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Thursday, November 16, 2006

3's conversion to the Internet faith.... No IMS... but also no wVoIP...

Filling in a few more details about the Hutchison 3 mobile broadband announcement....

- The company's CFO made a very public & emphatic U-turn, using terms like "tearing down the walls", and "in principle, what's free on the Internet ought to be free on your mobile". He decried operators who priced their data services according to a resource-scarcity model, and deemed the idea of tariffing connectivity so as to dissuade people from using open-Internet services as "unacceptable". And this is from the guy in charge of the financials, not marketing...
- contrary to various reports, the Skype service is NOT wVoIP - it's a circuit-switched call from the phone into a Skype VoIP gateway in 3's network. I suspect this is because of both radio resource inefficiency of VoIPo3G, and the limitations on indoor coverage. The Skype client on the phone uses IP-based presence, which works over 3G or 2G.
- although there are various proxy servers for things like the IM applications and (I think) Orb, none of the things announced today use an IMS in 3's network. No CSCFs or all the rest of it - most is just a big fat pipe straight to the real Internet. There's some policy management stuff in there to maintain network integrity & throttle back particularly heavy media streams (and, I suspect, watch out for things for filesharing), but it sounds to me that 3 has launched a whole bunch of new appealing things without any of the complexity of IMS.
- Chatting over lunch, it seems that many of the people at 3 share my view that 900MHz refarming & Elisa's trial in Finland is indeed of critical importance.

Overall, I saw the whole event as an example of "beautiful heresy". All the usual so-called operator nightmares - Skype, flatrate data, applications not services, free IM (potentially replacing text), placeshifted media - are being embraced.

Yes, we still don't know the price, but to be honest, it doesn't matter. I think there are plenty of people who will instinctively want a mobile ISP service which enables them to use their handsets the way they use their PCs & broadband modems. Having a select range of tuned / tweaked / customised / optimised Internet brands like Skype and Sling is the icing on the cake. And the fact that they are not subject to extra per-use charges is the cherry on top.

I know I'm sometimes very cynical about mobile operators, but I have to say I've been genuinely astounded by all this. I've been jokingly using the term "legacy mobile-only operators" for some time in comparison with more Internet-savvy FMC carriers. But this announcement makes it clear that not only are some mobile operators going to try & keep up... but that many others are now beyond "legacy" and heading towards "history".


Anonymous said...

Check out Amp'd and Helio in the US. All you can eat data, messaging, VOD, MOD etc... in one of the most backward cellular markets in the world. No wonder these guys are being so successful.

Dean Bubley said...

Yes, fair point - the Helio offer is also relatively similar in some ways, I hadn't scrutinised the details before.

Main difference appears to be just quite how Internet-centric 3's offer is, plus the placeshifting

Also, as it's initially smartphone-based, there's the ability for higher-end users to download new applications like 3rd-party software clients. Apparently you'll even be allowed to put the full packet-based VoIP version of the Symbian Skype client on it when it's released.

Just had a look and the Helio "fair use" cap is 160MB / month. Will be interesting to see how this stacks up by comparison.

Anonymous said...

"There's some policy management stuff in there to maintain network integrity & throttle back particularly heavy media streams (and, I suspect, watch out for things for filesharing), but it sounds to me that 3 has launched a whole bunch of new appealing things without any of the complexity of IMS."

I do not understand why they would waste their resources on using this thing called "IMS". What would be the benefit of using it in practise ?

IMS is kind of exercise for the old telecom people used to develop architectures for years - and then allow the application developers some restricted sandbox for restricted innovation.

Anonymous said...

IMS is a step forward to an all-IP architecture and a strategic one by the way.

IMS will enable new communication services with a high degree of interoperability and enhanced by presence and location information.

IMS will bring considerable value to communication services.

Dean Bubley said...

I've posted a lot about IMS over the last year.

Bottom line - some carriers will deploy it for some applications in some circumstances. Others won't. It's certainly not essential, and it will certainly never be ubiquitous. It's more applicable to fixed/FMC than mobile-only operators.

It's just one (complex & unfinished) way to create an all-IP network. There are others, as well as hybrids and "part IMS, part other stuff".

There are still huge unanswered questions about things like IMS devices, integration with non-IMS application (especially the web), the transport layer, billing etc etc

However, there are some operators with more-sensible IMS+SDP strategies emerging (eg BT, KPN). But as 3 has pointed out, that's not the only route to new service deployment.

I'm going to be at the IIR IMS Congress in Geneva talking about much of this in a couple of weeks' time. http://www.iir-events.com/IIR-conf/Telecoms/EventView.aspx?EventID=533 .

Anonymous said...

Have a look at HWLs annual report financials and look at the kind of loss Three has been making since it was launched. Still honestly beleive Three UK's CFO talks sense? Its kinda amusing to watch their latest attempt at comercial suicide.

Anonymous said...

"I've been genuinely astounded by all this"

We're talking about Three right? Excuse me while I double up in laughter on the floor. This is the company who'se subscriber acquistion costs are greater than the lifetime value of the customer? The company who despite paying customers to receive calls and texts still can't convince anyone to take up their prepay offer? Whose churn rate is so off the scale they don't bother stating it any more? Who aren't even first to market with their consumer internet offer? and this taken this long for the first 3G network in the UK?

Dean Bubley said...

As the tone of my post suggests, I haven't exactly been the world's biggest fan of 3's strategy in the past. I've also felt that its has been guilty of various of the areas I wrote about in my "Fudging the numbers" post a while back.

Yes, there's still an awful lot for them to prove to me & the industry that they can execute and generate profitability.

However.... the point is that in launching a flatrate & optimised consumer Internet-centric service, they have:

a) Actually given customers something they demonstrably want & understand (ie Internet access), instead of giving them third-rate expensive "services"
b) Hopefully raised the competitive bar (as they did with voice minutes) so that even if they ultimately mess up, other operators will have to follow suit to a large degree.

Furthermore, this may also enable them to grow their market share & generate customer loyalty - and conceivably even reduce CACs.

Wearing my "personal user" hat, in the past I would never have gone near a 3 contract as I couldn't get a decent Google+Yahoo+ISP email experience. Hence my use of Web'n'Walk on T-Mobile. I just want to get online, and then the operator to get out of my face as much as possible. I'm prepared to accept a limited amount of advertising or branding as quid pro quo, but otherwise I just want a decent "smart" pipe & client software.

Anonymous said...

I think that H3G's choice not to use mobile VoIP for mobile Skype deserves more attention. Especially since the lead devices are smart-phones and thus theoretically capable of running the Skype VoIP client... but which is pretty difficult to finish, as Skype's Zennström admitted publicly.

H3G's supplier for the mobile Skype solution is apparently the start-up iSkoot:
Overview how it actually works: