a gift. Purchasing aprepay service is also generally more convenient as little or no information is requiredfrom the customer by the sales agent. Finally, mobile carriers and resellers can marketprepay service on an affinity basis; prepay cards or vouchers can be easily associatedwith affinity groups such as the Boy Scouts. Customers will sometimes buy prepay cardsdue to the affiliation or perhaps even as a collector’s item.

MARKET SEGMENTATION LEADS TO PRODUCT SEGMENTATIONBased on the various target market segments and other factors, mobile prepay serviceproviders can benefit greatly by segmenting their product offerings based on marketsegmentation.

PREPAY WITH A MINIMUM RECHARGE AMOUNTThis is the traditional prepay program, geared toward those that are not cash flowchallenged, but rather just want the convenience of prepay.

PREPAY WITH LOW MINIMUM RECHARGE AND EXTENDED ACCOUNTEXPIRATIONThis is for the "glove-box" target market or infrequent user. Mobile prepay serviceproviders could charge a high rate (extra per-minute fees) to this group in return forallowing an extension on the account before a recharge must occur.


PREPAY WITH NO MINIMUM RECHARGEThis type of service offering meets the needs of the customer who wants prepay, andwants to recharge frequently, but doesn't necessarily have a lot of money to recharge.

MONTHLY FEE WITH BUNDLED MINUTESThis type of service offering is almost exactly like post-paid, only it is mobile prepay.This meets exactly the needs of the cost control market. For an additional charge (extraper-minute fee), minutes could be rolled over from one month to the next.

LOW MONTHLY FEE WITH NO BUNDLED MINUTESThis type of service offering meets the needs of the customer who wants to keep prepayservice, but does not want to worry about an expired account or minimum rechargeamounts. The monthly fee would be used to pay for the cost (plus a profit) to maintaina potential inactive account on the prepay system.

SPECIAL RATE PLANS FOR NON-VOICE SERVICESSpecial rate plans should be offered for those hooked on SMS or WAP based services.

CLOSED USER GROUP PLANSSpecial rate plans should be offered to those who want to benefit from frequent calling tocertain groups such as friends and family. All other calls would be a higher rate.

SUMMARY OF PRODUCT SEGMENTATIONThere should be two goals of product segmentation:

1. Make sure that people are on the right plan to maintain their loyalty (prevent themfrom churning to another network)

2. Try to steer people to the plan that provides the best profit margins to the mobileprepay service provider

Balancing the two above goals can be quite difficult, as they can at time be mutuallyexclusive objectives. It is incumbent on the service provider to optimize the serviceofferings, while keeping them relatively simple, easy to understand and use, andallowing customers to recognize and appreciate the value.

MARKET DEMOGRAPHICS AND REGIONAL MARKETSPrepay in Europe, Latin America, Asia and parts of Africa far outpaces the rate of growthin the United States. As an example, we see a story of contrasts between Latin Americaand the United States.

One thing that is common among all markets, however, is that prepay service iseffective at each stage of the product life cycle including:


§ Low-penetration, developing markets§ Low-penetration, developed markets§ High-penetration, developed markets

ASIA PACIFICJust as in Europe, mobile prepay is a growing market segment, especially for new mobilenetwork provider market entrants. With high mobile penetration in certain countries,mobile prepay represents and opportunity to further expand market penetration into newmarket segments. In some of the larger, yet less developed countries such as China,India and Indonesia, mobile prepay is an opportunity to kick-start the penetration ofmobile service into a large base of potential subscribers.

Mobile penetration in a few select countries as of 4Q00:

§ Australia 53%§ Burnei 34%§ China 7%§ Hong Kong 74%§ India < 1%§ Indonesia 2%§ Japan 45%§ Malaysia 27%§ New Zealand 51%§ Singapore 76%§ South Korea 56%§ Taiwan 79%§ Vietnam 1%

INDONESIAOf the approximate 3.4 mobile customers in Indonesia, about 75% are prepaycustomers, with about 85% of all new customers added to the prepay base. While anexcellent penetration for prepay of the total customers, total mobile penetration inIndonesia remains at approximately 2% of the population. Indonesia is an excellentexample of an opportunity exploit prepay as a means of building a mobile servicesbusiness to sustainable and profitable operational levels.

EUROPEEurope leads the world in overall mobile penetration. Below is the penetration in a fewselect countries as of June 2000:

§ Finland 76%§ Italy 62%§ Ireland 56%


§ Spain 51%§ Belgium 39%

Prepay is growing at a brisk pace in Europe with some operator's prepay penetrationover 70%. The overall average penetration is just above 50% in Western Europe asprepay overtook post-paid in 2000. Prepay is expected to overtake post-paid in EasternEurope in the 2003 timeframe.

While prepay is enjoying great success in Europe, customer retention is a major issuedue to mobile number portability (MNP) and the ability of customers to switch operators.We shall discuss MNP more later in this report.

AUSTRIAAccording to the Strategis Group, MaxMobil of Austria had 1,200,000 prepay customersagainst a total customer base of 2,100,000 as of Q4 2000.

CZECH REPUBLICPrepay penetration in the Czech Republic is about 76% of total mobile customers.

LITHUANIAPrepay penetration is 39% of total customers against a mobile penetration of about13%.

UNITED KINGDOMThe UK is enjoying splendid growth in mobile prepay. For example, from the January15th, 2001 edition of Wireless Week:

§ Vodafone added 1.4 million customers is Q4/2000 - 1.2 million were prepay

§ One 2 One grew to 8 million plus customers by Q4/2000 - 6.4 millions of thoseare prepay

According to the Strategis Group, BT Cellnet had 6,690,000 prepay customers against atotal customer base of 10,244,000 as of Q4 2000.

MIDDLE EASTLEBANONAccording to the Strategis Group, FTML-Cellis of Lebanon had 255,000 prepay customersagainst a total customer base of 382,000 as of Q4 2000.


AFRICASOUTH AFRICACustomers on prepay plans in South Africa represent 68% of total customers.

LATIN AMERICAAs much as 73 percent of the mobile customer growth in Latin America is expected tocome from prepay through 2003. Prepay currently represents slightly less than 50% ofall overall customers in Latin America as of 2001.

FACTORS FOR RAPID GROWTH IN LATIN AMERICA:§ Pent-up demand due to limited wireline infrastructure§ Calling party pays available in many markets§ Reduced account fraud including lower risk international calling§ Cash economy embraces prepayment

BRAZIL: A LARGE MARKET OPPORTUNITY FOR PREPAY IN LATIN AMERICAPrepay represents approximately 50% of all mobile usage in Brazil. Being a largemarket in this region, studies indicate that by 2005 Brazil will represent up to 38% of allprojected prepay in Latin America with Mexico at 18% and Argentina at 13%.

CANADAAccording to the Canadian Wireless Telecommunications Association, as of March 31,2000, prepay penetration was about 17% overall across mobile network operators. Thebreakdown:

Prepaid vs. Contract in Latin America

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§ Bell Mobility: 3.5 million total, 525 thousand prepay§ Rogers: 2.2 million total, 322 thousand prepay§ Microcell: 655 thousand total, 275 thousand prepay§ Clearnet: 615 thousand total, (included in Bell Mobility figure)

MEXICOPrepay represents the method of service for approximately 80% of the mobile users inMexico. One of the factors that led to this significant growth was the strategy of mobileoperators to extend the expiration limit on the prepay account, allowing the customer towait longer to use the airtime. This is a very good example of a specific demographicand target market need that, when met, led to improved penetration of service.

UNITED STATESPrepay is growing at a more moderate rate in the US.

FACTORS FOR MORE MODERATE GROWTH IN THE US§ Continued sigma associated with prepay users§ Lack of calling party pays§ Cost of prepay service vs. post-paid service§ Credit economy shuns prepay

MARKET DEMOGRAPHIC SUMMARYWhile we used Latin America and the United States as an example, it is true that thereare significant differences between each major market area. If compare Europe to Latin

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America for example, both have high prepay customer penetrations, but for differentreasons. Europe tends to be more cost control oriented versus Latin America which issimply a cash oriented society. The important point is to key on those distinguishingcharacteristics that make the target market unique.

MARKETING STRATEGIESWe will next discuss marketing and sales strategies for prepay service providers.

CARRIERS/OPERATORSMobile operators are at the top of the value chain in terms of prepay service delivery andin the best position to fully realize the opportunity. Whereas resellers must buy airtimefrom the wireless carrier, the mobile operator has control over those costs, therebyallowing the carrier to focus on market segment differentiation and delivery of value-added services. Examples of some innovative mobile operator prepay programs are asfollows:

§ Teensafe programs - prepay service wherein the child can only call emergencynumber and home number

§ Campus phone - prepay service wherein the student has unlimited campuscalling5 at a prepay flat-rate, can make calls outside of campus at the prevailingrates, can call home anytime/anywhere at a flat rate, and can call emergencynumber anytime/anywhere

§ Personal use of business mobile phone - many employees have a mobile phone.The mobile operator could offer a plan wherein the customer may have unlimiteduse of the phone while at the home zone6.

RESELLERSIt is more difficult for resellers to create differentiation, as they do not have control overthe enabling infrastructure. Furthermore, resellers do not have control over costs, asthey must buy airtime from the wireless carrier. Resellers must therefore focus primarilyon certain market segments and/or develop unique marketing programs.

Distribute refurbished phones in cost control/credit challenged markets such as studentsand glove box users. This will keep the cost of acquisition low for the reseller. Offerupgrade programs for better phones to long-time and high use customers.

Institute special co-marketing programs such as alliances with roadside assistance andtraffic information services. Calls to these businesses are free. The towing service pays

5 Note: This service would require location technology for service.6 Note: This service would require location technology for service.


for calls, but benefits from the business. The traffic information service is advertisersupported.

If the mobile operator allows, offer personal number service and/or SMS to help createloyalty to the reseller.

REPLENISHMENT AND DISTRIBUTION STRATEGIESIn the first part of this report, we discussed replenishment and distribution issues. Wewill now expand on that discussion to evaluate various alternatives for replenishmentand distribution. This is a key area as we recommend business strategy later in thispublication.

RECHARGE METHODSThere exist various methods prepay customer recharge. These methods, along withtheir advantages and disadvantages, are as follows:

CALL CENTER REPLENISHMENTThis method entails the use of customer care personnel accepting calls forreplenishment. The customer care representative takes the request and processes therecharge within the prepay system.

§ High "touch" of human interaction is perhaps the only acceptable method forsome customers

§ Chance to "up-sell" services to customer

DISADVANTAGES§ Expensive to service provider§ Inconvenient compared to other methods

HANDSETThis method entails a customer self-replenishing via the handset. Various options areavailable including over the air via SMS, WAP, or USSD or IVR via DTMF.

§ Convenient for user§ Low cost replenishment system for service provider

DISADVANTAGE§ Must authenticate the user - chance for fraud

RETAIL OUTLETThis method entails recharge at a retail point-of-sale (POS) location such as aconvenience store or department store. The most common payment option is a


disposable 7 debit card or voucher. However, an account card is a viable option for point-of-sale replenishment.

In the United States, retail outlet locations for distribution of prepay cards fall roughlyinto the following percentages:

§ Discount or department store 26%§ Convenience store 25%§ Grocery store 15%§ Gas station/truck stop 8%§ Warehouse 8%§ Drugstore 7%§ Other stores 4%§ Other types of retail outlets 16%

As discussed in Part One of this report, POS activation (POSA) is an important issue.Activating cards at the POS helps in the following ways:

§ Reduce shrinkage (stolen/lost cards)

§ Allows cards to be placed on store shelves (rather than placed out of sight in cashdraws)

§ Allows for consignment billing - the ability to keep cards separate from thephysical product/service - the mobile phone and prepaid service - allowingmerchants to keep a zero cost inventory (they only pay for cards once activated -allows no risk, low cost merchandizing)

CHARACTERISTICS OF RETAIL OUTLET DISTRIBUTION§ Extends "market presence" and distribution of service provider§ Helps promote spontaneous purchase prepay replenishment

DISADVANTAGES§ Customers may spend money on beer instead of phone§ Fraud at point-of-sale

ATMThis method entails recharge at an automatic teller machine (ATM).

§ Convenient for user§ Low cost replenishment system for service provider§ Extends "market presence" and distribution of service provider

7 Use once and throw away.


§ Helps promote spontaneous purchase prepay replenishment§ Prepay customer may recharge in non-standard amounts

DISADVANTAGE§ Not all ATM's will work with prepay replenishment system

§ Must either have special ATM to produce voucher or establish financial clearingwith prepay account card provider

INTERNETThis method entails recharge via the Internet. This will typically occur via a PC from afixed network. As WAP and other non-voice technologies expand, however, Internetbased replenishment will increasingly occur while mobile.

§ Convenient for user§ Low cost replenishment system for service provider§ Extends "market presence" and distribution of service provider

DISADVANTAGE§ Not all customers are willing to replenish via the Web

§ Must either have special ATM to produce voucher or establish financial clearingwith prepay account card provider

PAYMENT OPTIONSCREDIT CARDThis entails the use of a charge or credit card such as American Express, Visa, orMastercard.

ADVANTAGES§ Convenience - the customer does not need to have cash

DISADVANTAGESTransfer from bank accountThis entails transfer of monies from a bank account to a prepay account.

Advantages§ Independent of card distribution§ No margin share with card issuer

Disadvantages§ Cumbersome§ Takes up to seven days


§ Potential for mistakes in processing

Disposable debit card or voucherThis is the typical purchase of a debit card/voucher that contains a PIN. Once used, thecard is no longer valid.

Advantages§ Easy to use§ Dealers like follow-up business§ Dealer participation in airtime

Disadvantages§ Good distribution is critical§ Security and fraud must be managed at point-of-sale§ Margin, handling, and administrative cost§ Customers may want non-standard replenishment amount8

Account cardThis method utilizes a permanent card that is used to recharge a prepay account. Thecard has a magnetic strip for use at the point-of-sale. The card also has a serial numberand PIN for replenishment via the Internet, ATM, handset, or call center.

Advantages§ Creates affinity between user and provider§ Allows purchase of non-standard amount for recharge

Disadvantages§ Has to be replaced if lost§ Recharge can not be given as a gift to existing customers

BALANCE CHECK METHODSThe ability for a user to check prepay balance is crucial to maintaining cost-effectiveservice and a high level of customer support. Accordingly, various balance checkmethods are provided below for reference. Some of these same methods may beemployed for alerting the customer of low balance or non-replenishment (after aspecified period of time).

§ Call center§ IVR via DTMF§ Handset via SMS, WAP or USSD§ Internet (from PC)

8 Most debit cards are sold in standard face-value amounts determined by the issuer


ALERTING THE PREPAY CUSTOMER OF A LOW BALANCEExperience indicates that prepay customers will invariably allow their balance to reachzero, possibly not recharging the account for days, weeks, or perhaps months. Some ofthese users may never recharge while others are simply on hiatus for some reason. It isimperative to have various mechanisms in place to deal with this situation such as churnprediction tools and loyalty programs. Low balance alert is the first line of defense inpreventing slow or non-replenishment.

The user may be alerted via the mechanisms mentioned above in the balance checksection. While it is a given that these capabilities must be made available by the mobileoperator, the important issue for discussion is policy regarding when and how to alert.Mechanisms must be in place to alert the user immediately when a low balance thresholdis met, allowing the customer the opportunity to recharge prior to being disconnected(upon reaching zero balance) or be reverted to an IVR, either scenario being ainconvenience and/or potentially embarrassing. Beyond this initial alert, the mobileoperator must have churn prediction algorithms and marketing and loyalty programs inplace to prevent churn and encourage recharge. Service Detail Records (SDR) discussedin the first part of this report are an important element of churn prediction and policyregarding implementation of loyalty programs.

SUMMARYWhile prepay customers will go out of their way for initial purchase of phone and airtime,they wan convenience for recharge, or they are likely not to replenish at all.Accordingly, mobile operators need to implement effective marketing and replenishmentstrategies.

STRATEGIES FOR THE PREPAY PROGRAM IMPLEMENTATIONBUSINESS ISSUESLOYALTY PROGRAMSAs we alluded earlier, loyalty programs can be a critical part of a customers overallretention strategy. However, systems and processes must be put into place to enable aneffective loyalty program. Prepay systems must have robust SDR capabilities to alertpoints-of-sale and other systems that predetermined activity has taken place. Forexample, an SDR could alert an SMS Center to send a SMS message to a user, alertinghim that he will have a discount on his next prepay voucher if he buys now. Anotherexample would involve alerting the point-of-sale equipment to offer a discount to theuser upon recharging (if they meet certain criteria or if a special promotion is offered).However, the latter example would be much easier to implement with an account basedreplenishment system.

Certain companies such as SLP InfoWare provide predictive CRM tools for providing anearly warning when customers may churn to other mobile operators prepay plan. These


types of tools should be used in conjunction with a loyalty program to ensure the rightmeasures are brought to bear on customers that need extra attention.

SEGMENT STRATEGY IMPLEMENTATIONTo the extent possible, customers should be pre-qualified to determine their real needsprior to making a prepay service sale. However, to do this would require gatheringcustomer data, which is problematic with prepay. This means that a wireless operatormust attack the issue with proactive marketing.

Marketing programs should address at least three tiers of users: moderate to high endcost control users, credit challenged moderate users, and low-end glove box users. Highend users should be targeted to receive digital phones, advanced features, and low rates(with perhaps post-paid service using a prepay process to provide cost control), andadvanced features. These users should also have the most attractive loyalty programs.

Credit challenged moderate users should be targeted with analog phones that have anassociated higher per minute service rate or more expensive digital phones with a lowerper minute service rate and should receive good loyalty plans based on their actualreplenishment rate. They should also be targeted with value-added services to drive uprevenue per unit and usage. Location Sensitive Billing (LSB) could be used to increasetheir usage.

Glove box users can be targeted with analog phones and, in return for longer vouchershelf life (time before account credits expire), they should pay the highest rate plans forservice. They could also receive loyalty programs geared toward infrequentreplenishment. Finally, they should be offered services such as LSB to attempt to movethem to the next tier in terms of usage.

OFFER VARIOUS FEATURE ADD-ON'SIn order to keep customers "hooked" to the service and to improve unit margins, it isimportant to offer various feature add-on's. Many of these additional features/servicescould be non-voice oriented, thus is important to target the use of SMS for delivery.While many customers will not want to have SMS mobile origination capability and/or themobile operator may not have yet deployed the infrastructure/application to offerprepaid SMS, mobile termination SMS may still be employed to offer features/services(charged to the customer on a monthly basis) such as:

§ Joke of the day and horoscopes§ News and financial information§ Voice mail notification

At the discretion of the mobile operator, certain mechanisms may need to be put in forceto prevent the number of SMS messages from becoming prohibitive and/or preventmessages from certain sources, as the customer is paying a flat, prepaid rate for SMS


mobile termination. It is recommended that the mobile operator have a plan in place forfull (mobile origination and termination) capabilities via prepay, as many customers maywant full flexibility to receive and send SMS once they get hooked.

Many of the feature add-on's can and should be marketed to the customers as they areengaging in activities such as account monitoring and recharge. The Internet is a perfectlow-cost, 24 hours/day vehicle to promote these add-on's.

OFFER VARIOUS PROMOTIONSOne way to boost penetration of the market for mobile prepay is to offer virtual prepaycards or vouchers. These vouchers are simply a document that typically provides aserial number and PIN for activation of a prepay account, which may be problematicbased on the type of technology supporting that mobile prepay network.

These vouchers can be easily offered in a variety of high profile, low-cost manners suchas attaching them to consumer goods and banner advertisements. These virtual cardscould even be given away as gifts by other merchants (such as a thank you for doingbusiness and/or completing a survey), allowing the mobile operator to leverage a verylow-cost distribution network.

The idea is to get consumers to try a given mobile operator's prepay service in situationsin which the consumer already has a phone and either post-paid or prepay service fromanother plan.

Since the vouchers are a virtual unit (no physical card), they may be distributed via theInternet. They may even be exchanged via email or SMS between business andcustomer, friend, and colleague.

It is important to reiterate, however, that it can be problematic to offer virtualcards/vouchers with the multitude of different service providers, networks, andtechnologies. This strategy may be best reserved for attack on a very targeted marketand/or competitor.

Perhaps the best use of such a strategy will be in support of certain mobile commercebusiness models. For instance, an existing mobile prepay customer may listen to anadvertisement from a merchant in exchange for a voucher at the end of the ad as areward. This type of mobile commerce would be particularly more useful with theimplementation of additional technologies such as location based applications. The usercould be pin-pointed as being near a merchant location and then be offered theadvertisement in return for the reward of prepay time on the account. The award couldeven include a discount on merchandise from the merchant.


RESELLING AND OTHER DISTRIBUTION STRATEGIESMobile carriers have an excellent opportunity to leverage increased sales and networkthrough resellers. However, many carriers are averse to allowing direct connection totheir switch as required by point solutions. This will no longer be a concern with mobileIN that facilitates connectionless signaling between the mobile carrier switch and theprepay platform containing the reseller’s user data.

The proverbial “double edged sword”, however, is that these resellers will also wantaccess to WIN and CAMEL triggers necessary to offer value-added services. Mobilecarriers are likely to want to offer access to basic service for prepay but want to limitaccess to potentially differentiating capabilities.

TECHNOLOGY ISSUESAs discussed earlier, technology deployment will be driven by market needs.

ACCOUNT VS. DEBIT BASED SYSTEMSUnlike debit-based systems that utilize “consumable” or “throw away” cards or vouchersfor replenishment, account based systems use permanent cards that are associated withthe user. These cards are used like an ATM or consumer debit card whereby money isput into the account (through various means) and the account is credited. The accountis only debited once prepay service has been used.

This provides an advantage at the point-of-sale as the user is easily identified forreplenishment discounts based on loyalty. It can also provide a marketing advantage ascards can be branded or co-branded (again like ATMs), allowing users to replenishwherever they see the brand name displayed.

MOBILE INIt should be the goal to ultimately deploy mobile IN based prepay systems. The benefitsof mobile IN are numerous, but what about the lack of ubiquitous triggers for anestimated five years? CAMEL and WIN will not support serving carriers that do not havethe triggers, but there is a way around this issue.

DIGITAL PHONESDigital phones should be provided initially to high-end prepay customers as pricescontinue to drop and ultimately to every customer as the increased system capacity andpotential for feature deployment also benefits the operator.

LEVERAGE THE INTERNETThe Web should be exploited to the extent possible for the following:

§ Sales to new prepay subscribers§ Balance check and replenishment to existing subscribers§ Offer special promotions as discussed above


§ Advertise new services and feature add-on's§ Provide news of upcoming features and new phones§ Provide a FAQ and ability to send questions to customer service

The intent is to leverage the Internet to provide 24 hours/day, 7 days/week, 365days/year customer service. This is not only of benefit to the customer in terms ofsatisfaction, it is also a means of reducing the cost to support customers.

BALANCE CHECK AND LOW BALANCE ALERTAs discussed earlier, it is critical to provide this capability as the most important goal isto ensure recharge. Otherwise, the customer will not have an opportunity to judge otherthings like cost/performance and quality of service.

COMMERCIAL OFFERINGSEUROPE VS. UNITED STATESPrepay is huge in Europe, with some operators enjoying 50% or more prepaypenetration. Some PCS carriers in the United States are realizing comparable success,but by and large the penetration rate is somewhere around 5% of the overall customerbase. This is expected to change, however, with some estimates ranging too as high as20% of overall prepay penetration in the United States by the end of the year 2002.

Prepay is a more mature and accepted service in Europe. This is due to culturaldifferences as well as to technology. There is no stigma in Europe associated withprepay service. In the United States, some people assume that a person is “creditchallenged” if they have a prepay phone, when in fact they may merely desire costcontrol. Another reason that there is a more mature attitude towards prepay is Europeis the same reason post-paid is more prominent. GSM is a ubiquitously availabletechnology, allowing customers to roam from country to country and SIM based prepayallows customers to use their service virtually everywhere throughout the whole ofEurope.

Europe also has a well-established Calling Party Pays (CPP) mentality and the network tosupport it. Unlike the flat-rate local calling (from fixed network to another fixed number)available in the United Stated, Europeans are accustomed to paying usage sensitivepricing for all calls (local, long distance, and calls to mobile numbers). In Europe, mobilenumbers are all assigned to the same major number block (like an NPA or Area Code inthe United States). This means that a caller always knows when they are calling amobile number (a call that usually costs more than calls to a local wireline number).Due to the pervasiveness of CPP in Europe, mobile prepay users (like post-paid users)receive proportionately more incoming calls than their United States counterparts.Everything else considered equal, this means more revenue for the mobile operator.


PRICINGGenerally speaking, prepay pricing is more in line with post-paid pricing in Europecompared to the United States. Some European operators charge a minimal premium(no more than 20% above post-paid price). Others do not charge any premium. Thereasoning is that, due to the much lower cost of acquisition, lower prices are merited.

The situation is currently much different in the United States where the premium forprepay service can be as much as two to three times that of a post-paid service. This isbeginning to change, however, as some operators are offering prepay pricing plans thatare approaching the per minute cost of some of their own post-paid plans.

Perhaps the reason for the difference in pricing between Europe and the United Stateshas to do with market maturity and ubiquitous technology. As we discussed, prepay hasbeen more mainstream in Europe for a long time relative to the United States. This isdue to the ubiquitous nature of GSM SIM solutions and the effect on consumer behaviordue to other pervasive technologies such as CPP. These cross continental difference arelikely to change as mobile IN is deployed as the standard in the United States for prepayservice, driving innovation, greater service flexibility, and lower prices.

In addition, many prepay providers in the United States heavily subsidize the cost of themobile phone, or in the case of some resellers, offer cheaper model refurbished phones.In contrast, Europeans view prepay as a convenience - not just for the credit challengedor those with little money. The cost for phones tends to not be heavily subsidized inEurope. Next, we compare and contrast prepay pricing plans, using select mobileoperators in England and the United States for comparison.

CALLING PLANS ENGLAND9

BT CELLNET

Type of Calling Cost (Pence)

Standard Call Rates (peak/off peak/weekends) 25/10/2pCalls to other BT Cellnet mobiles (peak/off peak/weekends) 10/10/2p

Calls to other mobiles (peak/off peak/weekends) 50/25/25pText messaging (per message) 10p

Voicemail 10pMobile Internet 10p

9 Information to compare and contrast these select mobile operators' calling plans was derived from eachrespective company's web page, which reflected then current calling plans. Neither the author and MobileLifestreams nor can be responsible for any changes that may occur after publication.


ONE 2 ONE§ Cost for first two minutes of use each day: 30p/minute (local calls, national, and

other One 2 One customers)§ Cost for calls after first two minutes use each day: 5p/minute (local calls,

national, and other One 2 One customers)§ Calls to other mobile operator's customers: 30p/minute (any time)§ Mobile Internet: 10p/minute (any time)§ Text messaging: no additional charge

ORANGEJust Talk§ Calls from as little as 5p/minute off-peak§ Text messaging from as little as 5p/message

Out There§ Five free text messages per day§ Up to 60 seconds of free calling if account goes to zero

On Campus§ Calls from as little as 3p/minute off-peak§ Text messaging from as little as 3p/message

VIRGIN10

Prepay and post-paid calling is the same price

§ Cost for first 15 minutes of use each day: 15p/minute§ Cost for calls after first 15 minutes use each day: 5p/minute§ Calls to other mobile operator's customers: 35p/minute (any time)§ Free voice mail retrieval§ Text messaging: 10p/minute

VODAFONESmartstep§ Cost for first three minutes of use each day: 25p/minute§ Cost for calls after first three minutes use each day: 5p/minute§ Calls to other mobile operator's customers: 40p/minute (any time)

Allcalls§ Monday-Friday: 35p/minute peak and 10p/minute off-peak

§ Weekends: 10p/minute peak and 5p/minute off-peak

10 Many know Virgin only as an airline. They are also a mobile virtual network operator.


§ Calls to other mobile operator's customers: 50p/minute weekdays and30p/minute weekends

§ All calls charged per second billing

Original§ Monday-Friday: 35p/minute peak and 5p/minute off-peak

§ Weekends: 2p/minute

§ Calls to other mobile operator's customers: 50p/minute peak and 30p/minute offpeak weekdays and 30p/minute weekends

CALLING PLANS UNITED STATESAT&TAT&T recently launched an improved prepaid program, which includes the following:

§ AT&T VoiceMail with Message Waiting Indicator§ Call Waiting§ AT&T Caller ID§ Call Forwarding§ Three-Way Conference Calling§ Line Blocking§ Per-Call Blocking§ AT&T PCS Text Messaging

AMOUNT PRICE/MINUTE PRICE/MINUTE

Local National$25 $0.50 30 days$50 $0.40 180 days$100 $0.40 180 days$200 $0.40 180 days

Domestic LD Included IncludedDomestic Roaming $0.85 Included

Recharge methodsAT&T wireless provides three ways to recharge including online, calling a toll-freenumber, and visiting an AT&T store or authorized dealer.


CINGULAR WIRELESS

AMOUNT MINUTES PRICE/MINUTE EXPIRATION

$10 20 $0.50 30 days$20 50 $0.40 180 days$30 75 $0.40 180 days$50 125 $0.40 180 days$90 225 $0.40 180 days

All calls outside the Cingular Wireless network are charged at $1.95/minute.

SPRINT PCSSprint PCS recently discontinued its own prepay program. However, Sprint PCSlaunched its Private Label Services program last year, a distribution channel for wirelessresale. Through this program, wireless resellers will develop and promote their ownbranded programs, with network services provided on the Sprint PCS network. Amongother things, this program allows affiliates to use the Sprint PCS network to sell mobileprepay service.

VERIZON WIRELESSVerizon recently rolled-out a National Prepay Wireless plan, which requires a tri-modephone and includes the following:

§ Includes Roaming in all Verizon Wireless network Cities§ Includes domestic long distance from all Verizon Wireless network Cities§ Basic voice mail§ Caller ID (but not available in all areas)§ Call Waiting

AMOUNT MINUTES PRICE/MINUTE EXPIRATION

$30 60 $0.50 60 days$50 125 $0.40 60 days$75 214 $0.35 60 days$150 750 $0.20 60 days

MOBILE MARKET TRENDS AND THE FUTURE OF PREPAYWe will now explore some of the more significant trends that will impact the future ofmobile prepay communications service.


COMPETITIVE THREATS TO MOBILE PREPAYCustomer Migration to Post-paid PlansIn certain market segments, customer migration from prepay to post-paid is as naturalas coming of age and building one's credit ability/history. For other markets and marketsegments, prepay remains a convenience - not a stigma. For these markets and marketsegments, mobile operators need to focus on the positives of prepay.

One might ask questions like: "Why care if customers migrate from prepay to post-paidanyway?" "Doesn't the mobile operator get to keep the revenues anyway?"

The point here is that the mobile operator must first KEEP the customer if they are to getany revenues. It is much cheaper to keep a customer then to obtain a customer, evenfor prepay. Accordingly, mobile operators must fight to keep their prepay customers ontheir prepay plans, lest they try another operator's post-paid or prepay service.

While for certain market segments, prepay remains a convenience, one of futureimpetuses for migrating to post-paid service is simply cost. Particularly when mobileoperators roll out 3G networks, new business models will emerge in which non-voiceservices garner higher fees and voice based services become more of a commodity. Inthis scenario, 3G based post-paid voice may be significantly cheaper than 2G based postor prepay service. While this again does not affect the operator (so long as they cankeep the customers on their own network), it does affect the prepay industry.Accordingly, the ability to support prepaid 3G voice and data services will be particularlyimportant.

Throwaway PhonesA currently small, yet grow threat to the prepay industry is the emerging throw awayphone market segment. Companies like Dieceland (www.dtcproducts.com) aredeveloping disposable mobile phones and computing devices. The notion is that peoplewill buy a throwaway phone as a convenience, and perhaps because it is cheaper, ratherthan purchase a (normal, durable) phone and simply recharge when needed. Perhaps agood commercial example would be the success of disposable cameras.

While this notion may seem crazy to some people, it actually has merit in certain marketsegments. For example, the traveling customer who does not have roaming servicefrom his mobile prepay provider would definitely be a customer for such a product. Thisunderscores the one of the business drivers for the need for improved roaming supportfor mobile prepay, which we discuss in the next section. Even if roaming is supported, ifthere is not a convenient mechanism in place for replenishment, disposable phones arestill a viable option for the traveler.

Another market segment for this type of product is the gift market. People would bemuch more inclined to purchase a disposable phone that costs $10.00 (and has 30minutes of airtime) rather than pay $100-$300+ for a phone plus airtime. The recipient


of such a gift also benefits as they are locked into any one network provider or plan,allowing them to try prepay service before making any long-term decisions.

Competitive threats such as these underscores the need for mobile operators toengender loyalty and offer differentiated, value-added services to their traditional prepaycustomers. If successful, mobile operators could actually exploit such a threat (thedisposable phone product) as an opportunity to gain airtime revenues while getting newcustomers try a low-end prepay service as a prelude to up-selling to a more valuabletraditional prepay service.

It is important to note that this disposable technology for mobile communications hasnot yet been commercially proven. We shall watch developments here closely.

INCREASED ROAMING: SERVE THOSE BUSINESS TRAVELERS AND TOURISTS!With international tourist arrivals growing from about 450 million in 1990 to about 650million in 2000, and mobile phone user service expectations ever-increasing as well, theability to offer prepay services to roamers is of the utmost importance. Mobile operatorsshould strive to seamlessly serve inbound roamers into their networks from othernetworks.

While supplying temporary phones and vouchers is always an option, it is certainly notthe best option in a world in which seamless service is expected. Despite the inherentchallenges of weaving together disparate networks and prepay systems, mobileoperators must strive to ensure seamless roaming among all major mobile networkroaming partners.

NON-VOICE SERVICESLeading mobile operators are beginning to deploy prepay non-voice services such asWireless Application Protocol (WAP). This enables the wireless carrier to offer WAPservices to a much broader customer base than if restricted to post-paid alone. WhileWAP services have been historically based on circuit switched connections and billing isbased on access duration, WAP services that use GPRS as the bearer will be packetswitched and billing will be based on amount of data accessed as well as content basedpricing scenarios.

In order to fully support prepay WAP customers, mobile operators will need to supportseparate rate access, throughput, and content billing. This will also enable revenueshare with content providers for services to prepay customers.

Logica recently announced the launch of its prepaid billing platform, which allows forbilling messaging services on a prepaid basis, without the need for a CDR (hot billing)type solution which is prone to fraud.


In late 2000, Dual Point Communications announced the launch of its web-enabledhandset for the Unites States prepay market.

INTRODUCTION OF DATA ORIENTED VALUE-ADDED SERVICES FACILITATED BYWAP, GPRS, AND LOCATION BASED APPLICATIONSIt is fortunate that in Europe and other GSM territories, where prepay penetration is thehighest, GSM is also the predominant technology. This is fortunate because theintroduction of GPRS will enable GSM networks to more fully leverage WAP by providinga more efficient, packet-based bearer for communications.

We discussed earlier that prepay customers desire to have the same types of servicefeatures as post-paid customers. This is also the case with GPRS enabled WAP featureswhich introduces the possibility for a variety of new types of features including:

§ Enhanced web browsing

§ File transfer

§ Vehicle positioning and other location based services

§ Remote LAN access and various other corporate applications such as collaborativeworking

The advantages of faster connection speed and immediacy of information enable all ofthese services. Furthermore, the always-on capability enabled by GPRS will facilitatemany "push" type services as we have seen already in offerings such as NTT DoCoMo'siMode service which also uses a packet network for mobile data.

By definition, push services are those that do not require user interaction at the time theservice is delivered. Instead, the customer establishes a relationship with the content orapplication provider in advance. Examples include daily jokes or horoscopes, news andfinancial information, or other alerts and entertainment.

All of the aforementioned is enhanced by location technology and applications, which wediscussed earlier as a value-added application in and of itself.

The key issue here is how to pull all of these technologies together so that it is seamlessto the customer and efficient and cost effective to the mobile operator.

As a case in point for the virtue of moving ahead aggressively, BT Cellnet was the firstEuropean operator to commit to large-scale prepaid WAP deployment, allowing them tolock in up to 90% of the prepay WAP market in the UK in 2000.


MOBILE COMMERCEMany mobile commerce services will be non-voice services, meaning that mobilecommerce is expected to be mainly information and transaction oriented.

It is also believed that mobile prepay is perhaps the best vehicle for most mobilecommerce situations in which a micro-payment is required.

We will next discuss some of the market trends and the potential future of prepay in thisarea.

THE USE OF CARDS IN MOBILE COMMERCEFrom reading this report you know that there are all types of cards. For review:

§ Debit cards - These are typically throw-away or virtual cards whose onlypurpose is to recharge the prepay account. Often these cards are sold atmerchant locations and must be activated at the point of sale wherein the prepaycustomer may immediately replenish the prepay account or wait until later.

§ Account cards - These cards are sturdy, reusable cards and look just like typicalconsumer debit/credit cards, but are used to provide account information. Themobile prepay user will typically use the magnetic strip on the card to replenishhis account at a point of sale location.

§ Smart cards - These are the cards that are embedded with a microchip and usedto provide mobile prepay service with the handset. A Subscriber Identity Module(SIM) is a perfect example of a smart card.

Of the three types of cards, the last two best lend themselves towards mobile commerceas they are permanent cards that may be used for more than just the purpose ofrecharging the prepay account for minutes.

STORED VALUE AND UNIVERSAL CARDS IN MOBILE COMMERCEThe concept of stored-value is one in which an account and/or card may have valuestored in which may be other than simply minutes of airtime on a mobile phone network.In consumer terms, this is the debit card concept, however, unlike consumer debit cardsthat are usually limited to the recharge/disbursement means allowed by the financialinstitution, stored-value accounts/cards may be used and replenished in a variety ofmanners.

Account cards and smart cards are the vehicles for the notion of a Universal Card thatmay be charged with value that may be used in a variety of commerce. The idea is thatthe card could be used for a multitude of consumer needs such as shopping, bill paying,and entertainment.


Debit (consumable) cards may be stored with some type of value such as the ability topurchase groceries, gifts, refreshments, etc. These types of cards could be distributed inphysical form at merchant locations and/or as virtual cards/vouchers. The distinguishingcharacteristic of these cards is that typically they may be used once. However, it ispossible to use these cards store value in a universal account which could be used inconjunction with the prepay system and/or smart card.

AD HOC NETWORKING, SMART CARDS, AND MOBILE COMMERCEBluetooth technology is perhaps the best example of an ad hoce networking technologythat will enable mobile commerce. Used in conjunction with prepayment systems,bluetooth will allow the user to wirelessly transact payments as well as recharge to theprepay account.

Bluetooth establishes a personal area network (PAN) between all bluetooth enabled(typically mobile) devices. For example, the PAN enables a mobile phone tocommunicate with a laptop, making things such as prepaid Internet from the mobilephone company more of a reality.

Bluetooth allows such a connection at a distance of up to 10 meters in a secure formatdue its encryption algorithms. On the downside, however, the Bluetooth requires thateach enabled device "acquire" one another before communication may take place,slowing down connection time, and in some cases, preventing it from happening. Incontrast, infra-red allows more rapid ad hoc networking but is not as secure.

Ad hoc networking will allow the smart card-enabled mobile phone to make payments aswell as recharge the smart card.

Payment Scenario: The prepay customer walks up to a refreshment dispenser and getsa beverage. This is facilitated by Bluetooth communication between the mobile unit andthe beverage machine. Bluetooth provides a communications link to the beveragemachine. The SIM Toolkit (STK) provides an API to the SIM so that the SIM mayacknowledge available funds, decrement the funds appropriately, and send a messagethrough the STK to the beverage machine that it is OK to provide the beverage.

Recharge Scenario: The mobile prepay customer approaches a kiosk that is advertisinga certain consumer product. The kiosk indicates that if the consumer watches andlistens to an advertisement and answers a couple of questions, she will get some airtimeas credit and a discount at the store. The prepay customer decides to listen to theadvertisement and is instructed to point and click at the Bluetooth-enabled kiosk. Afterlistening to the advertisement, the prepay customer has ten seconds to point and click atthe kiosk again to receive the credit and discount. The customer is then given the optionto engage in a survey in which the phone is used to make choices. The reward for this isactual store credit, provided to the customer's account via Bluetooth, STK, and the SIM.


MOBILE PREPAY AND MICROPAYMENTSMost mobile commerce will involve opportunistic and/or spontaneous payments ofmonies. Not many people will buy a car while when they drive past a automotivedealership (but they may be interested in knowing about sale prices). However, manypeople would buy a beverage from a vending machine while in a shopping mall.

Mobile prepay lends itself especially to these micro-payments. The belief is thatespecially the youth market will be most apt to maintain a universal account for buyingeverything from sodas to sneakers as well as mobile communications services. Parentscould conveniently put money into the account just as they would pay a weeklyallowance. For young people, prepay mobile commerce may be the only way to shopon-line as they typically will not have access or be eligible for credit cards - the normalmeans for shopping on-line.

These electronic wallets will not only allow portability of funds but also allow merchantsto electronically add to these funds through various promotions. The actual credit to theaccount could be accomplished via Bluetooth, offering special promotional stored valuecards, and/or through electronic transfer.

The universal account could be managed on the Internet. Each account could have itsown profile. According to the profile, a customer could receive solicited and/orunsolicited credits goof for various goods and services. Many merchants would want thecredits to be time-bound or even time-windowed, allowing for the merchant to haveprotection from over demand and/or maximum flexibility to increase sales duringhistorically slow sales periods.

PREPAID MOBILE COMMERCE AND FINANCIAL CLEARINGMobile commerce based on mobile prepay will require clearing just as will post-paidservice. The model is one in which their is a financial institution that handles financialclearing between the mobile communications company collecting the funds/credits andthe merchant that requires crediting for purchase of goods and services.

Unlike a post-paid customer who would see a summary report of purchases and inclusionof the sum as a part of a monthly bill, the prepay customer has no monthly bill.Accordingly, another value-add for prepay customers whose engage in mobile commercewould be to offer such a summary of purchases on a on-line account via the Internet. Itis likely that many prepay customers who engage in mobile commerce would be willingto pay an extra fee just for the ability to see where the monies are spent. In fact, thiscapability would be an interesting capability for parents to see how their children'sallowance is being spent and/or to view general spending habits. This is also a impetusfor the child to begin to pay for his own prepay service so as to hide such personalactivities from the parent!!


HANDSET BASED INTERNET REPLENISHMENT WILL LEAD TO MOBILECOMMERCEUse of the handset to recharge over the Internet using technologies such as WirelessApplication Protocol (WAP) will be one of the precursors to mobile commerce. WAP willbe used for recharge of basic voice services, value-added non-voice services, andcontent-oriented services. This will also be the precursor to transaction-oriented mobilecommerce. For example, the prepay user can by movie tickets at the same time sherecharges her universal prepay account from which she debits her voice, basic WAPservice, and her personalized trivia question of the day service.

THE EVOLUTION OF MOBILE COMMERCE VALUEThe value proposition for delivery of mobile commerce services will evolve from the earlystages of flat-fee non-voice services to a more value-oriented transactional approach.

1. Flat-fee based services2. Fee per transaction services3. Fee per capacity11 services4. Fee per value12 of transaction services

This evolution is driven by mobile operators' desire to be more than just a bearer ofservice. Instead they desire to be a full owner in the value chain of service delivery tocustomers. This is important for all types of customers and services, but perhaps evenmore important for mobile commerce to prepay customers who tend to have less loyaltythen post-paid customers. Consequently, mobile operators will align themselves withkey partners for co-branded content and transaction services, possibly even aligningthemselves with banking and other financial institutions for the delivery and clearing oftransactions.

WHICH MOBILE COMMERCE SERVICES WILL BE POPULAR?While financial transactions and micro-payments will eventually catch on to themainstream user, mobile operators will enjoy success in this area for primarily the largeyouth market and a few other more niche market segments.

So from where shall prepay commerce come from?

Two of the biggest areas for mobile commerce will be mobile entertainment andmessaging.

Mobile entertainment includes:§ Mobile gaming

- Adult themes such as gambling

11 Number of bytes used/downloaded12 As determined by the provider and the specific premium service


- Trivia and "follow-along" games such as "guess the next play" at a sportsevent

- Youth oriented games

- Video clips (and ultimately with 3G) full length movies

- Treasure hunt, catch the thief, and other location based games

§ Mobile music

§ Jokes, virtual pets, photo images and horoscopes

§ Movie trailers

§ Ringtones

Mobile messaging includes:§ Basic messaging via SMS

§ Mobile chat

§ Find a friend/date service

§ Other presence and availability services such as an alert when a friend to enters azone, comes into the proximity of the user, or logs onto her ISP

MOBILE ENTERTAINMENTMobile entertainment is already huge in Japan with NTT DoCoMo's iMode service in whichcustomers play various games and have content such as "virtual pets" automaticallydownloaded to their phones. While some of this may be cultural, and also be influencedby other issues such as long commute time (e.g. need to kill time) to get to work,entertainment is something that everyone can relate to and embrace. Entertainmentalso captures the massive youth market, which tends to have a lot of disposable income- because young people generally dispose of what income they do have on fun.

Prepaid mobile entertainment makes a lot of sense as it fits well with the psychology ofentertainment spending, which for some product market segments, is geared towardspontaneous spending. Many people would not make spontaneous purchases on largeticket items and/or with "real" hard cash or credit. However, the prepay account isalready "paid-in", making it easier psychologically for people to spend their money onentertainment. This is akin to the concept of time-share properties. Often times theoverall cost is greater than if the person/family would rent a hotel or condominium whenthe need arises. The psychology is that the time-share "forces" the time-share owner to


take a vacation/holiday. The approach is to pay ahead to ensure that one has fun and tomake life easier. The same is true with prepaid mobile entertainment, only thepayments are not for time-shares.

Individual spontaneous expenditures on entertainment will not be large. Instead, theywill be micro-payments. The important issue is the prepay customer must recharge hisaccount so as to allow numerous micro-payments on entertainment.

Another less honorable advantage to the mobile prepay customer is anonymity. Thehead of household who is spending money on gambling and other adult entertainmentdoes not want his/her spouse to know where the money is going !

MOBILE MESSAGINGWhile there is not yet as much prepaid messaging service history to review for analysis,preliminary studies have indicated that mobile prepay messaging customers actually asubstantial amount more than post-paid customers on things such as basis SMSmessaging. The theory is behind this is two-fold. First, a different target market isinvolved. Being a very strong target market for prepaid, and a very strong market fornon-voice services, the youth market heavily favors strong sales for prepaid messaging.The second reason is once again psychology. If the mobile operator makes basicmessaging very cheap, and the customer has already paid in advance, the customer willbe less adapt to count up the cost of the hundreds of messages placed/received permonth.

More advanced messaging services will be enabled by additional technologies such aslocation position equipment, location middle-ware applications such as tracking,Bluetooth, intelligent agent and profiling technology, and more efficient mobile databearers such as GPRS and 3G technologies.

While it remains to be seen how successful these more advanced features and servicesshall be, one should be confident that they will be embraced by the same users whousing basic messaging and games today.

REVERSE PREPAIDWhat is reverse prepaid? Traditional prepay involves the customer paying for airtime andthen using it. Reverse prepaid involves advertiser and merchant paying for airtime andthen the customer using it immediately.

Scenario§ Advertisers list feature codes and phone number that, when called, initiate an

advertisement or promotion of some type. The call or feature code itself is free.Once the caller listens to the advertising, she may place another call of a certainduration for free. The caller may remember the phone number or feature codefor future use. However, many advertisers would want this type of arrangement


to be location based for better target marketing. For example, one may listen toan advertisement for casinos only while in the city zone of Las Vegas.

The advertiser and/or merchant support reverse prepaid themselves. Accordingly, thefee for the free call made by the mobile customer is paid/debited by the advertiser to themobile operator in advance of the mobile customer placing the free call. We alsodiscussed earlier the notion of advertisers/merchants crediting the mobile prepaycustomers universal account for discounts and free goods and services. This is also aform of reverse prepaid.

The catch is that most mobile operators will not want prepay accounts to be creditedwith airtime to be used later. Even if the mobile operator is getting paid a portion of theadvertising money per a new business model, the operator still has a core business torun that depends on managing capacity of the network. Accordingly, businessarrangements of this type will involve the need for the mobile customer to place a freecall immediately after the promotion. The promoter may alternatively offer a credit fortheir own goods and services.

BUSINESS ISSUESIn the first part of this report, we discussed certain basic prepay business issuesincluding cost of acquisition, roaming, rates, churn and replenishment, services anddifferentiation. We will now discuss some additional business issues affecting thesuccess of offering mobile prepay communications services.

VALUATION OF MOBILE OPERATOR COMPANIESInteresting, one of the issues that drives how wireless carriers approach prepay has todo with how their value is determined in the marketplace. Industry financial analyststhat place a high value on average revenue per unit and churn have made it difficult forsome mobile operators prepay efforts.

In an effort to keep revenue per unit higher and reduce churn, some wireless carriershave initiated the misguided practice of cutting prepay customers too soon. Forexample, some operators may deactivate customer accounts after only 60 days ofinactivity (non-replenishment). This represents as much as 95 percent of all churn forprepay accounts. This practice continues for some mobile operators despite the fact thatoften customers replenish after a few months.

MARKETING DICTATES CUSTOMER PERCEPTIONThe way that a mobile operator positions a prepay offering dictates the way itscustomers perceive its value. While this seems like a simple concept, if is very profoundin its implications. This has proven itself in the United States wherein must peopleconsider prepay to be a poor person's service. Prepay should be positioned as a valuablepayment alternative. One of the areas for value realization is in the area of universal


prepay account usage. We will discuss this concept in the Business Strategies forProfitable Business section.

CALLING PARTY PAYSThe lack of calling party pays (CPP) in the United States is arguably a major inhibitor ofprepay service, especially for the cost control and credit challenged segments. Theseprepay customers would leave their phone power-on more frequently as a result of CPP.Consequently, the mobile user could receive short messages and other means ofnotification to recharge when necessary.

In other parts of the world where CPP is the norm, prepay customers leave their phonespower-on more. This allows the mobile operator to recognize revenue for additionalmobile-to-mobile calls. Additionally, the implementation of location based technologymay allow the mobile operator to alert the prepay customer when approaching arecharge location such as a retail outlet or ATM. This is potentially a powerful tool againchurn when coupled with predictive churn algorithms and loyalty programs.

FREEPHONE (TOLL-FREE WIRELESS CALLING)This is another area in which a service capability can stimulate additional prepay serviceimplementation and usage. The United States does not yet have Freephone - the abilityto make completely free (airtime and long distance) calls - capability, but will soon withthe implementation of Wireless Intelligent Network capabilities. Freephone will enablemobile users to place calls without decrementing the prepay account. Service providersmake money from the reverse charging effect of Freephone and from the indirect resultof customers utilizing their phones more. The more they use it, the more they are apt toplace chargeable calls and subsequently recharge the account.

BUSINESS CASE ISSUES FOR PREPAYTHE ORIGINAL BUSINESS CASE: SERVING AND UNMET NEEDIn the United States, 30-40% of potential mobile communications customers is rejecteddue to unsatisfactory credit history. While this is mainly a United States issue, it isimportant to note that many people throughout the world do not have good credit. Oneof the most important reasons for mobile operators to offer prepay is to capture thismarket. While a good source for revenue, prepay customers often do not add unitprofits.

NEW SOURCE FOR REVENUEWhile a good source for revenue, prepay customers often do not add unit profits. It istherefore important to look for additional sources of revenue from prepay customers thatdo not involve high expense to support. This is one of the arguments for establishingalliances with third parties to provide additional value such as Internet based contentand services.


CANNIBALIZATIONIt is difficult to quantify the effect of cannibalization of post-paid by prepay, but itappears that prepay actually expands the addressable market, with no substantiveadverse effect on revenue from existing customers. Still, it is not recommended toencourage post-paid customers to become prepay. The converse is also true. Prepaycustomers should not be coerced to become post-paid customers. This would only dilutethe important message that being a prepay customer is a valuable proposition.

FRAUDIt is important to identity the potential for fraud. Some presumed customers neverintend to pay. Sometimes these people skip from one service provider to another, oruse fake names, or engage in true-name fraud13. We discuss fraud in greater detail inPart 4: Operational Issues.

THE FINANCIAL GOAL OF PREPAY: SELF-MANAGED SERVICES WITH MINIMALOVERHEADThis is one of the most important goals of offering prepay service. Prepay customersmay not be as loyal, but they should be less costly to serve, and hopefully no morecostly to keep if the automatic recharge and loyalty programs are functioning asplanned.

Prepay service should be as simple as possible, triggering few questions for customercare. Customer care should also be as automated as possible, with almost everyquestion or concern handled on a Web page or through a voice response unit.Customers should be able to view their accounts on-line and recharge with automatedtools.

FINANCIAL ANALYSIS - ILLUSTRATIVE BUSINESS CASE EXAMPLEThe below business case information is provided for illustration and discussion of theissues only. Actual results will vary based on the specific situation.

13 Assume the identity of another.


Expenses Exp/cust Rev/cust

Acquisition 300.00$ Point of Sale Support 25.00$ Distribution (including cards) 10.00$ Customer Care & Replenish 50.00$ Advertising/Marketing 25.00$

420.00$

410.00$ 420.00$

Additional VAS 3rd party mobile commerceMOU $'s content

42.00$ 60.00$ 18.00$ 21.00$

Total extra revenue 141.00$

Grand total revenue 561.00$

Expanded Revenue Opportunities (annualized)

Basic Financials (annualized)

The above analysis consists of a basic view of costs and revenue and an expanded viewof revenue. Both views are annualized and assumed accurate for the first year ofoperation. Assuming the prepay customer remains a customer of the original providerafter the first year, the acquisition cost14 for that customer goes to virtually zero.However, some customers will require phone upgrades, driving this figure up to a highpercentage of its original number.

The basic view shows us that, if a customer stays a customer for one year, break evenoccur regarding direct costs15. If the prepay service user remains a customer after the 14 Cost of acquisition includes warehousing phones, distribution of phones, commissions to agents and/oremployees, and other handling fees.


first year, the service provider can begin to enjoy marginal returns on the serviceinvestment. This underscores the importance of reducing churn to a minimum.

The fact of the matter is that churn is prevalent for many service providers. Ideally, theservice provider must put into place programs to reduce churn as well as stimulateadditional revenue per unit. It the analysis above, we show this with the expandedrevenue opportunities.

Additional revenue can be generated from the following areas:

§ Stimulating additional and/or faster recharge of the customer account cangenerate additional MOU

§ Delivery of value-added services (VAS) to the prepay customer

§ Delivery of third party content to the prepay customer

§ Delivery of mobile commerce services to the prepay customer

RECHARGEWhile marketing, advertising, and promotion will certainly help with recharge, the areaof focus that we recommend is automation and reward. Simply put, we recommend thatthe service provider:

§ Make it as easy as possible to recharge

Provide the user as many (simple) tools as possible to recharge.

Do not force them to use a call center for recharge.

Provide them with recharge tools that they are accustomed to using for other purposessuch as SMS and WAP.

Provide a Web site for recharge so they can replenish on-line.

Establish high quality, highly available merchant and banking relationships for recharge.Use of an ATM for recharge is a great convenience for the user.

§ Remind the user in an unobtrusive manner with appropriate timing based onevents

15 Direct costs do not include cost of prepay infrastructure, a major fixed cost for the mobile operator. If thisanalysis were from the reseller's perspective, the cost for buying minutes of use (MOU) from the mobileoperator would be shown as a direct cost to the reseller.


§ Use SDR analysis to predict churn or slow recharge

Alert the user with appropriate periodicity and urgency. As a courtesy, remind thecustomer immediately when they have depleted his account. Remind him again atprogrammatic intervals based on SDR analysis. Do not harass the user. If he has notrecharged after the certain period of time, there is likely good reason. Wait until apredetermined period of time prior to making special recharge offers based on a loyaltyprogram. Send a message to the customer (via SMS, WAP, or voice message); rechargenow at "XYZ" merchant to receive a 20% discount on airtime. Provide the customer apersonalized e-coupon serial number and use location technology to direct the customerto the closest location. The customer will think it is a special promotion for that time andlocation (and they are right), but it is directed at them alone, based on the SDR analysisand the loyalty program.

§ Reward the user for recharging

Let the customer know that there is a loyalty program to encourage prompt recharge.Provide additional rewards for frequent recharge such as free use of randomly selectedservices such as three-way calling. These services could be made available for sale at adiscount after the free period.

Effect of recharge: 10% increase in MOU revenue = $3.50 per/month ($42/yr.)

VALUE-ADDED SERVICESBy definition, value-added services are services that16:

1. Not a form of basic service but rather adds value total service offering

2. Stands alone in terms of profitability and/or stimulates incremental demand forcore service(s)

3. Can sometimes stand alone operationally

4. Does not cannibalize basic service unless clearly favorable

5. Can be an add-on to basic service, and as such, may be sold at a premium price

6. May provide operational and/or administrative synergy between or among otherservices – not merely for diversification

It is safe to say that it makes sense to provide VAS to any customers, but it is criticallyimportant to provide VAS to prepay customers, as they are more prone to churn.

16 Used with permission from Value-added Service white paper by Gerry Christensen 1999


Through their differentiating characteristic, VAS can engender loyalty while drivingadditional revenue. An excellent example of a VAS is location sensitive billing.

Effect of VAS: $5/month ($60/yr.) combined MOU and service revenue

THIRD PARTY CONTENTThe service provider can deliver third party content to the customer. Content caninclude personalized information such as news, weather, sports, driving directions,information about sales items, scheduling, and other lifestyle management. It isassumed that third parties are the best source (at least initially) for this information asthey have a business focus in this area.Effect of third party content: $1.50/month ($18/yr.)

MOBILE COMMERCEThe service provider can cooperate with financial institutions to provide various mobilecommerce services, many of which would be provided on a prepay basis.

Effect of mobile commerce: $1.75/month ($21/yr.)

BUSINESS STRATEGIES FOR PROFITABLE BUSINESSIn the first part of this report, we discussed certain basic prepay offering strategiesincluding loyalty programs, account vs. debit systems, segment strategies, anddistribution strategies such as resale of service. In this publication, we shall discussadditional strategies for capitalizing on business opportunities.

PREPAY AS AN ALTERNATIVE TO TRADITIONAL BILLINGThe traditional practice of creating, delivering, and collecting payment of bill is expensiveand provides little value other than reminding the post-paid user who provides hisservice. Even worse, it may remind him how much he is spending, forcing him toperhaps reconsider how the amount he pays for ancillary services.

Some customers, perhaps most, prefer the convenience of a monthly bill as opposed toprepay customers who must remember or be alerted to recharge. Therefore,prepayment as an alternative to traditional billing is not for everyone, but it is a viablealternative to many who want to simultaneously control spending while establishingaccess to goods and services that would be unattainable with traditional mobile operatorbilling.

EBPP AS AN ALTERNATIVE TO TRADITIONAL BILLING OR PREPAYIt is important to note that, if the goal is simply to offer a non-traditional billing methodas a means to reduce the cost of billing (which can be quite high), there is anotheralternative - electronic billing presentation and payment (EBPP). EBPP entails theissuance of a bill electronically, whether by email or on-line, reducing the cost of


producing and distributing paper bills. EBPP as an introduction and technical solution isin its infancy and is currently only a niche solution for some operators who seek earlyadopter post-paid customers. However, one should keep an eye on this solution as itprovides a lot of the convenience and control of prepay when coupled with othertechnologies such as the Internet for customer care.

One unique use for a variation of EBPP would be to use it in conjunction with mobileprepay simply as a means of electronic notification and recharge. The prepay customercould receive an email notification indicating a low-balance and/or an opportunity torecharge at a preferential rate. The customer may have both prepay and post-paidaccount with the mobile operator, allowing the customer to authorize payment via EBPPfrom the post-paid account to the prepay account for purposes of recharging thecustomer's daughter away from home attending college.

ACCOUNT SPENDING LIMITIn the second part of this report, we discussed account spending limit (ASL), the conceptof allowing the mobile service customer to limit spending (control costs) without therequirement for prepay service. In other words, a post-paid customer can enjoy thebenefits of cost containment without prepayment. This may afford lower calling ratesand/or the ability to consolidate billing and calling plans, while still benefiting from thecost control aspect of prepayment.

This is a viable service offering for those customers that require cost control, but forwhatever reason, really do want a traditional post-paid bill. The beauty of this service isthat, while it has certain near-term limitations17, this service can be offered immediatelyto all customers on a trial basis. In fact, it is often useful to offer this service to selectcustomers initially as a limited introduction. Interested retail customers would pay $1-2for this service and corporate customers would pay $2-5 per mobile unit for cost control.

UNIVERSAL PREPAY ACCOUNTAs discussed earlier, prepayment allows the customer to establish an account from whichmany the fees for a variety of goods and services may be debited. This concept is bestimplemented in conjunction with an account card or smart card based prepaymentsystem. The account card is a permanent card, used just like a debit card. The accountis initiated and recharged as needed. The customer uses the card to buy goods andservices such as telecommunications equipment, long distance, local, mobile, andInternet service. The account is also decremented any time the customer engages infinancial transactions or any other form of mobile commerce. The prepay serviceprovider may make money of the provision of the services as well as the handling of themonies.

17 See Advanced Prepay Concepts and Applications part of this report for descriptions of interdependencies withmobile IN and roaming issues


DEVELOP NEW BUSINESS MODELSWe discussed quite extensively the value of the universal account for mobile commerce,the need for financial clearing, and the supporting technologies. However, it is importantto understand that there is a need to develop new business models to support emergingcommercial exchange issues such as advertiser payments, referral services, and contentsyndication.

One need only look to the NTT DoCoMo model as an example of what can be successful.DoCoMo charges every content/application provider 9% of their receipts forcontent/services delivered over DoCoMo's iMode service. This provides an incrementalrevenue stream for DoCoMo, which is above and beyond the charge the levy to theircustomer on a per-packet basis for basic iMode service.

Mobile operators must begin to figure out these new business models NOW. This isespecially critical for prepay service as there will be many advertisers and referralagencies who will jump at the opportunity to offer potential customers free, prepaidvouchers for them to try goods and services.

FOCUS ON MARKETING AND REPLENISHMENTOne central focus to this publication is the need to concentrate on marketing andaccount replenishment, as churn is the biggest adversary of the prepay service provider.Accordingly, the service provider must consider creative approaches to encouragerecharge.

Affinity programs that include co-branded prepay cards and benefits to the supportingorganization can be effective. For example, non-profit groups can distribute phones andcards at a discount, with the discount value benefiting the charity.

Marketing and sales alliances are another area of consideration. For example, computermanufacturers, Internet service providers, and prepay service providers could team tooffer a combined package of ISP and mobile service as part of the initial PC purchase.Additional on-line and airtime could be purchased on-line at a reduced rate.

OFFER VALUE-ADDED SERVICESThis is one of the most important areas as the margins for prepay service can often bethin. The example provided earlier of the campus phone is a perfect illustration VASdeployment that can enable greater penetration and unit margins.

It is important to recognize, however, that deployment of VAS often entails investmentin enabling technologies. Thankfully, the same investment can often be used for post-paid and prepay services.


LEVERAGE A CONVERGED SERVICE OPPORTUNITYIn the United States, where fixed network access to the Internet is in great demand,there is an opportunity for mobile operators to offer a converged service that includesmobile minutes as well as Internet access - both paid in advance.

In cooperation with an ISP, the mobile operator could offer a prepaid Internet accountand mobile prepay service as a combined package. The Internet account would comewith an email address that allows for forwarding and/or alerting to the mobile phone.The idea is to create customer stickiness. Additionally, the customer would be allowedto keep the email address so long as the overall account is recharged every month.

SUMMARYPREPAY POSITION IN THE MARKETPLACEWith numerous market segment (and some virtually untapped such as cost control)opportunities, prepay is sure to grow in consumer acceptance and become an even morecritical part of the mobile operators service portfolio. As a critical element, wirelessproviders must provide service to prepay customers that is at least as good as thatprovided to post-paid customers. In fact, a strong argument could be made to provideprepay customer better service and value-added features, as they may be more prone toeasy churn than post-paid customers. Providing value-added services will be possiblethrough various technology improvements that are underway.

IMPROVEMENTS TO PREPAY UNDERWAYThe most significant improvements will come as a result of mobile IN implementation.WIN and CAMEL deployment will allow the following:

Better customer segmentation – cost control customer call processing and rate plans willreflect their unique needs

Additional service on a prepay basis such as SMS, abbreviated dialing, etc.

Value-added services such as location sensitive billing

Feature enhancements such as directing the prepay user to the closest point for accountreplenishment

Improved operational efficiencies as fewer trunks will be required with WIN/CAMEL vs.point solutions or ISUP loop-backBroaden reseller opportunities with no more direct connections

Increased flexibility in terms of customer phone number administration, allowing aprepay customer to switch to post-paid (and vice versa) without changing his phonenumber.


FUTURE OF PREPAYIn conclusion, we will leave you with a few predictions and the recommendation to learnmore about mobile IN for prepay. We predict:

§ More emphasis on loyalty programs to retain prepay customers

§ Use of Service Detail Records (SDR) and integration of SDRs with other systemsto support loyalty programs

§ Increased emphasis on value-added services to differentiate prepay serviceofferings

§ Ubiquitous deployment of WIN for prepay in three to five years

§ Ubiquitous deployment of CAMEL for prepay in two to three years (standard has ahead-start on WIN)

§ Point and CDR based solutions will fade away as WIN and CAMEL becomeubiquitous. Smart card based solutions will take on more of the role as a vehiclefor mobile commerce

§ Increasing deployment of digital phones for prepay service, allowing featureenhancements such as constant account balance updates to the mobile phone viaSMS

§ Use of prepay for other services including wireless data and some emergingcategories including mobile IP services for Internet communications, informationservices, and e-commerce

§ Significantly lower pricing for prepay as WIN and CAMEL become ubiquitous,although overall market forces are the main driver here

§ As the price for prepay service drops further, and zone billing (based on locationtechnology) becomes available, prepay service will become an increasingattractive alternative to fixed line service, especially for the credit challenged orlow-end user segment


PART FOUR

DEPLOYMENT ANDOPERATIONAL ISSUES

This part of the report provides a review of the major deployment and operational issuesfacing the mobile prepay service provider. We raise these general deployment andoperational issues so as to help prepare the mobile prepay communications serviceprovider to avoid potential pitfalls and complications.

DEPLOYMENT ISSUESIn deploying a prepay system/service, one must consider many of the issues discussedearlier in this report - issues such as target market, deployment strategy, andtechnology selection. In this section we will discuss some of the commonly overlookedor glossed over deployment issues.

ESTABLISHING MARKETING AND DISTRIBUTION CHANNELSPerhaps the single most important aspect of deployment is establishing the rightbusiness arrangements regarding marketing and distribution. Technology does not sellphones - marketing and distribution does. It is therefore important to cultivate the rightrelationships with third parties to optimize the relationship for both businesses. A "win-win" relationship is important as the mobile prepay provider should strive to developlong-term relationships with channel partners. Over time, customers will grow toassociate the channel with the service provider. Pleasant experiences for the customerand mutual profitability for the businesses will lead to long-term success.

TECHNOLOGY PERVASIVENESSWe discussed the need for ubiquitous technology during our discussion about mobile INtechnologies. The need for technology pervasiveness is, however, not restricted to anyone technology. It is important for service providers to consider the availability ofsubscriber and network equipment prior to making technology selection. Thosetechnologies that are not widely available will inhibit important aspects of deploymentsuch as roaming capability.

ROAMINGServices should ideally work in the same manner while roaming as they do at home.Customers of all types increasing expect to have service availability everywhere. Thereis often a careful balance that must be made between advanced features (which may beavailable in the home only) versus fully functional basic services (and preferable


advanced ones too) while roaming. The mobile prepay service provider must understandand consider technology pervasiveness, business arrangements with roaming partners(other mobile operators), and market segment needs of the customer base beforemaking any technology decision.

TECHNOLOGY OBSOLESCENCEIt is important to consider the possibility of technology obsolescence in planning anddeploying a mobile prepay solution. While all technologies will eventually be supplanted,a safe bet is to go with standards-based technologies and/or those that are widelydeployed. The last thing that a service provider wants is to be stuck with "throw-away"technology. Therefore, careful business case analysis most be employed, especiallywhen the system in question involves even a portion of proprietary technology.

MOBILE PREPAY AND MVNO'SMobile Virtual Network Operators (MVNO) are picking up additional momentum in Europeand may eventually catch-on in the United States and other parts of the world. Mobileprepay is a less risky market entry strategy for many MVNO's. Incumbent mobilenetwork operators enjoy the benefits of selling wholesale minutes of airtime to MVNO's,which in turn sell to their own customers.

PREPAY AND POST-PAID SERVICE INTEGRATIONAs we discussed earlier, prepay customers do not want to be special cases - they want tobe special. They want to have all of the services (or more than) post-paid customersenjoy. While the implementation of mobile IN technologies enables many services to beextensible to prepay that were previously only available to post-paid customers, mobileoperators should have a strategy to provide these features even before this evolutionoccurs.

Some services, such as caller ID, voice mail, and SMS, may be provided on a flat-fee,all-you-can-eat basis. Other services (that require system interaction) may beprohibited by certain types of prepay systems.

Other services may truly be provided on a post-paid basis to prepay customers. Thismarket segment includes those that want to control costs for certain services but notothers. An example would be as stated earlier in which a father has a daughter incollege. The father may want the daughter to have prepay as a means of managingexpenses but yet maintain a post-paid account for the main mobile usage.

Regardless of the specific situation, integration of post-paid and prepay services willrequire close coordination between billing systems and prepay systems used by themobile operator. Leveraging of the Internet and EBPP technologies can makemanagement of associated post-paid/prepay services much easier.


PREPAY AND INTERNET SERVICE INTEGRATIONEveryone knows about mobile Internet, which is using a mobile phone with specialcapabilities such as WAP and/or GPRS for wireless data applications. We talked earlierabout the importance of offering these non-voice services via prepay. We also talkedabout the evolution of prepay to incorporate various aspects of mobile commerce. Whatwill also occur is integration of mobile services and Internet based commerce. One goodearly example is what Cincinnati Bell Wireless (www.cbwireless.com) is trialing in 1Q2001 called i-wireless. Cincinnati Bell Wireless offers it prepay customers the ability topurchase various items on the i-wireless web page (www.i-ontheweb.com) .

Exploiting the Internet as a means of allowing prepay customers to make purchases (viaan ISP connection) on the web with funds from their prepay accounts is one of the firstlogical steps towards true prepay mobile commerce, which is making transactions whilemobile with funds debited from the prepay account.

PATENT ISSUESIt is important to bear in mind that all legal issues relative to mobile prepay deployment,not the least of which are patent issues. Below we briefly discuss a few examples ofsome patent infringement cases.

Freedom WirelessIt remains to be seen what will come of a legal battle between mobile prepay providersand Freedom Wireless, a privately held Phoenix, Arizona, USA-based wireless technologycompany that was granted US patents for completing prepaid wireless phone calls.

Litigation in the Freedom Wireless case has been engaged with the potential implicationsand outcome inconclusive at this point in time. We shall monitor this situation andprovide progress in the next revision of this report.

A. Katz Technology Licensing L.P.In another patent case, A. Katz Technology Licensing L.P. has prevailed in patentdisputes with several companies, most recently with AT&T. Katz maintains a patentportfolio for which it intends to offer licensing as it has done so with quite a fewcompanies already.

TelemacIn July 2000, Topp Telecom settled a patent infringement action commenced byTelemac, which ended in Topp licensing Telemac's technology.

In May 1999, Telemac sued USIntellicom, now a wholly-owned subsidiary of Pre-CellSolutions Inc. for infringing Telemac's patent. Telemac's lawsuit against USI continuesin Federal Court in Oakland.


Telemac recently commenced a patent infringement lawsuit against USI, Pre-Cell andPrepaid Solutions, for infringing Telemac's new '915 patent. Among the remedies soughtby Telemac is an injunction to deactivate all infringing software, including software inphones serviced by USI's licensees.

Telemac's new patents cover a network-independent billing system for prepaidwireless services and makes the following claims in terms of functionality:

§ There is no requirement for the use of automatic over-the-air means foractivation.

§ There is no clock chip claim element.

§ There is no requirement that the phone be capable of international dialing. Allthat is required is that the phone be capable of classifying calls into a plurality ofcategories.

§ There is no requirement that the phone use specific monetary values, rather thanunits or any other representation of prepaid funds.

OPERATIONAL ISSUESOnce deployed, there are many issues to address in supporting the operation of a prepaysystem and/or service offering. We will discuss some of the more important operationalissues in this section.

FRAUDThe three primary types of fraud that can affect prepay service operations are creditfraud, subscription fraud, and prepay card inventory fraud.

Credit Card FraudCredit fraud arises from individuals who pay for their prepay airtime with credit, butnever intend to pay their credit card bill. Depending on the prepay service providersarrangement with the credit card merchant, either the service provider or the merchantmust bear the bad debt. Even if the arrangement is such that the merchant pays, theprepay service provider must be diligent to prevent this form of fraud or risk losing goodstanding with the merchant.

The Federal Trade Commission of the United States claims that physical credit cards arenot present in up to 54% of all fraud involving credit cards. Most of this type of fraud isbased on "social engineering". For example, a customer may convince a mobileoperator's customer service representative that the replenishment processmalfunctioned. In these cases, the mobile operator does not have the time to follow up


to see if a valid credit card was actually used. Sources of fraudulent use of valid cardsinclude discarded receipts, stolen mail, and duplicate or cloned cards.

Subscription FraudThere are many types of subscription fraud, but they all involve an intent to never paythe service provider. With the percentage of "technical" fraud to other types of fraud atroughly 40%/60% and growing, many prepay providers are either eliminating (not agood option as this is a unique market segment) anonymous accounts for prepay and/orsetting up special programs to deal with this problem. However, some nations do nothave the credit bureaus and other means to screen applicants.

Furthermore, a special type of fraud called "true name" fraud makes the battle againstsubscription fraud especially difficult, with crooks alluding the best attempts of providersto perform background checks. With false identities are easy to obtain, true name fraudarises when an individual falsely represents their identity, never intending to pay forprepay service. This is an increasingly common form of fraud with post-pay service asmobile operators (through anti-fraud technology) have beaten other forms of fraud. Thisform of fraud is on the up-rise, and along with credit card fraud, is the one of the biggestforms of revenue leakage for mobile operators. True name fraud can be reduced bycareful identification and background checks.

While subscription fraud by itself is a direct problem for post-paid service, it is enabler ofother types of fraud for prepay such as credit card fraud. The subscription fraud crookcan easily use fraudulent credit cards, vouchers, and/or other means to credit the prepayaccount with almost total impunity to prosecution.

Prepay Card/Voucher FraudThe final form of fraud is very common among those providers who have prepay cardsas part of their distribution strategy, but do not have adequate controls in place at thepoint-of-sale. This form of fraud is due to point-of-sale employee pilferage of prepaycards for personal use and/or gifts or unauthorized sales to others. This form of fraudcan be best stopped at the point-of-sale. Those merchants that do not crack down onthis form of fraud will likely not remain distributors for the mobile prepay serviceprovider.

Other types of card/voucher fraud include:

§ Unauthorized generation/activation of PINs

§ Card/voucher manufacturing fraud - duplicate cards/vouchers made at the factory

§ Transaction inflation fraud - merchant/distributor inflates prepay transaction toget higher commission


Whether committed directly or through facilitation to help another commit fraud, all ofthe aforementioned activities are illegal acts that a mobile operator must be cognizant ofin order place prevention procedures/policies in place.

Mobile operators should ask themselves questions such as:

§ Are controls in place to safeguard data files for PIN manufacture and retention?

§ Is a settlement process in place to verify merchants' receipts versus inventory ofcards/vouchers?

§ Do vouchers/cards have physical safeguards such as lock boxes?

§ What controls are in place to ensure safe delivery of cards from manufacturerand/or warehouse to merchant locations?

However, try as they might, mobile operators will always experience a certainpercentage of fraud, even with prepay fraud controls in place.

Below are some illustrative figures that may be used as a benchmark for how muchfraud is "too much":

INDEX POORBELOW

AVGERAGEAVERAGE GOOD

Fraud as a % of bad debt 45-60% 30-45% 15-30% 10-15%

Fraud as a % of revenue 5-15% 3-5% 1-3% <1%

Actual loss as a % of uncollectedfraud revenue

100% + 85-100% 70-85% 50-70%

CRIMINALS USING PREPAY TO AVOID SURVEILANCEPrepay can be an easy means of criminals conducting activities to avoid surveillance.Accordingly, mobile operators need to be prepared to cooperate with officials to helptrack down and catch crooks. As a case in point, a few rather high-profile criminal casesin 2000 involving prepaid phones in Japan urged the government to force operators torequire prepay customers to show identification upon initiating service.

In the United States, work is underway to institute lawful monitoring of calls by police inorder to catch criminals. As prepay becomes more mainstream in the US, it is likely thatadditional measures will be taken such as criminal profiling at the point of sale andlocation based tracking of a suspected criminal phone numbers. However, privacy andprotection of human rights are a big issue here, so these are also likely to be very stickyissues.


SURVEILLANCE AND MONITORING OF THE SYSTEMLittle thought is often put into the issue of system surveillance and monitoring.However, these are two of the most important operational issues. Ideally, prepaysystems should be deployed with automatic monitoring systems so that "live people" donot have to provide surveillance all the time. However, even the best automatic troublereport systems are not infallible. Therefore, it is recommended that live people providesurveillance at least to some extent during known peak calling dates/times but evenmore so in conjunction with planned system upgrades and maintenance. This allows forimmediate intervention should a problem arise that could otherwise go on discoveredwithin an acceptable period of time.

MAINTENANCEMost mature systems will run without any problems, unless something is done to changethe system equilibrium such as a software upgrade. One form of maintenance istherefore to perform routine system backups of subscriber and system data. Anothercommon form of maintenance is simply to perform maintenance servicing andreplacement of mechanical parts such as cooling systems for hardware. It is importantto plan for necessary maintenance and personnel to attend to such matters.

MOBILE NUMBER PORTABILITYThe effect of mobile number portability (MNP) on mobile prepay can be critical as itallows customers to change service almost at will to try other mobile operator's prepayplans. While not yet in force in all countries such as the United States, MNP is a threatand an opportunity in places it is in force such as the United Kingdom. Many operatorssee MNP as the opportunity to gain market share through more aggressive marketing tocompetitor's existing customers.

Tactics to capture new customers from the competition include:

§ Allowing the prepay customer to transfer their existing balance to the new planand/or a free amount of minutes on the new plan

§ Offering free services such as SMS for a month

§ Offering a phone upgrade at low cost to qualified customers

Tactics to keep customers from going to the competition include:

§ Offering a low-cost one-number service, allowing calls to be routed to the mobileor fixed location. This type of service typically requires special intelligent networkinfrastructure and application. If the competition can not support such a service,the customer will be less apt to change service providers.


§ Provide valuable feature add-on's as discussed earlier. Various forms of mobileentertainment such as jokes and horoscopes could be sold at low-cost. Onceagain, if the competition doesn't have it, customers that are "hooked" to theentertainment will be less apt to leave.

§ Provide superior customer service. This is always a good idea.

While the above general suggestions should apply to most every mobile operator, therewill be specific and overall exceptions. One overall exception will be when MNP isavailable in the United States where calling party pays (CPP) is not in place. On onehand, you could say that there is currently no barrier to changing providers todaybecause few people give out their mobile number. On the other hand, for those that doreceive a lot of calls on their mobile, MNP will be a big benefit. However, prepaidcustomers in the US do not tend to give out their mobile very much because of lack ofCPP.

THE EFFECT OF MNP ON DIFFERENT PREPAY TECHNOLOGIESIt is important to note that MNP has a different impact that depends on the system type.For example, point solutions that utilize service node technology are typically engineeredsuch that they require dedicated phone numbers (mobile directory number [MDN] forANSI-41 and MSISDN for GSM) to function. In contrast, handset based (including SIMbased), INAP, CAMEL, and WIN based systems can utilize any number.

This means that customers may easily port to a different prepay provider, keep theirMDN/MSISDN, despite the fact that MNP requires a change in the customer's MIN/IMSIon non-point solutions. This is a key point in the comparison between point solutions forprepay vs. others:

§ A customer may port from a mobile operator that has a point solution to a mobileoperator that has a non-point solution

§ A customer may not easily port from a mobile operator that has a non-pointsolution to a mobile operator that has a point solution. Since point solutionsrequire dedicated phone numbers, mobile operators typically want to manageprepay customer numbers in contiguous line ranges due to the fact that supportof single numbers would drive up the cost of administration and switchtranslations.

CUSTOMER CAREEven in this evolving world of automation, a mobile prepay provider can not overlook theneed for well-trained and equipped customer care personnel. While many subscriberswill be handled by automated systems such as VRUs, others will want the personal touchor assistance of a human customer care person. Mobile prepay customers have unique


needs. It is therefore recommended that a sub-set of the customer care organizationreceives specialized training and tools to satisfy mobile prepay customer needs.

DEALING WITH INTERMEDIARIESThere are many different types of intermediaries to deal with in a mobile prepayoperation and they all have unique needs. Resellers have different requirements than apoint-of-sale merchant as do mobile phone providers. The successful mobile prepayservice provider will provide staff necessary to manage these various third party serviceproviders.

OBTAINING FEEDBACK ABOUT PRODUCTS/SERVICES AND CUSTOMER NEEDSOne of the most important issues is obtaining feedback, for without it, there is little basisfor improving services. There are many ways of receiving feedback. The methods rangefrom obtaining information through customer surveys to automatic reporting of mobileprepay customer activities such as recharge and use of supplemental services. Whilemany improvements can and should be made on the basis of strategy and featuredevelopment, it is important to take every opportunity possible to obtain direct feedbackfrom the customer. One example would be to offer a loyalty program that providesextra minutes of use if the user provides feedback about the service. This may also be auseful time to request demographic information - something that mobile prepay usersare reluctant, but sometimes willing to provide.

DOING BUSINESS ON THE WEBAs discussed in this report, one of the Internet is perhaps the most powerful technologyto leverage for various operational aspects including customer care, sales andreplenishment, and advertising. The recently signed Electronic Signatures in Global andNational Commerce Act (E-Sign Act) gives electronic contracts full effect under the law.While the E-Sign Act will inevitably lead to greater exploitation of the Internet, it isimportant to note that there are certain guidelines that should be followed whenconducting business over the Web as a means of protecting the prepay provider frompotential problems.

AGREEMENTSAny agreement posted on the Web should disclaim implied warranties, limit liability,disclaim responsibility material to hyper-linked sites, and any errors or omissions.

OPERATING POLICYThis should post the permissible and impermissible uses of the Web site.

PRIVACY POLICYA privacy policy should be in effect to protect the users of the Web site. This policyshould be clearly posted to assure customers that their personal information shall beproperly handled.


INTELLECTUAL PROPERTY STATEMENTThis is intended to make it clear to all visitors that the Web site and its contents arecopyright of the prepay provider.

COST RECOVERY ISSUESOne significant cost recovery issue in the United States is relative to enhanced wirelessemergency services (wireless E-911 in the US). In the US, W-911 is rolling out asmandated by the FCC. In order to pay for the high cost of the infrastructure andsystems required for W-911, the FCC has put agreed to allow for cost recoverymechanisms to the operators.

While cost recovery plans are in place for mobile operators to charge fees to post-paidcustomers (cost recovery is allocated to the jurisdiction associated with the billingaddress), obtaining cost recovery from prepay customers is problematic at best.

Potential solutions include:

§ Charging/allocating the cost recovery fee based on customer's address. This willproblematic as many mobile prepay plans do not require the customer to providean address and some users prefer to remain anonymous.

§ Charging/allocating the cost recovery fee in conjunction with the location in whichthe customer initially purchases the equipment/card(s) and subsequently whererecharge occurs. This method is also problematic as recharge location is verydifficult to determine due to the fact that replenishment may occur via remoteconnection such as a VRU or Internet replenishment in contrast to physicalreplenishment at a store or ATM.

§ Charging/allocating the cost recovery fee based on location when actually used.While this is the most correct from an accounting perspective, it would be a costlyendeavor to monitor and allocate cost recovery monies based on every calllocation.

There is no easy answer here. Other countries outside the US will also experience thisissue once similar emergency service initiatives are in place. Once this issue surfacesoutside the US, its magnitude will be even greater as a much large percentage of usersare prepay outside the US, thus making the issue of cost recovery from prepay userssignificantly more important.

DISCLOSURE ISSUESAs a part of engaging in fair business practices, every prepay service provider shouldprovide information about service and charges prior to offering those services. The


International Prepaid Card Association (IPCA) offers the following disclosure guidelines(not fully approved at the time of this writing) for its members.

IPCA PHONECARD DISCLOSURE GUIDELINES18 ADOPTED BY THEBOARD OF DIRECTORS - JUNE 5, 2000A statement of policy: that the IPCA believes that consumers of phonecards should haveall information about charges and services prior to the purchase of such services, and,further, that where there are potentially confusing charges or differing internationalcharges, the consumer should be informed that explanations or international rates canbe obtained via a toll-free customer service number.

SUMMARY OF DISCLOSURE GUIDELINESThe following information must be disclosed to the consumer and made available on thephonecard and its packaging, materials distributed at point of sale, via the customerservice hotline, on the company’s website if cards can be purchased from the website, oron a phonecard vending machine. The party responsible for disclosure is the card issuer,also defined as the underlying carrier and/or the tariffed entity.

1. The rate per billing increment of domestic time

2. Rounding policy – if not stated, is assumed to be one-minute.

3. Rounding policy if more than one minute

4. Any domestic and international connection fee – only one connection fee maybe charged per call.

5. Any periodical maintenance fee – the amount and the period fully disclosed –and, maintenance fee be levied no more than once per call.

6. Any “tax” surcharge or surcharges that would cover government-impostswhen imposed as an added charge

7. Any payphone use surcharges

8. The full underlying carrier name or DBA as registered with the governing stateregulatory agency

9. Customer service toll free number

10. No undisclosed charges should be applied; i.e. “Other charges may apply.”

18 These guidelines were reprinted by permission of the IPCA and are their copyright.


11. When the maximum number of minutes available on a card is advertised, thecircumstances under such usage may be available should be disclosed.

12. There should be a clear statement that all charges for international calls canbe obtained through Customer Service

I. Items disclosed on the card itself must include:

1. The customer service number

2. The access number

3. The PIN number (with or without security)

4. The value of the card in dollars or “units”

5. The name of the issuer, and

6. Expiration policy (which, if not stated, the card will be assumed to be live forat least one year after purchased)

II. Rounding policies (the time increment used to decrement a card)1. Rounding must be in minutes unless it is in seconds or groups of seconds.

2. Rounding policies should be limited to the same increment (a card shouldnot round for the first minute, and then round for two minutesafterwards).

3. Only policies in excess of one minute must be disclosed

4. If billing increments are in excess of one minute, prices should be stated inbilling increments: “30 cents per three minutes”

5. Prices should be stated in rounded increments if in excess of one billingincrements: “30¢ per three minutes”

III. Specifications on POS posters or literature

Issuers should establish a plan to instruct distributions and retailers (includingvending machine operators) as to disclosure requirements, and, when notifiedthat such information is not being provided, have certain procedures in place toremedy the situation, which may include disqualifying a non-compliantdistributor/retailer from carrying the issuer’s cards.


IV. Specifications on packaging (material attached to or inserted with a card)Information on all disclosure should conform to the rule that there is sufficientcolor contrast to provide for easiest possible reading.

V. For purposes of regulation, how should a “surcharge” be defined? Any feeor cost decremented from a card in addition to a per-minute or billing incrementrate.

VI. Customer Service (a toll-free telephone service that provides certaininformation/assistance to the consumer)

Live customer service should provide a minimum of 40-hours per week, during normalbusiness hours, with a recording system or an IVR system back up for off hours. Whenthe recording/IVR system is in use, and when customers request a return call, attemptsto return customer calls must be made by COB the following business day. Customerservice, when requested, should provide:

1. Remaining balance2. International costs3. All surcharges4. Rounding policy5. Recharge policy and costs6. Name of issuing company7. Expiration policy8. Name and phone number of state regulatory agency.

VII. Surcharges – numbers and types

1. Surcharges should be allowed only when they are disclosed in specific “units”or dollar costs or in percentages when related to costs of taxes or othergovernmental fees that are levied in such a manner.

2. There should be no second connection fee added on a given call. However, ifdisclosed a company may impose a second connection fee on a “#reoriginated” call.

VIII. Connected and completed calls

1. A card can not be decremented for non-connected time

2. A card cannot be decremented for non-completed calls.

3. A completed call is a call to the called party.

4. A completed domestic call is a call that receives answering supervisionsignal from the called number.


5. Determining when an international call is “completed to the called party”.When an answering supervision signal is not received, most companiesconsider a call complete after a period of time once the terminatingcountry dial tone is received and the called ANI is transmitted. ITAbelieves that the industry standard should be sixty seconds. The card thencan be decremented for a completed call.

IX. Promotional Card standards (cards that are not sold, but given to theconsumer of the telecom services)

1. There should be no differential made as to full disclosure regardingpromotional cards, which should have clear disclosure that they are not forresale.

2. Promotional cards should meet the following disclosure standards:

A. Clear disclosure that the card is “Not for Resale”B. The number of domestic minutes provided in a given card and the billing

increment if more than one-minute.C. Any payphone use surchargesD. Clear indication if the card cannot be used for international callsE. If the card can be used for international calls, there is clear indication of

higher rates or fewer minutes of time.F. Rounding policy if greater than one minute (see above)G. Any connection fees or added surcharges/decrementations.

X. Language - Cards providing marketing, POS materials or packaging in a given

language should also provide full disclosure of all information cited above andprompts in that language.

XI. Refund - When an issuer offers a refund policy, it should be clearly disclosedprior to sale.

XII. Public Utility Commission information - Customer Service should be able toprovide on request, a phone number for the telecommunications regulatoryagency in each state.

XIII. It is recommended that IPCA members comply with these standards within oneyear after the Board of Directors adopts them.


SUMMARYTHE FUTURE FOR PREPAYPrepaid mobile communications, in which people pay for their airtime in advance, haveover the past couple of years propelled the mobile communications industry to new highsand into new customer groups in many but not all countries around the world. However,the future of prepay looks very different:

§ Network operators are telling us that prepay users are mostly not profitable forthem- because prepay tariffs are no longer time related (necessitating regularreplenishment), network operators have little or no control over how much returnthey will get from that user- who may not use their mobile phone much at all.Mobile network operators feel compelled to keep pushing prepay to acquirequantities of customers, even if the quality is not there.

§ Many prepay customers never register with their network operator- despiteinducements such as additional airtime credits for submitting their details. Insuch cases, network operators have no customer data or relationships.Anonymity, one of the advantages of prepay to the user, is proving to be a bigdisadvantage to the operators.

§ Mobile terminals are getting more feature-rich as nonvoice services come to thefore. Youth markets are a key driver for such nonvoice services- and a keycustomer group for prepay- yet it is difficult for network operators to aggressivelysubsidize sophisticated multimedia capable terminals such as the Casio Message-Cam (see the Devices Zone on www.mobileMMS.com). Network operators aregenerally willing to subsidize such devices when they are connected to post-paytariffs on a minimum contract term because they have some guaranteedminimum revenues and because Average Revenue per User (ARPUs) tend to behigher for users of such devices. In 3G markets, a substantially larger proportionof terminals will be smart and multimedia enabled, necessitating post-paid tariffs.

§ Two of the biggest areas of revenues predicted for the 3G world are mobilecommerce and mobile location. Mobile commerce requires user authenticationwhich is inconsistent with anonymity, and mobile location requires user opt in andopt out to services, witch is also inconsistent with the anonymity that prepay canprovide.

As such, we predict that prepay will account for a diminishing proportion of the totalmobile market and that the postpaid billing mechanism will become resurgent. Within acouple of years, the two forms of payment are likely to be roughly equally used in the 3Gworld, with application centric devices on postpaid tariffs and voice centric terminalsmainly on prepay tariffs. Thereafter, as network operators begin to focus more on thequality of their users, prepay may fall away further.


PART 5

GLOSSARY

ACD - Automatic Call Delivery

ACM - Answer Complete Message

AMPS - Advanced Mobile Phone Service

ANSI - American National Standards Institute

ANSI-41 - Formerly Interim Standard (IS) 41

ASL - Account Spending Limit

ATM - Automatic Teller Machine

CAMEL - Customized Applications for Mobile Enhanced Logic

CAP - Capabilities Application Part

CDMA - Code Division Multiple Access

CDR - Call Detail Record

CPP - Calling Party Pays

CS - Capability Sets

D-AMPS - Digital AMPS

FISU - Fill-in Signal Unit

GPRS - General Packet Radio Service

GSM - Global System for Mobile communications

GSM MAP - GSM Mobile Application Part

GTT - Global Title Translations

HLR - Home Location Register

IAM - Initial Address Message

ID - Identification

IMSI - International Mobile Station Identifier

IN - Intelligent Network

INAP - Intelligent Network Application Part


INCM - Intelligent Network Conceptual Model

IP - Intelligent Peripheral or Internet Protocol

ISO - International Standards Organization

ISUP - ISDN User Part

IVRU - Interactive Voice Response Unit

LSB - Location Sensitive Billing

LSSU - Link Status Signal Units

MAP - Mobile Application Part

MDN - Mobile Directory Number

MF - Modified Feature

MOU - Minutes Of Use

MSC - Mobile Switching Center

MSISDN - Mobile Station ISDN

MSU - Message Signal Unit

MTP - Message Transfer Part

NMT - Nordic Mobile Telecommunications

PCS - Personal Communications Service

PDC - Personal Digital Cellular

PDE - Position Determination Equipment

PLR - Pseudo Location Register

PSTN - Public Switched Telecommunications Network

RBOC - Regional Bell Operating Companies

RegNot - Registration Notification

SCCP - Signaling Connection Control Part

SCP - Service Control Point

SDR - Service Detail Record

SIM - Subscriber Identity Module

SMS - Short Message Service

SMSC - Short Message Service Center


SN - Service Node

SONET - Synchronous Optical Network

SP - Switching Point

SS7 - Signaling System number Seven

SSN - Subsystem Numbers

SSP - Service Switching Point

STP - Signal Transfer Point

TACS - Total Access Communication System

TCAP - Transaction Capabilities Application Part

TCR - Transfer-Cluster-Restricted

TDMA - Time Division Multiple Access

TFP - Transfer-Prohibited

TUP - Telephone User Part (TUP)

UMTS - Universal Mobile Telephone System

USSD - Unstructured Supplementary Services Data

VAS - Value-Added Services

VLR - Visiting Location Register

VRU - Voice Response Units

WAP - Wireless Application Protocol

WIN - Wireless Intelligent Network


ALSO PUBLISHED BY MOBILE LIFESTREAMS

Yes 2 Prepay – Gerald T. ChristensenPublished: March 2001 (161 A4 pages)

Written by Mobile Lifestreams’ Prepaid expert, Gerry Christensen, this 161 page reporthas been designed to help product and service providers and those investing insystems/solutions to make more informed business decisions.

For more information visit: http://www.mobilePREPAY.comPrice: 495$USISBN: 192910541X

Messaging Metrics – Simon BuckinghamPublished March 2001 (129 pages)

The intention of this report is to satisfy the large number of requests that MobileLifestreams receives for detailed quantitative and qualitative information on the growthof mobile messaging services such as text messaging (SMS), enhanced messaging (EMS)and multimedia messaging (MMS)

For more information visit: http://www.mobilesms.comPrice: 495$USISBN: 1929105371

Success 4 WAP – Simon BuckinghamPublished: February 2001 (200 pages)

The Wireless Application Protocol (WAP) is a hot topic that has been widely hyped in themobile industry and outside of it. Mobile Lifestreams originally produced its first WAPreport, “Data on WAP”, in July 1999. Due to rapid changes and developments this reportwas reissued as "Yes 2 WAP" in May 2000 and as “Success 4 WAP” in February 20001.

For more information visit: http://www.yes2WAP.comPrice: 495$USISBN: 1929105215


YES 2 3G – Simon BuckinghamPublished: February 2001 (283 pages)

"YES 2 3G" presents an optimistic look at tremendously exciting possibilities that ThirdGeneration/ UMTS technologies and applications enable. Timescales, profiles of all themajor infrastructure vendors including the Japanese vendors, every mobile multimediaapplication, "At home with your futurephone"- mobile communications in the next fewyears, 3G Talking Points, all the 3G contracts awarded, the standards, handset alliancesand partnership opportunities and much, much more are included in this report.

For more information visit: http://www.mobile3G.comPrice: 495$USISBN: 1929105150

Next Messaging: From SMS to EMS to MMS – Simon BuckinghamPublished: December 2000 (275 pages)

Messaging is evolving beyond text to enhanced text and simple pictures to fullmultimedia messages. This report plots this evolution path and is an essential resourcefor those working with SMS who are looking to maintain their position in the future. Thetransition from text messaging to multimedia messaging is as important for mobilephones as the transition from DOS to Windows was for the PC.

For more information visit: http://www.NextMessaging.comPrice: 495$USISBN: 1929105258

Yes 2 GPRS – Simon BuckinghamPublished: August 2000 (218 pages)

This report shows how to make mobile data a success by maximizing the use of, andtherefore the revenue from, the General Packet Radio Service (GPRS). Education is theprinciple means of achieving this objective- by providing the first and only single sourcefor accurate and comprehensive information about the development and deployment ofGPRS around the world. “YES 2 GPRS” explains and interprets both the existing andfuture aspects of GPRS. It provides both an explanation of these developments, andanalysis to help interpret them. The idea is to identify the critical success factors for theGeneral Packet Radio Service- now and in the future

For more information visit: http://www.mobileGPRS.comPrice: 495$USISBN: 1929105258


Mobile Positioning – Stephen M Dye and Dr Frank BaylinPublished: November 1999 (273 A4 pages)

"Mobile Positioning" is a report about mobile positioning systems- in particular, theGlobal Positioning System (GPS), non-GPS location techniques and Cell Broadcast.Although the report focuses primarily on the Global Positioning System (GPS),appendixes cover other non-GPS location schemes and Cell Broadcast in considerabledetail.

For more information visit: http://www.MobilePositioning.com Price: 250$USISBN: 1929105134

NOTE: To order any of the above publications, please visit our secure online orderingform at https://www.mobilesms.com/ordering.asp

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