Profiting from mobile multimedia services: how to gain first-mover advantages

Profiting from mobile multimedia services: how to gain first-mover advantages – MMS

Jayesh Patel

The success of SMS was somewhat of a surprise when it quickly proved itself as a high-value service. The rollout of new color mobile handsets by all operators is poised to do the same for MMS and picture messaging.

If the success of Short Messaging Service (SMS) is any indication, the delivery of Multimedia Messaging Services (MMS) will likely create explosive demand for 2.5G and 3G mobile data services. Rapid adoption of SMS was a surprise success and those providers that offered early services captured the market.

Mobile data operators cannot afford to have a massively popular service sneak up on them in today’s economic climate. Many operators are now in the planning stages of designing MMS capabilities, and these services will gradually be announced over the next year.

Successful deployment of MMS depends on a next-generation network infrastructure that enables service delivery and the ability to offer pricing based on metrics that are meaningful to the customer. Since MMS is in its infancy, the exact nature of these services and their infrastructure requirements is not yet completely clear. Operators are left analyzing market conditions and planning for deployments as best they can so they can evolve their network to offer exciting new services.

However, during these times of uncertainty, there are opportunities for network operators to assess market opportunities and infrastructure requirements so they can gain first-mover advantages in the delivery of MMS.

Capitalizing on Transaction-Based Pricing Models

The success of SMS has shown the popularity of transaction-based or event-based services and pricing models. SMS has quickly proven itself as a high-value service. It allows subscribers to send and receive brief messages over the control channel, usually of less than 160 characters, and can be flexibly offered on a flat-rate or usage-based charging model.

Operators profiting from SMS can now look to use transaction-based pricing for MMS so subscribers can send messages comprising a combination of text, sounds, images, and video using MMS-capable handsets over 2.5G or 3G networks. These subscribers can be charged according to their perceptions of value based on what is sent, to whom, when, and why. Subscribers will be able to send mobile postcards, photos, greeting cards, maps, interactive business cards, moving images, cartoons, and interactive video using MMS. Mobility adds a timeliness that can increase the value of the information.

The simplicity and clarity of SMS charging models have been key drivers to the popularity of these services, since subscribers will see value in the difference between making a voice call versus sending a short message. As a result, they understand exactly what they are paying for and can individually choose the extent to which they want to use the service. This simple value proposition has encouraged operators to develop pricing plans that encourage high-volume use of SMS, and this pricing has stimulated the ever-growing popularity of these services.

Operators are seeking ways to offer multiple ways to bill for multimedia services so they can charge for the value perceived by the customer. Today’s network infrastructure offers limited ability to support flexible charging models, yet operators need to support a broad range of pricing and charging models to offer flexible consumer selections that drive subscribers to increasingly use 2.5G and 3G services.

Flexibility Required to Profitably Grow MMS

The key to the success of transaction-based pricing is its simplicity and predictability, which provides subscribers with a sense of control, and encourages trust in the operator, which catalyzes service adoption and progressively increasing usage. The success of MMS therefore depends largely on the ability of the network to support transaction-based pricing among an array of charging plans so that operators can monetize these services and charge for value.

Interestingly, operators will require the flexibility to “shut off” access-based fees when implementing transaction-based charging for MMS. For example, a subscriber paying a fixed fee for transmitting photos over the network would feel cheated if she were additionally hit with a usage-based fee for the connect time used during the image transfers.

The flexible charging models required to optimize the monetization of MMS require the ability not only to charge for what is included in the traffic characteristics, but to concurrently disable other charging mechanisms for what is not included in the characteristics. Operators that successfully address this conundrum of complexity will be able to offer the simplified pricing necessary to drive the rapid adoption of multimedia services that bind mobile subscribers to always-on mobile data services, and allow operators to cross-sell services to increase Average Revenue Per User (ARPU) levels.

Support for Both Usage and Transaction-Based Charging

Current GPRS and CDMA core networks are designed to support basic transport services, but are unaware of applications and services. Today’s networks therefore do not allow the operator to capture the full value of innovative mobile data applications and services such as MMS. Charging mechanisms and access rates today are tied to user sessions, which are linked to the subscriber profile and mobile appliance. This approach allows the operator to charge for access by time or volume, but it lacks support for the transaction-based pricing models needed to support MMS.

With intelligent network infrastructure in place, operators can determine the appropriate fee structures; however, how those fees are charged should be at the option of each customer. They should have rich options for prepaid or postpaid services and have the flexibility of paying for services via credit cards, cash, or debit cards. Robust network infrastructure with per-flow control allows operators to best meet consumer needs by offering maxi-mum payment flexibility. Operators can then tailor rate plans and payment methods so a subscriber can have maximum choice in selecting the best plan.

Operators need the ability to automatically waive access charges when a subscriber is using a transaction-based service. Users of transaction-based services rightly expect to pay only for the transaction without receiving additional charges. This is crucial so that operators can establish value-based pricing schemes for MMS.

Overcoming Limitations of Today ‘s Pricing Models

Today’s early stage mobile data services are largely based on the same billing and charging models that led to commoditization of Internet access and mobile voice services. These pricing plans are based on metrics that are easy to measure but are largely irrelevant to the user experience.

Charging by minutes or by volumes of data transferred removes the operator from the value chain and trivializes the value of the service being delivered. For always-on multimedia services, “minutes” become irrelevant. Similarly, subscribers will see little value in a monthly bill for the number of bytes transferred since this metric has no real relevance to subscribers.

The first sign of progress toward profitability will be as progressive operators begin to offer differentiated, value-based pricing plans that maximize the opportunity to mirror the customer’s willingness to pay. The capital crunch has slowed the deployment of 2.5G and 3G networks, but as subscribers begin to taste high-value services like MMS, their appetites for ultramobility will grow. The greatest challenge operators now face is building out the network infrastructure so they can monitor usage and bill for value, by using relevance to the customer as the benchmark for establishing pricing models.

MMS is the ideal service for transaction-based charging, and operators can offer simplified, value-based pricing models. For example, a subscriber could be billed for each photo sent over the mobile network. For an extra charge, the message could include sound or a voice message, or the subscriber could send streaming video.

Operators therefore will greatly benefit by implementing simplified, value-based charging using metrics that are meaningful to the customer. Instead of charging for the volume of bytes of downloaded information, the operator could instead present a bill for downloads of a quantifiable number of MP3 files, spreadsheets, news reports, and/or video clips. This billing information is relevant to the customer who can now assign value to each transaction.

Delivering MMS Over Intelligent Networks

Operators can now build the intelligence into the network utilizing a next-generation intelligent GGSN/PDSN that distinguishes MMS traffic from non-MMS traffic by observing the data traffic and enabling real-time differentiated charging models. This allows aggressive operators to gain dramatic advantages in delivering powerful MMS offerings.

The intelligent network method (see Figure 1) allows operators to future-proof their networks to deliver powerful and scalable MMS offerings. Operators can implement per-flow inspection and observe multiple data flows from a subscriber through a single access point name (APN). By doing this stateful inspection, the MMS traffic can be culled out from WAP browsing or other traffic types and differentiated charging can be applied in real time.


IP flows are inspected in real-time by a next-generation support node (see Figure 2), which serves as a GGSN in GPRS networks and as a PDSN in CDMA environments, but has the added intelligence required to provide transport, real-time metering, and flow control. Unlike existing GGSNs/PDSNs that function to merely transport data, a next-generation support node needs to provide the processing horsepower and hooks required for variable charging by supporting metering and monitoring and by controlling data flows in real time.


The MMS-specific traffic is separated from the non-MMS traffic to allow different predetermined charging characteristics to be applied to the different traffic types. This differentiated charging can be utilized in conjunction with the real-time charging capabilities of the intelligent GGSN/PDSN to support real-time prepaid or spending threshold managed postpaid charging models. This method is easily extensible to incorporate new service types with little or no changes to OSS infrastructure. The real-time charging capability can utilize traditional CAMEL-based infrastructure to support real-time methods, or can easily be integrated into emerging IP-based converged billing systems.

This approach can be extended into handling complex roaming scenarios and it enables new services to be readily added. OSS applications do not have to be altered as new services are introduced, and changes to network topologies or service additions do not require complex provisioning steps in the subscriber appliance.

Additional intelligence can therefore be integrated into the network to maintain sessions while subscribers are roaming, including the data transfer intelligence needed to maintain multimedia sessions as subscribers travel throughout native and foreign service areas. Networks need to be able to instantly access subscriber profiles to support the personalized ultramobility requirements of each subscriber.

Operators benefit from increased network visibility and control so they can carefully monitor the use of network assets, to ensure they are being allocated to profitable services. They gain the power to be able to shut off volume-based or time-based charging as subscribers use MMS services that include their own charging mechanisms. These next-generation mobile data infrastructure solutions can support multimedia services and have the ability to inspect IP traffic flows to determine in real time whether access-based charging should be “switched off” if transaction-based charging is preferable.

Mobile data operators therefore gain highly granular views of traffic flows so they can bill for value and offer differentiated services at premium pricing. With advanced mobility management and granular visibility into traffic flows, operators can rapidly implement value-based pricing models for MMS that put them on the road to profitability.

As operators increasingly deploy highly differentiated MMS offerings, they require the power and flexibility to support diverse services that bind the subscriber to the network. Operators need the ability to capture real-time charging information so they can offer flexible billing models based on metrics that are meaningful to the subscriber. Adding intelligence to the core of the network provides the most efficient and scalable means of offering MMS capabilities. By enhancing the fundamental basic bearer charging function by making the function service and subscriber aware, services can be added easily without impact to OSS applications, and operators can deploy flexible pricing models for innovative multimedia services.

Operators can select the most appropriate pricing model for each multimedia service. They gain the freedom to offer diverse charging mechanisms and simplified value-based pricing. They can offer an abundant mix of access-based and transaction-based services that trigger the appropriate charging mechanisms, allowing sub-scribers to clearly understand their pricing plans and select the services that they value. Increasing the intelligence at the core of the network enables efficient monetization of MMS so that operators can profitably deploy media-rich services that captivate subscribers and encourage the use of other 2.5G and 3G services.

Jayesh Patel is VP of marketing for WaterCove Networks.

COPYRIGHT 2003 Sys-Con Publications, Inc.

COPYRIGHT 2003 Gale Group