Such networks of multiple firms offer mobile operators the best chance of providing new services in the highly-competitive and rapidly changing telecommunications sector, said Dr, Carleen Maitland, assistant professor of information sciences and technology (IST).
"The next generation of mobile technology could be as dependent on the business models adopted by operators as on the infrastructure and handsets," she said. "In the wireless market, a company's business model has the possibility of being an asset and a competitive advantage."
With two other researchers, Maitland analyzed business models adopted last year by several European mobile operators. The interfirm networks offered content services to consumers in the Netherlands, Germany and Sweden. The number of firms involved in the networks differed, as did the services.
Co-authors of "Network Formation for Provision of Mobile Information and Entertainment Services" were Elizabeth A.M. van de Kar of Delft University of Technology and Dr. Uta Wehn de Montalvo of TNO (The Netherlands Organization for Applied Scientific Research). Maitland and van de Kar presented the research June 10 at the 16th Bled Electronic Commerce Conference e-Transformation in Bled, Slovenia.
The networks studied for the paper provided only information and entertainment content, a market where mobile operators are facing pressure to develop advanced services, Maitland said. The content included a multi-actor game, two "find-the-nearest" services, ringtones and erotic pictures and games.
"Unlike the Internet, mobile operators are playing a gatekeeping role with content and making decisions about what content to offer, the quality of the content and the price of the content," said Maitland, a faculty member in Penn State's School of Information Sciences and Technology. "These decisions are affecting how the networks of firms are forming."
While mobile operators had envisioned in-house creation of content in the 1990s, they have since recognized that's too costly and too slow. Cooperative relationships with content providers make better sense although they create their own issues from who sets prices to how to share revenue and who controls content.
Those "cooperative relationship" networks are influenced by the mobile operator's business model.
Maitland's research explores three models through five case studies. One of those is the "i-mode" model launched by Japanese operator NTT DoCoMo in 1999 and used by two companies in the study. I-mode, which can be licensed, sets parameters for a broad range of operator-content provider interactions from revenue sharing to content control.
The second business model involved a mobile operator hiring an intermediary firm to manage the operator's contracts with content providers. The third model studied used an exclusive relationship between a mobile operator and a content provider of a game involving robots, opponents and missions.
Maitland refrains from endorsing one particular business model. "We don't know which works best because they haven't been around long enough to stand the test of time," the Penn State researcher said. "It may be that there is no one best model, and companies need to figure out what works best for them, possibly with an eye to their own innovative model."
And at this time, content providers are willing to accept lower-than-hoped-for revenues in exchange for reaching a broader audience. The industry and the networks could change when it become clear how much consumers are willing to pay for content.
The interfirm-network business model will not just impact operators and content-providers, but it also will define the role of the customer.
"When comparing business models, we find that in some endusers could end up having more control of content than in others," Maitland said. "Other business models may make it easier for consumers to communicate their wants and needs directly with the content provider rather than the operator. If content providers are able to act on this information, customers will be more satisfied which benefits all involved."
The research was a collaborative effort with Delft University of Technology and two Dutch research institutions, Telematica Instituut and TNO-STB (the Netherlands Organization for Applied Scientific Research – Strategy, Technology and Policy). For this study, the institutes received funding from corporate partners including IBM and the multi-national ING Bank. Maitland began the research while an assistant professor at Delft University and has continued it since coming to Penn State.