Keywords

1 Motivation

Since 2017, websites have been accessed more often by mobile devices than by desktop PCs. In the third quarter of 2018, 52% of global website visits came from mobile devices [16]. Globally, the trend towards mobile online services offers great opportunities, but also a lot of challenge for service and technology providers from all market sectors.

In the future a secure Electronic Identity (eID) will be the user’s key to a wide variety of (mobile) online services. A non-discriminatory access and universal applicability is necessary for participation in the digital world. Many branches, companies, administration and government have recognized the relevance of eID.

Already today many mobile devices have been equipped with Embedded Secure Elements (eSEs) or Embedded Universal Integrated Circuit Cards (eUICCs). Therefore, many things are conceivable:

  • Mobile ticketing in public transport: eID apps for customer onboarding by storing high-priced tickets on a Secure Element (SE), online payment

  • Carsharing: registration, payment and storage of the electronic car key in the SE, onboarding via eID app

  • Air traveling: SE used for boarding pass, on-board-eID and payment

  • Hotelling: Mobile check-in, storing the room key on SE, access to different hotel facilities

But there is still no infrastructure for these kind of mobile services that meets the reliability requirements (substantial) given by the European Union (EU)’s Electronic Identification, Authentication and Trust Services (eIDAS) directive for electronic transactions in European markets.

Fig. 1.
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Stakeholders of the ecosystem offering eID secured mobile services

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In 2018 the research project OPTIMOS 2.0 started with the target to define an open, practical ecosystem using secure identities on mobile services. The project wants to demonstrate scalable eID applications utilized for secure identification and authentication in Internet of Things (IoT), mobility sector as well as mobile networks and services. The German Federal Ministry of Economic Affairs and Energy funds the project and made sure that all relevant stakeholders and associated partners from all parts of the ecosystem were present (see Fig. 1).

The number and roles of stakeholders of the SE-based ecosystem for mobile services is very complex – especially when addressing several markets. By using the first results of the OPTIMOS 2.0 project, this paper wants to introduce a sequence of steps leading to business an billing models for Multi-Sided Platforms (MSPs) for the involved stakeholders such as platform owners, eID service and technology providers, mobile network operators, mobility service providers, system providers and Original Equipment Manufacturers (OEMs).

Market-dominating international corporations (e.g. Facebook, Google, etc.) use their enormous customer base to establish their own ecosystems, to keep customers in them (lock-in-effect) and to collect far-reaching data about the user’s behavior. Service or technology providers may face barriers to access and unreasonable obligations towards the operators of such closed systems, hamper competition and undermine the implementation of national and European objectives on IT security and data protection. As an alternative, OPTIMOS 2.0 aims to create an infrastructure for mobile services that fully meets the criteria of an open ecosystem:

  • Accessible to service providers and technology suppliers on a non-discriminatory basis,

  • Customers should be able to choose between as many service providers as possible, and

  • Comprehensive support of the national and European requirements on IT security and data protection.

The task of the Technische Universität Dresden is to investigate and evaluate efficient business and billing models for all partners involved in an open ecosystem offering mobile services by using secure identities. One of the main questions is the pricing of the different eID mobile services and the revenue sharing among the various partners. The major goal is to increase the attractiveness of the platform for all user groups.

2 Project OPTIMOS 2.0

2.1 Main Innovations

The main innovations provided by OPTIMOS 2.0 will be the following:

  • Specification and development of an open trusted service management system for all types of secure elements.

    The main challenge with SE-based architectures for mobile services is to provide all interested service partners with a non-discriminatory place on a SE in the customer’s mobile device, to implement the API and to manage it. Therefore, OPTIMOS 2.0 specifies and integrates a Trusted Service Manager (TSM) that provides service providers from different markets with a defined technical and commercial interface for access to the secure platforms of mobile device manufacturers (eSE) and mobile network operators (eUICC) in the sense of one-stop shopping (see Fig. 2).

  • Specification and development of a TSM API for developers of mobile applications.

    Service providers should be able to use the SE-based ecosystem for mobile services without having to acquire a detailed knowledge neither of the architecture of mobile devices with SE nor the existing Application Programming Interface (API) for accessing SE.

  • Minimization of access barriers for small and medium enterprises and new entrants – research, specification and development of a Secure Wallet

    The Secure Wallet work package explores, specifies and demonstrates a concept that allows multiple service providers to share a storage space on the SE, ensuring that data from different applications can coexist in a single storage space. This offers commercially viable options for companies that have no expertise with SE or whose services are only used occasionally or by a limited number of customers for a limited time.

  • Definition of new open interfaces and direct cooperation in standardization

    The innovations resulting from the activities described above are to be introduced into the responsible international standardization committees such as the International Organization for Standardization (ISO), the Near Field Communication (NFC) Forum, the GSM Association and the Global Certification Forum (GCF) for Mobile Devices.

Fig. 2.
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General architecture of the SE-based ecosystem.

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2.2 Fields of Application and Use Cases

The basis for numerous eID mobile application fields e.g. in transport, mobility, government or in the hotel industry is a trustworthy identification with the help of an NFC-enabled mobile device and the eID function of the identity card.

Fig. 3.
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Data capturing by the eID secure app

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As shown in Fig. 3, the identification data is taken from the identity card using an online platform of the operator of the secure eID app. Based on the requirements of the OPTIMOS 2.0 deployment scenarios, additional data may be collected and managed.

Use Case Carsharing. The use case Carsharing demonstrates the flexibility and wide range of the possibilities planned in OPTIMOS 2.0:

  1. 1.

    Creation of an online account and login using the Secure eID App, i.e. customer onboarding, registration, and payment is executed/handled via the app

  2. 2.

    Storing the electronic vehicle key in the secure element

  3. 3.

    Using the vehicle key via the NFC or Bluetooth Low Energy (BLE) interface also when the mobile device is offline or in battery low mode

The demonstration will be based on the Secure Wallet. The carsharing provider can use the tools and the protected area of the Secure Wallet in the SE for his own app development. It is not necessary to rent a separate area on SE via the TSM.

Use Case Onboarding and Management of IoT-Devices. IoT devices can be securely assigned to a responsible person using mobile eID applications by introducing secure authentication for device management (see Fig. 4). One field of utilization will be the customer on-boarding for eUICC devices of the preferred mobile network operator. Manufacturers of SEs for IoT devices will work together on open standards to define a method that can be used across manufacturers. Similar fields of application can be identified:

Fig. 4.
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On-boarding by the eID app online or at the point of sale and authentication for the device maintenance

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  • In air traffic for passenger check-in (customer onboarding by eID app, SE used for boarding pass, on-board-eID and -payment)

  • For ticketing in local public transport (same security level as chip card, supporting all ticket products, interoperable with existing public transport readers, cards, etc.)

  • For check-in, registration and payment in hotels key management for hotel rooms, access to hotel facilities of any kind and checkout

The services can be used in any case (offline or in low-battery-status).

3 Concept for Creating Business Model for Multi-Sided Platforms

3.1 Multi-Sided Platforms

MSPs enable interactions between several market players. In traditional markets they are already exist, e.g. broadcasting, real-estate agents, flea markets or shopping malls. Typically, those platforms bring together suppliers and consumers, whereby a large number of suppliers attracts a large number of customers and vice versa. Additionally they can add values to both sides as well as attract third party actor for entering on such a market place (like advertisement in broadcast media or newspapers).

Characteristics of Electronic Platforms. Platforms in electronic markets have an even much wider focus than in traditional markets. With their digital algorithms, they are able to extend existing processes, emerge new value creation structures and generate additional value for all platform partners [7].

Subsuming the results of literature research [2, 3, 5, 14] successful digital MSPs

  • have a high scalability and wide reach, because computing capacity can be adapted quickly and flexible,

  • facilitate transaction between different market partners anytime and anywhere even without knowing each other before,

  • create the basis for complementary services,

  • accelerate processes on provider as well as on demand side,

  • make transactions cheaper and simplerFootnote 1.

3.2 Platform Types and Characteristics in the OPTIMOS 2.0 Project

Different electronic MSPs cooperate on different value-added stages within the OPTIMOS 2.0 ecosystem.

The Generic SE-TSM (platform type I) is the core of the ecosystem. It is operating a trusted service managing platform pooling and brokering SE memory space between all kind of SE owner and sector specific TSMs (see Fig. 5). It enables mobile eID services on a substantial secure level. Service providers (platform type III) with customer contact can integrate them for

Fig. 5.
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Identified platform types of the OPTIMOS 2.0 ecosystem

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  • providing one-step electronic services to their customers,

  • simplifying their operations or sale processes or

  • adding customer value to a wide variety of service applications.

Furthermore, there is a possibility for new players (platform type II) in the ecosystem bundling the demands of a specific market field (e.g. public transport, government, banking, etc.). All these platforms “have two vital goals: increase their service base and sustain their service offerers” [4, p. 2]. They all look for sustainable business models. Therefore, we are discussing the features and principles of MSPs as well as methods for developing business models taking into account design features and characteristics.

Regarding to OPTIMOS 2.0 we expect simpler and cheaper transactions for services requesting a substantial secure identification by using the eID instead the original identity card. Service providers can optimize their operating processes for registration, using already verified electronic data, and offer services anywhere and anytime.

Network Effects. Managing a MSP, we have to consider the fundamental features of network effects. We can distinguish between direct and indirect network effects. They can have positive but also negative influence on the platform participants.

Direct network effects are same-side network effects, if more users attract even more users on the same platform side. The value of the platform increases by more potential interactions between the usersFootnote 2. Indirect or cross side network effects occur, if one network side benefits from the size of the other side. Network effects lead to mutually reinforcing effects, which are an inherent feature of digital platforms and influence price setting.

In OPTIMOS 2.0 are no interactions between same-side partners. Therefore, only indirect network effects emerge and have to be managed.

Chicken-Egg-Problem. Even knowing which side creates additional value for the other side it is not easy to start a platform and to generate network effects. The question is who enters first the platform, who is essential to attract partners of the other platform side and to create a critical mass of participants too. This is called the chicken and egg problem. Only by exceeding the tipping point, the platform can grow by self-reinforcing effects in the direction of exponential network effects [6, p. 81].

Establishing a platform in an ecosystem like OPTIMOS 2.0 the question is fundamental which group of participants has to enter first in order to attract other participants.

To solve the chicken-egg-problem Parker et al. [12, pp. 89–99] determined eight different strategies applied by successful platforms:

  • Follow the rabbit: The functionality of the business model is proved initially on an one-sided market (Practical example: Amazon Marketplace).

  • Piggybacking: The new platform takes over the user base of another platform (Practical example: PayPal payment as a solution for eBay).

  • Seeding: The platform creates value in advance in order to convince users and to push the market. (Practical example: Innovations in the Google Play Store)

  • Marquee: The platform incentivizes and motivates important and well-known users (Practical example: Influencers on LinkedIn).

  • Single-side: The platform acquires first market group (Practical example: reservation system at OpenTable).

  • Producer evangelism: The supply side introduces its own customer base in to the platform (Practical example: auction process at Mercateo).

  • Big bang: The platform attracts attention to its launch with maximum marketing effort. (Practical example: Twitter party on SXSW festival).

  • Micromarket: The platform initially establishes itself in an already existing community. (Practical example: Facebook at the Harvard University).

In OPTIMOS 2.0, it is important to get partners early on board who are sufficient to reach the critical mass. Therefore, it is most essential to commit partners offering the data spaces on SEs. This is necessary for attracting the service providers with their large number of potential end users benefiting from one-step-services supported by a secure mobile eID. Since the offered eID-service still is new on the market and end users are not used to such kind of identification a fast market penetration can build user acceptance necessary to reach the critical mass.

The piggybacking strategy is the most promising one. Already established provider platforms will implement mobile eID-services to add value to their core business. It is essential to take on board suitable and promising business fields and to run first demonstrators to show the value of the new implemented service in the early project phase.

The seeding strategy can also be important. The new implemented security architecture and features for secure digital identification can attract end users to ask for such services even in other business fields.

3.3 Developing Business Model

Business models describe how businesses are running. They consider combinations of production factors, competitive strategies together with functions and rules of all actors.

The Integrated Business Model describes already established businesses and gives an idea how a specific business runs and which success factors are essential. It focuses on different sub-models like market model with competitors and the demand side, procurement model, performance model, model of service offer, distribution model and capital model focusing on financing and revenue [17].

Starting a new MSP like OPTIMOS 2.0 we are facing the task to develop a successful business design attracting all partners in the ecosystem as well as investors. Therefore, we approach the process of business modeling as “the managerial equivalent of the scientific method – you start with a hypothesis, which you then test in action and revise when necessary” [9]. It will be an ongoing process focusing to the following core questions [11, 13]:

  • Who are the customers and who are potential partners at the case of MSPs?

  • What is the specific value for customers and partners? What is the Unique Selling Proposition (USP)?

  • What is the economic logic delivering value to customers?

  • How can we earn money? Who is paying for what?

  • What are the appropriate costs?

We designed a schedule to answer these questions illustrated in Fig. 6. The design process starts by using the Platform Business Model CanvasFootnote 3 to detect the core elements of a business model: value propositions, value transactions and key platform components for all partners. Based on these results the Business Model CanvasFootnote 4 helps to become deeper insights to all related business fields like customer segments, channels of distribution and interaction, customer relationship, cost structure alongside with key resources, partners and activities. Afterwards, we can formulate complete business models for a participants. The Morphological Matrix helps to describe, structure and analyse the developed models. Finally, we can design new, so far not noticed combinations of business models and present all partners their realistic opportunities.

Fig. 6.
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Schedule for creating Business Models for different platform types

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Platform Business Model Canvas. The main idea behind this model is to take the perspective of each platform participant. This includes the supplier or producer side, the consumer or demand side as well as the platform itself, which enables the core service between two or more market sides by providing their infrastructure. In addition, third parties can offer services via the platform to both suppliers and customers. The three main perspectives – value proposition or USP, transaction activities including billing approaches and key components – are investigated and developed in a design process. The process is carried out iteratively.

In the following we will present some first results focusing on Value Transaction for all partners of the Generic SE-TSM platform. Through its services, the platform owner facilitates interactions between the SE owners (supplier side) and Sector Specific TSMs (customer side).

Value Transactions. On the first step, we have to think about the transactions the participants of OPTIMOS 2.0 want to carry out, esp. what kind of transactions take place and who will pay for which transaction. Here we start with our first drafts:

  • SE owner transactions:

    • Allocation of memory space to Generic TSM platform

    • Generating revenue for providing memory space

  • Generic SE-TSM platform transactions:

    • Purchasing memory space from SE owner

    • Providing identification keys for memory space of SE to sector specific TSM

    • Providing applet or API to eID app provider

    • Managing end user account to ensure singly eID per person

    • Paying SE owner

    • Generating revenue by reselling

  • Sector Specific TSM platform transactions:

    • Purchasing eID keys from Generic SE-TSM

    • Providing identification keys for memory space of SE to Service Provider

    • Bundling demands of different Service Providers

    • Paying Generic SE-TSM

    • Generating revenue by reselling

In the further process of the project we will underpin this approach by business modeling workshops to find more details and even more reliable answers.

Billing Options for Platforms. The Billing Model focuses on monetizing the added value created by platforms. This is one of the most important questions for successful businesses. Possible opportunities are “access to value creation, access to the market, access to tool, and curations” [12]. By establishing the Generic SE-TSM – based on the development of the infrastructure as well as on their open standards for secure mobile eID services – OPTIMOS 2.0 will grant access to tools and also to the market. Thereby, this creates a single point of sale, where SE owners can provide their service and Sector Specific TSMs can purchase it.

Table 1. Pricing components for core platform business
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Generally, there are several ways for pricing services. Price setting components can be distinguished between transaction-based or transaction-independent elements (see Table 1) as well as charging one-time or periodically. Every platform has to decide, how to use these components – in a simple or combined form. Also they have to consider, how price setting could influence network effects.

Nevertheless, depending on the business model platforms have the possibility to create value out of data collected on their platform by generating indirect revenues out of aggregated information, trend analysis, selling contacts, etc. They also can integrate other actors, e.g. advertising partner and suitable additional services, to improve their own services or by pricing the access to data (see Table 2).

Table 2. Pricing components for additional services on the platform by integration third party partners
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The pricing mechanism can also be distinguished in static and dynamic pricing as shown in Table 3.

Table 3. Pricing mechanisms [10, p. 33]
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Looking into the OPTIMOS 2.0 ecosystem the integration of third party partners seems only reasonable for service provider platforms acting in Business to Consumer (B2C) markets and not for the TSMs, since they operate in Business to Business (B2B) markets.

With respect to OPTIMOS 2.0 we consider four billing models for the different transactions between the integrated partners (see also Fig. 5).

  • Billing Model 1 (B2B) between the Generic SE-TSM and the SE owner (e.g. Mobile Network Operator (MNO)): The Generic SE-TSM pays the owner of the eSE or eUICC for provisioning certain memory space on the SE. The most reasonable way is paying per transaction only one-time for a certain period or periodically over an agreed period of validity.

  • Billing Model 2 (B2B) between Generic SE-TSM and Sector Specific TSM (e.g. Mobility TSM): The Generic SE-TSM could use all pricing components of Table 1 to generate revenues for his services as a broker providing access to secure elements in smartphones from a single source. It seems to be most useful to set prices for transactions. Depending on the market situation and the acceptance of the SE-TSM integrating transaction-independent pricing elements are possible.

  • Billing Model 3 (B2B) between Sector Specific TSM (e.g. mobility TSM) and Service Provider (e.g. car sharing provider): All options according to Table 1 are possible. Service providers pay for the trusted services provided by the Sector Specific TSM. He decides which pricing components has to be included in his pricing model.

  • Billing Model 4 (B2C) between end customer (e.g. carsharing user) and service provider (e.g. carsharing provider): All options shown in Tables 1 and 2 are possible to use and to combine. Service Providers have to decide how to attract their customers and third party partners. It is possible that one group subsidizes the others. The service provider has to create acceptance for the billing model, depending on the core services, the customers’ willingness to pay, the possibility and necessity for fast roll out.

In the next step we are clarifying which monetization strategies and models should be considered in order to architect the platform “in a manner that affords its control over possible sources of monetization” [12]. Considering network effects we have to decide who should be charged.

Business Model Canvas. Based on the result of the Platform Business Model Canvas for all participant groups we can get comprehensive insights in the business modeling process by deploying the Business Model Canvas (see Fig. 6). It is a tool for describing, analyzing and designing business models and gives a good structure especially for understanding and evaluation the platform owner’s business. The model defines “nine basic building blocks that show the logic of how a company intends to make money” covering “the four main areas of a business: customers, offer, infrastructure, and financial viability” [10, p. 15] as follows:

  • Customer Segments: This block focusses on the question for which customer groups a platform will create value by facilitating interaction between two sides. They will realize transactions via the platform in case it is more convenient and cheaper than direct transactions.

  • Value Proposition: The OPTIMOS 2.0 ecosystem enables mobile services using identification on an eIDAS substantial level to ensure high confidence.

  • Channels to reach the different customer segments: Via service provider applications end users request eID services for identification.

  • Customer Relation: Customer Relation bases on an automated process in form of customer self-service mobile apps with access to customized features and characteristics.

  • Revenue streams: Based on the different options for setting billing models or pricing schemes (see billing models) the more detailed investigation focuses on the willingness to pay based on competition situation.

  • Key Ressources: For running a business essential physical, intellectual, human and financial resources have to be identified.

  • Key Activity: In case of OPTIMOS 2.0 all main processes to enable the automated services belong to the key activities.

  • Key Partners: Since OPTIMOS 2.0 will create an ecosystem, all partners have to be identified, needed to run the business, to optimize the business, to reduce risks, or to acquire financial resources.

  • Cost Structure: General we can distinguish between the two extremes of cost structure: cost driven or value driven business model. Generally, we often find approaches between those two extremes. For getting an understanding and later a more realistic calculation we have to identify fix and variable costs and determine how they will be effected by economies of scale or economies of scope.

Based on that structure possible business models for the OPTIMOS 2.0 partners will be described and analyzed. In case the result does not show a sustainable business prospect we will have to adjust the business models and start a new modelling process.

Morphological Matrix. A Morphological Matrix allows a qualitative description of pattern or features of a specific business model. It is a tool to examine different combinations and variations of electronic businesses [1, p. 5]. It can be used for business model creation “so that proven ideas in one business could be transplanted in another” [8, p. 4].

For OPTIMOS 2.0 we want to deploy this tool for evaluation the business models designed by the modeling process with the canvas methods. Based on the work of Clement et al. [1, p. 6] and Lee et al. [8, p. 4] we have developed a first draft for a Morphological Matrix (see Fig. 7) taking into account various main and sub design fields and their possible characteristics useful to describe potential business models for OPTIMOS 2.0 partners. By implementing the demonstrator system further research and project work will lead to more sophisticated perceptions to complete this approach.

Fig. 7.
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First draft of the Morphological Matrix for OPTIMOS 2.0 project

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4 Outlook

Based on the introduced methodology we will carry out various workshops for defining and validating business models for all OPTIMOS 2.0 partners. Furthermore, we are identifying legal and economical conditions for specific use cases.