The Future of Mobile Commerce, Challenges and Lessons

Learned

Abstract: This research aims to investigate future mobile commerce based on

case studies in Japan, China, and Hong Kong. The results of study conclude some

of major impediments for mobile commerce. Lessons on WAP service from Japan,

China, and Hong Kong will be applied for Thailand’s mobile commerce on WAP

service delivery, mobile handset, content and application, payment method.

Based on the results of the study, a framework for Thai M-Commerce is being

developed.

Key Words: Mobile Commerce, WAP, Lessons Learned

1. Introduction

Wireless Application Protocol (WAP) service and the future 3G has been finding it hard to be

widely used in Thailand owning to costs, and technology. WAP is today’s primary path for on-the-go

access to Internet content and the future 3G. The focus of this article is examine the impediments on

WAP service and the future 3G based on case studies in Japan, China, and Hong Kong. The result of

the study will be used as a guideline for firms’ future strategic direction for other new technology to

the customer e.g. 3G, GPRS.

Recently, WAP Forum was formed by an alliance of partners made up of telephone

manufactures, Motorola, Ericsson, Nokia, and Unwired Planet, a US software company (renamed to

Phone.com). They set the standard of WAP in summer of 1997 and at the end of this year they

established the WAP Forum to provide a worldwide open standard for the delivery of Internet-based

services to wireless handheld devices. Early of 2001, there are over 600 members from the leading

wireless device manufactures, wireless operators, and software development companies. By 2003, it is

predicted that over 90 percent of all mobile phones dispatched will be equipped with a WAP browser

(AU- System Radio, February 1999).

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 WAP has been designed to provide a user interface that is adapted to the small screen of a

mobile handset and adjust to the speed and latency restrictions of mobile networks. WAP is bearer-

independent and can be used on any digital mobile networks, packet-switched mobile data networks

and 3G. Most operators are currently using the circuit-switched network as a bearer for WAP services.

This study will benefit mobile phone operators in a successfully launch of WAP service and the future

GPRS in Thailand based on the lessons learned from Japan, China, and Hong Kong. Mobile operators

will benefit from increased airtime traffic over their networks. WAP also makes use of the Internet

paradigm to provide a flexible service platform.

2. Proposed Technique

A comparative study for based on Little (2001) is to be applied with the proposed technique,

of which areas of coverage are Customer Ownership, Convenience and Personalization, Localization,

Timeliness and Ubiquity.

A Case of Japan for WAP Service

The “i-mode” service operated by NTT Docomo, is the first recognized a successful case of

WAP. i-mode is a new platform for mobile phone communications that has revolutionized the way

nearly one-fifth of the people in Japan live and work. Introduced since February 1999, this remarkably

convenient, new form of mobile service has attracted over 28 million subscribers.

With i-mode, cellular phone users get easy access to more than 40,000 Internet sites, as well

as specialized services such as e-mail, online shopping and banking, ticket reservations, and

restaurant advice. Users can access sites from anywhere in Japan, and at unusually low rates,

because the charging are based on the volume of data transmitted, not the amount of time spent

connected. i-mode network structure not only provides access to i-mode and i-mode-compatible

content through the Internet, but also provides access through a dedicated leased-line circuit for

added security.

i-mode has been phenomenally successful in Japan as a result of having remarkably

convenient for users, employs powerful new technology, and relies on NTT DoCoMo's unique i-mode

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business model. Underlying this business model is an entirely new approach to the mobile service

value chain and to the relationship between wireless service and the Internet.

NTT DoCoMo synchronizes the entire i-mode value chain, in order to develop ever-better

mobile service for subscribers with a close collaboration with equipment manufacturers, content

providers, and other platforms ensures that wireless technology, content quality, and users'

experience evolve at the same optimal pace. Ultimately, this synchronization guarantees that the

customers, partners and shareholders have their interests aligned with the end-user's, enabling all

parties involved in the value chain to maximize value.

In particular, NTT DoCoMo has adopted a wireless communications model utilizing variations

of de facto Internet standards such as HTML. By basing their content on iHTML, a subset of HTML,

they give the customers access to the existing network of conventional Web servers, and therefore,

provide them with seamless Web service. At the same time, they use of iHTML has greatly simplified

the creation of i-mode sites for their content providers. Other key standards they have adopted

include GIF, Java, MIDI, and HTTP.

As mobile services evolve and data traffic increases, their unique collaborative business

approach will give a major competitive advantage in communications markets around the world.

A Case of Hong Kong and China

In China, there are 100,000 WAP users by the end of 2000 at the period of launching WAP

service. Only a small proportion of users applied for WAP services and some of these dropped out

later, although WAP-compatible handsets accounted for as much as 15% of total sales. Moreover, no

meaningful revenue was being earned from WAP service at this time.

The financially unsuccessful situation was a direct result of China Mobile’s free-of-charge

policy for WAP services in the trial operation period. It found major impediments for a successful

launched of WAP services in China. They are due to slow speed, pricing method, limited content and

application. They are as follows:

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 Slow speed: WAP service is based on GSM and the transmission speed is 9.6 kbps.

These services are not delivered by way of packet data exchange and are not always

online. In this case, users need to dial a specific number on their handsets when they

want to get online. This usually takes several minutes to access a WAP site at all

when the network is congested with traffic in peak hours.

Pricing method: The way WAP service provides charged users was based on usage

time. It means that the slower the speed, the longer subscribers used the services

and the more to pay. China Mobile’s postponement of charging users was not helpful

in enlarging the subscriber base.

Limited content and applications: There was a long-running argument in China

during the trial operation period of WAP services about the operators’ role and

relationship between the operators and content/application providers. Most

content/application providers opposed China Mobile’s original plan to both network

platform provider and content/application provider. Apparently, many potential

content/application providers do not enter the market because competition with their

network provider. This was the reason why content and application were so limited

during the trial operation period.

Meanwhile the WAP service in Hong Kong is found not successful because of lacking

experience of the mobile operators, which provide WAP service and the WAP users are unfavorable to

the speed of transfer rate. The expectation for WAP service of users is very high, in terms of the

Internet service, a graphics with high resolutions and animation.

The provision of WAP services over the new phones turns those mobile devices into a product

on which the customers depend for information. Customers perceive greater value from their

relationship with the firm, and consequently continue and strengthen that relationship. And from a

customer perspective, WAP services can offer the customer so much more value than voice alone,

connecting them to a world of information.

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 Of the lessons from Japan, China, and Hong Kong, major issues for the delivery of WAP

services are summarized as follows:

Customer awareness and education

Mobile operators have to be ensure that the customers both knows what the services

are, and how these services can bring benefits to them. This is being done through a

wide range of advertising, promotion and direct mail campaign.

Technology

WAP technology is a challenge to which the mobile operators have realized. They

have committed substantial resources to WAP, concentrated on building strategic

relations such as a strategic partnership, creating content partnerships, product

marketing, and our technical capabilities.

Branding

In order to enhance awareness and ensure that those services fit into the existing

operators brand values, much time and effort has been spent developing the message

that they want to portray to their customer with the WAP services.

Distribution

The services, and phones that take advantage of these services, are available through

all existing distribution and sales channel as is possible. When new products are

launched, demand typically outstrips supply, so managing the expectations of their

customers, by allowing pre-ordering of the phones, is one way in which they manage

the demands placed upon our distribution channels.

Managing expectation

Mobile operators should manage the expectations of their existing customers that

don’t have WAP enabled handsets. They are doing this by ensuring that a similar

range of services are available via text messaging, or via audio information lines for

their customers to call. Furthermore, the launch of the Internet service provider, was

a big step forward in this respect, providing customers with access to a wide range of

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 information content on the orange.net site, much of which will be accessible via text

message to non-WAP enabled handsets.

Content partners

Of the content partners, mobile operators have formed relationships with content

partners who are fully aware of the potential of this exciting new technology, and who

understand the true revenue models. Crucially, the future is not just about reselling

content, but driving transactional e-commerce via the mobile device. The content

partners are fully realized this and new and exciting applications and services will be

developed to run over the WAP services, further stimulating demand.

Thailand WAP Market

In Thailand, the number of cellular subscribers is estimated to be 8 million and is expected to

reach 10 million by the end of 2002 and there are 7.5 million installed telephone lines provided by

TOT, TA and TT&T with about 3.4 million of these now in use. (Telecom Journal, February 2002)

Advanced Info Service (AIS), a subsidiary of Shin Corporation, is launching wireless data

communication services, including WAP and GPRS. This investment includes 20 million baht for the

Sim Tool Kit, which is basic technology that enables mobile phones to access data at a greater

volume. AIS invested about 450 million baht for a WAP gateway and 300 million baht for the GPRS

network to enable the network to transmit data at higher high speeds, increasing from the current 9.6

Kbps to 115 Kbps.

TAC (Total Access Communication) has developed WAP and GPRS technologies on its network

and provides WAP services through a tie-up with Djuice.com, a mobile portal site operated by

Norwegian partner Telenor Mobile Communications. TAC invested 88 million baht to develop

Djuice.co.th and the WAP gateway for its subscribers to access the site.

TA Orange, a partnership between Orange SA, Telecom Asia and the CP Group, has

announced the much-anticipated launch of the TA Orange’s wirefreeTM communications service in

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Thailand. TA Orange has announced to launch its WAP and GPRS technologies on its network and

WAP services.

2.2 Research Instrument and Measurement

The survey research is the systematic collection of data from respondents for the purpose of

understanding and/or predicting some aspect of behavior of the population of interest. The survey

also allows researchers to study and describe massive population in both efficient and economical

fashion. The survey technique provides relatively low costs, minimal time and an accurate means of

assessing information about the population.

For our study, a self-administered questionnaire is used as the method for collecting data,

with an appropriate sample size designed by sequential sampling at 95% confidence level. The

estimate of sample size is determined as follows:

n = Z2/4e2

Z0.975 = 1.96, whereas e = 0.05 at 95% level of confidence

n = (1.96)2/ 4(0.05)2

n = 385 samples

The stratified samples here are specified by cluster of organizational sector. The proportion of

this research samples based on the sample size of 385. The sampling proportion in this research will

be the WAP user and is 30% of the total respondents. This study employs stratified sampling, which is

a probability sampling technique. The logic behind stratified sampling is that sampling variables are

categorized into group of subscribers, which currently use the WAP service and currently do not use

the WAP service or Non-WAP users represented as the sample of population of each group.

The data was collected between March 1 – May 31, 2002. Sampling units are selected based

on convenience and judgment. Under a regression model, we use

Y = α + βX + ε ;

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 and by the multiple regression, we predict one variable y (dependent variable) from several

explanatory variable x (independent variables). The equation of the multiple regression model takes

the form:

Y = β0 + β1X1 + β2 X 2 + β3 X 3 + …….. + βk X k + ε, whereas

K = Number of independent variables;

Y = Dependent Variable and use y to estimate the equation;
Xi = Independent Variable or Explanatory Variable number I
and uses xi to estimate the equation;
β0 = Constant of multiple regression equation and use b0 to
estimate the equation;
βi = Regression coefficient of independent variable number I
(Xi) and use bi for the coefficient of independent variable xi. βi or bi
and other independent variables are held constant;
ε = Random error.

Questionnaires designed is being treated as the instrument in this research. In a descriptive

analysis, the raw data of the respondents are presented in form of frequency as well as percentage

for nominal data and some of the interval data. The ordinal data is presented in form of rank order.

These data include personnel characteristics (gender, age, education, occupation, monthly average

income), WAP service usage, knowledge behavior of WAP service, behavior of using mobile phone and

Internet.

3. Experimental Results

From a regression analysis, m-commerce application is to be convenient to use, service must

easy to access and use, pricing has to be easy to understand, tracking user behavior generates

valuable information about the user-friendliness of services. In addition prototype, focus groups and

friendly user tests help to increase the user-friendliness. Communications, which focuses on the

technology rather than on the benefit of a service are likely to fail. The customer needs to be

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educated on the benefits and features of a service. The pricing strategy is a key element in defining

the long-term revenue impact of a mobile service.

Model Summary of factor that make subscriber not to use WAP service

Model R R Square Adjusted R Std. Error of

Square the Estimate
1 .806 .649 .639 .28
a Predictors: (Constant), Currently use Internet, why not use Expensive service charge, cost of handset of respondent, why not use Doesn't have
any attractive application, why not use WAP Don't know WAP, why not use Have non-WAP enable mobile handset, why not use Hardly use, why
not use Not essential wanted, Know WAP service, Handset have WAP-enabled

Model Sum of Squares df Mean Square F Sig.

1 Regression 52.613 10 5.261 67.676 .000
Residual 28.454 366 7.774E-02
Total 81.066 376
a Predictors: (Constant), Currently use Internet, why not use Expensive service charge, cost of handset of respondent, why not use Doesn't have
any attractive application, why not use WAP Don't know WAP, why not use Have non-WAP enable mobile handset, why not use Hardly use, why
not use Not essential wanted, Know WAP service, Handset have WAP-enabled
b Dependent Variable: Currently use WAP

Unstandardized Standardized t Sig.

Coefficients Coefficients
Model B Std. Error Beta
1 (Constant) .873 .082 10.625 .000
Don't know WAP .180 .078 .081 2.297 .022
Difficult to use .103 .021 .158 4.874 .000
Not essential .116 .011 .371 10.507 .000
Expensive service charge .046 .007 .215 6.401 .000
Doesn't have any attractive application .022 .007 .100 3.103 .002
Have non-WAP enable mobile handset .024 .006 .144 4.008 .000
Cost of handset .042 .017 .085 2.529 .012
Handset have WAP-enabled .216 .037 .235 5.869 .000
Know WAP service .130 .055 .082 2.349 .019
a Dependent Variable: Currently use WAP

It is concluded that key drivers associated to WAP service are from the common ground that

they don’t know how to use WAP or realize the benefits of the usage, WAP is found to be difficult to

use, not essential, expensive for usage, not attractive application, cost of handset with a function

support for WAP. The results of the study are in line with factors summarized from case studies. They

are Customer awareness and education, Technology, Branding, Distribution, Managing

expectation, Content partners.

Monitoring users will help to adopt services to the changing and expected user behavior.

Many operators have launched services not changing the service portfolio over time and lost

attraction. Service launched with alternative roadmaps allow quick adoption to user behavior.

Launching the service in different phases prevents functionality overkill. Users need time to get

accustomed to a new service.

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 Mobile operators are to have a general positioning strategy for new services in terms of

content and applications. The operators would give away m-commerce opportunities. Playing the role

of a content aggregator an operator will have high investment in content management, IT, and

human resources.

4. Conclusion

The results of the study are in line with factors summarized from case studies. They are

Customer awareness and education, Technology, Branding, Distribution, Managing expectation,

Content partners.

Key factors drive WAP users to use the service is of the speed of data transferring, user

friendly, worth of WAP service charge, information integrity and security, security and privacy,

technology hype and brand creditability of mobile operator respectively. The factors, that is found less

in the importance is the WAP-enabled handset availability in function and graphic design. In Figure 2,

to use WAP, the subscribers is to see benefits for the use and the application to use, service

environment such as technology for providing, model and cost of handset support WAP, service

charge and the mobile operator which provide WAP service, respectively.

Of the findings, technically, WAP success depends on rapidly expanding the installed base of

WAP terminals. Operators are in a strong position to do this, but they must put pressure on the

handset vendors to provide WAP terminals on time and at the right price. An upgrade strategy is

required with a carefully constructed marketing message, as further upgrades will be required for

2G+. From the results of the study, the key determinants for WAP service and m-commerce in

Thailand are summarized in Figure 1.

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 Little satisfaction in
WAP because low speed Most users have non- Users know WAP in
and difficult to use WAP enabled handset 'negative' view

Key determinant for WAP service

Technology
Content and application User persceive WAP is
Users prefer to pay by
Payment method not essential and
usage based
Price of handset difficult to use
Customer awareness and education
Customer perception
Marketing and promotion

WAP enabled handset is Mobile operator don'y Content and application

expensive know users expectation not attractive and variety

Figure 1. Key Determinants for WAP service

Based on the results of the study, it is recommended that WAP service delivery is needed to

have a reliable network infrastructure, infotainment, messaging, location-based services supported by

WAP applications, with the stated key success factors.

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