International Telecommunication Union (ITU)

Basic E-Commerce Training For Pakistan

Pakistan Telecommunication Authority (PTA)

Islamabad, Pakistan
31 March – 5 April 2001

Current and Future Trends

Alexander NTOKO, Project Manager, ITU Electronic Commerce
ITU Telecommunication Development Bureau (BDT)
Email: ntoko@itu.int Web: http://www.itu.int/ecdc

©1998-2001 ITU Electronic Commerce for Developing Countries (EC-DC). Page - 1

 Agenda

The trend is Convergence

The platform is IP
The strategy is Alliance
The focus is Services
The future is Mobile
From dot.coms to dot.gones

©1998-2001 ITU Electronic Commerce for Developing Countries (EC-DC). Page - 2

 Internet Trends

Phenomenal Growth Projections in all Regions.

New Types of Alliances and Partners.
New Business Models and Revenue Streams.
Core Platform for Convergent Services.
Reduced Set-up Costs for Start-ups.

©1998-2001 ITU Electronic Commerce for Developing Countries (EC-DC). Page - 3

 The Platform is IP
Rapid Evolution in Several Platforms
Fixed Networks (dial-up, ISDN, Satellite, leased line)
Digital Mobile Data Services (GSM, WAP, I-mode)
Streaming Media (WebTV, VoIP, Cable Modems)
Household Appliances (TVs, Microwaves, Refrigerators)
Wireless Access (PDA + Mobile, Bluetooth)

Broadband (xDSL, DWDM, UWA, 3G Mobile - IMT2000)

Power-line Technology For Internet Access
Fixed Mobile Convergence (FMC)
©1998-2001 ITU Electronic Commerce for Developing Countries (EC-DC). Page - 4
 The Trend is Convergence
Breaking Industry and Service Barriers
Broadcasting Companies --> Voice and Network Services
Telecom Operators --> data network and financial services
Computing Companies --> Broadcasting (TV services)
Financial Institutions --> Data network access Services
Voice Services provided over data networks (VoIP)
Data Services over broadcasting networks (DVB)
Broadcasting services over data networks (WebTV, Radio)
Voice and Data Services over electrical power lines
TV Stations Using Web as another Distribution Channel -
MMXI estimated 400% growth in access to TV Web sites
©1998-2001 ITU Electronic Commerce for Developing Countries (EC-DC). Page - 5
 The Strategy is Alliance
No Single entity holds answer to puzzle
Broadcasting Companies + Access Providers = TV-based
Internet access and e-tailing
Content Providers + Network Carriers = Distributed Content
delivery and Hosting
Mobile Operators + Financial Institutions + Software Firms =
Mobile e-Payments
Fixed Operators + Broadcasting Companies = Voice Services
via TV Networks
Energy Companies + xSPs = Powerline Internet Access
Operators + Financial Companies = ePayment Solutions
Small Businesses + Big Businesses =Survival
©1998-2001 ITU Electronic Commerce for Developing Countries (EC-DC). Page - 6
 The Model is Services
Application Service Provisioning (ASP)
Deploy, Host, Manage, Rent Access to Applications for
businesses from a central location with security, availability
and performance.
Issue: Finding the Right Position in the ASP Value Chain
1. Network Access Services (Network Connectivity)
2. Content Distribution Services
3. Community and Hosting Services
4. Business Productivity and Communications Solutions
5. Application Integration and Work-Group Solutions
Network --> Services --> Applications --> Content --> Portal
©1998-2001 ITU Electronic Commerce for Developing Countries (EC-DC). Page - 7
 Strategies - NSP

Network Service/Access Provisioning (NSP)

Reliable, low-cost, high speed access for Businesses and
Consumers
Issue: Finding the model for reliable and affordable Internet
Access to All.
1. Determine Appropriate Pricing Policy for Services
2. Take Advantage of New access Technologies
3. Forge Strategic Alliances with New Bread of Carriers
4. Migrate from Traffic to Content Delivery Services

©1998-2001 ITU Electronic Commerce for Developing Countries (EC-DC). Page - 8

 The Forces of Change
the rapid rate of change of technologies and its falling costs,
the convergence of technologies, services and industries and the
process of globalisation,
the phenomenal growth of the IP networks (e.g. Internet) and the
proliferation of pervasive computing,
the emergence digital wireless mobile data services and
technologies (Bluetooth, WAP, GPRS and IMT2000), digital TV,
voice recognition, Internet appliances and Broadband IP (xDSL,
DWDM, UWA) access,
the increase in mergers, alliances and powerful new players,
the breakdown of geographical, time and industry sector barriers,
are perpetuating the phenomenon of e-convergence and introducing
new opportunities and challenges to developing countries.
©1998-2001 ITU Electronic Commerce for Developing Countries (EC-DC). Page - 9
 E-Business Drivers
o Metcalfe’s Law of Connectivity: The value of a
network grows exponentially with the number of
nodes. As the number of nodes double the value
of the network quadruples ( f(x) = x2 ) creating the
conditions for e-business.

©1998-2001 ITU Electronic Commerce for Developing Countries (EC-DC). Page - 10

 E-Business Drivers
o Moor’s Law: The performance of micro-processors
(computing power) doubles every 18 months
resulting in cheaper, faster and convergent
technologies.

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 E-Business Drivers

o Better Shopping Options, Price Comparison,

Cost-effective and Rapid Market Expansion.
o Drive to Streamline Business Processes and
Customer Demands
o Search for New Revenue Streams by
moving up the value-chain as Profits
Margins for Voice Traffic Declines.
o Operators Capitalising on Customer-base
and Investments.

©1998-2001 ITU Electronic Commerce for Developing Countries (EC-DC). Page - 12

 The future is Bright. The future is Mobile

Rapid evolution towards Mobile Internet as high speed digital mobile services
become widely available. From GSM to High Speed Circuit-Switched Data to
General Packet Radio Service to Enhanced Data Rate for Global Evolution to
International Mobile Telecommunications (IMT-2000) WAP, I-Mode already
delivering Internet services to mobile subscribers.

©1998-2001 ITU Electronic Commerce for Developing Countries (EC-DC). Page - 13

 M-Commerce

©1998-2001 ITU Electronic Commerce for Developing Countries (EC-DC). Page - 14

 M-Commerce Drivers
High growth rate expected due to lower deployment cost
and speed of deployment.
Mergers and alliances between mobile operators,
equipment manufacturers and service providers creating
opportunities for new services.
Convergence to IP as platform is facilitating access to
existing IP-based services through WAP and I-mode.
Problems of low speed on 2G platforms and limited WAP
services will be resolved as migration from circuit-switched
to packet-switched networks continues.
Migration from time-based tariffs to volume-based tariffs
will create opportunities for IP-based services and content.
Security (SIM and PIN codes) on Mobile terminals (as
PSEs) encourage secure e-payment solutions.
©1998-2001 ITU Electronic Commerce for Developing Countries (EC-DC). Page - 15
 M-Commerce Drivers

Falling prices for high speed processors and reduction

in their sizes will transform mobile devices to powerful
handheld computers.
Deregulation will increase competition and drive down
prices for mobile services.
Pre-paid services will provide low-entry cost for
subscribers but might have negative impact on operator
revenues as customer loyalty reduces.
These drivers will affect the business models for
operators as voice revenues decline.
… But they also present new markets for innovative
operators and service providers what can capitalise on
the opportunities brought about by these changes.
©1998-2001 ITU Electronic Commerce for Developing Countries (EC-DC). Page - 16
 M-Commerce Services

Banking - Accounts, Statements, Bill payments and

Fund Transfers
Payments - Credit cards, Micro payments and Pre-paid
Trading - Stock quotes, Notifications of events.
E-Government - E-voting and E-administration
Retailing – Subscription and Direct sales
Entertainment - Interactive TV and Live Music

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 Mobile Commerce Services

Security Services
•Access Control
•User Authentication
•Digital Signatures
•Non-repudiation
•Data integrity

©1998-2001 ITU Electronic Commerce for Developing Countries (EC-DC). Page - 18

 The dot.com euphoria
What Happened to the New E-conomy?

o Building market share and dominance was vital.

o Long term future was justification for high share prices.
o Cash and profits were secondary.
o Unlimited cash injections from VCs and IPOs.
o Business models too complex for VCs and investors.
o Having an Internet strategy was a guaranteed component
for success.
o More than USD 3 trillion lost when the bubble burst.

©1998-2001 ITU Electronic Commerce for Developing Countries (EC-DC). Page - 19

 The dot.com euphoria

From
bricks and mortar to
bricks and clicks to
clicks and clicks to
bricks and clicks

Can these pitfalls be avoided?

How does this affect e-commerce?

©1998-2001 ITU Electronic Commerce for Developing Countries (EC-DC). Page - 20