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Monday, May 18, 2009

At the LTE Summit. With a herd of elephants in the room.

I'm in Berlin at the LTE World Summit for the next couple of days. It's a well-attended event, with a better-than-average mix of operators vs. vendors, as well as broad range of heavy hitters.

I'll try and put up a few posts over the next couple of days, but already a few things are standing out. Never mind "an elephant in the room", I'm wondering if there's an entire herd, plus a few hippos thrown in for good measure.

The two largest and ugliest pachyderms are:

- Voice
- Business model

A panel of FT/Orange, T-Mobile, GSMA, Ericsson and 3 failed singularly to deliver a compelling answer on how we'll get voice working over LTE, especially in the short term. T-Mobile wants to use IMS in the longterm, but reckons it might need UMA/VoLGA in early deployments. Orange is much less convinced about VoLGA (is Uniq *really* that successful?) and thinks 2G/3G fallback is the way forward. Ericsson is still flogging the dead horse that is IMS MMtel (remember that?). The GSMA wants us to focus on data for LTE, and thinks it's actually quite impressive that we're even thinking about voice now, rather than as a post-hoc "oops" after LTE launches. And 3 seems to be skeptical about LTE for the very reason that it's already looking really fragmented for things like voice. (I reckon 3 might spring a surprise with "native Skype" on HSPA+ - or else will stick with GSM for a long time to come).

Up to a point the GSMA is right - at least we're thinking about this now. Although it was already a clear problem 2 years ago, when I first published a report on VoIPo3G. But the notion that it's all on track, especially given the protracted timeframes for handset platform & device development, is untenable.

(Separately - I'd love to be a fly on the wall when Ericsson tries to pitch the idea of an MMtel-enabled LTE iPhone to Apple....)

My view is that voice on LTE is looking ever-more intractable. VoLGA looks like a good idea, but I'm not sure that every operator will want to go through the hassle of deploying all the gateways & tunnelling paraphernalia, although some will. 2G / 3G fallback strikes me as a nightmare, especially for high-end devices, unless it's possible to run multiple radios simultaneously. Ed Candy talked about the issue of time needed to change network - but the other elephant is what happens to any running 3G data services if you want to make a call. Talk on the phone and use Google Maps at the same time? I don't think so, unless you have very clever multitasking connection managers & radio layers. Add into the mix the impact of femto vs. macro voice for LTE, and it gets even messier - the optimum approach could well be different when on a femtocell.

I'm starting to think that my old favourite theme of bearer-aware applications will be essential for voice on LTE. The dialler/telephony app (perhaps in conjunction with the app server in the network, especially for inbound calls) may need to make smart decisions about the best way to "game" the network for phone calls, based on an intelligent view of latency, quality, concurrent applications running and so forth.

The other thing that's going to be problematic is that of business model for data-centric devices. Moray Rumney from Agilent asked an impassioned question to the panel about the ridiculousness of roaming tariffs, and how they can be mitigated (or whether WiFi will remain as the nomadic broadband standard). The GSMA response was equivocal, pointing out how happy the association is at the idea of extra revenue from data roaming, and pointing out that rates are coming down as a result of regulatory intervention.

This is palpable nonsense of the first order - the fact that we've gone from 5 orders-of-magnitude overpricing, to just 1000x, on the pain of regulator pressure, is hardly cause for celebration or smugness that the problem is solved. And in any case, that's only intra-European roaming anyway. Even more egregious was the comment that the hotel's WiFi (fast & free - thanks Informa / Hotel Palace) was costing someone a lot of money, and therefore this highlighted the "value" of the cellular alternative.

Now it's absolutely true that had it not been "free" it would have cost a ludicrous €22 per day at this particular establishment. No surprises there - it's provided by Swisscom, which is always consistently outrageous.

But the delegates are not paying for it. Someone else - Informa, the hotel, or one of the sponsors - is picking up the tab.

This is a business model which simply would never work for LTE, because the underlying architectural standards work against it. The reason that third-party sponsored WiFi works, for a room of 200 people, from maybe 30 different countries - is that it does not require cumbersome roaming mechanisms, or a physical SIM card.

In my view, the lack of a SIM-less option for LTE is a huge mistake. It completely destroys the possibility for a whole raft of innovative session-based, ad-hoc, temporary or location-specific business models for data connectivity. Don't get me wrong - absolutely there should be SIMs for normal subscription services and various value-adds. But there are plenty of other commercial opportunities for data services in particular, for which the need for the user to obtain a physical SIM would be a deal-breaker.

The industry is leaving money on the table by ignoring this - it will instead continue to be picked up by WiFi, fixed networks and WiMAX, all of which are more flexible in their authentication options. For now, this is masked by the rapid increase of monthly-subscription contracts. But the pool of suitable customers is limited, and as the growth tails off, it will be essential to find new pricing models.

I think this will get fixed somehow (or perhaps worked-around with clunky roaming options) - but it needs to be examined ASAP for LTE to be as much of a success as its proponents hope.


Markus Göbel's Tech News Comments said...

Great summary of the first day.

See you there tomorrow in Berlin! I attend the second day as press.

Markus Göbel

Anonymous said...

What about NSN's NVS solution, i.e. their mobile Voice over IP application server? Did anyone dwell on it? Apparently operators don't need IMS for it!?