The first services based on the WAP protocol¹ have been launched in a climate of conflict which, in the long term, could slow the market's development. With the number of players growing rapidly, the success of Mobile Internet will depend on several key elements: technological innovation, development of mobile networks, new business concepts, development of mobile-commerce, etc. Because of the many underlying concerns in an environment dominated by commercial negotiations between incumbents and new players, an easier transition towards third-generation mobile systems require short and medium term visibility.

As we move towards new services more fully integrating technologies based on the Internet protocol (IP), the "centre of gravity" of mobile networks will shift slowly but surely from voice to data. This shift implies several stages: technical (evolution of network, terminal and protocol architectures), economic (revolution on the value chain initially centred on voice) and legislative stages. For legislative aspects, discussions on the introduction of third-generation mobile systems in France (authorisation framework, frequency freeing timetable, etc.) are essential if Mobile Internet is to develop. Moreover, recent technological innovations require that we study the initial phases leading to this new market.

This document approaches Mobile Internet from the angle of WAP services on GSM and GPRS. It is based on informal meetings held by the Authority since the beginning of the year, as well as on initial observations presented at the Mobile Internet round table held on 27 July, i.e.:

• many architectures and access modes to services,
• a highly competitive and commercial climate,
• a constantly changing technological environment,
• business concepts to be developed,
• the need for an open model.

The arrival of new players on the value chain makes visibility all the more essential. First, we will present the upheavals in technical issues, services and business concepts as we move towards Mobile Internet. Then, we will review a few essential parameters affecting market development and propose a few simple principles which could promote market development and growth in a climate of fair and open competition.

The irreversible move of mobile networks towards an environment which will eventually be data centric requires that we change architectures, adding new access offers and new forms of services. Existing business models are brought into question, and new ones have to be created. New players (backbone operators, service providers, software developers, Web hosts, Internet service providers (ISPs)) are all operating on this new market which is shaking up the initial mobile telephony-based model.

Initially, the introduction of Mobile Internet services using WAP, will require not only new mobile terminals, but also new peripheral equipment used by GSM mobile and fixed telecommunication networks to communicate with IP networks and to manage the dialogue between the terminals and ad-hoc service platforms² (see appendix 1: WAP architectures on GSM). Moreover, the evolution of GSM mobile networks in coming months towards GPRS³ will require, among other things, the deployment of a new mobile core network using IP. This will require the replacement of the initial architecture models identified above (see appendix 2: WAP architectures on GPRS), another replacement of handheld devices, etc.

With mobile networks constantly changing, it seems inevitable that we will see a great many access modes to new service platforms.

With the migration of mobile networks to IP, new services are emerging, which might be grouped in portals offering packaged services. In the logic of fixed Internet, multiple service providers, most of whom are independent of access or backbone operators, satisfy the needs of various consumer and business markets. The variety and richness of competing services and portals seem to be necessary if Mobile Internet is to develop in the long term.

Long before third-generation mobile systems are marketed, various business concepts and service environments will be closely connected to the many deployed or future architectures. The purpose of this document is not to point the market in any particular direction but to facilitate negotiations between players. Mobile Internet is developing in a commercial environment guided by market laws which encourage the emergence of competing business models. These new concepts, which must still be created, include new value chains and can be considered to be factors for growth in the long term.

Thus, all players—mobile and fixed telecom operators, service providers, equipment manufacturers and distributors—must find their place in this new environment characterized by a vast array of access offers to service platforms, packaged services and business concepts.

New access modes, services and portals offering as well as business concepts introducing new payment mechanisms are developing in a common framework having a few significant parameters: the regulatory environment, recent decisions regarding competition rules, and GPRS.

Mobile Internet is developing in today's telecommunications market regulatory framework. In this transition phase, involving new players, several elements from the Post and Telecommunications Code and telecommunications or the telecommunications network operator licence should be highlighted: the regulatory framework of mobile data services, the publication of public telecommunications network interfaces and the draft licence of third-generation mobile system operators.

The liberalisation of the telecommunications sector depends on the interconnection of telecommunications networks. Thus, the Post and Telecommunications Code states that any public network operator must satisfy interconnection requests from other public network operators and from public telephone service providers, in an objective, transparent and non discriminatory way.

WAP services, on which the first Mobile Internet services are based, can be considered as telecommunications services under article L.34-2⁴ of the Post and Telecommunications Code. They are provided freely.

Finally, since France Telecom Mobiles and SFR have considerable market influence in the mobile telephony retail market, they must satisfy all reasonable requests for access⁵ to their network regardless of the service to be offered. According to article L.36-8 of the Post and Telecommunications Code, either party may call on the ART to arbitrate in the event of a dispute over the conclusion or execution of an access agreement.

Directive 1999/5/CE, the so-called "R and TTE" directive, applicable from 8 April 2000, modifies the regulatory framework of telecommunications terminal equipment⁶ to be put on the market. Public network interfaces, including GSM mobile networks, are covered by this directive and must therefore be published by the concerned operators. Internal interfaces to the operators' networks, interconnection interfaces and interfaces of independent networks are not affected.

Published specifications, which must be regularly updated, must be sufficiently detailed to allow others to design terminal equipment capable of using all the services provided by the interface. For more information, see decision no. 00-329 of the Authority⁶.

This new regulatory environment for terminating equipment shortens time to market, and encourages innovation and the creation of new services.

The call for tender was launched on 18 August when the French Government published methods and conditions for granting licences for the introduction of 3G mobile systems in metropolitan France. The main conditions of the third-generation mobile systems licencing⁷ regime mentioned in this document refer to the relationships between network operators and service providers.

In order to facilitate progressive migration towards third-generation mobile systems, these principles must guide commercial negotiations between the various players.

In Wappup.com vs. France Telecom, the rulings handed down by the trade court⁹ and the Paris Court of Appeal¹⁰ both emphasize consumer's freedom in choosing an ISP.

This means that consumers must be informed that a mobile phone is pre-programmed to a certain ISP. Moreover, the trade court states that "users must be able to replace the ISP's number with that of another ISP in a few simple steps".

In its 13 July 2000 ruling, the Paris Court of Appeal considers that the sale of locked mobile phones is an anti-competitive practice as defined by article 7 in the ruling of 1986.

These trailblazing court rulings clear up the context in which the first WAP GSM mobile phones will be marketed and used, while broadly influencing the conditions under which future generations of the mobile equipment will be sold.

On 20 July 2000, the European Commission authorised Vodafone, Vivendi and Canal+ (acting together as a single company) to create Vizzavi, a multi-access portal, provided these companies provided certain assurances regarding the choice of portal.

In order to prevent competition problems, the parties agreed to allow the consumer to change the default portal. Consumers will be able to access third-party portals and to change the default portal by themselves.

This decision aims to protect the current competitive model for Internet services, in which consumers choose their own content provider independent of their ISP. The same can be true for the first Mobile Internet portals and packaged services offered on GSM or GPRS.

Currently, with the GSM, the relatively slow speed of connection and, possibly, the use of special numbers¹¹ to access third-party service platforms, could hold back the use and development of Mobile Internet.

The GPRS introduction in mobile networks which will require changes to the GSM core network brings into question a number of elements in the current approach. Among these are the means of accessing service platforms, billing methods and content format.

• Access to service platforms

The GPRS environment does not use network access servers, which act as interfaces between the circuit and packet switching environments.¹² For mobile phones, the number of parameters controlling access to the service platform is reduced.¹³ A new routing method is used to provide access to the service platform, requiring new connection modes to the mobile network.

• Billing

In addition to guaranteeing faster access to services than the GSM environment, the GPRS offers new opportunities for invoicing and for service quality which could boost the use of Mobile Internet services. New business concepts should appear based on new forms of invoicing and cast doubt on the lifespan of certain models inheriting a duration-centred approach.

• Content format

With new radio capacity, we can also expect new content formats. Users will be able to access new service platforms directly.

Finally, as shown by the various architectures we can expect in the GSM and the GPRS environment, the mobile network will continue to be an unavoidable element and the first link in the value chain regardless of the business concept chosen.

These few elements could have a major impact on the development of Mobile Internet. We should also, through a few simple principles, re-establish their application within the framework of the emergence of new business concepts.

Before third-generation mobile systems are introduced, the developments and technological innovations expected in the mobile environment will shake up services, the number of players and business models. Market growth must, whenever possible, continue without interruption. This approach requires quality of service, security, interoperability between terminals, gateways and servers and may lead to the market rejecting certain ill-suited technical solutions. We do not currently support any particular model, but simply define the principles which will allow players to operate in an open and competitive framework, at various links on the value chain, and to encourage market development—all in preparation for the arrival of the GPRS then of third-generation mobile systems.

Thus, the general principles presented below, which have been taken from initial discussions on WAP services on GSM, aim to meet the need for visibility expressed by the players involved in the process. They are not binding and do not affect current legislation.

However, the adoption of these principles does not mean that the ART gives up the right to change them. It will do so, when necessary, either for the general interest, or in response to particular circumstances. In either case, it will clearly explain the reasons for its actions.

These principles touch on a few important points: mobile terminal equipment, service visibility, gateways, cost of service access and use and technological innovations. They are based on the cornerstone of the Internet competitive model: consumer free choice.

Unlike the initial approach combining the mobile phone and PC, the transition to Mobile Internet and Internet access is based on the mobile phone market using a new communication protocol (WAP) and a user-agent (browser), among other things. Thus, the growth of the market for WAP services will depend on the replacement of mobile phones via a wide variety of distribution circuits and offers.

Moreover, whenever new services are introduced, mobile consumers require a learning and introduction phase before they adopt new technologies. WAP Mobile Internet is no exception. Service parameters will need to be programmed. The way they are programmed can be complex and will depend on the type of mobile phone. So, in order to make it simpler for consumers to use these services during the learning phase, the mobile phones could be pre-programmed to a dedicated Internet access or service provider. The pre-programming and the pre-selected Internet access or service provider will depend on the way the mobile phones are distributed or on the distributor.

Still, several competing access methods will co-exist. At this stage, in the spirit of the Internet competitive model, consumer free choice is important in promoting development, competition and innovation. Therefore, users must be able to re-program their mobile phones which have been pre-programmed to an Internet access or service provider.

• Principle 1: Users must be clearly informed that mobile phones have been pre-programmed and that they can be re-programmed regardless of how they were marketed.
• Principle 2: Regardless of who programmed the mobile phones to a given Internet access or service provider, users must be able to re-program them.
• Principle 3: There must not be any locking mechanism preventing users from re-programming mobile phones to another Internet access or service provider.
• Principle 4: Users must be able to re-program mobile phones in a few simple steps.

Because of constraints inherent to mobile phones (small screen, limited memory, limited battery autonomy and power, short keypad), service visibility is of major concern in the first phase. Indeed, users will not connect to the Internet with their mobile phone in the same way as they would on a PC: e.g. they will spend much less time connected. High-speed service access must be preferred in order to shorten search times and unnecessary connection times, which would discourage the development and use of services. This could be obtained—by analogy with fixed Internet—by reducing the number of "clicks" to access services, free choice of the default home page or portal¹⁴, bookmarks, etc.

• Principle 5: By analogy with the competitive model of Internet services, high-speed access to services must be preferred: reducing the number of "clicks" to access services, free choice of the default home page or portal and bookmarks¹⁵.
• Principle 6: When navigation help functions (bookmarks, etc.) are available for a given mobile phone, these functions must be available in the same configuration regardless of how the handheld device is marketed.

Many architectures are possible for service offering. The WAP gateway will have a significant influence on the service offering provided to end users because of many functions and parameters associated with it: quality of service, security, user names, etc.

This element is used not only by network operators but also by third-party players. Access to this platform must be simplified through fair and open competition. In their sales agreements with service providers, gateway managers must ensure they do not create discrimination between service providers based on the technical and economic services offered.

• Principle 7: In their sales agreements with service providers, gateway managers must ensure they do not create discrimination between service providers.

Initially, before GPRS is introduced, a number of factors might discourage use: access times to WAP service platforms, reduced browser conditions and constraints inherent to mobile devices. Still, despite this unfavourable context, as shown by initial analyses which underline the sharp increase in new mobile service queries, Mobile Internet represents additional traffic. Moreover, alternative access methods, which could be based on surcharged numbers in the mobile environment, could significantly increase the cost of use. In the near future, while potentially reducing access times to service platforms, GPRS will encourage the creation of new pricing offers which could cut costs for the consumer.

Moreover, not only access, but services themselves could be invoiced in various forms (subscriptions, charge per connection, fixed monthly fees, etc.) based on several parameters: value of the content, source, customisation of the information, etc. Thus, it could generate new revenues for the service provider.

In all cases, if consumers are to increase their use of WAP services, the cost of accessing them will have to fall, through shorter access times and more access offers. Consumers must receive clear information on the multiplication of players, offers and access methods, Internet access and service provider invoicing mechanisms.

• Principle 8: If the market is to develop harmoniously, consumers must receive clear information from the players on the value chain. It must cover the cost of access to these new services and related services, regardless of the number of accesses used, and the cost of the services themselves.

The technologies associated with new Mobile Internet services are constantly changing. The provision of location-based services, for example, will depend on the functions accessible on the mobile network, developments to this network and the speed with which new features are deployed. The mobile network is, moreover, inevitable, regardless of the access method, business concept, services sought, etc.

Today, short messages are used primarily between mobile phones. A short message server integrated in the mobile network provides an interface between the mobile and fixed telecom environment. Because of the intrinsic functions of message transmission and reception or broadcasting to a group of users in a given area, value-added services based on short messages (banking services, information services, mobile-commerce, etc.) should also develop strongly. The servers sending short messages or queried by mobile users would not necessarily be located within the mobile network.

Finally, subscriber or mobile user location information, offering high added value, offers new prospects for new services: local services, custom information, positioning, etc. This area will be key to the development of future mobile services. Service providers will have to use this information in accordance with France's Computing and Freedom Law and with European directives currently being prepared.

• Principle 9: As concerns accessible functions and servers¹⁶, mobile operator as a network operator must offer equitable and non-discriminatory technical and economic services to all third-party service providers.
• Principle 10: Mobile operators must transfer mobile subscriber identification and location data to service providers in a non-discriminatory way. The specific rules for the use of subscriber data by a service provider must still be defined in accordance with the Computing and Freedom Law and the European directives currently being prepared.

In order to facilitate service interoperability and the choice of providers, open and non-proprietary solutions must be the norm.

Downloading mechanisms, which are the easiest for consumers to use, and which could be used to re-program mobile phones remotely¹⁷, are currently proprietary, slowing their development. The remote re-programming function is, among other things, a characteristic of the user-agent (browser) software integrated in the mobile phone.

Moreover, as on Internet, the integrity of the mobile phone could be compromised if viruses are downloaded. User must expressly ask for such messages, be informed when they are received and validate entry by selecting the profile (list of parameters) they wish to modify.

Still, when the remote re-programming function is available on a given handheld device, it must also be available if the device is sold as part of package offer. If eventually, such mechanisms are made available in open and non-proprietary and broadly deployed offers, they must be covered by a code of ethics or code of conduct which must still be defined. It is important that all players initiate discussions on these points, without delay.

Principle 11: When the remote re-programming function is available on a given mobile phone, it must also be available if the mobile phone is sold as part of package offer.

Principle 12: Until a code of conduct is established by players, consumers must initiate remote downloading of new access parameters from a service provider. The user must be informed when the parameters are received and validate entry by selecting the profile to be replaced.

Moreover, with regard to the Post and Telecommunications Code and their license obligations, telecommunications operators are required to respect obligations for neutrality, confidentiality, integrity and non-discrimination regarding the contents of the messages transmitted on their network. These obligations are particularly important for remote re-configuration messages.

Appendix 1

Appendix 2