Mobile broadband - a lack of loyalty built-in?

Something to ponder on:

- With a mobile phone, you have two tie-ins to keep you in a subscription-type relationship with your operator: your number and the handset subsidy.

- With PSTN or ADSL connections, you also have the number, which necessitates a subscription-type relationship. In addition, the need for the copper line to be maintained and terminate on a switch port ensures that only continuous types of service are feasible.

- With public WiFi, you can have a subscription, or you can purchase adhoc connectivity when and where you want it.

So what about mobile broadband? As modems get cheaper, or included in PCs, subsidy becomes irrelevant. And there's no need for a permanent "number" - apart from the mechanistic requirement of using a SIM card. But there's no real reason for a customer to be a "subscriber" with an ongoing relationship, rather than buying connectivity on a transaction basis.

This is one of the reasons why operators are desparate to add value to PC-based mobile broadband through additional services like SMS or IM. Otherwise, there is no more need for a subscription than there is to subscribe to "cinema service", or get a season ticket for a transport system. It may be convenient, if you're a regular user and you get a discount and less hassle.

But in principle, there's no reason for mobile broadband connections to be ongoing relationships. This is likely to lead to:

a) Very high churn levels
b) The emergence of a plethora of business models other than "normal" contracts and prepay accounts. Ad-hoc and bundling approaches will become particularly important
c) The near-irrelevance of ARPU as a metric, as it becomes impossible to identify a significant proportion of connections as regular "users"

Does the mobile network standards process inhibit business model innovation?

One of the things that struck me from the LTE summit last week was that the way that some standards bodies operate (notably 3GPP) risks entrenching legacy business models for operators and others.

This is ironic, as many standards groups, staffed by engineering-type people, try and avoid the whole issue of commercial models. This is either because they have limited understanding of that side of the industry, or limited time - or perhaps are worried about regulatory and anti-trust implications.

The problem arises because certain aspects of technical architecture can act as limiting factors. Physical SIM cards, for example, need to be distributed physically. Which means that a customer has to physically go to a store, or via the post. What seems like a technology-led decision can mitigate against particular business models, such as ad-hoc usage - and add in "latency" of hours or days to a process.

Or alternatively, dependencies between otherwise separate sub-systems can cause huge brittleness overall. LTE is being optimised for use with IMS-based core networks. But not all operators want to deploy IMS, even if (in theory) they want LTE - again, restricting business model choices or forcing them towards what is now a non-optimised radio technology.

The insistence of a lot of mobile operators to only view each other as peers (through the GSMA club, and various of its standards initiatives like IPX) is another example. This reinforces the notion that alternative service providers like Skype or FaceBook are *not* peers, but instead deadly enemies. For some operators that may be true, but for others they might be critical partners or even (whisper it) in a dominant role, for which the MNO is a junior part of the ecosystem.

Freezing old-fashioned assumptions into standards and architectures, often without even identifying that those assumptions exist is a recipe for disaster.

This isn't to say that standards are bad - but just that there is often no mechanism by which seemingly-sensible technology decisions are double-checked against potential future business models. Having a cycle in which people ask questions like "Will this work with prepay?" or "What's the wholesale model?" or "What happens if 3 people want to share one 'account'" or whatever would avoid many of these mistakes. You can never account for all eventualities, but you can certainly test for flexbility against quite a range.

Again thinking about the LTE Summit, I did not hear a single mention of the word "MVNO" during the whole event. Nobody has thought what an LTE-based MVNO might look like - or whether there might be cool features which could enable such an provider to provide more valuable services. I was met with blank stares when I asked about implementing open APIs on the radio network, to make it "programmable" for developers or partners. So I guess we won't be getting latency-optimised virtual mobile networks for gaming, then.

Many speakers appeared to view the only mobile broadband business models as traditional contract and prepay mechanisms - no talk of sponsored or third-party paid access. No consideration of the importance of Telco 2.0 strategies. No discussion about where in the EPS or LTE networks a content delivery network might interface, and so on.

One option for fixing this problem is via the other industry bodies that don't set standards themselves, but which can consider use cases and business models a bit more deeply - NGMN, OMTP, Femto Forum and so forth. Perhaps that's the level to bring in these considerations, so that they can then "suggest" specifications for the standards bodies to work to.

How about "Future mobile networks MUST be able to support a variety of MVNOs of example types A, B and C" for example?

On the same theme, I'll write another separate post soon, about why the increasing desperation to get IMS deployed is a particularly dangerous risk to the industry. In my view "legacy IMS" is a set of standards that is not fit-for-purpose in mobile - in large part because it is entrenched in a philosophy of walled-garden business models, rather than built around openness from Day 1.

Upcoming events - Open Mobile Summit and WiMAX Forum

I've got another couple of important mobile industry events coming up over the next couple of weeks.

In particular, the second Open Mobile Summit is taking place in London on 10th & 11th June. The first one, at the end of 2008 in San Francisco, was a pretty good read across the whole of the industry, covering most of the various types of "openness" from net neutrality to smartphone OS's to open spectrum and white space.

I've doing a "fireside chat" with Truphone's CEO Geraldine Wilson, and will also sitting in the audience asking nasty questions to most of the other speakers as well.

The other parts of the agenda looks good this time as well, and I'm especially looking forward to seeing friend & fellow cynic James Enck chairing the first day.

If you're interested in going - tell 'em I sent you.

Also upcoming next week is the WiMAX Forum summit in Amsterdam. I'll be talking about the potential for new business models emerging around the technology. Should be interesting to compare with LTE last week.