iPhone non-exclusivity in Italy - it's all about prepaid

There’s much confusion and discussion today about Apple selecting two operators to sell iPhones in Italy – Vodafone and Telecom Italia. Plenty of observers are pointing to a huge shift in Apple’s exclusivity strategy, or debating whether the iPhone is uncompetitive in the Nokia-rich European marketplace.

But in my opinion, there’s a much simpler explanation, especially missed by most of my counterparts on the other side of the Atlantic.

It’s just about prepay.

In the US, prepaid mobile phone services are viewed by many with disdain – they’re for socioeconomically disadvantaged people, or migrants without US bank accounts or who fail credit checks. Americans seem to think that all real mobile users are always happy to be tied into 2-year cast-iron contracts with monthly subscriptions.

I’ve lost count of the number of conversations I’ve had with people from the US who are genuinely amazed that most of the world’s mobile subscribers use prepay. And in many cases this is not because they have to use prepay because of economic circumstances, it’s because they prefer to. Many simply do not want to be “on contract” because they want the flexibility to top-up their account and control their spending. Some like to swap SIMs to play tariff arbitrage. Many want multiple phones and numbers, and not need to maintain ongoing accounts for each. Some want to buy a phone separately to the service component. Or because the contract-based plans don’t meet their needs in terms of bundles. Some just do it because they’re used to it – it seems natural.

Take me for example. As well as a couple of contracts, I have a prepay SIM from H3G because it gives me cheap mobile data on unlocked phones. And I regularly get prepay SIMs to use when I travel - if I'm in Mozambique or Bolivia or wherever, why not spend just $3 for a SIM to make local calls to hotels or restaurants? What's the point in routing calls back via London & paying huge roaming charges for the privilege? I also prepay for travel in London on my Oyster card, and I prepay for beer in the pub, rather than after I've drunk it, or via a monthly subscription. (Hey, now that's an idea...)

But people from the US tend to think there’s some kind of stigma attached to prepay, rather than it just being the way it’s done, no big deal.

It’s similar to the way that the rest of the world looks at the US and is amazed by the preponderance of phones in hip holsters – which in our eyes have an equivalent social stigma. But for people in the US, wearing your phone on a Batman-type utility belt seems as acceptable for a trader on Wall Street or a fashionista on 5th Avenue as it is for the geekiest nerd in the IT department – it’s just the way it’s done, no big deal.

And so to Italy and the iPhone.

Vodafone Italy has 22.8m customers, of whom 91.2% (about 20m) are prepaid customers.
Telecom Italia Mobile has 36.3m subscribers, of whom 85% ( 30.8m) are prepaid.

And many of the contract customers are actually corporate users, or even subscriptions for 3G modems or embedded M2M modules. While plenty of prepay customers have shiny, high-end smartphones.

In other words, the number of individual consumers in Italy who would buy an iPhone, together with an 18/24-month contract, is roughly twelve. Apple has obviously realised that its much-vaunted monthly revenue-share business model isn’t going to work very well in Italy, especially if it only has one carrier as a route to market. And given that prepay top-ups make it is almost impossible to identify which phone they are used with, I can’t see how Apple is going to get a revenue share on prepay that way either. Far better to try and persuade Italian consumers to pay full-whack retail price for the device, and then use it with the prepay SIM from the operator of their choice.

This is also quite possibly why Vodafone’s announcement yesterday was so terse – Apple is probably going to have to reinvent its whole revenue model for the iPhone in prepay-centric markets, and somehow communicate that to its investors. And face down its current contract-based partners wincing about paying Mr Jobs a 10% tax for the privilege of selling his device.

And I’d guess Apple probably wants Vodafone to keep quiet about exactly how this will play out in other prepay markets like India, Egypt, Turkey et al.

Vodafone + iPhone...

I wonder whether there's a deeper story behind Vodafone's remarkably terse announcement this morning that it's going to be selling iPhones in 10 of its national markets.

There is no quote from either Jobs or Sarin - just two abrupt sentences. As I'm writing this (9am in London), the release isn't up on Apple's own site either. No details on pricing, contract length, how Voda will work with (or around) iTunes...

.... and even more importantly, no indication whether "the iPhone" might be a new 3G version.

IMS Rich Communications Suite - Necessary but not sufficient?

OCT 11 2010 NEW REPORT AND BLOG POST ON RCS HERE
At the Informa IMS conference in Paris last week, there was a lot of discussion about the new acronym du jour - RCS, or Rich Communications Suite. I'd had a bit of a heads-up on this at 3GSM in February, but I got to drill a bit deeper, see some demo's, and harass a few of its advocates with awkward questions.

In a nutshell, it's a lowest-common-denominator IMS mobile client, that incorporates a presence-enhanced address book with some IM capabilities and bits of file/image/video-sharing. It's being pushed by a semi-formal alliance of the largest handset vendors and a few of the more IMS-centric operators who share a fairly centralising/walled-garden view of the world. (I talked a bit about Orange & Telefonica as being 'old school' in February, and their central role in RCS just enhances my view - and I'd add TeliaSonera to the list as well).

Interestingly, RCS is being pitched as a lowish-end standardised client suitable for embedding onto featurephone platforms, as well as higher-end smartphones. This makes a huge amount of sense to me: smartphone-only software is of little use for services that require Metcalfe's Law to be exploited (ie value growing with the square of the number of connected users). The chances of everyone in a group of friends or IM buddies having a smartphone any time in the next 5 years are essentially zero.

In a nutshell, it seems like RCS is destined to join the fairly short list of very-standardised set of native applications on most phones:

• Phone dialler
• SMS client
• MMS client
• WAP browser
• (on 3G phones) - videotelephony

The more observant reader may recognise that not all of these have been a monumental success. The amount of 3G videotelephony traffic is utterly negligible, and there are no reasons to believe that it's going to change any time soon.

Some of the RCS features like IM are fairly uncontroversial, especially if the operators deploying it are prepared to "play nicely" with existing Internet IM brands. However, the exclusion of those same Internet players from the RCS closed-shop is a major negative. There's also been little involvement of the myriad of smaller IMS-client framework vendors that have been working hard on presence-enabled phonebooks and the like for several years.

I'm pretty negative on things like video-sharing, but at least having a standardised solution means that less money is wasted on dozens of individual projects. Filesharing and image-sharing are more worthwhile - I just place a low value on real-time variants like video.

Also a negative is the pointless rhetoric about RCS enabling a "community of 3 billion mobile users". Amusingly, I heard this roughly 48 hours after posting about the misuse of the exact same figure. Nothing I heard suggested that RCS' promoters had actually bothered to understand the sociology of how communities & social networks form and evolve, and to design the software to accommodate this. I strongly suspect that the way in which engineers form networks of friends & contacts differs substantially from the way in which FaceBook, Bebo et al have emerged. As an extreme example, consider the role of the "cool" people who inevitably act as social-network hubs, migrating large groups of their friends en masse. Given that a reasonable chunk of such super-influencers have iPhones or steer their social empires from their PCs, it strikes me that courting them upfront could have disproportionate effect on RCS' success.

There are plenty of other unanswered questions, as not that much information on RCS specs have been released publicly yet. But some more food for thought:

- will operators provide presence data for free to prepay users, in the hope that one day they'll send a message?
- how "realtime" is the presence function if you have 100 buddies?
- will anyone bother to put an RCS client on a "vanilla" handset sold through non-operator channels? How is it configured?
- what happens if an end user wants to use an IMS service provider other than his/her access provider? If I'm an Orange customer but I really like a Telefonica app, how can I get it?
- what happens to people who belong to multiple existing social groups or online communities? Can I get access to my Skype buddies? Or should I just download fring to give me full access?
- is there a developer API? How is it used? Through Java JSR281?
- how well does RCS integrate with "legacy" users who won't have it enabled on their phones at first?

My gut feel is that RCS is primarily being designed as a walled-garden defensive play to protect SMS revenues, by trying to push some form of IM as "SMS v2". I certainly can't see it driving additonal revenues on its own, in its current version, but I'll keep an eye out for future developments.

More thoughts on green issues & cellular CO2. But will femtos help?

As I mentioned the other day, I was chairing a conference session on "Green" base stations and network on Friday. It had some really fascinating presentations from NSN, Ericsson, Vodafone & T-Mobile, with a lot of detail on a variety of different angles on reducing the environmental impact of mobile - and the opex implications of energy efficiency in the radio network.

One thing that unfortunately came across very clearly, however, was the difficulty of producing & reconciling statistics. The environmental side of industry is a long way behind finance in terms of coming up with consistent, auditable numbers. At the moment, it seems like pretty much anything can be proven or disproven - for example by including various "behind the scenes" factors in terms of CO2 emissions, or possible "savings" elsewhere from giving people better communications tools. None of this is particularly wrong in my view, but it just means that comparisons are nigh-on impossible and some of the headline figures need close scrutiny.

So for example, should we measure CO2 emissions per subscription, per customer, per square mile, per cell site, per transceiver, per volume of data traffic, or 101 other options?

However, as a useful starting point, one of the Ericsson representative's slides gave some useful headline numbers suggesting that 2G cellular accounts for about 24kg of CO2 / sub / year , and 3G is about 29kg. (These figures are "fully loaded" with handset manufacturing, older legacy cellsites and all sorts of other stuff included). As a reference, the average European probably emits 4-5000kg a year in total, based on a quick look on the web, so we're talking about perhaps 0.8% of total, even with multiple device ownership being common.

Another very important factor that was raised is that to make any big differences, the industry needs to focus much more on improving the performance of current "legacy" infrastructure, rather than just on the performance of new designs & shipments. No operator is going to throw away functioning base stations, even for useful-but-small improvements in power efficiency. T-Mobile had a really good statistic that showed that because of typical electricity prices in Europe, a saving of 100W in average power consumed saves about €130 in opex a year - so any capex on improvements really needs to be <€600 - including the cost of an engineer visiting the site.

One other thing that really struck me was the ready availability of some "quick wins" - especially reducing the need for air conditioning in base station enclosures. Apparently a lot of equipment works perfectly well at 40degC, so keeping it all nicely chilled is a complete waste of energy. The idea of switching off a chunk of radio capacity in quiet periods, rather than leaving transmitters powered-up "on standby" also seems like a no-brainer.

There was also a lot of discussion of sites that are "off grid", especially in emerging markets. Solar and wind power were discussed in a lot of depth, and are slowly being rolled out along with efficiency improvements to reduce reliance on diesel being trucked to sites. All in all, there's obviously a lot being done on the radio side of the industry, which accounts for a huge proportion of the total power consumption of cellular. It's an area I'll keep a closer eye on, and potentially write a report later in the year.

One awkward question did occur to me though - do femtocells help or hinder the trend? It's very easy to say "they operate at much lower power than macro sites, so it must be good", but it's more complex than that as they're also probably going to be left switched on but unused for most of the time. They'll also indirectly drive power usage in broadband infrastructure, and typically it's less energy-efficient to have millions of small gadgets rather than a few larger, optimised & centralised ones. When I asked the panel, the opinion seemed to be "we're not sure yet, but it's possible that femtos will increase overall energy used, although obviously from an opex standpoint the mobile operators won't be paying for it as it's plugged into the users' own electricity sockets".

What's in a number? Is 3 billion irrelevant?

The cellular industry is very fond of big numbers - 1 billion phones shipped, 3 billion subscribers, 3 trillion SMSs - I'm sure you recognise them. Obviously, these are all important and impressive achievements and should be applauded.

However, the industry is also very fond of quoting these numbers in contexts in which their relevance is marginal. A typical examples compares 3-4 billion mobile subscriptions with around a tenth of that figure for fixed broadband connections. Another is "Pah, WiMAX will never get the scale economies - there's a billion phones sold a year, how can a measly 50 million or fewer units possibly compete?". Similar examples are used to demonstrate relative importance against TVs, PCs, SMS vs IM or email and so on.

There is a very common theme of comparing apples with oranges here.

If you look at the handset market, a very large chunk is still cheap 2G phones used for nothing other than voice & SMS. There is no obvious sign that this part of cellular marketplace is rapidly evolving to 3G, extensive use of data services, smartphones or other high-end devices. To all intents and purposes, it is a separate market. Interesting from a statistical point of view, but also misleading. Yes, Nokia and Motorola and Samsung get some extra buyer power with their suppliers on components like filters or memory or screens. But hang on a minute, which are the companies developing WiMAX devices as well?

And in fact, the addressable market for the type of high-end products that WiMAX is targetting first (dongles, PC modems, PDAs, game & web consoles etc) is much smaller than 1 billion - and yet it is this consituency that is already driving most of the traffic on HSPA networks - not phones. I'd go as far as saying that 3.5G and 4G networks aren't about 3 billion, they're about perhaps 300 million potential customers, at least in the next 10 years. Including the other 2.7 billion in the discussion obfuscates the argument.

It's notable that the PC / Internet industry doesn't play the "zero's" game as much. It could trumpet 3-billion (approx) ethernet ports or a roughly similar number of USB devices. It could constantly talk up $7 trillion (or whatever this year's number is) in PC-mediated e-commerce. I read recently that foreign exchange trade volumes are in excess of $3 trillion per day, again mostly facilitated by traders with desktop computing hardware. That's a quadrillion dollars a year. But although it's an impressively big number, it's not relevant to most discussions about future technology.

So I'd challenge the mobile industry to be a bit more grown-up about the way it uses its statistics. I'd certainly agree that 3 billion people with access to telephony and messaging is incredibly impressive. A billion devices a year is almost incomprehensible. But don't wheel out the big numbers as PR collateral, just to support arguments that only apply to tiny fraction - it smacks of either insecurity or a lack of knowledge about how an addressable market is really defined.

It's all going Green in wireless

Over the last 6 months there has been a quite spectacular explosion in interest in "greentech" in the mobile industry. I'm chairing a panel session on Friday on Green Base Stations, and numerous vendors have recently pitched me with energy-saving concepts.

Now, some of this is undoubtedly "greenwash" PR spin, and there's also a lot of rampant self-interest driven by spiralling energy costs. If you have a base station off the electricity grid in an emerging country, and you're having painful bills sending truckloads of diesel out to it, I don't think that CO2 is the prime motivation for using solar cells, or at least some more-efficient infrastructure equipment.

But there's also a lot of serious work being done - aiming at tackling both environmental footprint and direct costs. I've seen very persuasive arguments advanced around some "quick wins" in newer variants of 3G base stations, which should drive continued investment despite any economic downturn. The immediate wins in Opex should justify the Capex - even in a recession. Recent discussions I've had with some operator strategists have underscored this.

I'd expect to see a lot more operators following Vodafone's example and declaring intent to cut its CO2 emissions. The specificity of its statements are much to be applauded, and should be a wake-up call to others lagging behind in evaluating their energy usage and its associated tangible & intangible costs.

But I would much prefer others to avoid some of the knee-jerk cliches that the green world often specialises in. Personally, I despise the word "sustainability" - it's a misanthropic and disheartening term, and one which should be expunged from the world's vocabulary. It's also a shame that as an advanced technology company, Vodafone cites just "renewable" energy as a proportion of its total, and fails to take the braver approach and give "renewable+nuclear".

I'm also not a fan of the oft-quoted Mr Jonathon Porritt, whose background in dubious quasi-political & anti-developmental organisations like Friends of the Earth make him a poor choice of bedfellow for a globalised company.

The problem I see is that it's still perceived as very awkward for companies to pitch themselves as advocates of "environmental capitalism". This needs to change.

iPhone + fring = winner

Based on my questioning a very small sample of 2 ardent iPhone users (my cousin and my father), the new early-release fring VoIP client is looking like a major winner. I had a play with it yesterday, and the interface looks impressive, and the voice quality & ease of use on SIP seemed pretty good, although my dad was having glitches getting his SkypeOut working on it.

The downside is that at the moment it's only working on jail-broken iPhones, but given the apparent fervour among Apple-istas for it, I'd hope that Cupertino sees sense and makes sure it gets certified as an official app through its developer programme ASAP.

Apart from a very early Truphone demo last year, this appears to be the first major VoIP release for the iPhone. Will be interesting to see what the other players - Truphone, Skype, the enterprise players like Cisco & Divitas etc - do in response.

Device multiplicity is driving ARPU, not mobile web

I see that O2 UK is about to launch its 3G dongle service, aiming it primarily at its existing customers, and offering a discounted (but still high, especially for an 18 month contract) price.

This maps onto developments elsewhere, for example by Hutchison 3, which also encourages multi-device and multi-subscription users.

This makes a lot of sense to me. Why try & charge an extra few £ a month for someone accessing the web on their phone.... and possibly have to subsidise a device upgrade to get one with a decent browser... when you can charge £20 a month for a separate (and very cheap) device? Which then connects to the user's existing computing and user-interface platform (the PC), which the operator doesn't need to design or test or subsidise or distribute?

Yes, I know the arguments about bit-pipes and the possibility of selling advertising and assorted mobile-phone centric web apps. But the reality is that nobody is buying them, and the amount of paid-for browsing or data bundles on phones is low, whilst 3G modems & subscriptions are flying off the shelves.

Mobile VoIP - nobody's a pure play

Truphone has just raised a new round of financing - against a tough market for speculative investments in VoIP at the moment, it has to be said. However, the wording of the release, coupled with last week's acquisition of SIM4Travel, indicates that VoIP is only a part of the wider mobility story for the company.

This strategy makes intuitive sense. The most likely response to VoIP-based pricing erosion is for the existing mobile operators to cut their prices, offer flat rates and so forth. Most end users won't be prepared to download software clients, swap SIMs all the time, do manual network re-selects, initiate calls from PCs, or jump through any of the hoops that commonly apply in the sector. That said, roaming mobile users are still getting sick of unjustifiably high tariffs, even if the intra-EU situation has improved a bit since last year's regulatory intervention.

Consequently, running a mobile network (with bits of MVNO), issuing SIM cards, and crucially being able to offer a fully-integrated SMS service, makes a lot of sense. It's notable that the term "VoIP" doesn't appear in either of the most recent press releases.

On the other hand, what I suspect may be more difficult will be for the company to integrate other mobile data services onto handsets - I'm not aware of any reseller or MVNO operators in Europe selling 3G cards, or data bundles. However, the current target audience for Truphone probably tends to travel equipped with a laptop, Blackberry or other device anyway.

I'm expecting most of the standalone Mobile VoIP players to start to integrate cellular connectivity into their offerings, offering blends of WiFi, VoIPo3G, call-through and special SIMs, backed by a variety of social networking / Web 2.0 capabilities. Skype (in conjunction with partner iSkoot) is already there, and fring tends to co-exist with handsets' native cellular services (and is usually viewed comparatively benignly compared with the more disruptive models of the others).

Vendors bidding for spectrum - now Qualcomm looking at the UK

One of the interesting developments I've been tracking of late has been the tendency of equipment or silicon vendors to start getting directly involved in spectrum auctions, either through joint ventures, or with the intent to build out wholesale networks themselves.

Probably the most prominent advocates of this approach have been:

• Intel's WiMAX-related JVs like Pipex/Freedom4 in the UK, and with KDDI in Japan
• Qualcomm's Media Flo network in the US & its recent bids for 700MHz spectrum
• NextWave, which has broad a variety of equipment & spectrum assets

And so against this backdrop, I'm curious what Qualcomm might want to do if it wins some 1490MHz frequencies in the UK....

Convergence confusion

Still at Telco 2.0, I've just seen a scarily wrong presentation from someone involved in mobile banking & payments. It really shows up how long-lasting some of the more egregious memes can be away from the coalface of mobile technology development.

He gave a 2003-era view of convergence, postulating that a handset would subsume the functions of someone's PC, wallet and even keys. He gave various spurious "solution in search of a problem" mobile applications as alleged proof-points - such as the useless Westminster pay-by-SMS parking meters, or equally pointless handset-based boarding cards for aircraft. And he talked about the likelihood of using videotelephony on a mobile phone to talk to banks' customer service staff about arranging loans or mortgages.

I suppose I shouldn't be surprised that mobile myths and soundbites endure. I also heard an interesting anecdote today from someone who'd personally tracked down the iconic and oft-repeated "African fisherman + SMS for pricing" service and discovered that it was largely rubbish.

On the other hand, on the topic of mobile payments, I was much more convinced by a representative from the GSMA talking about mobile-based overseas money transmission. Apart from anything else, they're working with Western Union, who have a pretty good view of how this actually works in the hands of end-users. The speaker didn't blather on about phones replacing your wallet - he made the reasonable point that if some form of mobile wallet technology becomes more pervasive in handsets, then there may be some new and interesting usage cases.

Why use QoS when you don't need it?

I've just watched a presentation at the Telco 2.0 event by a network vendor. Like many I've seen before, it asserted that the network would increasingly become "application aware" and behave differently according to what type of service a user is trying to obtain.

I've got some sympathy for this view. If you're a quadplay operator with dedicated home gateways, and customised & locked-down phones and set-top boxes, then you should be able to easily spot, and define QoS parameters for (say) IPTV or traffic destined for a femtocell gateway.

But the concept breaks down when devices are open and smart. The network may well be application-aware. But increasingly, the applications are going to be network-aware. This already happens on PCs (your streaming media player can identify the connection type and speed, and self-configure appropriately), and will extend to mobile handsets as well.

Software will be able to access (perhaps from a particular website, or peer-to-peer) information about specific network conditions policies. Or it may be able to measure and deduce them itself
in near real-time. The application will know what network connections are available to it, and will be able to present the options to the end user. It will know what needs to be realtime, and what can afford to be delayed.

So, for example an application might be able to know that at a given time in a given place, best-effort connections are actually good enough. So it can initiate a VoIP call, or a low-latency game, using a cheap & basic connection. But if quality shows signs of degrading, the app could ask for a higher-QoS connection and upgrade on the fly. Or if it reasonably suspects that the network is deliberately blocking or degrading the service, it can advise the user, or look for an alternative method of connectivity. (Or maybe initiate a realtime auction among multiple service providers for its desired connection).

In the real world, in the short term, there will obviously be a balance. People are lazy and often take what they're given - especially if its free or subsidised. They won't configure software, or want to be too intrusive, even if it's telling them about ways to save time or money. Often, people will accept (or have no option but to accept) locked-down devices. But over time, processing capability moves to the edge of the network as a consequence of Moore's Law.

Anyone who thinks that the network will always be able to identify and outsmart applications is naive. Applications will (in some cases, but not all) become able to play the network at its own game and win - and the incentives for creating these game-players evolve in parallel with the networks' intended control platforms.

Marketing vs End Users

In the UK fixed-line broadband access market, there is currently a huge controversy among ISPs about a recent innovation called BBC iPlayer, which has ignited a Net Neutrality-type discussion here. iPlayer is the BBC's platform for either streaming, or enabling legal P2P, for its own content - typically enabling "catch up" of the best of the past 7 days' broadcast programmes.

iPlayer has been wildly successful since its launch, and has driven a huge amount of extra traffic onto ISPs' networks. Given the system whereby UK residents have already paid TV licences, we're entitled to BBC content "for free" - undoubtedly a contributory factor in its success, and why it's such a pain point and 'accessible target' for broadband operators' complaints. The BBC's head of technology has been pretty scathing about the complaints though - and has now quit the Beeb to join a firm doing the same thing on a multi-broadcaster basis (details are sketchy but sounds like a UK version of Joost to me).

He even threatened to "name & shame" ISPs that attempted to block, degrade or packet-shape iPlayer - "Content providers, if they find their content being specifically squeezed, shaped, or capped, could start to indicate on their sites which ISPs their content worked best on (and which to avoid). I hope it doesn’t come to this, as I think we (the BBC and the ISPs) are currently working better together than ever."

(Frankly, I think that threats like this expose the risk & absurdity of non-neutrality. Rather than controlling the content over "their pipes", operators are actually going to risk being held hostage by the Internet players - maybe a 2-second latency imposed on Google searches for unfriendly ISPs, or Facebook exhorting customers to switch broadband providers when it detects a particular IP address).

As elsewhere, the whining from UK ISPs derives from the fact that many of them mis-sell their services with eyeball-catching marketing terms like "unlimited". And then complain when customers actually use what they've been sold.

I might have some sympathy had iPlayer come as a bolt from the blue. But it didn't - the fact is that a sudden ramp-up of demand for rich legal video content (probably driven by P2P) has been entirely predictable for at least the last 3 years. And if ISPs were too short-sighted to notice it back then, YouTube's success ought to have been a wake-up call over the past 18 months about what was clearly likely to happen. Frankly, anyone in the ISP business that has been taken by surprise by a sudden growth in traffic obviously isn't very good at business planning. It's not like the BBC has been quiet about its ambitions either - and in any case, it could equally well have been CNN or Joost or high-def YouTube or some random TV startup that tipped the balance. I'm surprised it's taken this long, to be honest.

The problem is that marketing people often think they're smart. "Let's call this 'unlimited', it'll make great catchy adverts! And nobody will ever use it - we've analysed the historic traffic data & extrapolated it". Or "If people use 700MB a month on average then they won't risk just going for the 1GB option, we can offer them 3GB for another £5 a month and improve our margins as usage will stay constant!".

Unfortunately, it's quite common that end-users, and especially developers and hackers, are smarter than marketing people. And they're quite good at spotting cheap excess capacity that's been sold to them in the expectation it wouldn't be used.

And marketing people are often unwilling to look into the future to spot possible flaws in their arguments. That's why one of my larger competitors as a thing called a hype cycle - it's because companies in the telecom industry always focus on here-and-now problems without thinking about what the generally quite predictable second-generation problems will be - or how long they'll take to solve. And if you haven't got the time or broad vision to spot these prospective issues... then find someone else who does. (Subtle hint: cross-technology analysts & consultants....).

Other industries have long been able to predict risks and put policies in place to stop abuse. "All you can eat buffet! Conditions apply: Maximum 1 hour, no sharing, no takeaways, you get charged extra if you don't eat all you have on your plate". And it works - as long as the conditions are stated clearly & upfront, and not buried in a mountain of fine print, the system becomes "ungameable" - the customers know the score as soon as they look at the menu (and the contents of the buffet), and are able to make a judgement about the real value on offer.

But if you design a marketing proposition on the basis that peoples' behaviour won't change, even when they understand why the deal can be made to look so tempting then you're naive. And you'll be out of business.

People like exploiting loopholes and feeling that they've "won" against the system, whether it's taxes, clothing sales, or broadband. There's satisfaction in "putting one over" on those annoyingly smug marketing types who bombard us with adverts in aggressive attempts to part us from our hard-earned cash. And as the world gets "smarter" there's an ever-growing phalanx of software developers around to help us automate our revenge.

I can see the same problem moving to the mobile space over time. There's lots of "unused capacity" sitting around, waiting to be exploited. Flatrate data plans. 'Spare' minutes and SMS's at the end of the month. If you're in a room with 20 people (a cafe, say), there's a very good chance that someone has a month-end coming up on their contract in the next few days.

A simple algorithm could work out the likely amount that the person will use based on past behaviour, plus a "safety margin". So you have a 1GB data cap... you've used 500MB by day 27.... so perhaps you can exploit 250MB. I can think of several ways this might work (contact me if you're interested in exploiting - or preventing - this type of thing).

Bottom line: Marketeers - if you try and "game" your customers into upgrading unnecessarily, spending more to get less, assuming loyalty despite poor service - or you expect them to underuse services compared to "what it says on the tin"..... then expect them to game you back under your own terms and conditions. And win.

Carnival #119

Some interesting links from this week's Mobilists' Carnival: my article about comparison-shopping from your phone whilst in-store gets a mention.

LTE IPR agreement - but what about everyone else?

So, Alcatel-Lucent, Ericsson, NEC, NextWave Wireless, Nokia, Nokia Siemens Networks and Sony Ericsson have collectively agreed to a framework which aims to limit LTE patent royalties to single-digit % of handset sales value.

OK, that's clearly a worthy goal.... but it does rather beg the question of what % of the total necessary IPR they own between them. I'd guess it's a fairly good chunk, but there are a few obvious missing representatives, notably all the chipset & RF component suppliers like Qualcomm, TI, Intel, Broadcom and so forth. Then there's the various IPR licencing specialists like Interdigital, plus presumably various of the operators have invented some of the clever stuff in their own labs. Also missing from the roster are Motorola, Nortel, Huawei and most of the other Asian vendors.

This is however definitely a good ploy in term of getting NGMN to further favour LTE over alternative candidate technologies. It will be interesting to see if the WiMAX community does something similar.... and if the WiMAX and LTE groups (which overlap quite a lot) can find it in their hearts to cross-licence things where necessary. I wouldn't hold my breath, though.

At last, a data-only tariff plan for handsets in the UK

It's always irritated me that UK (and many other) operators have missed the opportunity to offer data-only tariffs aimed at handsets, rather than modems.

Quite a number of people have the combination of separate voice phones and data devices - perhaps using the data device only during working hours for email / web etc. And there are also plenty of people like me "in the industry" who want to play around with new mobile apps, but don't want to install them on our primary phone - and there's no point having a full voice+data contract on 'spare' device.

Up until a year ago, T-Mobile used to sell Web'n'Walk on a data-only/data-mostly package, which bundled some minutes in, but which was primarily aimed at Internet access. (I;ve still actually got one of these old tariffs, and I daren't try & change it or I'll end up paying more). They've subsequently changed it so that it's mandatory to buy a Flext voice/SMS bundle and then get the data access as some form of add-on.

Other operators have similar offers - so for example the cheapest contract rate on O2 is the SIM-only O2 Simplicity at £15 a month, but you'd need an extra £7.50 data bolt on.

So I started looking at the various prepay SIM-only tariffs, most of which are now starting to be a bit more data-friendly. The typical pitch is a cap of £1 or £0.50p for a day's "flattish rate". So Vodafone gives you 15MB, H3G gives "Fair use", and so on. And T-Mobile gives a "5-day pass" for £2.50

But the absolute bargain has to be 3's monthly prepay Internet add-on, at £5.

So I just paid £10 for an anonymous SIM, which came with £10 of credit. I've signed up via 3's online portal for the Internet add-on, and so now I have an unlocked phone with flatrate 3G, albeit with a non-specified "fair use" which I suspect is probably around 1GB a month. And even better, the usual 3 roaming policies apply - so no premium when I'm on another 3 network, and £3 / MB elsewhere (which is still expensive but about half the price of the competition). I'm not going to use the phone or SMS, just the data services - primarily Internet access.

To be honest I'd rather have the same £5 / month data-only service on a normal postpaid contract rather than have to re-activate the Internet monthly, but given that it seems to be impossible, I'll stick with this for now.

It's also got to be a fantastic deal if you're travelling to the UK and have a spare unlocked phone or PDA and want to have mobile web access.

Is m-commerce about to kill the retail industry?

Interesting post here, about the possibility for shoppers to arbitrage pricing while in-store, by texting a numerical product code to Amazon and seeing if they can get a discount.

Funnily enough, I actually registered a bunch of URLs in 2001 such as mobilecomparisons.com , in the expectation that this type of technology would emerge. I got bored waiting in about 2005, and let them lapse.

I can see some big advantages in this particular case - notably that it's Amazon, with whom many people already have an account via the PC (I can't imagine wanting to set up a new account on the phone), and who are also the masters of the logistical side. It's also good that it bypasses the operator (who would otherwise want to add their own margin to the price, probably negating the benefit). And it's certainly good that it charges to your credit card rather than your mobile bill.

On the other hand, even without any knowledge of the retail industry, I can think of numerous ways that this can be circumvented from the retailer's point of view:

• Work out an explicit value for "instant gratification" and make sure the Amazon discount doesn't cover it
• Negotiate with your suppliers for slightly customised versions of products that aren't available through other channels, and which therefore have a unique UPC code or barcode that Amazon doesn't have access to
• Put a sticker over the UPC code with a proprietary product tag only recognisable by the checkout system
• Offer different "Get it now!" and "Free delivery tomorrow" prices for goods.
• Offering complex product bundles described on shelves & assessed at checkout ("Price of camera + memory card = $200", or even just "Buy one get one free")
  

I also think that some of the notions about always-on ubiquitous mobile broadband are over-optimistic, even though the US is now a bit of a special case because of 700MHz' reach.

Verizon's C-Block is 2 x 11MHz - and I'll leave it to a more techy-minded reader to work out the likely "Mb/s per square mile" based on density of cell sites, sectors/cell, frequency use & a bunch of other technical innovations like beamforming. But I'm pretty sure it's going to struggle to get to (let's say) an aggregate 1GB/s per square mile, which will then have to service all simultaneous users. Femtocells could help, but probably not in a retail environment.

Sure, mobile web user experience will get a lot better with improved devices/browsers, and 3G/4G/WiMAX/white-space/band-sharing technologies. And I can see evolutions of this technology with barcode (or even just product) photos being interpreted.

But I can't see m-commerce killing retail, even though it may shake it up a bit, in the same fashion that PC-based Amazon already has.

Telco 2.0 and Forum Oxford conferences next week

There's a couple of great events next week that I'm attending / participating in, and which I'd recommend to anyone interested in next-gen telecoms strategies, or a more specific analysis of mobile applications.

First off, on the 16th & 17th, is the latest Telco 2.0 brainstorm event. I've chaired/attended various of the previous ones and they are a world away from the usual vendor-led powerpoint onslaught. Martin Geddes & Co usually give some extremely insightful angles on how incumbent & new-entrant operators can work towards valuable new revenue streams, without trying to fight stupid battles against the inevitabilities of the Internet & IP.
(Disclosure: I work collaboratively with the STL / Telco 2.0 guys on various things)

Next up, on the 18th, is the Forum Oxford Future Technologies conference. ForOx is a great online mobile-focused web forum, which is often host to some fascinating debates & insights. The event should be a good (& inexpensive) tour around emerging types of mobile application & service. It also features myself arguing against regular online sparring partner Tomi Ahonen in "The great mobile debate: Will the future of the Internet be shaped by mobile, or is the PC still in control?", which should be a fun session. I'll be contending that the overall structure or usage of the Internet isn't going to be meaningfully changed by people accessing it via mobile phones. I'm not going to give my arguments away in advance, but I'd imagine that words like "dongle", "spectrum", "multi-tasking" and "enterprise" will all crop up at some point.

Is WiMAX losing the battle to 3G for connecting laptops?

I've been looking at the 3G vs WiMAX battle from a number of angles recently, for some work I'm doing about spectrum. And I've also been layering on some analysis about how this fits with the continued explosion in mobile broadband for PCs, especially with HSPA dongles.

The battle seems to boil down to a few sets of variables:

• Can Intel get integrated, WiMAX-enabled laptops into the market as fast as it did for WiFi?
• Can mobile operators encourage (subsidise?) laptop manufacturers to embed 3G modules instead of (or as well as) WiMAX?
• Is the current laptop installed base going to churn as fast as did (about 3 years) when Centrino was introduced?
• While existing HSPA dongles & inexpensive mobile broadband subscriptions are flying off the shelves, can the networks scale fast enough (in terms of backhaul & maybe extra sites) to avoid worsening user experience?
• What happens when a laptop has both WiMAX and 3G in it/attached to it? How does the connection manager cope and assert preferences?
• Are 3G operators' existing frequency allocations (up until now underused) soon going to be struggling to deliver a decent broadband experience to a massmarket of PC users? What frequencies are available to them, and in paired (FDD) or unpaired (TDD) spectrum?
• How well can different operators deal with supporting pre-paid models for mobile broadband rather than monthly subscriptions?

Clearly, the 3G guys have been a bit rattled by WiMAX's successes in spectrum allocations. This doesn't relate to specific deployments (or delays) like SprintNextel's, but by the strategic success of the lobbying machine when it comes to important decisions like the ITU's acceptance of WiMAX as part of the IMT family of allowable technologies in 3G-designated spectrum. Add to this the recent movement in Europe towards supporting "technology neutrality", especially in 2.6GHz, and the recent endorsement of a report (CEPT #19) permitting national regulators to deviate from the supposedly-harmonised original band plan for 2.6GHz to permit more WiMAX-suitable TDD spectrum to be allocated, at the expense of 3G/LTE-optimised FDD.

Ofcom's new statement on the upcoming 2.6GHz auctions clearly demonstrates that it expects to push ahead with a flexible band-plan approach, and although some other EU regulators (Sweden & Austria) have toed the conservative 3GPP-friendly CEPT 05(05) line, I suspect others will follow Ofcom's path.

Conversely, it looks to me as if the WiMAX community is getting rattled by the seeming success of mobile broadband offers by the HSPA and EVDO operators. The whole 'dongle' phenomenon has sprung up in a narrow window of opportunity before WiMAX-enabled offers start to emerge widely. They're also supported by existing MNOs' huge retail and marketing presence, and arguably are setting price points that are making future new entrants wince as much as incumbents. And there are some early and very smart moves to support prepay for data.

I had a very persuasive briefing call yesterday with a leading WiMAX advocate who felt that existing 3G networks were going to saturate very quickly with the current consumer dongle offers, and felt that without extra capacity the propositions only had a limited shelf-life & appeal. While I think that some extra capacity may come from femtocells I don't see it changing the dynamics fast enough to make a huge difference - I reckon some of the European 3G networks will start to creak by the end of this year. As a side note and possible anecdotal evidence, my HSDPA modem on 3 UK now seems to struggle to get much above 300kbit/s, and it's often much worse.

So where are we? How will laptops be connecting in 3-5 years' time?

The future situation for laptop-suitable WiMAX spectrum is definitely improving, in some places more so than others.

But 3G operators have stolen an early lead in getting devices to market, although there are storm clouds gathering about scalability of their existing networks.

And as I've written about before, 3G-embedded PCs are still going nowhere, although ultra-cheap laptops (subsidisable down to £zero) may make a difference for those operators who have sufficient retail skills to sell & service computers.

And I certainly wouldn't write off WiFi, as it becomes more ubiquitous, easier to use, and increasingly free.

I think that the pivot point will be the perceptions of quality of existing 3G dongle-based service over the next 12 months as the networks fill up - and whether the existing mobile operators are getting sufficiently good margins to make them want to bid big for 2.6GHz spectrum, even in the face of a likely Intel-led onslaught of WiMAX-capable PCs.

Mobile context firewalls - aggregated mobile membership clubs??

An interesting thought occurred to me about how mobile advertisers hoping to exploit individuals' context might be disrupted. I keep hearing about how the unique personal nature of mobile phones will enable advertisers to target "the segment of one", and to quote Arun Sarin "we know who you are. We know what your age is. We know where you live. We know a lot of things about you".

Now to be fair, Sarin has also said that operators should be responsible about using contextual information, and even reward users for sharing it and opting-in. This is what Blyk does as well - you get free calls in exchange for giving away some element of your privacy.

But I wonder how the boundary will flex, between what is "responsible" and what is desirable by a marketing guy up against the end of the quarter. Knowing the industry's propensities for pushing the boundaries of what is acceptable until forced otherwise (eg on roaming charges, and previously on number portability), it wouldn't surprise me if there is the occasional mismatch in the perception of 'reasonableness' between operator/advertiser and end user.

I'm wondering if one of the best ways for users to collectively protect their privacy, and also get extra benefits (and a greater share of advertising revenue kick-backs) would be to organise into membership organisations for mobile services. Almost like affinity-group MVNOs, but without the need for a wholesale agreement.

Let's say that a Mobile Membership Club is established with 10,000 members. It could then attempt to negotiate discounted group mobile tariffs, similar to an enterprise. It could even potentially get customised handset UIs or applications, administer its own number ranges, perhaps even host its own services.

And it could act as a sort of "context firewall" by not identifying mobile user #7356. Obviously the network would still be able to guess quite a bit, by looking at location, usage patterns etc. But they wouldn't be able to pin the user to a specific name or address or demographic, unless the user or club decided to share that information. Obviously, for legal reasons, they'd have to identify a user to law enforcement officials, in the same way that an enterprise mobile account holder could be forced to identify an employee.

In fact, it may even be possible for the mobile membership club to switch user IDs inside its "private network" so that it would be even more difficult to identify people from outside. A sort of mobile equivalent of the Internet's dynamically-allocated IP addresses, with a NAT (network address translation) unit...

Now let's further wonder what might happen if the aggregator was titled something like "Facebook Users' Wireless Alliance" or "Google Mobile Club".....

(Yes, I know this is all competely speculative & rather difficult to do in practice. But I quite like the notion of disruption and re-intermediation where privacy and context ownership is concerned. If someone wants my context, they ought to pay me - or my agent - for it)

Edit - a bit of digging led me to other examples of consumer-oriented collective purchasing (or "Crowd Clout" as this very interesting page puts it). Apparently it's already happening at a basic level for discounted mobile phones & services in Holland, or the "tuangou" team-purchase philosophy in China. Now let's see if it can be spiced up with a bit more technology akin to one of the enterprise mobility gateways....

Post #500... so what's changed in 2.5 years?

This is my 500th post on this blog. By coincidence, it is almost exactly 2.5 years to the day since I started on this journey, so I'm averaging 200 posts a year.

It's been ages since I even thought about the stuff I was writing about in 2005, so I thought I'd go back to my very first post and see what's changed, what I'd got right/wrong.

I had a list of Over-hyped wireless technologies:

• UMA (unlicenced mobile access) - well, it still hasn't got much traction after another 30 months. Maybe 1.5m subscribers at Orange & T-Mobile US, plus some hopefulness around femtocells. My original forecasts (considered horribly pessimistic at the time) of 5.5m UMA homes at end-2009 now actually look insufficiently pessimistic after all.
• Cellular operator IM - I was spot on. Branded mobile operator IM, with a couple of niche national exceptions, has gone precisely nowhere. Even familiar Internet IM from MSN, ICQ, Y! Messenger has been pretty patchy on mobile to date, albeit a bit more popular in markets like the US where teenagers think that QWERTY phones are socially acceptable.
• Near-term massmarket WiMAX - Sprint's Xohm launch was delayed again yesterday. 'Nuff said.
• Free wireless VoIP - Sure, mobile VoIP still has some buzz, but it's been hit by complexities of handset user interface design, operator obfuscation of key APIs, power consumption issues, unwillingness of users to install 3rd-party applications.... and above all, ever-cheaper mobile circuit phone calls.
• Dual-mode WLAN/cellular phones - Yes, they're still important and the basis of lots of interesting new business models and FMC vendors. But predictions that "all phones would have WiFi" were misguided - most end-users are more prepared to pay for 5MP camera modules or a pink casing than 802.11 on their phones. And even where phones are dual-mode, quite often the WiFi is never or rarely used.
• Wireless presence - It's been overhyped like mobile IM, but more so. Maybe it'll make a return with the eventual rollout of IMS, and things like the rich communications suite. Or perhaps it'll get absorbed into some of the cool Mobile Web 2.0 and social networking applications that are emerging. But there's a lot of outstanding issues - such as whether operators want to subsidise presence capabilities for the mass of youthful prepay users, or whether their often low-end handsets can support it anyway. I still think it's overhyped although it's at least now a bit more feasible.
• Smartphones - I still think the industry cares more about smartness than end users do, although clearly the iPhone, Nokia N95 and assorted Blackberries & WinMob devices have raised the game. On the other hand, on a local trip to my closest Carphone Warehouse store, I counted 9 types of smartphone on the shelf, and 11 types of pinkphone. Hardware is still more important than software to Joe Public.
• "Seamless" roaming - I think Motorola's (tagline "Seamless Mobility") recent problems have perfectly highlighted the ridiculous 2005 hype around "seamlessness". As I've consistently said, seams are important and I see no reason to change my assessment.

And what about the things that I thought were under-hyped?

• Under-estimated- PBX/cellular integration - Certainly, this seems to be the ongoing focus of enterprise FMC these days. Yes, there are still plenty of "bin the PBX and use mobile centrex" announcements, but the story's the same as it was, and there's still virtually zero traction. I don't see it changing.
• Poor indoor performance of 3G, WiMAX and other services - The interest in the recent 700MHz auctions (and digital dividend frequencies in Europe in future) have partly sprung from an awakening awareness that 2GHz+ signals don't go through walls very well. It's also a huge limiting effect on WiMAX (especially at 3.5GHz) and metro-WiFi at 2.4GHz. It seems that the annoyances of basic physics have penetrated a bit further into mobile executives' brain tissue than into buildings.
• Novel in-building wireless coverage solutions - I first mentioned the term femtocell a month after the blog started. At the time it drew blank looks whenever I dropped it in meetings with clients - but now it might be time to transfer it to the list above.
• "Single-mode" (non-cellular) VoWLAN phones. OK, hands up, I got this one mostly wrong. I'd been expecting the price/feature curve to have intersected that of DECT and similar cordless devices by now. It's been very, very slow except for a couple of interesting-but-niche Skype handsets, and a handful of slightly less-clunky enterprise devices.
• Impact of VoIP on cellular pricing. It's difficult to dissect the drivers of flatrate and "big bucket" voice pricing in mobile - competition, regulation and VoIP all play a role in carriers' decisions. But VoIP and call-through is certainly exerting pressure on international tariffs.
• Upgrading cellular network backhaul. In 2005, backhaul was an unloved backwater of the industry. But it's now one of 2008's hottest topics, especially as 3G networks fill up with data from cheap flatrate HSDPA modems.
• Difficulty of integrating & testing new features on mobile handsets. There used to be an assumption that handset software was easy, because devices are small. So many firms have now had their fingers burned trying to get client software user-experiences working across a decent range of phones, that there's been a huge move to "put things in the browser" instead. Certainly, those companies that are doing handset client applications now seem to recognise the magnitude of the task they face. And then there are the prizes awarded by the likes of Apple & Google Android to sweeten the pain for app developers.
• The impact of a lack of "email portability" on FMC business models. My thought here was that many people still use ISP-based email addresses, and wouldn't want to switch broadband providers just to benefit from FMC. But to be honest, there's been so many other problems with consumer FMC propositions that email has been way down the list of pain points.
• The role of "service enabled" home gateways for FMC. In 2005, most home broadband users still had simple broadband modems, often USB-connected. In 2008, there is much greater interest in dedicated and sophisticated end-points like BT's Home Hub and Orange's LiveBox as an entry point to the "digital home". I expect this to continue.

So... where will this blog be when I get in post #1000, perhaps in late 2010?

Will we all be consuming huge amounts of mobile advertising, while talking via VoIP to our IMS-presence enabled buddies on our LTE iPhones running at 2.6GHz on our integrated home femtocell/gateways?

Femtocells - too large & clunky. What you need is an Attocell....

Congrats to ip.access on their new invention..... I've heard rumours that their engineering team, lead by CTO Olof Prila, has been hard at work on this for some time.

Will too many frequency band choices delay LTE?

A few years ago, the first 3G UMTS networks to be launched involved some relatively simple choices.

In Japan in 2001, DoCoMo launched its FOMA service initially with just a single frequency band supported. This was 3GPP Band I, using 1920-1980MHz paired with 2110-2170MHz, commonly just called the 2100MHz or 2.1GHz band. Initial devices were launched without 2G dual-mode support.

In Europe, operators used the same 2.1GHz band, but were reluctant to launch devices which didn't also support GSM for fall-back. This typically meant adding support for 900MHz and 1800MHz 2G into the handsets, which was one of the contributory reasons for the delay in wide launch of 3G handsets, as well as their expense, clunkiness and poor battery size.

Nevertheless, at least the handset designers and operators knew what they were dealing with, when it came to frequency support - the 2.1GHz was a known quantity: challenging, but at least the goal-posts were fixed.

Now ratchet forward to the future introduction of LTE.

What's going to be the main launch frequency for LTE in Europe and Asia?

Is it the forthcoming 2.6GHz band, for which auctions are already starting? This has a fair amount of capacity, but may suffer from poor indoor penetration or the need for much denser networks of cell sites. There are also some issues around possible interference from WiMAX or other TDD technologies in the middle of the band, especially if certain regulators like Ofcom look to adopt national-specific bandplans with a unique mix of TDD and FDD.

Is it refarmed 900MHz GSM spectrum? It's a prime frequency, but not every operator has some of this to refarm. Will regulators insist on a reassignment as part of the refarm process? And will this be enough for LTE, especially as the broadband business case really needs 10MHz or 20MHz channels? There's certainly not enough for 3 or 4 operators per country to have 10, 20 or more MHz.

Could it be 1800MHz refarmed spectrum? Again a possibility, but not for everyone.

Maybe a straight replacement of existing 2.1GHz 3G?

What about the UHF Digital Dividend spectrum down at 450MHz? That's also patchy, and not available until analogue TV is switched off in different places at different times.

Then there's 700MHz spectrum in the US, and various other local variants in Japan. And what about China?

The bottom line is that nobody really knows. 2.6GHz is looking like a probable candidate, but certainly not the only one. And if handset manufacturers and chipset vendors have to start out with dual- or tri-band LTE, and also support 2G and 3G radios for fall-back, I think that the timelines and costs will suffer.

Carnival of the Mobilists

Tip o'the hat to the Situational Marketing blog for referencing one of my recent posts on handset OS fragmentation in this week's Carnival.

And I also realised I missed the link at the previous one at Chetan Sharma's great blog as well.

Catching up - China and Heathrow Terminal 5

I haven't posted this week because I've been behind the Great Firewall of China, at ZTE's analyst conference (more on that company in a later post). While there seems to be a bit more flexibility in net non-neutrality from that part of the world these days (Skype & Yahoo Messaging, plus BBC News' website was fine, so no problems reading about events in Tibet), I couldn't access Blogger, or other blogs hosted on TypePad or Wordpress. Definitely another "ah hah" moment when I realised what was happening.

By coincidence, the trip meant that I was able to score a seat on this morning's inaugural flight BA26, from Hong Kong into Heathrow's gleaming new Terminal 5. As well as being another temple to architecture deity Richard Rogers, it also features a comprehensive WLAN infrastructure from Aruba. Apparently, as well as being used for baggage handling (which from my perspective seemed to work a lot more efficiently than other bits of LHR) airport operator BAA "acts as a service provider to .... multiple hotspot Internet service providers."

Unfortunately though, I had just flown in from Hong Kong's Chep Lak Kok airport, which is a similarly-impressive edifice (courtesy of Norman Foster) but conspicuously offers 24-hr free WiFi, courtesy of PCCW throughout. (Free WiFi at the hotel in Shenzhen, too).

That Heathrow T5 attempts to perpetuate the overpriced European WiFi paid-hotspot market, rather than looking at how to provide passengers with free access as a utility doesn't surprise me in the least. It's run by BAA, the rapacious mall operator best-known for forcing its customers through endless rows of shops, viewing the flights themselves as inconveniences that limit the 'retail experience'.

It's also been advised in wireless strategy by consulting and engineering firm Red-M. The system enables it to set & monitor policies about exactly what wireless coverage is available where. I imagine they've been able to extract similar rents from the hotspot & cellular guys as they do from ordinary retail stores.

And I noticed that I couldn't get a signal for Hutchison 3G, or 3G on my O2 phone, down in the Heathrow Express train station. Wouldn't want 3G modems to compete with the presumably lucrative contract offered to T-Mobile to run WiFi there, would they? Will be interesting to see how good 3G coverage is on each operator in the rest of the building - I'd guess that some operators were prepared to stump up the requisite cash and others weren't. Expensive-looking Vodafone 3G modem adverts adorn the arrival hall, so I guess that Big Red's network will be fine.

Put simply, this is another example of the danger of giving network policy tools to organisations whose policies are questionable. It wouldn't surprise me if BAA took a leaf out of China's book and also invested in some firewalling policy-management gear as well, and started to limit what websites or IP services are accessible via the WiFi.

So let me know if you manage to read this blog from T5's departure lounge, or whether I've been network-blacklisted for daring to make a negative comment about the BAA regime....

(Sidenote - British Airways gave passengers on my flight into T5 a small gift to commemorate the opening. Bizarrely, it's a wireless computer mouse, of the type not usually permitted for use onboard planes.)

Attn AR/PR folk: No, I'm not going to be at CTIA

...so please refrain from sending emails asking if I can meet with your clients there.

Cheers

Dean

US 700MHz - Will Qualcomm do something disruptive?

So the US 700MHz auctions are over, except for the unloved D-Block.

What's changed? Well, there's no Google, that's for certain (no big surprise there, to be honest, I really couldn't see it wanting to hire 1000's of radio engineers). And AT&T, Verizon, Qualcomm & Frontier Wireless hoovered up most of the licences on offer. Although it should be interesting to see if the requirement for openness makes a meaningful difference.

According to the FCC, 99 bidders other than the current US incumbents took over 700 individual licences between them, meaning that at least in theory, there are potential new wireless broadband competitors in each regional US market.

I'll be honest & say I don't know much about Frontier, which is essentially now a nationwide spectrum owner.

But the one that caught my eye was Qualcomm. It cherry-picked some of the key US markets - Boston, NY, LA, SF & Silicon Valley, Philadelphia - with some hefty bids for B- (12MHz of paired spectrum - FDD) and E-Block (6 MHz unpaired - TDD) spectrum.

Now, it already owns some spectrum that underpins its Mediaflo TV platform. I'm wondering if, just maybe, it might extend that model towards its own unloved UMB evolution of its main cellular technology, which seems to have been sidelined by LTE and WiMAX in recent months. UMB can work in both FDD and TDD spectrum.

It could potentially develop a wholesale network, which could then host services from (say) ISPs for fixed-broadband, local government & public safety (who often have regional requirements not needing full national coverage), and various other channels. Yes, it would potentially compete with Sprint's WiMAX Xohm network in some cases - but this could help salvage UMB, which could have the side-effect of persuading some remaining CDMA waverers (notably KDDI in Japan) to take the plunge as well.

I'll readily admit that this is all speculation - it could just be it wants more Mediaflo spectrum, or perhaps there's another hidden plan I've missed. But I have a sneaking suspicion that UMB will raise its head again somewhere.

Rant: Enough with the NXTcomm spam

I don't know if NTXcomm is a good trade show or not. I've never been. And I'll never go.

Two years ago I stupidly signed up for a press/analyst pass, as I thought I might be able to attend. That simple act, combined with exceptionally poor database management on the organisers' part, led to a seeming never-ending stream of emails about the show. I think they take the PR/analyst list & redistribute it to about 12 departments within the same company, none of whom bother to check to see if I'm a relevant target for their dross.

Last year I received over 40 emails from them. Despite clicking on the "unsubscribe" link at least 8 times.

Eventually, I got in touch with some of the PR folk & told them if it didn't halt, I'd write a pretty coruscating post about their capabilities in terms of data protection, and their lack of competence in managing something as simple as "unsubscribe" request . I asked that they delete every reference to me from their databases.

Now, I'm already receiving 2008 messages from the organisation. And again they've ignored unsubscribe requests.

I note that the US "CAN SPAM" act contains the legal instruction "It requires that your email give recipients an opt-out method. You must provide a return email address or another Internet-based response mechanism that allows a recipient to ask you not to send future email messages to that email address, and you must honor the requests. "

Now, at the moment it's just a nuisance. Although it's obviously very unprofessional of them, I'm not the sort of person to pursue legal action over something this trivial. I'd rather just give them a bit of a kicking throuhg this blog. But if you're an exhibitor or sponsor of the event, next time your sales representative calls, tell them to sort it out.

And if you're an journalist, analyst or other potential attendee of the event - can I suggest you set up a "disposable" email address with Yahoo or similar, rather than trust the system with your primary address.

EU stance on DVB-H: Inconsistency and irrelevance

I see that the European Telecoms Commissioner Viviane Reding has issued a pronouncement about mobile TV, encouraging companies & countries to standardise on DVB-H, rather than alternatives like T-DMB, 3GPP MBMS or Qualcomm MediaFlo or Nextwave's TDtv.

Yet the term "For Mobile TV to take off in Europe, there must first be certainty about the technology" seems to be completely contradictory when compared with the emerging European view on technology neutrality in other mobile services, especially wireless broadband.

Ongoing trends such as WAPECS (EUspeak for tech-neutrality) in 2.6Ghz and 3.5GHz bands are looking like a certainty, while other moves are afoot to allow refarming of GSM spectrum for 3G or LTE (& maybe other) radios. Various arms of regulatory bodies are bending backwards to accomodate WiMAX in particular as a competitor to UMTS & LTE standards.

Plus, the European Commission seems to be stuck in 2003 when it comes to their bullish predictions on Mobile TV. Yet the general consensus (and my own long-term view) is that hardly anybody wants mobile broadcast - it's a niche application, not a massmarket one. It's much easier than any other new mobile service for customers to understand..... ("it's telly, on your phone").... yet it's almost universally viewed as an irrelevance.

The typical digital-TV subscription model also doesn't work too well with prepaid handset users, who account for the bulk of most European countries' user bases. This makes it much more difficult to create a business case as it will be based around pay-per-view or perhaps one-off payments for day/week/month access. Few operators will want to subsidise DVB-H functionality in phones if there's a chance that the customer may only ever spend €1 (or zero) on using it.

In order to succeed, there will also need to be some utility for TV-enabled phones working in "offline" (ie free) mode, to get people to become familiar with the general concept, then hope that revenues follow over time.

This gives a prime example of why government or supra-governmental organisations shouldn't try and pick technology choices. I guess we should be thankful that Reding chooses to standardise things that nobodyreally cares about, rather than the important ones.

Handset OS fragmentation is here to stay - and may even impact future network architecture

A couple of years ago there were lots of hand-wringing comments about how the proliferation of handset OS's was harming the chances of any consistency in mobile applications development and uptake of data services. Operators like Vodafone made pronouncements of how they intended to rationalise their software platform base.

At the time, I was skeptical that there would be any easy way to meaningfully reduce the number of smartphone OS's as well as proprietary featurephone platforms. And in fact, if anything the number has risen, with the continued growth of RIM, the emergence of Apple's OS, Google/Android on the horizon and a continued plethora of other Linux platforms vying for attention. Meanwhile, none of the major handset vendors has committed to phasing out their proprietary platforms like Nokia S40 or the various Moto / Samsung / LG / S-E equivalents.

On the merchant-featurephone software stack there have been a few changes to be fair, with Qualcomm's BREW/UIone appearing on some more devices, but with TTPCom's Ajar being absorbed into Motorola's software maelstrom. Others like OpenWave and Obigo and Intrinsyc are still around too.

There is no obvious emerging contender to sweep away all others, especially at a global level. I can't see Nokia pushing S60 much further down into S40's domain. I can't see Apple or Google making a huge mark outside North America. I can't see RIM or Microsoft abandoning the enterprise sector. UIQ and a couple of the Linux players are not the strongest, but if they disappear I'm sure there will be plenty of newcomers to take their place - isn't it about time we saw a reincarnated Java/SavaJe-type player, for instance?

Meanwhile, all the real action seems to be migrating to the presentation layer - Webkit browser, Adobe Flash, Microsoft Silverlight and so forth. There seems to be at least a vague semblance of homogeneity emerging there, at least on high-end devices. Sure, even at that level there won't be "one platform to rule them all", but some variation of Web+Widgets+XML+various extensions is perhaps not as tricky as the current app-porting challenges.

There are some interesting side-effects of all this - even propagating through to the network side of the industry, despite the fact it likes to think itself divorced from developments with mere handset software.

In particular, the industry seems to be moving even further away from fully IMS-capable handsets. Sure, in some ways the IMS client framework is starting to get a little more realistic, but with the shift in value (and certainly the shift in innovation) towards the browser it's starting to look a little irrelevant. Yes, we might get some IMS-based apps on the phone - IM, presence, even full VoIP - but that's not where the cool stuff is, and I think that the web aspects of the handset are moving too fast to be captured in even a next-gen IMS/Web architecture.

In particular, the chance for VoIP to become an "anchor tenant" for IMS has diminished, with the standardisation of the fairly-pointless MMTel Multimedia Telephony. As I've mentioned before, 3GPP has totally missed the point with MMTel: next-gen mobile telephony will be about integration, mashups & web services.... not video-calling/sharing and other "media".

Given that some sort of VoIP is mandatory with LTE (unless operators want to run GSM/UMTS networks in parallel forever), somebody really needs to get working on a more useful mobile VoIP standard NOW, and work out how to implement it in phones. In fact, whoever does the work should start from the standpoint of the user, with a phone in his/her hand and then work backwards to determine what the network has to look like to support a proper version of Mobile Telephony v2.0.

One of the themes I've discussed with a few companies recently has been the impact this could have on cellular network architecture. In particular, I've been looking at the current converging mess at the edge of the network that is some combination of SBC, security gateway, softswitch, GGSN and assorted other functions. I've been speaking to companies like Stoke, Acme Packet, Sonus, Nextpoint, Mavenir etc recently, and I'm starting to wonder if the required aggregation models will be driven indirectly by device type & usage cases, as much as they are by infrastructure-based decisions for multi-access.

If the traffic delivered by handsets - and the capabilities valued by end-users - moves away from session-based services like voice & IM, and towards more web/browser/widget functionality - what effect does that have on the boxes at the edge? I haven't got a full answer to this yet, but it's definitely something I'm looking into closely.

eComm day 2 - Android and others

Some quick notes on today's presentations at eComm in Mountain View.

Rich Miner from Google/Android presented this morning. I've refused to be drawn in by the Android hype over the recent months, and today's pitch has done nothing to convince me either. I'm not quite at the stage of saying "The Emperor has no clothes" - idealists with money are inherently unpredictable - but I'm definitely not convinced that it's going to be very important, especially outside the US.

Miner's presentation got off to a very shaky start with the tired old canard about "1 billion Internet users, 3 billion phones" and how this somehow proves that many people would be "One screen" users only using their handsets. I realise that Google's expertise about fruit & vegetables is limited, but I would have thought they'd have worked out the difference between apples and oranges by now.

There are also many open questions about Android in terms of radio support (especially 3G), SIP APIs, and just how "open" it really is. It obviously still has the "Google can do no wrong" halo among developers in Silicon Valley, but there still appears to be a US-centric view that end-users actually want to install applications on their handsets.

At least Miner had a better answer to my question "why does this matter to prepay users who don't have data plans" than Symbian has in the past. (Answer: it'll scale down to low-end featurephones & reduce bill-of-materials, plus people can sideload apps rather than download them).

Overall - I'm not writing off Android. It is Google after all. But I'm deeply skeptical that it'll become very important, very quickly. It's certainly not going to be ubiquitous.

Apart from Android:

• Ribbit has a very clever-looking API platform for creating telephony mashups, based on a "big iron" Lucent class-5 softswitch. Discussions about blending voice+web have cropped up increasingly of late, and although this isn't my core area of coverage, it looks impressive at first sight.
• Intel had anthropologist talking about context, GPS sensors, location-based services and related topics. Very well-observed commentary distinguishing between "machine-readable" context [GPS, motion sensors, light/dark etc] and more personal forms of context [commute vs journey, home vs house, relevance to conversation etc]. She comprehensively demolished some of the sillier location-related business models like sending coupons/ads to passers-by at a particular location.
• Yahoo's Fire Eagle cross-platform location API and service platform sounds intelligently thought-through. It basically captures a wide variety of location inputs (GPS, cell, addresses etc) and maps them to a personalised profile for a person, enabling each "querying" application to have separate, user-defined permissions settings for what data & granularity is divulged. It also gives the users reports to work out which applications have been regularly asking for location lookups, so you can track which software has been snooping on you.
• Embarq gave a presentation about privacy vs security, which was interesting, but not as memorable as a phrase in the upfront disclaimer "some concepts are still in the ideation phase". I'm stealing 'ideation' as it's the most obtuse jargonese I've seen in ages.

Notes from eComm

I'm in Mountain View for the next couple of days, at eComm 2008, Lee Dryburgh's get-together for an impressive assortment of forward thinkers around personal communications, billed as the "trillion dollar rethink" - what telecoms will be when it grows up.

I'll add thoughts & edits to this post as the event evolves.

I'm not sure I agree with Lee's opening stance that "the telephone is dead, long term". The idea being that it morphs into a "relationship lifecycle management device". I'm not so sure - I think the phone has been around for 100+ years and people quite like it. For people with 2+ devices (or people with 1 device but not much money), I'm unconvinced that cool stuff like social networking & presence on their primary phone is very valuable or desired. Especially compared to (say) a camera, MP3 player or cute design.

David Isenberg (of "stupid network" fame) talked about Net Neutrality and "The Political Layer" above the usual ISO network protocol stack. He dragged Martin Geddes on stage and asked what I thought was a weird question "How many ISPs can you get access to in Edinburgh?". Martin answered "about 30", and I shrugged. Then he asked the (predominantly US-resident) audience members "Who here can get access to more than 1 or 2 ISPs?". Pretty much the only people raising their hands were the Europeans.

Now I understand why Americans get so exercised about open access, net neutrality and so on. I hadn't realised quite how appallingly competition policy had failed in the US - I knew it was bad.... but I hadn't really grasped just how bad. The stuff I take for granted in the UK - lots of wholesale ISPs, and quite a few local-loop-unbundled ones, plus cable - just doesn't map onto the reality in the US. I've realised that I sometimes assume that ordinary, mundane, competition will give deep packet inspection and application-blocking a solidly good kicking. Which is fine, if ordinary, mundane competition actually works.

Edit, 2pm Wednesday

There's been a lot of discussion about assorted voice-recognition technologies and applications, like Voice XML. Frankly, I don't think it's that interesting - I know lots of people seem to think that voice-based applications are some sort of magically futuristic appeal, but apart from widely-detested IVR systems and in-car handsfree voice-dialling, I'm just not convinced. Voice apps fail the "real world" test - I don't know anyone (outside the industry) who likes them, and I can't imagine anything that's likely to change that. Most of the suggestions I've seen are solutions looking for a problem, whether they're mobile-oriented or fixed.

Handset volumes - when's the point of inflection?

There's been quite a bit of discussion in financial circles over the past couple of days concerning a possible slowdown in the expected growth in handset shipments in 2008. Much of this seems to have been provoked by Texas Instruments' gloomy outlook, although this partly reflects Nokia's decision to source chipsets from more suppliers. TI has also suffered a bit compared to Qualcomm through having less exposure to 3.5G growth (lower volumes but higher margins), in areas such as HSDPA modems.

Nevertheless, despite the possible market-share shifts on the silicon side of things, it's also worth keeping a realistic view on the handset market itself. One issue is that the high end devices (eg 3G phones for mature markets) often have wholesale prices up to 10x that of low-end phones popular in emerging economies - and commensurately higher margins. Using overall headline figures like 1.1 bn handset shipments makes great statistics for the industry, but distorts the underlying picture of financial health.

A related thing to consider is the segmentation of the market between:

- sales of phones to new mobile users
- sales of replacement phones to existing users
- sales of 2nd / 3rd devices to existing users

Clearly, in mature markets the majority of purchases fall into the second two categories. Some interesting things to ponder there, though:

- Firstly, replacement phones are often highly contingent on operator-inspired upgrades. And it's notable that in markets like the UK, there's been a huge push recently to move people from 12 to 18/24-month contracts, to reduce the necessary costs of customer retention (eg subsidy) and reduce churn. This is especially true of 3G phones, where operators are loathe to upgrade people to their second or third 3G handset when they're not really using the network that much. Essentially, they'd just be subsidising people to move from a 2MP camera to a 5MP camera on the device - and currently they're using this as a lever to get people to sign up to longer terms.
- Secondly, additional devices (2nd/3rd phones) may well not be as expensive as a user's primary device. They might be cheap fashion-phones, or 3G dongles, or novelties like the 3 Skype Phone. This is good for volumes, but not average selling prices.

Overall, I can't see the handset market taking a nosedive. But I definitely think that some of the underlying dynamics are shifting in ways that perhaps the financial market hasn't priced-in.

The return of low power GSM

About 2 years ago, there was a sudden buzz of excitement around a new spectrum auction in the UK - referred to as "low power GSM", it represented a sliver of frequencies that were formerly a "guard band" between GSM @ 1800MHz and DECT. There wasn't enough spectrum to build out a national network, and it was expected that instead it would just be used for low-power indoor coverage, typically with picocells. And rather than selling the spectrum to a single operator, it was suggested that multiple indoor providers could share it - with operators expected to work with each other to avoid interference.

Ofcom sold 11 LPGSM licences for quite low prices, to an eclectic range of companies, from BT and C&W though to Swedish operator Spring and some very random ones like Philippines Long Distance Telecom.

Much excitement ensued, with speculation (by me among other people) that this was another interesting FMC route, competing with WiFi-based alternatives, using ordinary GSM phones. I'd been following the use cases for picocells since 2001, and this was quite a milestone. (Bear in mind that May 2006 was before the femtocell hype started to hit home).

But.....

Not much has happened since. The big problem is that having private indoor cellular networks is a great concept, but runs into practical and user-experience problems when people leave the building. There are four options for what happens next:

• The phone stops working. The SIM card is for the indoor-only operator
• The indoor service provider also has a macro service network outside, and the phone just hands over
• The user does a manual "network reselect" on their handset, either using two SIM cards or with the indoor operator doing something clever with a small offshore roaming service provider
• The indoor operator signs a "national roaming" deal (ie becomes an MVNO) with one of the main national MNOs for outdoor coverage.

The only UK LPGSM operator with its own macro GSM network is O2. But it seems to have been singularly distinterested in doing anything with its licence, and perhaps just bought it cheaply to check up on what everyone else was doing.

Two licencees already had MVNO deals in place that could have possibly enabled them to knit together overall solutions. But BT has been more focused on Fusion and dual-mode WiFi-cellular, and Carphone Warehouse probably doesn't have the enterprise reach needed to justify the price of picocells.

[Sidenote: picocells cost around $2k apiece. And most LPGSM opportunities are on corporate sites that would need integration with existing PBX and LAN infrastructure]

Until recently, Teleware's arm Private Mobile Networks was the only commercial LPGSM operator with a launched service and growing channel. I met with the company recently, and it has also developed a productised version of its solution tailored for the construction industry. Teleware's background is in developing communications servers & applications for the enterprise market, so it's got a lot of the important systems integration and channel-partner credentials. (And also, in the construction industry, building sites obviously don't have existing PBX/LANs).

My understanding is that MVNO terms from the major operators have been less-than-generous. Understandable, given that the LPGSM model represents a possible cannibalisation threat for their corporate business. Also, the timing of rollout of corporate dual-mode WiFi FMC was also delayed, so this more cellular-centric approach hasn't even been considered as useful hedge. That situation has changed recently however, with real-world dual-mode deployments in some UK companies (eg BT Corporate Fusion) & education facilities.

But now, C&W has finally cut a roaming deal with Orange to become another live LPGSM operator. (see the press release and also articles like ZDnet's). It's intending to launch a corporate FMC solution by the end of 2008.

One of the interesting thing is that C&W's recent business update presentation refers to its supplier for the solution as Ericsson. The significance is that Ericsson has long talked up its 2G femtocell (rather than picocell) products. Most of the femto vendors have been focused on 3G rather than 2G because of a different set of challenges in network integration, and the fact that 2G coverage is generally pretty good anyway. Presumably this will bring the capex requirement per-site down from a few thousand pounds towards a much lower figure.

I've also heard rumblings that a few of the other LPGSM providers are also stirring from their slumber. Having 2G femtos available as well as picos should definitely help. I suspect we'll see a few more announcements over the next few months.

Whatever happened to HSUPA?

It seems to me that in the rush to deploy and enhance HSDPA services, scaling downloads speeds from 3.6 to 7.2 to 14.4 and onwards, most operators have put their plans for high-speed uploads, through HSUPA, on the backburner.

According to the GSA (Global Mobile Suppliers Association) and also GSMA, we're on about 28 network launches, with another 24 in the works. There's a good table here. And there are now about 30 devices (the GSA says 33, GSMA says 26).

Sounds promising on the face of it, but it seems to be a much slower ramp-up compared with HSDPA, and certainly slower than the migration to higher speeds within HSDPA. And it's also worth noting that the vast majority of devices are still laptop data cards/dongles and fixed modems. In terms of phones, there's just a handful on DoCoMo's network in Japan, and a couple of HTC and i-Mate high-end PDA-type devices. It was conspicuous that none of the major handset vendors at 3GSM last month were talking up 'full HSPA' in their devices.

I think the problem is that nobody really knows what the added-value of HSUPA is. Just as most consumers don't really scrutinise upstream bandwidth for home DSL/cable, there doesn't appear to be an immediate need for symmetry on mobile either.

Yes, I know about user-generated content - but to be honest, just how many MB of video can any average person upload per month? Otherwise, yes, I can see the benefit for low-latency gaming (HSUPA improves ping time as well as bandwidth). And yes, professional photographers would like to send their 10-megapixel images to the newsdesk or a media agency. But ironically, most of the other HSUPA applications are probably "naughty" ones that the operators don't really want to encourage - VoIP, P2P, TV place-shifting (SlingBox et al), and people illicitly using their wireless endpoint as a web server.

And given that HSDPA is selling like hotcakes at the moment..... why move to HSUPA before it's really needed, given that the proposition is much less clear?

eComm interview about wireless, openness and spectrum

I had a conversation the other day with Jonny Bentwood, who has recently updated his Top 100 Analyst Blogs chart. He commented that as well as blogging, I could probably benefit from looking at some of the other Web 2.0 and social media approaches to distributing my blog content and building a greater community around my research themes. As well as things like Twitter, we also discussed podcasting and other approaches. I'm certainly going to try and look into some of these, and I'll mention them here as time goes on.

It's therefore also a pleasing coincidence that Lee Dryburgh has put up a transcript and audio recording of a conversation we had a couple of weeks ago. He interviewed me in advance of my presentation at eComm, about some of my thoughts on wireless VoIP, new ways of looking at spectrum regulation, and the general move towards 'openness'.

One of the areas that Lee touched on was the concept of 'open spectrum' - whether people will ever be able to 'hack' radio in the same way they do software. I'm not convinced, beyond the current existing unlicenced frequency bands. While I can certainly appreciate the concept of free-market, democratic, innovation-inspiring access to the airwaves, I think there's just too much risk of interference and other unwanted side-effects from allowing a free-for-all. Nevertheless, I'm definitely curious about whether there are methods to stimulate more clever RF inventions, and less bureaucratic revelations. If anyone else has any thoughts on how we might practically create a "radio playground" I'd be fascinated to hear them.