info

Mobile commerce and the creation of a marketplace

Johan Lembke

Article information:
To cite this document:
Johan Lembke, (2002),"Mobile commerce and the creation of a marketplace", info, Vol. 4 Iss 3 pp. 50 - 56
Permanent link to this document:
http://dx.doi.org/10.1108/14636690210440013
Downloaded on: 25 June 2016, At: 02:00 (PT)
References: this document contains references to 5 other documents.
To copy this document: permissions@emeraldinsight.com
The fulltext of this document has been downloaded 3296 times since 2006*

Users who downloaded this article also downloaded:

Downloaded by University of Malaya At 02:00 25 June 2016 (PT)

(2012),"Factors determining firms' perceived performance of mobile commerce", Industrial Management & Data Systems, Vol. 112
Iss 6 pp. 946-963 http://dx.doi.org/10.1108/02635571211238536
(2008),"Explaining the adoption of transactional B2C mobile commerce", Journal of Enterprise Information Management, Vol. 21 Iss 2 pp.
110-124 http://dx.doi.org/10.1108/17410390810851372
(2012),"Factors influencing consumption experience of mobile commerce: A study from experiential view", Internet Research, Vol. 22 Iss
2 pp. 120-141 http://dx.doi.org/10.1108/10662241211214539

Access to this document was granted through an Emerald subscription provided by emerald-srm:376953 []

For Authors
If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service
information about how to choose which publication to write for and submission guidelines are available for all. Please visit
www.emeraldinsight.com/authors for more information.

About Emerald www.emeraldinsight.com

Emerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than
290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional
customer resources and services.
Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE)
and also works with Portico and the LOCKSS initiative for digital archive preservation.
*Related content and download information correct at time of download.

Mobile commerce and the

creation of a marketplace
Johan Lembke
Johan Lembke is a Researcher/Instructor at Elliott School of International Affairs, George Washington University,
Washington, DC, USA.

Downloaded by University of Malaya At 02:00 25 June 2016 (PT)

Keywords Mobile communications, Regulations, Europe

Abstract The initial debate on mobile commerce
(m-commerce) was characterized by a high level of optimism,
followed by a more nuanced and realistic approach. Still,
m-commerce is expected to constitute a significant future
market worldwide. It is a new concept and is emerging in a
context of few or no established norms, rules and standards.
This article explores the move toward global rules and strategies
for m-commerce and the creation of a viable marketplace. In
particular, it focuses on the relationship between initiatives to
elaborate a coordinated strategy for m-commerce in line with
European regulatory requirements, on the one hand, and
ambitions to promote technology and build global alliances in
the world marketplace, on the other. These objectives, however,
are often difficult to combine due to the variation in preferences
among the corporate and standards organizations involved as a
result of global competition and corporate activities in
information and communications technology markets.

Mobile commerce: a European competitive

advantage?
he telecommunications and computer technology
sectors have experienced a rapidly changing
environment. The new environment is characterized
by a more competitive landscape, an increasing focus on
marketing, software and applications, the convergence and
integration of previously distinct industries, a gradual move
from traditional telecommunications to Internet-enabled and
wireless-enabled technology and services, as well as from
national and regional to global markets.
Japan, and notably NTT DoCoMo, leads the telecom
market in content for mobile data services with i-mode and
the launch of Foma in Fall 2001. Other East Asian countries
are also moving ahead aggressively in this field. Overall,
Western Europe has a competitive advantage in digital
wireless communications, not least due to a uniform
deployment of the global system for mobile communications
(GSM) and its acceptance in other parts of the world (and
increasingly in the United States). Western Europe is

regarded as a large potential market for mobile commerce

(m-commerce) also because of smart card penetration.
Within Europe, however, there is diversification in the field of
m-commerce. Finland and Italy are in a leading position due
to the combination of high penetration of mobile phones and
early use of smart card technology and are likely to be
among the earliest markets followed by France, the UK and
the Benelux and other Nordic countries. The reason why
Finland and Italy are in a better initial position to capitalize on
the evolution of m-commerce is arguably more based on
sociological rather than technological factors. Table I
presents data and estimates on penetration and subscribers
by region in mobile cellular communications.
The possibility of handling trusted electronic transactions
from a personal mobile device (and wireless Internet-capable
terminals) is regarded as one of the most important areas of
the wireless Internet. Establishing an interoperable approach
for secure mobile electronic transactions would create a
common and global marketplace. The alternative to a
fragmented market has to be avoided since in would be likely
to lead to a smaller market with fewer business opportunities.
``For a user, a mobile phone is a highly personal device that
today is expected to be easily and securely tailored according
to an individual need. These expectations cover also the fast
emerging mobile e-business sector. A mobile device will be
the platform to bridge the virtual and physical worlds of
e-business. Integrating security and transaction applications
on a common core standard and platform will create a global
mass market for mobile e-business. This will benefit all
participants from various industries within the value chain, in
addition to hundreds of millions of consumers throughout the

The current issue and full text archive of this

journal is available at
http://www.emeraldinsight.com/1463-6697.htm

info 4,3 2002, pp. 50-56, # MCB UP Limited, 1463-6697, DOI 10.1108/14636690210440013

50

Table I Penetration and subscribers by

region
1997
Penetration (%)
North America
Western Europe
South East Asia
Rest of world
Total

20.1
14.1
2.4
1.1
3.5

1999
30.7
38.4
5.4
2.8
7.7

2001
46.9
69.5
9.1
6.6
13.7

2002
55.5
76.8
10.8
9.1
16.4

2003
63.9
81.0
12.4
12.0
19.0

Table II Projected market evolution of

mobile commerce, 2000-2006 (US$ billion)
2004
72.1
83.1
14.0
15.2
21.5

Subscribers (millions)
North America
59.9 93.4 145.8 174.3 202.7 228.6
Western Europe
54.6 149.2 270.9 300.0 317.1 326.1
South East Asia
66.4 152.9 265.1 318.8 370.6 425.4
Rest of world
27.0 71.3 171.1 239.5 323.3 410.6
Total
207.9 466.8 852.9 1,032.6 1,213.7 1,390.8

Downloaded by University of Malaya At 02:00 25 June 2016 (PT)

Source: Wireless Strategy Analytics (2001)

world'' (Matti Alahuhta, President, Nokia Mobile Phones).

Wireless equipment manufacturers aimed to create an
environment that would allow wireless operators, financial
institutions and other service providers to facilitate secure
mobile transactions, economies of scale in terminal
equipment and network economies in services (network
effects or externalities).
The activities in the area of m-commerce were guided by a
number of trends; that is, localization, instant connectivity and
personalization. European industry and the European
Telecommunications Standards Institute (ETSI) and many of
its members based their analysis of m-commerce on an
expected highly accelerated market growth: m-commerce
growth would reach $US 200 billion by 2005, there would be a
global increase in the number of wireless data users from 300
million around 2000-2001 to around 1 billion by 2005, 50
million users would own an Internet-enabled/commercecapable wireless phone by 2001, and a third of all Europeans
would use the Internet through mobile phones by 2004. The
promoters of m-commerce situate it within the context of an
entirely new emerging market the Web economy, an
economy which reaches far beyond the Net. The expected
evolution of the market for m-commerce (Table II) is closely
linked to the projected evolution of the market for thirdgeneration (3G) wireless services. In February 2002, the
UMTS Forum published estimates of the future markets for 3G
services. It concluded that there would be around 629 million
3G subscribers by 2010, that the market (in service revenues)
would then be worth $320.5 billion, and that the value of the
total market up to 2010 would be $1.154 trillion (Table III).
We strongly believe that as 3G services become more widely
available, the benefits and exciting potential of this technology will
become more apparent to financial audiences and consumers alike
(UMTS Forum, 2002).

While some industrial actors (such as Nokia and Vodafone)

believe this could be achieved, others (such as Ericsson and
Telia Mobile) are more cautious in light of expected delays in

Year
Western
Europe
North
America
Asia Pacific

2000

2001

2002

2003

2004

2005

2006

23

41

61

86

99.8

0
1

1
2

6
6

13
14

23
25

37
41

48.8
58.2

Source: Wireless Strategic Analytics (2001)

the deployment of network infrastructure and uncertainties

about how network operators will offer services.
There has been no shortage of enthusiasm for m-commerce
among suppliers. Many users, however, are uncertain about
the new technology and it may be too early for some to
contemplate the idea. Despite the early market enthusiasm
for the concept of m-commerce, adoption has thus been
slow. The sheer number of mobile devices on the market
underpins the potential market for m-commerce but
widespread acceptance is still an unknown. There has been
a tendency to over hype the m-commerce development and
its associated technologies that are not yet ready to be fully
implemented by business. We are only at the start of the
lifecycle for m-commerce (see Figure 1).
To gain market acceptance, customers must be confident
that transactions will be secure and that data will be protected.
Until technologies such as General Packed Radio Services
(GPRS) and 3G are available (as well as more functional and
user-friendly devices) that allow customers fast and easy
access to information and services (for example, stock price
updates, commercial banking, location-based services, and
entertainment information or ``infotainment''), there is no
compelling reason for m-commerce uptake and for mobile
operators and service providers to elaborate implementation
strategies. Branding and technology initiatives are attempting
to boost consumer confidence. Bigger bandwidth is coming
along with richer HTML-enabled personal digital assistants
and smart phones, and content and applications will be
``intelligent'' to specific mobile devices. All this should help
ensure that m-commerce has a future.
The ETSI standard strategy initiative for mobile
commerce
The European Telecommunications Standards Institute (ETSI)
plays a major role in developing a wide range of standards
and other technical documentation as Europe's contribution
to global standardization of telecommunications and
associated domains. The market in which ETSI members now
operate is one of open global competition, in which the
convergence of the world's telecommunications, computing,
broadcasting and entertainment industries sets new
challenges for the standards-makers, while also generating
new opportunities for sharing the diverse skills residing in the
different industries. ETSI standards have already been
info 4,3 2002

51

Table III Projected market evolution of third-generation (3G), 2002-2010 (US$ billion)
Year
Market value ($ billion)
Subscribers (million)

2002

2003

2004

2005

2006

2007

2008

2009

2010

1.0
2.6

11.0
13.1

37.2
47.2

67.7
95.5

105.7
170.3

146.4
254.1

201.3
360.7

263.9
493.0

320.5
629.0

Source: UMTS Forum (2002)

Downloaded by University of Malaya At 02:00 25 June 2016 (PT)

Figure 1 The evolution of m-commerce

successful in the global arena, including the Global System for

Mobile communications (GSM), the Digital Enhanced
Cordless Telecommunications system (DECT), the Digital
Audio and Video Broadcasting platforms (DAB and DVB), the
Integrated Services Digital Networks (ISDN) and the Universal
Mobile Telecommunications System (UMTS).
ETSI's technical organization forms the ``life-blood'' of ETSI,
producing and approving technical standards. Composed of
technical bodies, such as technical committees (TC), ETSI
projects (EP), ETSI partnership projects (EPP notably the
Third Generation Partnership Project or 3GPP), and special
Committees, it brings together the world's leading experts to
develop the technical standards, specifications and reports
needed by the market, that is, the industry. ETSI technical
committees (TC) define the technological foundations for
tomorrow's electronic communication networks and systems.
ETSI projects and partnership projects build on these
foundations to elaborate the specifications for specific types
of products and services. The Partnership Project concept has
been developed to enable ETSI to collaborate with similar
organizations on standardization work of common interest.
The first partnership project created (3GPP) brought ETSI
together with partners from around the world to find common
solutions for the 3G mobile telecom systems (Lembke, 2002).
The response of ETSI to rapidly changing market,
regulatory changes and technology development has been
translated into a greater international focus (while retaining
European roots) and the internationalization of projects. It has
led to a more expansionist agenda through mainly partnership
with other organizations, tighter strategic management where
the priority has been to create standards that meet members'
business needs, and a shorter development cycle where time
info 4,3 2002

52

to market is an overall priority. ETSI was guided by a number of

``standard-driven objectives'': to shape the future of mobile
communications, to remain a driver in fixed networks, to target
the organization's Internet contributions, and to bridge the
fixed/mobile/Internet/broadcasting convergence. One of the
major challenges and ambitions of ETSI is the convergence of
emerging technologies and the need to bridge the gap
between different dimensions of traditional telecom, Internet
protocol (IP) and broadcasting environments by following the
market trends and creating key synergies.
In mid-2000, the ETSI standing organization launched a
discussion on the need for a European standardization
strategy for m-commerce. It established the so-called ETSI
Project for Mobile Commerce (EP M-COMM) based on the
movement toward requirements for electronic signature and
electronic payment for m-commerce. In late October 2000,
Karl-Heinz Rosenbrock, ETSI director general, opened the first
plenary meeting at the ETSI headquarters in Sophia Antipolis.
The participants elected Michael Radnoti (Chipcard
Communication Systems) the new EP m-commerce chairman
and Mark Kamers (Europay International) vice chairman. The
former would be liaison officer with Mobey Forum and the
latter with GMCIG (Global Mobile Commerce Interoperability
Group). Motorola accepted the task to identify a person to
liaise with the WAP Forum, and British Telecom accepted to
identify a person to liaise with GSM Association. The
attendees at the launch of the EP m-commerce initiative
represented a wide range of sectoral players (such as Alcatel,
British Telecom, Compaq Computer, Deutsche Telecom,
DGTP, DTI, Europay International, Finnet Group, Griffin
Consulting, Intracom, Jinny Software, Marconi, Microsoft
Europe, Motorola, Palm, Samsung Electronics, Siemens,
Smarttrust, Sonera, Telecom Italia Mobile, Telenor, Telia,
Unisys Deutschland, Vodafone, and ZeroKnowledge).
Some industry analysts have predicted that m-commerce
will experience tremendous growth over the next few years
through the growth in commerce-capable wireless phones.
Network operators will have an interest in providing and
controlling content and commerce services, whereas new
mobile Internet providers (MIP) will start delivering open
Internet access to people. Both wireless operators and
financial institutions would benefit from banking, credit/debit
card, payment, ticketing, travel and gambling services used
from hundred of millions mobile phones that were expected
to generate more revenue. In terms of standardization, a
particularly important link that had to be supported by new
standards was that to content providers. Current and future

Downloaded by University of Malaya At 02:00 25 June 2016 (PT)

scenarios for the value chain for m-commerce are shown in

Figure 2.
The overall ETSI objective stressed that there was a need
for standards in order to take full advantage of the expected
market growth and to avoid market fragmentation. The growth
of mobile electronic commerce (e-commerce) and the EP
M-COMM initiative was viewed as ``a strategic development
realm'' that would have a direct impact on ETSI and more
specifically on GSM, GPRS and 3G standardization activities.
This ETSI initiative would identify the technical areas within
ETSI that would be affected by the requirements for digital
signatures and identities as outlined in EU directives and
various ways of electronic payment related to m-commerce.
The European Commission was represented in the ETSI
initiative and has also supported the development of
m-commerce through funding for research and development
and institutional support.
The ETSI m-commerce strategy consisted of four scopes:
(1) to consolidate the ETSI members' input and
requirements regarding m-commerce;
(2) to develop further and maintain m-commerce expertise
to actively address issues related to the m-commerce
domain;
(3) to define interoperability requirements between different
players in the m-commerce environment; and
(4) to support agreements of technical, legal, regulatory and
user requirements that would be relevant to
m-commerce, for example, privacy considerations.
The ETSI organization argued that its m-commerce initiative
was well positioned to promote and support a number of
areas: the integration of payment functions in the global
mobile telecom environment, the provision of mobile telecom
technology to the financial community, the integration of
mobile telecom and m-commerce, and the interoperability
between different industrial and user organizations. ETSI
stressed that the European-based m-commerce activity and
strategy should be an integral part and fully aligned with the

agreed approaches for GSM/UMTS within the 3GPP

framework. Aside from the convergence of emerging
technologies, this initiative constituted a challenge in that it
needed to provide a balance between European regulatory
considerations, requirements and interests, on the one hand,
and global commercial developments (and the need to
promote European technologies and systems in a global
marketplace), on the other (Lembke, 2001). A key ambition
was to ensure that the ETSI m-commerce initiative would act
as a focal point and coordinator between ETSI activities
relevant to m-commerce and key organizations involved in
similar activities that were open as well as currently not open
for all ETSI members. The list below shows the organizational
landscape for standardization in 2000:
(1) Organizations open to ETSI members, 2000:
& Global Mobile Commerce Forum, GMCF;
& Global Mobile Commerce Interoperability Group,
GMCIG;
& European Electronic Signature Standardization
Initiative, EESSI;
& WAP forum;
& PKI Forum;
& GSM Association;
& European Committee for Standardization/ Information
Society Standardization System, CEN/ISSS;
& International Organization for Standardization, ISO
& Smart Card Forum;
& Radicchio.
(2) Organizations not open to all ETSI members, 2000:
& European Committee for Banking Standards, ECBS;
& Common Electronic Purse Specifications
Consortium, CEPSCo;
& Europay-Mastercard-Visa Consortium, EMVCo.
By December 2000, ETSI had explored links with external
organizations and had appointed liaison officers to GMCIG
and to the financial industry-driven MOBEY Forum, the task
of which was to encourage the use of mobile technology in

Figure 2 The Value chain for m-commerce

info 4,3 2002

53

Downloaded by University of Malaya At 02:00 25 June 2016 (PT)

financial services. In addition, liaison officers were appointed

to the GSM Association and the Wireless Application
Protocol (WAP) Forum. In sum, the ETSI Project for
m-commerce aimed at capitalizing on the m-commerce's
strength to allow for the integration of commerce and
payment into the mobile telecom environment and to support
interoperability between different players. However, the
interest among the leading wireless telecom equipment
manufacturers, notably Ericsson and Nokia, was low and the
development of rules and standards would evolve within and
between industrial alliances.
Industrial alliances and strategies
Since around 1999-2000, a number of industry alliances have
worked toward the creation of a framework for secure mobile
transactions in order to ensure that interoperable mobile
transaction solutions are developed around the world thus
enabling consumers the ability to access and buy goods and
services seamlessly wherever they are using a mobile device.
Manufacturers and financial institutions agreed that different
regional implementations of mobile electronic transactions
would be against the interests of consumers as their shopping
patterns increasingly disregard country borders. Wireless
operators, in turn, were well positioned to take advantage of
the opportunities in mobile electronic commerce.
The overall objectives of the leading m-commerce alliances
were similar but varied some due to their different business
and technology strategies and the type of organizations
involved in the respective alliance. The Global Mobile
Commerce Forum (GMCF) a cross-industry initiative
focusing on the development of secure mobile payments over
a variety of technology platforms was established in
November 1999 in order to foster knowledge exchange
between MasterCard's member financial institutions, network
operators and leading mobile technology companies. Its
goals were to stimulate trials of m-commerce applications, to
develop solutions to facilitate online payments, and to
document and win support for standards. Regarding the MeT
(Mobile electronic Transactions) alliance, the founding
organizations' strategies aimed at using existing and
emerging standards, at building a common framework, at
creating an implementation roadmap in order to enhance the
fast adoption of trusted mobile e-business, and at merging
existing initiatives with de facto standards. In April 2000,
Ericsson Mobile Communications AB, Motorola and Nokia
Mobile Phones announced that they had established the MeT
consortium as a joint effort to develop an open and common
industry framework for secure mobile electronic transactions.
In May 2000, the Mobey Forum was established with the
mission to encourage the use of mobile technology in financial
services such as payment, remote banking and brokerage
aimed at raising the awareness of and encouraging mobile
technology for financial services, promoting global
standardization and facilitating the open provisioning of
info 4,3 2002

54

mobile financial services, identifying business considerations,

working to obtain the interoperability of the technical and
security requirements for the mobile finance industry (and
providing an active liaison between various standardization
forums in the mobile industry and the financial industry in
order to promote competition. ``It is highly gratifying that the
leading on-line financial institutions and mobile technology
companies will work together to promote global
standardization enabling safe, wireless day-to-day shopping
and banking business anywhere in the world'', said Bo Harald,
executive vice president of MeritaNordbanken and the
Forum's first chairman (GMC Forum, 2000). Its founding
members were ABN AMRO Bank, Banco Santander Central
Hispano, BNP Paribas, Barclays, Citigroup, Deutsche Bank,
HSBC Holdings, MeritaNordbanken, SEB-Skandinaviska
Enskilda Banken, UBS, Visa International, Ericsson, Motorola
and Nokia. The financial institutions were particularly
interested in achieving global standardization and technical
and security interoperability of mobile financial services (Table
IV). Working groups were also established to handle horizontal
issues such as requirements and technology, rules and
regulations, and business activities.
In late May 2000, the initiators of the MeT Alliance
(Ericsson, Motorola and Nokia) announced that they would
cooperate with MasterCard International's GMC Forum, which
then had more than 200 participants. ``In order to unleash the
potential of the m-commerce marketplace, a common,
consistent and globally accepted environment for secure
mobile transactions has to exist. Supporting MasterCard
International's Global Mobile Commerce Forum is one step in
the process of reaching this common understanding,'' said
Jan Ahrenbring, vice president marketing and
communications at Ericsson Mobile Communications
(Ericsson, Mororolla and Nokia, 2000). Chris Jackson, vice
president and general manager of Motorola's Personal
Networks Group, EMEA, agreed: ``Joining this Global Mobile
Commerce Forum underlines the MeT Initiative's commitment
to the development of the mobile Internet and making it a
secure environment for doing business. Trust is the essential
factor for mobile interactions and transactions becoming
accepted into the mainstream'' (Ericsson, Mortorolla and
Nokia, 2000). Europay International, MasterCard's strategic
alliance partner, stressed Europe's competitive advantage in
wireless communications and in the convergence of emerging
technologies. ``Europe is leading the world in the development
of innovative mobile commerce applications. Europay
International is delighted that MeT has joined a truly open
initiative that will help accelerate the roll-out of mobile
commerce in Europe and provide many benefits to our
member banks and their customers,'' said Eric Joye, director,
Services Group at Europay International (Ericsson, Motorolla
and Nokia, 2000).
The membership of each of these m-commerce alliances
would expand over the years, thus giving them further

Downloaded by University of Malaya At 02:00 25 June 2016 (PT)

Table IV Leading m-commerce alliances, 2000-2001

Mobey Forum

MeT

GMCF

Launch date
Founding organizations

May 2000
Banks
Visa international
Ericsson
Motorola
Nokia

April 2000
Telecom equipment
manufacturers:
Ericsson
Motorola
Nokia

Focus activities

Payment
Remote banking
Brokerage

Banking and trading

Credit Card and Payment
Loyalty/Bonus
ID Cards

November 1999
MasterCard
Europay
Orange
Telia Mobile
BT Cellnet
Motorola
Banking and finance
Ticketing
Contracts
Info services

momentum. In early 2001, for example, American Express

(financial services) and Hewlett-Packard (computer
technology) announced that they had joined Mobey Forum
which hoped to transform its mobile payment architecture
(MPA) into the de facto world standard for m-commerce in
order to influence the future direction of the wireless industry at
a local and international level. At this time, Visa had already
joined this consortium. The Money Forum worked closely with
the MET alliance since they were supported by many of the
same companies (notably Ericsson, Motorola and Nokia) and
intended to integrate a set of m-commerce standards from
the latter in terms of user friendliness and mobile payments.
Compared to the 3G landscape and circumstances, the
m-commerce industry including its main driver, the telecom
industry has the ambition to be as ``technology agnostic'' as
possible. In other words, the dominant strategic need to build
on GSM, as was the case for the development of 3G in
Europe, is not as compelling a goal. However, what could be
particularly useful is the use of the subscriber identification
module (SIM) cards small chips that are integrated into most
credit and telephone cards that would enable two SIM cards
in one mobile telephone (one of which would be controlled by
banks and the other that would authorize calls by operators,
thus allowing banks and mobile operators to offer
independent services). In addition, the emerging m-commerce
industry could benefit from the GSM Association to generate a
``federation of operators'' in support of the development and
adoption of m-commerce in Europe and beyond.
In 2002, the industrial alliance landscape had changed
through the creation of new groups for the establishment and
promotion of m-commerce. These groups were all based and
dominated by European organizations but increasingly
welcomed non-European and international actors. The Mobey
Forum (where banks were the main drivers that wanted to use
the mobile phone as a payment function) and the MeT
consortium (driven by wireless telecom manufacturers) were
still highly active. Parley, an organization that worked to
establish standards for network and access operators to
make the network as a vital component of the m-commerce
marketplace, had been created but lost some of its steam
since it was viewed as too close to operators and too

distanced from content providers. One new major industrial

consortium was the Mobile Payment Forum, which was
initiated by credit card companies (such as American Express
and Visa), involving some operators, which wanted to create a
business model of m-commerce based on the use of credit
cards. Another new alliance was PayCircle, which was initiated
by Hewlett-Packard and Siemens. Finally, the Open Mobile
Architecture (OMA) alliance, an umbrella-like standards
organization, develops standards in various areas in the field
of Internet protocol-based communications infrastructure
software and applications for m-commerce services. It is
based on different technology platforms that enable an open
mobile infrastructure such as WAP2.0/XHTML, MMS
(Multimedia Messaging Service) and JavaTM technology
and collaborates with standards bodies like the 3GPP, the
WAP Forum and Java Community Process (JCP).
Some of the major hurdles that need to be resolved are
the establishment of new rules and standards for this new
m-commerce industry and its associated markets, the
creation of new viable business models, and the generation
and financing of a security-enhanced and credible (but easyto-use) m-commerce infrastructure and technology. While
telecom equipment manufacturers have been the major
drivers, media and content providers have been cautious,
and operators have been reluctant to invest and agree on
business models that would establish operator agreements
in order to facilitate interoperability and interworking and that
would create an arrangement where content providers play a
more distinct role in terms of revenues. In this environment,
equipment manufacturers consider standards creation as a
strategic tool to:
& reduce the resistance among operators and increase
the interest among content providers; and thus to
& generate commitment in industry that would stimulate
technology adoption and market acceptance; that is, to
move from technology push to a market-pull environment.
Creating a marketplace for mobile commerce
The development of global rules and standards for a new
concept and marketplace mobile commerce (m-commerce)
illustrates the delicate relationship between formal standards
info 4,3 2002

55

Downloaded by University of Malaya At 02:00 25 June 2016 (PT)

creation through legally recognized bodies (such as the

European Telecommunications Standards Institute, ETSI) and
informal standardization through industrial consortia. In recent
years, ETSI members have debated the organization's role in
a rapidly changing standardization environment: the
increasing competition between technologies and market
players as well as among industry standards promoted by
industry consortia and alliances, the move from regional
toward strictly market-oriented and globally applicable
standards, the gradually changing standards policy for
information and communications technology markets of the
European Union, and the likelihood that the overall importance
of standards in public procurement will be relaxed. One of the
problems of formal standardization is the multitude of
members involved (and thus different interests and priorities),
whereas in the field of industrial consortia/fora/alliances,
members are often more likely to act on the basis of a
common policy, objectives, expectations and a commonly
agreed strategy (although, of course, there are controversies
within industrial alliances as well). The proliferation of industrial
standards alliances complicates ETSI's ambition to be ``the
neutral place and organization where it happens'' as a
complement to its members' own efforts by attracting more
members to strategic meetings and by bringing in technical
specifications from outside bodies.
The ETSI standards strategy initiative for m-commerce
launched in 2000 was an attempt to adopt a more aggressive
policy to foster a concerted standards effort for m-commerce,
to avoid market fragmentation, to help members maximize
their return on investment in standardization activities in an
m-commerce marketplace, and to help strengthen the
credibility of its output on the global market where its
members will face ``brutal competition''. ETSI recognizes that
industrial alliances have a good grasp of market requirements
and are critical mass generators that are essential for the
successful marketing of standards (collaborative competition).
The organization, though, wants informal alliances to market
and ensure the worldwide uptake of ETSI standards. ETSI has
encountered difficulties when making standards that may be
used beyond the European region due to the resistance
among various industrial-political coalitions around standards
and the region; that is, the references to Europe have been
downplayed or removed in order to render the standards
more acceptable on a global level (for example, the cases of
TETRA, DECT and UMTS/W-CDMA/3GPPP). The overall ETSI
and EU strategic objective is to make international standards
happen first in Europe at the same time as other regions and
interested parties have access to ETSI deliverables in time to
accept them as potential standards. Major players in the
m-commerce sector not least the leading wireless
equipment manufacturers were less keen on formal
standardization through ETSI and did not participate in the
``strategic meetings'' to elaborate a concerted
standards strategy.

info 4,3 2002

56

The development of rules and standards for the evolving

m-commerce marketplace (and the future architecture for
mobile financial and other services) in order to facilitate the
operations of content providers and others (and to spur
market acceptance) are driven by a number of industrial
coalitions. The leading alliances are Mobey Forum (to allow
banks to become key players in the m-commerce
marketplace), MeT (to allow terminal equipment
manufacturers to make the mobile phone a pay function in
m-commerce), Parley (to allow network and access operators
to transform the network to an integral part of m-commerce),
Mobile Payment Forum (to allow credit card companies to
operate mobile phones and m-commerce services through
credit cards), PayCircle (to establish standards for payment
functions), and the Open Mobile Architecture alliance (to
define standards in various areas directed toward the external
environment such as the Internet).
The telecom industry wireless equipment manufacturers
and operators has spearheaded this development since
they need to recoup the significant investments in 3G wireless
communications. Ericsson, Motorola and Nokia are members
of most of the leading m-commerce alliances. These initiatives
need to overcome a set of hurdles in order to foster
technological adoption and market acceptance, such as the
creation of security-enhanced infrastructure and viable
business models, the establishment of cooperative
agreements and collective support among operators, and the
adoption of a more pro-active approach on the part of content
providers, particularly those content providers that do not
develop services specifically for the mobile world. The
emergence of global rules and standards for m-commerce is
a central strategic element in reducing resistance in the
industry, in generating a positive and credible commitment in
favor of the evolving m-commerce marketplace, in moving to
the next stage of the life cycle for m-commerce in Europe and
beyond, and thus in promoting scales economies in terminal
equipment and network economies in m-commerce
services.
References

Ericsson, Mortorola and Nokia (2000), Met Initiative, Ericsson, Motorola

and Nokia, to Join MasterCard's Global Mobile Commerce Forum,

press release, 31 May.
GMC Forum (2000), Leading On-line Financial Institutions and Mobile

Phone Manufacturers Form Mobey Forum to Drive Mobile

Financial Services, press release, 10 May.
Lembke, J. (2001), ``Harmonization and globalization: UMTS and the
single market'', info, Vol. 3 No. 1, February, pp. 5-26.
Lembke, J. (2002), Competition for Technological Leadership: EU High

Technology Policy, Edward Elgar Publishing, Cheltenham.

UMTS Forum (2002), Potential Remains High for 3G Services Post

September 11th: $1 Trillion Opportunity for 3G Predicted Over

Next Decade, press release, 26 February.

This article has been cited by:

Downloaded by University of Malaya At 02:00 25 June 2016 (PT)

1. Antonio GhezziBased at the Department of Management, Economics and Industrial Engineering, Politecnico di Milano, Milan, Italy
Filippo RengaBased at the Department of Management, Economics and Industrial Engineering, Politecnico di Milano, Milan, Italy
Raffaello BaloccoBased at the Department of Management, Economics and Industrial Engineering, Politecnico di Milano, Milan, Italy Paolo
PescettoBased at the Department of Management Engineering, Universit degli Studi di Genova, Italy. 2010. Mobile payment applications:
offer state of the art in the Italian market. info 12:5, 3-22. [Abstract] [Full Text] [PDF]
2. Chun-Xia Qi, Zhen-Fa QiConsumer shopping based on mobile computing V1-189-V1-192. [CrossRef]
3. Kaan Varnali, Ayegl Toker. 2010. Mobile marketing research: The-state-of-the-art. International Journal of Information Management
30:2, 144-151. [CrossRef]
4. Rakesh Belwal, Shweta BelwalMobile Phone Usage Behavior of University Students in Oman 954-962. [CrossRef]
5. Sean Xin XuAssistant Professor, School of Business and Management, Hong Kong University of Science and Technology, Kowloon, Hong
Kong Xu YanAssociate Professor, School of Business and Management, Hong Kong University of Science and Technology, Kowloon, Hong
Kong. Xiaona ZhengAssistant Professor at the Guanghua School of Management, Peking University, Beijing, China. 2008. Communication
platforms in electronic commerce: a threedimension analysis. info 10:2, 47-56. [Abstract] [Full Text] [PDF]
6. E.W.T. Ngai, A. Gunasekaran. 2007. A review for mobile commerce research and applications. Decision Support Systems 43:1, 3-15. [CrossRef]
7. Dr George M. GiaglisDamian WoolfallHenley Management College, Henley, UK. 2006. A game and network perspective on mbusiness
partnerships. Business Process Management Journal 12:3, 265-280. [Abstract] [Full Text] [PDF]