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CHAPTER 13: M-COMMERCE M-Commerce

1.Also called wireless commerce or mobile e-commerce. 2.It is a monetary business activity conducted via mobile communication n/w and is defined in different ways. 3.Tarasewich defined m-com as all activities related to commercial transaction conducted through communication n/w that interface with wireless devices. 4.Another study defined m-com as the use of handheld mobile devices to communicate,interact and transact via high-speed connection to the Internet.

Characteristics of m-com
1. Mobility capability provides users with a free of time and location. 2. Reachability is directly related to mobility. Mobile users can be reached instantly. 3. These 2 characteristics can solve any geographic or time obstacles of a particular situation. 4. Other characteristics include : user identity, location awareness and interactivity, security and instant connectivity.

Difference between E-com and M-com


In comparison to E-com, advantages of m-com are as follows: Ubiquity - The end user device is mobile, that is, the user can access m-com applications in real time at any place. Accessibility - Accessibility is related to ubiquity and means that the end user is accessible anywhere at any time. Accessibility is probably the major advantage by comparison with e-commerce applications involving a wired end user device. Security - Depending on the specific end user device, the device offers a certain

level of inherent security. For example, the SIM card commonly employed in mobile phones is a smart card that stores confidential user information, such as the users secret authentication key. As such, the mobile phone can be regarded as a smart card reader with smart card. Localization - A network operator can localize registered users by using a positioning system, such as GPS, or via GSM or UMTS network technology, and offer location-dependent services. Those services include local information services about hotels, restaurants, and amenities, travel information, emergency calls, and mobile office facilities. Convenience - The size and weight of mobile devices and their ubiquity and accessibility makes them an ideal tool for performing personal tasks. Personalization - Mobile devices are usually not shared between users. This makes it possible to adjust a mobile device to the users needs and wishes. On the other hand, a mobile operator can offer personalized services to its users, depending on specified user characteristics (e.g. a user may prefer Italian food) and the users location. The following list summarizes the main disadvantages of m-commerce: Mobile devices offer limited capabilities (such as limited display). Between mobile devices these capabilities vary so much that end user services will need to be customized accordingly. The heterogeneity of devices, operating systems, and network technologies is a challenge for a uniform end user platform. For this reason, standardization bodies consisting of telecommunication companies, device manufacturers, and value-added service providers integrate their work. For example, many current mobile devices implement an IP stack to provide standard network connectivity. At the application level, the Java 2 Micro Edition (J2ME) offers a standardized application platform for heterogeneous devices. Mobile devices are more prone to theft and destruction. According to a government report, more than 700000 mobile phones are stolen in the UK each year. Since mobile phones are highly personalized and contain confidential user information, they need to be protected according to the highest security standards. The communication over the air interface between mobile device and network introduces additional security threats (e.g. eavesdropping).

Framework
To help future applications and to allow designers, developers and researchers to strategize and create mobile commerce applications, a four level integrated framework is proposed. These four levels are as follows: m-commerce applications, user infrastructure, middleware and network infrastructure which simplifies the design and development. The framework provides a developer and provider plane to address the different needs and roles of application developers, content providers and service providers. Fig. 2.1 depicts the Framework of M-commerce in brief. Content provider can build its service using applications from multiple application developers and also can aggregate content from other content providers and can supply the aggregated content to a network operator or service provider. Service providers can also act as content aggregators, but are unlikely to act as either an application or content provider due to their focus on the network and service aspects of m-commerce.

Figure 2.1: A Framework for m-Commerce Wireless carriers can play a very active and important role in the mobile commerce applications and services due to the fact that mobile user is going through

their network to perform all mobile commerce transactions. Mobile user is likely to prefer a common bill for voice, data and mobile commerce services. Fig.2.2 shows the Life Cycle of Mobile commerce.

Figure 2.2: Mobile Commerce Life Cycle

Mobile Financial Services Mobile Financial Services (M-Commerce) are recognized by the GSMA as a killer application to boost the MNO's Revenue in 2009 and beyond. There are many business models that depict each markets' specifics, but all of them have one thing in common, which are: 1. Offering financial services over mobile networks 2. Banking the unbanked or under-banked and collecting a profit from this neglected communications field. From customer perspective, M-Commerce is an additional feature on their mobile device, that helps them to send and receive money, settle their bills, buy goods and services. Customers are very happy to see joint ventures between the MNO and banks, these vetures bring the consumers safety and security to the perfectly convenient tool - the mobile phone. In this emerging market there are many

opportunities for partners of MNO's (Merchants, Money Transfer Companies, Payment Card Associations) in this business. A perfect Mobile Money ecosystem means successful partnership between mobile operators, that provide users with Mobile Wallet, Banks and Banking infustructures that offer their know-how, legal umbrella and significant number of Merchants that make this system available.

Emerging Applications
There are unlimited number of mobile applications, we attempt to identify several important classes of applications and provide examples within each class. Table1 summarises the different types of Mobile Applications with their category and examples. Type of mobile Applications Mobile Financial Applications Mobile Advertising Mobile Inventory Management Product Shopping Wireless Reengineering Mobile Office Wireless Data Center Mobile Entertainment Mobile Distance Education Category B2C,B2B B2C B2B,B2C B2C,B2B B2C,B2B B2C B2B,B2C B2C B2C Examples Banking, brokerage and mobile payments Sending user-specific and locationadvertisements Location tracking of goods, people, etc Ordering items by a mobile device Improvement of Business Services Working from traffic jams, conferences, etc Information downloaded by mobile users / vendors Video on demand and other services Taking a class using streaming audio and video

Table1 : Different types of Mobile Applications 5.1 Mobile Financial Applications (MFA) Mobile financial applications are likely to be one of the most important components of m-commerce. They could involve a variety of applications such as mobile banking and brokerage service, mobile money transfer, and mobile

payments as shown in the figure. One interesting mobile financial application is micro payment involving small purchases such as vending and other items. A mobile device can communicate with a vending machine using a local wireless network to purchase desired items. Micropayments can be implemented in a variety of ways. One way is that the user could make a call to a certain number where per minute charges equal the cost of the vending item. This approach has been used by SONERA, a finish wireless provider, in the famous Coke machine service. In effect it collects money from the users and credits it to the vending providers. Figure 5.1 below shows various Mobile Financial Services available presently.

Figure 5.1: Several Mobile Financial Services 5.2 Mobile Advertising Mobile advertising is also a very important class of mobile commerce applications. Using demographic information collected by wireless service providers and information on the current location of mobile users, much targeted advertising can be done. The advertising messages sent to the user can be location-sensitive and can inform a user about various on-going specials (shops, malls and restaurants) in surrounding areas as shown in Figure 5.2 below which shows a possible scenario for mobile advertising and shopping. This type of advertising can be performed using Short Messaging Service (SMS) or by using short paging messages to mobile users. The messages can be sent to all users located in a certain area, a userspecific message can be sent independent of the users current location. Since the services need the current location information of a user, a third party may be needed to provide location services. However this may require a sharing of revenues between the network service provider and location service provider. As more wireless bandwidth becomes available, content rich advertising involve audio, pictures and video clips can be produced for individual users with specific

needs, interests, and inclinations. It is also possible that direct advertising to users may be performed without much control from the wireless service providers.

Figure 5.2: A possible scenario for mobile advertising and shopping 5.3 Mobile Inventory Management (MIM)

Figure 5.3: Location tracking of goods This class of application involves location tracking of goods, services and even people. The tracking of goods may help service providers in determining the time of delivery to customer, thus improving customer service and obtaining a competitive edge over other business. One very interesting application is rolling inventory-which may involve multiple trucks carrying a large amount of inventory

while on move. Whenever a store needs certain goods/items, it can locate a truck and just-in-time delivery of goods can be performed. The rolling inventory and delivery application can reduce the amount of inventory space and cost for both vendors and stores and may reduce the time between when an order is placed and the goods are delivered (shown in figure 5.3 above) (cf. [13]). Location tracking of components can be broken into two components: indoor and outdoor. Indoor tracking can be performed by a chipset (TX/RX) and location information may be transmitted over a satellite or cellular/PCS system to the component supplier where such information is needed. 5.4 Product Location and Search (PLS)

Figure 5.4: Product Location & Search This class of application includes locating an item in a particular area or location. This is concerned with finding an item with certain specifications and whether it is available in a specified area or not. Potentially, there could be multiple places where such an item or items of similar attributes are located. Currently many people are going to several stores to find an item (certain brand/size of TV, VCR or an automobile) and compare prices and features. Using a mobile device and centralized/distributed database containing information on products, a user should be able to find the exact location of the store where a certain item is located. After that the user can buy online using a browser on his/her mobile devise. In the case of multiple stores/vendors carrying an item desired by a user, they could compete to get customer by real time manipulation of prices or by offering instant discounts. From the technological point of view, a mobile user can send a query message to a centralized location (shown in figure 5.4 above), which in turn can interface several different stores/dealers and decide if the item is available or not.

5.5 Proactive Service Management This class of application is based on collecting pertinent information about current or near future user needs and providing services to users proactively. One such application may involve collecting information about the aging components of an automobile (shown in figure 5.5 below).

Figure 5.5: Information Transmission on aging Automobile components to dealers This would help reduce anxiety levels of owners and improve the general conditions of automobiles on the road leading to the reduced number of traffic jams, accidents and even fatalities. From the technological point of view, automobiles can be equipped with smart sensors that keep track of how much wear and tear a car component has gone through. This information can then be transmitted using a radio/microwave/satellite system to a specified service center or other location. Some implications of such applications are privacy, security, reliability and cost of deployment.

Mobile e-commerce players


We first look at Japan, because the wireless Internet (e.g. i-Mode) has existed there since February 1999 and certain m-commerce player categories have emerged and are economically viable. According to [16,32] in the market initiated by NTT DoCoMo one can distinguish the following players: a user; mobile network operator (MNO); telecom operator; application provider; facility supplier; information provider; contents holder; solution provider; financial institution; terminal manufacturer. Not all these players take part in actual m-commerce transactions, but get their revenues indirectly. Typically,

companies providing the network infrastructure or system software for the terminals are such players. Typical of Japanese market is that services are billed and thus payments are not performed on-line [32]. Thus, conventional telecom business models are adopted, rather than those applied in Internet environment.

Players The following are the different players in the M-Commerce value chain. User : User is defined as a person who is authorized to use his Personal Trusted Device (PTD). Every user of M-Commerce is associated one or more PTDs. Users of m-commerce can be divided into two main categories: > End users or system users: Retail subscribers of mobile phone services who uses mobile phones for commercial activity comes under this category. Here the benefit or the end-result is received by the subscriber > Customer or suppliers: In this category the end-result or benefit is obtained by an organization that utilizes M-Commerce for increasing the productivity and efficiency of its activities. Network Operators : Network operators offer the transport facility for data to pass across from the end-user to the destination and vice-versa. Operators enable this by providing network infrastructure with technologies such as GSM, PDC, GPRS and 3G.

Service Providers : Service providers typically involve in activities that develops new services on the common platforms providing standardized functional interface to application developers, and utilizes the network infrastructure provided by the Network Operator to provide the data in a consistent and user-friendly format for the end-user. Content Providers : Content providers aggregate mobile device content from different sources. They also link up with Commerce Mediators to handle the payment activities. Commerce Mediator : Any organization that provides payment solutions or services comes under this category. These organizations act as mediators between content providers and financial industry. This category also includes firms providing security solutions for payment. Finance Organizations : Any commercial transaction on a media requires framework and infrastructure to complete it with payment for the item transacted on. Financial industry has unique positioning and role in M-Commerce value chain. It provides necessary facility to carry out such a transaction. PTD : The predictions are that mobile phones with always on internet access will soon outstrip the number of fixed line internet terminals. For M-Commerce, the mobile phone is regarded as a user centered Personal Trusted Device (PTD). The mobile phone is small, personal, familiar, secure and available at all times. As a PTD, the mobile phone will be able to handle all transaction-related functions in both the online world and the physical world. This PTD may include mechanisms for user verification, an area for secure key storage and cryptographic processing, a certificate database, and a transaction database.

Environment A Mobile device enables M-Commerce in three different environments. The functionalities for each of these environments are different. Hence it may require different functional elements to be added to the mobile device.

The physical or local environment by facilitating payment services in shops, identifications services (e.g. at work).The personal or home environment by working with Bluetooth technology to access and process internet content with a PC, but use the PTD for identification, authentication, and authorization of transaction services, for example. Interfaces : There are three interfaces defined for M-Commerce. The service registration interface defines how the PTD subscribes to a service. It includes steps for requesting and delivering the service certificate for a particular service. The service execution interface defines how the PTD accesses a service for transactions. It includes functions such as secure session, authentication, and authorization by the user. The user interface is somewhat different in nature to the other two, but crucial for mass acceptance. It addresses technical and usability issues. Elements of this interface specified so far include: flexible service selection, awareness of used service / brand, awareness of the security environment (level; of security in use), user verification awareness of digital signing, access to digitally signed contracts, access to delivered objects (such as receipts and tickets). Fundamental security services defined for M-Commerce are: Confidentiality, Integrity, Authentication of origin and recipient, Digital signing for authorization. It currently specifies the use of the security layer protocol WTLS and a security element such as a tamper resistant WIM. 5 major steps characterize any M-Commerce transaction Initialization, Registration, Establishment of a secure session, Authentication, Authorization by the user, Usage. M-Commerce activities can be categorized into Consumer to consumer Business to customer or Business to business

CHAPTER 14: MANAGEMENT OF MOBILE COMMERCE SERVICES Challenges In M-commerce


A. Security Security is a key enabling factor in M-commerce. GSM provides a relatively secure connection through the PIN (personal Identi_cation Number) when turning on the handset. An authentication protocol between handset and the network through SSL encryption of voice and data is also there in GSM. But it is not enough to convince people. In order to get the con_dence of critical mass of consumers, more is expected in the _eld of security. It looks that the smart cards will be the preferred way of gaining access to a secure system. The smart card can be in the form of a credit card or in the form of a SIM like miniature card [1]. It is possible to run a variety of application on a single small SIM card. Encryption is being used to ensure con_dentiality through a secret key in association with the algorithm. This produces a scrambled version of the original message that the recipient can decrypt using the original key to retrieve the content. The key must be kept secret between the two parties. There are two basic methods, which can be used to encrypt a document: symmetric and asymmetric. With the symmetric method the same key is used for encryption and decryption. The problem is that the key has to be transmitted to the recipient of the message, and a third party could gain access to the key during this transmission. Within symmetric encryption both parties have typically a key of 1024 2048 bits. Using asymmetric algorithm, also known as public key methods, a set of two keys is used a private and a public key. Information encrypted using the public key can only be retrieved using the complementary private key. B. Business A key challenge that companies will face as they build businesses for the wireless and wired age is that they will need to integrate capabilities and disciplines that are quite separate in most organizations today. These include creative thinking, seasoned business skills, a deep understanding of technology and technical issues in both telecommunications and information systems, an understanding of how all this will evolve, and well-honed skills in design and branding. Executives will need to begin to think now about how to assemble these skills and how to create processes for effectively coordinating them. As they build these new digital businesses, executives should not underestimate what they already know. The opportunities for success in m-commerce will go to those who focus on creating compelling value for customers, rooted in a deep understanding of the mobile experience, who build dynamic infrastructures for the business, and who forge

business models that harvest sustainable value from the offerings and economics of the mobile Web. Executives are also to think about how to tackle the changes that mobile computing will bring about in the organization. Absence of proper management can have negative effect in the performance of business and lead to failure of mobile computing as such.

Role of emerging 3G/4G WN and wireless LAN


Third Generation: The basic idea of 3G is to deploy new systems with new services instead of just provide higher bandwidth and data rate. Support for multimedia transmission is another striking feature of 3G. It employs both circuit switching and packet switching strategies. The main access technologies are CDMA (Code Division Multiple Access), WCDMA (Wideband CDMA), and TSSDMA (Time division Synchronous CDMA). B. Limitations of 3G Some of the reasons for a new generation of mobile communication are listed below Difficulty of CDMA to provide higher data rates Need for continuously increasing data rate and bandwidth to meet the multimedia requirements Limitation of spectrum and its allocation Inability to roam between different services To provide a seamless transport end-to-end mechanism To introduce a better system with reduces cost C. Some main desired Features of 4G: High usability and global roaming: The end user terminals should be compatible with any technology, at anytime, anywhere in the world. The basic idea is that the user should be able to take his mobile to any place, for example, from a place that uses CDMA to another place that employs GSM. Multimedia support: The user should be able to receive high data rate multimedia services. This demands higher bandwidth and higher data rate. Personalization: This means that any type of person should be able to access the service. The service providers should be able to provide customized services to different type of users. D. Main Challenges To achieve the desired features listed above researches have to solve some of the main challenges that 4G is facing. The main challenges are described below Multimode user terminals: In order to access different kinds

of services and technologies, the user terminals should be able to configure themselves in different modes. This eliminates the need of multiple terminals. Adaptive techniques like smart antennas and software radio have been proposed for achieving terminal mobility. Wireless system discovery and selection: The main idea behind this is the user terminal should be able to select the desired wireless system. The system could be LAN, GPS, GSM etc. One proposed solution for this is to use software radio approach where the terminal scans for the best available network and then it downloads the required software and configure themselves o access the particular network. Terminal Mobility: This is one of the biggest issues the researchers are facing. Terminal mobility allows the user to roam across different geographical areas that uses different technologies. There are two important issues related to terminal mobility. One is location management where the system has to locate the position of the mobile for providing service. Another important issue is hand off management. In the traditional mobile systems only horizontal hand off has to be performed where as in 4G systems both horizontal and vertical hand off should be performed. As shown in figure 1, horizontal hand off is performed when a mobile movies from on cell to another and vertical handoff is performed when a mobile moves between two wireless systems. Personal mobility: Personal mobility deals with the mobility of the user rather than the user terminals. The idea behind this is, no matter where the user is located and whatdevice he is using, he should be able to access his messages. Security and privacy: The existing security measures for wireless systems are inadequate for 4G systems. The existing security systems are designed for specific services. This does not provide flexibility for the users and as flexibility is one of the main concerns for 4G, new security systems has to be introduced. Fault tolerance: fault tolerant systems are becoming more popular throughout the world. The existing wireless system structure has a tree like topology and hence if one of the components suffers damage the whole system goes down. This is not desirable in case of 4G. Hence one of the main issues is to design a fault tolerant system for 4G. Billing System: 3G mostly follows a flat rate billing system based where the user is charged just by a single operator for his usage according to call duration, transferred data etc. But in 4G wireless systems, the user might switch between different service providers and may use different services. In this case, it is hard for both the users and service providers to deal with separate bills. Hence the operators have to design a billing architecture that provides a single bill to the user for all the services he has used. Moreover the bill should be fair to all kinds of users.

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