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Business model IV: Private pull approach I

- Expected ad perception: affinity;
- Mobile network operator-centric;
- User owner: mobile network operator;
- Incentives: LBA as part of service;
- Source of payment: user and retailer;
- Target group: tourists;
- Revenue stream: user + retailer - mobile network operator - content supplier
- Typical applications: tourist guide, find-the-nearest.

In this mobile network operator-centric model the mobile operator is the sole linkage between all players, in particular it is the mediator between the two ends of the value chain. Therefore it receives payments from both the user as well as the retailer.
LBA as part of a pull service, e.g. POI requests, is liable to pay by the user on the one side, and from the retailer who uses this advertisement medium on the other side. As LBA is based on the user’s subscription to the mobile operator, the big advantage lies in the established billing relationship between the two entities. This is a decisive criteria for LBS as it enables the charge of so-called micro payments, i.e. payments with a very low monetary value. Application developers, middleware providers and location technology vendors receive one-off payments from the mobile operator whereas the content supplier as an integral part participates in the persistent revenue stream. The role of the content supplier is a very significant one due to the fact that the user normally subscribes to a service based on its appealing content.

It is also imaginable to a have an additional entity between user and mobile network operator, such as a travel agency. In this case the service is primarily focusing on tourists as users. The tourist then is not directly subscribed to the mobile operator but to the travel agency, which acts as the service provider, i.e. through leasing of the appropriate mobile handset or just the SIM card. A similar case that has been put into practice is the ( m-ToGuide project by the Information Society Technologies (IST) Fifth Framework Programme of the European Commission.

Another typical application refers to one of the most popular Location Based Services which is known under the service label “find-the-nearest”. LBA can be combined with this service, thus to obtain a more appealing appearance.

The big disadvantage of this business model consists in its operator-centric construction. The most dominant actor can shape the development path of LBA, always solely focusing on his own interest, and therefore not necessarily for the sake of LBA itself. The mobile network operator is expected to inhibit any possible entrance of players that might endanger its position and force it to cede some of its LBA market share.

However, it is questionable if the mobile operator is able to tackle all tasks alone, especially as LBA does not belong to the core business and it barely has any experience on this field. Furthermore does the direct customer management of every single retailer seem to be exceeding the resources of the mobile network operator. Apart from that this model only applies to LBA within the same mobile communication network. It seem to be infeasible to exploit LBA independently from the specific network because no operator will share the access to sensitive information of its own customers with any competitor. Without the interoperability, however, the development and growth of LBA will be dampened.

Reported by

YellowMap AG
Wilhelm-Schickard-Strasse 12
76131 Karlsruhe
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