20 November 1997
Heathrow Hilton, UK
10 November 1997
Minutes of Meeting
Mike Short, Cellnets Director, International Affairs welcomed the delegates attending the conference and thanked those who had travelled from as far away as the United States and Japan. Approximately 80 delegates arrived for the start of the conference, peaking at 105 during the afternoon.
Mike highlighted the objectives of the inaugral conference: to review the status of Mobile Commerce; to identify the barriers to growth; and to establish a Forum to support growth.
Using data collected from 120 delegates to the IBC conference in September 1997, Mike Short showed a slide which revealed that 45 per cent of the IBC sample thought that partnerships is the most necessary factor for Mobile Commerce to succeed. This was followed by Clear Vision (25 per cent); Standards (18 per cent); and Smart Card structure (15 per cent).
The IBC sample also thought that the three industry sectors most likely to be affected by the development of Mobile Commerce (outside the mobile communications industry) were Finance (52 per cent); Transport (18 per cent), and Retail Loyalty (16 per cent).
Mike Short then introduced Kevin Duffey, Logicas managing
consultant for mobile innovation.
2. The Mobile Commerce Opportunity
Kevin Duffey offered the conference a preliminary definition of Mobile Commerce: "the delivery of electronic commerce capabilities directly into the consumers hand, anywhere, via wireless technology."
Kevin also explained that service companies might like to think of Mobile Commerce as "a retail outlet in your best customers pocket." He invited the Forum to make further refinement of the definition.
Kevin then ran through the agenda for the day and introduced the next speaker Tom Alexander, Cellnets Head of Business Partnerships .
3. The Mobile Commerce Vision
Tom Alexander explained some of the drivers to Mobile Commerce. For example, it is forecast that there will be 150 million mobile telephony users in the world by 2000, and 25 million in the UK alone by 2005. The massive growth of the cellular market, combined with falling costs and increased cometition will turn mobile telephony into an every day part normal consumer life. Mobile telephony therefore represents a strong foundation for commerce solutions of the future.
Several electronic purse schemes, such as the Mondex electronic wallet already exist and the next development, the "PTU" (personal transaction unit) will be a mobile wallet that can work in real time to move value around the network. Such a "PTU" would be a mobile phone with one or more slots for Smart Cards supporting various commerce values and applications.
Mobile commerce values are likely to be in four key areas initially: cash/credit (including pre-pay telephony); loyalty points, authentication, and ticketing. Applications would need to be introduced gradually to the consumer to gain acceptance of the concepts of providing information, then transactions, and eventually e cash, ticketing and Pay as you Go.
This evolutionary, pragmatic approach will not just be about innovation but about partnerships on an international scale between network operators, manufacturers and service providers.
The Forum would be important for setting standards and engendering co-operation between industry sectors. Tom then re-introduced Kevin Duffey to explain how large the demand for mobile commerce could possibly be.
4. How and Where will Mobile Commerce be big?
Kevin cited the example of the introduction of the ATM (cash machine) and customer acceptance of them because they offer convenience. This convenience driver will be a major one for mobile commerce.
Western Europe is regarded as the largest potential market for Mobile Commerce followed by East Asia, Australasia and North America. This is because Western Europe leads the way with digital mobile phone technology and smart card penetration. GSM operators have low foot print in US and this low coverage will limit their ability to focus on, and to deliver, mobile commerce, despite the speed at which Internet Commerce is evolving in the USA. Within Europe, Scandinavia with its high penetration of mobile phones and early use of Smart Card technology is likely to be among the earliests market followed by the UK, France and Benelux.
Kevin forecast that as much as 6 per cent of mobile phones could support Mobile Commerce applications by December 2000, if the Forum and its members are successful in driving the development. This 6% figure would represent 5.1 million high net worth individuals, early adopters who value convenience highly.
While Kevin emphased that this forecast represents the upside opportunity, it was agreed that Mobile Commerce is a "market worth investing in today" Kevin suggested that one of the roles of the Forum should be to firm up on the market predictions.
Kevin then made tentative forecasts of the speed at which different Mobile Commerce applications will take-off, and the financial value of the transactions likely to be associated with each.
Individual companies will need to identify pragmatic steps
that are profitable immediately as they develop full Mobile Commerce
capabilities. Kevin introduced Mike Herman, Cellnets Manager for Mobile
Commerce to explain how Cellnet had succeeded with its early steps in this
5. The Mobile Commerce Value Chain
Mike Herman then reviewed the business capabilities needed to deliver Mobile Commerce.
The Value Staircase of business capabilities starts with payment systems, moves up to information display (public and private information), transactions (initially banking transactions and then ticket purchasing etc) and, finally, cash (or credit or debit).
At this point several questions were asked from the floor
including one on the apparent omission of consumer needs in the Mobile Commerce
marketplace. Was the marketplace going to be all service provider push and
no consumer pull? It was agreed that some consumer research was needed but
the analogy of the ATM was also drawn in that no consumer could have actively
demanded an ATM service because they had no concept of the benefits of the
technology at the time.
6. Key GMCF Enablers
Mike Herman briefly ran through the details of three current trials - Post Girot in Sweden, Moments in Germany and Mobidick in Holland. All were examples of partnerships between at least four players - a financial company, an operator, a smart card vendor and a terminal manufacturer. Enablers were also required - a shared market vision and commitment to delivering it; customer confidence; regulation, standard and traditional electronic commerce capabilities.
Mike then ran through the roles, motivations and capabilities of three of the four categories of trial partner - the operators, smart card manufacturers and terminal manufacturers. To summarise:
Mike then introduced Graeme Hutchinson, Barcalycards
Head of Telephony Services, to explain the motivations of a finance company
to become involved in Mobile Commerce, and to explain what he had learnt
from his partnership with Cellnet.
Graeme Hutchinson of Barclaycard reviewed the role of financial companies in Mobile Commerce and presented the experience of the partnership between Cellnet and Barclaycard.
7.1 The Financial Company
Graeme explained that by "Financial Company", he included banks, credit card companies, post offices, and payment card schemes.
The motivating factors for financial companies to become involved in Mobile Commerce are as follows:
The relevant strengths of financial companies are as follows:
Launched two years ago, the partnership between Barclaycard, Cellnet, Gemplus and Alcatel has worked well. Graeme believes that alliances are the key to generating wider market opportunities.
In this partnership, Barclaycard could offer 9 million customers (and 15 million Barclays customers), compared to the total 8 million mobile phone users in the UK today. By packaging their capabilities together, the partnership could offer a broader proposition. Customer research shows that customers are very happy with the service and, interestingly, 80 per cent of the customers who are using the new service are new to the mobile phone market. This proves that the partnership between a bank and an operator is a much more effective means of reaching new users than almost any other method (since most channels normally attract 50% of their customers from other operators.)
Graeme identified the key success factors as:
Both Barclays and Cellnet could offer financial and telecommunications core skills which, by working together towards long term goals, could deliver success.
The first joint venture service was launched in October 1995. It was a mobile phone with a B button to access services and information. There was an integrated payment systems through Barclaycard and a discount off Cellnet calls. The first phase generated 70k customers plus the following banking benefits:
The next phase of the Cellnet/Barclaycard initiative - BC2 - is a mobile phone with SIM smart card that allows customers access to their bank account details. This has required the involvement of Barclays Bank.
Summary of Success to Date:
Graeme summed up the Cellnet/Barclaycard initiative in terms
of synergy through partnership. The partnership was the key to
developing the vision via an evolutionary approach. The service has to be
easily understood and used by customers. End to end security was also critical
and this was one of the challenges of the Forum.
Graeme spelt out his vision of the Forum:
The Forum would have to tackle the following issues:
8. Pre-Lunch Questions
Q. Should companies such as Marks & Spencer, Tesco, Sainsbury etc be part of the Forum bearing in mind that they are financial companies as well as retailers? A. Yes - Eurostar and RAC have already expressed interest. It was definitely agreed that a broad spectrum of of companies should be encouraged to join the Forum and, hopefully, PR would help to spread the word
Q. Would terminals other than those using JAVA technology be considered? For example, phones with small screens which can deliver Internet web page information? A. Yes! But this did raise the issue on priority/sequence.
9. Proposed Structure of GMCF
Kevin Duffey ran through the proposed structure of the Forum, stressing that, despite the fact that many in the room were competitors, the Forum should genuinely strive for a "shared vision" and should not just be a talking shop but a genuine collaboration between companies who have a desire to develop the market.
Kevin highlighted the goals and objectives and said that his
intention was to have a clear statement of objectives and market vision by
the time of the Plenary Conference in Cannes in February. Kevin suggested
the production of a video to promote the Mobile Commerce concept to the 2,500
delegates at the GSM Cannes Conference.
10. Group Activity
After lunch, the delegates broke into four groups to discuss the following:
The four groups discussed these issues for approximately an
hour and then reported back to the conference.
10.1 Founding Principles Group
The Group discussed and agreed the following:
The Group also refined some of the terms of reference for the various structures suggested for running the Forum:
10.2 Standards Group
This group considered the groups that may touch upon Mobile Commerce, including OMG, SIM Toolkit, FIDA, UMTS, ETSI/MAEE, ITSEC and Java Card Forum. Thus the group covered the following areas - security, proof of identity, architecture, mobile MMI, internet standards, Java platformm wireless application protocols and electronic payments.
The Group identified the following four part approach to how the Forum should be developing standards:
10.3 Solution Trials
The Forums Solutions Trials role should be to help create real opportunities and generate good PR by communicating experience within the group and promoting the work already done to the outside world.
The group identified the following issues:
The key elements of the groups role should therefore be:
10.4 The Market Vision Group
The group tried to answer the question of what is mobile commerce and agreed that it contained the concepts of:
Fundamentally, mobile commerce overcomes the "problems of being away from where you want to be".
11. Election of Officers
Alison Lorimer of IBC announced the results of the election of Officers for the Forum.
Executive Chairman: Kevin Duffey, Managing Consultant of Logicas Mobile Innovation Group. Tel +44 956 138 321; email@example.com
Chair, Market Vision WG: Mike Herman, Cellnets Manager of Mobile Commerce. Tel: +44 1753 564 000; firstname.lastname@example.org
Solution Trials WG: Graeme Hutchinson, Barclaycards Head of Telephony Services. Tel: +44(0)1604 253966; Fax: +44(0)1604 254187
Standards WG: Didier Serodon, De La Rues Technical Manager for Mobile Commerce. Tel: +44(0) 1684 854276; Fax: +44(0) 1684 290111
Australasia Interest Group: Leon Vandenburg, Netcom Technologys managing director . Tel: +61 8 8271 5311; Fax: +61 8 8271 5268
North America Interest Group: Leo Legaspi, Gemplus marketing director for North America. Tel: +1 201-634-9618; email@example.com
12. Housekeeping Information
KD stressed that the primary method of communication between the Forum members would be via email and the website and he encouraged everyone to provide their email addresses and to use the website for information sharing.
A press release on the Plenary Conference will be distributed to the national, business, vertical and IT media by 14 November 1997. Meeting notes will also be available via email by this date.
This press release, and other materials will be published on the Forums web site:
The next meeting will be held on 4 December 1997 at the Crest Forte Hotel, Regents Park, London. Details will be posted on the website. The intention is to start at 09:00 (reception) and a formal welcome at 09:30, concluding by 17:00 latest.
Those wanting to join the Working Groups should contact the Chairperson by Friday 21 November, using the contact details provided.
All members are strongly encouraged to send delegates to the 4 December 1997 meeting of the Forum, and to notify Alison Lorimer of their intention to do so by 21 November 1997. Alison can be reached at either firstname.lastname@example.org or tel: +44 171 453 2110.
All members are also strongly encouraged to invite other companies to join the Forum, by inviting them to contact Alison Lorimer for details.
11 November 1997