work package 4 deliverable 4.2 business models · the delivery of digital homecare. we have also...

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Work Package 4

Deliverable 4.2

Business models

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Document Information

Grant Agreement Nº 30-CE-0714596/00-50 Acronym CfH

Full Title Connected for Health

Project URL http://epliitto.fi/connected_for_health_en

EU Project Officer Name Adina Ratoi

Deliverable No 4.2 Title Business models

Work package No 4 Title Research and Analysis

Date of delivery Contractual 01.05.2016 Actual 13.05.2016

Status Version 3.0 Final

Nature Prototype Report X Dissemination Other

Dissemination level Consortium+EU

Public X

Target Group (If Public) Society (in general)

Specialised research communities X Health care enterprises

Health care professionals Citizens and Public Authorities

Responsible

Author

Name Marco Forzati Partner Acreo

Email [email protected]

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Version Log

Issue Date Version Author (Name) Partner

1.0 TOC and First draft Acreo

2.0 Stable draft up for input from partners Acreo, Eptek

3.0 Final version submitted (figures to be updated)

Acreo,

Eptek,

RCSO,

Alleato

Executive Summary

This project with its pilots in Denmark, Finland and Sweden, run with a limited piloting lifetime, has provided valuable insight and thoughts about, amongst others, business models.

This task has analysed the business models currently in place for the delivery of digital homecare. We have also proposed alternative models and identified an evolution of the digital homecare model into the existing business model for open FTTH networks, that could in the near future become relevant and prove more efficient.

Keywords Digital homecare, e-health, business models, FTTH, open access, open networks, digital social care

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Contents

1 Introduction ............................................................................................................................. 5

1.1 Why business models ...................................................................................................... 5

1.2 Concepts and terminology ................................................................................................ 5

1.3 Socio-economic cost and benefit ..................................................................................... 6

1.4 Business models for FTTH open networks ...................................................................... 6

2 Stakeholders in e-health and digital homecare ....................................................................... 8

2.1 Home-care users .............................................................................................................. 8

2.2 Informal carers (relatives etc.) .......................................................................................... 8

2.3 Home-care professionals ................................................................................................. 8

2.4 Equipment vendors........................................................................................................... 8

2.5 Digital homecare providers (DHP) .................................................................................... 8

2.6 Connectivity (broadband) providers: NP, SP and telecom operators .............................. 8

2.7 Open platform providers (TSO) ........................................................................................ 8

2.8 Homecare authorities (Municipalities, regions, hospital districts, etc.) ............................. 9

2.9 Home care providers ........................................................................................................ 9

2.10 Society at large ................................................................................................................. 9

3 Business models for delivery of digital home care services ................................................... 9

3.1 Model 0: “Vertical silos” model ......................................................................................... 9

3.2 Model 1: “Full-procurement” model, with open platform ................................................. 11

3.3 Model 2: “Platform market” model .................................................................................. 12

3.4 Open FTTH networks and digital home care: towards a new model? ........................... 14

3.5 Business model sustainability ........................................................................................ 15

4 Conclusion ............................................................................................................................ 17

Appendix: List of abbreviations used .......................................................................................... 19

Bibliography ................................................................................................................................. 20

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1 Introduction

This deliverable analyses the current business model options for the delivery of homecare, and maps out a possible evolution towards a closer integration with the established open FTTH business model.

1.1 Why business models

The business model defines how the different stakeholders interact with each other, and how value and money flows between them. For any innovation to establish itself in society, it has to be supported by a business model in which all stakeholders have something to win. In other words all stakeholders should see a positive net benefit (defined as benefits minus costs).

Innovation in health and social care is no different. In fact, because there are very diverse stakeholders involved, with very different motivations and needs, defining a successful business model may be a challenging task.

1.2 Concepts and terminology

The terms eHealth and eWelfare are sometimes used to indicate the set of digital services and systems to provide healthcare and social care at the patient’s/customer’s home. More specifically [1]:

eHealth: An overarching term for the range of tools and services based on information and communication technologies (ICT) used to assist and enhance the prevention, diagnosis, treatment, monitoring and management of health, care and lifestyle.

eWelfare: Use of information and communication technology as well as electronic information management in social care.

The Connected for Health project has adopted this terminology in e.g. D4.4. In this deliverable, we introduce a term “digital homecare”, referring to both eHealth and eWelfare, stemming by a term “homecare”, which includes both healthcare (connected to hospitals and clinics and often the prerogative of national or regional authorities) and social care (connected to elderly homes and social services and often the prerogative of local authorities, e.g. municipalities). Homecare includes help with bodily and domestic tasks in the home of the recipient. This may include assistance with tasks such as cleaning, shopping, getting dressed, bathing, preparing and eating meals, psychological support and help to participate in social activities [1]. Administratively it may also contain health care, namely home nursing.

By digital homecare, we mean the set of services and products which, relying on technology and broadband access networks, complements and supports the delivery of homecare.

Stakeholders are all the actors (private persons and organisations, public and private) who have a stake, or an interest, of any sort in the service in question, in our case the digital homecare.

By net benefit we mean the difference benefits and costs.

By business model, we mean the way the different stakeholders interact on homecare, both in terms of financial transactions, but also in terms of non-financial values such as improved health and perceived gains in quality of life/work.

The monetary flows between the different stakeholders is called the value chain.

By socio-economic cost and benefit analysis we mean a quantification of all costs and benefits – financial and not – accruing all the stakeholders combined. The optimisation of the business model needs not only to maximise the total net benefit, but also to ensure that the net benefit for all stakeholders individually is positive.

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1.3 Socio-economic cost and benefit

There are studies which have proven that the introduction of FTTH networks and digital services delivers significant net socio-economic benefit [3]–[9], and the Connected for Health project has quantified some of them, using a simplified MAST analysis, as is reported in [10]–[14]. This means that society at large can benefit from the introduction of digital services. In order for this to materialise, a proper business model needs to be designed which distributes this net benefit to all stakeholders.

1.4 Business models for FTTH open networks

Because the business models considered here are thought to be employed mainly in the introduction of open FTTH networks, we briefly review the business model of such networks here (which is explained in better detail in [15] and references therein).

The traditional telecom model is based on “vertical integration”, in which one entity delivers the service, operates the network, and owns the network infrastructure. In the open network model, instead, services are provided on a fair and non-discriminatory basis to the network users, is enabled by conceptually separating the roles of the service provider (SP), and the network provider (NP). Due to the different technical and economic nature of the different parts of the network, different roles and actors can be identified. A fibre access network broadly consists of a passive infrastructure (implying right-of-way acquisition, trenching, cable duct laying, local-office premises), and active equipment (transponders, routers and switches, control and management servers). The passive infrastructure is typically characterised by high CAPEX

1, low

OPEX, low economies of scale, and is highly local, hard to duplicate and inherently subject to regulation. The active equipment is characterised by high OPEX, economies of scale, and is subject to limited regulation. These factors justify a further role separation between a physical infrastructure provider (PIP), which owns and maintains the passive infrastructure (typically real estate companies, municipalities, utilities); and the network provider, which operates (and typically owns) the active equipment (incumbent operators, new independent operators, broadband companies).

Depending on which roles different market actors take up, the network will be open at different levels and different business models will arise, as illustrated in Figure 2. A single actor may act as PIP and NP, in which case the network is open at the service level (active-layer open model, ALOM). If the roles of NP and PIP are separate, then openness at infrastructure level is achieved (passive-layer open model, PLOM). Generally, one PIP operates the infrastructure, while one or several NP can be allowed to operate the active infrastructure generally over a fixed period of time, at the end of which the contract may or may not be renewed, in which case a new NP is designated and active equipment may need to be replaced (three-layer open model, 3LOM). Most often, economies of scale make it impractical to have a truly multi-NP network (although larger networks may assign the operation of different geographical parts of the network to different NP). Independently of the specific model, however, the NP should offer different service providers access to the network (and therefore the users) on non-discriminatory conditions. The end users typically purchase services directly from the service providers. The NP receives revenue from the SP and pays a connection fee to the PIP for network access. This value chain is illustrated in Figure 1.

1 CAPEX means capital expenditure, i.e. the cost of purchasing and installing things; OPEX

means operational expenditure, i.e. the cost of operating things.

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Figure 1 – The open network model and typical open access value chain

Figure 2 – Access network business models.

If the NP also acts as SP the network cannot be described as being really open according to the definitions here, but it is still “more” open than the conventional vertically integrated model in which most incumbents worldwide follow today. In case of local loop unbundling (LLU), a vertically integrated operator is still present, but there can be multiple actors working as combined NP and SP. In case of bit stream access the vertically integrated operator assumes the role of NP, but there can be multiple SPs offering their services in the networks.

Observe that some of the roles in Figure 2 can be subdivided into more roles and that the limit between the different roles is not always as clear as in the figure. However, the figure should give a pretty good idea of which kinds of business models (in particular with respect to open

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access) are used in Sweden today. The definition of “open” may vary a lot depending on the type of actor and which level in the network is regarded. On the other hand, one could argue that if there is only one entity owning the fibre infrastructure the network is not open – despite the fact that all NPs get access to the fibre on equal terms.

2 Stakeholders in e-health and digital homecare

In this section we list the relevant stakeholders and describe their needs, drivers and motivations.

2.1 Home-care users

Home-care users (patients/clients) are the immediate beneficiaries of home health care and social care (collectively referred to as homecare). These are the people in need, receiving care at home. Most of all they value timely and good quality care in addition to convenience, personal-empowerment, privacy security and safety – in short good value for money.

2.2 Informal carers (relatives etc.)

The home-care user’s relatives are almost equally immediate beneficiaries of the services. They care for their close ones, so they have a direct driver to satisfying their needs. On top of that, they value good quality and worthwhile service as well as convenience and efficient use of their time. They also appreciate if the services give some relief from the care work they perform.

2.3 Home-care professionals

Home-care givers are the stakeholders who will use the digital services the most extensively of all, and they are in constant contact with the patients and customers, so they are the most obvious stakeholder to collect feedback on the quality of the services.

Home care is for them their source of income as well as the activity they spend most time on. Hence reassurance that their job position is not threatened is pivotal. Convenience and quality of life on the work place is an important driver, as well as the recognition of the value of their work. The new technologies should also make their work easier, or at least is should not make it more heavy or complicated.

2.4 Equipment vendors

These are technology companies building hardware and IT systems. They are typically the suppliers of consumer-premise equipment (CPE) such as broadband routers/modems, home gateways (HG), sensors, etc. and could be a channel for distributing the platform software as the software will drive the hardware business.

2.5 Digital homecare providers (DHP)

Digital Home Care services and Telemedicine solutions demands also a secure platform and a “hub” for all connected services.

2.6 Connectivity (broadband) providers: NP, SP and telecom operators

In order to deliver the digital homecare services, we need one or more broadband connections. The actors providing such connections may be service providers (SP) or network providers (NP) in an open-network model (see below), or vertical telecom operators. There is a constant need for more services requiring a platform and a secure environment adding value added services and new revenue streams for these kinds of stakeholders.

2.7 Open platform providers (TSO)

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This role becomes relevant in the models relying on a single platform and communication channel for the delivery of digital homecare services. The open platform providers run and manages the platform maintains the open standard interfaces. The open platform provider is sometimes referred to as Trusted Service Operator (TSO.

2.8 Homecare authorities (Municipalities, regions, hospital districts, etc.)

These are the public authorities in charge of delivering social care and health care. There is a strong demand for offering services how to offer possibilities to live longer in the individual homes in order to save costs and also to care or nurse the individuals at home instead of occupying elderly shelters, accommodations and hospitals.

2.9 Home care providers

These are the companies (or social/healthcare administration units) and their employees, delivering the homecare services. Home Care Providers demands new solutions in order to deliver safe and quality, but also in combination with decreasing costs

2.10 Society at large

Society has lots at stake albeit only indirectly: improved quality of life and social inclusion among the elderly population may lead to an increased participation of this section of the population into social and possible even economic life; the better use of taxpayers’ money may free up resources for better social services for everybody; the increased demand for digital services may lead to increased digital competence and new business opportunities in other areas of ICT; and the pressure released from informal carers such as relatives may increase their productivity at work and their activity in society.

3 Business models for delivery of digital home care services

3.1 Model 0: “Vertical silos” model

We call this model 0, the traditional model, as our starting point. This is the traditional model, which was currently employed in pilots 2, 3 and 4, in which the digital homecare services were delivered directly over an open FTTH network in some cases (pilots 2 and 3) and over traditionally vertically integrated fixed (pilot 4) and mobile networks (pilots 2, 3 and 4). In this model, the homecare authority (municipality, regional council or other local authority) procures each service as an independent package. The digital homecare service provider will then have to ensure that there is a working digital communication channel (a broadband connection). Each service will be a vertical silo and if N services are offered to the end user, then N communication channels will be needed. This might be mobile connections (each with their subscription and SIM card), or fixed connections (typically bundled together in a home router, e.g. wifi, as best-effort

2 over-the-top

3 communication on the fixed Internet connection e.g. DSL or FTTH).

Typically money flows from the homecare authority towards the digital homecare service provider. The communication operators receive revenue from the homecare authority, from the DHP or the end user, depending on the service type, the commercial offers available and the type of end-user, as shown in Figure 3.

This model is conceptually very simple, but it does not scale when the number of services increases because it leads to increasing number of connection subscriptions and related hardware units. This is of course no longer true if a straight over-the-top (OTT) solution is

2 The public Internet functions according to the so-called best-effort principle: each information

packet is delivered aiming at the best possible performance but with no performance guarantee. 3 Information exchanges taking place over the public internet is referred to as “over-the-top”

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followed, in which that all the services are simply delivered over a standard Internet subscription, meaning over the public Internet. However, this might not desirable in, due to issues of security and quality of service

4. An alternative solution would be to put in place an

open platform over which all the Digital Homecare services can be delivered, using one communication channel (possibly a robust broadband connection like FTTH). Figure 4 graphically compares the traditional vertical-silos approach, with a platform-based solution.

Figure 3 – The “vertical silos” model: the homecare authority procures services from the DHPs; typically, the DHPs will take care that connectivity is available from a connectivity provider; in some cases it may be the end user or the homecare authority that take care of the connectiviy (hence the dashed lines from these stakeholders to the connectivity providers).

4 It is true that, because the system vendors and DHP’s build solution that are supposed to work

also in not fully-closed environments, the the DHP’s solutions’ data security are already expected to be top notch. At the same time, if a high-quality FTTH network is in place with very high performance in terms of bandwidth and latency, the lack of quality of service management in the public internet may never become a real issue. In such a sensitive area as digital homecare, however, homecare authorities may require, inherent security and reliability.

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Figure 4 – The open platform model for digital homecare makes it possible to use network resources in a more efficient way and puts in place an open market for the procurement and delivery of digital homecare services

3.2 Model 1: “Full-procurement” model, with open platform

A way to enable service delivery over an open platform is to follow a full-procurement procedure, whereby the homecare authority (municipality, regional council, or other local authority) procures all the components of the digital service package: meaning the provider of the open platform (also known as Trusted Service Operator), as well as the providers of the services themselves. This is the model that was put in place in pilot 1.

The procurement for the open platform has to be designed such that the platform delivered has open standardised interfaces, to enable the service procurement from the largest possible number of digital homecare providers (DHP). Moreover, this model allows DHPs to offer additional services directly to the end-users (home-care users), over the same platform, using the same standard interfaces and possibly standard sensors and other equipment at the end-user’s premises.

The other actor that is needed is the network provider, which ensures that the necessary network connection (FTTH/FTTB or other) is present and activated. In the full-procurement model, it is again the homecare authority that is responsible for this activation.

Typically money flows from the homecare authority towards the open platform provider, the digital homecare providers, and the network provider, as shown in Figure 5. In case the end-user already has an active broadband connection, the latter transaction may not be needed.

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Figure 5 – The “full procurement business model”: the homecare authority directly procures all the components of the model, including the open platform.

3.3 Model 2: “Platform market” model

In this model, which is a parallel of the three-layer open model for FTTH networks [15] the homecare authority (municipality, regional council or other local authority) only sees to that there is an open-platform system in place. The homecare authority only needs to procure all the services it needs from an open DHP market. One (or several) open platform provider (OPP/TSO) enters the market and offers a platform for DHPs to be able to participate to the procurement tender by the public authority, provided they have open standardised interfaces. From the homecare provider standpoint, this model is equivalent to the silos model described in Section 3.1.

In principle, this could be a self-regulating mechanism: competing platform providers will offer access to the end users, and the digital homecare providers will be able to choose the platform that offers the best technical and business conditions. In practice, however, this may lead to equipment duplication at the end-user premises and potentially in the management system that the home-care providers use. Therefore, a more likely implementation of the model is again to have one open platform provider to be awarded through a public procurement. The platform provider will come with an offer of diverse digital homecare providers on the platform (to be selected through open market agreements). Because the number and quality of digital homecare providers will determine the attractiveness of the platform, the OPP/TSO will have an incentive in offering the best technical and business conditions to its customers, i.e. the SP. The homecare authority then becomes a customer for the OPP/TSO. Hence money flows from the homecare authority towards the digital homecare providers, and from those to the OPP/TSO, as shown in Figure 7. Money may flow then from the homecare authority to the network provider (if end-user already has an active broadband connection, this may not be needed), and from the OPP/TSO to the homecare authority. So we have a potentially cyclic value chain DHPOPP/TSOhomecare authorityConnectivity Provider.

As in the full-procurement model, the homecare authority needs to assign an OPP/TSO to deliver an open platform with standard interfaces, but this time with two differences:

The OPP/TSO will come with a number of DHPs available over its platform

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The homecare authority needs not to purchase the platform as a service; in fact, one may even envisage a situation in which it is the OPP/STO that pays a fee to the homecare authority for the “privilege” to do business in the area.

Like for the full-procurement model, also here digital homecare providers may offer additional services directly to the end-users (home-care users), over the same platform, using standard interfaces and possibly standard sensors and at the end-user’s premises.

And again, the network provider (NP) needs to be involved to ensure that the necessary network connection (FTTH/FTTB or other) is present and activated, and again the homecare authority is responsible for the broadband activation, so there may be a money transaction from the homecare authority to the NP.

Figure 6 – “Platform market” model: here one (or several) open platform provider (OPP/TSO) enters the market and offers a platform for digital homecare providers (DHP) to be able to participate to the procurement tender by the public authority.

It is useful to put the “platform market” model within the context of open FTTH networks. In an open FTTH network, services are provided on a fair and non-discriminatory basis to the network users, by conceptually separating the roles of the service provider (SP), and the network provider (NP). As was explained in Section 1.4, depending on which flavour of open model used, the NP may operate its own passive infrastructure, or rely on a physical infrastructure provider (PIP), which owns and maintains the passive infrastructure (typically real estate companies, municipalities, utilities). Examples of SPs could be Internet Service Providers (ISP), IP-TV providers, cloud service providers, telephony companies, etc. (often an SP would offer several or all of these services).

In such a context, the OPP/TSO could be yet another service offered over the NP network infrastructure. Figure 7 shows the OPP/TSO within this context. Given the close technical interaction needed between NP and OPP/TSO, the NP may in this case take the role of OPP/TSO either directly or through a third-party actor, as we will discuss in 3.4

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Figure 7 – “Platform market” model in the context of the open FTTH business model.

3.4 Open FTTH networks and digital home care: t owards a new model?

The two models presented above rely on an independent OPP/TSO, which is an additional business introducing a degree of complexity in the business model. In the “full-procurement model” (model 1) the complexity is taken care of by the homecare authority. In the “platform-market model” (model 2) the complexity translates into an open question of how the selection of the OPP/TSO should be done and by whom (the homecare authority, the specific SPs, “the market”?) or whether we should accept to have multiple OPP/TSO.

The increased complexity is the cost to pay to implement an open platform on top of an existing business model for broadband delivery (which could in principle work according to either an open-access or a vertical integration model), without the need to interfere with that business model. As the market grows and matures, however, this non-interference precondition may become less critical, and we could envisage a model in which the OPP/TSO role can indeed be taken up directly by the connectivity provider, which can then offer a fourth service (a “homecare” or “welfare” service) alongside the commercial triple-play services.

In the context of an open-access FTTH network, open-platform homecare delivery can be implemented in one broadband gateway with four dedicated ports: three for traditional triple play services (Internet, TV, telephony), plus one port for digital home care services. This port could be a secured wi-fi network with Quality-of-Service (QoS) management. The gateway will have to take care of QoS both over the broadband channel, and also in the in-home network, especially when it comes to wi-fi.

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Figure 8 – “Platform market” model in which the OPP/TSO functionality is integrated in the connectivity provider’s system.

3.5 Business model sustainability

In the analysis and surveys carried out on the pilots [10]–[13], a number of benefits have been identified, and in deliverable D4.1 [14], we have assessed the socio-economic benefits, which indicate that the introduction of digital homecare services over open FTTH networks is indeed a net benefit deal for society at large. For this innovation to truly work, however, the business model needs be such that all stakeholders experience a net benefit. In this section we briefly analyse costs and benefits for the key stakeholders in the delivery of digital homecare. We will mainly take into consideration the value chain for the vertical silos (Figure 3) and full-procurement models (Figure 5), which are the ones currently in use for the delivery of services, and we present considerations on the other models.

The value chain gives an indication of the type of incentives that the stakeholders financially involved will see. The DHPs will typically receive monthly revenue per user, and will have to pay an access fee. The homecare authority will be happy to pay for the DH services as long as the savings generated are exceeding the service costs (which in an open market solution are bound to be considerably lower than currently charged for tailor-made solutions), and given that the stakeholders involved in the daily use of the DH services, i.e. the end users experience a value added. This value is generally in terms of increased quality of life for the homecare takers and informal homecare givers (e.g. family members) and increased work efficiency and professional fulfilment for formal homecare givers (employees of the homecare authority or the contracting homecare company). Ease of use, reliability and security/privacy here are crucial, hence apparently minor technical hitches may jeopardise the project.

So, in essence, maximising these non-financial indicators (striving towards a social optimum) will be instrumental to making or breaking the financial business case for the overall Digital Homecare solution. The project has tried to evaluate some of the costs and benefits for the different stakeholders.

Let us start from the direct financial values. For the vertical silos model, the homecare authority pays each DHP directly. It is more interesting to look at the more complex but potentially more


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scalable open-platform model, specifically in the form of the full-procurement model currently in place in pilot 1. The open platform provider in the project, Alleato has indicated that a gateway price under €150 and a management and technical support fee of around €650 per year as amply sustainable levels to cover capital and operational costs, or alternatively a €1350 per year for the whole platform and sensor package. The video-communication service is preliminarily priced by nWise at €500 per user per year, excluding the tablets at the end-users, at €750, or €250 per user per year for a three-year depreciation. Hence a total cost for the video-communication service is €750 per user per year.

The municipality of Hudiksvall procured the night-supervision service from the market in 2015 for an annual user fee of €2500. The procurement was successfully aligned with the Connected for Health project: among the requirements in the tender, was that the service should work also over the open platform being tested in the project. The service was then tested within the framework for the project (in pilot 1) and the open platform proved successful in carrying the night supervision service. This enables savings in terms of reduced equipment and transmission fees.

Finally, the connectivity provider fee is in the order of €200–500 annually for the open FTTH network provider in Hudiksvall (Fiberstaden), which was involved directly in the pilot, as external partner. That puts the total cost for the connectivity, the platform, and the services in a bracket of €2,300–€5,000, depending on what services basket is used and

To put things in proportion, the average annual homecare cost in Sweden is well in excess of €10,000 per year per end user

5, meaning that there is space for a sustainable business case.

Indeed, as estimated in D4.1, we can expect cost reductions of €4,000 per user and year can be expected for the video-communication service (compared to an approximate total annual DHS cost of €2,300 per user), and of €11,000 per user and year for the night supervision service (compared to an approximate total annual DHS cost of €5,000 per user).

These figures show that the value chains as sketched in the previous sections should distribute value to all stakeholders financially involved. The homecare authority’s savings on its huge homecare costs is expected to outweigh the costs to purchase services and even to purchase the open platform itself. The prices above are what the DHPs involved in the project (as well as the connectivity provider) have indicatively quoted to be interested in participating in a commercial deployment.

When it comes to the additional commercial services, the service fee for the sensor-based “Safe at Home” package by Alleato is about €100 per year plus €30–€120 per sensor (movement, temperature, smoke, gas, door/window opening, night-time led lightning, etc.). These price levels are expected to be very attractive for end users, hence providing perceived value for the end-users, encouraging signing up for the digital homecare solution, and in turn representing an attractive market for DHP to be present on the platform.

Coming to other stakeholders directly involved, homecare takers have reported positive experience from the use of the digital services (see deliverable D4.2), which is good indication that homecare takers are winners and will contribute to the success of the model. Informal caregivers are expected to see an improvement in quality of life as they can more easily be in contact with the homecare takers. This is expected to reduce anxiety, increase communication with their loved ones, and reduce “preventive travel”: the indications received during the interviews with homecare takers seem to confirm these expectations, however a better assessment is recommended. Regarding formal homecare givers (employees of the homecare authority or the contracting homecare company), the interviews carried out in the pilot show a positive attitude in the majority of the personnel, both at the beginning and at the end of pilot, with a slight improvement throughout the project, despite the technical issues experienced.

Hence, as it looks now, the value chain sketched in Figure 5 for the full procurement model delivers a positive net benefit for all key stakeholders.

5 All figures quoted in this Section are per end user, unless otherwise specified.

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In principle, rearranging the value chain from the full-procurement model (model 1) to the platform market model (model 2), only implies an integration of the {homecare authority OPP/TSO} financial flow into the {homecare authority DHP} value flows, increasing the price of each service somewhat in order to cover the cost of the platform. This is to some extent what the value chain looks like in the vertical silos model (where there is no open platform).

The model proposed in Section 3.4 (integration with the open FTTH network business model) involves a reduced number of business actors, incorporating the OPP/TSO role into the connectivity provider. This assigns new costs and benefits for the connectivity provider. The main extra cost is clearly in terms of complexity, both technical and business-wise, because a new functionality needs to be provided by the connectivity provider (the “welfare broadband”). The feasibility and potential for success of the model hence largely depends on ensuring that this cost remains below the extra revenues that the connectivity provider can realise. For the rest, the same net benefits should hold here as for the platform market model, for all remaining stakeholders, with the extra bonus of them operating in a less complex market structure and in less complexity in the home equipment.

4 Conclusion

In this document we have characterised and described the business models currently in place. Throughout the Connected for Health project, a “vertical silos” model was employed in pilots 2, 3 and 4, whereas pilot 1 employed an open platform with a “full procurement” business model, in order to make the most of the open FTTH network and reduce hardware and connectivity duplication.

Both models indicate that all stakeholders should see a positive net benefit and the model should be sustainable, however, as argued in 3.1 introducing an open platform over which to deliver all digital homecare services has the potential to ensure more secure service delivery and lead to savings in terms of reduced communications costs (connectivity fees and hardware), and hence be a more viable model. As the market matures and digital homecare becomes more commonplace, the market will grow, and it will start to make sense combining the open platform functionality into the business role of the connectivity provider, with the potential to further simplify the value chain and reduce transaction and hardware costs.

We have hinted as potential issues in the document and in conclusion, we offer further considerations on this. Broadly speaking, there are technical, financial and communication issues to tackle. The technical issue may seem trivial but as the pilots have shown, minor technical issues may spoil the user experience to such extent that the non-financial net benefits become negative for key stakeholders like homecare givers and homecare takers. This can even carry reputational damages, which may invalidate future development plans.

The second issue is more obvious to visualise: each digital service must contribute positively to the homecare authority business case. This implies calculating exact costs and benefits of the specific service and being able to document the calculations both before, during and after the introduction of the service, in order to secure and maintain the needed political support.

The communication issue was not explicitly investigated in the project, but it is as crucial. Digital homecare services are a sensitive issue that becomes easily controversial. Involving all stakeholders early on relying on their feedback in an open communication campaign towards external stakeholders (press, industry and interest groups, political associations) will make it easier to avoid opposition to the project.

This project with its pilots in Denmark, Finland and Sweden, run with a limited piloting lifetime, has provided valuable insight and thoughts about, amongst others, business models. The challenge and opportunities with demographic ageing in Europe and most globally put digital homecare services right in focus. However, as open platforms and associated business models in this context are fairly new, further studies will be necessary to analyse pros and cons with open platforms regarding to e.g. lowering market barriers, market take up, opportunities for Start-ups and SMEs, economic growth and export possibilities.

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Appendix: List of abbreviations used

3LOM Three-Layer Open Model

ALOM Active Layer Open Model

CAPEX Capital Expenditure

CPE Consumer-Premise Equipment

DH Digital Homecare

DHP Digital Homecare Provider

FTTB Fibre to the Building

FTTH Fibre to the Home

HG Home Gateway

NP Network Provider

OPEX Operational Expenditure

OPP Open Platform Provider (equivalent to TSO in this document)

OTT Over-the-Top

PIP Physical Infrastructure Provider

PLOM Passive Layer Open Model

QoS Quality-of-Service

SP Service Provider (e.g. Internet, TV, telephony provider)

TSO Trusted Service Provider (equivalent to OPP in this document)

Table 1 List of abbreviations

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Bibliography

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[7] Västerås Kommun, “ rojekt Be ovsst rt -st d – n randet av e e tjänst apport aug 2012”, Västerås 2012.

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[10] Connected for Health: D3.2. Results of Pilot 1




[14] Connected for Health: D4.1. Evaluation of the pilots

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http://www.ssnf.org/Press/Pressmeddelanden/2012-/Bredbandsenkaten-2013-Sju-av-tio-kommuner-vill-satsa-mer-pa-e-tjanster/

http://www.ssnf.org/Press/Pressmeddelanden/2012-/Bredbandsenkaten-2013-Sju-av-tio-kommuner-vill-satsa-mer-pa-e-tjanster/

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