Another IMS handset software firm gets acquired.....

It looks like the days of independent IMS handset software client specialists may well be numbered.... after the acquisition of Openera by NMS Communications earlier this year, Qualphone has now been acquired by Qualcomm. Qualphone has worked with Nortel and IBM in the past, including participation in an IBM-led trial with Swisscom Mobile on IMS. It has also worked with Infineon to embed PTT functionality into its APOXI handset software framework.

Even more surprising is the low prices paid - just $16m for Openera, and now $18m for Qualphone. Given that these were both quite high-profile specialist players (and in Qualphone's case also had a separate & established business in mobile testing), these are pretty low-ball sums. In what ought to be a rapid-growth field (enabling the creation of IMS handsets), it strikes me as odd that they didn't hang on for a higher price at a later date.

Unless, of course, VCs were unwilling to stump up for another round of investment.....

.... which ties in with my general views that IMS-enabled phones are going to be late in reaching the market, and that IMS handset software vendors are going to struggle, as there are no detailed standards or even generic operator requirements to work against yet. In other words, royalties for "full IMS" software clients on mobile phones won't start to ramp up until 2008-9, and even then it is probable that firms will need huge additional resources in integration and customisation.

So who's next for the IMS phone M&A mill? Ecrio? Movial? Nable? If I was a player in this space, I'd start thinking more about all the other clever things that could be done with SIP-enabled phones apart from IMS applications, and which won't be tied to the glacial pace of IMS handset standards development.

(For more details on IMS-capable handsets, see here for details of Disruptive Analysis' recent report on the topic, authored by yours truly)

Once and for all..... fixed broadband will always be faster / better / cheaper than wireless

I still get people trying to convince me that HSDPA, EV-DO, WiMAX or whatever will close the gap between fixed and mobile broadband speeds.

And I still believe it's arrant nonsense. Copper & fibre are cheaper than spectrum, and unless you live somewhere a long way from the nearest exchange or cable headend, they always will be.

In fact, I firmly believe the gap is broadening, not narrowing. And this post from James Enck over at EuroTelcoBlog underlines the point.

Yes, that's €7 per month for symmetrical 30Mbit/s .

Stick that in your 4G pipe and smoke it.

Mobile Java being open-sourced - just in the nick of time

According to a few things I've read it appears that Sun is pushing Java ME (formerly J2ME) towards being Open Source.

If so, this is extremely important in terms of handset software going forward. Most mid-to-high end GSM phones feature a Java Virtual Machine, typically used for games, and a few additional applications like dynamic UIs. Generally, Java has been a "limited success" - generating revenues & establishing an ecosystem, but without much success in extending beyond a confined games-oriented domain. At one point in time, various companies were talking up full Java-based operating systems (Coincidence: I got a PR email from SavaJe as I wrote this post), but these have not really got any traction.

An extremely sore point among handset manufacturers has been the need to pay a royalty to Sun of (historically around $0.50-1.00 per phone, I believe), on top of the cost of the JVM itself. While this doesn't seem like much, it is a significant fraction of a phone's total "bill of materials" and hence a major impact on the price and achievable margin on the device. In addition, the fragmentation of the way in which J2ME is actually implemented on phones has landed developers, operators, and device vendors with myriad headaches in porting software across a whole range of handsets. Companies like Tira Wireless have closed the gap with specialised porting tools, but it's still been a bone of contention.

Java's future on the handset as the "3rd party software platform of choice" has therefore been threatened - while it still has a huge developer base, it has been faced mounting competition from other software platforms that can support games, and often much more. Obviously, native Symbian, Windows and Palm applications are alternatives on smartphones, with shipments growing and OS licence fees falling. Linux has also been making a strong push recently, especially with the introduction of a secure "application sandbox" in implementations from TrollTech, although the number of mobile Linux developers remain quite small, especially for games. It's also increasingly possible to run software applications like games inside a handset's browser (eg using JavaScript/XML like OpenWave's MIDAS) or in an abstracted "user experience" layer like Adobe/Macromedia Flash Lite, or solutions from SurfKitchen & its peers.

This move may particularly benefit Motorola, which has been focused on hybrid Java/Linux software platforms for some time. This article quotes a senior Moto exec gushing enthusiastically about the move. I think it's a negative for TrollTech, which is aggressively trying to evangelise the "pure Linux" approach to phones & sway developers away from other platforms.

Overall, I think this move has the potential to entrench Java more firmly in future handsets at a time when its future was looking shaky - especially as this is a critical time as the industry moves towards more sophisticated handset platforms employing IP/IMS connectivity, multi-tasking and web-type functions.

T-Com's dual-mode offer.... actually, I think it's on the right track

I noticed a couple of posts from Andy Abramson and Richard Statsny about the new FMC dual-mode offer from T-Com in Germany, based on their custom-made TC300 handset.

Richard & Andy are pretty ambivalent about the proposition, referring to it as "fake FMC" because it uses call forwarding, and essentially combines two separate services (a mobile phone, and a fixed-VoIP connection with a "cordless" handset) in one device, rather than a one-number, one-service device of the type proposed by UMA enthusiasts.

I'll take a contrarian stance. I actually think this (along with NeufCegetel's attempt in France) is closer to the leading edge of FMC/dual-mode than some other propositions. It's about taking a home broadband service + VoIP + SIP, and leveraging the handset's form-factor by adding on cellular, rather than vice-versa (taking a cellular service, and leveraging broadband by adding on cheap local WLAN connectivity).

It uses two numbers rather than one - a distinct advantage in markets like Germany where there is a very low penetration of outbound cellular calls vs fixed, and very high fixed-to-mobile termination fees. Nobody wants to call from a fixed-line phone to their friend's mobile number at an extortionate rate per minute - they'd much rather call a fixed-line number. This is why the established German "Cellular HomeZone" services, like O2 Genion and Vodafone ZuHause also feature dual numbers.

The device itself is quite sleek - certainly among the nicest/smallest dual-mode phones out there. I understand that T-Com actually got a proper industrial designer to create a "want one" shape & look, and it shows. The corollary is that it's too small/light to feature a big battery, so I can quite believe that using WiFi drains the battery. (Someone told me the handset is made by FoxConn in Taiwan, but I haven't had confirmation of this).

It doesn't feature "seamless roaming". Big deal. This is one of those things that gets attention FAR beyond its actual importance. People will use it on what, 5% of calls? At best, it's a nice-to-have. At worst, it's a distraction. Sure, in the long term it's important, but for early dual-mode services, it should be priority #17.

In my view, T-Com has made a sensible decision to prioritise the introduction of SIP, rather than get sucked into the "roaming by any means" philosophy by hitching themselves to the dead-but-still-warm UMA.

Speaking to T-Com, my understanding is that this is definitely pitched as an initial, basic, entry-level phone. It's a "new" WLAN home cordless phone, which also has a cellular connection. Coming from the fixed/IP side of the Deutsche Telekom, it has good WLAN pedigree features like WPA2. No, it doesn't have whizzy mobile-phone colour & camera & multimedia.... but who cares? It looks quite cool, and that makes up for its lacking megapixels. There will apparently be follow-ons using handsets from Nokia's N-Series or others coming in the future.

Even more clever is T-Com's ability to sell the product into non-broadband homes. It can act just as a "WLAN cordless phone" attached to an ordinary PSTN (or ISDN, this is Germany...) line, again doubling as a basic cellphone when out & about.

Instead of hooking everything back to a mobile HLR & seeing the WLAN as a cellular "extension", it uses a mobility management function located in the T-Com fixed network, almost using the T-Mobile network as a sort of "internal MVNO" rather than having a fully-integrated network core. It's a very fixed-network operator view of FMC, and one that I think makes a lot of sense. To my mind, FMC is a great tool for the more aggressive fixed/IP/broadband/VoIP service providers looking to re-substitute minutes from the lazier, legacy, IP-phobic mobile operators.

Overall, I rate this pretty highly as a first attempt at FMC. It will be interesting to see what T-Com's 2nd and 3rd iterations are like, especially as Deutsche Telekom moves to a converged core network over time.

Multiplicity rules in mobile

A theme I've mentioned before is that of "Multiplicity". (I also sometimes call it "Divergence", largely to annoy the more religious convergence zealots). I'm increasingly convinced that this is an important future trend, and that vendors and operators need to understand its implications. This is a corollary of the segmentation strategies employed by operators & manufacturers - the more tightly segments are defined, the more likely that any individual will associate with two or more of them. (So, for example, you might be a music-lover with additional obsessions for checking work email

A couple of conversations I had yesterday with vendors point to the fact that this is (slowly) becoming accepted, with functions such as multi-device management being integrated into their boxes' capabilities. Chipset, operating-system and software client vendors are also talking up their multi-platform capabilities (mobile phone, VoIP phone, broadband modem etc). I'm also seeing the first signs that the obsession with Powerpoint slides featuring "Ones" (one device, one number, one bill, one identity, one operator etc) has peaked.

This morning, Multiplicity has even become visibly trendy.....

Nevertheless, I think we are a long way before operators or other constituencies in the mobile industry fully embrace - or even evangelise - multiplicity. Finding service providers which make it easy for you to get a multi-SIM offering is still tricky. I don't know any operator that offers some form of "personal multi-device management service", perhaps recognising that you'll also use a work-provided phone or BlackBerry from another operator. There's so much battle for subscription market share, that companies have failed to realise that there is possibly more value in integrating/federating across multiple different providers.

I suspect it will be 2007 before this trend really becomes evident, but it's something I'll come back to as it evolves.

Fuel cells in mobiles - Forget it, it ain't gonna happen.....

I've long thought that fuel cells in mobile phones were never going to happen. Yes, they pack a high energy density, but the idea of using a methanol-fuelled device by my head has never really appealed, especially given the ongoing risks of "normal" high-energy batteries spontaneously combusting.

I'd also been skeptical about the notion of taking cells with flammable contents on board aircraft. And yes, I know about less-flammable things like borohydrides, but given the hoo-ha of the last week about any liquids being taken on-board flights, I think we can finally lay this idea to rest. A pity, as it sounded kind of cool, but I think this is one area where practicality will get in the way.

OK, I don't usually take potshots at my peers....

.... but this piece of analysis/spin/marketing made me grin.

"MMS can be seen as a very popular and successful service"

... on the basis that people are now using it occasionally. (Even me, since it seems to have a decent user experience on my new phone).

Just a shame that operators have subsidised something like a billion cameraphones to the tune of around $10-20 a piece (apparently about $9 for the camera module and then a bunch of bits of software & integration work), plus had to invest $XXbn in MMSCs and other bits of infrastructure, and $YYbn in developing & marketing their photo messaging services.

It's pretty difficult to get any reliable stats on MMS traffic, but the anecdotal evidence I've seen points to a maximum of around 150-200m being sent globally per month (excluding the exceptional-as-usual Japanese). Verizon's one of the leaders, at 62m per quarter (ie 21m per month), while another big advocate Telecom Italia Mobile made a grand total of €49m from MMS in 2005. Scaling that up means MMS is (optimistically) a $2bn business in 2006.

Yeah, great success, given a cumulative investment of the order of $20bn+

Sprint, WiMAX and the fallout... and device thoughts

Hmm. I wonder how long before someone acquires IPWireless, now that it's big chance has evaporated, with Sprint's decision to go with mobile WiMAX rather than UMTS-TDD or Qualcomm/Flarion's technology.

This line in the press release is interesting: "...will provide voice service using the core 3G network. The 4G broadband network will offer a complementary, high-bandwidth service driven by data centric devices" as what it seems to suggest is that Sprint is deciding to focus its new EV-DO RevA network (due to be deployed from end-2006) for voice - maybe cellular VoIP. Reading between the lines, this seems to suggest that a broader move is occuring, polarising networks to device categories:

- 3.5G networks = predominantly cellphones, with a smattering of data cards, moving to VoIPo3G over time, and also supporting handset-centric applications like downloads, messaging etc. That is, mostly things that work with the operator's own services most of the time (ie on-net, either for voice or content/app portal, or, presumably IMS type stuff)

- 4G = predominantly data devices (in Sprint's words "computing, portable multimedia, interactive and other consumer electronic devices") - probably with a mix of "high speed pipes" (about time we had mobile VPNs, methinks) and in-house/partnered services, but generally more IT/Internet centric philosophy. I suspect it will be relatively independent of IMS's interference, and certainly not too walled-garden centric. This also confirms my view that WiMAX phone form-factor devices are unlikely to appear until 2010 in any meaningful numbers, if at all. Oh, and I'm willing to take a bet that the early Sprint WiMAX devices won't be SIM-based for authentication.

One interesting question is where this leaves smartphones in the future. Are the going to be confined to the "voice+a few other bits" category of 3.5G? Or will they evolve more into the higher-end device segment? I think that if this type of network divergence is replicated elsewhere, they start to look uncomfortably positioned on the fence.

Another interesting element is Samsung's involvement. Clearly, the Korean telecom establishment's decision to steamroller through the commercial deployment of WiBro is going to yield huge dividends for network infrastructure exports (and possibly IPR), just as its handset business looks on shaky ground.

More thoughts on all this in due course....

Whatever happened to WiMAX for cellular backhaul?

At various points over the last couple of years, I've heard WiMAX advocates talk enthusiastically about the possibility of using their favourite technology as a cheap & effective way of improving mobile backhaul.

So what's happened? As far as I can see, the need for faster, cheaper, better (ideally non-line of sight) backhaul has grown tremendously. The demand certainly seems to be there.

And a never-ending stream of alternative approaches is appearing, from fibre & metro-ethernet connections, to various forms of multiplexing & compression, even industrial-grade DSL backhaul.

But speaking to one of the largest WiMAX equipment vendors last week, I got the distinct impression that this is one of the "use cases" that hasn't made it as far as the initial marketing pitch for the technology. I suspect this is partly down to the limitations of existing interfaces (and physical space) at cell sites. But it also seems to be a distinct aversion in many traditional mobile carriers to the idea of deploying another wireless network, especially just for "spot" solutions.

Mobile phones features: operators, users & subsidies

Keith over at TeleBusillis has an interesting point about reclaiming analogue FM radio spectrum for digital uses.

He also talks about whether operator-subsidised mobile handsets should include features like FM radio, which generate no additional revenue for the carrier. He mentions Bluetooth in the same context, pointing out that it generates little extra revenue (some extra in-car calls, but I'd guess no more than 1% of total mobile minutes are on Bluetooth headsets), but enables easier sharing/piracy of ringtones or content. (It probably also generates expensive customer support calls).

This is a central issue in the handset business at the moment. In many (but not all) countries, mobile phones are heavily linked to the operators' business models. Often they will be subsidised, customised & distributed by the carriers, especially in markets like the US and Japan (China and much of the rest of Asia is the opposite, however). Some will even be designed by the operator from the ground up, and manufactured by the ODMs.

Keith concludes that handset manufacturers (he singles out Nokia as probably the earliest advocate of FM radio in mobiles) "cannot go winding up the operators and playing them for fools " .

I can sort-of see his point, but at the same time the operators also recognise that the phone has two "personalities" from the end-user viewpoint. Sure, it's a "service device" intended to be part of the mobile communications package you get from an operator, integrated with & optimised for billable services like phone calls, SMS, and possibly some of this other stuff that not many people can bothered with....

... but it's also a piece of consumer electronics / jewellery / computing hardware. Nokia refers to its N series as "mobile computers". Others draw comparisons with fashion accessories, or imaging devices. This is what customers want - and, if necessary, this is what the operators will need to "bribe" them with in order to persuade them to use their services. It's not just FM radio and Bluetooth - it's titanium casings & laser-etched keys, 3 Megapixel cameras & memory cards. I mean, the calculator software or the clock doesn't generate revenue either, but it's expected in the phone. Going forward, WiFi may also be included in some devices for non-operator functions (and will have to work well for these purposes, as well), as well as SIP for applications outside the operator IMS as well as inside it.

To some extent, the advent of the RAZR killed the idea that operators had "won" over manufacturers. In one swoop, Motorola proved that the "shiny thing" philosophy won over a large proportion of consumers. "Give me one of those.... or else I'll churn to an operator that will". Hardware is more valued than software, which in turn is more valued than services. Ouch.

The subsidy issue is a thorny one. Up to a point, I have some sympathy for the operators. Subsidising something like Bluetooth or WiFi that generates no revenue (or even helps cannibalise existing revenues) has got to hurt. Ditto subsidising something that generates costs like support calls, or higher returns (step forward smartphone OS's...). My view is that subsidising something gives the operator some moral authority to say how you use it. But not as much as some of the US operators, that cripple Bluetooth & otherwise act dictatorially over "their" phones.

The question is one of balance. How can an operator minimise subsidies, whilst not increasing churn (or, worse, persuading people to buy "vanilla" handsets not optimised/customised for any operator's value-add services). It's a problem that will only get worse, as Moore's Law & other technology scale economics mean that the average handset will bundle in more capabilities (memory, power, processor, display, software, connectivity....) faster than the operator can exploit.

Historically, subsidies were about either (a) acquiring new customers, or (b) keeping them. Now, you also have (c) persuading them to use more of your cool new services, by giving them customised applications and user interfaces. But customers don't naturally want phones with 9 icons, 8 of which are trying to sell them stuff - you have to give them a certain amount of other cool stuff "for free", or else they'll just exploit the scale economies & processor price/performance curve and buy one SIM-free.

I chose my last two devices based on capabilities I wanted - decent camera, memory slot, good browser, aesthetics etc - and then looked at which carrier subsidised it most, with the fewest restrictions on usage and the least onerous service charges. But then I live in the UK, which has 5 main mobile operators and numerous MVNOs, and so they compete aggressively for my custom. It's also helped by a strong non-operator retail presence (AKA Carphone Warehouse) and a decent channel for SIM-free phones via firms like Expansys. Other markets are less (or more) open.

Bottom line - operators may be handset vendors' main direct customers, but the end user often ain't stoopid. There's going to be an ever-greater bunch of stuff that phones can do, which doesn't generate revenue for the carriers. Sorry, but that's the real world. Black chrome on a razor's handle doesn't directly help Wilkinson Sword sell more blades, but it's still subsidised as part of the whole package, helping them compete against Gillette & minimise "churn" amongst the shaving population.

WiFi phones: look, will you just forget about hotspots?

There's a sudden rash of articles about WiFi-capable phones at present, seemingly catalysed by a NY Times piece.

A common theme seems to be "Wow, these will be usable at WiFi hotspots! What happens to the carrier business model then? Cannibals ahoy!!!!"

Look, all of you, will you just forget about hotspots for WiFi phones? It's irrelevant, a niche of a niche of a niche. Dual-mode phones are about using VoWLAN in the home & at work. Period. Everything else VoWLAN-related - hotspot, hotzone, plane, donkey, whatever - is noise. Secondary or tertiary - remind me again in 2009, and I might be persuaded to care. Sorry FON, T-Mobile, The Cloud, city WiFi evangelists, but unless I'm a top-1% prosumer enthusiast user, or a street-cleaner spending all day outdoors, it's an irrelevance.

Yes, I know, I've talked before about running Skype-over-WiFi from my laptop in a hotel, but that's different: I'm using the hotspot for data already anyway, I've signed up using a full-screen browser & credit card, I'm avoiding heinous international roaming fees, I'm not moving, it's not dual-mode with cellular (seamless or otherwise) and I'm only making outbound calls.

So why is all this nonsense?

Think about who is buying (or subsidising) dual-mode phones, and why they want to use them.

• Fixed-mobile combined operators (France Telecom, Telecom Italia etc) want to launch innovative triple/quadplay services leveraging their home broadband user base. Yes, this might include cheap voice at home (using WiFi or maybe cellular-only solutions), but it'll also be relatively sophisticated with other "converged" features like video, network-resident address book & other valuable, churn-reducing capabilities. Some of these will succeed, but only with a lot of effort in areas like customised phones, dedicated home gateways & 100 other niggly bits of technology and customer experience to optimise.
• Partnerships of broadband/mobile operators, or MVNOs (BT, Sprint/cable co's etc) want much the same. They're also likely to have a fair shot at this, although not controlling both sides of the infrastructure will make it harder.
• Mobile operators would potentially like to exploit their customers' broadband and WiFi at home, because it's a much cheaper way to provide coverage. You, the customer, pay for part of their radio network using your own broadband line and WiFi. It also lets them offer a VoIP service which could, in theory, further their aims of fixed-mobile substitution. However, there's a whole bunch of problems with configuration, customer support and a decent user interface/experience which means most such attempts will fail miserably.
• Residential customers want WiFi in phones primarily for data, not voice. Browse the web or do IM from your sofa, transfer 6 megapixel images or MP3 files to/from your PC and so on. If you've got lousy cellular coverage, or are particular enthuiasts of Skype or another Internet VoIP provider then yes, you might want a VoWLAN client on the device as well - but it will have to be a top-end phone to work properly.
• Business customers want to reduce their cellphone bills by any means possible, especially in Europe, where roaming is a huge issue. Many already have office/campus WiFi, albeit without 100% coverage or voice optimisation. Most have PBXs or IP-PBXs that they'll keep for a long time (forget IP centrex too), and many have long-distance IP networks like MPLS-based VPNs connecting their main offices. Most are also aware that employees prefer to use cellphones for many calls. Most don't want to pay for more devices than needed, but also don't want to route calls through a carrier (& pay) when it's not necessary. This is driving companies like Cisco, Avaya, NEC, Siemens, DiVitas and others to put a PBX "personality" on a WiFi-capable cellular phone. Not easy, either in terms of technology or route-to-market, but it's the first time in 15 years as an analyst I've seen more end-user "pull" ("I want this now!!!") than vendor "push" ("Hang on, it's not that easy, we're still working on it"). Most will want to work with some operators, but ideally fixed/mobile hybrid providers with teams who understand both PBXs and systems integration, not common-or-garden legacy mobile-only carriers with no entreprise network expertise.
• VoIP service providers want to use dual-mode phones to put their software clients on devices & turn them into a "second line" using WiFi. They also face a whole bunch of challenges around integration, and may turn to hotspots in desperation, when they realise they can't control all the bits of a proper residential/corporate offering as described above.
• Hotspot and Hotzone providers are also desperate to add voice as an application, because they've wasted 3 years' lead on HSDPA / EV-DO by sticking to stupid pricing, roaming and marketing strategies. Hotspot operators face huge problems of browser-based settings on "normal" dual-mode phones, except on pre-configured (and probably WiFi-only) devices sold specifically for that purpose. Hotzone / metro-WiFi operators will face problems of extremely patchy indoor coverage (amongst other things)
• Handset manufacturers want to play arms merchants to all of the above, but also make sure they don't get tripped up in the "sour grapes" politics of wireless carriers who've realised they can't exploit WiFi, and who therefore don't want anyone else to play with their toys either. Especially in those countries where handsets are subsidised.

Bottom line: dual-mode is difficult. Not impossible, but nowhere near as trivial as many people make out. Some of the technology, ironically (battery life etc) is the easy bit to fix. The real problems are in user interface, integration with the fixed domain (broadband, VoIP, PBX, WiFi AP, whatever) and things like authentication/security and channel-to-market.

Consequently, business models around VoWLAN will only work in those places where there's already high usage, where lots of costs can be saved - in the home, or at work. Saving 2.7 cents twice a week when calling outbound from Starbucks doesn't make a viable business for anyone. Hotspots might come later, but for now, they're not where the dual-mode action is.

(Hey, I'm really proud - I managed to write a whole article on VoWLAN without singling out UMA and being rude about it once.....)

iPods and musicphones..... another angle

There's been a lot of hoo-ha recently about "is the iPod's star waning", and, in particular, will it get trounced by music-capable phones.

It all depends on your angle, of course. Depending upon whether you sell music, make flash memory, run an operator, build devices, provide network backhaul capacity, design headphones, or a hundred other roles, your view of "what stat is important" will vary.

What matters?

• Number of "music-capable" devices sold? (and do you include FM radio as well as MP3?)
• Number of "music-optimised" devices sold (eg a SonyEricsson Walkman phone vs a SonyEricsson Cybershot imaging-oriented phone which also has an MP3 function)
• Number of music-capable devices in use (ie addressable "installed base")
• Number of music tracks sold, intended for a specific device? Their value?
• Total hours of music listened to per user per day/week/year?
• Total # of people who have ever used their device for music, even if only once?
• Proportion of people who listen to music "regularly" on a platform
• Source of music listened to (or bought) - mobile download, sideload from a PC, split between online purchases vs CD rips vs peer-to-peer filesharing?
• Number of music devices per person and when/how they're used?
• Proportion of someone's total music listening given per "context" - mobile / car / home hifi / gig / club / friend's house etc?
• Total aggregate share of someone's entire disposal music-related expenditure?
• etc. x 100

You get the point.

Now, I've been engaged as part of a vigorous debate with the esteemed Tomi Ahonen, who stirred up a firestorm a week or so back with a hard-hitting piece on whether we should claim "iPod RIP". I'm not going to re-hash all the arguments, counter-arguments, flames and other stuff. It's all still burning on Tomi's site with small secondary conflagrations on places like the excellent Forum Oxford.

I'm certainly not going to get embroiled in the 14% / 76% market share debate. As the above indicates, there are at least 10 differently-defined "market shares" here, which are of differing importance to different people.

I have, however, tried to do an apples-to-apples comparison with some publicly-available data, which suggests that there may still a range of 2 orders of magnitude (ie a factor of 100) in terms of regularity of purchase of "music for devices".

Firstly - the UK. A market with a fairly good number of musicphones (however defined) and fairly decent 3G penetration, as well as high levels of music-fandom overall. In March 2006, the UK division of Hutchison's 3 mobile operator reported "With average sales of over 200,000 tracks per month, mobile media company 3 today announced that its audio service has made up over 53% of mobile audio track downloads since the start of 2006". In other words, in Q1 2006, the run rate for the market as a whole was about 400k songs to mobiles in the UK.

In Q1, 3 had about 3.5 million 3G subscribers, so it was selling 0.057 songs per sub per month = 0.69 songs / sub / year annualised. As 3 is the leader, this is probably a better rate of sale than the other 3G operators in the UK, ie probably an average 0.5 songs / sub / yr for 3G in the UK (particularly as other operators have more datacards subs). Another source has suggested "11% of 2G/2.5G users in Britain, and 32% of 3G uses in Britain downloaded music to phones" that suggests 2.5G users would perhaps be around 0.15-0.2 songs / sub / yr , and probably (average across all UK subs, probably around 80%+ 2G) about 0.25 / sub / yr averaged across the whole UK mobile population.

Japan is one of the most advanced mobile music markets. KDDI has now downloaded 50m songs, with the last 20m sold between Dec '05 and May '06. ie a run-rate of 4m / month and thus 48m / year. It has 24m subs, so this is 2 tracks / sub / yr. I've seen something else (can't find the source unfortunately) which suggests that 23% of its users download music, so this average figure is skewed between lots of people on zero, and a smaller number on much higher figures.

Conversely, Apple has around 40m iPod users as an "installed base" of users. It had sold 500m iTunes songs in July 2005 and 1bn by Feb 2006 ie a run-rate of 71m per month, ie 1.8 / owner / month or 21 / owner / year.

All this obviously excludes music ripped from CD (or downloaded from other legal/illegal Internet sources) and put onto iPod or phone by USB or memory card. However, to sum up - legal device-oriented full-track music sales, averaged across all users/subscribers (yeah, I know definitions are a little different & some people have several phones or iPods) are:

UK mobile - about 0.25 songs / sub / year, rising to 0.5+ among 3G users (and using some other stats I've seen on what % ever download any music, probably about 2 songs / active mobile-music sub / year)

Japan mobile - about 2 songs / sub / year (and at 23% of KDDI users downloading music at all, about 11 songs / active mobile music sub / year)

iPod - about 20 songs / user / year

I reckon that's about as close to "apple-to-apples" as I can get on published data.

Disclosure: I own an iPod Nano, 3 different MP3 playing-phones and never buy songs from iTunes or via operator download, preferring to buy & rip CDs instead & use USB and memory cards.

Free mobile as a triple play marketing tool?

I had an interesting discussion with a client yesterday. We were discussing the "Free Broadband" services being launched in the UK by companies like Orange and BSkyB. Basically, they are all different spins on bundling - ie get "free" broadband when you subscribe to an expensive-enough package for voice / mobile / satellite TV.

It got me to wondering why "reverse" free mobile packages aren't offered - perhaps "Free mobile phone + 200 mins / 200 texts per month, when you subscribe to our £30 a month 20Mbit/s ADSL2 service"

Can't be too long before someone tries this angle, probably an fixed/broadcast provider with an MVNO arm, and not much of an existing mobile base to worry about cannibalising. BT, maybe?

Fudging the numbers, part 1

Recently, I've been becoming increasingly aware that the mobile/wireless industry often plays fast-and-loose with statistics. It does this both to appear good externally (to investors, commentators, regulators, and scaring competitors) and as a form of "positive affirmation" internally (OK, OK, self denial....) when it is confronted with unpleasant truths.

Before I get a flood of emails, obviously the mobile industry isn't the only one that plays with numbers to put a positive spin on things. The marketing industry's use of surveys does the same thing across every segment from cars to chocolate to (I imagine) industrial waste disposal. Most government bodies do the same as well (step forward Tony, Gordon & Ken, in particular.....)

I suspect that this will be an ongoing theme, but I'd like to try and compile a "top 10" list of numeric fudges. Let's see:

1) Subscribers = Users
- Fudge: multiple phone/SIM ownership by many people

2) Overall ARPU numbers
- Fudge: exclusion of rebates, and similar repayments that come out as "costs" rather than lost revenue

3) Data ARPU (1)
- Fudge: Inclusion of revenue from enterprise & data-only devices (laptop cards, M2M modules, Blackberries) aggregated in non-SMS Data ARPU, and then using the figures to suggest that consumer use of content/MMS/etc is rising faster than it actually is

4) Data ARPU (2)
- Fudge: Revenue allocation of bundling. So, I get 250 minutes + 500 texts per month for £30 (+ video / MMS / whatever). How do they decide that "inside the bundle" 1 min = 5p / 1 text = 10p ... or 1 min = 3p / 1 text = 14p ? How is this audited? How much "arbitrariness" is there when operators report "Data ARPU was 19%"?

5) Coverage %
- Fudge: it's outdoor coverage, bizarrely using "percentage of population covered". Which is strange, as I always thought that most of the population lives indoors.

6) Radio downlink speeds (for 3G, or WiFi, or WiMAX or whatever)
- Fudge: what's the aggregate capacity of the cell? so, how many concurrent users of your 1Mbit/s HSDPA saturate the base station, or its backhaul?

7) Comparisons mobile vs. broadband
- Fudge: comparing apples & pears - people vs. households. Sometime useful, but often irrelevant as both are important metrics for different reasons.

8) Comparisons of mobile phones vs PCs
- Fudge: no, most people's "computing experience" won't be on phones, even in developing countries. Have you been to many developing countries, Mr Marketing VP? Seen kids packed into in Internet shops using MSN & doing their homework? Stop using the (equally spurious) home PC penetration figures & understand the real world

9) Early mobile application market growth numbers
- Fudge: often include substantial "internal" use by the mobile industry itself - application developers, competitors, journalists, testing (including automated network probes) etc, rather than "proper customers"

10) Smartphone market size
- Fudge: Includes a huge number of "closed" operator-customised phones developed on theoretically open OSs (eg DoCoMo FOMA use of Symbian & Linux) which are locked-down for 3rd-party software, plus a vast number of Nokia S60-based devices bought by people who neither know nor care that their device has an open "smart" OS. The proportion of smartphones bought by individuals who knowingly choose an "open" & flexible software platform is probably less than 20%.

I'm sure there's loads more of these type of things.... any suggestions?

The problems with unlicensed spectrum

Clearly, I've underestimated some of the dangers of interference between different wireless devices operating in the same spectum.

OK, no sniggering at the back now. And absolutely no jokes about QoS.

The Tyranny of the SIM Card

I've been meaning to write this post for a while, but some events today have catalysed me into action.

I've regularly been using the term "Tyranny of the SIM Card" in meetings and at conferences for the past few months. I'm fast being converted to the idea that the SIM is a relic of the 1990s, and deserves to play little (if any) role in the future of mobile telephony, except for the most basic prepay low-ARPU mobile-only unconverged services.

Don't get me wrong, there are some good things about SIMs. They can be transferred between handsets, they're secure, and they have enabled some OK-ish first-generation data services. I bought a bunch of local SIMs in Africa over Xmas to make cheap local phone calls. Easy to distribute, and proven technology. The problems occur when you start trying to "converge" products and services from multiple sources. I own my PC & laptop, I've got a couple of "vanilla" handsets knocking around, my consumer electronics are my own and so forth. If I worked for a large company, I'd have a wide variety of bits & pieces of comms & IT kit that are owned or leased by the organisation.

The SIM is essentially "a service provider on a chip". Which is fine for authenticating you against things that are standalone services, like basic mobile voice on a basic phone. But much less good in instances where there are multiple parties involved in security - your IT department, your broadband provider, your digital TV supplier, or indeed you yourself.

I'm never going to have a SIM in my TV set. Or a SIM in printer, or my home broadband WiFi router. They're mine, they're not subsidised, and I don't want them "registering" with a service provider before I can use them. Similarly, I don't want a SIM embedded in a laptop, as it turns it from being a computing "product" into "part of a 3rd-party service". Sure, if I use a cellular broadband data card, I might use one, so long as I don't have to have branded & clunky operator-specific software cluttering up my device UI.

Clearly, the more advanced FMC services cannot rely on a SIM in everything, especially in the typical multi-person, multi-service providers, lots-of-consumer electronics household. Thus the fixed-line equivalent of IMS, ETSI's TISPAN architecture, allows non-SIM devices to be connected. And if you won't get SIMs in everything in a converged service.... then why bother to have them in anything?

But what's really convinced me of this is my experience today. On Friday I wrote about my nightmare experience getting a new phone & plan from Carphone Warehouse. Well, the helpful guy's promise held true, and I had my new phone delivered this morning. Only without the new 3G SIM the invoice suggested ought to be in the box. Cue another round of IVR and customer service hell. In the end, rather than wait for another delivery, I got them to credit my account with the cost of a replacement SIM & arrange to pick one up from my local store.

Observations? Both the customer service rep and the sales guy in the store were confused & asked me if my old (2G) SIM didn't work in the phone, as that should suffice. I had to point out that the new phone is 3G, and that therefore a 3G SIM might be useful if I was to access the new & wondrous services promised by the marketing people. "Oh, well it only gives you access to videotelephony" was the helpful response. Eventually I persuaded the guy to give me a new 3G SIM, after pointing out that there were in fact some technical differences between the SIMs, even though they were the same shape.

(even more amusing is that on CPW's receipts, they still refer to O2/Telefonica as BT Cellnet. The invoice says "BT 3G SIM" )

I now have to have the new one's IMSI registered. There will, apparently, be an indeterminate time between my old 2G one ceasing to work and the new 3G one being activated. Between 2 and 24 hours. Useful, eh? So business contacts, friends etc go to voicemail if I'm lucky, or get lost in the ether in the intervening period. What idiot thought that system up?

I mean, when I part-exchanged my car earlier this year, my dealer didn't have to tell me to re-register the new key for 6 hours with the DVLA (UK car & driver licensing authority)? I gave him the old key & car, and drove off with the new one. When I download a new version of the Skype software, it doesn't need a lengthy re-registration period. Replacement credit cards work instantly, perhaps sometimes with a phone call to confirm receipt.

This is a theme I'm going to come back to, because I reckon I'm one of the few who's really stood up and said that the SIM Emperor has no clothes. No, I'm not sure what to replace it with yet - but I'm sure someone will have a smarter idea than the current dinosaur-on-a-chip.

Spectrum neutrality, 3G and WiMAX

The GSMA appears to be more scared than I expected by possible future competition from WiMAX, especially in Europe. It's put out a press release (not yet up on its website as I write this) essentially saying "Technology Neutrality in 2.5GHz? No way!"

In a nutshell, the situation is this:

The European 2.5-2.69GHz band is designated for "3G extension". In other words, it's sort-of been pre-allocated for use for existing 3G services "for future expansion" with a specified technology. This has historically been the way wireless service have evolved. "You can use this bit of spectrum in this particular way".

However, there is an ongoing move towards being much less restrictive. Obviously, the 2.4GHz area used by most WiFi is a complete free-for-all, but has been a huge success in terms of usage & innovation, even if congestion occurs. But this is unlicensed spectrum - there's a parallel trend for regulators to move away from being technology-specific in licenced bands too. The UK's Ofcom has already adopted a position of saying "Spectrum should be technology neutral unless there's a very good reason otherwise", essentially putting the onus on the vendors & operators to work out ways to ensure their various different technologies play nicely with each other & don't interfere. The European Commision has been watching this keenly, as have various other national regulators.

Clearly, there are powerful influences at play in the 2.5GHz range. The existing mobile operators (ie the GSMA's membership) have the experience & scale to roll out existing 3G services in new spectrum in the future. New entrants would have a tough time, and it is likely that the vertically-oriented access+service model would continue to bumble along. But on the other hand, they've made a pretty poor collective job of doing cool & useful stuff with existing 3G spectrum.

As an alternative, backed by Intel, Motorola and others, WiMAX (and assorted other wireless broadband alternatives) are looking hungrily at 2.5GHz, which represents the best chance for fairly-harmonised global wireless broadband spectrum. And which would level the playing field of established cellular operators vs. new entrants. Many of which are more likely to adopt the philosophies of the IP/fixed broadband in terms of service definition and pricing, thereby having a knock-on impact on the "competitiveness" of rival services in the existing 3G bands.

The GSMA is taking the angle that "standardisation is necesssary for decent scale economies", amusingly overlooking the fact that usage 2.5GHz outside Europe is likely to be pretty standardised on WiMAX anyway. I particularly love the patronising line "The GSMA also fears that developing nations will be the hardest hit by the fragmentation of spectrum usage" and that if "the price of a low-end 3G phone increases by $30, the effect will be severe"

Really? I would have thought that decent competition between technologies would have the impact of pressuring rapacious patent-holders to price their IPR at non-monopolistic prices. And that if we encourage more business models & value chains than the traditional mobile operators, we stand a decent chance of properly harnessing the benefits of Moore's Law in the mobile domain?

Mind you of course, as the GSMA believes that 2.5GHz "must be reserved for the IMT2000 family of technologies" that seems to imply it's quite OK for it to be used for CDMA EV-DO as an alternative to UMTS. You listening, Sprint and KDDI? The GSMA is happy for you to bid for 2.5GHz alongside Voda, Orange et al and the WiMAX guys.....

Carphone Warehouse and customer (dis)service

I'm always wary about recounting my personal experiences in buying/using mobile services, but after this afternoon I feel the need to vent / discuss ..... especially as I feel it reflects on the day-to-day service received by "the average punter", as well as customer psychology.

I've had an account with O2 via Carphone Warehouse for more than 4 years. It's been reasonably OK - couple of glitches with international roaming permissions, another with trying to get a GPRS data "bolt on" which screwed up all my data usage temporarily, a replacement SIM easily obtained after a handset theft, but otherwise unremarkable. The guys in my local CPW store (actually the one where the company started out) are pretty decent blokes & helpful. I've spent quite a bit of money over time.

Given I work in the industry, I haven't been getting handset upgrades/replacements from CPW/O2 - I've usually had "vanilla" phones about to put my SIM into. This time, however, I thought I'd try out a proper, up-to-the-minute, operator-customised 3G phone - and also try & lower my bills at the same time. I had a look around at phones, decided on a SonyEricsson K800i (never played with an S-E for any length of time but hear good things, liked the specs etc, so seems a decent choice). I had a look at the SIM-free price (about £330), so decided to go for a subsidised one, either getting it on my CPW/O2 account, or churning & using number portability to switch to either Orange or Voda. Had a look on the Voda website, and with the (equally friendly) blokes in my local Voda shop as they had a pretty good deal in terms of bundled minutes/SMS.

I phoned up CPW "customer service" (on an inexcusable expensive 0870 national-rate number) and clicked through the IVR to the "customer loyalty" option to see if they'd match the Voda tariff. And sat on hold. Repeatedly over the course of 2 weeks. Tried the "upgrade" IVR option - same deal. Looks like CPW has taken half its phone support staff & cross-trained them to help out with the new & woefully-understaffed Broadband call centre. So I went to the store instead, thinking it would be quicker. If I'd just wanted the K800i, it would have been easy. But to change tariffs, the staff had to dial into the call centre & get me to talk to them. (Phone call made from the store's landline, amusingly....). Cue 30 mins of hold music & occasional "it'll just be a minute" interventions from the first customer service bloke trying to transfer me to the "loyalty" (!!) dept. Getting fed up, I asked the store staff if I could just cancel my contract & get the number portability PAC code from them. No. You need to spend an hour on the phone just to cancel the damned service.

In the end, I had to resort to the blogger's equivalent of "Do you know who I am??" and start throwing my weight around. "Put me through to someone senior who can make decisions". "I want to speak to your boss, your boss's boss, or else Charlie Dunstone's secretary". "I'm not wasting any more of my time on hold. Get someone to say when they will call me about this". "My time's more valuable than yours - this'll cost you £2 per minute - who do I send the invoice to?". "No I won't call back tomorrow, I want to speak to someone now". "Who runs the call centre - O2 or CPW? I want to be sure to criticise the right people".

I nearly got a red card & was threatened with being booted off the call for swearing when I said I "couldn't be arsed" to hold any longer (Arse? Oooh, what a naughty word. There, I said it again. Report me to the police or sue me for being offensive, I dare you).

Finally I stooped to saying "I'll be writing something on my blog about this - exactly what I say depends on how helpful you are". I'm not proud I had to pull a trick like that, but it seemed to work. (I pity Joe Average, though) I don't know whether they Googled my name to realise I wasn't bluffing, but I eventually got through to a customer service manager called Martina who was helpful / efficient / allowed to say something that didn't come up as a script on the screen. She promised I'd get a call back from "one of the best guys" in their loyalty dept in 15mins. And indeed, I got another real person called Matt phone me back quite rapidly. He's obviously one of their guys dedicated to particular troublemakers like me - conciliatory, and empowered to offer me a decent deal, which I accepted. When I say "decent" I suspect that translates as "almost bribe him". Given the handset subsidy, a rebate & the cost of the customer service peoples' time, I estimate that collectively CPW & O2 will make roughly zero gross margin out of me over the next 12 months, if that.

Interestingly both O2 and Voda now seeing to be using big SMS bundles as a "sweetener" - perhaps unsurprising as the internal cost of these is near-zero, and presumably it enables them to fudge the data ARPU percentages (a topic for another post....)

Bottom line? If in doubt......shout.

Disproportionate resources.....

Hmmm. You know what I said yesterday about deep packet inspection etc only being useful for the use case of "Limit/throttle any person using an app which consumes disproportionate amounts of network resource" ?

Well, thanks to James over at the Chaotica blog it appears that this use case might be needed pretty soon. Something I've used as a "case study" for a while is at fruition. P2P-over-3G from a smartphone.

Put this app on your shiny new HSDPA Windows-Mobile device (like the numerous upcoming variants of the HTC Hermes, including the "vanilla" non-operator own-brand TyTn) , attach an "unlimited" data plan, sit in a basement with 10 of your friends, and hey presto! An accidental denial-of service attack, and the cell collapses ("breathes") down to the size of a coin, while the backhaul connection gives up too.

So OK, in this eventuality, yes, I'll give in and admit that some form of protection in the network is a necessity. There's a big difference between crass anti-competitive blocking of things you don't like from a commercial standpoint (eg Skype, Google) vs protecting the overall functionality of the infrastructure.

ID cards RIP.... tiered/non-neutral Internet next in line?

For the past few months, I've been pretty trenchant in my views around the "Net Neutrality" debate, along with the larger carriers' attempts to block or monetise competing services' traffic using deep packet inspection (DPI).

The techno-libertarian in me cries "foul", and worries that all this will stifle innovation from the type of "two guys in a garage in Palo Alto or Bangalore" operation that has hitherto been much more successful at generating killer apps for the Internet (Google, Yahoo, Skype, Hotmail, HotOrNot etc etc).

However, the pragmatist in me has been saying "Who cares about the legislation when the whole stupid idea won't work anyway?". There are so many flaw, work-arounds, ill-thought out approaches, legal risks, opportunities for customer disloyalty and churn that it doesn't stand a chance of occuring. Better, the more idiotic attempts to monetise "pipes" may backfire so badly that the operators concerned will lose more money, more customers and more credibility with observers & shareholders.

In fact, with clients and at conferences, I've regularly been comparing the notion of DPI/Internet-tiering with the UK Government's daft and draconian plans for an all-singing, all-dancing ID card for us hapless citizens. "Lousy idea, but I'm not too worked up about it, as it's doomed to fail anyway, just a shame I'll end up paying for the failure through my taxes".

But, miracle of miracles, it now looks like the UK Home Office has woken up to the fact that it's facing an impossible task, and is on the verge of fudging / postponing / cancelling it.

How long before the more aggressive operators (especially in the US) also start backing down in the face of the impossible task of picking a fight with Google & Yahoo? Or realise what might happen if they block some innovative corporate customer's P2P app, or a clever way of using VoIP for emergency services, or one of their roaming partners' new services, or whatever?

I've already spoken to quite a few product vendors whose pitch has shifted from "Block Skype! Charge Google! Kill all peer-to-peer!" to the much softer "Limit/throttle any person using an app which consumes disproportionate amounts of network resource".

Come on, telecom operators - there's still time to put out a face-saving "it's under review" press release before you commit your shareholders to the bottomless pit of "policy management".....

All-or-nothing technologies, IM, presence and IMS

I'm starting to look at mobile services and applications from a slightly different angle. It strikes me that some could be describe as "all or nothing technologies". What I mean by this is that they either work fantastically well - or not at all. There's no middle ground.

So, if everyone has them, they're standardised, and people use them appropriately - they're great. Think SMS here. This is the "all".

Or, alternatively, they're poorly standardised, not ubiquitous, implemented in different ways of varying user-friendliness, and non-interoperable with alternatives. Nobody uses them. Think MMS. This is the "nothing".

Basically, these technologies do not "degrade gracefully". They're binary. On or off. Success or failure. 100% usage (approx) or 0%. Lots of Internet applications (eg failed social networks) are "nothings" as well, it's not just a mobile phenomenon.

The converse are technologies which are either so simple, or so open, that they can thrive with adoption rates in the middle. Multiple different implementations and standards can work in (relative) harmony with a bit of glue - gateways, aggregation servers and the like. Voice telephony is one of these. It doesn't matter if you use PSTN, GSM, CDMA, SIP-VoIP, H323, Skype, Cisco or (almost) a tin can on a string. You can still talk to everyone else. Email is another.

I reckon that mobile presence is dangerously close to being all-or-nothing. It's great if 100% of people in a community use it 100% of the time, updating their status information regularly. But if 90% of people use it 90% of the time, it starts to become irritating. At 80%/80% you have to put up with a whole bunch of inconvenience, even before you consider interoperability issues. Below that it's worse than useless. Even the attempts to second-guess some of the status information into smart network-resident applications won't cut it sufficiently in my view. Too many "false positives" - yes, you're theoretically available, but in reality you've bumped into your boss in the corridor & don't want an interruption. Or you've nipped to the bathroom & didn't change your status first.

Attempts to knit together different mobile IM/presence domains won't work either, unless there's a transparent (and free) interconnection with Internet/PC based ones. Again, it's all-or-nothing. Interestly, the Internet IM presence model isn't all or nothing. With plenty of screen real-estate and a decent multi-tasking OS, there's nothing stopping people overcoming interoperability/uptake issues by the simple expedient of having multiple apps running simultaneously. This won't work in mobile as long as some people have operator-provided handsets with second-rate Internet IM interconnection, and others use single-tasking featurephones.

I'm also wondering about IMS. It's now patently obvious that the mobile world is never going to be all-IMS. There too much legacy, too many alternatives that bypass it, and too many operator-specific partial implementations rather than the whole shooting match. And of course, my pet topic...no phones. In other words, if it's an all-or-nothing technology.... it ain't gonna be "all".

So there's an interesting set of questions about how IMS behaves in a heterogeneous world. The best "vision" I've heard that can potentially extricate IMS from this mess is the idea of an "ocean" of Internet/IP applications, with "islands" of IMS floating in it, offering particular value-adds like QoS, integrated billing and so forth.

In other words, it's best to position IMS as a platform for selected "premium IP services", rather than the current worldview of IMS as a repository for "all mainsteam IP services, with a gateway to that nasty uncontrolled other stuff for the real pain-in-the-butt customers we don't really 'own'".

I'll be talking about some of these views at the upcoming IMS Services Brainstorm . This event looks like an increasingly influential one, and for this week there's a kind offer of a 25% discount for Disruptive Wireless blog readers - email the organisers and claim your special 'Disruptive Analysis' reduction".

UMA conference

I managed to survive my jaunt to Barcelona last week, where I faced a rampaging mob of UMA-istas wanting to lynch me for my heretical comments about their pet technology. I was reasonably stark with my views, with one slide entitled "Salvaging something from the wreckage of UMA".

Actually, there were mostly pretty nice about it, to be be fair. I was only there for one day of the three, but there had already been a bit of a reality check from the highly emphatic John Strand

Some thoughts:

- There was a common refrain of "but it's just another access technology!" which is sort-of true but ignores the fact that it's an access technology with a range of dependencies on handset capabilities & user experience, as well as things like home gateways
- There was a fair amount of agreement with my (comparatively positive) belief that UMA may get reincarnated as a more generic authentication technology for operator-provided devices which aren't dual-mode phones.
- There's still an underlying belief (also present in IMS circles) that "the network knows best" and that applications such as voice ought to be "access agnostic", with the "top layer" of the phone unaware of what wireless access is being used. This despite increasing numbers of discussions I'm having pointing out that Moore's Law means that phones are increasingly smart enough to decide which network to use (and how) for themselves.
- Customer service issues remain a potential business model killer for UMA. In particular, my assertion that only households with operator-provided home gateways (rather than retail purchased WiFi APs) seems borne out by operator feedback.
- Many operators quite like the idea of VCC as a UMA alternative, but to quote one UMA-deploying operator "unfortunately VCC's not available tomorrow". I'm also starting to suspect that it may not be as easy as it looks, either.
- Interesting presentation from inCode suggested there's no clear roaming business model for UMA. (Interesting as well in that inCode has been a lot more UMA-positive in the past - something which had prompted me to challenge them to a head-to-head debate, which their PR people shied away from.....)
- Nobody seemed to have considered the possibility that UMA traffic could be easily-spotted (and perhaps blocked / charged / degraded without Net Neutrality) on a non-friendly broadband ISP's connections
- UMA business models which don't rely on cheap in-home voice as the main driver were thing on the ground. And given the other ways of getting there with HomeZones, Picocells and (as Mr Strand pointed out) cheap flatrate MVNOs, it's not obvious that this pricing argument is sustainable.

I'll update the post with some more thoughts later as I have to run now....

Conference WiFi update

Regular readers may recall that I'm running a campaign to force conferences & conference venues to provide free (or at least sensibly-priced) WiFi & good wireless coverage to delegates. I will be refusing to speak at WiFi-less events in future, and will be extending that to poor indoor cellular coverage. It's generally the fault of the venue owner, which may charge £200-1000 per day for WiFi to the conference room, often with clunky sign-up mechanisms to boot. The alternative is usually delegates buying stupidly-priced hotel WiFi on an individual basis.

As a result of a previous post, I've been trying out a portable WiFi router backhauled with a Vodafone 3G card. The idea is that this is a proper "guerilla access point" that completely bypasses the hotel/venue's rip-off inhouse hotspot. My experience has been fairly positive - obviously, it's subject to 3G coverage being available, but it seems usable for a few concurrent web/email users - and probably many more if it was a new HSDPA card running at 1.8Mbit/s. Technically it's been a bit of a mix - easy to set up in "unsecured" mode, but for some reason the setup software threw a glitch which stopped me setting up a security key. Also, the international roaming on the temporary press SIM didn't seem to work when I tried to use it abroad. It's quite light & compact to carry around, though.

Bottom line: I reckon there's a great niche business for operators renting these out to conference or event organisers. An informal sample I made (OK, two) suggested they'd perhaps pay £50-100 a day, which works pretty well vs a normal monthly datacard flatrate 3G tariff. (Although something would need to be done to circumvent roaming fees, maybe supplying them with a range of national SIMs, as there won't be any inbound calls).

Stick that in your pipe & smoke it, Hilton Hotel or Olympia Conference Centre WiFi Pricing Drones.

Redefining seamlessness

I've long held the belief that "seamless" is a nonsense term - at best an irrelevance, and at worst a dangerous distraction. I remember Motorola announcing its adoption of the term "seamless mobility" a couple of years ago, at a point when the term was already trite. A pity, because it's generally a quite smart product & technology strategy, masked by stupid marketing guff & a lousy brand.

Up until now, "seamless" has tended to be used mostly by people talking about handing off voice calls from cellular to WiFi networks, using dual-mode phones. It's one of the features of UMA (which was designed around facilitating it) and it is often emulated/hyped/exaggerated about the various SIP and IMS/VCC based alternatives.

The idea is that the end-user should remain blissfully unaware of what the technology is connecting him or her to the network, even if that connection changes "seamlessly" mid-call.

Which is fine for the 1 time in a hundred that someone might start a phone call on WiFi & walk out the house and expect the call to just switch over without dropping. But useless (or possibly worse than useless) for many of the other use cases for dual-mode devices. "Seamless handover" is a nice-to-have - but only if it doesn't introduce problems elsewhere.

This all fits in with one of the biggest fallacies with IMS - that applications or services should be "bearer agnostic" - ie work the same, irrespective of whether they're connected over 2G, 3G, WiFi, WiMAX, ADSL or a piece of wet string. And that they should be able to switch over "in mid-flight".

This ignores the fact that at the "seam" lots of things change. Bandwidth, latency, price, maybe ownership, control, security, context and lots of other things. While the user should (in some cases like an ongoing voice call) have minimal interaction, the device itself and its resident applications need to be fully bearer-aware to enable a good user experience, especially for data applications. Moving from a low-latency to high-latency connection has a huge impact on software that has complex "hand-shaking" procedures, for example. And moving from an unlimited-data environment (eg home or office WiFi) to one that is tariffed per-MB clearly needs intervention. If I have anti-virus software, for example, I don't want it downloading 5MB of stuff unannounced, especially if I'm roaming. And I want the music application on the device to recognise I'm at home on WiFi, and default to getting MP3s from my PC hard drive, rather than defaulting to the operator music portal.

Generally, I deduct 2 "credibility points" per use of the word "seamless" in a vendor's or operators presentation or marketing material. (Almost as bad as single device / bill / number, in fact). "Ubiquitous", "Transparent", "Flexible" are all much better terms.

This isn't just me, by the way. I've heard very large operators agree that they want intelligent "bearer aware" applications on devices, not "bearer agnostic" ones. Moore's Law rules, as usual.

So it was interesting to be at a conference this morning and hear both BT and DT essentially start to redefine the term "seamless". Both speakers said that "seamless handover between bearers" was not essential - but that access to certain functions like address book or voicemail was. I agree with this - and if "seamless" is to be more generally used as a marketing-friendly way of saying "multi-access", I may reconsider my views about the credibility of its proponents.

It's still trite, though.

Another problem for dual-mode and UMA

I've seen a couple of articles commenting that the Italian Telecom regulator has blocked Telecom Italia from launching its upcoming dual-mode WiFi/cellular phone, called Unico. (I'm struggling to find the link now, bar this short comment).

It looks like this move is based on the notion that TI can't offer the product on a wholesale basis, and therefore it's anticompetitive. I'm not sure of the exact details of the regulatory regime around FMC in Italy, and I haven't heard of this sort of thing occurring elsewhere, although various people have discussed issues around FMC single bills being in something of a grey area.

I imagine that if the service offers customers some form of benefit (eg better coverage / lower prices) then there will probably be some sort of agreement made with the regulator eventually. However, the timing of this is a bit unfortunate for the already-beleagured UMA enthusiast fraternity, as it is another indicator of the narrowness of the window of opportunity - especially as I've already heard various TI people sing the praises of the next-generation of dual-mode technology, VCC.

Regular readers will know that I'm not the world's greatest UMA advocate. Despite this, I've actually been asked to speak at the UMA Conference in Barcelona next week. More details of my (rather punchy) presentation to follow shortly..... Let's just say that much of this weekend is going to be spent buying a bulletproof vest & hiring a bodyguard in preparation.

Place-shifting to mobile - IP and arbitrage, again

I've been watching with interest the growing momentum behind "placeshifting" - ie having access to your home content & applications when you're "somewhere else", either on an Internet connection in a cafe/laptop etc, or potentially on your mobile phone.

The best-known is SlingBox, which hooks into your TV and beams the content outbound over the Internet, for you to watch somewhere else. Access and Sony have launched a similar-sounding product.

Of course, the interesting thing here is whether the "somewhere else" in on a mobile device, arbitraging the inevitable trend of mobile-data towards flatrate pipes/large MB bundles, vs. the alleged extra amount people will pay an operator for a dedicated mobile TV "service". Obviously, the mobile TV service should be optimised for device size, user interface etc, but whether it'll stack up competitively against the "best efforts" version is yet to be proved.

Of course, this concept isn't new. During the earliest days of standalone home telephone answering machines in the 1980s, it was possible to dial-in & pick up your messages from a remote phone. It arbitraged against the hassle & cost of going home to get your messages in person. It used the phone network as a "pipe" for voice messages, rather than a dedicated operator-provided voicemail service.

Sending an MMS enables a friend to send you a "postcard" of wherever they might be. This arbitrages against the airfare needed to go & see it for yourself. This is an operator service, though. Sending a picture via email is less of a bundled service, more like a pipe-based one again.

Push email is obviously in the same category as well, although this has both operator-controlled (ie BlackBerry) and "pipe"-based user-controlled versions.

In other words, operators are more than happy to do their own "place-shifting" when it suits them. So really, the operators have nothing to complain about TV-placeshifting from a moral point of view. You don't hear about airlines barring carrier execs from flights (or downgrading them from business class to "best efforts" standby), as they contribute to turning them into dumb aluminium pipes & arbitraging them to the wall with MMS, do you?

.... all of which brings me to the most fascinating version of place-shifting: Vodafone Germany's trial . Nice to see big Red leading the charge on arbitrage for a change, rather than complaining about it & trying to block it. It will be very interesting to see if T-Mobile has a go as well, or whether "placeshifted TV" is added to the list of things that will get your 3G account summarily cancelled.....

Siemens and Nokia

Well, well, well.

Three weeks ago I posted that Siemens' carrier business unit didn't quite have its story 100% right. I thought that some of the implicit assumptions around rollout of IMS, FMC, mobile TV and other areas were a little bit unrealistic.

...it looks like I wasn't alone in thinking that it needed a bit more weight. Today's announcement that it's merging its operator-facing group with Nokia Networks to create a €16bn / 60000-employee behemoth is hugely significant. There's a conference call later today, so I should have a few extra details.

But a couple of thoughts upfront:

We've now seen Nokia/Siemens, Ericsson/Marconi, and Alcatel/Lucent mergers. Assuming that this trend of consolidation is going to continue, that leaves Nortel, Cisco, Motorola and the various Asian manufacturers still standing. Difficult to suggest any obvious matchmaking "couples" there to be honest - I wonder if Ericsson's going to scoop up Nortel as well? Conceivably Cisco/Moto as well, although Cisco doesn't usually go in for mega-mergers.

It's worth thinking about the underlying root causes of this process as well. Clearly, a lot of telecom infrastructure sales have been under severe price and margin pressure, because of the presence of companies like Huawei and ZTE. But I reckon part of the problem has also been (again) the creeping effect of IP-isation/IT-isation on the telecom industry. It's becoming increasingly difficult for the major equipment vendors (and their standards-body counterparts) to push "centrally-mandated" solutions such as IMS, and have them adopted rapidly. Such architectures are intended for normal "cookie-cutter" operator business models, in an era when either innovative bundling/marketing structures (think quadplay or MVNOs) or disaggregated connectivity/application (Internet etc) is become de riguer.

As well as the network complexity, they are also having to contend with the device complexity as well, necessary in order to exploit the new network functionality. It's like a group of "mainframe" manufacturers, trying to deal with the fact that the "terminals" (same term, even) are now turning into PCs (or mobile computers, as Nokia would say). The analogy doesn't quite work, as obviously in the IT industry, the newly-emergent server vendors didn't have the equivalent of the telco firms' radio business.

In fact, I'm wondering if consolidation would be better served with more horizontal specialisation. As we move towards more standardised hardware platforms in the telecom industry, is there any obvious justification for keeping both servers/networks and radio systems together in the same group? Maybe Nokia and Siemens should have gone further and created two new independent businesses - a radio/access company and a server/application one.

(Rather lost in the noise today is another announcement from Nokia, that it is launching a WCDMA picocell. It's not obvious whether this is entirely own-brand, or whether it is OEM'd in a similar fashion to its 2G picocell from RadioFrame. Perhaps better-known is Siemens' 2G picocell from ip.access . It will be interesting to see how all these products are aligned, not least because I reckon a dual-band 2G/3G picocell is preferable to a 3G-only one. Nokia has also had nothing much to say about femtocells.)

I've said it before, and I'll say it again:

Mobile operators: your strength is connectivity, not content.

And this isn't just a philosophical question, but now proven, quantitative fact. A very clever piece of analysis by mobile testing firm ArgoGroup has demonstrated this in a completely clear & real-world fashion.

Last night, FIFA and Yahoo! managed to beat all the mobile operators in getting SMS alerts out to the end-users who weren't near a TV or radio (ie about 7 people) when Peter Crouch scored against Trinidad & Tobago. FIFA's 2-minute delivery time was half the average speed of the operators. Own goal, or what?

What's the betting that the operators won't have the problem fixed for the England:Sweden march next Tuesday? Or maybe they'll just use their deep-packet inspection boxes to delay all SMSs emanating from Yahoo!'s gateway for 5 minutes, to make their own latency-ridden in-house content teams look good by comparison.

OK this goes against the grain.....

.... I mean, I know I enjoy being contrarian, but I have to say that I fully endorse a lot of the views espoused at the new "telecom sceptic central"

It completely fits with my current mantra "Connectivity is King, not Content". Oh, and I might as well add "Context is Prince". Content? Sorry, that's Cinderella's ugly step-sister..... I'd rather invest in pumpkins.

Hmm. Inspiration fails me.... I'm really struggling to stretch out this metaphor for an analogy for IMS.

But suffice to say I'm going to be one of the "analysts in residence" at the Telco 2.0 Brainstorm in October, espousing my views that "IMS handsets" (or rather the lack of them) are another set of nails in the coffin of vertically-integrated telco business models.

(Oh, and speaking about IMS phones, I know I trailed this a few weeks ago, but stand by for a rather louder set of comments about this issue tomorrow.....)

Awesome service

OK, this is fantastic idea.

If you use Internet IM a lot, you'll know the benefits of having multiple identities. I also use Yahoo! Mail Plus, which gives me "disposable email addresses" linked to my main account. So I can use the addresses (or in this case phone number) for people I don't really know, or that I think might send me loads of spam. If any of them get over-spammed, I can simply bin that address, safe in the knowledge that my friend can still reach me on my "proper" email address.

That said, this "Tossable Digits" thing looks a bit pricey - $5 for a month, and you get some clunky fixed-line + 5 digit extension number. And it won't cope with SMS by the look of things. By comparison, Yahoo! charges something like $20 a year for their whole "Plus" service, including a whole bunch of features.

This should be offered as an operator service here. I'd gladly pay, say, $2-3 per month for a spare, bin-able mobile number - which should get a huge gross margin as it really only needs a number-translation server somewhere. At the moment, I am very wary of putting my mobile number down on any untrusted mailing list for fear of spam & unwanted calls, but if I had the confidence that I could consign the number to the great spam repository in the sky, I'd use that rather than my fixed-line.

One last point - it's another one in the eye for those Luddites who insist we'll only have one device / number / bill / identity. Not only are you wrong, you're getting more wrong by the day.

From Dynamic UI, to on-device portal, to....?

Met with SurfKitchen yesterday for an update on their progress. For those of you that are not familiar with the company, it is one of a cluster of firms that have software to enable improved user-interfaces on mobile phones. The general idea is to work around the limitations of mobile browsers, and the inconsistency between the way data applications are implemented on different phones. Operators (and maybe others) will implement these extra software layers on devices in order to make it easier for users to access (and spend money on) new services like music downloads, as well as offering "themes" for the overall handset look-and-feel.

This isn't entirely new - SurfKitchen has been around for a few years. It has a number of important peers - such as Action Engine, Qualcomm's UIone division (formerly Trigenix), Adobe/Macromedia and OpenWave's MIDAS product, all aimed at roughly the same space, albeit each with unique spins. I met with Action Engine last week at another event, so I've been pondering what's realistic about the sector, and what's just marketing bluster.

What has changed has been the practicality and reasonableness of vision. About 2.5 years ago, I was at a mobile handset software conference at which at least 15 separate companies all declared that their product would own the "top layer" of the phone. "The whole phone will be inside the browser / dynamic UI / Java / application suite etc". Frankly, it was unrealistic - not least because none of these products worked across a decent array of devices.

Now, the focus is on "On-Device Portals", where the software solves one or two specific problems: how to make downloads easier, or driving the "music" section of the phone. Less ambitious, but much more realistic than an unproven all-or-nothing approach.

I also see this functionality being driven further "down" - and being used almost as a browser plug-in, to improve the "real Internet" experience, when appropriate. Now, I had a bit of an unfinished argument on this with the highly-knowledgeable SurfKitchen boss Michel Quazza, but I am still a big believer in the web browser being the optimal user interface, with other tools masking its limitations where required.

I also asked a question that seemed to resonate with both Michel & a representative from Orange - using this type of software to improve operators' revenues in...... voice. This strikes me as completely obvious - why just try & improve the user experience (& revenue) from what is a tiny % of data applications.... when you could also try & improve usage of mainstream apps like voice & SMS.

Bottom line - now that this type of product has gotten over some of its more gradiose, unrealistic visions, it now seems to be gaining traction on making specific aspects of the handset work better. I'm waiting for a version to help make phones better at doing FMC - or, more importantly, switching between "public service-oriented" and "consumer device" modes.

Nonsense Surveys

I've worked as an technology analyst & consultant for a long time. One of the things I've learnt is that large-scale surveys are exceedingly difficult to do well, and generally produce either self-evident truths, self-serving sponsored propaganda or just utter nonsense. The general rule-of-thumb is that:

"95% of respondents didn't know what they were talking about. And the other 5% lied."

Surveys of consumers (especially the "would you use this function/service? and how much would you pay for it?" type) are invariably suspect. They're often poorly-worded, with a poor selection mechanism for people, and poorly-interpreted. They tend to be over-represented by people who enjoy doing surveys (ie too much time, probably a bit geeky, and liking the self-validation from someone actually caring about their preferences).

Surveys of businesses have to contend with the fact that the people who actually know stuff or buy stuff (CIOs, architects, IT managers etc) are bombarded by survey requests - in some cases more than 50 per week. They might do 1 or 2 at most, if they have a good reason (something decent in return, or more likely being part of panels where they get to network with peers). Survey companies therefore have to make up numbers by speaking to people who aren't saturated with interview requests. I'll let you guess how much those people know, and whether their supposed job titles are actually real.

And then lastly, quite often nobody ever bothers to sanity-check the results. "Hmm, now why is it that 78% of people have claimed they're happy to sell their grandmother to pay for a bundle of 200 MMS?"..... "well, that's the survey result, so I guess that's true then. I'm sure the question was well-worded & asked to the right people. And we spent lots of money on the survey. Let's put it in a press release." And you can absolutely bet that the PR will never mention any findings that are "inconvenient" and that don't support the sponsor's view of the world.

With all that in mind, the survey-of-the week award goes to Nokia , with a survey sponsored by its high-end N-series division called "Multifunctional Mobiles Make the World Go Round"

Some claimed highlights:
- 68% of Indians use their mobile phones as their "primary camera".
- over two thirds predict a music-enabled mobile will replace their MP3 player
- over a third (36%) of respondents are browsing on their mobile devices at least once a month
- more than one in two (58%) of those questioned would like to be able to control all their household appliances via their mobile device. This is especially true in India (85%)

Actually, some of the stuff in the press release was actually genuinely interesting, and I was sufficiently intrigued to contact the PR company for the more detailed findings. I haven't had a chance to go through everything, but some alarm bells started ringing with about 20 seconds.

One chart caught my eye in particular. "% who regularly use MP3 function on their mobile phone". It lists two options "Yes" and "Function not available".... presumably the rest being "No" or "Don't know". For India, Yes = 88% and Not Available = 4%.

Yes, that's right - 96% of all mobile phones in India have MP3 players built in. And 88% use the capability on a regular basis. Allegedly.

So I skipped to the end, to the important bit:

"ICM Research interviewed 5,500 respondents aged 18 – 35 years old across eleven countries between 27 February and 18 March 2006. There were 500 interviews conducted in each of the following countries: Brazil, China, France, Germany, India, Italy, Japan, Spain, Saudi Arabia, UK and USA. All interviews were conducted online with the exception of Saudi Arabia where interviews were conducted via telephone."

So they've selected an audience that has a PC and Internet access. And that is solely focused on the more "sophisticated" age group. In this article, it suggests that India, a country with a population about a billion, has fewer than 5m PC households. (It also has the fascinating line "Cyber café’s are the primary mode of access. 60-70% of internet users access the net at cyber cafés"... but do you seriously expect people who pay-per-hour for online time to spend it filling in surveys?).

And how about this line "Almost half (44%) of respondents are already using their mobile phone as their primary camera." What exactly does "primary" mean? The one they take most photos on? The one they take their most important photos on? The one they carry the most? The one they'd pick out of their pocket if they were carrying both a phone & camera at the same time? The one they show other people pictures on most?

It may well be that there's some good, accurate, meaningful stuff in the survey. But unfortunately, by including what appear to be spurious or ambiguous results, it throws the credibility of the whole thing into question.

Bottom line - if you're a vendor thinking about using a survey... make sure you have someone appropriately cynical check the questions, survey methodology, and results, before putting them out into the public domain - or, worse still, use them as the basis for business plans & investments.

Finally, consolidation in handset software.....

Yesterday Motorola acquired handset software & silicon IP vendor TTPCom for £103m, through a specifically set-up subsidiary. TTPCom is a company I know very well, having first met them shortly after their IPO, more than 5 years ago (I was previously an equity analyst for an investment bank, covering small technology firms). The announcement came on the same day that TTPCom announced its results for its 05/06 financial year, which had been pretty poor, despite the growth in volume of the handset industry.

This is quite telling. There are dozens of specialist software companies (as well as semiconductor & silicon IPR firms) servicing the mobile phone industry. The fact that one of the largest independent suppliers to the sector has suffered from such problems, in a banner year for the industry, is a bit of a sobering thought for the hordes (shoals?) of minnows that still flock to it. I've long thought that the market for handset software - especially application "suites" - has been overcrowded, especially given in-house development by a handful of leading handset manufacturers. But it seemed as though every time one disappeared (eg IXI Mobile) another two would pop up in its place.

Generally, handset software firms fall into two categories - those with "point products" like video players, predictive text functions or individual "clients" like push-to-talk - or those with platforms or "integrated suites". Clearly, there's a huge attraction in becoming a "platform player", but the problem has always been that the larger vendors like Nokia are quite happy with their in-house software, so outsiders have always been chasing the Tier 2's and 3's. And there's not a huge amount of kudos (or value) in being "leading software platform supplier to all the vendors who don't have enough scale to do their own". Not only that, but end customers don't really value software that much (they prefer pinkness & thin-ness), and very few other people in the industry seem to recognise just how tricky it is to get right. (Hence my prediction that "IMS phones" will be incredibly late-to-market, as everyone has understimated the complexity involved. See the new Disruptive Analysis SIP and IMS Phones Report for more details)

Motorola, however, appears to "get it". Long castigated for its phones' user interface limitations, and slow in rolling out its various Linux and Windows Mobile products, I think it's fair to say that handset software has never been Moto's core strength. Lower down the stack, it has also been fairly closely tied to its spun-off Freescale chips. TTPCom fills in a few separate pieces of the puzzle - firstly, its protocol stacks work across multiple vendors' chips, and secondly its Ajar platform can potentially fit nicely "below" the higher-end Java-Linux inhouse platform (or, possibly, be integrated with it). The TTPCom solution should also mean it's easier for Moto to manage its various outsourcing/ODM partners, by providing them with a more standardised software platform.

The acquisition premium was pretty staggering, at 246% of the previous closing price, indicating how vicious and short-term sentiment had been around the company's share price - and how difficult it is for outsiders to get their heads around the mobile phone software business. That said, $200m for 600 high-end mobile engineers is not unreasonable at all.

The other interesting side to this acquisition is TTPCom's stake in ip.access , probably the best-established player in the suddenly smoking-hot cellular picocell infrastructure business. TTPCom recently got a round of external funding for this arm of the company, but retains a large stake. Interestingly, there's a very good fit indeed here - ip.access has been relatively slow with creating 3G "home cellular access point" versions of its products (also called femtocells). Meanwhile, Motorola's AXPT rival lacks 2G capabilities - fine for providing indoor high-speed data connection, but missing out on the more basic need for low-cost homezone voice options.

Potentially, this acquisition throws a few spanners into the works for various of TTPCom's other customers. TTPCom has a broad range of other handset clients (although it has probably focused more on semiconductor firms as routes-to-market of late), while ip.access has an OEM deal with Siemens for picocells. Whether Moto can assuage these companies' fears by setting up a separate subsidiary remains to be seen.

This is also not the only transaction involving handset software recently. Swedish rival Teleca (which owns the Obigo software division, a rival to Ajar) has bought a Russian consulting firm, Telma, which also had Motorola as a client. It will be interesting to see if some of the other big players in the space (eg OpenWave's mobile software unit) also have a role to play in consolidation.