Mobile and wireless predictions for 2008

I think that 2008 is going to be a tough year for the mobile industry. With economic clouds gathering, saturation in major markets, competitive and regulatory impacts on margins, and little traction for new services, I'd say that developed-world operators are facing an unpleasant background to the new year.

But the grey outlook for operator services doesn't equate to the whole of the mobility and wireless industry. New business models and products will gain traction. Above everything is the impact of Moore's Law and the power of the handset vendors. Increasingly, the phones have the ability to tell the network(s) how to behave. There is clearly a pent-up demand for access from mobile devices to 'the real Internet'.

I've put together 10 predictions which I'm expecting to evolve into recurring themes over the next 12 months:


1) There is a notable shift towards non-operator unlocked 'vanilla' handsets

Globally, about 50% of phones are sold through operator channels - although it is much higher in operator-controlled markets like the US and Japan, as well as those with an addiction to subsidy, like the UK. Various trends are emerging that will start to reduce this in 2008, although change will be slow in markets where operators retain stiff control over retail outlets.

• Firstly, the US is starting to wake up to the idea of unlocked phones, courtesy of non-AT&T iPhone angst and the new 'bring your own phone' openness pitch by Verizon.


• Secondly, Moore's Law & scale economies are bringing down the price of really quite good non-subsidised phones to below important thresholds like €100 or £100.


• Thirdly, operators' attempts to lock people into 18 or 24 month contracts will mean they get hungry for cool new devices long before they're due for upgrades.


• And fourthly, some segments like VoIP users or enterprises will recognise that 'there's no such thing as a free lunch' and realise they're better off with vanilla devices rather than subsidised ones locked-down and larded with operator menus.

Expect alternative options for handset financing, a healthy second-hand market for phones, and a slew of new retail, B2B and online options for acquiring devices.


2) The European Commission cracks down on data roaming prices.
You've been repeatedly warned that this is on the watch list. Yet many operators still charge around €10 per megabyte for roaming for mainstream customers. There are a few exceptions - Vodafone's €12 per day cap, and Three's free data while on-net. But as we move to flatter networks, flatter tariffs and split-tunnels breaking out Internet traffic in the radio access network, the current prices start to look more like those of a cartel. Pricing needs to have at least 1 zero, and arguably 2 or 3, chopped off. Expect Ms Reding to take action.

3) Mobile broadand continues its rapid growth - but 3G-embedded laptops lose out even further to USB-based 3G modems
External USB modems are now a massmarket proposition. They're available in pink, even. They work with anyone's existing laptop, they selfload software, they don't require that operators put the PCs themselves through testing labs, they're easily understandable and upgradeable. Sure, an operator would love to tie a PC user to a single access service for the life of the device. But it's not going to happen - unless they fancy subsidising computers down to free. In enterprise, they overcome sales channel issues that mobile operators aren't great at explaining computer features, and IT hardware salespeople aren't experts on HSPA. But unless you're absolutely cast-iron sure that your behaviour (or competitors' prices or coverage) won't shift over the 3 years or so you've got the notebook, you'd be crazy to go with an integrated solution. A possible solution is a good 'universal connection manager' as part of Windows, rather than risking layers of operator-customised software on your PC. Expect the USB approach to accelerate even further away from 3G built-in PCs in 2008.

4) At least one mobile operator will face an investigation over reported numbers
I've posted several times before about operators fudging their reported KPIs, using opaque or arbitrary definitions. One of my more vitriolic blog comment critics has even claimed, as an insider, that carriers regularly overstate subscriber numbers to appeal to investors' superficial analysis - and seemed quite sanguine about this. I've had private discussions with other analysts where we've looked in disbelief at some published data. Sure, internal management have access to more 'real' figure - but that doesn't excuse them from providing it externally as well, as most are public companies. I suspect that a serious financial miss, or a whistleblower, could provoke some more serious scrutiny into irregularities, if obfuscation turns out to actually mean misleading.


5) Android... hmmm, it's just another platform. I really can't see what the fuss is about Android yet, especially outside of open smartphone-starved North America. That said, I'm not going to write it off - clearly the Big G holds a few cards up its sleeve. But one thing I'm pretty certain of - it ain't changing the world in 2008. We'll be back here in 12 months saying that Google's Android might be a big deal in 2009.

6) Technologies for exploiting end-user context and state become the hot topic of the year. At the moment, mobile 'presence' (IMS or proprietary) is pretty lame. The user is registered to the network.... hasn't been 'active' on a call for 79 minutes, has a self-set status they've forgotten to update.... and that's it. How much richer would it be if the network could extract more useful 'state' information about the device and/or user, especially if it is enriched with embedded sensors... "phone on charge", "user is on a Bluetooth headset", "battery low", "at location xyz", "moving in a way that looks like it's on train", "in a darkened room" and so on....



7) Operators realise that knee-jerk attempts to block VoIP are counterproductive.

2007 has seen many operators move towards flatrate data for both PCs and smartphones. But quite a few have used restrictive T's and C's, or in some cases port-blocking or other network means, to try and stop people using VoIP over wireless networks. A few have tried to charge VoIP-able 3G flatrate as a premium service, although a few more enlightened operators have shrugged and adopted an 'anything goes' approach to their data pipes. Expect many more to follow suit in 2008. The possible cannibalisation threat is overstated - and is more than balanced by the benefits of mobile broadband service contracts. In any case, things like mashups, VPNs and non-telephony VoIP will make it much trickier to isolate VoIP as a distinct "service" in future. Net result - pragmatism, and some of the more visionary operators exploiting VoIP rather than fearing it - either launching their own fully mobile VoIPo3G services, or partnering with players like Skype, Truphone or fring.


8) Femtocells have a year of ups and downs. Some niche success, but practicalities will mean it's H2'09 or 2010 before massmarket deployment.
Sure, we'll see some headline "deployments" in 2008, much like we've already seen Sprint's much-ballyhooed Airave launch. But these will mostly be v0.9 soft launches, not full, production-ready offerings that are able to be sold in their millions to Mr Joe Average Punter. Operators will realise that the proposition, while sounding good in paper, has a million niggly little issues around user experience, management, billing, regulation, emergency calling, numbering and so on. The business model will also need to evolve beyond purely coverage-based or macro-offload. As per normal, more attention has been lavished on the network aspects than actually thinking through user experience and requirements. There needs to be more standardisation, a recognition that there could be lots of multi-femto households, guarantees that femtos work nicely when colocated with WiFi and so on. And, whisper it.... but I think that there might need to be some optimisations or modifications to handsets, to make them work nicely in a femto context.



9) OK, this might be wishful thinking, but I'm hoping to see more pragmatism & innovation around the concept of mobile multiplicity.
Lots of people already have multiple phones, SIMs, numbers, identities and so on. While some purists may bemoan the inelegance of this "oh, if they just had the right offer, they'd only want one", they are flat-out wrong. People are happy with complexity. The software in your brain is much more flexible about choosing appropriate modes of communication than the software in the network. People like multiplicity. They want multiple service providers. They often don't care about multiple bills or logins. They are not loyal. So live with it - and exploit it where possible. Offer people ways to federate messages or numbering across multiple carriers. Give them ways to manage the richness. Offer them second SIMs or phones for the same number, or multiple numbers on a single device. Don't try & shoehorn them into your marketing department's polarised view of what a user experience should be. Sure, give them incentives to be stay with & extend their business with a single provider (ie bribe them), but also recognise that coercion or bloody-mindedness isn't conducive to loyalty.


10) No, No, No, No, No

- Mobile search. Still pointless. Haven't you realised by now that people just want normal, full-fat Google on their phones?
- Mobile advertising will definitely grow - but it's not going to get beyond a few % of ARPU in the foreseeable future except for a handful of segments
- Mobile centrex. I stand by what I've been saying for years. Hosted/centrex enterprise telephony has an opportunity for gaining 10-20% of total business lines. Mobile hosted services only have an opportunity for 10-20% of the 10-20%.
- UMA dual-mode services. OK, maybe we'll get to 2-3 million users in 2008. Wow, that'll really set the handset industry on fire....
- Unfortunately, we'll still have mobile industry dinosaurs referring to handsets as 'terminals', as if they were mainframe-style dumb endpoints. Mind you, it's a good filter to see who really doesn't 'get' what happens to mobility when it intersects with Moore's Law. Unfortunately, I predict we'll still have the word 'terminal' at the end of the year. (And 'seamless', too, ugh)
- Unlicenced-spectrum wide area wireless. Some people have been talking up 2.4GHz WiMAX to me recently. And of course there's the ever-delayed xMax as well. Maybe it'll work in a couple of rural areas where there's not much interference, but unfortunately I can't see city-wide unlicenced data working.
- GSMA's IPX. Sorry, but this just won't work in the real world apart from maybe some internal peering arrangements between operators. End-to-end multi-operator IMS-based QoS? Oh, please.

A tale of 2 EComms....

As some of you may already be aware, I'm getting involved in Lee Dryburgh's new conference, EComm 2008 next March. It's looking to be a rapid-fire, whistle-stop tour of new forms of interpersonal communications. Brough and Martin are also involved, and have more on the back-story regarding the event's predecessor, eTel.

I largely concur with the notion that "The first wave of consumer VoIP has had only a minor impact" . It certainly seems to me that the current 'killer app' for VoIP is straightforward PSTN replacement (eg in France as part of triple-play offers). I see the same thing being the driver in the mobile domain - the long-term, slow, replacement of circuit-switched cellular with all-IP equivalents.

Sure, there's some high-profile movement around Skype, Vonage, Truphone and all the rest. But to be honest, that's still a very small sliver of the overall telecoms marketplace, with the possible exception of international call traffic.

I've been talking to a lot of people recently about 'non-telephony VoIP', aka voice mashups, or application-embedded VoIP. I'm expecting this to become a lot more important in a qualitative sense in 2008-9, albeit rather hard to measure quantitatively.

EComm should enable a bit more flesh to be put on the bones of this concept. If you're interested in going, let me know and I can sort you out with a discount code.

On a tangential note, I see there's another synonymously-named event later next year. It appears to owe much to the dubious efforts of London's tyrannical mayor, Ken Livingstone and assorted other misanthropic individuals, to enforce (and I'm laughing at the irony here) "mobility management" policies on his electorate.

Make sure you book tickets to the right one.....

So how did I do with my predictions?

'Tis the season to be producing 2008 market predictions. But let's wait a day or two fo that - I'm going to follow Russell at MobHappy's lead and first have a look and what's happened in 2007 vs. my predictions from last year.

1) Increased focus on manufacturers selling multiple "diverged" devices to users

Implicitly, yes this has definitely happened. I've heard a lot less "oh, you only need one device" nonsense. Although my friends over at Forum Oxford still like to imagine mobile phones taking over from laptops, GPS devices, iPods, toasters etc.


2) A lot of noise about VoIP over 3G.

Yes. But, er, mostly from me. While a lot of times I'll be critical of a technology concept, or at least say "Yes great idea, but it's not as easy as it looks", this is definitely one area where I think the market is vastly underestimating the importance and potential.

(btw - as an Xmas bonus, I'm offering a 10% discount for any blog readers who order the report before Dec 31st 2007. Email "information AT disruptive-analysis.com" for details)


3) Emergence of corporate-focused MVNOs

Yes, although they haven't quite set the world on fire yet. BT, iPass and newcomers like IIJ in Japan.


4) Continued uptake of various dual-mode services & handsets, but they won't change the world

Yes, indisputably.


5) Spectrum lobbying noise, regulation momentum and lawsuits ratchet up several notches.

Yes - WiMAX as 3G, 900MHz refarming, ITU World Radio Congress, US 700MHz, 2.5GHz.....


6) IMS confounds both its critics and its evangelists, but needs to improve integration ASAP

Yep. It's not slunk away into a corner & died, and certainly hasn't taken over the world either. But a new, rather humbler version of IMS is taking its role as part of the future landscape. IMS proxies and convergence boxes mean that it's integrating better, while we're slowly progressing on the IMS handset front.


7) Navigation becomes rather more important on mobiles. Mobile search doesn't.

Yes. There's a reason Nokia spent $8bn on Navteq & everyone on a BlackBerry loves Google Maps. But there's not been much movement in special mobile-optimised seach engines. Just give me proper Google.com search please.


8) The City WiFi bubble bursts

Yes. At best, it's wireless for bus shelters & traffic wardens. Yawn. At worst, it's a negligent waste of taxpayers' money by bored local government IT drones seduced by glossy marketing BS about 'digital inclusion'.


9) Flat-rate data becomes the norm, with browsing the killer app, driven by high-res screens

Yes. Although I missed that it was also driven by cheap USB modems for PCs. Laptops are the new smartphones.


10) No, No, No, No, No

Mobile IM won't replace SMS - true

Laptops with built-in HSDPA won't sell much (and even where they do, the cellular bit won't be activated by most owners). - true, it's all about USB dongles

WiMAX will get a few more major operator advocates, but still won't be seen as a threat to "normal cellular". - True

Mobile TV won't make much headway. - True.

Web 2.0 stuff like social networking really won't be a big deal in mobile outside Japan, Korea & maybe the US, unless carriers work out a way to give decent Internet access & capable devices to prepay users. - OK, maybe I underestimated this a bit, but there's still not that many people checking FaceBook on their phones, or Twittering.

Oh, and maybe Apple's Phone won't play music at all, but will be "just a phone". - Cough. OK I'll hold my hands up.... that was a bit tongue in cheek anyway, but still wrong.


I'll leave the 2008 predictions for another day......

Handset subsidy.... or loan?

A few years ago, I tried to estimate the total annual market value of handset subsidies by mobile operators. I seem to recall that I came out with a figure of perhaps $20-30bn a year.

Roughly speaking, that's perhaps 400m of the world's phones sold annually that are subsidised / bundled, at perhaps an average $60 each. The exact numbers are unimportant for this discussion.

Most of these are 'locked in' to contracts of typically 12-24 months. So in other words there's probably >$30bn of subsidised handsets in users' hands at any point in time.

This begs a couple of questions:

1) If you look at the relative price of similar subsidised / unsubsidised contracts+phone combinations (for example looking at markets like Italy or Finland for which subsidy is unusual or illegal), what's the implicit cost to the consumer of financing their handset purchase? What's the APR (annual percentage rate) on that loan? And if it's higher than normal retail financing (say in comparison with an electronics retailer) is there a market opportunity for 3rd-party "phone loans" at cheaper rates?

2) Should mobile operators be forced by regulators (telecom and/or banking) to either unbundle phone+finance+subscription, or at least quote an implicit APR on the financing?

3) Do mobile operators really want to be in the consumer credit business at the moment? And how do they quantify their exposure to credit risk?

3GSM in Barcelona...

Mobile World Congress. Who thought of that rebranding?

First of all, go to a mirror and watch your lips as you say "M..... W..... C....". Then do it again with "3... G... S.... M". Acronyms with W's in the middle are quite literally a mouthful.

Now, what does that tell you about the priority placed on "user experience" among the networks part of the mobile industry?

I must have already had 10 conversations which have gone "Yeah, I'll be at 3GS... er.... I mean Mobile Congress W..... er... World Mobile Co.... er....... in Barcelona"

Then there's the completely unaffiliated event I attended in Hong Kong a couple of weeks ago, called Mobility World Congress. Or have I got them the wrong way around?

I'll still be calling it 3GSM, and I encourage everyone else to do the same. It's memorable, its pronounceable and it's uniquely differentiated. If I really fancy winding people up, I might say 4GSM, which would have been a much better re-brand.

Unless anyone has any new clever ideasfor turning MWC into a nicely-enunciated word? "MoWK" perhaps? Or maybe said as if it was an air-kiss "Oh dahling, are you going to be at mwoc this year?"

A New Years resolution

I've realised that I can be a bit of a Luddite at times. I've been thinking about the amount of "new" communications technologies I use, and it's actually fairly poor. I (like a lot of people) have huge inertia in adopting cool new stuff.

Sure, I have this blog, but that's more because I like writing and it's of direct commercial benefit to my business. I don't have a personal blog, apart from my issue-specific (and very occasional) environmental one. And I'll use SkypeOut on a PC to make long international calls (but over WiFi, usually, so I get points for that....)

But I don't use Twitter, I use IM maybe twice a month, rarely update my FaceBook page apart from my status, I send MMS's once a month, eschew all forms of video communication and collaboration technology and so on. I've recently received some invitations to yet another social network (Spock) and winced.

Even my two main mobile phones are more than 18 months old. And although one is a smartphone, I never download applications to it.

So as a New Year's Resolution, I'm going to consciously become a bit geekier. I'll probably get a quarantined plain-vanilla Symbian or Windows phones that I can install software on, and wipe clean or reflash when I need to do. Time permitting, I'll try and play around with the latest gee-whiz social or business communication tool. I'll upgrade my normal phones and probably get one of 3's new prepay USB HSDPA modems as well. And I'll look out for interesting things like mobile voice mashups to play with.

I might even tart up this blog & the main Disruptive Analysis site, with some of the latest, trendiest blogging furniture & widgets. (But not that awful link-prevew window thing which I detest).

I'll give it 3 months initially... which coincidentally takes me up to Lee Dryburgh's ultracool eComm 2008 conference, more on which to follow in another post. Hopefully it'll mean that (a) I'll retain some vague credibility among people I meet at the event, and (b) I won't be wandering around like a total cynic saying 'are real people honestly going to use that when they could just use SMS?"

Now, I just have to find some new friends who actually care about any of this stuff to talk to....

Whatever happened to BT Fusion?

Doing some update work for a client on FMC services, I realised that everything had gone remarkably quiet on the BT Fusion front of late. I keep hearing about Orange's (comparative) success with Unik, so I had a quick look at the current status of BT's FMC proposition.

Not impressive, I'm afraid.....

Let's see - I'm one of BT's 2m or so Broadband customers, with a Home Hub gateway, so I'm privileged enough to be entitled to Fusion. If I decided to get a new phone today, I could get:

a) A humdrum Nokia 6136, ancient Motorola A910, or slightly-better Samsung P260 for £19 a month over 18 months, with 100 minutes calling (or 400 when at home in range of Fusion) from BT

or...

b) A quite nice 3G SonyEricsson K800i, with 500 mix/match minutes or SMS, for £18 a month over 18 months, on 3 UK . Which also comes with free IM, Skype calling (!) and an extra 300 on-net 3-to-3 minutes.

Unless I had absolutely shocking indoor coverage.... why on earth would I pick (a)? And if wasn't a BT Broadband subscriber, I wouldn't even have the choice.

I'm not surprised that there hasn't been a recent update on subscriber numbers.

I wonder if BT is going to go the same way as Telecom Italia, and bin its UMA dual-mode service and wait around a bit longer for a SIP/IMS version as it gets 21CN up and running. Or maybe it will (finally) make some use of its low-power GSM spectrum licence and do something fun with femtocells (there are some 2G femtos about....)

Cisco & IMS - it's about coherence, not seamlessness

Attending a great panel session at Cisco on service provider architecture, and the thorny issue of IMS cropped up.

I've long shuddered at the mere mention of the hideous word 'seamless'. My general rule is that any presentation at a conference loses several credibility points if it includes it, and in the case of companies embracing it as a major element in product names or branding (eg Motorola) it's much worse.

Responding to a question about blending mobile video services with IPTV, one of Cisco's execs came out with the fantastic line that they are "aiming for a coherent experience, not a seamless experience". In other words - the application needs to be similar, but bearer- and device-aware. He used the example of Outlook on a PC bs a BlackBerry. It's obviously the same underlying application, but presented in a coherent way to give an optimum, context-based user experience, rather than being truly seamless or identical.

I'm so stealing the word 'coherence' when talking about convergence & fixed/mobile applications....

Video... so just how important is it really?

I'm sitting at Cisco's analyst event in the US at the moment. The various execs presenting have been trying to hammer two themes into the heads of several hundred analysts sitting in the audience - video, and collaboration.

The collaboration theme fits into Cisco's acquisition of WebEx. It put up some fairly persuasive examples & demos of this yesterday - talking up the potential to improve productivity in large businesses. It also eats its own dogfood in realigning its own business processes around interactive, collaborative teams.

While I personally detest using the type of online presentation tools that's one of the more familiar faces of WebEx (just send me the Powerpoint by email, please, and talk it through on the phone), I can certainly appreciate the benefits for internal corporate collaboration for large businesses. There's also a lot of cool Web 2.0 stuff they're talking about like Wikis, blogs etc. Basically Intranet 2.0 stuff, which makes a lot of sense (eg submitting business opportunity suggestions & getting them rated / favourited).

The video message is a little less clear. Despite attempts to claim "no, it's not just about driving IP traffic up the curve & selling more routers" I'm really unconvinced. Obviously, IP video is important in IPTV (hence Cisco's Scientific Atlanta acquisition). And Cisco's high-def Telepresence corporate videoconferencing gear is very impressive. And lastly there is a lot of sense in networking up CCTV cameras via IP.

But I simply do not buy the argument that video-based communications will become pervasive, and will be used in a large percentage of total person-to-person interactions. This is actually a bit reminiscent of Ericsson's attempts to shoehorn video into mobile handsets, either in the past through the useless H324 videotelephony approach, and again now now with the over-complex IMS Multimedia Telephony standard.

My belief is that each individual's (or company's) communications will become fragmented. Sure, certain business-to-business sales calls, or internal product planning meetings, among technology-savvy (and technology-happy) people will benefit from telepresence. But other instances will not - if I'm in a cab late for a meeting, I'll use SMS. I can see almost no business reason for me to use video - for me personally, it adds little beyond voice, and I much prefer face-to-face meetings with my clients for a host of reasons. Mobile video for business is an even more unlikely proposition, unless I'm sitting in an airport watching YouTube or maybe a business webcast on my PC.

The irony is that increasing mobility of employees works precisely against the use of video in the enterprise. It is inceasingly likely that one party in a given call will be driving, walking, out of coverage, roaming, using an incompatible phone, in a different timezone and so on.

Of course, Cisco doesn't have a major presence in mobile devices & cellular networks, so in an ideal world perhaps Cisco would actually like people to get back to their desks and offices, and be connected with a big fat LAN. Given their comments about the travel savings associated with telepresence, it wouldn't surprise me to see a green argument expounded in the future, about the "evils" of corporate mobility.

In fact, I see this as emblematic of a much wider long-term battle between the world's too most important communications technologies - 3GPP GSM/UMTS cellular vs. Ethernet. I think that's another theme for 2008, although I don't expect too many people to admit it openly.

Depersonalising mobile

This is a speculative, 'what if?' post rather than one based on current observable trends.....

I regularly hear that one of the unique aspects of mobile communications is 'personalisation'. You are identifiable by a number, you have a private, non-shared, customised device with your favourite ringtone & colour scheme, and you are 'owned' and identified by your service provider.

In general, I agree - but will this always be the case?

I'm just wondering out loud, but perhaps there might be scenarios which 'depersonalise' the mobile. It's certainly not common now, but it's dependent on social dynamics & fashion, so it might change. Some possible scenarios that could muddy the waters:

- Phones shared ad-hoc among friends (eg teenagers 'swapping identities' as apparently sometimes already happens with IM or MySpace)
- Mobile numbers being allocated to shared (non-phone) devices like PCs, web tablets, consumer electronics
- Secondhand mobile phones
- Swapped prepay SIM cards
- Maybe it becomes cool to have a new phone / number every week so they get passed around
- Use of non-operator SMS-replacement clients could mean that you could 'sign in' from any phone
.... and so on.

Maybe there are specific 'depersonalisation' opportunities.... if you could automate number portability via a web interface, and couple it to ways to move your personal phonebook & profile, you could switch seamlessly between operators or phones.

You could rent an appropriately stylish phone to match your outfit for the day, then give it back & revert to your normal one. You could temporarily switch to another operator for the duration of the Olympics, if they had exclusive Mobile TV rights. You could try out all the operators in your country to find which one has the best overall coverage during the course of your day.

And maybe sharing phones could reduce the environmental impact of producing a billion handsets a year?

To be honest, this is all totally speculative on my part. I'm just musing. But it occurs to me that there would be quite a lot of business models exposed if we ever saw mass depersonalisation of mobile phones / numbers for some reason.

And look at other markets. In theory, cars (and registrations) are very personal. Yet people regularly rent cars, use taxis, lend cars to friends/family - and, recently, you have innovations like the shared City Car clubs.

I'll keep a close eye out during 2008... remember where you first heard 'mobile de-personalisation"...

Sensor-tastic

I'm at Cisco's analyst event today so I don't have time to delve into this right now, but at first glance this looks absolutely like what I've been talking about with motion sensors in phones.

So what has been the 'device of the year' in 2007?

I reckon the three most influential mobile products this year have been:

• For FMC and VoIP: I'd nominate the Nokia N95 for its relevance in driving assorted top-end features like WLAN and good-quality Naked SIP support into the mass marketplace - especially from the point of view of Mobile VoIP. And of course the 5MP camera and GPS, and more recently its 8GB version have also been major catalysts driving the initial sale of the device to customers. The E65 has also escaped from its original intended market of the enterprise, and become an important part of the SIP-based FMC landscape, and the 3 Skypephone (made by Amoi) is cool as well.
  
• For user experience & changing perceptions: The Apple iPhone has lived up to its hype. I have to confess I was a skeptic initially, but having played with a few and listened to lots of owners, I'm pretty impressed. It's certainly forced the rest of the handset industry to sit up and pay attention. And its forced the operators to ask themselves hard questions about whether they can really do cool UIs themselves - and given them another concrete reality check that consumer like hardware rather than services. And above all, it has that ineffable "Oooh I want one of those" quality.
  
• For driving data services and defining mobile broadband: It's got to be the Huawei family of USB-connected 3G modems. They've facilitated the adoption of mobile data by consumers as well as business users, and illustrated perfectly why 3G-embedded PCs are niche products. Why would you want to have an operator-customised (and possibly locked-down) laptop, when you can get a proper unmolested one and just add a separate plug-and-play connectivity device? Laptops last longer than mobile contracts, so the user wants the ability to switch providers (or rent a local modem when travelling to avoid roaming charges). Lastly, they're better for operators too - they really don't want to put 500 different types of PC through their testing labs, when they can just test 3 external modems instead. And they're (finally) driving 3G data revenues - laptops are the best devices for getting 'the real Internet' when you're mobile. According to a presentation I saw last week, the Huawei devices are the current top-selling 'phones' in Sweden.
  

So what do you want in your phone for Xmas?

I saw "disruptive" adverts from two companies yesterday - both advocating bypassing the cellular network through choosing handsets with advanced features

- Truphone is advocating getting smartphones (ideally with WiFi, but at least "Internet ready")
- SanDisk is exhorting customers to "discover their slots'

The issue I see is that the SanDisk argument (sideloading of micro-SD cards) is indisputably usable without incurring extra operator charges, while the "Internet-ready" approach typically means paying out for a data plan (albeit with the potential to save money via using VoIP as well) unless you just use local WiFi.

In an ideal world, your Internet-ready phone would also have a 'no cost' win by enabling efficient sideloading as well - it would be 'PC ready' for connection via USB cable, or better still WiFi. But many people still balk at the clunkiness of PC-phone connectivity, and instead turn to memory cards. This ties in with my recent comment about the lack of cool "local" apps for WiFi phones.

SanDisk's marketing is also a manifestation of another long-term trend - the much steeper price/performance curve of storage, compared with other computing metrics like processing power, network capacity or battery power density. Brough Turner has had a couple of fascinating blog posts recently on this. The long and short of it is that, if your application doesn't need to be realtime, memory wins out over wireless networks.

The world's highest-capacity form of data transport between two cities is a truck full of flash memory. Lousy latency, but awesome bandwidth. Luckily for Truphone & peers, latency is rather more of an issue for VoIP than it is for content....

Multiple device ownership - crunching some numbers

A regular theme that I have to deal with is multiple mobile device or SIM ownership. Statistics are very fuzzy on this - you get the usual estimates of 120%+ penetration, but very little analysis of what that means in reality.

Vodafone occasionally tries to estimate the level of multiple SIM ownership in its markets, and I commented on a survey on the UK market recently which seemed to suggest 1.6 SIMs per person, but definitions seemed questionable, eg with penetration of phones among children.

I thought I'd try and come up with some slightly harder numbers.

The UK has 70m SIM registrations at the moment, and 60.8m people, with a demographic breakdown given here. Last year, Carphone Warehouse did some analysis of mobile penetration among children up to age 12, while Ofcom has some great research (figs 15 & 16) on the proportion of adults who personally use mobile phones.

This yields the data that 86% of people >15 years old are active users. This is heavily skewed by older people - only 52% of over-75s use mobile in the UK. Among children, from the CPW study there is near-zero penetration among 8-year olds & below, 20% @ 9, 50% @ 10, 70% at 11 and 90% at 12. Given the other data it seems reasonable for me to assume that about 93% of 13 & 14 year-olds are users. The youth data is a year old, so might have shifted slightly, but it's a good starting point.

Multiplying this all through by the population stats gives me:

Total UK Mobile Users = 46.4m individuals - ie 76% of the total population.
Total UK non-users = 14.5m (mostly young kids & seniors)
I'd estimate 1-1.5m SIMs are used in non-personal M2M applications (EPOS terminals, vending machines, wireless routers etc, but excluding laptops & PDAs which are personal devices).

So.... 69m personal mobile subscriptions among 46m active mobile users =

1.46 Mobile Subs / Active User in the UK.

This excludes UK citizens who have international SIMs as well (although probably some of the UK SIMs go abroad too).

What remains slightly unclear is the mix of people with 1SIM+Multiple Devices vs. Multiple SIMs+single device. ie the ratio between active subs/person and active phones/person. Travellers often put local SIMs into a single phone when abroad, but users who like phones for fashion reasons may swap a single SIM among multiple devices.

What this all categorically tells me is that the "one mobile device" philosophy is completely inapplicable in the UK. My rough estimates are

Zero Subs = 24% of all UK individuals
1 sub = 49%
2 subs = 17%
3 subs = 7%
4+ subs = 3%

Bottom line = a majority (51%) of the total UK population either has zero mobile subscriptions, or multiple. People with just a single active SIM are actually in the minority (49%).

A misconception - 1 SIM = 1 Identified User

There seems to be a common belief that because all GSM/3G phones have SIMs, and that everyone has a phone, this means that the SIM is an ideal platform for determining identity. I've heard people suggesting integrating SIMs with healthcare records, payment cards, ID cards and other similar alternatives.

I'd urge caution on this. The world is not as simple as you think.

Some of the problems:

• People have multiple SIMs, and multiple devices. While this doesn't apply to everyone, a growing fraction of individual users will fall into this category. I'd expect far more people to have 2 SIMs than 2 nationalities/passports.
• A few people have no phone/SIM and no inclination to change. Some form of 'digital inclusion' policy would be needed for the cellular refuseniks.
• *EDIT* - also see my more recent post where I try to quantify the two factors above
  
• Many countries still have anonymous prepaid SIMs. While some countries like Italy & Thailand force SIM purchasers to register their ID, that's a far from uniform situation. I've bought loads of SIMs over the years with total anonymity. And I'll bet that black markets exist even in countries where registration is mandatory.
• Just because a SIM is registered to an individual, that doesn't mean they're the user. A speaker from India yesterday said that SIMs are usually registered to a head-of-household, rather than the actual user.
• No idea what happens with legal responsibility & identity with children with SIM cards, but I'll bet it's complex and variable per-country
• Plenty of SIMs are used by machines, not people. How do you know if it's actually a vending machine that's sending a message, or someone hooked up via a PC?
• Some phones or other devices are shared between multiple people (eg in 'pooled' devices in businesses, cellular fixed phones, or phones for a whole village in emerging markets)
• There is some evidence that young people swap phones (& SIMs) amongst each other in social groups. This could be because of the dynamics of who has prepay credit among friends, for example, or in situations where an operator doesn't offer x-network minutes and it makes sense to use someone else's phone to save money.

The last point is perhaps the most crucial. The whole idea of one SIM = one person it hugely exposed to the risk of social dynamics and fashions. It only needs one group of teenagers to come up with a 'killer app' for phone-sharing or swapping (maybe it becomes cool to have a new number every week), you get viral adoption around the world in a couple of months, and the whole identity/SIM linkage falls apart.

Ironically, the use of Internet access on mobile devices exacerbates this risk, as potentially users can sign into Yahoo/Google/Skype/Truphone/Fring from any device rather than their 'official' phone & SIM.

E-Mobile - cellular VoIP and subsidised DSL

I'm in Hong Kong at the Mobility World Congress, speaking about Mobile VoIP and also mobile user interfaces.

One of yesterday's speakers was from E-Mobile, Japan's new 4th operator, of which I have to confess I'd been fairly unaware until recently. It's affiliated to E-Access, an established fixed broadband operator with about 2m DSL subscribers.

E-Mobile's main offering is flatrate HSDPA - at around $45 a month. Interestingly, it comes with the offer of a 'free' DSL line for customers to use at home (and which would offload some traffic from the cellular network). Although some companies like Carphone Warehouse have given away 'free broadband' before, this is the first time I've heard it being done more for the reason of macrocellular offload economics, rather than simple bundling.

This has some significant implications for future femtocell business models - the current working assumption is that the user should be "happy" to pay for their own indoor-wireless backhaul when their phone is on the femtocell. That assumption may be a bit too optimistic:

- If the broadband is supplied by a separate company to the mobile operator, they may well view cellular femto traffic as being as undesirable as P2P when running on 'their pipes' . They may try to extract some form of rent from 'over the top femto operators' in the name of QoS - especially as those femto operators are likely to be mandated to provide emergency services access. It's easy to imagine femto traffic being 'traffic shaped', especially if it's being used for high-speed data. (I've heard some fairly fanciful notions of femto-HSPA being positioned as a replacement for WiFi in-home, but I'll address that in another post)

- If the broadband is provided by the same company that runs the femtos (triple/quadplay), then they are at risk from competitive pitches like E-Mobile's. "We've sold you a personal mobile broadband service, but we'll reward you for using DSL at home by giving it to you for free, as it saves us money"

E-Mobile is also expected to launch a full mobile voice service early in 2008. Although details are not available yet, I suspect that it might turn out to be a full mobile VoIP service using HSDPA+HSUPA. As it's a completely new IP-focused operator, I can imagine that it would probably like to avoid buying a cellular circuit core if it can avoid it. (It has a roaming deal with DoCoMo outside its own HSPA coverage area).

VoIPo3G would probably be made easier in Japan than many other countries, because of the lack of need for SMS or prepaid billing support. There is also ample scope for tariff arbitrage - apparently mobile voice charges in Japan are amongst the highest in the world - the presenter suggested 40c per minute is typical, which goes some way to explain why data services like email are so widely used instead.

It is already offering a partner-based VoIPo3G service in conjunction with Jajah, on its mobile data PDAs.



It's also apparently launching a mobile voice service early in 2008. Although details are not available yet, I suspect that it might turn out to be a full mobile VoIP service using HSDPA+HSUPA. It has a roaming deal with DoCoMo outside its own coverage area,

Femtocell - who coined the term and when?

A fairly tangential question cropped up in a client meeting recently.... how long has the term 'femtocell' been in use? I first encountered 'picocell' as a term in 2001, along with ip.access' use of its brand 'nano BTS'. But femtos are more recent developments, and have also been called 'home base stations and various other synonyms.

PicoChip can claim a Feb 2006 use of the term.

I first had a mention in my blog from Nov 2005. I'm pretty sure I didn't invent the term, though - but I'm struggling to remember who I first heard it from. It might have been a presenter from O2 at a wVoIP conference in Brussels in late 2005.

Anyone got any prior claims?

Is there such a thing as a 'vanilla' IMS handset?

There's been quite a lot of renewed talk about IMS-capable handsets recently. It's still early days, and most industry participants still only expect to see large-scale mobile IMS service launches in 2009 and onwards, but there's definitely a sense of movement. Some of the problems I identified last year appear to have been fixed.

A thought occurred to me, however. There is also now a definite move towards the sale of open, 'vanilla' handsets, both through established non-operator channels like Expansys and Nokia's own stores, but also catalysed by shifts like Verizon's new openness policy.

How will these vanilla devices be configured to access a given operator's IMS? What needs to be provisioned, downloaded, set up? Can this be automated? Can there be a 'native IMS client' which will automatically register work with anyone's IMS infrastructure, or is this too much of an interoperability headache? Presumably, this would only work with the core set of IMS applications (IM, presence, videoshare, PoC etc) as it presumably wouldn't be possible to download an arbitrary 'cool, differentiated, operator IMS app' to an arbitrary IMS handset framework.

I guess a similar situation will occur when roaming with an operator-provided IMS phone onto a foreign (non-affiliated) operator's network.

Sorry, I don't have any answers for this one at present, but it's something I'll see if I can check up on soon.

Handset privacy - any rules or standards?

I was just playing with the Adobe Flash player on my PC, and stumbled on this page about privacy settings.

It got me thinking about the software on my mobile handsets - what applications have the automatic right to access the microphone and/or cameras? Obviously the main phone dialler, any obvious speech-based functions, and the videotelephony app, and any VoIP clients... but what else? And how do I control it?

Now I know there have been a few stories about the potential for security services to covertly switch on phones' microphones, but that's a little separate. I'm thinking about other applications - either mainstream multimedia apps, or perhaps malware. Maybe I'm just being paranoid.

As far as I know, there aren't any standards about this which span different handset smartphone OS's, or even more locked-down featurephones. As a user, I have no direct knowledge of when the mike or camera is "live". Maybe there should be the equivalent of a TV camera's red 'recording' light? I guess that organisations like the OMTP might be the best-suited to standardise something like this.

I suspect that any really intrusive always-on audio/video spyware would have a noticeable impact on battery life, but imagine a piece of software that just recorded what you said for the 30 seconds after the end of a phone call.

"Great! another customer paying full price! What a sucker"
"OMG, he just asked my on a date!"
"It's OK, my wife thinks I'm in a meeting"
"Yeah, that geezer's got a garage full of moody kettles"
"Jeez that was a tough briefing. Bloody know-it-all analysts"

I'm currently sitting in a hotel room, so I can't check & see if a Windows or Symbian device has a privacy menu which enables you to force applications "to always ask for permission" to use the mike or camera, but I can't remember seeing one, and I suspect that 99% of normal users would never find it anyway.

Mobile payments for car parking - awful user experience

I've just had my first encounter with Westminster Council's new mobile parking payment system.

It sucks. Totally. Wearing my "mobile user" hat rather than my "analyst" hat, this was my first and hopefully last real-world encounter with mobile payments.

Basically, London's Westminster Council is fed up with people vandalising or stealing coins from parking meters, so it wants to reduce its amount of on-street payment equipment. Laudable & understandable on the face of it, but that's the only positive.

The system they've chose is for users to either phone or text the reference number of the parking bay and the length of time they want to stay. But the payment mechanism is via debit or credit card - and the first time you park, you have to call into an IVR system to set this up (or do it on the web if you're organised enough to sort it out before driving), and your car registration.

The first problem is the number - an 0870 premium-rate one, which isn't included in most mobile call packages, and which therefore costs an unknown extra amount to call. The second problem is being certain that some phisher hasn't swapped the signs over - how do I know that it's the correct IVR system, and not one that someone's set up to capture credit card details? The third thing is that I don't know who else is involved in running the system, and I really don't want to have my credit card # on file with the council - let's face it, local government authorities aren't always the most trustworthy institutions.

Once you're set up on the system, the next time you just have to SMS the location code, length of time and credit-card validation number. Which assumes you remember which card you've registered with, of course.

All of this must be a triple nightmare if you're a tourist using roaming, or if you use hire/share car systems with a different registration every time.

Then I thought "why on earth aren't they using premium SMS or some other mechanism that doesn't need a credit card to be set up?".

My first thought was that the council (quite reasonably) didn't want to involve mobile operators taking a cut of their revenues. As the end user, I certainly don't want to pay any more for subsidising my own inconvenience - it's much easier & quicker to put coins in a meter than faff around with texting. And I really don't want parking fees appearing on my mobile bill anyway.

Then another thought struck me - credit risk and complexity of integration with prepay billing. I seem to remember reading that the average prepay user only has £5-10 credit on average at any point in time - yet parking is £3 an hour up to a maximum of 4 hours. Given the high proportion of prepay users in the UK, this would mean many users having to first top up their account, before paying for parking - clearly nonsensical.
It also raises the issue of whether the whole amount is debited upfront, or drip-fed over the period of parking.

NFC approaches wouldn't work either - it would still need some equipment on the street to scan & print a ticket. And then you might just as well have a debit-card reader in it too, for people without NFC phones.

All in all, I reckon the most convenient form of mobile payment for parking remains the coin. It works, it's quick and there's no need to pay anyone else trying to shoehorn themselves in the value chain.

I'm not the only person who reckons the system's rubbish either. The UK's next-but-one Prime Minister has also experienced the same problem

On the bright side, all this confusion will probably lead to more parking fines & cars being towed. Given I'm also a Westminster resident, the extra cash should help lower my taxes.....

Verizon Wireless and LTE - don't be so hasty

Interesting to see yesterday's Verizon's announcement about its LTE trial & deployment intentions with Vodafone. It's been an open area of discussion that the company has been interested in LTE for some months now, although I've been a little warier than some in describing this as a death-knell for CDMA UMB.

While I agree that the statement is pretty definitive, there's still a number of unanswered questions & scenarios that could play out:

• Firstly - it's a trial. Until the trial is proven successful, presumably the chequebook stays in Verizon's pocket.
• Secondly, as Sprint's current review of its deployment of WiMAX illustrates, it's always possible to change direction at a later stage if necessary.
  
• Verizon is likely to keep (and evolve) its existing 3G EVDO Rev A network irrespective of LTE. Its news release says that it will "continue the expansion" of its existing technologies. Although Rev B isn't getting much traction either, I guess there's scope for a Rev A+ of some sort.
  
• The big 'swing' factor for UMB continues to be Japanese operator KDDI. If it also backs away from the CDMA family, then its pretty much goodnight for UMB. If it runs with it, then there's possible large scale deployments to follow in places like India or Brazil.
  
• Another variable is of course SprintNextel, the other big US CDMA operator. Don't forget that it originally trialled Flarion's Flash-OFDM (on which UMB is based, since Qualcomm's acquisition of Flarion), and quite liked it - but felt it wasn't ready for deployment back in 2006. If Sprint backs away from WiMAX (or scales its rollout down), I can't see it necessarily wanting another 3.5G+ technology in the shape of LTE.
• Lastly - it's unclear what might happen if Vodafone & VZW ever parted company.
  

My gut feel is still that I see full radio convergence more in the timeframe of the next step beyond LTE, lets call it ELTE (Even Longer Term Evolution). But I could certainly buy the notion that Verizon might want a converged access network that looks like SAE in the meantime, which could connect together multiple radio standards.

Essentially, I see convergence between 3GPP and 3GPP2 extending from the core outwards for major carriers:

Stage 1 - Core Network (IMS or something similar), Now
Stage 2 - Radio Access & Transport (aggregating LTE together with HSPA, EVDO, WiFi, TD-SCDMA and maybe WiMAX), around 2011
Stage 3 - Air Interface becomes fully harmonised (excluding things like TD-SCDMA probably), around 2015

That said, the option to create dual-mode CDMA/LTE devices could help Verizon manage multiple networks. And if it did, then it would definitely also create an interesting backdrop for how it treats voice - would it use VoIP on LTE, and circuit on EVDO? Or VoIP everywhere?

Phone... or wallet?

Put your wallet in your phone?

I think you're much more likely to put your phone in your wallet.

xG Technology finally launches mVoIP..... Well, sort of.

According to this news release, xG has started operating a network with mobile VoIP capability in Daytona Beach in Florida. There's been a flurry of news recently about new wireless technologies being rolled out (like China's TD-SCDMA), so it's good to have some confirmation that xMax is finally out of the starting blocks. [And another mysterious one is just emerging too]

A few months ago, in its last results, the company promised a November launch, and so it looks like they've just managed to sneak in before the beginning of December.

I'll certainly agree that xG deserves some congratulation on reaching the milestone of deploying its technology in a real-world environment. It's a small company and has undoubtedly encountered many setbacks and unexpected technical and useability glitches along the way.

But on the other hand, I have to say this is a fairly tenuous use of the word 'launch', which appears to be used more to satisfy its detractors by hitting its self-imposed November deadline, than in the way the telecoms industry would usually interpret it. "The first soft launch customers will begin populating the network shortly in anticipation of the retail launch" is a bit woolly. I wouldn't say that first installation = launch. It's perhaps more equivalent to laying a foundation stone.

Compare and contrast with the Brough's description of the status of China's TD-SCDMA "trials": "under the name 'application trials,' experimental TD-SCDMA networks began running in four cities in 2005. It took longer than expected to get the system running, however, since April 2007, these “trials” have been extended to ten cities and have been substantially enlarged to what I might call “deployment scale.” . (Also discussed here)

It's also interesting to see what xG isn't saying in its new release:

• No new specific deadlines on commercial launch, that might hold it hostage on timing in the future. The phrase "continuing to pay particular attention to the quality of service for voice" is quite telling. [by coincidence I am listening to a technical conference presentation on VoIP QoS as I write this. Put simply - it's challenging & time-consuming, and needs tools like dedicated test & measurement gear]
• No outlandish claims of orders-of-magnitude improvements in performance or capacity, just a fairly loose marketing-ese comment of "longer range, more power efficient"
• No mention of the service provider deploying the network - notably the mysterious Far Reach. It's pretty unusual for a vendor to announce a launch rather than an operator, so I suspect it may be an in-house operated network rather than that of a customer operator. The use of the term 'customer' to refer to end-user in the text perhaps also indicates direct sales from xG rather than via a service provider.
• No more assertions that it is the first mobile VoIP solution provider, when plenty of others are now in that space.

Overall, it looks like an important step for xG, but I still think it's a long way off large-scale rollouts and the exact nature of any competitive differentiation (technical or cost) is unclear. As the technology is still proprietary it will need to have significant clear & measurable advantages for operators to consider it. Really, xG needs to push it somehow to become a standard.

Given the final paragraph includes the line "we are now afforded the occasion to address the multiple other opportunities, both wired and wireless, which have presented themselves" I'm wondering whether the company is finally realising that mobile VoIP is the hardest and most competitive place to start, and is going to look at less-challenging applications as a priority.

Verizon Wireless opens to 'any apps, any device'

One of the core assertions in my VoIPo3G market model & report is that operators will relax their restrictive and VoIP-hostile terms of services on their 3G+ networks over the next 12-24 months.

Some such as 3 and ONE Austria are already implicitly permitting VoIP, while others like Vodafone are much more restrictive and can actively block VoIPo3G.

I believe the laggards will, by and large, be forced to change their attitude. The combination of direct competition, regulatory intervention, customer demand and emergent threat from WiMAX will act as catalysts - plus the incentive of new revenues from competing head-to-head with fixed DSL and cable broadband for PC connectivity.

I've encountered skepticism from some quarters, with some commentators insisting that carriers are utterly conservative, and will resist VoIP and other competitive 3rd-party applications at all costs. A few people have pretty much offered to eat their hats if this changed.

Which is why I'm feeling rather vindicated today:

"Verizon Wireless today announced that it will provide customers the option to use, on its nationwide wireless network, wireless devices, software and applications not offered by the company. Verizon Wireless plans to have this new choice available to customers throughout the country by the end of 2008".

Now to be fair, the devil's in the detail & we won't know the full technical specifications - or the price of openness - until Q1 2008. But the line "Any application the customer chooses will be allowed on these devices" seems pretty unequivocal to me.

Would you like your hats fried or toasted?

EDIT - I wonder if this will also mean that Nokia is tempted to start making CDMA Symbian phones?

I'm quoted at Carnival of the Mobilists this week

Thanks Martin for including my post about dual-mode WiFi phone in this week's Carnival roundup. Some other really good links there too, including Michael Mace's critique of the Amazon Kindle.

His own post on tech vendors' YouTube videos is pretty cool too - I like Ericsson's pseudo-cheesy IMS adverts. Although they've still got a long way to go before they compare with the anti-establishment virality of some the VoIP service providers' efforts like Truphone & Vonage.....

Impact on WiMAX from World Radio Congress

There has been an awful lot written (by me among others) about the ratification of WiMAX as a 3G technology within the IMT family. This gives it access to the 3G-designated frequency bands like 2.5GHz.

Cue lots of huffing & moaning from the UMTS advocacy brigade.

But now I'm wondering if perhaps the boot is on the other foot. Part of the outcome of the WRC was to designate a number of new ranges for IMT technologies, and also to get rid of the distinction between IMT-2000 and IMT-Advanced. Two of the bands discussed - 3.4-3.6GHz and 2.3-2.4GHz - have previously been home to fixed broadband wireless technologies of various types, and, especially recently, WiMAX.

There's lots of 3.5GHz WiMAX being deployed, usually for fixed applications even if it's using 802.16e. Korea uses 2.3GHz for WiBro.

Now, it looks like we could see UMTS or CDMA encroaching into those bands. I bet we'll see a 3GPP profile for 3.4GHz UMTS pretty quickly.... and then it wouldn't surprise me to see a lot of HSPA+ or LTE fixed-3G chipsets and devices being made available pretty rapidly.

Given that the mobile operators are already successfully pitching 3G modems to home users for fixed/nomadic usage, I reckon that fixed WiMAX will come in for some stiff competition in 3 years or so time.

Why are there no cool local applications for dual-mode WiFi phones?

I am becoming slowly more disillusioned with the notion of WiFi on mobile phones.

For the last 4 years, I have been expecting the addition of WiFi to drive innovation in handsets, and lead to a variety of interesting applications and business models. But to date, I've only really seen 3 use cases:

• Connection to operator telephony+SMS via WiFi, using UMA, or sometimes SIP.
• Connection to non-operator telephony based on VoIP (Skype, Truphone, enterprise PBX etc)
• Connection to the Internet to share a broadband connection for web & email

I suppose 'indoor coverage' is a fourth, and maybe (from the operator point of view) macrocellular offload onto the customer's own broadband connection. But I'd argue that those are justifications rather than actual applications, and in any case overlap strongly with enabling the other three.

I've seen almost nothing about using the WiFi to connect to local computing or electronics resources. Nobody uses a WiFi phone instead of a microphone at conferences. Nobody shares music or video between phone and PC hard drive via WLAN. Most people still sync email & PIM via USB or Bluetooth. Nobody uses their handset as an Xbox or PlayStation controller. Nobody interacts with a street kiosk with a dualmode phone. Nobody orders their own food in a restaurant.

The exception here is in the enterprise, where phones will now hook into the PBX for a variety of purposes beyond voice - and WiFi (albeit usually on single-mode devices) is also used for a variety of specific corporate data applications like stock control or point-of-sale connectivity. But I don't see Nokia N95's or 'handsets' as such, being used in warehouses -although maybe the Symbol MC series count as dualmode phones.

But in the consumer market, WiFi phones are just about telephony and Internet. Apple has helped a bit with the iPhone, so maybe we'll get some innovation there. And in theory, the use of universal plug-n-play (UPnP) on some Nokia devices should facilitate better interworking with consumer electronics.

I suspect there are a few problems that have inhibited the use of cool, local, WiFi-enabled apps on smartphones:

• Relatively low numbers of WiFi handsets - and often consumers don't know, don't care or can't even switch it on when they do have it. I'm thinking here about people who got an N95 subsidised down to zero, solely choosing it on the basis of a 5MP camera.
• Relatively low numbers of WiFi homes (and offices) until recently. Plus lots of general horribleness around configuration, security settings etc etc. As an aside, this has also inhibited the use of WiFi in other non-PC devices like cameras.
• Passive or active discouragement of WiFi by operators, especially in operator-centric, non-Nokia strongholds like the US, Japan & Korea.
• Lack of willingness by handset makers to rewrite all their embedded applications to exploit WiFi. "Oh no, do we really have to rewrite the music player app to look for a PC hard drive when the phone's in WiFi range?"
• Usual problem of fragmentation of operating systems & customisations, that makes creating any sort of 3rd-party software a pain. Add this to the fragmentation of home WiFi setups and you multiply the complexity.
• Generally poor support for developers to write bearer-aware applications - ie apps that behave differently (or are only accessible) when the phone is in WiFi mode. This is slowly changing, with Symbian's new Freeway architecture, for example. Long way to go, though.
• Potential for 'fights' between operator use of the WiFi, and local applications. What's more important & gets priority - an operator phone call, or a file transfer to the company's Oracle database over the WLAN? It's very difficult to balance the rights and privileges of 'private' WiFi use against 'operator' WiFi, especially if there are multiple SSIDs set up (eg on some home gateways, UMA services have their own WiFi SSID).
• Generally low awareness of, and low comfort with, WiFi in peer-to-peer mode.

Obviously telephony (operators' or someone else's) and fast web/email access are hugely important. Offloading that phone/Internet traffic from the operator's network is economically attractive for some operators. But I think for WiFi to really get beyond perhaps 10% of handsets, there has to be more than that. With the advent of HSPA/EVDO with flatrate data, various improvements to indoor coverage (eg femtos), there's nothing compelling or unique that you need WiFi for in a phone, except in the enterprise. You can do VoIP over the 3G network. You can browse over it. You could even run UMA over 3G if you really wanted.

For dualmode WiFi phones for consumers to become massmarket, there need to be local applications, connecting to home PCs or consumer electronics, or maybe stuff besides Internet connection at hotspots. And these will mostly need to be non-billable, non-operator applications too.

Put simply - stop calling it WiFi, and start calling it by its techier name, Wireless LAN. Then forget the 'W' too. We need some LAN (local area network) applications for dualmode phones, not just wireless ones.

Over to you, Apple, Nokia, Microsoft & co.

Amazon Kindle - wireless eBook reader. Hmmm. Unconvinced.

There's apparently a lot of fawning and drooling today over Amazon's new gadget - an eBook reader connected via CDMA EVDO, which lets you download digital books (and magazine subscriptions) wirelessly. It costs $399 to buy, and then $8 or $10 for a book, and some other number for a magazine sub. Oh, and $1 for a blog/RSS feed.

And apparently there's a charge for converting PDFs to the inhouse proprietary protocol if you use the email service. Amusing, as I've joked before that in an all IMS world, we'd never have got free PDF clients, but instead be stuck with some lousy billable document viewing service. (I'm really going to have to stop writing up what I think are really stupid ideas as that's the second time in a month someone's actually gone & tried them out).

I like idea of a wireless tablet-type device in general (it fits in with my belief in multiple devices, and divergence). And the fact that there's no ongoing wireless service subscription fits in with my comments that we'll see more devices that subsidise the service, rather than the other way around.

But I'm totally unconvinced that this particular one will succeed. "This isn't a device, it's a service" says Amazon CEO Jeff Bezos. Funny, but actually I like to own stuff that I read. I don't want a personal document & library service. I want it tangible, sitting on my shelf or on my coffee table.

Some thoughts:

• In the eye of this particular beholder, it's hideous. The name's a bit naff too.
  
• It's black & white. OK for text in novels & newspapers, but not ideal for magazines.
  
• It's quite expensive for what's essentially just a screen & some memory.
• There's limited content. Checking the Amazon Kindle website for my favourite author, it only lists 3 of Iain Banks' novels. Same deal for Haruki Murakami. And there are none of the Lonely Planet travel guides listed (which would be pretty good to have in electronic form).
  
• "The captain has switched on the seatbelt signs. Please secure your tray-table and turn off your ebooks."
• "Long battery life. Leave wireless on and recharge approximately every other day". Am I missing something, or is that not really 'long' for a mobile device with the radio off?
  
• I'm not really interested in locking my reading matter to a proprietary device for all eternity. At least with iTunes I can play music back through my PC as well.
• It's not as obviously 'personalisable' as an iPod. And it doesn't come in pink.
  
• What's the point of reading most blogs if you can't follow the links? (or, presumably, add comments). OK yes there are some news-type blogs which I just scan, but I'm unconvinced I'd pay for this.
• I've seen some fairly spurious "save the trees!" environmental commentary. That's not convincing as most paper is made from farmed forecasts. And I'm sure that the plastics & silicon of the gadget itself have a fairly large energy input in their manufacture. Books and magazines are rather more easily recycled too.
  
• Magazines are delivered 'overnight' - which suggests Amazon cut a great MVNO deal with Sprint to get low-cost data transmission. I know that there is a part of the magazine market (subscriptions) for which timeliness is less important - but quite often I want instant gratification with reading material. [my gut feel is that the subs part of the magazine market is quite a small % vs. newsagent in-store purchases, but maybe that's different in the US]
  
• Not everywhere in the US has Sprint EVDO coverage. Let's hope people test it out before giving it as an Xmas present.
• I've got a pile of old magazines in bathroom. Maybe there should be a Kindle-holder accessory next to the loo roll holder.
  

And at least in London, there's actually huge competition from paper-based alternatives to mobile devices - there are now 3 free newspapers handed out on street corners every workday, one in the morning and two at night. Plus a couple of localised ones in the City and elsewhere. Sure they're not the pinnacle of journalism, but they're perfect for a 20 minute tube ride.

I think I'll be adding this to the 'What's not' column on my website's Opinions page.

And the killer mobile application is......

.... the colour pink.

This is an SMS I received from a friend this weekend:

"Is Orange worse than Vodafone? They have a pretty pink phone & I'm tempted"

Reality check, eh? OK, this isn't a particularly high-end user (prepay, mostly uses SMS, no interest in mobile Internet or downloading apps). But it's emblematic of the problems involved in differentiating based on software or applications.

I overheard a similar conversation in a branch of Carphone Warehouse recently. "Hmm, that's cute" (pointing at a Samsung) "Oooh, but that one's got a 5MP camera".... pointing at an expensive, ultra-sophisticated Nokia N95.

Anyone who says that users are 'demanding content' or 'clamouring for advanced services' probably goes to too many conferences where everyone has smartphones and contract data plans. It's easy to assume that everyone views things the same about mobility as people 'in the industry'.

My advice in response to the first SMS, by the way, was "borrow someone else's Orange phone & check you have decent coverage in your flat".

Salvaging something from unused videotelephony capabilities

One of the background themes in 2007's mobile industry has been:

"What can we do exploit the unused videotelephony capabilities we put in for 3G?"

Pretty much all 3G UMTS handsets have a forward-facing secondary camera, intended for videotelephony. It typically comes with software for controlling a video call, and uses the H324M protocol.

But unsurprisingly, nobody uses it. 3G videotelephony was one of those applications (like MMS) which was designed by committee, rather than on the basis of how users actually behave. To use mobile videotelephony, you have to hold the phone right up level in front of your face, or else the camera gets a great view of either your nostrils or your earhole. This is uncomfortable, unnatural, and downright dangerous if you're walking or driving.

Then there's minor issues like unclear pricing (question: do YOU know how much a video call would cost you with your current tariff?), privacy and a total lack of consumer demand.

Put simply, it's useless, it's always been useless, and it will probably always be useless. (As will be proved yet again with the upcoming IMS variant called Multimedia Telephony).

(Although I did see a drunk woman waiting for a bus last night, pointing the camera at the bus stop, as evidence to loudly prove to her husband that she was actually on her way home. So maybe, just like MMS being used for embarrassing photos in the pub, the optimum usage case for video calling is best summed up as 'seven pints of beer and a couple of tequilas').

And despite the pointlessness of videocalling, even the cheapest 3G phone still ships with the capability anyway, wasting time & money in BoM, software and integration & testing. And annoyingly, it isn't even possible to delete the video call application, so it just sits in the phone wasting memory, with unused icons cluttering the home screen, lengthening menu lists and adding unnecessary clicks to the user experience.

But something interesting is happening now..... unconstrained by the bewildering user-ignorance of standards bodies, some genuine innovation is happening with mobile video.

Developers have started to realise that it might be possible to salvage something from the wreckage of videotelephony. After all, there's now a standards-based video client on 10's of millions of handsets, so perhaps it can be pressed into service for something a bit more intelligently-conceived than person-to-person video calls.

Some interesting examples of H324M use cases include:

• TV streaming
• Uploads to social networking sites
• Video mail
• Video blogs
• Security & surveillance
• Video voting & other contributions for TV shows

Now not all of these are perfect, and there obviously are limitations in using client software originally designed for something else, but the general concepts are going in the right direction. The nicest thing is that using the built-in video client means that developers don't have to design their own software and port it to 10 different OS's laboriously.

I've had assorted briefings, discussions & collateral with a lot of companies in this space. I know the guys at NMS Communications pretty well, and they & their partners have some cool applications. And then I had an interesting discussion & some demos over dinner with HP the other night around the mobile video theme as well. (Ewan at SMS Text News has a great write-up here). Radvision and a bunch of other companies play in this space too.

Now there are definitely still some challenges here - the video quality isn't always good enough for some applications, and there's usually no option to save the video stream to the phone's memory as well as send it over the air. This means that the mobile video-call approach is best suited to 'real time' applications like TV viewing - otherwise you might as well as just use the videocam function, save the file to a memory card and transfer it to a PC later on. Once it's on a PC you can email it, upload it to YouTube and so on - usually for free. There's also still the question about pricing, and whether it fits with prepay models.

But overall, I'm a bit more positive about niche applications for mobile video - now that it's being exploited by market-savvy application designers, rather than some just group of academic grey-beards decreeing that videotelephony is 'obviously' a good idea.....

Disruptive Analysis website hosting problems

Apologies to anyone trying to access the main Disruptive Analysis website.

My current (and soon to be ex-) hosting company, who I'll happily name & shame as Pipex WebFusion, has had severe problems over the last 24 hours which seem to have taken down a lot of its clients' websites, including mine. They also host my email, so that's been up & down as well.

Track the ongoing status of their attempts at salvaging their reputation here.

Amusingly, even their own main website is also down. At least they eat their own dogfood....

Drivers for cellular VoIP - why operators will catalyse VoIPo3G

As expected, my press release on my new VoIPo3G report has caused a bit of consternation. 250m is a pretty big number, and it's raised a few eyebrows, especially in North America, where VoIP has always been a particularly contentious issue.

It's worth giving a bit of background to the market drivers I'm seeing for mobile VoIP.

The easier one to tackle is that of the independent, 'over the top' VoIP players like fring, Truphone, Yeigo and Skype, as well as softphone suppliers like FirstHand. They're all piggybacking on the increasing trend towards faster 3G networks (HSPA, EVDO Rev A), flatrate data tariffs and open smartphones.

A linked trend is the growing use of laptops with 3G data cards - not just for mobile executives, but also 3G USB modems pitched at consumers as an alternative to low-end DSL or cable offerings. Most broadband PC users won't even check the terms & conditions - they'll just download Skype, or whatever cool voice-enhanced FaceBook add-on their friends have invited them to sign up for - and expect it to work. While some operators frown on this (or try & block it), quite a few don't care, as long as they get an extra broadband subscription.

The independent players (or enterprise VoIP platforms) all have their own business models. Some are looking at PSTN breakout, some on inbound interconnect, some on advertising, some are hoping to be acquired and so forth. Basically, pretty much any rationale used for over-the-top VoWLAN also applies to VoIPo3G but with wider coverage. (Yes, it's actually a bit more complicated so ask me for any more details)

But it seems to be my assertion that operators will lead the charge to mobile VoIP that has caused the most consternation.

• First off, if the carriers want to move to future networks (call them 3.9G or 4G) like LTE, UMB or WiMAX for reasons of bandwidth, data capacity or better spectrum use, there's no choice. They're all-IP, so you have to use VoIP, or maintain parallel GSM/UMTS technology for circuit voice. The GSMA has just endorsed LTE as its preferred future technology. Another operator group, the NGMN (next gen mobile network alliance) specifically lists VoIP capabilities in its requirements document and is also closely aligned with LTE and is also watching UMB & WiMAX.


• Secondly, from HSPA+ or EV-DO Rev A onwards, you can get more calls/Hz/cell with VoIP than circuit switched. LTE should be able to get 100-200% efficiency gains. Given that voice pricing is coming down, capping the spectrum being used for voice makes sense. I believe that operators will become increasingly spectrum-constrained, and any ways to extend the carrying capacity of their frequency allocations will have economic benefits in future. There's a lot more on the links between spectrum policy and Mobile VoIP in the report.


• Thirdly, you can do 'cool stuff' with VoIP that you can't with circuit-switched - eg embed it in a game with stereo location cues, encrypt it, run a full unified comms client for enterprise and so on. You can also do hi-def voice and so on.


• Fourthly, over time the operators will want to switch off their GSM and CDMA 1x networks and reuse the spectrum for UMTS or LTE or EVDO, and not have to run multiple networks in overlays


• Fifth, FMC carriers will want to move to a single voice switching & application infrastructure (maybe IMS or some other NGN). If they're going towards VoIP on the fixed side (and ultimately turning off the PSTN), they'll want a similar migration path on mobile. Look at BT's expected opex savings deriving from moving to 21CN

It's also worth thinking about how VoIPo3G enables non-telephony VoIP applications. Operators are already launching VoIP-based push-to-talk (eg DoCoMo PushTalk in Japan), and Sprint is launching its VoIP PTT in Q1 2008 and eventually wants to migrate its 20m or so iDEN PTT subscribers over to CDMA Rev A. It wouldn't surprise me if other North American operators also go down the VoIP PTT route in the near future.

Then there are leading-edge operators like FarEasTone in Taiwan, which already has its own mobile VoIP proposition.

As I wrote the other day, the biggest sensitivity in my forecasts is to the rollout schedule of LTE and UMB. In fact, I reckon that one of the reasons that UMB will actually happen. But I also believe that the complexities of rolling out new LTE networks mean that HSPA operators ought to get earlier experience of VoIPo3G. I had an interesting meeting with Actix last night, which helps operators optimise 3G radio networks - and they highlighted the likely trickiness of getting LTE working well.

I think 2008 will see a lot of operators putting a toe in the water with VoIPo3G - some through PTT, some through IMS-based approaches like FarEasTone, and some through partnering with the independent guys. At the same time, fring & friends will also continue to gain users, and at some point we'll see a big push from Skype (and perhaps Google or Microsoft or others). 2009 will be even more busy, as we get HSPA+ rollouts, and perhaps UMB.

If you want more details about the report "Mobile VoIP: VoIPo3G Business Models", please email information@disruptive-analysis.com

New Disruptive Analysis Report - 250m users of VoIPo3G by 2012

I've finally published the new Disruptive Analysis research study on VoIPo3G Business Models. The press release is given below and also here, and details of the report & contents are here.


250m users of VoIPo3G by 2012

VoIPo3G to be driven by both wireless carriers and independent challengers

LONDON, November 13^th 2007 - A new research study from Disruptive Analysis shows that evolution of mobile VoIP will rapidly eclipse voice over WiFi and become a mainstream form of communication. The analyst firm predicts that the number of VoIPo3G users could grow from virtually zero in 2007 to over 250m by the end of 2012. This is comfortably in excess of the expected number of FMC users with dual-mode VoWLAN/cellular phones.

The report demonstrates that it will be the operators themselves which will be mainly responsible for the push towards VoIP being carried over cellular networks. Carriers will become increasingly attracted to VoIPo3G because it will enable them to fit more phone calls into their scarce spectrum allocations, reduce operating expenses by combining fixed and mobile core networks, and launch new services like push-to-talk and voice-integrated “mashups”. VoIPo3G also fits well with the move towards femtocells. Future generations of wireless technology – 3GPP LTE (Long Term Evolution), 3GPP2 UMB (Ultra Mobile Broadband), WiMAX – are “all-IP”, so unless mobile operators continue to run separate voice networks in parallel, they will inevitably transition to VoIP at some point.

However, because these new radio technologies are three to five years away from mainstream deployment – what happens in the meantime will provide the major disruption to operator business models. Some independent VoIP players are already exploiting the fact that today’s 3G networks can already support VoIP, putting dedicated software on smartphones, exploiting open operating systems, flat-rate data plans and features like “naked SIP” and built-in VoIP capability. These are linked to competitive ‘over the top’ phone or IM services via a mobile Internet connection.

At the same time, there is an increasing trend of carriers marketing 3G modems for PCs – not just for mobile computing, but also to compete with home DSL/cable broadband offerings. Laptop users expect to be able to use their normal broadband applications over 3G, including voice-based ones like Skype. Some operators are even offering their own VoIP software for PCs with wireless broadband.

The end-result of the push towards VoIPo3G is that by 2012, most VoIPo3G users will be using mobile carriers’ own standards-based VoIP capabilities, over the new, advanced 3G+ networks. However, a significant minority of about 60m will be using independent or Internet-based solutions – many actually operated in partnership with carriers or retailers.

Dean Bubley, author of the report and founder of Disruptive Analysis, comments: “3G networks are increasingly capable of supporting VoIP, for both traditional mobile operators and independent Internet-based VoIP challengers. But while CDMA operators will benefit from VoIP being ‘designed-in’ to their newest networks, 3GPP / HSPA operators will have to wait for several years – a window of opportunity which will be exploited by the ‘over the top’ players. Rather than competing head-on, partnership models have the potential to create win-win propositions”

The report, “VoIPo3G Business Models”, is available from Disruptive Analysis from today. It is based on a huge research effort spanning hundreds of interviews and meetings, and contains extensive market forecasts, industry commentary & analysis and company profiles.

Ends.



Commentary

Yes, 250m is a surprisingly big number. Especially when viewed against the VoWLAN users at the same time (below 100m). I did the sums and then had to triple-check my own model. But underlying it is one absolutely fundamental point:

If mobile operators roll out LTE or UMB, then VoIP is mandatory; they're all-IP networks, just as WiMAX is.

Now I've had to take a call on the realistic rollout schedules of those technologies, and if there are substantial delays, the VoIP forecasts move to the right as well. There's also an expectation that some operators will want to deploy VoIP earlier, on EVDO Rev A/B or HSPA/HSPA+ networks. This morning's announcement about FarEasTone's VoIP service is a very timely example.

I've also built in analysis of spectrum-related issues, device availability, IMS and a hundred other factors. The full set of inputs and sensitivities are in the report's methodology section.

The key thing to think about is that for many users, VoIP will be invisible. For them, it will be an underlying enabling technology, not a service in its own right. Its prime function will be to enable operators to squeeze more calls into a given slice of spectrum. Yes, its other functions are more interesting - helping independent 'over the top' VoIP providers get a foothold in the mobile market, and facilitating a new generation of 'Non-telephony VoIP' services. But they will be comparatively small compared with its main manifestation as 'necessary plumbing'.

(Non-telephony VoIP means where voice is not used for a simple Person A calls Person B phone call, but is somehow a feature of another application - inside a game, linked to FaceBook or some other type of mashup or corporate web service)

The other angle to recognise is that almost all of these VoIPo3G users will also still be using circuit switching for some of their voice traffic. There will be very few all-IP users - most will fall back to GSM or UMTS or CDMA 1x or another network, either when out of 3.5G coverage or for other reasons.

If you're interested in more details & pricing for the full report, please email:
information AT disruptive-analysis.com
A table of contents of the report is available here
I'll also be speaking at the upcoming IIR conference on VoIP & wVoIP in Madrid on the 26-28th Nov, and the Mobility World Congress in Hong Kong on Dec 2-5th

Operator VoIPo3G in Taiwan

My VoIPo3G Business Models report is launched today - I'll be making a separate post about it later.

But with impeccable timing, there's also another announcement (OK, yes I'm quoted in it) from Finnish IMS software vendor Movial, relating to a contract with Taiwanese operator FarEasTone for enabling its new VoIP service on both handsets and laptops. This includes the use of voice on its HSPA macro network, plus its in-home HSPA router with WiFi.

I reckon that this is the first 'official' operator-branded VoIPo3G service, except for some 3G-based IMS-PoC push-to-talk services like DoCoMo's, plus non-IMS partnerships like Skype/E-Plus.

Some interesting things to note

• firstly, FarEasTone pushes pretty hard on a whole host of technologies. It announced its IMS/HSPA deployment contract with Ericsson in September 2006.
• secondly, Skype has huge penetration in Taiwan, which is definitely a catalyst for operators' own VoIP launches, as people are looking for ways to mobilise it as well as using it on fixed broadband. This also seems to indicate that there's a substantial % of voice traffic for which 'best efforts' is perfectly acceptable.
• thirdly, FET is also a WiMAX licence-holder (it recently signed a deal with Alcatel-Lucent) for southern Taiwan and so is likely to benefit services that can ultimately bridge HSPA, WiMAX and WiFi.
• fourthly, Taiwan and FET have relatively low levels of prepay use compared with contract subscribers, which makes it easier to subsidise high-end devices, or for mobile operators to enter fixed-broadband markets.

All this means that FET has seemingly been able to launch VoIPo3G, before HSPA is fully voice-optimised. I suspect that some of the options in the network and handsets like RoHC (robust header control) and voice-friendly scheduling haven't been implemented yet - my understanding is that they're due to be included in most vendors' infrastructure components in 2008/9. I'm also curious about what's happening at the application level in the network, given that there's no specific 3GPP or OMA standard for 'ordinary mobile VoIP' yet.

This all suggests that VoIP on FET's HSPA network might not be as spectrally-efficient as circuit yet, although in this instance the unique characteristics of the Taiwanese market appear to mean that competitive gains offset this consideration.

Because of these fairly unique factors, I'm not expecting too many other HSPA operators to follow suit, at least in this specific way, before 2009. Apart from anything else, there aren't too many phones which have HSUPA as well as HSDPA, although that should change by H2 2008, with massmarket devices available in 2009.

What I see more likely is for an increasing number of operator VoIPo3G partnerships with the Skypes/Truphones/Frings of this world in the near term. Plus some more laptop-based VoIP services. But more on that later....

Voda data 'pipe' revenues up... and has content revenue fallen?

I'm quite impressed by Vodafone's results today - and even more impressed by the company's turnaround over the last 12-18 months into one which is embracing 'the real Internet' rather than persisting on trying to push its own content & multimedia services in preference.

Around London I see Voda advertising hoardings exhorting people to use Google on the go, something that would have been unthinkable a couple of years ago.

I suspect much of its epiphany has sprung from the realisation that it's 'pipe' revenue that is making its data revenue figures look good. It has shown organic growth of 45% in non-messaging data revenue. Non-messaging revenue is now up to a level of half that of messaging (SMS+MMS, which is itself still growing quite well) in Europe.

I've posted before about how much of Voda's data revenue must be attributable to laptop data cards & BlackBerries. This time around the company is pretty upfront about it: "The organic growth in data revenue of 45.1% was particularly strong and can be attributed in part to increasing penetration of Vodafone Mobile Connect 3G/GPRS data cards and handheld
business devices." [I suspect that 'in part' is a polite way of saying 'mostly']

This is particularly interesting given that "Handheld business devices increased by 112.6% since September last year and Vodafone Mobile Connect 3G/GPRS data cards grew by 78.9%."

This means around 1.8m data cards in Sep 07, and probably about 1.4m handhelds (there doesn't appear to be a hard number for last year's published so I'm extrapolating from Mar 06). So basically an average during the 6-month period of 1.4m 3G cards and about 1.1m handhelds [mostly BlackBerries]. Looking at my estimates last year this means that the time-averaged subscriber base has grown 65% and 100% respectively. Both are certainly above 50%, whichever way you slice it.

Now given those figure, that puts the 45% revenue growth in a slightly different light. It seems to imply that non-datacard/BlackBerry data revenues (content, Live!, consumer Internet, M2M etc) have actually fallen. It also probably means that the average costs for business data users have fallen, which makes sense as recent BlackBerries have moved outside the boardroom.

Let's use a very conservative back-of-an-envelope estimate of £35 a month for 3G cards, and £25 for BlackBerries. Multiplying through for 6 months gives £294m for datacards and £165m for devices. That's £459m out of a European total of £843m non-messaging data.

In other words, I'm estimating that 'data pipe' revenues have increased from 46% to 54% of Vodafone's European data revenues over the last year.

(I'm also not sure where Voda classifies data roaming interconnect fees, so that might account account for another chunk as well)

Once again, this illustrates my belief that mobile content is really pretty unimportant, compared with communications or context. Sure, Voda is very business-focused (28% of revenues are corporate), but it's still an indicator for the rest of the industry.