Holidays....

In theory, I ought to do a "round-up of 2005 & things to look forward to in 2006" post, but I've left it too late & I'm about to head for the airport.

If I get caught in an Internet cafe during any tropical rainstorms, I may post some observations from remote bits of southern Africa, but otherwise I'll be back in January.

And I might be a mobile analyst, but I take great pleasure in leaving my phone at home when I go in holiday... change the voicemail, put it in a drawer, and head to Heathrow. Connectivity courtesy of Yahoo! Mail is more than enough....

Lastly, a quick shout out to one of the more eclectic "communities" enabled by technology for organising an awesomely bizarre outing on Saturday. You may be unsurprised to read that Disruptive Santa is the one being contrarian and wearing black....

IP interconnect: carriers seem to have lost the plot

There's been a lot of noise about the possibility of large carriers attempting to enforce interconnect and policy management regimes on Internet-based services since I last mentioned it. James Enck has been following it closely, and last week at Cisco's Analyst Summit the company tried to make a virtue of it, fitting it around the company's earlier acquisition of P-Cube, which made "deep packet inspection" gear.

During the conference Q&A I tackled SVP Mike Volpi on the topic, and was given a remarkably "scared and blinkered carrier"-centric answer which can roughly be summarised as "broadband is not a human right" and "carriers have to protect their own services on their own pipes, and not have them risked by other people who don't pay them".

Now, I've often seen equipment vendors shrug at their customers' sillier ideas and imply "well, it's their money. If they really want to waste it on something we think won't work, they might as well waste it with us, rather than our competition". However, there wasn't much public eyebrow-raising equivocation of this type. They seem to be serious.

Now, from my perspective there are indeed a couple of reasonable angles to this. Carrier IP networks that are strangled by huge volumes of (usually illegal) P2P traffic are an issue, especially in instances where this could actually break the network. Cellular networks may be especially fragile (imagine a Symbian-born virus which spread using Bittorrent-over-3G) and so I'll buy the notion of packet inspection as a form of pressure valve. Arguably, content filtering should be done in the network too, although personally I think it should be device/terminal-based wherever possible.

But the notion that Internet "service providers" (actually, I see them more as "application providers") like Google or Skype could be forced to pay interconnect fees to carriers (or do co-marketing revenue-share type agreements, as Cisco's Volpi also suggested) is palpable nonsense. The notion that a carrier could explicitly or implicitly degrade Skype of Yahoo!, on the basis that it competes with some of their own services, is horrific to most Internet users, and is likely to stifle the fundamental innovative nature of the Internet.

I struggle to think of a single "cool" and "useful" application or service on the web that was originally developed by a large carrier. They've all come from 2 guys in a dorm at Stanford or 2 ex-Apple employees. Can you imagine the inventors of the next Skype or Hotmail having to negotiate with 327 different carriers and ISPs around the world to make sure their service works properly?

As I said, if IP interconnect is enacted the way the carriers are threatening (largely in the US), it will kill Internet innovation.

Luckily, it won't work. The whole stupid project will fail at several levels - and possibly take the more laudable aspects like P2P traffic-moderating down with it, as it sinks.

The main points of failure:

- All this is scuppered by putting the traffic into a VPN tunnel, originating on a PC or a smartphone. You try filtering something that's encrypted, application-by-application, or URL by URL. Google's supposed WiFi secure access client seems like a poorly-disguised beta for a future version of this.
- In the future, we might build apps out of components more. I reckon XML/.NET based apps and services will be nigh-on impossible to police with deep packet inspection. The same component going across the network could be part of 20 different applications.
- No carriers have a position of "Network Policy Manager", and the complexity of such as putative role in liaising with different departments (network, wholesale, marketing, regulation, legal, HR, large accounts etc etc) makes it unlikely that one will evolve any time fast
- Many apps will just evolve to evade IP interconnect. Someone will make MSN appear to the network as MMS, or Skype will spoof SAP.
- Many operators trying heavy-handed approaches to IP Interconnect will screw up uninintentionally. I'd love to be the fly on the wall when the CIO of a major investment bank rings his carrier account manager and says "I've spent $5m designing a class-leading realtime P2P application to distribute equity derivative pricing information between my traders' desktops and mobile devices. Your stupid network appears to have started blocking it & we've lost $100m through delayed trading. I'm taking my 10,000 users elsewhere, and you'll be hearing from my lawyers and the SEC in the next 30 minutes"

To close off - an open request to the software community. Can you build me a desktop application that will work out (proveably) if my broadband carrier is degrading any particular services? I'll pay you for it. And I'll use it to churn to a carrier that makes a virtue of letting me use my pipes the way I want.

Smartphone OS debates... who really cares? The action's somewhere else

To my mind, an inordinate amount of focus is placed on debating "which operating system will win on mobile phones?".

Microsoft vs. Symbian vs. Palm vs. Linux vs. SavaJe vs. whatever.

I've lost count of the number of presentations I've seen which have basically said "If all phones were based on our OS, then you, the operator, could do all sorts of cool new apps / save costs / increase ARPU / solve world hunger".

Very few of those Powerpoint decks, however, have gone on to point out how the real world works - that there will, clearly, be a mix of OS's, at which point some or all of their "benefits" start to disappear.

Let's face it, heterogeneity in mobile phone OS is permanent. At the bare minimum, Nokia will continue to champion Symbian, Motorola will push Linux, HTC is making a good living with Windows Mobile, and assorted proprietary OS's continue to make traction because consumers don't care.

It doesn't matter if 2008's coolest phone runs on FORTRAN or has a dozen monkeys with abacuses inside it. People will buy it, the way they bought the Moto RAZR, because it's cool. And therefore operators will clamour to sell it, irrespective of their internal goals to reduce the number of OS's they support.

So - OS diversity is a baseline. Most manufacturers recognise this, and most mobile operators as well. Even the most proscriptive, NTT DoCoMo, which develops its own software stacks, dual-sources from Symbian and Linux.

As a result, the focus of the action is moving a little further "up". I am seeing a revitalised set of attempts to compete at the "application platform" layer. Clearly, Java and BREW have been around for a while. DoCoMo has championed iMode around the world with a measure of success. Most of these can work "on top of" multiple OS's (although I'm not aware of any BREW-on-Symbian phones).

I see various new attempts by the Java and GSM communities to create essentially a "BREW clone, but without having to deal with Qualcomm". The OMTP and the approach of firms like SavaJe exemplify this. I see Qualcomm itself use its success in 3G chipsets and possibly its UIone interface solution to subtly push BREW towards wider acceptability anyway. I see DoCoMo getting greater traction with iMode (and maybe FOMA in the future?), and the Koreans seemed very enthused about the possibility of exporting WIPI. Arguably, even higher-level software layers like Macromedia Flash Lite, and Surfkitchen's & Action Engines' UI tools could be counted in this category too. If it didn't have more pressing concerns, I would have expected RIM to be playing harder here as well.

To some extent, this is the promise of J2ME, but updated with better functionality, security, less fragmentation and better end-to-end control by operators.

Where does this leave the underlying OS's? I'd argue that - except for specific usage cases - they are heading towards commoditisation. Clearly, they're not commodities in the way that suppliers of oil or coffee beans are - the investments and switching costs remain very high. But I see the debate remaining very restricted to internal bean-counting and engineering debates inside handset manufacturers, in a similar fashion to phone chipsets. I see no real reason why Symbian vs. Windows Mobile should get more coverage than Texas Instruments vs. Infineon.

Do you know what chipset is in your phone? Or what its differentiators are from its competitors? Is there a dedicated blog site extolling the virtues of Agere-based handsets? Sure, these matter if you're building phones. But so does the type of battery, the audio chip and a 100 other things. Add the OS to the list.

What are these "specific usage cases" I mentioned? Well, obviously Nokia's range of high/mid-end devices is one of them. Then, clearly, the Internet is stuffed with enthusiastic evangelists of one OS or another, who would gladly beat each other to death with the device of their choice. Certain groups of developers have natural leanings towards Microsoft or Symbian too, for example in the enterprise. But the Holy Grail of the OS vendors, to have mobile operators standardise on specific OS's, seems to have run out of steam. It's also much easier to test and develop new solutions on smartphones before pushing them downmarket - there's a reason why so many of the DVB-H mobile TV trials are on Symbian-based phones.

So, operators are increasingly happy to standardise on application layers, and have these run across multiple OS's. Sure, they might prefer fewer OSs - but we're maybe talking reducing from 10 to 6, not down to 2 or 3.

But fundamentally, we're moving to the "not-quite-lowest-common-denominator" position, abstracted a layer from the OS.

What this means is that OS's are not major differentiators for manufacturers. I have a feeling that Symbian may end up as a loser here. It's notable that Panasonic has shifted allegiance from Symbian to Linux this week, and that the Koreans I spoke to a couple of weeks back had tested - and rejected - WIPI-on-Symbian.

Microsoft's position is more obscure, but its focus on IT-type applications and more corporate-aimed devices may mean it runs parallel to the more consumer/content-centric WIPI/Brew/Java/i-Mode debate.

Linux seems to be a potential long-run winner (recent developments in APIs and standards are helping), but it "isn't as easy as it looks" seems to be a familiar refrain in my research. A newly-revitalised SavaJe is an outside bet, but my general belief is that all this means proprietary OS platforms still have several years' breathing space in front of them.

[Oh, and any VCs interested in funding my MPMMAOS (massively-parallel mobile monkey abacus OS) programme, please contact me at the usual Disruptive Analysis address]

korean wireless round-up

Owing to various client and travel commitments, I haven’t had a chance to fully write up a lot of what I learned in Korea, about innovations like WiBro wireless broadband, and DMB satellite mobile TV, as well as some of the more general trends in mobility.

However, I want to highlight a few things that appear to differentiate the Korean approach to wireless versus Europe and much of the rest of the world.

Perhaps the most obvious is just how much “Korea Inc.” is pulling together on WiBro. This is represented by a combination of the government (through 2.3GHz spectrum licencing), SKT and KTF in services roll-out, and Samsung and (to a lesser extent) LG on network infrastructure and devices. I got the distinct impression that WiBro is being set up as a showcase for all these firms to establish and extend their global position in the coming major transition to WiMAX. As a sidenote, it will be interesting to see if any of these companies can lock down a significant IPR position and patent portfolio, around the practicalities of implementing a WiMAX network. This could, for example, give Samsung a much stronger position in the wireless infrastructure market than has been the case in the cellular domain in the past.

Next is the Korean attitude (and reverence) towards technology. It’s very fashionable for many European and US companies to downplay the importance of underlying enablers. “Oh, we don’t want to focus on the nuts and bolts, it’s the content / services / applications / user experience that’s important”. Nonsense. In many cases – and the Koreans get this – if you bring the technology (and get it right, and get it early), the rest will follow, even if it’s not obvious to begin with. Both science and technology (especially IT & computing) have always worked this way, and it reflects badly on many western telecom companies that they are trying to present a fuzzier image now, largely in order to please mass-media and relatively tech-phobic populations. It was very notable that a slide from KT listed as key success factors “network, terminals and services”, and not brand or user experience.

[It’s also notable just how tech-savvy (and science/tech-educated) Koreans are. More generally, a similar story applies in China and India as well – just look at the science student population in Asia, and the attitudes of their peers, versus the trendy sneering about science and engineering geekiness in countries like the UK.]

So, in Europe, the idea of fast, open, mobile broadband would be viewed as scary. “An IP pipe??! But what about commoditisation? Can’t we just bury our heads in the sand instead and hope it goes away?” Operators are intensely defensive. “and, er, we’re really scared of Skype, so we’re going to price this stupidly high to skim the market and deter VoIP, and try and create some sort of allegedly value-add service to flog to our customers instead of giving them what they really want”. In my view, this is a surefire way to get hit much harder by the IP steamroller in a couple of years time.

But in Korea, not one of the presenting companies at the iMobicon conference in any way implied this was a major concern. The attitude seemed to be more like “sure, some people will want to use Skype or something else competitive. But to be honest, we’re not going to be able to stop them, so instead we’ll compete ourselves, creating our own VoIP and other IP applications that are better, easier to sell and use, and integrate with users’ other services”. This is much more of the “if we can’t beat them, then let’s join them….and then beat them at their own game” philosophy. Oh, and let’s have LOTS of bandwidth while we’re at it.

Another key observation is the aggression of the major Korean operators in extending their reach overseas. The SKT/Earthlink MVNO deal in the US is likely to be just the tip of a new iceberg. I got the distinct impression that the Korean operators feel they could be more successful in exporting mobile content platforms than DoCoMo has been with iMode. They characterised the iMode business model as being too inflexible, and seemed to suggest that a variant of WIPI and extra application layers could have wider applicability.

This is also reflected in the Korea operators focus on service brand (eg for their mobile music services like MelOn, or segment-focused service plans), rather than their overall corporate brand and image. This is extremely different to the Voda-style “it’s all got to be bright red with the same logo” approach to branding.

It’s also interesting to see an apparent inversion of the usual timescales for service development and investment horizon in Korea. Service trial and deployment schedules seem hugely compressed. WiBro commercial trials are scheduled for Feb and March 2006, with full switch-on intended for around June. No unwieldy 9-month trials and 4-month subsequent fiddling about with final service definition and launch.

Conversely, capacity for things like network backhaul is put in with a view to the long term. Korean cell sites typically have metro ethernet fibre connections. No short-term, build-it-incrementally “oh, just put in an E1 or two, and maybe upgrade to microwave or fibre some other time” mentality. This is one of the reasons why it is now simple to overlay WiBro, or future terrestrial mobile TV transmission on the cellular infrastructure.

Lastly, a few more “snippets” that I don’t have time to delve into now:

- Koreans seem happier with “chunkier” handsets then I expected, emphasising function over small size.
- Lots of slide form-factor devices and “swivellable” screens for horizonal viewing
- Somewhat surprisingly, there was much more emphasis on integrating WiBro and DMB into handsets, rather than WiFi, which was conspicuously downplayed. I think this fits with my general view that integrating WiFi into phones is much more difficult than expected, as it is not inherently a “service-oriented” technology, but is usually privately controlled.
- The WiFi hotspots in places like airports and the convention centre automatically tried to log my PC on, proactively looking for a certificate on my PC, rather than waiting for me to use the connection manager & sign on manually.
- Korea probably benefits from having a few very dense urban areas, which makes it easier to roll out new services more rapidly
- One conference participant (I forgot who) said that they had trialled implementing WIPI on top of Symbian – but decided against it.
- LG reckoned they have their handset development timescales down to as little as 3-4 months in some cases.

One last comment that underscores the “techiness” of Korean mobile…. Samsung’s convergence roadmap goes rather further than just “basic” mobile TV and FMC function. Their presenter gets the prize for the first cellular presentation I’ve seen which mentions nanotech and biotech as being in line as future handset technologies….. put me on the waiting list for a DNA-locked phone please.

convergence may not be so simple.....

On the face of it, the prospective NTL / Virgin Mobile deal sounds pretty good. It hits most of the sweet spots of the much-hype "quadruple play" offer, and certainly a fair amount of commentary seems to suggest this is the end game.

I've been a big believer in the upsides of the "broadband operator + MVNO" model for a while - not much legacy PSTN to worry about, someone else deals with the nasty complicated radio bit of the cellular service, and so you, the operator, can optimise least-cost routing and clever IP-based services to your heart's content. You don't have to be over-focused about shoe-horning traffic over a cellular network, just to fill up your available capacity that you've got with your expensive spectrum licence and network build-out. And at the same time, you have a nice shiny new IP network, modern and flexible IP billing system & (hopefully) a customer service function that doesn't get scared by words like "firewall" or "PC".

In theory, combining fast IP pipes and resold & well-branded cellular should be a match made in heaven for a service based on dual-mode cellular/WiFi phones, for example. And, unlike an operator such as BT with Fusion, Virgin comes with a big existing mobile customer base.

However, there are a couple of flies in the ointment. For anyone out there doing their due diligence on this deal, you might want to consider the following:

First, most MVNOs (especially in Europe) have an overwhelming proportion of pre-pay customers. Many will be young people who use someone else's broadband & whose parents / flatmates / university residence halls' managers may be unwilling to change to benefit someone else's bundled quad-play

Secondly, many of the favoured approaches to dual-mode services - not just UMA (which regular readers will know I tend to criticise anyway) but many SIP-based alternatives too - need boxes to be integrated fairly tightly into existing cellular networks. These usually require direct access to elements in the cellular core such as MSCs (switches) and HLRs (home location registers - essentially the database that tells the network where you are). My understanding is the most MVNOs' deals don't give full access to these network elements, and that "technically deeper" MVNO deals like BT/Vodafone are relatively unusual in this regard. I don't know what the precise network-side ins & outs of Virgin's MVNO set-up are..... but I'd advise any M&A guys to take a close look at things like "Access to the 'A' Interface" before putting up any persuasive Powerpoint slides featuring WiFi/cellular handsets & (yawn) "Seamless Roaming".

how much data in that bundle?

I saw an interesting mobile services bundle advertised yesterday. It includes voice, videotelephony, texts, MMS and downloads.

On the face of it, nothing particularly unusual, except the very heavy bias towards data services, especially texts, and to a lesser degree downloads.

What I want to know is exactly how the accountants and management work out the value of each element. Is it based on that element's included allocation in the bundle? Is it based on the actual usage of those allocations? And exactly how do you work out the relative implicit value of say, actually using 800 texts vs £7 of downloads vs. all 150 voice minutes?

This advert & bundle has reminded me of a question I first thought of a couple of years back.

How exactly do carriers work out the % ARPU attributable to data services, when most of those services come pre-bundled at a non-specified cost per message/download/video minute in a plan? Is there any consistency between mobile operators? Are these numbers audited, and if so, to what rules? Do the rules vary by country, or change over time?

I'm not getting at 3 specifically here; this applies to all operators in a similar fashion. Maybe everyone shouldn't be so surprised that mobile data ARPU percentages keep creeping up, as they're such an important and closely-watched metric.... and (perhaps) so easy to "fiddle".....

indoor coverage in Korea

One of the things I have been most impressed by about Korean mobile comms has been the prevalence of good in-building coverage solutions. Perhaps unsurprisingly, the metro in Seoul has what appears to be ubiquitous coverage (not that unusual - many cities are doing this, using many different technologies, although London will take years )

However, the thing which really caught my eye was the small KTF-branded repeater dangling from the ceiling by a cable, in a small downstairs bar in Seoul. (I think it was one of these , but unfortunately I didn't have a camera with me at the time). Nothing flashy, not even a large venue with 1000s of people (I reckon there could have been a max of 150 in the venue at any one time). Just a pragmatic installation to help people make calls where they want.

I keep hearing stories that European operators are going to be much more aggressive with these types of self-install solutions to improve coverage in retail or public facilities, but I see precious little action. I'm not sure whether there are clear technical or regulatory reasons for this, or whether it's just down to apathy or business model uncertainty. And although I'm hearing a lot more "chatter" about mass deployments of picocells and residential-grade "femtocells", offering extra base station coverage (and extra capacity), I'm pretty sure the time horizons are quite far out.

driving churn....

...overheard a quick comment from a fellow conference goer today, which underscores some of my issues with the opportunity for operator-controlled IMS services:

"Well, obviously for my work life I use my company email address at ___.com ... but personally, I've been a Yahoo! Mail user for years - I even pay for it - and if my carrier tried to block access to it from my mobile, I'd obviously move to another provider"

Amusingly ___.com is a very large European cellular equipment vendor, that is currently pitching operator IMS solutions very loudly indeed....

killing time?

I'm in Korea for a conference at the moment, and spent a few days in Seoul before coming down to the island of Jeju for the event. I've been keeping an eye on the way the Koreans buy and use their cellphones and other bits of technology.

One of the things that I've noticed is just how much "personal technology" there is around. Not just cellphones, but also huge numbers of MP3 players (but few iPods), and also "proper" digital cameras. It's also telling that this is a very low-crime society, so nobody worries about the risks of wearing a few hundred dollars-worth of gizmos on a lanyard around their necks or in their handbags.

Also, as is well-documented elsewhere, there are hundreds of PC gaming / Internet shops known as PC-Bangs (as well as DVD-Bangs and other "outside of home" pay-per-hour technology locations that would normally be covered by home consumer electronics usage in Europe or North America)

Koreans use their phones a lot. Sit (or more likely stand) on the Seoul subway, and there is a large percentage of people pecking away at keys (mostly games or SMS), and a substantially smaller number actually talking (there's decent cellular coverage in the metro). Interestingly, there are far fewer people actually talking on their phones on the streets & other locations as well.

This has got me thinking about the way some of the much-vaunted new applications like mobile-TV and gaming are being pitched in Europe. Quite often, I've heard terms like "ways of killing time", "info-snacking", "mobisodes" and so on. The idea being that when people have a couple of spare minutes, they could use these new mobile apps rather than perhaps read a newspaper.

But in the UK certainly, and probably elsewhere in "chatty" countries with few taboos about talking on the phone in public (Italy, for example), I'm wondering if larger bundles of voice minutes & better in-building coverage would just make people use more voice instead. If you've got a few minutes free - why not call your friends or family? why bother trying to download music onto your phone (and paying through the nose for it), when you could have a good gossip instead "for free"?

xMax.... there's something there, but I can't be sure exactly what....

Met up with xG Technology the other day - those guys with the seemingly-unbelievable wireless broadband technology that they reckon is orders of magnitude more efficient (power, range etc) than WiMAX or other emerging technologies.

Unlike some journalists, I haven't had a demo, but I got to chat with their execs in some detail. They answered lot of my questions about latency, indoor performance and so on, but it seems like a lot of this will be up to exactly how the radio is implemented by any future licencees. There's nothing obviously untoward in the basic technology itself which would act as a limiting factor.

Apparently it works by modulating a signal onto a single wave cycle, rather than the 100s / 1000s of cycles more commonly used in other types of radio. (The long-buried physicist in me does wonder if this might induce any odd quantum effects, by trying to interpret a single wave, rather than averaging out a property measured over 100s - anyone else out there have a view on what Heisenberg & co might have to say about all this?)

More interesting was the commercial status & focus of the company. Essentially, they seem to be fending off various approaches from all and sundry in the telecoms industry, from chipmakers to equipment suppliers and carriers. Apparently, they don't need cash - they've been in stealth mode for 5 years & are quite happy on their own.

They are involved in an interesting game of chess - they want to create enough interest in their technology that someone agrees to licence it... but they don't want to give enough short-term concrete proof points that other companies try and use 1000s of engineers to reverse-engineer it themselves, emulate the idea and then adopt a "Go, on, try & sue us, how many lawyers have you got?" strategy.

Basically, their position is "we reckon we've got something cool, we want to create some buzz & speculation & excitement.... but we're quite happy if everyone else rubbishes it for a while longer, as it gives us a chance to navigate the mountains of unrealistic NDAs and liability legalese that prospective licencees are trying to foist on us".

It still sounds interesting, though.... and I guess there's half a chance some chipset manufacturer (Intel? Qualcomm?) might take a punt....

Mobile TV: good idea..... but will it work?

There seems to be a groundswell of naysayers around Mobile TV. I've been at a couple of conferences recently where the mantra of "why would anyone pay for it?" seems to have been chanted.

Is it a technology in search of a market?

I actually think these observers may have it the wrong way round. For me, it's one of the few recent inventions in the mobile business that actually seems to make sense. People know what TV is, and many of them pay for it already, so they understand intuitively about mobile TV.

The marketing message is pretty simple "It's telly. But on your phone" . Job done.

Contrast that with, say, the MMS proposition, which is trying to train users to do something utterly new:

"Yes! You can take lousy low-quality images, compress the living daylights out of them further, put them in a cumbersomely-constructed message, and spend lots of money to send them to someone else, who might occasionally receive them OK. No! Don't just upload the image to a PC and email it for free more easily instead"

Or Push-to-Talk:

"Yes! It's Voice-over-IP! But you pay more for it, not less! And, er, don't ask us about the latency"

And I'm still unconvinced by the whole download-music-over-the-air thing as well, but at least the idea is relatively easy to understand, even if the pricing is silly. (But at least it's only a factor of 2-3x silly, so that's not too bad, when you consider that international mobile data roaming is often priced 10x-1000x silly)

So, for once, I'm a believer. Mobile TV makes sense, conceptually. People will "get it". I don't know if I'd use it personally (I don't pay for cable or satellite TV at home), but I can understand the millions who might want football / soaps / news / "adult" content on their 2.5-inch screen.

One fly in the ointment, though.... (leaving aside the usual theme of handset price & user experience) is in-building penetration. I did a quick scan of some studies about DVB-H and the general consensus seems to be that if you want decent indoor coverage, you'll need transmitters on cell sites as well as existing TV transmission towers. Which changes the cost of deployment very significantly. I haven't had a chance to find out if Qualcomm's Media-FLO and the satellite DMB approaches have the same shortcomings yet.

Bottom line in this case, for me at least, seems to the reverse of the usual:

Is it a market in search of a technology?

Service, application or feature?

I'm doing quite a bit of research on IMS at the moment. Apart from the head-spinning array of acronyms, one of the things that jumps out at me is how differently the IP and mobile worlds treat "things that people can do with their phone & the network".

There seem to be three main schools of thought:

- "It's a service" - which means "we, your carrier, will install a bunch of complex kit, maybe customise your end device, and bill you for using this thing every time/month/per-byte/etc. We might also try & charge you for using someone else's service, and bill you on their behalf."

- "It's an application" - which means "we, your carrier, will try and sell you some software that makes this thing work, and maybe even host it for you. However, you will 'own' it, which means that any problems are yours to solve"

- "It's a feature" - "we, your carrier, are annoyed that Microsoft / Symbian / someone else has bundled this in with the software of the phone, and that it connects to some server outside our control, relegating us to the role of 'bit pipe', without any chance to earn extra revenues, even if we're adding no appreciable extra value".

There's also the fourth school of thought, which is "It's bait for out community/advertisers/OS, and if it's not good enough, we'll keep adding extra bits until it is". Which translates as "we, Google / Microsoft / Yahoo / eBay will gladly give you a whole bunch of stuff for free, because we know it's actually pretty cheap to provide, even though you value it quite highly"

It strikes me that one of the things that IMS will enable is much simpler service vs. application vs. feature arbitrage. Of course, this isn't the IMS intention at all, which is purely about services - but to make IMS work, it seems likely that phones (and networks) will need such a lot of upgrade in terms of "smartness" and performance, that the feature & application stuff will probably sneak in regardless.

It will only get worse.....

Vodafone's gloomy outlook today does not really surprise me. What surprises me is that the City doesn't appear to have priced in what seems apparent to everyone I meet: that margins in the cellular business are going to face continuing pressure, despite the promise of whiz-bang new services and networks.

Voda is blaming its future difficulties on high levels of mobile penetration (exactly why this is surprising is beyond me, it's hardly as if its suddenly happened), and falling termination rates. Its continuing problems in Japan aren't helping in the short-term either.

Which is interesting, as it tells me that the likely additional pain from IP-derived pressure on roaming, plus price erosion for indoor and fixed "nomadic" use of mobile phones is not yet priced in.

Basically, customers (and competitors / substitutes) are waking up to the fact that the "mobile premium" on voice pricing is only acceptable when you're actually mobile - ie moving around. If you're stationary, sitting at home in or in the office, all that cool cell-to-cell handover technology in the network has zero value to you. And, increasingly, there will be ways to avoid paying for it in those cases.

At the moment, the IP-based options to play arbitrage games (like dual-mode phones) are still clunky, but they're evolving in various guises over the next few years. Other cellular-only options will also give lower-priced indoor phone calls. Voda itself has a "HomeZone" type service in Germany, offering low-cost calls ostensibly to substitute for fixed-line voice, but also to compete with O2's successful Genion product.

This is why conferences like last week's Wireless VoIP event are so telling - it's the cellular carriers that have the defensive presentations, talking about blocking VoIP, or pricing data traffic to mitigate the risk of Skype. It's also why I think the more aggressive fixed/mobile hybrid operators will be the ones to benefit from new network architectures like IMS.

I'm chairing this event on next-generation networks tonight, so if anyone's around, say hello.

International roaming and VoIP

Does anyone know what proportion of carriers' international roaming calls is accounted for by long, outbound calls? It strikes me that it's probably quite high - business people phoning into conference calls, ringing back to head office or to clients - or even tourists phoning home.

I think this section is uniquely vulnerable to PC-based VoIP substitution, unlike inbound calls transferred to the user, quick outbound calls for voicemail and so on.

At a conference the other day, a substantial section of the audience (admittedly attending a Mobile VoIP event) had been using Skype or some other form of VoIP over in-room broadband or hotel WiFi whilst they had been there.

I did myself - I had to have a 30min+ conference call with someone in the US, while I was myself roaming in Belgium. Given a choice between my mobile, the hotel phone, or the (relatively painful) €20 WiFi charge + pennies on SkypeOut, it was no contest.

Add in the fact that the timing of the call is often known in advance, the user (especially a business traveller) will likely have a PC anyway, the desirability of having web access to Google or a client's website while on the phone, and the ergonomics of a headset, and it's a bit of a no-brainer.

What's not clear to me is just how much of a typical carrier's voice roaming falls into this category - but I suspect it's a pretty sizeable chunk.

Wireless VoIP

I'm currently at a conference on the technology, applications and commercial issues around Wireless VoIP. I've been speaking myself (on the topic of enterprise use of VoWLAN), and generally harassing most of the other speakers with questions.

Some interesting snippets that are emerging:

- Skype is already doing VoIPo3G with E-Plus in Germany, initially from laptops with UMTS data cards. It's looking at other operators, and also at working over EDGE. At present it creates about 1MB traffic a minute, so it's not useful on the hideously overpriced 3G data services available in Europe (often $1-3 per MB, and much worse on international roaming). E-Plus is one of the first operators with a sensible flat-rate data pricing strategy.
- Interestingly, another analyst at the event (coming from a very defensive and cellular-operator centric position) suggested carriers should maintain this type of pricing structure to limit the threat of wireless VoIP. Given that my view that wireless data transport in Europe is 2-6 orders of magnitude too expensive, it seems that this is a massive opportunity either for new entrant cellular "challengers" or WiMAX / TDD / other wireless IP broadband operators. Back to my rallying call of "Just give me a pipe!"....
- Disagreement on the timelines, volumes and impact of dual-mode WLAN/cellular devices and converged FMC services. My view is that volumes will be lower than many think (I've been forecasting complex stuff for too long to draw oversteep hockey-stick uptake curves - I think there are lots of practicalities that will dampen the market growth rate), but the wider impact on cellular pricing and strategic realignments in the industry will be greater. I'm also ever more convinced that UMA is a non-starter - not so much because of the technology, but because of the commercials and ways of building the user interface, customer support and billing etc. I'm also starting to wonder about the timelines on SIP-based dual-mode, and whether my (relatively low-ball) predictions may be too bullish. I'm particularly skeptical about the market opportunity for non-smartOS phones with WiFi
- Starting to see more people talking about using cellular over low-power GSM/3G picocells as an alternative to VoWLAN in-building. I've been mentioning these at FMC conferences for at least a year, but it's the first time I've seen so many other people appear to take them seriously. This fits in with trends & opportunities observed by these guys and also the recent announcement from these other guys, that could help drive wider development of picocells, and even the new "flavour of the month", home "femtocells" hanging off DSL lines. I'm already looking forward to the Daily Mail's headlines about base stations in your living room.....

Too good to be true?

I've woken up this morning to several news stories, emails & blogs telling me about the "new new thing" in wireless broadband - a proprietary technology being called xMax by its inventors xG Technology . In fact, the technology is supposedly applicable to wired applications as well (although that's true of UWB as well)

It all reminds me a little of other "You what?!" broadband innovations - sending signals through gas pipelines , or via hovering airships. There are always stealth startups popping up, claiming to be about to change the world. Sometimes I guess it comes true.

It certainly sounds clever. And it may well work as claimed for certain usage cases. Whether it's commercial or not is another question. On the other hand, it certainly addresses some of my usual questions asked to mobile broadband evangelists: "will it work in-building?", "will it be low-powered enough" and "will it work internationally?".

But ever the cynic, I'm also looking for any possible stumbling blocks. I have to admit that some of the fine-grain discussion around RF modulation and encoding is beyond me, so many of my questions may have simple and obvious-to-some answers. But.....


- Are there any issues around latency? Does lots of clever signal-processing and error-correction add so much time to a "roundtrip" that it's useless for realtime apps like voice?
- Is there anything about xMax that means it doesn't work well with IP or ethernet protocols?
- Is there anything else new or around-the-corner that could interfere with it? Other types of UWB, for instance?
- Can the receivers be small enough to fit into phones?
- How well does it work with moving devices / users? At what speeds?

... and so on. Clearly, there are 100s of other questions that need answers.

My overall take is that xMax if probably now over the first hurdle - people are taking it seriously enough to at least sit up and notice it. I'll be watching it carefully, for one.

Just give me a wireless pipe....

Great piece by James Enck at EuroTelcoblog today . But my view is that the IP/Internet issue is going to hit the mobile operators even harder than the fixed guys, and that the cellular industry is even more ostrich-like in its state of denial at present.

I reckon a lot of the hybrid fixed/mobile operators like FT/Orange, TI/TIM and BT(+MVNO) now "get" the issues around VoIP, and the impact of MSN, Yahoo!, Google, Skype/Ebay et al.

They might not like it, but I reckon most of them understand its importance.

It is notable that BT is pretty cozy with Yahoo and FT with Microsoft.

I also think they have internalised that the way they will make money in the future is by becoming "smart pipes". They are rushing to deploy IMS or other IP-based NGN core transport networks, with various types of application platform layer sitting above it.

Sure, they will try & slow down the rate of change, but fundamentally, the fixed operators have long understood the value-added opportunities associated with network connectivity. This is because they have long dealt with selling wholesale services to other carriers, and above all the complexities of the enterprise communication world.

Fixed operators sell plenty of "smart pipes"already. They provide IP-VPNs, managed security services, they resell and maintain IP-PBXs and do all sorts of other complex nuts-and-bolts services with acronyms like MPLS. Increasingly, they are pushing into mainstream IT services, and enterprise LAN/WAN sales and management.

And although there have been some strange outbursts about MSN, Skype et al from some carriers, the fact remains that they have long accepted the existence of 3rd-party VoIP for millions of users. Fixed carriers aren't complaining that corporate firms are using "their pipes" for services delivered via grey boxes with Cisco and Avaya logos. Many of them sell & install IP-PBXs themselves.

None of this is glamorous stuff. It doesn't involve glossy TV advertising campaigns with pop stars & footballers. Their office Christmas parties will probably be full of boring people in boring clothes, talking about boring network widgets. But it's got a fighting chance of being profitable. It's difficult to commoditise hardcore network engineering expertise.

But the mobile operators are different. They are addicted to the consumer market, to glossy marketing, and the idea that absolutely everything is a "service" and therefore billable. Although some grudgingly wholesale capacity through MVNOs, they're still incredibly sensitive about being seen as pipes, especially "dumb" ones. Most don't have a sophisticated enterprise group that is educating the rest of the organisation that pipes can be "smart", albeit at the cost of being dull. Instead of trying to offer robust mobile IP-VPNs so users can deploy their own VoIP solution, they're still trying to pretend that "mobile PBX" solutions can succeed. Many also seem convinced they can offer billed IM services that don't interoperate well with MSN and Yahoo.

Many seem uncertain about deploying IMS, worrying that it could open the floodgates to 3rd-party IP applications. What they don't realise is that it's going to happen anyway, and that opening the floodgates is the only way to avoid drowning in the flood.

Presence or Absence?

I seem to be bombarded with companies wanting to talk about "federated presence" at the moment. There seem to be 100s of variations on a central theme:

"People have too many phone numbers / devices / services / IM accounts / all of these. Nobody can ever reach them without leaving messages like "I'll call you on your mobile instead" or "u there?" How can we simplify this & make some money as well?"

There are operator-based solutions, web-based ones, PC-based ones, handset-based ones, enterprise collaboration-based ones and IP-PBX based ones. Some of them rely on the user to update their presence information, others infer it from factors such as whether your mobile phone is switched on, your Skype client online and so on.

The idea is that you (or your service provider) should be able to set rules.... "don't phone after 8pm with work inquiries unless you're my boss"... "don't phone me when I'm travelling in a different timezone & it's 3am"... "I'm on a phone call, but email me if it's urgent"... "send my email headers to me via SMS except when I'm logged into MSN in which case IM me instead", or whatever.

All this is great in principle. But I have my doubts about just how viable this wonderful "unified presence" concept really is. Can people really be bothered to update their presence religiously? It doesn't "degrade gracefully" with non-compliance.

I reckon that if 90% of the users use the system 90% of the time, it'll be great.
If it's 80% of people & 80% of time, it'll be marginally useful.
But if it's 70% of people complying 70% of the time, it'll be an active pain in the backside & create more problems than it solves.

And if you're really important, do you actually care if other people have to jump through hoops to find you? Surely that's their problem, not yours?

Maybe "absence" will be simpler and more important then "presence". Rather than try & tell people the "best" way to reach you, why not just tell them which is worst? "Don't both calling my mobile, I'm on a plane". "I've got 1000 emails to reply to. Try something else."

Overall - it all sounds utopian. But I have a sneaking feeling that practicalities may get in the way rather a lot. The user interface is going to a major stumbling block, even if the back-end technology works.

How do we deal with Multi-WLAN households?

I reckon a battle is brewing for control – or lack of it – in the home WLAN space.

About 30-40m homes around the world are thought to have WiFi networks already, although that number is skewed quite heavily towards the US market. Most of these are bought retail at ever-lower prices. An increasing number of broadband service providers are sneaking in WLAN to new subscribers' homes (whether they need it or not) in integrated home gateways. Although some providers are tempting users to trade-in their old equipment, I bet many users still run two APs or routers in parallel (or at least keep one in the cupboard).

But that's not all. Future home PCs may have WiFi AP's built-in, with some Digital TV set-top boxes going the same way. Dedicated TV-centric WiFi solutions are emerging. It may be that your company gives you a separate secure AP to connect to the corporate network. Your mobile carrier might give you another one in a wirelessly-backhauled gateway box. Maybe your next super-dooper games console / hifi / toaster has one too. And you can see your neighbour's one through the wall, and the local municipality's hotzone from the lamp-post in the street.

What this means is that any WiFi device will need to have some damn good connection-management software and an easy and flexible user interface. Services providers and equipment suppliers have to assume that homes will have multiple APs/routers. And customer service departments dealing with wireless-related inquiries will need some pretty impressive skills to navigate users through this minefield.

It also strikes me that there's a whole bunch of product opportunities out there waiting for enterprising vendors. Just don't give me the "you only need our box" pitch, because it's plain that the average broadband household in 2009 will have 2+ separate wireless networks. Oh, and add in WiMAX/TDD/Flash-OFDM/HSDPA/EV-DO/etc while you're at it.....

Personalisation portability

I had an interesting thought during an IMS (IP Multimedia Subsystem) presentation at an industry event today... if operators (fixed or mobile) start to act as aggregation points for "user identity" (ie linking together your service subscriptions, phone #s, IM accounts and so on), will users face absolute lock-in with their contact lists / buddy lists etc? This certainly seems to be one of the possibilities / threats being posited about IMS-based networks & applications.

Does this mean that you will have to accept you have an "operator for life"?

Or will there have to be cooperation (or laws) about "personalisation portability"? (in the same way I discussed the lack of email portability recently). How would this work?

Or will users be better off with (free) "operator independent" Internet-based identity hubs like MSN, Google or Yahoo!