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Bluetooth wireless technology:
a great opportunity for the mobile network operator

By Anders Edlund, Marketing Director, Bluetooth SIG

The Challenge Facing Mobile Operators
With 25 percent customer churn per year and the need to recover the costs of investment in 3G technology, mobile operators now have to increase customer loyalty and develop new ways of driving voice and data traffic to their networks. They need to create new, exciting services that capture the imagination and deliver real life benefits to customers, while generating new revenue streams that will boost the bottom-line. This paper gives an introduction to Bluetooth wireless technology and explains how operators can use this exiting technology to reach these objectives.

What is the Bluetooth wireless technology?
In simple terms, Bluetooth wireless technology enables cable-free connection of devices that would normally be physically linked by wires, such as personal digital assistants (PDAs), mobile phones and portable computers. Beyond pure cable replacement, Bluetooth wireless technology also defines how devices interoperate and exchange information, effectively adding intelligence and new functionality to enhance the way people experience connectivity.

This short-range radio technology links devices within a 10-meter radius – and even connects devices that are not within line of sight. Using the Bluetooth wireless technology, users can link together two – often called ad-hoc networking – or multiple devices as a scatternet or personal area network (PAN). In addition, Bluetooth wireless technology acts as an invisible link, connecting devices to the Internet, mobile data and voice networks, driving demand for voice and data services as well as increasing network traffic.

Because the Bluetooth wireless technology is a global standard, it works everywhere. Applications that comply with the Bluetooth wireless specification ensure communication compatibility worldwide. Driven by the Bluetooth Special Interest Group (SIG), a group of industry-leading companies that spans a wide range of market segments – from software developers to IT and consumer electronics companies, car builders and mobile operators – the Bluetooth specification is a cross-industry solution that marries a vision of engineering innovation with an understanding of business and consumer expectations.

Thanks to its combination of interoperability, security, simplicity, power-efficiency, affordability and small size, Bluetooth wireless technology is revolutionizing the personal connectivity market.

Ubiquitous technology
Within five years Bluetooth wireless technology is set to be a ubiquitous component in the mobile consumer sector. According to Zelos Group, about 90 percent of PDAs, 80 percent of notebook PCs and 75 percent of mobile handsets will integrate Bluetooth wireless technology in 2006. Furthermore, the impact of Bluetooth wireless technology will reach beyond the traditional technology product market. For example, a significant growth area that is already taking off is the automotive industry, and by 2006 15 percent of new light vehicles in Europe are expected to incorporate a Bluetooth “hands-free” phone solution.

For each of these areas, data indicates that consumers are willing to pay a substantial premium for the benefits of wireless technology, just as consumers paid more to have cordless landline telephones and wireless PC keyboards and mice.

The Opportunity for Mobile Operators This potential for new Bluetooth wireless solutions and services is reflected by the projected market explosion of Bluetooth wireless technology over the coming years. According to technology research firm Allied Business Intelligence, worldwide shipments of Bluetooth chipsets will grow from 33.8 million in 2002 to 1.1 billion by 2007, with mobile phone handsets accounting for the majority of the early growth.

Such early adoption of Bluetooth wireless technology by mobile phone vendors, added to the fact that Bluetooth wireless technology clearly complements 2.5G and 3G mobile network infrastructures, offers network operators an exciting opportunity to create new and innovative services. Bluetooth wireless technology offers mobile network operators the opportunity to capitalize on this technology to generate additional revenues and attract more customers with new value-added services, as well as help minimize customer churn through increased customer satisfaction with these new services.

According to research firm The Zelos group, it is expected that by 2006, Bluetooth wireless technology will result in $2.6 billion and $3.2 billion of incremental revenue for mobile operators in the U.S. and Europe respectively, or about 2.5% of total carrier revenue in each region.

For mobile network operators, Bluetooth wireless technology provides an inexpensive mechanism to extend the use of both voice and mobile packet data services and subsequently generate incremental revenue from increased use of these. For example, a user with a Bluetooth enabled digital camera, GPRS handset will be able to take pictures and seamlessly and instantaneously send them to friends and family via the mobile Internet. The Bluetooth wireless technology is already a technology that has taken off and proven its worth, we can certainly expect further innovative hardware and software solutions that use Bluetooth technology to complement next-generation networks.

The core benefits to the operator are adoption of value-added services and increased traffic combined with enhanced customer satisfaction, reduced churn and strengthened content provider relationships. In particular, Bluetooth wireless technology provides customer satisfaction by providing the user with a high level of flexibility and ease of use by enabling a broad spectrum of value added services.

Innovative applications of Bluetooth technology are growing rapidly and presenting mobile network operators new areas of opportunity for increasing revenue. According to research by The Zelos group, an operator can potentially increase its revenue by two percent per user per annum – an attractive prospective given the minimal additional investment required, other than specifying Bluetooth wireless technology as a requirement for future devices.

The End-user Perspective
For the end-user, ease-of-use is one of the core benefits of Bluetooth wireless technology. Just as other technologies have become common convenience features in many households in the form of remote controls, cordless phones etc., Bluetooth wireless technology is set to bring further simplicity to everyday lives by removing the tangle of wires that connect electronic devices. Imagine being able to print mobile phone calendar data from anywhere in your house, or have game pads with no physical connection to your gaming center. Furthermore, the added intelligence of Bluetooth wireless technology that makes devices automatically connect further increases ease-of-use.

Beyond user convenience, Bluetooth wireless technology also offers consumers a whole new dimension of fun and interactive applications that were not previously possible. The coolness factor and “look what I’ve got” appeal of Bluetooth devices and applications are also worthy of note. And finally, a hidden advantage that should not be ignored is the personal safety benefits that Bluetooth wireless technology gives for many usages such as hands free solutions in car – for today’s health-conscious generation, this increased safety is a real plus.

In a business context, Bluetooth wireless technology adoption is being driven by the desire to enhance workforce productivity, efficiency and effectiveness. A report released in August 2002 by TDK Systems Europe and Cordless Consultants revealed that five percent of a typical management consultant’s time spent travelling between meetings is unproductive, resulting in downtime costs of £3,700 per executive per year.

With Bluetooth-enabled notebooks or PDAs, executives could stay connected to the office and email systems while on the move, using a GPRS handset without having to sit down and set up.

Data security Corporate data security concerns are also addressed by the Bluetooth specification which has three different security levels depending on the applications: non-secure, service-level security and link-level security. So for simple data exchange, such as electronic business card swapping, security can be fixed at a low level to maximize speed and convenience, whereas for more confidential applications Bluetooth wireless technology has built-in support for 128 bit encryption and challenge-response authentication routines.

End-user Scenarios
Already we are seeing a proliferation of new solutions and services based on Bluetooth wireless technology, such as “hands-free” devices for convenient in-car telephony, as well as Bluetooth enabled PDAs and notebooks for mobile Internet connection via mobile phones, and easy wireless synchronization. However, these living examples are simply the tip of the iceberg of potential Bluetooth applications.

Below are a few examples of how Bluetooth wireless solutions can help generate incremental revenue for mobile operators.

In the Short-term
  • MMS Messaging and Sharing
Mathilda is on an adventure holiday in Peru, and comes across some very exciting ancient artefacts. She wants to share the moment with her parents, and starts taking pictures with her digital camera, when she realizes that:
  1. the camera’s memory is full
  2. she has to send the pictures to the family album hosted by her parents’ UK-based operator
She transfers her pictures to her GPRS handset using Bluetooth wireless technology, without realizing that even in the remote village she is visiting there is GPRS coverage. She then seamlessly logs onto her parents’ family album site and transfers her pictures, before sending a quick update MMS to her parents.

  • Gaming
Martin downloads a multi-player Java-based game from an operator’s web site onto his game console. Next day, during a long history class at school, he connects to his friend Peter’s console via Bluetooth wireless technology and wins a battle. Later, he receives a teaser from another friend who has more game levels. Martin exceeds the community best score and is invited to call a gaming radio show for an interview (paid for by the game creators). He becomes an overnight hero and before long receives an SMS inviting him for drinks and a hot date.
  • Hands-free System – Bluetooth Car
A family on a driving holiday has a GPRS phone system and Bluetooth enabled in-car entertainment, including a DVD player and game console with LCD panels for the two backseat passengers. During the journey, the driver uses one of the Bluetooth headsets to confirm dinner reservations that evening, while the backseat passengers download games to occupy the next leg of the journey and send MMS snaps to their friends.

In the Longer-term
The mobile phone is quickly becoming a multi-faceted extension of people's lives. With Bluetooth wireless technology the mobile phone becomes the Swiss army knife of a new generation. Bluetooth wireless technology is virtually limitless in potential applications. It's conceivable that it will eventually open the garage door, turn on lights in the house, adjust the temperature in the office, turn the channel on the TV and pay for dinner at a restaurant in addition to the connectivity tools that it already allows. Bluetooth wireless technology will continue to evolve and reveal new possibilities at the speed of ideas making the Bluetooth enabled mobile phone more valuable than the keys to one's house - in fact, it could BE the keys to one's house. All of this inevitable will drive overall mobile phone revenue. Mobile operators have the unique opportunity to deliver this tool to their customers, today.

  • Bluetooth Hot Spot
James arrives late at the cinema and wants to see which films are available. Standing in the Bluezone (or Bluetooth hot spot area) in the lobby he sees on the overhead display that the latest film has one seat left. His phone’s WAP browser presents a booking page and he selects to pay for a seat over the GPRS network to the central server. He then receives a ticket number and rushes upstairs just in time for the usher to show him to his seat.
  • Bluetooth mobile phone as emergency medical device
Phillipa has suffered from heart problems for years. As a precaution she wears a Bluetooth enabled heart rate monitor full time. One frightening day, Phillipa suffers a heart attack and experiences cardiac arrest and is unable to reach her Bluetooth enable mobile phone to call for help. Fortunately, her Bluetooth enabled heart monitor senses her cardiac arrest and immediately sends a message via Bluetooth wireless technology that alerts her mobile phone to dial emergency medical services. Emergency medical services arrive in time to give Phillipa life saving treatment that a few minutes difference may not have allowed.

Bluetooth wireless technology is ready. Are you?
Just as the market for new digital services – such as personalized messaging services and customized billing – for landline telephones was supply driven, the popularization of Bluetooth will be dependent on the availability of compelling solutions to stimulate consumer and business interest and demand. Therefore, to fully capitalize on the huge potential of Bluetooth with mobile data and voice services, the role of the mobile network operator will be paramount.

Anders Edlund
Anders is responsible for improving Bluetooth SIG marketing activities, as well as making sure the Bluetooth wireless technology is accurately, consistently and increasingly communicated to members and end users.

Working last five years for Ericsson, Anders has been leading the activities of bringing the Bluetooth wireless technology to the market, with a key role in forming the Bluetooth Special Interest Group (SIG) and building the Bluetooth marketing message.

Anders has a technical background with an electrical engineering degree and working experience in the fields of satellite communication and computing science. He has since acquired many years of experience within marketing and product management.

For more information, please contact:
Anders Edlund: anders.edlund@bluetooth.com

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