New Report:Mobile Broadband Computing - Device & Business Model Forecasts

I'm delighted to announce the publication of my new report on Mobile Broadband Computing

By the end of this month, there will be 35 million users of notebooks with mobile broadband access globally. That should rise tenfold to 341 million by end-2014, including new computing platforms like MIDs. (Note: this figure excludes smartphones)

However despite explosive growth in 2008 and huge long-term potential, the outlook for 2009 is not quite as optimistic as some might expect. In particular, (and this will come as no surprise at all to regular readers of this blog) the report finds that the long-awaited push towards embedded-3G notebooks will happen more slowly than many hope.

In terms of shipments, about 8% of notebooks will sell with 3G or WiMAX built-in during 2009. This will rise to about 23% in 2011, although some segments (eg netbooks) will be notably quicker.

In terms of active users, embedded-WWAN notebooks will represent about 30% of the active mobile broadband user base by the end of 2011. I prefer the term "user" rather than "subscriber", as by that point, the majority will not have conventional monthly subscriptions, but use alternative methods of payment - prepaid cards, session-based services, or free or bundled connectivity.

I'll be discussing the report's findings it more depth in coming weeks. If you're interested in buying the full report, please check out the Disruptive Analysis website or email sales AT disruptive-analysis DOT com  . 

I've included the formal Press Release below, for any journalists reading this. Please feel free to contact me via firstname.lastname AT disruptive-analysis DOT com if you'd like to arrange an interview or obtain data or quotes for an article.

Embedded-3G laptops over-hyped –  will only account for 30% of Mobile Broadband Computing subscribers by 2011 

Combination of Credit Crunch and Capacity Crunch will dramatically slow take-up

London, 10^th December 2008: The near-term importance of new embedded-3G and embedded-WiMAX notebooks has been significantly over-estimated, according to a new research report published by Disruptive Analysis. Even in three year’s time, laptops with built-in wireless access will only be used by 30% of total, active mobile broadband subscribers globally. External USB modems (or “dongles”) will account for 58% - almost twice as many.

However, the report, “Mobile Broadband Computing: Device Market Forecasts & Business Model Scenarios” predicts that in the long term, embedded mobile broadband will indeed overtake separate modems, in terms of both shipments and the active user base. By 2014, there will be 150m users of notebooks and the smaller “netbooks” with embedded mobile broadband worldwide. In terms of device shipments, 100m wireless-enabled laptops will be sold annually by then – although not all of them will actually be activated.

The study identifies numerous reasons for the slower-than-anticpated growth of embedded WWAN (wireless wide area networking). Key reasons include: the global recession impacting notebook purchases, unfavourable pricing differentials; the limitations of the sales and support channels for mobile-enabled notebooks; and the typical two-year monthly contract payment model, which does not fit with much of the target market for these devices. This makes comparisons with the rapid rate of adoption of WiFi in laptops appear over-simplistic.

The report’s author, Dean Bubley, said “Mobile-embedded notebooks are very elegant in concept – but suffer from practical and business-model limitations that will restrict their near-term growth, especially during a period of economic uncertainty when buyers will be especially conservative.”

Other findings from the report include:

• The new market category of “Mobile Internet Devices” (MIDs) will grow only slowly. Only 3m will be sold in 2009, although by 2014 this should grow to ten times that figure.
• By 2012, there will be 45m users of WiMAX mobile broadband computing devices. 11m of these will also use 3G or LTE connections in various hybrid or multimode approaches.
• An increasing proportion of subscribers will use their 3G handsets as “tethers” for their PCs, instead of using separate modems or built-in modules. However, fewer than 10% of people will use tethers as their sole access method.

The report also predicts that 2009 will be a much more difficult year for mobile broadband, compared with the huge growth experienced in 2008. The recession and non-availability of credit will drive a softening of demand for laptops generally, as well as a focus on value. For most people, built-in 3G or WiMAX is a “nice to have”, not a “must have”.

Some mobile operators, especially in Europe, have over-sold the 3G dongle proposition, experiencing huge uptake at very low prices, threatening congestion and worsening user experience. On some networks, 90%+ of data traffic comes from PCs, with tariffs as low as $10-15 per month barely covering the underlying costs. Huge growth in traffic from Apple iPhones and other smartphones is adding to the operators’ pain. Despite upgrades to higher peak speeds for HSPA, the total capacity is still limited by a range of network bottlenecks.

Finance officers at the operators have been happy about getting back some revenue on their existing, expensive and under-utilised network assets. However, they are much less enthusiastic at spending on upgrades. This combination of Credit Crunch and Capacity Crunch will have a marked effect.

One outcome will be a shift to new business models for mobile broadband. As well as revised prices and bandwidth caps, Disruptive Analysis expects to see new payment mechanisms emerge. Prepay (“pay as you go”) accounts are already popular in some markets and this will increase. In addition, new session-based, sponsored or “free” mobile broadband models will start to mirror the WiFi hotspot business – especially where network congestion can be lowered by the use of new “femtocell” access points. Conventional, long-term, monthly contracts will account for only 40% of worldwide mobile broadband subscribers by the end of 2011.

The report, “Mobile Broadband Computing: Device Market Forecasts & Business Model Scenarios” is available to buy from Disruptive Analysis. It includes detailed analysis of new product sales (3G laptops, netbooks, dongles, MIDs), installed base and mobile broadband service uptake by device type, network technology and business/payment model.  Details are available at www.disruptive-analysis.com. 

MIDs, netbooks, UMPCs, smartphones: some quick definitions

I see a lot of people conflating the various terms for "smallish mobile computing device intended mostly for Internet-type applications, which probably has some sort of wireless".

As always in the technology industry, there are few precise definitions and lots of grey areas and exceptions. Different companies and observers pick & choose their own preferred terms to fit with their own market positions.

I've tried to use a consistent set of definitions in my work on mobile broadband and emerging devices. For reference, my thoughts (in brief) are:

Smartphone: device with an open operating system, full telephony stack, decent browser, and a size that means it can be held up to the ear for voice calls, without looking like an idiot. Typically with a screen size up to about 3 or 3.5 inches in width, although resolution may vary. Examples: Apple iPhone, E- and N-series Nokias, BlackBerries, most Windows Mobile devices

Obviously, they all have WWAN capability - predominantly 3G, as WiMAX isn't really mobile voice-optimised yet. Most now have WiFi as well.

MID (Mobile Internet Device): Handheld device with 4-8" screen, probably with resolution of VGA (640x480) or above. Various OS options, but not with a full PC-type specification and user experience. You'd be unlikely to do large spreadsheets on it, for example. Primary applications are generic Internet/computing tasks like web browsing, email, web-based productivity apps, social networking, access to some forms of content. Secondary applications vary, but perhaps navigation, voice, TV. Various form-factors (clamshell, slider, tablet etc), but generally too large to hold to the head as a "phone" unless you want to look like Dom Joly.

I make a distinction between "generic MIDs" - ie Internet-primary devices like Nokia N810 or the Aigo - and "application-primary" devices which also do mobile Internet stuff as a secondary capability, like the Archos 5, which I'd say is first and foremost a media player. Similarly, the Sony PSP has long had WiFi and is usable for web and VoIP, but is clearly a gaming product primarily. I reckon the iPod Touch is slightly too small to really be a full-spec MID but it's very very close to my (admittedly arbitrary but consistent) definition size-wise.

I'm expecting virtually all generic MIDs to have embedded WWAN - like phones, they'd be almost useless without it, and not necessarily support separate external modems with ease. Some will be 3G, some WiMAX and in future, some with both - and WiFi as well.

UMPCs (Ultra Mobile PC): Although the term is still used a lot, I'd define a UMPC as, essentially, a full-spec Windows Vista PC in a smaller physical form-factor, perhaps with a touchscreen and no conventional keyboard. Generally, UMPCs are quite expensive and may be tailored for particular vertical markets. Not, for the most part, massmarket consumer products. An example is the Samsung Q1. Almost all have WWAN capability built in, mostly 3G. All have WiFi.

Netbooks: These are probably the most prominent "small computer" form at the moment, exemplified by the Asus eeePC and more recently a plethora of competitors like the Dell Mini 9, HP Mini 1000, Acer Aspire One and numerous others. Basically, these are small notebooks, with a laptop-type form factor. They have 7-10" screens, and 80-90% size keyboards, with a mix of Linux and Windows OS's (no Mac netbooks yet....). They are typically intended for "lightweight" online and offline PC applications (eg web-based services, office applications) although they are generally not up to "heavy" gaming or corporate apps as they have less-powerful processors then full-size PCs.

Typically priced sub-$500, an increasing number will have built-in 3G or WiMAX, but despite predictions this will be far from "default" for a long time, as it will be an option rather than pre-configured. All have WiFi.

Sub-notebooks: The classic "small notebook" form that's been around for years. Normally a premium-priced, quite high-spec device such as various models of Sony Viao or Toshiba Libretto.

Notebook: Classic laptop, with a screen size of 11" and above. Mostly $500 and above. All have WiFi, and a small but (slowly) growing number will have embedded 3G and/or WiMAX.

Maybe in a year's time I'll need to review these definitions, but as I said above, it's always going to be possible to find exceptions or corner-cases.

Published December 2008: Disruptive Analysis research report on Mobile Broadband Computing. For details see here.

Google's using my pipes for (almost) free! ... Whinge 2.0

Tip of that hat to Tim Poulus for pointing me towards this amusingly partisan "study" about the fact that consumers - and implicitly their broadband providers - are "subsidising" Google's use of the Internet access. Sponsored by a "a pro-competition e-forum funded by broadband interests" , it contains meaningless statements like "Google used 16.5% of all U.S. consumer Internet traffic in 2008" and so many non-sequiturs that I've run out of derisory analogies to use.

Funny, I always thought US consumers used Google, rather than the other way around.

Google's own pithy rebuttal is here

Honestly, both fixed and mobile operators need to get real about Net Neutrality, before it comes round and bites them on their collective backside. How would they react if some of the larger Internet companies started displaying announcements saying things like

"You appear to be using CompanyX as your ISP / mobile broadband provider. We will be ceasing to support access for users from that provider in 12 months time. We suggest you churn to CompanyY or CompanyZ, which have more enlightened policies on Net Neutrality"

Who do you think would win in a "battle of loyalty" between Google or FaceBook, versus a typical ADSL or HSDPA provider?

Going forward, I'm half-expecting Google to start charging unfriendly ISPs or cableco's. "$0.02 per search, unless you want your customers to get a 3-second interstitial advert for your competitors"

This is why I find it hard to get exercised by the lobbying around this area. The market will sort it out - if they keep whining, "pipe" providers are going to get taught some hard lessons about market power and competition. This isn't rocket science - it's been in strategy textbooks for 30 years. As Tim says - the answer's in the business model, and in the locked-up capabilities of operators' networks and billing systems and customer devices. Exploit your existing assets, not your Washington lobbying budget.

Embedded-3G modules for notebooks still expensive

I'm expecting the price of built-in 3G notebooks to come down sharply over the next 18 months, as OEMs and module vendors struggle to get the general mass of consumers interested in mobile broadband.

However, at prices like an extra $199 as charged by HP in the US, we're certainly not there yet - especially as that's up against the much more attractive "free" price point available to buyers of external USB modems. I also remain highly unconvinced that there's a massmarket of people out there who want to tie themselves into multi-year monthly contracts for their embedded notebooks. It's conspicuous that this is occurring at a time when many consumers are moving away from long-term plans for their voice phones, towards SIM-only and rolling one-month contracts.

As a quick heads-up, the Disruptive Analysis report on Mobile Broadband Computing is (finally!) published this week. Watch out for more details over the next few days.

Edit: One possibility is that some notebooks/netbooks might ship with embedded 3G modules, but with the OEM only paying its supplier if the mobile broadband is actually activated. Given the push to get more and more mobile broadband users online, I could imagine some of the more strategic suppliers (eg Ericsson or Qualcomm or the GSMA Mobile Broadband consortium) actually subsidising the modems' upfront cost, in the hope of encouraging an "aftermarket" of actual service activation.

Downturn driving an increase in mobile payment defaulters

One of the issues I've raised in the past is the risk of payment defaults on contract mobile bills, especially where device subsidies are considered.

This article, from the UK's mobile trade newsletter, seems to point to the threat becoming real.

It's not immediately obvious whether it's the retailer or the operator that wears this risk in this scenario, and I'd guess it'll vary depending on whether it's an independent retailer or the MNO's branded outlets. There's also all sorts of complexities around commissions and other payments, but the net effect on the overall mobile value chain is similar, if ultimately retailers go bust.

2009 is going to be painful for device vendors

I'm still bemused by the assertions of many people that 2009 will be a banner year for mobile devices. Pointing to the uptake of the iPhone, many observers are imagining a sudden glorious transition of the population to "superphones", especially in the US.

I've seen breathless commentary about the entry of a new "manufacturer" of Android phones, the Australian company Kogan. "Kogan simply designed a device, had it manufactured in China, and loaded Android onto it". Hmm, a small company importing LCD TVs and other electronics "designed" a device? They did interoperability testing against all the HSPA network hardware variants? They designed the antenna? Given their own price went up by Aus$100 over initial expectations because of currency movements, who'd want to guess their margins a year out?

Well, one thing's for sure, they announced it the same week that Nokia said that the global handset market is falling off a cliff.

It's tempting to say "Oh, well, it's still a billion+ devices a year, I'm sure new entrants can make money".

Same deal with all the new cool MID (mobile Internet devices) coming onto the market with shiny Intel Atom or TI OMAP or Qualcomm Snapdragon chipsets. Surely everyone wants a portable web device?

But think through the other ramifications:

• Nokia & Samsung will presumably take the opportunity to lower prices, benefit from scale economies, gain market share and squeeze/kill the less fortunate. Ditto the larger notebook vendors.
• Consumers will sign up for longer contracts as operators try to extend upgrade cycles
• Consumers buying unlocked phones are going to think very carefully before parting with their hard-earned cash (or they hard-crunched credit)
• Enterprise buyers will defer upgrades and replacements of anything. Especially if they expect to fire 20% of their employees next year. And where they do buy stuff, they'll know that they can get great deals out of existing suppliers who have friendly and trusted salespeople desperate to keep their jobs.
• Suppliers are going to want cash upfront, especially from startups.
• Distributors and retailers will want to cut risk and costs. Putting large marketing budgets towards "cool new stuff" from "cool new companies" will be less likely.
• Nobody is going to want to tie up capital in large inventories of anything - components, finished devices etc.
• Various companies in the value chain will go bust, leaving holes in supply chains, distribution channels.
• Any operator giving a subsidy for anything will be doing doubly-diligent credit checks.
• It's anyones guess what happens to currency movements. Bigger companies can hedge better than smaller ones. (OK, unless they're investment banks, it seems....)
• Any capacity-crunched networks are likely to stay crunched for a bit longer, unless a CTO physically forces the chequebook out of the CFO's hands.

Sorry to sound like a doom-monger on this, but really, I think some of the unbridled enthusiasm around high-end smartphones, MIDs, network deployments like LTE and broadband-enabled notebooks and netbooks is going to come down to earth with hard bump.

Frankly, I hope I am wrong on this. It doesn't do my business any good either - not many companies tend to spend money on pessimistic advice. And there will certainly be bright spots - Apple, for instance, as long as iPhone revenues offset any weakness in iPods, and its operators don't start playing hardball in negotiations. Nokia's new N97 (and its scale and reach in low-end devices) should help it weather the storm better than most.

Overall, I'd rather start 2009 with the glass half-empty, and then hope to get a top-up. Too many people are going for half-full, without spotting the cracks.

LTE+WiMAX dual-mode is inevitable

There's plenty of continued debate about the supposed battle between "LTE vs WiMAX".

I suspect the winner will be "both".

There's an interesting comment from Clearwire about this here . And I'm hearing about dual-mode LTE/WiMAX chips and devices.

In fact, I'm forecasting that by the start of next decade, there will be more dual-mode modems and modules sold, than standalone WiMAX ones.

Truphone on iPod Touch.... cool, but...

Truphone has announced that it's now supporting the iPod Touch as a platform for its VoIP client. Andy Abramson's got an analysis of his view of the impact here.

It seems cool (although Fring has also been on the platform for a while), but I'm wondering who it's aimed at. The pitch seems to be around kids & college students. But most of them don't actually use voice these days - just SMS. A few use mobile IM, but that's definitely a minority sport in comparison, and likely to stay that way for the foreseeable future.

I'm not sure how many Touch's have shipped so far - I certainly don't see that many around in London on the Tube, but I guess it may have had more traction in the US. And I'm curious about user experience - what happens when you get an inbound call: is there a loud ringtone or vibrate? What about if you're listening to music at the time? (Can the Touch handle multi-tasking of the music player & background apps?)

So, I'm a bit skeptical about all this, as my 2005 predictions of WiFi-only VoIP devices have turned out to be over-optimistic. I was expecting to see lots of single-mode VoWLAN devices start to replace DECT and other cordless phones. But even with the advent of Skype-integrated WiFi handsets, there's been little traction, despite some decent brands like Netgear getting involved. Various DECT phones can now hook into Skype or SIP VoIP services via terminal adapters, but that's not exactly set the world on fire either.

Having VoIP as a secondary application on an iPod or a personal media player or a handheld navigation device is all very well, but I'm just not convinced that many people will want to use it, when they've got a mobile phone in their other pocket, with their main address book & SMS. As Andy points out, various VoIP applications have been usable on Nokia tablets, Sony PSP and other devices for some time. They don't appear to have made a huge impact, though.

Yes, the VoIP/iPod combination is probably quite convenient for people wanting to make international or long-distance VoIP calls away from their PC, if they haven't got an unlocked dual-mode smartphone.

Also, it's possible that in the US there are still kids & students who actually speak to each other on the phone rather than text, so maybe I'm looking at this through Euro-centric eyes.

Actually, I still think the most important non-handset platform for 'mobile' VoIP is the laptop - I often see people in airports or hotel lobbies with headset attached to their PC, and it's certainly my own main use case for VoWLAN. I often do conference calls using Skype-over-WiFi from my notebook, as it means I can take notes into a Word document and look at a website or slide deck simultaneously.

So, where's the Truphone client for Windows?

Rant: I am not a blogger

A quick rant:

I am getting a sudden increase in email, phone calls and other inbound traffic which is based on the presumption I'm a blogger. Lots of stuff about SEO (ugh), "driving traffic", offers to write posts on my blog, offers to pay me to write posts, people trying to talk me into writing posts about their companies and so on. I'm not interested in "stories", I'm not interested in your web buttons, I'm not interested in having my posts syndicated on sites not frequented by my clients & contributors. And I'm certainly not interested in unsolicited press releases that Executive A from Company B is speaking at Conference Z.

So let me set the record straight: I am not a blogger.

I'm an industry analyst & consultant who happens to write a blog. My company is called Disruptive Analysis, not Disruptive Wireless.

I am no more a blogger than a politician, or a vendor's head of product marketing, or a TV journalist that happens to use a blog to reach out to potential customers / voters / viewers / whomever.

This blog is a tool, like the phone or email. I'm not an "emailer" or a "phoner". There is no advertising. It's a means to an end, not an end in itself. If it ceased to generate business for me, I'd stop writing it tomorrow without a second thought. I'm not interested in some nebulous and fluffy "blogging community".

The blog exists to generate interest in my published reports, consulting service, workshops and speaking engagements. Its secondary role is through the comments, which have often valuable insights. And the third role is for awareness - it's useful to me when people I meet have read my stuff & recognise my name.

I do not mind receiving (relevant) press releases. But read first, to be sure it really is relevant and not tangential to what I research. And then ask me if it's OK to add me to your list.

The sole exception to this is for those (few) large vendor companies that weirdly have better-resourced and more responsive "blogger relations" teams than those for analyst relations. In those cases, I'm happy to masquerade temporarily as a blogger, if you get me better access to the company than an AR team that doesn't recognise independent analysts.

Rant over. Apologies if it changed your view of who I am & what I do - but that's how it is.

Government remote access to data on PCs (and phones?)

Only the other day, I mentioned that the European Union's interventions in areas of technology should be restricted to consumer and competition issues, as it patently doesn't understand the subtleties of computing and communications.

The Register has a great example of European inadequacies and worrying authoritarianism. State authorities installing trojans on peoples' PCs to enable remote searches. I presume that the same philosophy would be applied to smartphones as well.

Luckily, the concept fails on so many practical and technical levels, we probably don't need to get too worked up about it just yet - although continued vigilance against creeping State invasion of data privacy is pretty important.

Some obvious flaws in the concept:

• How this software is installed on PCs in the first place
• PC security software
• Separate hardware firewalls (eg in corporate networks - I can just imagine them being reprogrammed to allow external agents to peer inside PCs on the LAN)
• Threat of these trojans being subverted by other malicious users
• How this would work with roaming users - would the government have the right to snoop on visiting Chinese users' PCs? Or would your PC's data continue to be visible when you were outside Europe?

According to El Reg, it is the Germans who are most keen on this approach.

Of course, here in the UK, if the government wants to know what's on your PC or BlackBerry, (for example if you're an opposition MP receiving embarassing leaks), it's much easier just to take a leaf out of Robert Mugabe's book and arrest them and physically seize their computers and phones.

The mobile industry buzzword of 2009 will be......

OFFLOAD

This year has been all about mobile broadband revenue and traffic growth. Dongles, iPhones, embedded PCs, Android, consumer BlackBerries, Nokia E/N series.

But there is a mismatch. While operator data revenues might have risen 50% or 100%, 3G traffic has gone up by 500% or 1000%.

Until now this has, largely, been absorbing existing 3G/HSDPA capacity that has been lying dormant up since original deployment. Clearly, this has been perceived as beneficial - generating at least some revenue from data is better than nothing, and there are also signs of additional upside in using mobile broadband as a retention tool.

But the storm clouds are gathering, in my view. Not everywhere - some operators, and some parts of their networks, are more exposed than others. In the US, traffic is being driven more by the iPhone and other "superphones", while in Europe it's consumer user of 3G dongles. Given variations in population density, cellsite locations (and planning process), spectrum allocations, speed of backhaul upgrade & numerous other factors, it's certainly unlikely that the whole industry will grind to a congested halt.

But while some networks will be more robust than others, that doesn't mask a simple fact - the macrocell capacity of 3G - or even WiMAX or LTE - is not unlimited. While it can be tweaked and optimised, with more spectrum and MIMO and improved coding and other tricks, the laws of physics start to intervene.

Put simply, I reckon that the theoretical, mid-term, aggregate capacity of all operators' macrocell mobile broadband in a given urban location is in the range of 1-3Gbit/s per square kilometre. In other words, all the mobile capacity in that area equates to a single fibre used for current-generation metro ethernet.

Yes, that's quite a lot of traffic. But it would get absorbed very quickly if used for real "heavy lifting" applications like corporate data, HD TV, mass use of P2P and so on. The growing availability of HSPA and WiMAX devices with good browsers and big screens represents an ideal breeding ground for the next "viral" application after social networking.

It's not just the radio network that's a future bottleneck either. It's also the backhaul transport, the core & gateway elements like SGSN and GGSN, any ancillaries like DNS servers and so on. The usual steady onward march of mobile technology generations is impressive: HSPA+, LTE, SAE etc - but it's not quite up to scaling at growth rates more generally expected of fixed-line ISPs.

The only answer I can see is this is offload. Take the traffic off the macro network, and off the existing backhaul and core as far and as fast as possible.

There are various solutions to this:

• Femtocells - these are the most visible heros of the offload strategy, but I'm not convinced they'll ride in for the rescue quite quickly enough. There's also not enough emphasis on local breakout onto the Internet - the mobile industry still wants to funnel everything through the femto gateway & GGSN to retain control.
• WiFi and dual-mode devices are due a resurgence - both in homes/offices and in public locations. There's a lot out there already that can be exploited: hence AT&T's acquisition of Wayport
• Flattened IP cores, bypassing the SGSN. Ericsson and Nokia-Siemens Networks have already been deploying these for certain carriers.
• Optimised backhaul - there are various strategies here, including shunting all the Internet-destined traffic onto higher-bandwidth / lower-QoS / lower-cost connections, keeping voice and other priority traffic separate.
• Smarter and ultimately software-defined radios that can choose less-congested frequencies or technologies, or operate in shared spectrum like white spaces.
• Content delivery networks (CDNs) can also spare the operator core network the pain of dealing with some of the real high-volume traffic - although these don't yet delivery rich media like video direct to the base station. As we move towards IP-based RANs, that should also improve.

Of course, all these are very network-centric approaches. My expectation is that device, OS and application vendors will also take matters into their own hands, and develop their own offload approaches. There will be a rise of smarter connection managers and APIs, that will allow the apps to pick the appropriate bearer and adjust their traffic profile to suit it. They'll monitor congestion, latency and packet loss. They'll actively look for their own offload channels, especially via WiFi.

The bottom line - 2009 will be about "offload" from a network viewpoint, and "connection optimisation" from an app/handset viewpoint. Much of the time the strategies will be aligned, but there will also be some conflicts.

I also refer to the "capacity crunch" issue in the new December 2008 Disruptive Analysis research report on Mobile Broadband Computing. For details see here.

Inside-out deployment of LTE using femtocells

There's been a lot said and written recently about the concept of rolling out LTE in homes or hotspots first with femtocells, rather than deploying a full macro network.

I've been calling this an "inside-out network" approach.

On the face of it, I can see a lot of positives - it potentially reduces the overall capex requirement needed for network rollout, and solves a lot of issues about indoor coverage for markets where LTE is most likely to be deployed in the 2.6GHz band.

But I'm a bit wary about some of the assumptions being made. Particularly comments like "In 2013, 60% of mobile data usage will be indoors".

Maybe. Maybe not. It's a brave person who'll pre-judge what applications will be used, on what devices, in what contexts, five years out. A year or so ago, nobody was expecting the use of Google Maps on handsets to be one of the prime drivers of macrocellular 3G traffic. Although I'm perennially skeptical, maybe someone will have finally worked out a way to get people to consume mobile TV. Nokia's been talking up the idea of a sort of augmented-reality overlay, superimposing extra information on a view of the "real world". Maybe we'll all have Bluetooth head-up displays, showing streamed video adverts on what we'd normally see as blank walls.

Are operators going to be happy about possibly being held hostage to future application innovation? Someone comes up with a great revenue-earning new service - but it's used outdoors, so it can't be deployed on an inside-out network.

And in any case.... assuming that a lot of that mobile data use is indeed indoors, what % will be on devices that also have WiFi in them? PCs, iPhone, most high-end smartphones (Blackberry Storm excluded, obviously...). Over 90%, perhaps 99% of that indoor data could be offloaded to WiFi.

And I certainly don't believe all the femto hype about substituting for WiFi, especially in markets with 4-5 competing LTE operators and no national roaming, so you'd need an array of separate operator-specific femtos. Yes, there might be the odd single-person household or combined family-plan home that could work for, but they'll be the exceptions, not the rule. And you'd definitely need to support all operators in public hotspots.

Then there's backhaul. Putting an LTE femto on a 2Mbit/s ADSL line isn't going to be tenable, especially if it's from a third-party ISP which decides to throttle IPsec traffic at busy periods, as one example in Europe apparently does. You'd need high-end cable or VDSL or fibre to do justice to LTE. And outside Japan, I don't see much ubiquitous nationwide FTTH any time soon, given the economic outlook.

Last of all, there's the voice issue to consider. The current crop of early femto deployments from Sprint and Starhub tend to have heavily voice-centric homezone-type components to their business model. And yet, the question of LTE handset availability pivots on deciding what the LTE voice service looks like. Clearly, it needs to be some sort of VoIP - but what, exactly?

Overall, despite the attractions of the inside-out model, I'm not yet convinced it's truly the answer to LTE. I'm reminded of the words of a Nokia radio networks guy I talked to at 3GSM about 3 years ago, asking about femtos and picos. He said (in a gruff Finnish accent):

"Outside-in, always wins"

Mobile broadband business models: free dongles as retention tools for voice contracts

The comment from a reader called Thomas on this post of mine tallies with other anecdotes I'd heard and seen.

Some operators in the UK are now heavily discounting 3G USB dongles and monthly contracts - or after rebates, actually giving them away to existing voice/phone customers. In other words, they're using them as customer retention tools to reduce churn. Buy one contract, get one free.

He reports on Vodafone giving him a free HSUPA dongle, and discounted £7.50 / month connectivity, offset with a £75 bill credit. I also regularly see adverts in the window of my local 3 UK shop offering half-price dongles to phone customers, and I guess some hard negotiation could yield some sort of extra rebate as well.

My view is that not only are these type of deals commoditising mobile broadband pricing still further, they make some of the other business models look really inflexible and old. I think that the "traditional" 12/18/24 month standalone monthly contract for mobile broadband will become a minority option - whether it's for a dongle or an embedded-3G PC.

At the moment, I estimate that these traditional post-paid monthly billing models account for about 80% of all mobile broadband subscriptions. But by the end of 2010, that will have fallen to 50%. And further out beyond that, I expect to see various new options, like 3rd-party sponsored "free mobile broadband", to reduce the monthly-bill segment to below 20% of users by 2014.

Anyone who is working on basic "per month" revenue models for their mobile broadband services needs to rethink them. The term "subscriber" will swiftly become meaningless, as most 3G users won't have classical subscriptions for their PC connectivity.

My new Disruptive Analysis report, Mobile Broadband Computing, has full forecasts for these different business models, broken out by 3G vs. WiMAX, and for dongles, embedded notebooks and MIDs. It is published this week. Please email information AT disruptive-analysis DOT com for more details.

EU intervention in mobile - a double-edged sword

The European Commission's involvement in the mobile industry, through the commissioner Viviane Reding, seems to be really bipolar.

On the one hand, it introduces consumer-centric legislation on competition which is broadly positive. Termination and roaming fees are in many cases egregiously high, and ordinary competition largely fails to bring them down to realistic levels. This is because despite retail-level choice for consumers, there is an effective monopoly by your service provider on interconnecting calls/messages to a given number.

And it's not like the industry isn't given enough warnings, so the recent moves to cap intra-European SMS and data roaming at €0.11 per message and €1.00 per MB can't come soon enough. In fact, there's probably a good argument for dropping another zero or two from the data roaming threshold, but it's a good start at least.

(Actually, the whole notion of "roaming" access for data is ludicrous - why is the 95%+ of Internet-destined 3G data traffic backhauled all the way via your home network anyway, rather than broken out onto the Internet locally in the visited country for pennies?).

So that's the good side of the European Commission. Competition, free trade, international tariffs and so on. It has also gone a long way to ensure that Internet connectivity is a basic right of citizens.

The downside comes when it tries to intervene in actual technology decisions or attempts to harmonise laws and regulatory regimes in a heavy-handed fashion. The recent "Telecoms Package" included many onerous, and in some cases frankly authoritarian, demands. Luckily the EU Council of Telecom Ministers has thrown out some of the more ridiculous aspects, including the suggestion of an EU-wide super-regulator and centralised spectrum policies.

While the original GSM Directive which mandated both technology and frequency choice has indeed, in hindsight, been a major success, the EC needs to recognise that the world has moved on. In particular, it misses the fundamental move from a vertically-integrated and voice-centric telecoms industry, to one which is layered, data/Internet-driven and intimately entwined with IT and entertainment industries, and increasingly various others as well.

Now, attempts to impose external legal requirements on particular layers of technology has a huge potential for introducing extra cost, delay or outright market failure. We have already seen pointless and wasteful intervention in the market for Mobile TV, where the insistence on DVB-H was completely in contradiction to the spectrum policy moves towards "technology neutrality" for wireless access.

The latest efforts by the commission to meddle in the market have been around supposed harmonisation of spectrum policy. In theory, that's a laudable aim which could help scale economies for suppliers, but in reality each European market is very different in terms of market structure, technology preferences, customer psychology and national government stance on key issues. The notion of an unaccountable Brussels-based authority that could veto specific national ideas is completely anathema to most observers.

Some of the thinking around "net neutrality" seems pretty woolly as well, especially given the likely emergence of innovative business models in some of the most competitive markets. There's nothing wrong with non-neutral models if people are easily able to switch providers. That said, legislation on openness and transparency about non-neutrality would be welcome, which is a very important distinction.

In my view the whole argument about the necessity of EU legislation to protect the relevance of the overall "European telecoms industry" in a global context misses the point. Why should accidental geographical contiguity of 27 countries determine information technology policy anyway? Why shouldn't Romania be able to adopt the spectrum policies of China if it chooses? Why should a country with high population density and lots of fibre have the same mobile vs. broadcast frequency allocations as one with sparse population? Why should a future libertarian government in the UK be forced to apply the same data-retention laws as those in France or elsewhere?

In my view, the European Commission and Viviane Reding should generally stick to issues impacting consumer protection and competition. And it needs to be especially wary of consultants that make huge sums through trying to steer EU-wide policy towards specific technologies or applications.

And I'm sorry Ajit, but I reckon that Reding's latest hobby-horse is another guarantee of failure "We must make sure that Web 3.0 is made and used in Europe". Frankly, that's the scariest and most megalomaniac statement I've heard from a bureaucrat in a long time (well, about technology at least), and an almost certain guarantee that nothing of the sort will occur. The only "main step that Europe has to take to respond to the next wave of the Information Revolution" is to get out of the way, and leave innovation to the innovators.

iPhone available with a year's prepaid connectivity on O2

I saw an advert in one of the Sunday newspapers today from O2.

It is selling the 3G iPhone with a prepaid SIM for £350 (about US$540) for the 8GB version, with the price including a year's data access via 3G and WiFi (excluding roaming or voice calls). After 12 months, an extension is possible at an extra £10 per month.

Interestingly, this needs a dedicated SIM card (presumably to stop people swapping the flatrate SIM into other devices), and the service excludes the availability of visual voicemail. Roaming data in the EU is £3 per MB, and elsewhere at £6.

Full details are here .

Although very conspicuously, there's no link from the line "Unlimited text and minutes are subject to an excessive usage policy. Terms apply" to a web page detailing exactly what the policy and terms actually are. Which is slightly ominous, given all the other aspects have a "View More details" link.

Mobile broadband PCs with embedded 3G - pricing comparisons

Interesting to see that Dell in the US has announced the availability of Mini 9 netbooks with optional embedded 3G.

The optional extra cost is an interesting one though - $125. Of which $120 is refundable through AT&T if you take out a data plan starting at $60/month for 24 months. (The base price of the PC is $349 plus other options and taxes).


Makes the UK plan from Vodafone look pretty good value in comparison, at £25 / £30 (for 1GB or 3GB per month respectively) for 24 months - plus you get the embedded-3G PC for free.


Although it's still better value just to buy the PC and add a separate 3G dongle....

As a side note, the UK Dell site has an advertising banner from Vodafone which offers a free 30-day trial and half-priced optional internal modem. It says "Select the option to include the half price mobile broadband module with your notebook". Initially, all the laptop configuration pages I checked out on the site, didn't give a mobile broadband option, full-price or otherwise. Then I found one which suggested the option would cost £50, but it was unclear whether this was the half-price or the full-price amount. And then when I selected it, it told me "Errors: The selection - Wireless Label (Dell Wireless Cards)- Core 2 Duo is incompatible with Wireless Networking ". Yes, this embedded module approach is so much easier than using a dongle.....

Will "iPhone" be used as general slang for "smartphone"?

Patrick Smith (whose new blog SMS is the New Black has got a plethora of thought-provoking posts) has written about an interesting phenomenon: the use of the term iPhone as a generic word instead of "smartphone".

It makes a lot of sense to me - I don't really hear "normal" people ever talking about smartphones. They certainly don't care about technical distinction like open operating systems. Frankly, the term "smartphone" is pretty geeky, and almost guaranteed to turn off a sizeable part of the potential market.

No doubt that Apple's lawyers and branding mavens will hate this as much as their peers at Nokia, RIM and others. But I can certainly imagine it happening, especially in Europe where technical jargonese often tends to be viewed as deeply uncool.

Nokia gets HSUPA.... blurring the featurephone/smartphone divide

Thanks to the anonymous commenter on this earlier post of mine, who draws attention to the new 6260 Slide, which is due for release in early 2009 at around €299 unlocked.

The interesting thing is that this is technically a featurephone, as it's based on Nokia's proprietary S40 platform rather than its open smartphone S60/Symbian OS. Although with a 5MP camera, 320x480 screen, GPS and maps, WiFi and presumably a full-spec browser, it's really a smartphone in all but name and "native" openness.

It's devices like this that really blur the line between smart and non-smart. The iPhone has already shown that full multi-tasking and background applications aren't really necessary if the device is fast enough. And this phone should be capable of running some pretty decent apps in the browser, Flash Lite or Java.

Sure, something like the similar (but more expensive) N85 has Symbian if you really want to download complex native software, but in the absence of a Nokia equivalent of the AppStore, I'd guess that most customers will go for the better radio and screen of the 6260.

The new phone's full spec is here.

When is UMA not UMA? Part 2

I mentioned last week that I'd been confused by T-Mobile US, which was using "UMA" as its network name for inbound roamers to the US, irrespective of whether they had WiFi in their phones.

Since then, I've also met a couple of (generally knowledgeable) industry folk who are starting to use "UMA" as a generic term for any dual-mode WiFi/cellular solution. I even heard it used in the context of enterprise-centric solutions.

I suspect that this is purely a US thing, as T-Mobile's Hotspot@Home is probably the highest-profile dual-mode service in the market at present, and is often compared against the Sprint Airave femtocell service.

Other non-carrier dual-mode solution providers (Cisco, Divitas, fring, Truphone et al), should perhaps start deploying some marketing firepower to correct this misapprehension.

Assorted interesting tidbits & observations

I liked the Nokia presentation at the Open Mobile Summit, which talked about using aggregated data from embedded sensors in phones. They're doing one experiment that uses GPS from 10,000 handsets to show traffic delays in realtime, and they also talked about possibilities of using motion sensors as seismometers to track earthquakes, or temperature sensors to watch the pattern of influenza epidemics. Cool stuff - and which could yield new Telco 2.0-style revenue streams from Government rather than end-users.


I went to the enormous new Westfield shopping centre in West London yesterday. I was surprised at how poor indoor wireless coverage way, given that it's a state-of-the-art facility that I would have assumed had a state-of-the-art distributed antennas or other coverage solutions. Both O2 and T-Mobile were very spotty, especially for 3G.

There's a fascinating comment at MobileBurn about the possibility of Nokia starting its own MVNO in Japan, as a way of driving uptake of its handsets without relying on the existing incumbent operators. If this is true, it also makes me wonder whether it would ever try something similar in its other under-strength major market, the US.

There's a good post on the uneasy mix of VoIP and LTE at 3G4G Wireless . This issue is something I identified a year ago with my VoIPo3G report - what happens to voice telephony when we move to an all-IP network? The easy option is to just use 2G/3G circuit connections in parallel - although that means having two radios working simultaneously, which could impact battery life. The other options include

• using a UMA-like approach to tunnelling "circuit voice over IP"
• using IMS as a VoIP platform - albeit without having a standardised IMS VoIP application defined at the moment, so probably having to use a "standard" NGN VoIP SIP server instead
• using NGN VoIP without IMS, which would need a lot of work on both handset and core network, possibly proprietary
• using proprietary VoIP solutions like Skype or fring, with lots of work needed in interoperability, numbering etc
• assume everyone with an LTE device will also have a normal cellphone, and forget out the problem entirely.

BT's recently-acquired web telephone company Ribbit has just announced its "Bring Your Own Network" strategy, along with its developer platform. Along with some femtocells and the Vodafone Facebook SMS app from a couple of months ago, this represents the first signs of incumbent operators selling their own-brand services over other operators' access. I'm waiting to see BT or Vodafone or H3G or Verizon applications running on iPhones and T-Mobile G1's....

My local branch of Carphone Warehouse was today advertising a promotion along the lines of "Buy a Nokia XXXX handset and get a free Asus eeePC netbook". (Sorry, can't remember which Nokia it was, or the contract details).

Thoughts on white space spectrum

One of the panels I moderated yesterday at the Open Mobile Summit was focused on US regulatory trends around open access, focusing on this year's 700MHz auctions, and also recent moves to free up spare spectrum in what are known as "white spaces". One of the speakers was from the FCC, so I got a pretty definitive view on what's going on and why.


For those people not familiar with the US White Space phenomenon, I thought I'd give a quick round-up of what it's all about:


- In the US, there are many areas that have spare (unused) channels among the TV broadcast spectrum. Because of the regional nature of the US TV industry, there's a geographic patchwork of "white space" frequencies that could be used .
- Some of these channels are already used by wireless microphones, eg at conferences or sporting events
- There is a strong push by some organisations to exploit the spare spectrum, especially by Internet players like Google and Microsoft, for purposes like mobile broadband, or perhaps a wide-area equivalent to unlicenced WiFi
- There has been push-back against the concept by incumbent network operators (particularly those like T-Mobile that worry about interference), and special interest groups like microphone users (a constituency notably championed by Dolly Parton!)
- The FCC has been broadly supportive of the concept, on the basis that "wasted" spectrum is undesirable, although so is interference. It has tested a variety of prototype devices from assorted manufacturers, which have demonstrated that avoidance of conflict with other users of those bands is possible, albeit with mixed initial results
- After lots of testing and lobbying, the FCC has essentially now given a green light to the general principle of white space utilisation, with a lot of caveats about using a combination of geolocation and databases of used channels, plus device-based monitoring, to avoid interference with TV broadcasts or wireless microphones
- there are various proposed rules that will limit how (eg fixed vs mobile, different power levels) and where (eg not around microphone-laden sports venues or theatre districts like Broadway), the spectrum might be used.

Various companies have already professed huge enthusiasm for the move, hailing it as a new era in WiFi-type business models.

My take?

Well, yes, sort of. At the risk of sounding like a broken record, my initial opinion is that utilising white spaces in a meaningful way is "a great idea in principle, but not as easy as it looks in practice".

There is clearly going to be a lot of necessary work first - not the least of which is going from several proprietary radio types to something which is at least roughly standardised. In particular, the location look-up / sensing approach will need a lot of work, especially for fully-mobile devices. (It should be easier for fixed devices which can be registered / activated centrally). The location accuracy won't need to be as good as GPS for emergency E-911, though.

At the moment, it's not even clear what the radio candidates are, of who is promoting them. It would be incredibly unusual to see just a single united approach, so we'll probably be in something of a battle to get to market. It will presumably also be necessary to ensure that white space devices don't interfere with each other, as well as with TV and microphone signals - which could be a challenge if there are two or more radio technologies involved.

I'd expect the main initial beneficiaries of white space to be people living in rural parts of the US - there are large areas without 3G or WiMAX coverage, or decent fixed broadband. Next may be inclusion of white space capability in large devices like laptops (Dell has already made positive noises). But given all the variables involved, I wouldn't expect to see massmarket urban users touting white-space handsets any time soon.

On a side note, I reckon this trend towards sharing little-used spectrum will become increasingly important on a more general basis in the next few years. It sort of fits with the moves by Ofcom in the UK to get access to swathes of frequencies used by the Ministry of Defence, Civil Aviation Authority and the like. To use a specific example - some bands are mostly used for maritime radar, such as the coastguards, pointing out to sea. In theory, that spectrum should be re-usable for commercial broadband for users who are inland.

A lot of this also fits in with general moves towards software-defined or "agile" radio technology, which is still at very early stages of maturity. But given the likely congestion of established mobile bands in coming years, it's good to see moves like White Spaces as smart ways to squeeze more from a limited resource.

Every time I see the Android pitch, I like it less and less

I've seen various pitches from Google about mobile. In particular, I've seen several Android presentations over the last year.

Each one looks less convincing than the last. I've just been watching Rich Miner speaking at the Open Mobile Summit, and although the developer story looks fairly well-articulated, I just think that some of the wider back-story about mobile looks tired, and the assumptions and world-view seem too simplisitic.

One slide seemed to suggest that hardware cost as a % of handset bill-of-materials is falling, making the software cost more important as a way of driving down overall costs. Really? That was the prevailing thinking four years ago, but since then we've entered a world of QWERTY keypads, 480x800 touchscreens, 16GB of memory, 8MP cameras and multiple radios.

Another slide trotted out the usual tired array of irrelevant statistics about 3bn mobile users vs 1bn PCs, and the stereotypical myth about people in developing markets only accessing the Internet on a phone.

It's possible that Google really does know how the industry works (Google Maps on mobile is fantastic, after all), but for some reason has not updated its messaging, and tries to paint too primitive a picture for reasons best known to its communications department.

Having played with the T-Mobile G1 a bit, and canvassed opinion from a few knowledgeable users, it seems to be what I'd class as a 7-out-10 device. Not bad, but nothing like the leap forward of the iPhone. A bit clunky, and although the network speed was impressive on HSUPA, I felt the user experience was quite frustrating and counter-intuitive. And certainly not what you'd call a sexy device - sitting in a bar playing with it a few days after launch, there certainly wasn't anyone coming over and going "Oh wow, is that the new Google phone? Can I see it".

It will also be interesting to see how it fares for T-Mo and other operators in terms of support costs, because of the branding and lack of direct consumer support from Google. One theme coming out of this conference has been the worry among US market players that they will end up wearing the costs of supporting users, when they download random applications to their phones and they don't work. (Or even if the built-in functions are poorly performing).

Yesterday, an AT&T representative said that they'd not experienced people calling their customer support hotlines about iPhone software questions - because it was clear to users that the software (and AppStore) was Apple's. But Rich Miner essentially took the opposite stance, and said that any problems with Android phones or user experience fall to the carrier or OEM to fix.

It will be interesting to see the relative costs - AT&T subsidy on iPhone, vs T-Mobile support costs on the G1.

GSMA trying to force adoption of NFC in phones

The other day, I wrote a post about the need for some form of forum representing end-users of mobile phones, which could define true requirements for handset manufacturers . I contrasted this with the current, highly-biased requirements-setting bodies, whose demands are derived from the desires of the mobile operators, rather than the actual preferences and best interests of real customers.

The GSMA has kindly illustrated my point for me, pronouncing its views on the "need" for handset manufacturers to hurry up with putting NFC into phones - based on a model which would see the SIM card playing a pivotal role.

As far as I can see, the handset-buying public neither needs nor wants NFC. Ignore the inevitable sponsored survey results in the press releases, which are clearly designed to prove a point rather than be dispassionate analyses of real requirements. NFC is a mildly interesting but fairly unimportant innovation, beloved only by large system integrators and the type of blinkered "mobile convergence-ist" who likes to spout nonsense about the phone absorbing the function of your wallet. Most of the NFC applications are "solutions looking for problems", especially the ones around mobile payments.

If the GSMA really wanted to help the manufacturers by "potentially boosting sales at a time when forecasts of device sales are looking significantly down" it would have told them to stop wasting time and money on things like NFC, and instead make sure they prioritise put decent web browsers into handsets, or GPS, or memory card slots, or xenon flashes for the cameras.

Carnival of the Mobilists at Mippin

Some good stuff this week on the Carnival, plus a big thank-you to the author for the kind words about this blog. I really liked Andrew Grill's post on mobile advertising.

Actually, I have to confess I didn't realise what Mippin actually was - basically an easy way to reformat sites like blogs to work better on handsets. Now I've checked it out, I may use it myself.

Question: When is UMA not UMA?

Answer: when T-Mobile uses the word "UMA" as its network ID for all roaming customers, instead of "T-Mobile US".

No idea why this happens - initially on an unlocked Nokia E71 with a T-Mobile SIM (I thought it maybe had a "hidden" UMA stack and auto-logged on to the SFO Airport network, until I switched off the WiFi). Then I got the same tag on my non-WiFi SonyEricsson, and realised the answer must be simpler.

I'm pretty sure it's always just said "T-Mobile US" when I've been here in the past.

Next week in SF - Open Mobile Summit & Telecom Council

I'm going to be in the Bay Area next week for a couple of events and various client meetings.

I'd exhort anyone who's interested in the whole "openness" scene to consider attending the Open Mobile Summit   on Weds/Thurs 19th and 20th.

I'm chairing the track on the first day that's examining the implications of "open" for existing mobile operators, with speakers & panellists from some notable organisations like the FCC, AT&T, BT, TeliaSonera, Orange and NextWave, as well as well-known individuals like David Isen and Chris Sacca. A parallel track looks at the implications for upstarts & challengers like Skype and Truphone & the Kindle guys at Amazon. 

The event's also got other luminaries from Google Android, Nokia, Intel, Motorola, Qualcomm, Accel, RIM and various others. 

Should be awesome, and I'll try and blog during it if I get a chance.

If you can't make that, I'm also one of four speakers at the Telecom Council lunch on the Tuesday 18th. Again, I'll be pontificating on openness in mobile.

Lastly, I've got a few hours spare on Tuesday 18th before and after that event. If you're in the Bay Area and want to set up a last-minute briefing let me know via [FIRSTNAME.LASTNAME   AT disruptive-analysis.com ]  I'm particularly interested in companies involved in mobile broadband (devices & services), femtocells and enterprise UC. And if you've got any urgent  requirements for analyst research or consultancy on these areas, so much the better.  

The need for end-user forums to start specifiying handsets

There are already a number of organisations that capture operators' requirements for handsets and feed them back to the OEMs. The OMTP is probably the most obvious, along with the OMA and some of the activities of the GSMA and CDG and WiMAX Forum. Standards groups like 3GPP also are clearly important in defining the standards for "UE" (user equipment) behaviour.

These groups do sterling work in a lot of areas - from making sensible decisions about standard screen sizes & power connectors, through to defining APIs for browsers, and certification mechanisms for radios. They put out reams of documentation stating that manufacturers MUST do this, or SHALL do that, or OPTIONALLY MAY do the other.

But there's something missing.

As far as I know, there are no consumer advocacy groups defining what the end user wants to get from their phones, and how they expect them to behave. There's no group setting desirable specifications that "average" people want, such as "It SHALL be possible to delete useless apps like videotelephony from the homescreen", or "There MUST be a highly-visible indicator of monthly data usage, configurable in X, Y & Z fashion"

Particularly as handset subsidies fall - or handsets become cheap enough for normal people to buy "vanilla" - it shouldn't be just the mobile operators that get to define features & behaviour. Yes, they might be the handset producers' main direct customers, but it's about time that the people paying at the end of the value chain started to throw their weight around.

The only reason that people have to "put up with" hobbled Bluetooth, annoying operator-branded UIs, locked-down operating systems and so on is because they aren't organised enough to try to change it. Complaining on web forums doesn't cut it. But if a delegation from a "Phone Users' Forum" representing 100 million people turned up in Helsinki or Seoul with a list of demands, I suspect they'd get a good hearing. (Although probably not in Cupertino, California....).

There is already precedent for this in the enterprise world. Organisations like the EVUA represent powerful groups of telecom and IT-using multinationals, that collectively exert leverage on their technology suppliers.

Perhaps the starting point for mobile handsets is also in the enterprise space. Although the volumes are lower, there is a greater bias towards smartphones and "vanilla" devices. There are various organisations like systems integrators and unified communications vendors that also have a lot of pull here. Collectively, the business community needs to make sure that the phone manufacturers continue to enable "over the top" applications in the best way possible. An influential group articulating & defining that requirement in concrete terms would be hugely beneficial.

A particular point of future contention might be around the IMS RCS client, which if pre-installed on handsets could become the "default" IM and presence application, hooking them into operator IMS cores. This clearly needs to be delete-able from devices used as part of enterprise-controlled unified communications solutions. There need to be variants of handsets available that are optimised for server/PBX-anchored corporate alternatives.

Over time, there may be parallel consumer advocacy initiatives, but I suspect they be more difficult to organise, especially internationally. But I can see great benefit in mandatory requirements for easy sideloading / backup of content and contacts, for example, and better information about costs and balances. The best way for end users to avoid future "lock in" by their operators is to specify workarounds to the handset manufacturers upfront. Make them remember who the real customers are.

The bottom line is that the billion or so handset purchasers need to play the system better. Otherwise, the system will continue to play them.

Mobile Broadband - the cracks are starting to show

Over the last 2 weeks, I've encountered a steady stream of indicators to suggest that the mobile broadband market, and especially 3G USB dongles, might be starting to overheat.

The problem is that operator and retailer marketing departments have suddenly found a new source of revenue, and are engaging in a massive land-grab to sign up new customers, roll out new propositions, and offset declining voice revenues as we go into recession.

But I'm starting to hear some creaks. I initially missed this article, about an increase in the return rate for 3G dongles which had been sold "over-enthusiastically". I've noticed a distinct uptick in marketing hype, especially around headline speeds for HSDPA. I've also noticed a distinct lack of warnings about the fact that coverage is patchy, especially indoors.

I suspect what's happening is that the market has shifted from people like me, who already have ADSL and use their mobile service as an adjunct when they're out (and typically out in areas with good coverage like airports or cafes with big windows). The customers coming onboard now are those who want to use the products at home - perhaps instead of ADSL/cable, and perhaps in buildings with a couple of walls between their room and the outside world. Unsurprisingly this makes for unhappy results with 3G at 2.1GHz.

I've also noticed slowing speeds on 3's network in central London - although whether that's because of capacity limitations or throttling of certain apps (I really notice it on streamed audio) is hard to tell.

But above all, the alarm bells have started to ring with the rate at which network capacity is being apparently used up. It was only about 6 months ago that I heard a presentation refer to an operator that had "fired up a second carrier", ie had filled up the initial 5MHz chunk of their 3G spectrum, and had started using another. Then I spoke to a large vendor a few weeks back, who said they knew of a few places where people were on their 3rd carrier.  And then another last week who mentioned somewhere they had heard about a 4th carrier - which is apparently outside the original UMTS specifications.

So given that most operators only have 10MHz or 15MHz paired allocations for 3G, it's no surprise to see the panicked interest in femtocells, 900MHz refarming, 2.6GHz auctions and various approaches to adding or splitting cells. LTE offers the chance of some more headroom too - but only if you've got convenient 10MHz or 20MHz chunks of decent spectrum spare. As if. The problem is that none of these is going to be ready for prime-time in most markets in 2009. And anyway, the backhual is still another bottleneck for many operators.

I'm predicting that next year is going to see some fairly ugly examples of mobile broadband "capacity crunch". And given that capex budgets are going to be a bit thin, I reckon we'll see quite a few more dissatisfied customers. The problem is that the €10 flatrate genie is out of the bottle, and it's going to be very hard to step up the prices now.

Another open question is how this will start to impact the useability of all those nice new smartphones & broswer/widget frameworks that are starting to get traction as well.....

Last point to raise, that I'll tackle in another post soon..... what does all this mean for upcoming spectrum auctions in 2.6GHz next year? Lots of capacity, but auctions at exactly the wrong time (hmm, shades of 2001 again?). Will the auction-tuned game theorists controlling the bidding remember that 2.6GHz and bricks/concrete don't always make a happy combination, I wonder?

Mobile data revenues more than messaging?

There's plenty of commentary today about Vodafone's half-year results out today. However, given the currency fluctuations that have been going on, you need to be a professor of accountancy to back out some of the more granular underlying trends. Nevertheless, there's plenty of evidence of both the economy and tightening competition and regulation squeezing some of the historic cash cows like roaming.

On the upside, there's plenty of healthy growth in European mobile broadband, which is taking the edge off the declines in voice revenues somewhat.

One little data point I do find a bit strange is tucked away on page 14 of the results release. Apparently, the EMAPA region (Eastern Europe, Africa, Middle East & Pacific)  has seen particularly spectacular increases in mobile data revenues, more than doubling compared to the same period in 2007. But what's really odd is that for Africa & Middle East, data revenues now exceed messaging , by £127m to £107m. That compares with £48m vs £88m last year. Given that number is mostly made up of Egypt, South Africa [Vodacom] and India, I guess that indicates a huge ramp-up of 3G modems at Vodacoms, possibly aided by mobile payments.

The release says "Strong growth in data revenue was driven by the increased penetration of mobile PC connectivity devices, as the absence of fixed line alternatives makes mobile data a more attractive offering. Data revenue also benefited from the launch of South Africa’s first high speed uplink packet access (‘HSUPA’) and the launch of Vodafone M-Pesa/Vodafone Money Transfer service in Tanzania"

I don't think I've seen any other operators reporting 3G dongle revenues > SMS, so that's definitely a first if true.  Vodacom reports its detailed group financial report next Monday, so maybe we'll get some deeper insight.

Carnival of the Mobilists 149

Thanks to Mark Hooft at Ubiquitous Thoughts for hosting this week's Carnival, and highlighting a couple of my posts. Some other really good reference to others' blog posts as well, like Mjelly's post on the impact of the recession on mobile. Check it out here.

PC vs mobile Internet access - where's the asymptote?

Clearly, access to the Internet from mobile devices is increasingly rapidly, from smartphones, lower-end featurephones and (depending on your definition) notebooks/netbooks.

As I've written about many times before, there's a huge debate about whether the future of the web lies in the mobile domain, or whether it will remain PC-centric.

Usually, the example that gets held up by the mobile fraternity is Japan, which clearly has been in the vanguard of wireless Internet adoption since the early days of i-Mode. The interesting thing to see is that in fact, most people in Japan use BOTH mobile and PC access. About 4% even use TV or game consoles as well.

The chart on Page 3 of this document from the Japanese Ministry of Communications is probably the most clear representation I've seen. I'll be interested to see what the end-2008 numbers look like, as there will undoubtedly be more mobile phone users, but also more people with netbooks and other mobile-broadband enabled notebooks. That said, the 3G dongle phenomenon doesn't appear to have been as broadly popular in Japan as elsewhere.

Of course, Japan could arguably be treated as an exception rather than an example -it is *different* to most markets in many ways. The operators control handset architecture & capabilities much more tightly, it was a very early adopter of 3G, and everyone is on poast-paid data plans with easy access to data. On the other hand, PC Internet is much more attractive as well, with ultra-fast and cheap DSL, and rapidly rising penetration of fibre to the home.

Looking at the stats, I wonder if the asymptote, for a country with affluent population and fantastic mobile and fixed networks, looks something like 15/70/15 . That is, 15% are mobile-only Internet users, 15% are PC-only, and 70% use both.

As I said, I'm hesitant to hold up Japan as an inevitable end-point for other country, because much of the technology market is pre-defined by "historical accidents" like government policy, specific operator strategies, or early PC/mobile uptake shaping users' behaviour.

ARPU is a lousy metric for tracking mobile broadband

The limitations of ARPU as a metric for mobile phones are fairly well-understood - people have multiple accounts, it's skewed by certain things like BlackBerries and business users, and has a hard time dealing with pre-bundled services. Yet observers and investors continue to use it, despite these caveats, because they now have a "feel" for how to interpret it against this complex background - and also because there isn't really something else convenient to use. Particularly when you separate out between prepaid and postpaid, ARPU can still convey something of use, if you're sufficiently cynical about it.

Unfortunately, I think this complexity is going to get worse with mobile broadband, rather than better. At least with phones, people tend to use them regularly, whether with prepay or postpay subscriptions. And phones tend to be either actively used for making calls/SMS, or not used at all. Nobody uses a mobile handset exclusively "offline".

In the early days of mobile broadband, it was much easier - there was usually a fixed monthly subscription, plus any extra megabytes and roaming charges. No really onerous accounting judgements to make.

Now, things are changing - various models of prepaid mobile broadband are popping up, either with traditional "top-ups", or pre-packaged. I saw an offer yesterday for a HSDPA dongle with 12GB of data pre-bundled, usable at any point up to 12 months from purchase. Also, there are various "free notebook" offers that massively hike the apparent ARPU by bundling in the implicit consumer finance of the computer with the data access charge.

That's a bit like buying a car with a built-in cellular tracking system, and charging the whole monthly finance charge against ARPU.

Going forward, the picture is going to get even more complex. There will be more "connectivity built-in" devices like the Amazon Kindle. If I (say) pay $300 for a mobile-enabled games console, with zero monthly fees, how does that count in ARPU calculations? Something based around the wholesale fee charged by the MNO to the device manufacturer? But what happens if it's offset against (say) using the device for the operator's TV and advertising channel?

What happens with instances of free or sponsored use? Let's say the Tunisian Tourist authority offers to sponsor 10MB of roaming data as long as a visitor checks out their restaurant guide & completes a survey form? What about free broadband given to delegates at a conference? How does that fit into either the "revenue" or "number of users" calculation?

What about bundling? Fixed+mobile broadband, with a DSL modem plus integral 3G dongle so I can take my broadband with me when I go out? That should keep the accountants busy.

If I get an embedded-3G notebook with a 2-month "free trial", am I counted as a user? And what happens if I sign up to iPass, which has various MVNO deals in a number of countries - am I one mobile broadband user, or six? And what happens where I offload traffic to a femtocell, or WiFi - am I double-counted, and how is the revenue split recognised?

And all this is before we get to any of the really clever Telco 2.0 style business models. If an MNO sees clusters of active 3G notebook users around certain locations, and sells the data to an advertising agency planning a campaign for Dell or Toshiba, does that count as mobile broadband "revenue"?

None of this lends itself to a nice, convenient headline metric like ARPU unfortunately. But that's the nature of convergence, so we have to ditch it before it obscures the reality of the market.

I'd suggest that a more useful metric might be the number of active individual users, or active devices, coupled with some quantifier of service revenue split between end-user and wholesale/3rd-party. Hardware sale/subsidy/financing should be stripped out and reported separately.

And there needs to be absolute clarity on definitions and assumptions - I see too many charts which give bland numbers of "mobile broadband subscribers" without defining what a "subscription" actually is.

And if you're an investor - now is the time to press CFOs on this. There isn't much legacy data on this market, so now is the ideal time to pick a useful metric to start with, rather than a superficial but increasingly meaningless one.

Work and personal profiles on a single mobile phone

Various companies in the mobile business have pitched me recently with the idea of separate personal and work "profiles" or "personalities" on mobile phones. The Nokia E71 has a way to toggle back and forth between these personae, and various enterprise unified communications (UC) suites are also talking up the idea.

In theory, there are some benefits:

- ability for user to personalise the phone with ringtones, wallpaper etc, but also have it "locked down" for business use
- ability for enterprise to distinguish between work- and personal-related calling, perhaps for internal accounting or benefit-taxation reasons
- supposedly helping the employee to manage their "work-life balance"
- helping the enterprise "own" their worker's business mobile number, so that if they leave employment it can be rescinded.

All these are worth goals, but largely fail to take into account typical user behaviour:

- The phone that the employee wants is probably different to the phone the employer wants to supply (5MP camera, looks cool, available in pink or green etc)
- Phones (and services) are cheap. There is an increasing likelihood that employees with company phones or email device will also have a personal mobile
- Possible legal liabilities of holding personal data on a business mobile device, especially if backed up in a corporate UC server. In the UK, for example, this is definitel a grey area when it comes to the Data Protection Act.
- Increasingly, the end user will want to do more on their mobile than just phone calls, and separating work & personal profiles makes it especially difficult to manage things like web browsing, personal email, data plan costs etc
- Privacy concerns of the individual, especially regarding deeply-personal call, SMS etc made from a "work" device. What is the legal/contractual status of using the device to call a recruitment consultant, for instance? Is it grounds for dismissal?

Overall, my view is that the dual-personality concept is vastly overstated in importance for this use case. However, the concept can be modified to help blend "work mobile" and "work fixed" numbers on the same device, which is much more useful.

Do you want HSPA modules in device, if you're aggressive about LTE?

I just had a call with the always-interesting Actix, which provides planning and optimisation tools for 3G networks. They're enthusiastic about LTE, commenting on its ability to lower the costs of mobile broadband provision compared to alternatives like HSPA+.

Certainly, some operators appear to agree - T-Mobile is cited as being an advocate of leapfrogging HSPA+ and going for early LTE deployment. Others like AT&T and Telstra are more enthusiastic about HSPA+ .

(Yes, officially it's called HSPA Evolved, but everyone I speak to outside Ericsson thinks that HSPA+ is a snappier term).

For the LTE enthusiasts, one of the prime attractions is lower cost-per-MB for data compared to HSPA, especially important given the price and use curves of 3G in notebooks and smartphones. There's even a suggestion that they might switch off UMTS 3G networks before turning off voice-optimised 2G GSM.

If that's really the case, I would have thought that having a long-lasting legacy of devices only using the older, more expensive network technology would be undesirable - you wouldn't be able to transition their traffic to the more efficient LTE until much later. Now phones have a natural lifecycle of a year or two, especially at the high end. But notebooks endure much longer.

If you're rolling out LTE as early as you can, do you really want a load of HSPA-embedded notebooks and other devices lingering around on your older network for 4-5 years?

[I suppose you could just give these people an extra LTE dongle nearer the time, although that may mean having 2 SIMs in the notebook operational simultaneously if they don't remove the embedded one].

Partner conference - Femtocells USA

A lot of the recent buzz around femtos has headed West across the Atlantic in recent months.

Sprint is continuining to roll out Airave, Verizon has been talking about launching its own 2G CDMA femto, and even AT&T has come out and said it's quite keen on the possibilities. And T-Mobile, while better-known for its dual-mode UMA service based on WiFi, has in fact been one of the pioneers in deploying femtos' bigger brothers, picocells.

Against that backdrop, the upcoming Avren conference in Dallas next month should be pretty lively. Details are here - tell 'em I sent ya.

Redefining "Telco Grade" for the Mobile Internet era

I've been at a couple of conferences this week - covering Telco 2.0 business models and femtocells. At each one, an "old school" telecom speaker has made reference to "Telco Grade" infrastructure and capabilities, either in terms of security models or reliable voice services.


This isn't new - I always hear representatives of incumbent operators or traditional infrastructure vendors talking about "Five 9's" and QoS. Voice quality scores (MOS) get quite a few mentions too.


It made me start wondering whether these concepts, which are heavily rooted in a world where telecoms was all about voice sessions and dialtone, are in need of a serious update.


In particular, any future metrics for reliability and quality need to cast their net much wider. Marek Pawlowski over at the Mobile User Experience has a coruscating post about his nightmare experiences in buying a T-Mobile Android G1 phone, for example. The fact that ordinary circuit calls might work quite well is clearly almost irrelevant to his view of either the "quality" of the operator or the phone itself.

Similarly, if we're talking about IP services like VoIP, IM or even full IMS over a mobile connection, the fact that one link of a long chain has managed QoS (and even differentiated billing) is totally irrelevant if 30% of the time I'm outside decent 3G coverage. That's the gating factor on quality, not what's going on in the middle of the NGN - you might as well just use the Internet.

It's like posting a letter from London to New York, and getting a QoS guarantee that the central London to Heathrow Airport leg of its journey is 99.999% certain to take 47.2 minutes. But there's a 30% chance the flight might get delayed until tomorrow, and another 17% chance the letter will get sent to Boston by mistake. And a 75% chance the guy at the Post Office sold you the wrong stamp in the first place.

It's also critical to think about metrics other than basic coverage and availability when it comes to "mobile Internet grade". Latency, jitter, packet loss and speed of connection setup can be critical for many applications. And it's amazing that many of the so-called "telco grade" mobile broadband networks have distinctly non-Internet grade DNS lookup capabilities. Loading a MySpace page with all its plug-ins might mean resolving 70+ IP addresses, and again, if you do it over mobile the critical factor isn't the operator's core network.

The bottom line is that vendors and operators continuing to use the "carrier grade" and QoS arguments are often missing the point, or are being disingenuous. Why over-invest in "quality" in one part of the network, when basic radio coverage, IP network internals, or customer service are the "weakest links" on your customers' overall perception of service reliability and performance?

Swisscom - the worst offender in public WiFi?

I'm still staggered that the paid-WiFi hotspot industry has managed to squander a solid four year lead, to become virtually a running joke in provision of mobility access. Awful user experience, shocking pricing and limited roaming are still the norm.

Yes, there are some good experiences to be had with premium-grade providers like iPass or Boingo. But for the one-off user, it's only a matter of time before cellular data roaming kills the business dead.

One of those hammering nails into its coffin is undoubtedly Swisscom. I always wince when I find out that they're the provider of what's euphemistically called a "service" at a conference venue.

Today I was at the Femtocell Deployment conference at the Hilton Amsterdam. The irony of a 27 Euro daily fee for WiFi access at an event talking about cheap & effective 3G indoor coverage was palpable. Of course, I could have opted for the "basic" access of 256kbit/s and no VoIP, for a bargain 22 Euros. In the end, I used neither, and picked up email headers via cellular roaming at a (comparably) sane 2 Euros per MB - itself a travesty, but that's another story.

But the real kicker was this - during a discussion last night, a certain mobile/WiFi operator was named as the villain by a separate conference organiser, this time wanting to charge $54000 (yes, you read that right) for providing delegate access at a proposed future event.

For that money, he could probably persuade one of the carriers to install a full HSPA macrocell in the building, with full-spec backhaul, and give everyone a free dongle & SIM card.

Don't get me wrong, I really like using WiFi, and will generally prefer it to mobile broadband if it's available on a free/cheap basis. The latency is better, the speed is better and I generally get better battery life than with a 3G dongle. But it just amazes me that the industry has such a suicidal attitude to pricing.

Conference organisers: choose your venues carefully. Or just put a few 3G routers or dongle-docks around the room, with some cheap prepaid 3G data plans, and bypass the "house" WiFi altogether. Frankly, I'm surprised the people who rent out lighting & conference equipment aren't supplying these already.

Mobile broadband - O2 highlights dissatisfaction and returns management

Last week, O2 announced a refresh of its mobile broadband offerings - an area in which it has been pretty weak in the UK so far. As part of its press release, it also yielded some findings from a consumer survey it had commissioned.


In particular, it highlighted the concept of "mis-selling" of mobile broadband - for example, customers' irritation at extra heavy costs for roaming that they hadn't been made aware of at the time of purchase, or what happens if promises of 3G coverage don't match reality.


Disabling "default" roaming privileges, forcing consumers to call customer service and get a lecture on the pricing realities obviously isn't as good as just lowering the cost to sensible levels, but should at least mitigate the risk of serious bill-shock.


More interesting to me is the idea of a 50-day money-back "happiness guarantee", which will apparently "allow customers, who purchased directly from O2, to return the device within 50 days of purchase with no termination fees being charged and any costs for purchasing the device being refunded".

It will be interesting to see whether this forces the competition into reciprocating. And even more interesting to see how this plays into the USB dongle vs. Embedded 3G notebook debate. It's one thing returning a dongle after a month - it won't need much "refurbishment" before it can be re-used. It's another thing entirely dealing with a notebook with an internal 3G module - returns management could be a nightmare for both customer and operators.

Just think about the practicalities for a minute - you buy an embedded-3G notebook. You configure it, download various new applications, start using it, set the passwords, register your copy of MS Office, start using the mobile broadband. Then maybe it doesn't work properly immediately. Or maybe it works OK in the study where you unboxed it, but not in the bedroom when you move it the next day. Or a week later, your network operator tweaks their local cell tower's set-up, or you move house, or you suddenly get congestion in your cell as 10 neighbours sign up.

So you go back to the shop. You complain about poor coverage. Maybe call customer services. You have a dilemma - you need to find another notebook, another operator, or both. If it's an "unlocked" 3G notebook, bought from an independent retailer, you can probably just try another network's SIM in the same device, without too much extra hassle besides sorting the cancellation and new sign-up. But if you've got a subsidised or locked notebook - perhaps bought from the MNO's own retail outlets - you have a problem. You would have to cancel the contract, download your data temporaily onto a USB stick or old PC (if you have one), delete your data & apps from the hard drive, and rebox it before returning it. Then the store would have to reformat the hard drive, check inside the PC to make sure you haven't added/changed anything (memory etc), reinstall all the bundled applications, test it..... and then find someone who will buy a "shop-soiled" laptop. And deal with all the back-office things like cancelling the MS Office licence.

Bottom line - I'd be very surprised to see anyone - including O2 for that matter - offering an equivalent return guarantee for embedded-3G notebooks. (If I'm wrong on this and someone's already doing such a policy, please let me know).

No WiFi in the Vodafone BlackBerry Storm - a serious mistake?

In the past, I've not been convinced by some of the conspiracy theories around some operators' alleged rabid diapproval of WiFi. Yes, Verizon has been a bit of an outlier on this, and some parts of Asia (China, Japan, Korea) have not been especially enthusiastic dual-mode WiFi/cellular.

My general impression is that when it comes to smartphones, most of the more progressive operators are now relatively open-minded about WiFi. It works OK, battery performance has improved, it's not generally used for canibalising applications - most VoWLAN is usually incremental not substitutive - and it's seen as an important utility by a fair proportion of users and developers. Not only that, but WiFi is starting to be valuable in offloading data traffic from the macrocellular network.

The situation with featurephones has been a bit different - WiFi has been seen as less valuable, software complexities reduce its utility, and the customer base is perhaps more likely to make expensive technical support calls about relatively trivial problems that smartphone-using peers could fix themselves.

The iPhone has demonstrated how appreciated it is. And almost all other top-end smartphones now have WiFi - Nokias, various Windows devices, the Android G1, quite a few of the recent Samsung Symbian phones and so on. So does the BlackBerry Bold.

Which makes its exclusion from the Verizon / Vodafone BlackBerry Storm all the more mystifying - and, to be honest, it seems rather cynical. Yes, I know it's got EVDO and HSPA in it, so it's a fairly complex RF platform, but that's not a sufficient excuse to hobble what could otherwise be legitimately seen as a proper iPhone peer.

Given that Vodafone has quite a few other WiFi-enabled devices in its portfolio, I guess the finger of blame must point at Verizon on this, which has a lot of "prior" when it comes to hobbling handset features. A real shame, in my view.

Mobile search doesn't exist - a good proof point

For the last two years, I've been saying that "there's no such thing as mobile search". I've completely disagreed with the rhetoric that "people don't want to search on mobile, they want to find things".

Instead, I believe that broadly, people just want to use Google on their phones. If I want to find an address, or a restaurant, or cheat in a pub quiz, there's a perfectly easy way to do it, without some newfangled search tool that guesses my context wrong.

So Symbian CTO David Wood's write-up of a Google presentation last week made me feel validated:

"The surprising thing is that the spider graph for mobile-originated search enquiries had a very similar general shape to that for search enquiries from fixed devices. In other words, people seem to want to search for the same sorts of things - in the same proportion of times - regardless of whether they are using fixed devices or mobile ones."

Unlike David, I'm not surprised.