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Saturday, March 31, 2007

Nokia N800.... yeah OK it's cool, but please don't overdo the hype

What is it with Nokia at the moment? I've been at 3 conference sessions during March where a representative has turned up brandishing their N800 Linux-powered WiFi tablet, and then given a presentation focused almost entirely on it and Nokia's peculiar notion that it somehow completely redefines computers to be "Internet optimised".

Typically the events were about telecoms or VoIP. Yes, sure there are some VoIP clients that run on it, but it's hardly the number one usage case for the N800. I cannot believe that internally, Nokia believes this class of device will ever carry more than 1% of the world's VoIP traffic, let alone overall voice.

Yet in at least one of the presentations, both PCs and mobile phones (and also handheld gaming consoles) were dismissed as essentially legacy devices. That "everything will be Internet-based", and that "bundling network services and a SIM" was an old business model.

Now even I, a fairly ardent supporter of most open-IP principles & a detractor of walled gardens and SIM-authenticated WiFi, do not take things that far. Sure, there will be some hugely interesting and important innovations will mean that VoIP, WiFi and pure Internet-resident capabilities become viable challengers for many users' spend and time. But equally there are certain things that licenced spectrum - and licenced operators - are actually pretty good at, which will mean that tied device+service combinations are not going to disappear.

More confusingly, I don't understand why Nokia feels it necessary or appropriate to pitch the Web Tablet type device as a PC or notebook alternative. An alternative to UMPCs, OK, I can buy that. But even Nokia has to appreciate that the web isn't just following Moore's Law on processor speeds and memory - it's also being driven by LCD display pricing, which is why more PCs and Apples ship with 20" screens, and many laptops are similarly-endowed: it ain't for spreadsheets, it's for better Internet and multimedia display.

I'd understand it all a bit better if the N800 had a slide-out keyboard, or even a decent camera, but in its current incarnation it's not even optimised for "user generated content".

To be honest, I find Nokia's positioning of its broader N-Series smartphone devices as "multimedia computers" a little contrived too. "The device formerly know as the cellphone"...oh, please.

I suspect that all this may be an attempt to put clear water between the N-Series and the more operator-centric approach taken by the Mobile Phones division. But to be honest, there's really not that much difference between an N73 and most of the Series-60 phones developed in the other units. Sure, most of the N9x devices are probably sold through non-operator channels, but I think it's too early for most buyers to think of them as anything other than cool phones.

Thursday, March 29, 2007

RIM risks marginalising itself in enterprise-controlled comms

Interesting to see that RIM has announced a new set of APIs for its Java developer environment. While there's a bunch of stuff in there which is obviously useful like the multimedia side, there's something conspicuously absent - support for SIP, via the JSR-180 Java API.

Assuming it's not lurking somewhere else in the depths of the release's specifications, this seems to put RIM at a serious disadvantage for developers looking to innovate communications applications within the IP domain, such as hooking up to enterprises' IP-PBXs or assorted Internet-based and enterprise applications.

I don't think I'll be alone in suggesting that SIP's omission will have been heavily influenced by the more paranoid and backward-looking of RIM's operator partners.

It's interesting to contrast this with the hugely pro-SIP attitude of Nokia's E-series and N-series groups, as well as Windows Mobile manufacturers. As far as I can see, this should limit RIMs attractiveness to the growing swarm of enterprise FMC systems providers, and their operator partners.

Looks like a missed chance to me.

Zynetix acquired by Sonus Networks

I see that Zynetix has been acquired by VoIP and softswitch specialist Sonus Networks. I've known Zynetix for several years - the company has some interesting bits of GSM infrastructure used to connect picocells via IP into miniaturised cellular network elements, especially small MSCs. It's used these in a variety of niche contexts such as on-ship cellular deployments, network fill-in for remote areas and various military applications, as well as having a pitch for connecting up PBXs to cellular in the enterprise.

Sonus should provide the company with a framework to scale up more fully than it could have done on its own, especially given the continued noise around femtos, many of which are designed with VoIP "coming out the back" and look essentially like VoIP phones to the rest of the network. However, while femtos are currently the "sexiest" part of the wireless access arena, it's their bigger brothers picos that have more current real-world sales (and shipments). Typically servicing 10-30 users and costing $1000+ (vs. maybe 4 users / $200 for femtos), there's definitely some interesting use cases that Sonus' scale, channels and VoIP focus should help address.

Congratulations to Ian, Andy & co. in Twickenham.

Tuesday, March 27, 2007

Ofcom new UK mobile interconnect rates & FMC

I see that Ofcom has unveiled its new interconnect costs for UK mobile operators, lasting from this April for 4 years. Interestingly the first line of the press release uses the specific phrase "for connecting calls on their mobile networks".

I haven't had a chance to wade through all the legislative bumph behind the PR page yet. If any lawyers would like to to have a look & see what the new rules might mean for MNOs "connecting calls on their fixed, WiFi or VoIP networks or to voicemail servers, but using their mobile numbers", I'd be fascinated.....

Monday, March 26, 2007

VoIP is about more than telephony... but not multimedia

Last week's VON stimulated thoughts about the nature of VoIP, and especially wireless VoIP. I think that the voice market will become increasingly fragmented, going beyond today’s normal expectation of conversational “telephony”. Voice calls/sessions will be embedded within many other applications, many of which may not need to use the same telephony-centric features like phonebooks, voicemail or call registers. It seems likely that, far from having a single “operator” that mediates all voice traffic going to or from a user, that most individuals will avail themselves of multiple providers or applications.

To some extent this already happens – not just because many people have two mobile phones, or a mobile and a fixed line or corporate PBX extension, but because they obtain “voice connectivity” in other fashions.

Networked voice has already been embedded into myriad non-phone platforms and software: PC-based applications like IM, gaming consoles, camcorders and CCTV, alarm and security systems, medical alert systems, baby monitors, conferencing systems, podcasting and so forth. In all these cases, voice traffic does not have to involve a traditional “phone call”, involving numbers and regulation, but can exist in a completely parallel fashion to the user’s telephony experience. In many (but not all) cases, these techniques use IP connectivity.

In theory, it would perhaps be appropriate to divide the world between “Telephony over IP” and “Non-Telephony Voice over IP”. It is a matter of one’s personal viewpoint as to whether PC-to-PC based Internet calling (eg on-net, fixed Skype calls) would fall into the first or second category.

There is no reason to believe that this will be different in mobile, especially for applications like

- Gaming
- Corporate
- Entertainment / communities
- Conferencing

Of course, this fragmentation will not happen smoothly, or without definitions being blurred. This will lead to problems. Nobody would suggest that a piece of software enabling player-to-player chat “inside a game” should also be able to call emergency services in the real world. But on the other hand…. maybe it should be open to lawful interception? And how do you define something like Second Life – are the rules for a “game” the same as the rules for a “virtual world”? And how does this fit with the operators, and their capabilities, or terms of service?

As far as Disruptive Analysis is aware, nobody has yet quantified the volume of traffic involved in “non-telephony VoIP”. If one excludes PC-to-PC calling within clients like Skype, Yahoo, MSN and Google, it is probably still less than 1% of all overall voice minutes. It will probably never get beyond 10%, simply because of the sheer volume of plain-old boring voice calls used for mundane applications, by billions of users around the world. Interestingly, though, the proportion in 3G (and over DSL lines) may well be higher, reflecting the richer and more application-centric devices at the end-points (PCs, handhelds, smartphones, high-end featurephones and so on). But the overall value and profitability of those voice-embedded apps is likely to be disproportionately high, and not subject to the usual fierce competition & commoditisation of telephony.

One thing is certain – many such application-embedded voice calls will exist, at one end at least, outside of operators’ control. A Second Life avatar-to-avatar conversation may be between a PC user on a cable modem, a mobile phone via 3G, maybe even bridged into the real telephony network. Now in theory, an operator would love to have a Second Life-equivalent virtual world running as an IMS application, and in some cases this will probably happen. But in others, it seems inevitable that the application will run on a standalone basis, especially in the business world or in instances where software development has initially been more PC-centric.

The interesting thing is that the IMS community appears to have got the whole concept inside-out. It is pursuing the notion of "multimedia telephony", which seems largely predicated on the notion of adding in elements like video or messaging to a voice conversation. In my view, this is 1980s-style thinking reminiscent of ISDN. It's much more important to either add context to voice calls, or as discussed here, add voice in to other applications.

BT - building a patchwork of MVNO deals?

Interesting to see that BT has persuaded Vodafone Spain to allow it to become an MVNO. The Spanish regulator CMT has been forcing the market to accept MVNOs over the last year or so, and there is a long queue of operators wanting to launch services, including Carphone Warehouse and KPN. BT's service however, is aimed firmly at "businesses and the public sector" - a very wise move in my view, as there are remarkably few operators that are able to grasp both mobility and the practical realities of corporate networked IT. I've talked before about the opportunity for enterprise MVNOs, and I'm surprised there hasn't been more movement in this field to date.

The fact that BT is working with Voda again is highly significant. The UK MVNO deal raised eyebrows at the time - including quite a few inside Vodafone itself. I remember being at the original launch of Fusion, and there seemed to be an underlying attitude among the lines of "it'll never work, so what have we got to lose?". I think it's actually quite a wise move - there's clearly a demand for some hardcore PBX-centric bits of FMC, and other top-end international IT outsourcing-style comms services, that Vodafone isn't really positioned to service but BT is. Wholesaling - especially if it's done in multiple markets with similar technical architecture - offers Voda a hedge against limits to mobile substitution in the enterprise.

Thursday, March 22, 2007

Thoughts from VON - dualmode devices

I've been at VON in San Jose this week. This morning I moderated a panel session on dualmode WiFi/cellular handsets, and putting together the intro slides made me crystallise my thoughts on them a bit more clearly, as I seem to have contradictory optimistic/pessimistic thoughts about them.

In a nutshell, dualmode phones are:

a) Qualitatively more important than many people think
b) Quantitatively less important than many people think

Point (a) refers to the catalytic nature of WiFi-capable phones - stimulating new business models & service providers in the mobile space, teaching end-users about using phones to connect to non-service applications and devices (PBXs, PCs etc), driving diversity & maturity into the non-carrier channel for phones, and so forth. The inclusion of WiFi also points out the absurdity of paying a premium for "mobility" when you're not actually moving about.

One of the panellists this morning said that the average number of cell base stations used in the course of a call is just 1.06. In other words, less than 6% of calls make use of the hugely complex & expensive cell-to-cell handoff capability in the network; the remainder is in a single cell, and often in range of a single WiFi AP.

Point (b) is the counter to this. I keep seeing forecasts from my analyst peers about hundreds of millions of dualmode phones shipping in the near future. I think this is wrong - I honestly can't see the "attach rate" of WiFi going beyond 10%, maybe 15%, of phones. It's so much more than just adding a $5 chip - it's the software, the integration, the application & UI optimisation work.

And when you think in a bit more detail about the handset market, the addressable segment of phones for which WiFI makes sense is actually quite small. So, for example, about 60-70% of phones worldwide are sold to prepay customers, often sold independently of any service provider customisation. In my view, I see almost no justification of including WiFi in these devices - certainly, I'd bet almost no dualmode devices have shipped into the prepay market to date.

Then there's CDMA - about 20%-ish of handset shipments. There has been much less interest in CDMA/WiFi dualmode to date - no equivalent of UMA, and not much interest in VCC or proprietary SIP-based dualmode. Sure, this might change, but not immediately.

Then there's the simple issue that outside N America, Europe & a couple of Asian countries, there's simply not that much residential broadband, let alone WiFi-enabled APs or gateways.

And, lastly, there's so much other cool stuff you could put in phones - GPS, VGA screens, TV, motion sensors - that WiFi is competing against lots of other hardware & software for space on handset designers' priority lists.

Thursday, March 15, 2007

Getting spammers to pay up... the first stage in consumers tackling the marketing industry

Good to see this Scotsman getting an unsolicited email advertiser to pay up, albeit in an out of court settlement.

I still reckon there will be a longterm trend whereby advertisers will - in some circumstances - need to pay consumers to watch/see their marketing.

"You want to know if I've got a pension or not, and then advertise a new/alternative one to me? Pay me £50 first and I'll let you. I might even give you a refund if I decide you're not wasting my time"

Put simply, marketing and advertising budgets are too large to simply be spent on ad agencies and media channels. Part of that budget should go directly to the consumers expected to be subjected to the advertising, who are expected to spend their time viewing/thinking/filtering through it.

Now obviously there will be exceptions - if I want to listen to free-to-air FM radio, for example, I recognise that it's advertising-funded, and in the first phase at least, I should have to accept I need to listen to ads if I want to hear the music. Same deal with Google searches - the big G provides me a useful service for free, so I'm prepared to put up with relatively unobtrusive ads.

But email spam, direct post junkmail, telephone cold-calls, mobile idle-screen on an unsubsidised phone - or even street-side advertising hoardings? No. You're taking my time, stealing parts of my field of eyesight or hearing that could be useful occupied by other more valuable things, even if it's just for a brief time. You should pay me by the second, or by metrics like (% field of vision X time exposed)

In the ultimate phase, I should even be able to monetise Google ads and the like, if I'm a "valuable enough" user. If I've bought 3 things, provably, n the past week after seeing a advert in a Google sidebar, I've got a "reputation", and should be rewarded accordingly.

Clearly, the mechanisms for this will be fiendishly complex. But the first part is for consumers to make sure they are not "owned" by any particular service provider. In particular, they should be wary of 3rd-party "identity services" that are looking to greedily monetise the advertising potential just for themselves. Be wary of the non-financial implications of bundling or consumer loyalty schemes... there's no such thing as a free lunch, so consumers should be certain they "negotiate" the most favourable terms for their information and loyalty.

So, an open challenge to innovators - don't assume we have to always be "advertised at" for free. Develop cool ID and profiling software we can use for charging back to advertisers, personal billing systems, smartphone anti-advert filtering clients, and maybe even intelligent spectacles that spot & block out ads in your field of vision that are trying to freeload. The global marketing industry must be worth a trillion dollars or more. Claim your share.

Wednesday, March 14, 2007

Vodafone Euro flatrate data roaming - looks like a WiFi hotspot killer to me

Just seen the announcement over the wires that Voda is extending its Passport service to encompass a flatrate (well, for 50MB) data roaming fee of €12 a day for laptop users travelling in Europe.

Given that a typical European hotspot costs about €6 an hour, or €20-30 in business-class hotels, this would make it largely pointless for business travellers to use WiFi hotspots, except where 3G coverage is lousy (eg conference rooms in hotels' basements), or if 50MB is not enough (eg 2 hours of Skype calls plus lots of emailed powerpoint documents). I imagine most European business travellers rack up €12 in phone bills, plus at least that in taxi fares and restaurant bills, so it should be absorbed pretty easily into travel budgets.

Once again, this shows up just how badly the European WiFi industry has been managed. It has managed to squander more than a 3-year lead over the cellular data industry. It has been plagued by lousy interoperability, grudging roaming relationships, and stupid pricing. Obviously the right price for hotspot pricing has been on a par with public Internet cafes - about €1-2 per hour, in other words paying a bit more for the more complex infrastructure and security, offset by the fact you're not using a public facility's PCs but your own instead. Instead, you have rapacious tariffs from the likes of Swisscom Eurospot (once of the worst offenders) and peers. The 5* hotel in Budapest at which I gave a conference presentation today charged €20 per day for WiFi. The hotel I stayed in around the corner gave it away for free (and more reliably, perhaps because of less marble) on a room tariff of only €60.

The fact that hotspot operators have tried to replicate the cellular industry's roaming model & charge premium rates for travellers further highlights their lack of credibility. Unlike mobile, there isn't even the complex HLR/VLR-type interconnect arrangement that could be used as an excuse for high costs of roaming. As far as I know, no hotspot roaming deal involves tunnelling all your Internet traffic back via your original WiFi provider, you just get a direct local connection. (iPass might be an exception because of its fancy security/enterprise functionality, I don't know)

There are however a couple of questions outstanding about Voda's new plan - firstly, why isn't it available on handsets as well as laptops? And secondly, it cites its applicability to "mobile-enabled laptops". I hope this includes laptops with external cards/USB modems, and not just embedded 3G, as for various reasons I have significant doubts that that particular category is going to fly - as well as it having a huge existing base of existing card-based users.

Incidentally, for those intending to use the service for VoIP - typically, reckon on about 500kb-1MB per minute. Assuming Big Red doesn't try something silly like trying to block it, that is.

FMC interconnect... something will have to be done

The more I think about it, the more I reckon that the differential between fixed and mobile interconnect rates is going to be a distortion, as FMC and related business models become more prevalent. Listening to a conference presentation this morning (credit
a very knowledgeable competitor of mine from Ovum) I realised that the whole thing hinges on the notion of interconnect being "cost based". Now obviously operators are going to fiddle around the edges to get the actual cost down a bit below the regulator-envisioned baseline, but it's not designed to be blown completely out of the water by VoIP.

Apparently there was a discussion a few years ago about the possibly differing cost structures on termination via 2G and 3G, although nothing much resulted.

This time around, though, I think things may be different. I'd suggest that mere numbering (07xxx and so on) should be considered an inappropriate basis for calculating fair interconnect prices. There should perhaps be an extra dimension for network/device type used for termination, or some other indicator of the real cost. Given the speed at which FMC and VoIP technologies are evolving, it would have to be a mechanism that could easily be updated. Perhaps something like:

type-1 interconnect = completed via cellular call
type-2 = via public wifi
type 3 = via private home/office wifi
type 4 = via wimax
type 5 = to a pc client over broadband
type 6 = to voicemail server & message downloaded over IP
type 7 = call forked & terminated in 2 places
.......
type N = whatever's invented in 2009

Now I'm sure that any moves towards this sort of model would (a) be very complex, and (b) would induce screams of anger from companies with business models playing games with current termination fees. But given the legal basis for such fees is supposed to be "cost based" I reckon that there needs to be something a bit more sophisticated and granular than just mobile vs. fixed. It may even need to be multi-variable to account for differences in peering as well as transport.

I wonder if any of the interconnect billing & mediation vendors have thought about this.....

EU views on Mobile TV... policy inconsistency?

Given it seems that the European Commission is moving (albeit slowly and without consensus so far) towards accepting "technology neutrality" for mobile spectrum, it seems a bit odd that Viviane Reding has stuck her oar in on the issue of mobile TV technology. It sounds like she's trying to encourage a decidely non-neutral approach with DVB-H as the favoured technology.

I wonder if she has her facts straight about the likely impact (and timelines) of mobile TV. I haven't got a copy of the source document, but if its an accurate representation, this line in the article raises some doubts "The commission estimates that mobile TV will generate EUR11.4 billion in revenue globally in 2009, with around 50 million handsets able to receive a mobile TV service."

What, €228 mobile TV revenue per enabled handset per year? Nearly €20 per month? Assuming 100% take-up rate & loyalty among all owners? Yeah, right.

A quick word, Ms Reding - there's a couple of reasons why Europe is being "slow" on mobile TV. The first is the length of the spectrum allocation process in different countries. The second is the weakening evidence of workable business models. A decision on DVB-H vs. the rest is not the number one stumbling block at the moment, or in my view even necessary.

Monday, March 12, 2007

Telco 2.0 conference and other events....

Just a quick post to highlight some cool upcoming events, especially the 2nd Telco 2.0 conference in London later this month, for which I'll be moderating the Digital Worker stream. If you haven't encountered the Telco 2.0 guys, they include fellow blogger/analysts like Martin Geddes, and use some interesting interactive widget things to enable delegates to pose questions & make comments anonymously.

I'm also at a plethora of VoIP events.... I'm also going to be at the VoIP Summit in Budapest tomorrow & Weds; VON in San Jose next week; and the Osney Wireless VoIP event in London at the end of the month. The VoIP focus is not a coincidence... watch out for some upcoming unique research findings & a new report, as a result of a project I've been working on recently.

Wednesday, March 07, 2007

FMC... does it break the interconnect charging model?

Had an interesting meeting with Rebtel this morning that set me thinking about interconnect fees to fixed and mobile operators. I have a suspicion that the model is broken.

At the moment, the cost of terminating a call to a mobile number (07xxx in the UK, for instance) is much higher than to a fixed geographic number (020 xxx for London). This is rooted in the idea that mobile operators' costs are much higher (spectrum, radio network etc) and that therefore they deserve a hefty premium (maybe 10x the fixed-telco price) for the privilege of transferring another operator's call to one of their end customers. So maybe terminating a call on fixed-line costs 1p per minute, but it's 8p on mobile (roughly speaking).

This is the reason that fixed-to-mobile calls are much more expensive than vice versa. Terminating SMS's is also quite expensive, for similar reasons.

(note that in the US, there is no differentiation between fixed and mobile numbers - this doesn't apply).

Up to a point, this is all fairly reasonable - after all, mobile operators' overheads are generally pretty high, if you include the cost of spectrum & infrastructure.

But the model breaks down in two ways:

- firstly, if a VoIP service provider gets a mobile number range (& therefore the interconnect revenues for inbound calls), but uses a cheaper way to terminate the calls (eg WiFi).
- secondly, if a mobile provider uses its own mobile numbers for services that don't use the expensive spectrum and infrastructure (eg also terminates on WiFi via UMA/VCC, or alternatively uses mobile numbers for fixed-VoIP offers like softphones).

In either of these instances, the whole "moral basis" for supposed mobile 07xxx numbers to have more costly interconnect than fixed geographic numbers disappears. While there's a justification for a mobile premium when using a complex mobile network, the justification evaporates if the only difference is the number of the endpoint & the call routing.

(interesting side comment here by the CEO of Rebtel - if the call terminates on a voicemail server rather than an actual cellphone, is the costly interconnect fee still justifiable?)

Tuesday, March 06, 2007

Unified communications... yet another naked emperor?

I'm rapidly becoming skeptical of the opportunity for enterprise "unified communications" -basically a glorified term for combining telephony, IM, email and collaboration. It seems to work on the misguided premise that somehow businesses can coerce their employees to use a single, centrally-managed communications hub.

Maybe in really proscriptive organisations it might work - government departments, or industries in which employees are so fearful of their jobs they'll put up with whatever the IT department foists on them. And for companies' departments which are wholly dependent on teamwork, some of the functionality may get used, some of the time.

But the idea that it will stop employees running their own parallel communications channels in nonsense. Generally, there's always something on the Internet, or on personal mobile devices, that is newer, more intuitive, and most importantly, which their semi-professional friends and "network" also use. The threat that "you can't install it on company laptops" is irrelevant if everyone's got a decent browser-enabled personal mobile as well. And the threat that the company won't reimburse users for non-approved forms of communication (eg personal mobiles where the user "owns" the number etc) also loses teeth in the face of flatrate phone calls and data tariffs.

And then there's the fact that most UC platforms don't integrate many employees' favoured forms of communication - SMS, Skype, even MySpace or other social networking platforms.

I'll come back to this theme another time, but for now, I'd sum up by saying that for every form of communications "unified" in a central managed platform, another two unmanaged (and more user-friendly) ones will inevitably spring up to take its place. This all fits into the general mythology around one number / one device / one identity, which, as I've commented before, is and utterly falacious philosophy.

Sunday, March 04, 2007

GPS-enabled handsets....a pedestrian problem

This article has made me think. Flavour of the month at 3GSM were handsets with built-in GPS capabilities. A million and one startups are trumpeting mobile search, mobile navigation and a whole bunch of other ideas, based on the assumption that increasing numbers of phones will have mapping capabilities. Nokia, Google and others have been pushing their mapping strengths.

All this seems to be based on the success of in-car satnav. But there's a problem... all the maps & navigation software is very vehicle oriented. It's of much less use to pedestrians - either because certain routes are inaccessible (lack of crossings, railings etc), or because many rights-of-way (footbridges, paths through parks, alleyways) aren't on the system at all.

So for example, if I wanted to get from my house to a restaurant in Camden Town in London, my GPS-phone probably wouldn't suggest a nice (and much quicker) walk through Regents Park. Interestingly, though, Transport for London's journey planner does get it right.

Saturday, March 03, 2007

Unsubsidised "vanilla" phones... are we waiting for the "Swatch" effect?

I reckon the time is about ripe for decent, well-designed, "cool" GSM/GPRS (maybe EDGE) handsets, with good-enough cameras (2MP or 3MP), good-enough MP3 functionality, good-enough browsers and a memory card slot to get to the sub-$100 mark on an unsubsidised basis. We're not quite there yet (at least not in the UK), and it will be the cheaper Asian brands rather the Nokias & Motorolas that get there first.

(Note: I don't follow component prices that closely, so I may have underestimated the cost a bit. Might be another year, or maybe $150 is a more reasonable price. The argument below still applies however)

$100 (or £50 here) is about the price of a midrange Swatch or similarly interesting watch, or other fashion item like a decent shirt, or a reasonable meal for two. In other words, the sort of money that 100s of millions of people will spend on a typical weekend afternoon or evening without flinching. It's the sort of price, in other words, at which subsidy becomes much less important, and a handset could become an impulse purchase.

It could be argued that people will always want an even better phone - 3G, bigger screen, good email experience, accessories, full OS, better browser, 5MP camera etc etc. But to be honest, I think that's a relatively small proportion of customers. After the addition of camera & music player, I don't see any other "must have" feature has emerged for phones in the past 2 years, except for the relatively small proportion who definitely want ultra-converged smartphone functionality. Most "civilians" I talk to (of all ages) can't/won't even do basic web & email on the phone.

I got the definite impression at 3GSM this year that handsets were starting to come to the end of their "cram in more functions" phase of evolution. If design is the last real differentiator, the market may shift very rapidly indeed, as "good enough" phones commoditise apart from aesthetics. GPS could possibly be a saviour, I suppose. TV? Hmm, don't think so - a new "killer feature" needs to have a "non-revenue" angle to it, the way that cameraphones and MP3-phones don't have to be used with carrier services. (Neither 3G nor WiFi is 'must-have', by the way - most people just don't care).

This could have a couple of effects:

Firstly, people will have a tendency to own even more multiple devices than they have now. If it's cool & funky & different & only $100, why not buy 3 of them? (caveat - clearly, there needs to be a zero-click way to share the phonebook between them. Constantly swapping SIMs is a barrier too).

Secondly, there's perhaps going to be more demand for "vanilla" handsets rather than operator-specific variants. This isn't certain... but it only takes one innovator with a hypercool product to take a risk and only sell direct to end users and not via carriers, and perhaps the market shifts. This is why the price is important - Apple's iPhone is too pricey to sell in large enough numbers to overturn the carrier channel for the mass market, for example - hence why it's gone with Cingular I suspect. Cutting an exclusive deal with a high-profile retailer that doesn't sell mobiles normally could be a good route here. And hamfisted lock-downs of phones by some operators provide additional impetus (step forward most of the US carriers, in particular - I see T-Mo has darkened its reputation in recent weeks)

I'm not sure this will definitely happen. There's a huge amount of intertia in both handset subsidy and users purchasing through operator channels. But it's a scenario I see as becoming more likely, without any other "must have" features on phones.

Friday, March 02, 2007

Mobile and advertising - forget about one-to-one marketing

I've been having a spirited debate over at the Forum Oxford discussion forum, following on from Tomi Ahonen's blog post on whether mobile will become "the 7th mass media", displacing TV, Internet etc.

I think he vastly overstates the case, and that it's more evangelical posturing than objective analysis and prediction.

I think some of the biggest fallacies are around advertising & the supposed "personal" nature of mobile.

The first issue - what is the definition of "mobile"? Is it a normal cellphone, on a "normal" network? Is it a unique number, or a SIM card? A laptop with WiFi is mobile. The free newspaper I read on the tube is mobile. The radio in my car is mobile. Even if you say "mobile electronic devices that link to a two-way wireless network", you have a broadening definition. We might find that Rupert Murdoch introduces a portable 6-inch WiMAX tablet optimised for full-browser MySpace & Sky TV, is that "mobile"? If the Economist moves to an e-book or flexible electronic paper & you get content downloaded via Bluetooth or UWB or NFC.... is that "mobile"?

But the main fallacy is "One SIM = 1 Mobile Number = 1 identifiable Person". This is only partly true today, and will be completely false tomorrow. Sorry advertisers, forget about one-to-one marketing hype, it's an unattainable dream, which ignores technology evolution.
  • Firstly, fixed and mobile numbers are being blurred. A fixed number may end up on a mobile device, or vice versa.
  • Secondly, the mobile industry is pushing SIMs and mobile numbers towards non-personal, and even non-display oriented devices, like femtocells or PCs or even consumer electronics products.
  • Thirdly, mobile phones are being pushed as "gateways" for multiple users or multiple devices - almost like broadband modems/routers. I saw a device at 3GSM which pushes video from the phone screen to an external TV. So, advertisers, +44 7934 104943 might be a phone... or a plasma TV with 10 people watching. This data will probably not be fed back via the network.
  • Fourthly, the average number of mobile devices owned by an individual will grow exponentially. Cellular radios are cheap, so people will own a bunch of phones & other connected gadgets, with multiple numbers and multiple service providers, making total media consumption impossible to track.
  • Fifthly, and especially in emerging economies, mobile devices are shared, perhaps between all the members of a village
  • Sixthly, while anonymous prepaid users' behaviour can be tracked up to a point, there is much less "hard" data available about the subscriber
  • Seventh, people switch phones & operators regularly. There is no obvious & easy mechanism to port measurement of media consumption.

So, advertisers - don't believe the hype about unlimited, exquisitely-targetable marketing enabled by mobile communications. It's simply not true. Yes, mobile advertising will become very important, but it's critical to have realistic expectations which take into account.

Thursday, March 01, 2007

[Personal story] O2 - incompetence verging on negligence

Bad timing O2, putting a banner advert in front of me for a 1-month contract SIM this morning. Hopefully, people will find this page via Google and realise that the way you can offer 1-month services like this is by failing to register peoples' new SIMs in the first place. O2, You've cost me business, time & reputation over the last few days - it's my turn to return the compliment.

My advice: STAY AWAY, potential new O2 customers. And CHURN, existing O2 customers. I know I will when I get a chance.

The sorry saga of my lost phone and unregistered new SIM has finally come to an end. After only about 60 hours of failure to register the new card on the network on the network - and countless calls to helplful Carphone Warehouse people, whose efforts were hamstrung by O2's "network error" message locking their systems, and O2's inaccessible and seemingly incompetent support staff.

Without going into detail, CPW's system doesn't allow them to enact changes on a customer account while their network provider (O2 here) has an unspecified "network error" in place. Their hands are tied, and the best CPW staff can do is "monitor the status" until O2 fixes the problem in their own sweet time. I tried to get contact details for the O2 network support department so I could give the people there a kick myself. But there's no inbound number, as they're too arrogant, scared or poorly-trained to talk to real end-customers. Or else they just spend the day in the pub instead.

Eventually I hear from CPW yesterday afternoon at 2pm to say things have been resolved, that my new SIM's registration is now going through the system & should be up and running soon. I say that I've retrieved the phone from Lost Property, and can they reactivate the IMEI on that as well. They agree, and tell me to throw away the old SIM card. Now roll forward another 10 hours. I'm STILL getting "SIM card not registered". I get a sinking feeling.

And then I have a brainwave. Maybe... just maybe.... and I'm right.

The old SIM card - the one I reported lost on Sunday night (directly to O2, not CPW as it was out-of-hours), but which I got back when I picked up the phone, is working. Luckily, I haven't yet thrown it away or destroyed it as was suggested to me. But not the new one, the number of which I have now given 4 times, is still dead as a dodo. As I hadn't had the phone for three days, I can't tell if the old SIM's been reactivated... or simply not barred in the first place. I suspect the latter, which is why an error might have occurred when I & CPW tried to register the new one in its place.

Frankly, this is appalling - and quite possibly negligent. If I have time, I'll put in a complaint to Ofcom about it. I'm certainly getting a refund for the useless new SIM. Luckily the phone was found by the honest & admirable people at Ariva bus company, not someone dodgier, as I'd have had a nightmare to prove I'd actually reported it lost in the first place in time.

Full marks to Dan, Jon & Charlotte at CPW, who've actually given me real personal customer service , though. I could sense their frustration at the inexplicable "network error" message. What they didn't realise was that it actually meant "sorry, you chose the wrong network in the first place, why don't you go to one of our competitors instead?"

Mobile network backhaul upgrades... are we there yet?

I realise I've "taken my eye off the ball" a bit over the last few months with regard to operators' strategies for upgrading their ageing, low-bandwidth backhaul networks. I'd sort of assumed it was in the progress of being fixed, and was only a short-term issue.

It's not as simple as that.

I went to an event last week called NetEvents. I've been going for years - it's an interesting 2 days of presentations and a dozen or so pre-organised vendor briefings, speed-dating style. (The bell rings and... "next!"). Mobile/wireless is only a small part, so I'm forced to catch up with bits of the networking industry I don't normally get exposure to. This time, there were a variety of metro ethernet vendors, as well as the metro ethernet forum, and some people doing clever things making multiple copper pairs work together where fibre isn't available. (step forward Hatteras, Actelis, Resolute)

I'll be honest, I find most in-the-background things to do with metropolitan fibre or copper networks deathly boring. But like many dull-but-worthy areas of the tech industry (I used to analyse enterprise storage for a while too...) it has a story to tell. I tackled the vendors about how fast they were seeing the much-ballyhooed wireless backhaul upgrades going.

The general consensus seemed to be that in the US and bits of Asia, things are going pretty well. Most North American cell sites have decent upstream capacity. But in Europe and some other countries, especially where there are older 3G networks (and limited fibre installed), progress remains very slow. Yes, this varies a lot between operators, and sure there's also a lot of microwave installation going on. Metro ethernet and all that cool stuff is still "in trials" rather than being rolled out aggressively in many wireless networks.

But the bottom line is that there's still an awful lot of base stations out there with 2 or 3 E1 connections (ie 4 or 6MBit/s connection to the network). Some of these are old and can't even support ethernet/fibre if the operator wanted, and will need outright replacement instead. These are bottlenecks as we move towards HSPA, LTE and so on. There's no point putting 100MBit/s on the radio side at a cell site if it's connected back to the core with a piece of wet string.

One of the problems is that the existing networks aren't at full capacity, and so convincing CFOs to stump up the case to replace them is tricky.

The paradox is that the "headroom" is now much lower. Imagine you have a 4Mb pipe from the cell site, and are selling normal WCDMA at 384kbit/s data speeds. You monitor usage... and at peak times maybe it's getting 3 users... then 4 users the next month.... 5 users two months later... you get time to plan an upgrade so that capacity is in place by the time 10x384 = about 4Mbit/s. Now move to today, launching 3.6Mbit/s-capable HSDPA devices. You monitor usage again, and this month you have zero users... then 1 user next month... and it's full.

Let's see how long it takes before the Metro ethernet community really reports some movement on actual deployments, representing a decent proportion of the installed base of cell locations.