Telcos = Google advert affiliates?

I'm at the IMS conference in Barcelona today. My bulletproof vest has already protected me from a couple of shots from large vendors. It's going to be an interesting day.

Most interestingly, the first presentation was from Google - specifically the YouTube rep for Southern Europe. She started with saying "this isn't about IMS", and carried on by showing a slide of an Alcatel Lucent video (hosted on YouTube.... the subtext being fairly obvious). It covered a broad set of cool innovations within YouTube, as well as the advertising / monetisation model. Basically, it pitched YouTube as a hugely valuable and important service platform, with numerous usage cases and features, as well as a plethora of revenue opportunities.

My question, which she deflected, was why she was at the event at all. What relevance did it have, either to IMS, or to the audience. Then I realised that the audience held a good number of services/apps people from - not necessarily IMS fundamentalists, but just looking for ways of increasing revenues at manageable risk levels.

My take is that Google is offering a (smallish) olive branch to operators at the moment - basically a revenue-share on advertising, where operators help them extend the reach of their existing properties. This is behind Android, and I expect the subliminal messaging behind the presentation was to convince operators that carrying (and indeed promoting) YouTube is in their own interest.

Certainly more so than whingeing to the European Commission about imposing a tax on Google's cleverness, which is the current strategy.

There's a word that Google uses to describe partners with which it shares ad revenue, when they help improve its reach.

That word is "affiliate".

Edit: The more I think about it, the more I realise how clever this approach actually is. It is basically saying to the operators "You can become a *happy* pipe, by sharing in our success". Push more and better quality YouTube, or Gmail, or Google Maps..... and it generates more advertising, and therefore more rev-share for the operators. And it doesn't require lots of complex core network capex with uncertain returns.

And it doesn't have to be "dumb" - adding smartness to the network adds even more value, enabling Google to better target its adverts (more rev-share!) and provide higher-quality user experiences (HD YouTube = more expensive ads = more rev-share!), and reducing churn means more users/viewers (more rev-share!).

There are many, many companies making money as Google affiliates - so why shouldn't telcos just be seen as a special case?

[The above is me playing Devil's Advocate, by the way. I'm not expecting many operators to find this a particularly palatable world-view - even though it may ultimately make a lot more sense].

Mobile websites

I am getting increasingly annoyed with mobile versions of websites. I really wish there was a way of configuring handset browsers (I'm using Safari on iPhone here) to permanently toggle to the full PC version of sites, if necessary by spoofing the ID it gives the server.

Many of my favourite sites have useless 'light' mobile versions and even if there's a link or switch to toggle the mobile version to 'off' it seems to revert the next time rather than using cookies or whatever to remember my preference.

Personally I want my Internet experience when mobile to be as close as possible to that I get on my desktop. It may not be a universal view but I cannot believe I'm alone in being irritated by site designers assuming I want a lousy half-cut version of their pages.

Yes, I can see the reason to "mobilise" websites very slightly - perhaps some tweaks because it is expecting touch rather than mouse, or browsers on devices with no "end of page" key. But complete redesigns are an anachronism, based on an expectation of 2G networks, limited browsers and small screens, in a time when we're moving to large screens, enough processor speed and zoom/pinch/drag tools to zoom around a full page.

I strongly suspect that much of this nonsense is down to "digital media agencies" and their ilk, insisting that their clients double their web spending to create mobile-specific sites. If I was running a larger site, I'd certainly make sure I got three or four separate opinions before running down this particular blind alley.

Conference season! Telco 2.0, Open Mobile and others. Discounts available....

Looks like April and May will be Powerpoint central for me.... numerous events that I've been asked to speak at or help develop.

Unfortunately I won't be at next week's eComm in San Francisco, but if you're interested in the most cutting edge innovations around the whole "next communications" arena, from cloud voice to social networks to augmented reality, it will be there.

The big event of the month is undoubtedly the Telco 2.0 9th Brainstorm here in London. I'm going to be running sessions on Mobile Broadband Network Economics, and telcos' ability to gain additional revenue streams via New Devices.

In May I'll be at the Open Mobile Summit from May 26-27, chairing the stream on "Open Mobile Networks".

For any of these, if you tell 'em I sent you, there should be a discount available on delegate fees. Email me for details if you need them.

In addition, I'm also at upcoming events on
- Telecom Cloud Services
- IMS (I'll be wearing my bulletproof vest)
- LTE
- Indoor Wireless

Get in touch if you'd like to arrange a meeting to discuss Disruptive Analysis consultancy services and published research at any of these - information AT disruptive-analysis DOT com.

Oh, and lastly a I'm speaking at next week in a personal capacity, although it's organised by a name many in the mobile industry will find familiar, David Wood, former SVP at Symbian. The UK Humanity+ event is all about ways we may change both our species and our planet over the coming decades, from cognitive enhancement to anti-ageing to the "singularity". Should be an utterly fascinating day, and if you're in London I'd exhort you to come along.

Mobile social networking doesn't really deal with networks very well

For the last six months or so, I've been feeling that the mobile industry is looking at social networking in the wrong way, but I've been finding it hard to articulate exactly why - it's just been a feeling that something is a bit wrong.

In particular, I've been having a lot of doubts about the million different attempts to bridge between social networks, so you have a single "active phonebook", or "active homescreen" which aggregates email and SMS and Facebook and Twitter and Ovi and Gmail and Skype and Vodafone 360 and Orange On and Apple MobileMe and all the rest.

The usual metaphor is to have an icon or picture of a particular contact, with some form of showing all the various ways to message them, get status updates and so forth. In particular, there's usually an over-riding expectation that somehow the mobile phone address book remains the natural "hub" for all of this, either still resident on the device, or abstracted to the cloud for your supposed benefit.

To me, that doesn't gel. It's yet another way of trying to push "unified communications" rather clunkily onto something it doesn't fit, with a good dose of unfriendly "customer lock-in" as well.

Now I'm not a human interactions or useability expert, but I'd like to think I'm reasonably well-attuned to the ways in which people use both mobile and Internet communications. I can talk about "social value" and easily describe why stupid concepts like SMS-to-the-TV destroy the inherent, implicit value in a particular form of communications.

My thoughts are starting to resolve into a couple of separate areas here:

- Mobile phones - and especially the inbuilt address book - are great for person-to-person communications. But they tend to be lousy for orchestrating groups of people or events.

- The web tends to be good for free-form communications, but only between selected groups. With the exception of email, most web-based comms is within rich but limited "islands" - chat rooms, fan pages, blogs and comments, IM communities, VoIP peers and so forth

- A lot of the value in social networks involves the interaction of individuals with groups. Sending a party invitation to 50 people on Facebook with directions. Messaging your community of blog followers via RSS and so forth.

- Certain forms of communication integrate better than others. Emails have attachments and embedded links and are easy to "cc". Skype video and file-sharing. SMS for ubiquity. But *all are different* and risk losing their individual characteristics if they are blended.

- People like to keep their communities segregated by default. Work contacts, personal contacts, very personal contacts... but they are too lazy to administer that segregation actively. It's much easier just to have silo'd islands of acquaintances and groups, even if they overlap, because you don't have to *actively administer* membership. If you just know all your work contacts are on Skype, then you quickly learn not to use Skype for certain types of messaging - you don't change your status to "feels very hungover this morning".

- The mobile handset address-book metaphor is useless for things like group membership and events, as it's usually too oriented around a number and specific "communications sessions" that it's hoping to enable. This is especially true for IMS-based variants, where the whole underlying premise it creating billable events. Do you expect to be charged to "like" someone else's status, or to RSVP to an event invitation?

- Increasingly, messages are duplicated through different channels for notification purposes. Facebook updates are sent to email. Event reminders are sent by SMS as well. Do you want to de-duplicate your active, aggregated homescreen whenever any of your contacts does anything?

I feel that I'm a bit closer to having a holistic view on how all this should work, but I'm not there yet. It is interesting that some of the most significant growthand behavioural trends (and viral buzz) are in new, completely-isolated islands like BlackBerry BBM, rather than aggregated platforms like 360 or Ovi.

Comments very definitely welcome....

An interesting angle on mobile broadband offload

Since the demise of mobile TV, the word "multicast" has pretty much gone out of the wireless industry. The idea of increasing efficiency of networks, by stopping the same content being transferred multiple times has pretty much dissipated. Yes, there is some discussion of cacheing certain files at various points in the network, but it would still need to be transmitted multiple times over the radio.

Obviously, side-loading between devices is an option, either via Bluetooth or memory card, but it can be a pretty clunky experience, and obviously iPhones don't have card slots anyway. It's also not good for realtime sharing.

The LoKast application from NearVerse looks like it might have some interesting potential. Although the initial use case has been local sharing of music (eg promos at SXSW in Austin), there appears to be a more general option to use it as a way of "offloading" mobile broadband traffic *to other handsets*. I'm pretty convinced that peer-to-peer connectivity among mobile devices is going to be a disruptor, whether it's MiFi-type products or virtual hotspots like Joiku's.

The CEO's phrase "unifying carrier and short-range wireless networks into a holistic, optimized system" in the funding announcement is an interesting comment that is evocative of various forms of cellular/WiFi (or in this case cellular/Bluetooth) hybrids.

Automated local sharing of content has some interesting implications for the UK's new and much-hated Digital Economy Bill too.

The secret social network success: RIM now advertising its BBM messenger direct to consumers

I've been researching the BlackBerry business model quite deeply recently, including a detailed briefing document for Telco 2.0's executive briefing service.

My general view is that the end to end RIM ecosystem tends to get underestimated in potential by operators, for example in terms of the potential for two sided revenue streams. I think that both the App World and BES could be interesting platforms to enable operators to interact with enterprise customers, for example for generating revenue from APIs.

But it is the consumer side of BlackBerry that is still really poorly understood - particularly its growing adoption among youth. My own anecdotal experience in London is that ownership has two separate peaks in age - business users around 40 and consumers about 22, the latter predominantly female.

The sheer number of students with BlackBerries is unexpected to many - there seems to be an assumption that the iPhone would be the device of choice, while in fact RIM has a "secret weapon"

The proprietary BBM messaging service seems to have evolved into a new social network purely by chance - and it has gone unnoticed by most commentators. Yet it has suddenly evolved into a quite exclusive club - pretty much acting as a mobile version to replace MSN, with what seems like viral uptake.

As usual, the social media industry gets hung up on newcomers like FourSquare and obviously Twitter, ignoring what looks like an old-school IM service. The mobile operators assume (wrongly) that people want all their social networks converged and bundled together with the handset phonebook. In fact, it makes perfect sense to have separate (and good) capabilities for Facebook, BBM, email and SMS in the same device.

Yet to my mind, BBM seems to have the most underground "viral" uptake of anything I see in the real world. Yes, I'm in London, which creates its own technology microclimate. But evidence suggests that BBM is also driving BlackBerry sales in places like Indonesia and Venezuela as well.

So it is with great interest that I noticed yesterday some saturation-advertising specifically for BBM on the Tube, on the platforms and escalators. Good to see RIM actually promoting it actively.

For all the hype about apps, it is wrong to underestimate the power of a messaging service or social network in device choice. Most apps are only appealing to individual users. But messaging gets the n-squared factor. Give an average teenager or student a choice between a must-have app.... or missing out on their friends' gossip.

As always, two maxims hold true:
- Divergence is more important than convergence
- Communications is more important than content

A side-issue here is that RIM (unlike Apple, or in the past Symbian) has been directly targeting prepaid users with low-end devices. Given the youth market outside the US tends to be 80%+ prepay, this is a completely open field that other smartphone platforms have abdicated, although Android is catching up now).

The incumbent telcos' attack on YouTube looks like a suicide pact

There is a right way and a wrong way to go about finding new business models for broadband services. Having just published a report jointly with Telco 2.0, I've been spending a lot of time delving beneath the surface of two-sided business models, and the opportunities for operators to make additional revenue from "upstream" companies like media and Internet properties.

Picking a fight with Google about YouTube traffic is categorically the wrong way to go about it.

Yet Deutsche Telekom, France Telecom and Telefonica are all trying to tweak the lion's tail. According to the FT, they're even suggesting that regulators could "supervise a settlement" if they can't persuade the Big G to hand over a slice of its advertising and application revenues.

Google's recent stance with China over censorship doesn't suggest that it is going to be happy playing that sort of game. But what bemuses me most is that the operators seem to be chasing after the wrong target. Google pays for its network connections like anyone else. That's the way the Internet works. It's not like phone calls, where there are originating and terminating ends to a connection. If end users start *uploading* traffic to Google's servers, are the operators going to be happy to pay for the traffic to be terminated in Mountain View?

There certainly are potential revenue-earning opportunities for the large telcos - either from Google or other players (Governments, application developers, other operators, media companies and so on). There are already signs that two-sided models are emerging to serve specific device types, specific customer groups, or "third-party paid" data traffic. But for those type of services to work, the operator needs to add value above and beyond connectivity.

Some form of toll-gate is not a value-add.

Payment mechanisms, authentication, managed security, guaranteed SLAs, device management and numerous other options represent value-adds. Partitioning a broadband connection and giving absolute guarantees of speed, latency, jitter and so forth might qualify. But simply attempting to gain a "free ride" on Google's skillful aggregation of services will not.

My view is that it will be extremely difficult for operators to derive additional monetisation from services that terminate on PCs. Smartphones, TVs and other devices are different - and those are some of the areas where they should be focusing their marketing and executive firepower. It is possible that this is just an opening skirmish before YouTube starts trying to pitch full HD-quality video for living room TV sets, in which case there is definitely a discussion to be had.

But otherwise, it wouldn't surprise me to see Google start to think about charging operators for carrying its content: after all, as DT's CEO says "There is not a single Google service that is not reliant on network service"... which could well be inverted to say "There's not a single broadband user that isn't reliant on Google's service".

It would also be remarkably easy for Google to offer free advertising to a given operator's competitors, less inclined to consider forms of extortion. Of course, in a properly competitive broadband market, there should be no barriers to operators trying whatever strategy they like - as long as there are no unfair attempts to block subscriber churn.

If operators are really going to push for non-neutral Internet connections, are they also prepared to deal with the fallout from non-neutral Internet services as a response.

If you are interested in the new Broadband Business Models report, which identifies a multi-$bn amount of Telco revenue opportunity via much less-confrontational approaches, then more details are here. Or email information AT disruptive-analysis DOT com.

iPad impact on mobile networks likely to be negligible

OK, I'm making myself a hostage to fortune here, but my expectation is that the Apple iPad should be very low on the list of operators' worries when considering mobile broadband traffic patterns.

There's been a lot of speculation that it could cause additional problems above and beyond the iPhone and 3G dongle-equipped PCs, but I'm really unconvinced it's worth other than some cursory monitoring.

Firstly, even the optimists (I'm not one of them) expect the iPad to sell in far smaller numbers than the iPhone.

Secondly, not all of them (or even most of them) are likely to come with 3G modems. They're optional and not even on sale yet.

Thirdly, they are unlikely to be used for many of the "quick hit" on-the-go access to maps, email, Facebook and so forth that are characteristic of iPhones.

Fourth, they are being sold with the benefit of hindsight - and at least nascent offload / traffic management strategies. It wouldn't surprise me if operators adopt some very specific iPad policy and enforcement techniques.

Fifth, a proportion are likely to be used almost exclusively as "stay at home" tablet devices, plus the occasional trip out of WiFi range.

Sixth, most iPad owners are likely to have an iPhone, which will probably be used for applications that need to be "always on" or most frequently-checked and generate much
of the signalling load. For networks like AT&T's it has been the iPhone's constant setting-up and tearing-down of data connections that has been at least as much a problem as the sheer bulk of data downloaded.

Seventh, it lacks a camera, which means that uplink traffic may well be much lower.

The main variable is the potential of the device to be used to consume large amounts of video over the 3G connection. Frankly, in comparison, the downloads of newspapers or a few apps is trivial in data volume.

RIP Guy Kewney

Sad news this morning that UK tech journalist Guy Kewney has passed away. I'd spoken to him, or met him at conferences and press events, on numerous occasions over the last 15 years or so.

He was witty, erudite, intensely knowledgeable and a totally unique character known by pretty much everyone in the UK IT and telecoms industry.

My condolences to his family and friends.

The dangers of over-reliance on simplistic metrics

I wrote yesterday about the decreasing relevance of "$ per GB" as a yardstick for revenues or costs in mobile broadband.

Thinking about it, I reckon it's symptomatic of an industry that tends to live by snappy, marketing-friendly soundbites that obscure underlying complexities.

Simple messages are great for headlines, but can lead to wrong decisions if they become too entrenched.

A classic pair of errors in mobile has been the unthinking over-use of two basic metrics:

- Number of subscribers
- ARPU

Subscriber numbers have been simple to measure - largely because they map nicely to SIM card MSISDNs (a phone number to most of us). While they're easy to count, they don't really give a good view of either the actual or potential base of customers. Some people have multiple SIMs, some are shared, while an increasing % go into machines rather than phones. In fact, the whole terminology has skewed business models towards subscription-based types - while non-subscription models (eg transactional) have been downplayed or totally eschewed.

Almost no service business should rely totally on subscription models. Yes, it's a useful *segment* and trends are useful indicators, but it shouldn't be viewed as a pivotal metric.

Worse still is ARPU. More accurately, it's Average Revenue per Subscription, not Per User. Ironically, if it were used properly, it would be more useful.

The fact that I have a £40 per month phone, plus a £15 per month 3G dongle (from a different operator) makes me a £55 a month mobile user. Describing me as two £27 per month subs on average doesn't really help anyone to understand their business.

ARPU is inherently biased towards operators giving large subsidies, then recouped as "revenue" over the contract. Yes, it's possible to do some maths with (ARPU minus acquisition/retention costs) but there's still often too much focus on the headlines.

I remember that 3UK always used to trumpet its high ARPU. Until it realised that this was simply because it didn't *have* any low-tier packages or prepay, so obviously the average was going to look high. Nowadays it has realised how much money it was leaving on the table, and has targeted those segments aggressively, and is about to reach profitability (finally), largely thanks to *lower* ARPU.

A classic example of ARPU-blindness has been the reticence to focus too heavily on M2M services. "What, an extra 10 million subscribers on $5 per month? What will that do to our figures? What will our investors think?" . "But they're vending machines and remote utility meters. They hardly use the network. We'll make $4 on each in profit margin"......

There have been plenty of suggestions about using Average Margin per Subscriber/User and so forth - and certainly, most operators' internal management teams are rather more sophisticated about financial analysis these days.

But nevertheless, the ghost of ARPU lives on. While it might be largely discredited by those who really care and play with spreadsheets deep in the strategy department, it is still measured and watched by observers - and used as a tool by vendors in their marketing. It hasn't really gone away.

Its influence remains disproportionately pervasive.

Another example is handset shipments, which lumps together a $15 GSM phone on an Asian market stall, with a $5000 Vertu in a Dubai shopping mall. There's still a regular refrain that Apple is irrelevant because it ships tens of millions of devices per year, compared to Nokia's half a billion. Only rarely is it mentioned that Nokia's average selling price is €63 while Apple's is perhaps eight times that figure. Or that Apple and RIM account for a hugely disproportionate % of handset industry margins.

It's like claiming that Honda is more important than Toyota, because it sells 13m vehicles a year against 7m. Let's ignore the fact that 10m of them are motobikes. Or that Giant is in the top 5 vehicle manufacturers. Never heard of them? I'm not surprised, as they make bicycles rather than cars - but hey, they all have wheels, yes?

To sum up - raw, headline numbers rarely tell the whole story. Over-focus on them can actually damage a business, and even where management "understands" this, it's still possible to be subconciously swayed.

As I mentioned yesterday, the next oversimplified metric to hit the headlines is "$ per GB". My recommendation is to take it with a pinch of salt - chasing that figure either in terms of revenue or capex/opex costs is likely to be a mistake.

Remember, the best-value way of transporting data, if you just used $ per GB as a metric, would be to drive a truck full of flash memory from A to B. The latency is pretty lousy, though.

(But if someone would like to pay me at 1 cent per GB, for a network that gets mobile data around the UK at a terabit per sec, please get in touch. I reckon a guy on $20 bike from Giant can easily a petabyte of memory cards....)

Mobile broadband problems - looking beyond the "obvious culprits"

I've written a few times in the past about the "capacity crunch" for mobile broadband, as well as the potential for offloading traffic or policy-managing the network to prioritise certain users or data types.

More recently, I've discussed the role of signalling as an important factor in driving network congestion, especially from smartphones.

But there is a fair amount of uninformed comment about what's causing the problems - it "must" be laptop users downloading HD video or doing P2P filesharing over their 3G dongles, or it "must" be iPhone users using Google Maps and Facebook.

My view is that these over-simplistic analyses are leading to knee-jerk reactions around capacity upgrades, or stringent policy-management and traffic-shaping installations. Many vendors don't want to (or can't) give a fully-detailed picture of what really causes problems for the network and user experience.

It is in many suppliers' interests to market a neat single-cause and single-solution message - "You need to upgrade to LTE to add more capacity"; "You need PCRFs and charging solutions to limit video"; "You need to upgrade your GGSNs to really big routers" and so on.

The truth is rather more complex. Different situations cause different problems, needing different solutions. Smartphone chipsets playing fast-and-loose with radio standards may cause RNCs to get blocked with signalling traffic. Clusters of users at a new college might overload the local cell's backhaul. A faulty or low-capacity DNS server might limit users' speed of accessing websites. And so on.

Or, as many parts of London are experiencing today, a fire at a BT office might knock out half the local exchanges' ADSL and also the leased-line connections to a bunch of cell towers.

Now, in the long run there certainly will be a need to carefully husband the finite amount of radio resources deployed for mobile broadband. My order-of-magnitude estimates suggest that the macrocellular environment (across all operators, with the latest technology) will struggle to exceed a total of maybe 3Gbit/s per square kilometre, even on a 10-year view. So offload to pico / femto / WiFi will certainly be needed.

But in the meantime, I'm moving to a view that Stage 1 for most operators involves getting a better insight into exactly what is going on with their mobile data networks. Who is using what capacity, in which place, with which device, for how long? And exactly what problems are they - or the network - experiencing?

In recent weeks I've spoken to three suppliers of products that try to analyse the "root cause" ofmobile data congestion [Velocent, Compuware and Theta] and I'm starting to hear a consistent story that "there's more than meets the eye" with regard to network pains.

Some of the outputs can be eye-opening. It may be that a lot of customer complaints about poor data speeds can be traced back to a single cell or aggregation box that is mis-configured. It could be that a particular group of devices are experiencing unusually high problem rates, that may be due to a fault in the protocol stack. It might be that viruses (or anti-virus updates) are responsible for problems. Or it might just be that all the iPhone users are using YouTube too much.

One thing is for certain - the yardstick of "Dollars per gigabyte downloaded" is an extremely blunt tool to measure the profitability of mobile broadband, especially when opex costs around support and retention are included in the equation. There's no value in having a blazing-fast and ultra-cheap network, if users end up spending an extra 4 hours on the phone to customer care, complaining that they can't get access because of flaky software.

Note: The new Disruptive Analysis / Telco 2.0 report on Broadband Business Models is now available. Please email information AT disruptive-analysis DOT com for details.

LTE and offload - a few random questions

A quick series of observations:

1) It is highly likely that LTE will have to be provided (at least in part) by femtocells and/or WiFi access points, rather than being solely transmitted via the macro network. This will be for coverage reasons, especially for 2.6GHz, but also because of the limits of capacity which will be quickly reached in some areas.

2) Given rising traffic volumes, there will also be a strong desire to offload bulk IP traffic direct to the Internet close to the edge of the network, rather than backhauling it all through to the operator core & then out again

3) Voice will in some packetised form on LTE, whether it's VoLTE or VoLGA or Skype or CSFB.

So... there will need to be a mechanism to send VoIP to the operator core, but dump bulk web traffic locally. I guess that could be achieved by using separate APNs (or whatever they're called in LTE-speak).

Or, will it need the new "Selective IP Traffic Offload" standard being worked on by 3GPP?

Or, could you use some sort of dual-radio solution in handsets, sending certain traffic over the macro LTE network (or HSPA), while sending low-value data via WiFi / femto?

Separately... presumably this also means than any VoIP that *does* go via an offload path (femto / WiFi) will need to be tunnelled back to the operator core via some sort of VPN.

So potentially we may see some LTE phones using CS-Fallback over a GAN-type tunnel.....

Hopefully, we'll be rid of the Twitter obsession soon

I've been a long-term Twitter skeptic.

I think it's value-negative, and of total irrelevance to anyone outside an unholy alliance of geeks, narcissists (politicians, celebrities etc), marketeers, "media" and their drone-like followers. It's mostly used by lazy journalists and broadcasters, as far as I can see.

I highlighted it as one of my "zeros" in my predictions for 2010.

So, it's edifying to see that the "growth" stats are proving my point for me.

The appearance of incredibly annoying floating Twitter buttons on some websites is a sign of desperation - and is hugely counter-productive, as visual spam of that sort is a great way to alienate people.

About time to swap the silly bird logo for a dodo, methinks.

Extinction beckons.

Network policy management and "corner cases"

I've been speaking to a lot of people about policy management recently, fitting in with the work I'm doing on mobile broadband traffic management, as well as the Business Models aspect of my newly published report on Broadband Access for Telco 2.0.

A lot of what I hear makes sense, at least at a superficial level. Certainly, I can see the argument for using PCRFs to enable innovative tariffing plans, such as offering users higher maximum speeds at different times of day, or using DPI or smarter GGSNs to limit access by children to undesirable sites.

But there's a paradox I see on the horizon. In the past, telcos (fixed and mobile) have been pretty obsessed with corner-cases. "What happens if a user tries to set up a 3-way call while they're switching between cells?", "What happens to calling-line ID when I'm roaming?" and so on. Sometimes this is because of regulatory requirements, sometimes it's because they're worried about the impact on legacy systems not being supported - and sometimes it just seems to be preciousness about some minor complementary service that nobody really cares about.

So what happens with *data* policy management and corner cases? What happens if I'm roaming and the local operator's policy conflicts with my home operator's? Do I get a subset or a superset? The lowest common denominator, or some sort of transparency? Imagine my home operator allows VoIP on its mobile broadband, but limits YouTube viewing to 100MB a month. But the visited network doesn't allow VoIP for its local customers, but also doesn't have the ability to discriminate video traffic - or, perhaps, applies some sort of compression via a proxy. Sure, everything might be backhauled via my home network.... or it might be offloaded locally.

[Side question - what happens to international data roaming traffic on a visited operator that does WiFi offload, provided by a separate managed offload operator?]

In a nutshell, I guess this boils down to "Policy Interoperability". And a need for policy IOT testing, on an ongoing basis. I strongly suspect this won't be as easy an many think.

Whether the "corner case" problems impact the overall use of policy management will probably depend on hard problems around with local regulations and laws, I suspect. But as a customer, will I really be happy with having the most stringent superset of policies applied, if there are multiple operators involved in my providing my connectivity?

Nokia acquisition of Novarra - fragmentation of optimisation?

Very interesting to see Nokia's acquisition of web/video optimisation & transcoding vendor Novarra, which has been quite widely deployed in operators looking to reduce data traffic sent over mobile networks.

The fascinating thing for me is that it's being pitched as a way to optimise web browsing on low-end Series 40 devices - in other words, it's *not* primarily about reduction in outright traffic levels for operators, which are dominated by laptops & top-end smartphones.

The other stand-out is that the acquisition is by *Nokia* and not NSN.

I've been giving a lot of thought recently to various ways to optimise / compress / offload / policy-manage mobile broadband networks, trying to work out a way of reconciling the different options available to operators.

As part of this, I've been looking at the approaches to transcoding and proxying of web traffic - either in centralised boxes from Novarra or peers like ByteMobile and Flash networks - or by specific client/server implementations like RIM's NOC for BlackBerry Internet traffic, or the Opera Mini platform.

My view is that there will be no "one size fits all" approach to traffic management, and that operators will have to be smart about treating different use cases in different ways. This is less about treating traffic differently on a per-application basis, and more about device/business model/customer scenario segmentation.

My current thinking is that laptop traffic will probably be offloaded close to the edge of the network, especially with WiFi, or femtocells once it's easier to use techniques like SIPTO or Direct Tunnel to avoid congesting the mobile core with traffic that is 99.99% destined for the wider Internet.

Smartphone traffic will be part-offloaded, and part-optimised or policy-planned.

And, based on this acquisition, it increasingly looks like featurephone traffic will be optimised at the application level.

In addition, there are likely to be a range of general capacity improvements and efficiency gains in the RAN, backhaul and elsewhere - dealing both with total traffic volumes and signalling load.

More on this topic to come...

Non-user revenue models for broadband - excellent example from Vodafone

One of the major themes I explore in the new Telco 2.0 / Disruptive Analysis report on broadband is that of "non-user revenues", otherwise known as two-sided business models.

The basic concept behind a 2SBM is for an operator (fixed or mobile) to use its network and IT platform to derive revenues directly from end-users, and also from various "upstream" companies like advertisers, governments, content providers, application developers and so on.

The idea is that retail broadband revenues will start to flatten - and must be incremented with new advanced wholesale propositions. Some of these will be evolutions of current telco-to-telco wholesale (roaming, interconnect, MVNOs, dark fibre and so on), while others will evolve sale of broadband capacity to "non-users". The Amazon Kindle is a good example of this - it's Amazon paying for the connectivity for book downloads, not the end user through a separate subscription.

One particular opportunity identified in the report is for governments to pay for broadband services (either outright, or for specific capacity / capabilities) on behalf of their citizens. It might be that data connections are bundled into an e-Healthcare service, or perhaps in the context of Smart Grids.

Or, as Vodafone has illustrated this morning, a government agency like a local council or development authority might choose to sponsor fixed or mobile broadband connections for those beyond the "digital divide". In this example, it's unclear whether Voda is providing fully "open Internet" broadband, or a more restricted service just providing access to educational websites. Either way, it's a perfect example of "non-user revenue streams" and highlights the power of two-sided models to add incremental opportunities to an operator's existing maturing propositions.

This type of sponsored broadband is just one of a class of "new wholesale" approaches to selling access. Telco 2.0 / Disruptive Analysis has developed a unique forecast model which suggests that these types of innovative propositions could ultimately account for over 15% of the total broadband access market value globally.

The full dataset, analysis and modelling methodology is featured in the new Fixed & Mobile Broadband Business Models Report, which is now available for purchase.

To inquire, please contact please contact Disruptive Analysis

New Research Report on Fixed & Mobile Broadband Business Models

Written and published in collaboration with the Telco 2.0 Initiative, Disruptive Analysis' founder and director, Dean Bubley, has produced a new 248-page Strategy Report on the future of operator business models for both mobile and fixed broadband, spanning retail propositions and new, advanced wholesale offers.

The report examines critical issues such as:

- Whether operators can use policy management and deep packet inspection as the basis for new revenue streams from Internet companies
- The prospect of greater government intervention in broadband, through regulation, stimulus investment or major national projects like Smart Grids
- The opportunities from new approaches to selling broadband - tiering, prepaid, 3rd-party paid, capped, bundled with devices etc.
- Differentiated wholesale models for mobile and fibre-based networks, including "comes with data" propositions and advanced roaming.

Complete with comprehensive forecasts spanning retail and wholesale tiers, this report is a unique analysis of Business Model Innovation in broadband, separating the practical from the "wishful thinking".

The report also includes a very detailed "use case" chapter, looking at the opportunities for fixed/cable operators to assist their mobile-industry peers by providing "managed offload" capabilities via WiFi or femtocells.

I'll be highlighting specific themes from the report in coming weeks in future posts.

For more details, contents pages and an extract/summary, please contact Dean Bubley at Disruptive Analysis

Picocells and the return of the DECT guard band - New service in Netherlands

Many people forget that before the advent of femtocells, a similar technology - picocells - has been around since 2001 or earlier. Picos have more capacity, but are considerably more expensive than femtos, and have required more expensive controllers and specialised installation procedures.

While many picos have been deployed by mobile operators for cheap "fill-in" coverage, or used in niche locations like oil rigs, ships or small islands, a more interesting business model was "Low Power GSM", pioneered in the UK with the auction of the 1800MHz DECT guard band four years ago. This enabled multiple new operators to bid for low-cost licences for indoor wireless services, using a thin sliver of unused 2G spectrum - especially enabling low-cost or free indoor private cellular.

I wrote about this here and closely watched the evolution of service launches, although uptake out to be comparatively slow. Cable & Wireless launched a corporate service for clients including Tesco, and Teleware has had some success with its Private Mobile Network. Two years ago, the market status was still limited.

One of the big problems has been for the new "indoor" operators to gain some sort of MVNO or roaming deal with the incumbent "outdoor" service providers, so they can provide a universal mobile coverage service. Perhaps unsurprisingly, the traditional "macro" operators have been unwilling to assist their new indoor-only cut-price competitors.

But something more interesting is occuring in the Netherlands. I wrote about 4 months ago that LPGSM was being enabled on a licence-exempt basis. And one of the companies that is now exploiting it has solved the indoor/outdoor conundrum, as it is *already* an MVNE, operating on Vodafone's Dutch network. Teleena announced its converged service yesterday.

Now obviously this is just GSM - so perhaps not much use for today's 3G smartphone-toting executive who finds that data services are sent over EDGE when in the office. Nevertheless, I'm considerably more positive about this type of approach than enterprise femtocells, which I continue to believe are unlikely to make traction for many years.

How much mobile broadband traffic is outside the user's awareness?

There's a lot of talk about controlling mobile broadband traffic by segmenting customers, or by trying to use tariffing to "modify behaviour".

Some of this makes sense - perhaps offering discounts for certain types of day, or even for using uncongested cells.

But I see a problem, literally "in the background" which may stifle attempts to "make customers use networks more responsibly" by being more careful about which applications they choose to use, or how they consume bandwidth.

I suspect that the amount of data traffic and events that are outside users' conscious control is going to rise inexorably. It will be very difficult to charge users for downloads that did not arise from them specifically clicking on a link, or firing up a particular application.

I'm thinking about:

- Javascript on web pages fetching extra data or applications
- Automated software updates running in the background (eg virus profiles, OS security patches)
- Interrupted downloads resuming while mobile
- Retransmitted data when someone reloads a web page because it hangs
- Repeated downloads of the same content (eg email attachments) because a device doesn't allow "save as", or because the file system is too convoluted to find it anyway
- Push notifications which drive both signalling and media consumption
- Pings and keep-alives between applications and servers
- Tracking data like cookies
- Monitoring of data about device "state" by the operator, OEM or 3rd party
- Encryption overhead
- Firmware updates and patches
- Lack of clear delineation between local applications and cloud-based components

.. and so forth.

I think that factors like these will make any application-based policy and charging very difficult to realise for mobile broadband. Expecting the user to know what their phone or PC is doing on their behalf, in the background is going to be a pretty tough sell. It's not user behaviour, it's device and application behaviour.

Does any operator have liability insurance that covers them for the consequences of throttling virus update downloads?

And should the user be aware of any compression being conducted on their behalf by the network? If I download a 10MB attachment, but it was only 2MB over-the-air, how can I be certain I'm charged for the lesser amount? Or if I'm drip-fed a downloaded video from an operator's buffer, is there extra signalling involved that I'm supposed to pay for?

Later this week, I'm going to be announcing the publication of a report on Mobile and Fixed Broadband Business Models, written on behalf of my associates at Telco 2.0. One of the themes it looks at is the role of policy in helping operators define new operating and revenues models. My view is that it is very important, but some of the theoretical possibilities about charging are overstated, because of complexities like these. If you're interested in getting some more detailed information about the new report, please email information AT disruptive-analysis DOT com.

A quick tip for North American readers....

... if you represent a vendor (or 3rd party agency) and you want to convey relevance and understanding of the global telecom marketplace, you might want to consider putting an international dialling code in your email footers.

It's a small thing, but just putting 123 456 789 reduces your credibility and makes a company look really parochial, compared to +1 123 456 789.

WiFi offload will not always win out over femtocells

There seems to be an undercurrent of skepticism about some of the usage scenarios for femtos - in particular, the notion of why anyone should bother with femto offload, if an increasing set of devices all have WiFi anyway.

The Femto Forum has released a study on femto/WiFi coexistence which highlights some reasons it sees for combined deployment, but I think a couple of additional ideas are also useful.

One important factor is the difference between laptop PCs and smartphones:

- In a 3G-enabled laptop, WiFi is almost always switched on, but 3G is usually only on part of the time (not least because most users will only plug in the dongle when needed)
- In a 3G-enabled smartphone, 3G is almost always switched on, but WiFi is usually only on part of the time

And for both, 3G (or at least data access on the phone) is likely to be switched off when roaming internationally.

This will mean that laptop 3G data offload is probably best done via WiFi, but smartphones may be more femto-centric - especially as smartphones are more likely to have operator-branded services that make it advantageous to keep the traffic on-net. Laptop data is 99.999% straight to and from the web, with almost zero operator value-add, so it makes sense to dump it to the cheapest connection as often as possible.

But even that overlooks yet more layers of subtlety in terms of user behaviour.

I've been using an iPhone 3GS the last few weeks, and the battery life is atrocious. So I've done the usual power-management tricks of turning down screen brightness, turning off GPS, and manually switching off WiFi when I leave my house, only switching it back on when I know I have access to free WiFi elsewhere such as a hotel or certain cafes.

So although it's not hitting the cellular network all the time, and my home WiFi certainly takes quite a lot of the strain, it's certainly not able to offload everywhere where the operator might like, or might have WiFi offload deals with hotspot providers.

My two local branches of Starbucks gives me a real sense of the paradox:

- I know I can get access to the BT Openzone WiFi for free with my Vodafone iPhone contract.... but I've got the WiFi switched off by default, it requires me to do some sort of registration process with my account number (which is at home) and 3G coverage works fine in both cafes, so I don't bother.
- For my 3UK dongle for my laptop, one cafe has good HSPA signal and the other is lousy. In the one which is lousy, I use the WiFi, which I can again get for free with a Starbucks loyalty card (there's no offload deal in place with 3). In the other, I always use the dongle as the WiFi access controller seems to have a 20-second setup time before hitting the splash page, and another 20 seconds before I get authenticated. And if I'm using the 3G, I'll switch off WiFi to save battery.

Now re-imagine these scenarios with a femtocell viewpoint. At home, I'd probably still use WiFi rather than a femto, as I'd expect it to be faster - and some pretty innocuous websites I visit fall foul of Vodafone's over-zealous content filter and get blocked. VoIP provider Fring's website is censored, for example. I can't be bothered to phone up for "adult access" permission, and anyway I'm sure there are other things in the T's and C's about fair usage that I can obviously ignore when I'm on my own WiFi. I obviously never use the 3UK dongle when I'm at home within range of WiFi, as my laptop just connects and authenticates immediately and without extra intervention.

The cafes are different - if there was a Vodafone femto and the iPhone switched onto it, I'd probably notice an improved performance and likely lower power consumption. Same thing with the 3UK dongle in the branch where I currently don't have coverage - I'd probably switch back from the WiFi with its more-cumbersome login process with passwords and splash screens.

But you've probably already spotted the problem - does Starbucks want 4 or 5 femtos in every branch, from different operators? Who would pay for them? The cafes already have "sufficient" connectivity for everyone with WiFi - it's unlikely to want to bear the cost of just making it marginally more convenient for a select group of its customers.

The point here is that the neat idea of a monoculture of WiFi offload everywhere, or 3G offload to femtocells do not fit with the annoying peculiarities of consumer behaviour. People very quickly find the most convenient / cheapest / fastest / best battery-saving strategies for their personal circumstances. It's very difficult for operators wanting to conduct offload to work their way around those optimisations - unless they use either very smart connection-management software, or very brute-force ways of ignoring the subtleties.

One other thing occurs to me: I wonder if it's possible to get the presence of a WiFi SSID to trigger a device to switch on 3G and look for a femto in that location. Or for the presence of a specific femto (on any carrier's network) to trigger a client to power up smartphone WiFi if it's switched off, and use that instead.

The right way to sell mobile broadband....

Just seen at London's Victoria station - a (Sandisk-branded) vending machine selling memory cards, phone acessories... and mobile broadband USB dongles. Shrink-wrapped, no cumbersome sales or registration process, no annoying salesperson trying to upsell you.

Just data connectivity, on a stick.
Like memory, on a stick.

Yes, there's still absolutely a role for contracts, retail stores, expert sales executives and so on. But solely going that route leaves money on the table when someone wants a quick transactional purchase. When I get to Victoria, I want to hail a taxi, not sign up for a cab account. Same thing for if I was dashing to catch a train and needed Internet connection for my trip.

"You can't use my eyeballs for free"

Let's look forward 10 years.

We've all got augmented reality browsers on our handsets, or perhaps our 4G-connected sunglasses. They can overlay all sorts of data and images onto our field of view.

There's a plethora of micropayment systems available, accessible via APIs to any developer with the right tools.

There are open and closed appstores. Any app you can imagine is available for unlocked devices.

Operators are starting to monetise contextual advertising - there are digital posters, sponsorship of content, location-based coupons.

And then there's the sudden backlash.

"You can't use my eyes for free"
"My visual cortex isn't a dumb pipe"
"I spend lots of money on contact lenses & eyetests"
"Let's prioritise certain aspects of our visual input"
"We should charge advertisers for access to our retinas"

Until, finally, the inevitable:

"We've created a deep-photon inspection (DPI) application for your smart AR glasses, which uses new visual-processing chips to recognise low-value-per-wavepacket images. It blocks or degrades incoming advertising traffic, unless the advertisers pay you a fee for guaranteed quality-of-sight (QoS) and delivery"

So there's the challenge for all of you marketeers talking about the future of personalised, contextual advertising, based on data-mining our phones and location and Internet usage. If you reckon you're so good.... well, let's see you pay us a deposit before you beam your messages to us. If it's relevant, informative or entertaining, we'll give you a refund and might even buy your product.

Will MIMO work indoors?

This post is more of a question than an answer.

Many larger buildings (airports, shopping malls etc) have various forms of indoor coverage - active and passive distributed antenna systems (DAS), in particular. These usually involve connecting small base stations - often from multiple network operators - to a network of antennas, splitters and other paraphernalia around the building.

All of which is fine.... until we get to technologies like LTE and some variants of WiMAX and HSPA+, which use MIMO technology. Multiple-in, multiple-out technology uses a number of antennas.

I've recently asked a few people the question "So, how does MIMO work with DAS systems installed historically in large buildings?"

The usual response has been "Errr...... that's a good question. Not sure".

I bounced this one off a DAS vendor this morning (Commscope's Andrew division), and got an answer that it *should* all work with their recently installed systems. Asked about whether older systems, or other vendors' installs will need upgrading got a less-clear answer.

So, a set of questions for anyone who might have looked at this already:

- Do older DAS installations work OK with MIMO?
- Does LTE (or WiMAX or HSPA+) work properly when MIMO doesn't do what it's supposed to? What are the side-effects? (Slower speeds? Lower aggregate capacity?)
- Are the effects made worse when you go to 4x4 or more complex versions?
- How do you test all this?
- If certain installations don't work OK, how much will it cost to fix them?
- And while we're on the in-building topic, will the older implementations support new bands like 700MHz and 2600MHz OK as well?

Netbooks - a skewed view on mobile broadband

In recent months, I've noticed an interesting misconception.

Some observers - notably from North America - seem to be under the impression that netbooks are, by default, mobile-connected. And, in particular, that they are major contributors to 3G data traffic.

As far as I know, this is not really true. Yes, in the US (and, I think, Japan), a fairly decent proportion of netbooks are sold through mobile carrier channels, with embedded or bundled 3G modems, usually on monthly plans.

Elsewhere, although that model exists, it is far from the most important. The majority of netbooks are sold through ordinary PC retail, corporate or online channels. And these generally do not have in-built wireless modules. Yes, some get used with USB 3G dongles (such as the one I'm writing this post on, from my local cafe), but many are just used with WiFi or even ethernet.

In 2010, there will probably be around 40m netbooks shipped. I'd be surprised if more than 10% are sold with built-in 3G, with maybe another 10-15% used with separate dongles. Ordinary retail netbooks rarely ship with 3G modules, as the cost is a very large % of the manufacturer gross margin - so the OEM won't wear the cost unless they're certain of either getting a higher retail price (unlikely as dongles are cheap), or some form of bounty from operators when/if customers sign up (rare).

The majority of PC-based mobile broadband traffic is generated by ordinary, larger *notebooks*, not netbooks, as both the installed base and new shipments are far higher than those for netbooks.

CTIA....

... I'm not going to be there, so please don't bother inviting me to events or meetings. (If it's like MWC, for which I got about 250 invites, I probably won't get a chance to write individual "no thanks" replies)

Thanks.

Mobile traffic management - video confusion

A lot of my meetings at MWC two weeks ago were about managing mobile broadband traffic - by offload, by compression, by policy and various other means.

There is a total lack of agreement on where the emphasis should be. Everyone has a solution - and it's far from obvious that they are not pulling in opposite directions. Dump most traffic to WiFi, and it becomes much harder to justify restrictive policies when the phone is "on net". Offer "premium" or "platinum" connectivity - and get let down by poor coverage. Put femtocells in place - and then try to distinguish femto vs. macro traffic in the policy engine, because throttling someone's 3G access *on their own cell & broadband* is a recipe for disaster.

And all this is before we get to the fun-and-games which will ensue in a world with widespread connection-sharing.

The starkest choices seem to be around "what to do about mobile video". Endless copies of Cisco's Visual Networking Index charts were trotted out (or other large vendors' inhouse equivalents) showing terrifying increases in forecast mobile video traffic, swamping all other types. Even leaving aside that other new apps might be even more traffic-generative (maybe augmented reality, for example), there are still huge issues about how to treat video.

First off, let's be clear - there is no single application called "video". There's a mix of downloads and streaming, one-way and two-way, embedded and standalone, numerous codec and frame rate options and so on.

In the eyes of a user, clicking "I like" for a YouTube clip shared on Facebook by a friend, is a very different application to watching the same thing on YouTube.com in a separate window. Context is very difficult manage in a policy engine, especially if it's a web mash-up.

One theme that I heard repeated a few times was the idea that some sort of server or gateway would intercept inbound video traffic on an MNO's main Internet connection, spot who/what was requesting it, and (let's be polite here) "mess about with it" in order to reduce the impact on the network.

It's a very similar idea to the various Web messing-about-with engines ("transcoders" or "content adaptation") we've seen before from the likes of Novarra, ByteMobile and Flash Networks. Yes, they sometimes reduce load, but when first introduced they mangled content and advertising, caused problems with mobile commerce and did some horrible things to sites that were *already* mobile-optimised by the original website owner. Over time, the worst effects of these seem to have been ameliorated, with some sort of grudging consensus now almost attained.

The same set companies, as well as a group of new ones like Acision and Ericsson, are now talking up the idea of compressing video traffic on the fly to protect the network. One comment made was that the network could choose to buffer video traffic itself, rather than let the phone/PC buffer fill up quickly, over the air. YouTube was cited as being "aggressive" in encouraging users to download whole videos upfront, when sometimes they closed the video window and "wasted" a lot of bandwidth, because they hadn't watched the whole thing.

To punish this sort of profligate downloading behaviour, it's envisaged that the network could either compress the video traffic, or "drip feed" the buffer.

Cue consternation from other people they haven't yet spoken to.

First up are the radio guys, who, paradoxically, would much *rather* whole videos downloaded fast rather than being drip-fed. It's more efficient for base stations to blast as much traffic as possible at a user, in a short space of time, if it's not actually congested. And it's also much better for the user's battery to download a big gulp of data in one go, and then switch the radio off. Keeping the connection up for longer may also increase the signalling load even if the actual traffic is reduced.

There is also an interesting regulatory angle here - if mobile broadband speeds have to be advertised on the basis of average actual speeds, rather than theoretical peaks, then the drip-feed approach could have serious marketing consequences.

The compression side of the equation is also likely to be extremely controversial. There's an interesting set of issues of liability if you've paid for HD video (or an advertiser has), and the network arbitrarily steps in and mangles it for you during delivery. There's another interesting set of questions of whether the network can work out exactly what video stream to compress, if it's sent via a CDN like Akamai, which might peer at various points in the network.

But all of these are minor compared to the likely outrage from various video content and aggregation companies that have their content "messed about with".

Put simply, any attempts to "optimise" video in the core of the network are likely to be very ham-fisted, especially if they attempt to compress or transcode. The core is unlikely to be able to know how best to compress a video as it will vary immensely on a genre-by-genre or even scene-by-scene basis.

Content can be delivery-optimised in various ways: frame rate, frame size, key frame rate, audio rate, etc. all can affect bandwidth, however the best encoding recipe may be influenced by the type of content: sport, talking heads, music video, being genres of content that could be argued to have opposing views as to what's the best encoding recipe. Think of an interviewer static in a chair with a fixed background, versus a live-streamed F1 race. Applying a single policy to both videos is likely to be very crude, and result in a very poor user experience.

Some policies are already causing consternation - for example, by blocking overhead-light delivery protocols such as RTSP/RTP over UDP, forcing publishers to more inefficient alternatives.

Other side-effects of network-centralised video policy management may be to push a greater processing burden down onto the handsets (and hence their batteries) - for example, re-coding video in formats like H.264. As well as requiring a lot of network-side processing power to do this in real time, we could end up with the interesting situation of power consumption differing on a per-network basis. That could make for some interesting marketing angles for operators "Get your XYZ handset on the network that gives you 3 hours longer between recharges!"

(Hat-tip here to input from my friend David Springall, CTO of Yospace, which provides platforms to mobile video content publishers).

One answer seems to be to optimise mobile video through a balanced combination of editorial control and network technology. If operators (or their network partners) provide adequate guidelines on making mobile-friendly video, it may be that providers all the way back through the value chain can help - for example, content can be editorially controlled to be more compressable, such as by avoiding unnecessarily moving cameras during production. This is similar to attempts by operators and device vendors to encourage their app developers to follow "network friendly" approaches like fewer server pings.

It seems unlikely that video publishers will pay operators "cold hard cash" for QoS (or even an SLA) on mobile broadband, despite the rhetoric around DPI / policy management boxes. It's simply too difficult to control end-to-end quality as far as the device UI - and *prove* it to the content provider. But publishers would likely respond to doing what they can with their video content to make it 'work better' on mobile networks. Although they don't have the technical ability to do this, they are using third-party platform providers to deliver their video and it is these third parties that can implement whatever is considered best practice by the networks.

Operators could publish clear guidelines to help third parties optimise video on their networks; platform providers should work to these guidelines in the interests of delivering a better user experience (assuming some measure of consistency across operators, of course - it's unlikely that they would wish to see 800 different sets of rules across the world - or, worse, 2400 if they vary for 2G, 3G and pseudo-4G networks). It would also help video content publishers if MNOs provided APIs that provided more information about the network quality in realtime, allowing platform providers to be more sympathetic to the network. While this may also be feasible via handset-side APIs, the network may enable a more consolidated view to be provided. Over time, this could even evolve to cell-by-cell "traffic reports" allowing video to be delivered differentially to those in the best/worst radio or backhaul congestion conditions.

Depending on the laws in each country, well-behaving video traffic (however that is measured and defined) could be prioritised in some circumstances.

One issue that is likely to crop up is how to deal with PC-based video traffic transiting mobile broadband networks via 3G dongles. This is a little more problematic than smartphone video, as it is usually marketed as being a direct alternative to ADSL or cable broadband. Nevertheless, some form of in-application smarts could still allow optimisation - it's been pretty common for years to have a choice of different broadband speeds / types before starting a video "Are you watching on: ADSL, LAN, 3G, WiFi etc" might put the user back in their normal state of control. There's also a very strong argument to prefer outright offload for PC-Internet traffic to WiFi (or femto) and avoid the core network and compression argument altogether.

Overall, I definitely think that the question of how to deal with mobile video is still at very early stages. Although various solutions are emerging, it seems probable that the initial knee-jerk attempts to reduce network load will have some fairly nasty unintended consequences in terms of user experience, device battery life, radio performance and content-mangling - and hence generate support calls and dissatisfaction. The idea that the network can somehow magically reduce the impact of video traffic, without any input from video publishers or aggregators / platforms, seems misguided.

Mobile apps - will the fickle hand of fashion swing against them?

Wandering around Barcelona last week, I started feeling a deep unease at the current level of hysteria around mobile apps. It is was compounded this week by seeing a T-Mobile advert on the London Underground which didn't show a phone, but just said "Would you like a free phone with apps for just £20 a month?" [meaning "We'll sell you a cheap Android instead of an iPhone, but don't dare mention it or show it"]. Apple is bombarding the world with "apps, apps, apps" advertising as well.

I'm a great believer in the Tyranny of Consensus. When everyone agrees - it usually means that they're all wrong.

I'm wondering if the great drive towards mobile applications on smartphones, catalysed by Apple although obviously around for years before, has the longevity that many people seem to be assuming. Operators, device vendors, OS providers, 3rd parties - everyone wants a piece of the supposed action.

But maybe it's just a fashion? After all, do you *really* want any form of ongoing "relationship" with a handset manufacturer? Will the mass market really want to keep adding new stuff to their device?

The first 100-200m owners of PCs bought and installed lots of applications. The most recent 100-200m have probably just got Office, a browser, Norton or some other security package, Skype and their favourite IM client. Apart from gamers, most people don't continually look for and download PC apps - although they're there occasionally if need strikes.

Maybe the mobile will go the same way - you'll get a phone with a pretty good set of pre-installed capabilities, perhaps through some sort of pre-sale configurator. "Skype - tick. Spotify - tick" and so on. You'll get another set of applications when you set it up for the first time or over the first week of ownership. And then on an ongoing basis you'll get occasional updates of these, but it will only be once in a blue moon that you'll actually download anything new.

(One slight difference is the current perceived trust in AppStore downloads - there's not the same worry getting some random .exe )

Most "cool new stuff" will be in the browser, just as it is with the PC. And maybe, just maybe after you've got used to it, you'll bother to find out if there's a 20%-better application. Once there are easy metaphors for multiple browser windows and tabs on mobile, and more ubiquitous support for multi-tasking, the idea of a "widget" becomes obsolete. They're just contrivances to get around small screen size, I think.

Yes, there is an alternative future, where we're all browsing app stores on a daily basis. Perhaps it could come true. I have to be careful here, because when I'm wearing my "personal" hat, I have an in-built bias as I'm utterly disinterested in mobile applications, bar a very, very small handful that I'd prefer were pre-loaded on a device in the first place (Google Maps, Skype, Facebook, maybe Spotify).

Obviously my "professional" hat as an analyst means I have to be both interested in, and familiar with the broader ecosystems, but my job doesn't need to extend to my private life. I'm a bit of a purist, in other words - also reflected by the fact I drive a car with absolutely no modifications, and indeed no weight-adding fripperies like ABS or airbags either.

Cars hold another useful metaphor though. It's generally considered to be absolutely fine to "customise" a vehicle when it's ordered new - the colour, trim, special options like better brakes or sportier suspension. But that changes - for most people other than special groups of enthusiasts - in terms of aftermarket customisation. Suddenly, add-ons become gauche and geeky. Sure, it's more socially acceptable for a rickshaw driver in India or a bus driver in Guatemala, but in normal circumstances loading a ton of extra tat onto your car makes you look like an idiot. (Caveat here: yes, I know some countries have a more permissive attitutde to modifying cars, but then some also have a lax attitude to wearing phones in holsters on your belt).

The bottom line is that I'm wondering if the massed billions of phone users will really care about iPhone-style junk applications. Personalisation is all very well - but it's best done upfront, not on an ongoing basis. The hand of fashion could also start to dictate that people customise something else rather than phones.

A vision of 4 billion "modified" smartphones represents a dystopia of geekiness.

Smartphones are adjuncts to PCs, not replacements

I've long been deeply skeptical about the notion that phones would displace PCs (I'm including Macs here) as the principal platform for computing and Internet access. In particular, I always try to bust the myth that "the next billion Internet users will first see the net on a handset" - a catchy assertion, but one backed up by zero evidence or clear rationale. I've been similarly unconvinced by Nokia's rhetoric about its smartphones being "mobile computers".

Yes, an increasing number of quick computing/Internet tasks are done on smartphones - checking email or Facebook, using a navigation app, jotting down your expenses, writing short blog posts and so on. But almost all of these are transactional updates of processes *anchored* by traditional PCs. Nobody sets up their Facebook account and configures all the settings on a phone.

I also disagree that the gulf between laptops and smartphones is narrowing. Netbooks are small laptops - the fact that a handful are sold through carrier channels with embedded connectivity is not changing the overall paradigm. Phones are "service" devices which are mostly useless without a linked subscription of some sort, while PCs are computing "products" owned and controlled by the user or IT department.

The interesting thing is that only Apple (and Microsoft to a lesser degree) seem to *really* understand the full importance and longevity of the PC - and the extra options it enables in terms of the business model for handsets/smartphones. Generations of mobile users have struggled with awful PC-phone connectivity software from almost all vendors, which have viewed the desktop as an afterthought.

Many people seem to make the mistake of assuming that Apple is targetting the 1-billion unit annual mobile handset market with the iPhone (and 4-5bn mobile users), usually citing its market share as tiny and insignificant, with a disproportionate amount of media and developer attention being focused on it. Apple itself seems happy to shrug off such criticisms.

I think this because it defines its market differently. I suspect that the real "addressable market" it's after is the installed base of PC owners/users - probably about 1.3bn/2.0bn repectively. By no great coincidence, pretty much all PC users also have a mobile phone.

Unlike purveyors of "mobile computers", "smartbooks" and the like, Apple doesn't want to substitute the iPhone against a desktop or a laptop. It appears disinterested in the iPhone being a new user's *only* source of Internet access. It wants the phone to be an adjunct - and also hopefully encourage a long-term switch to a Mac desktop or laptop.

Accessories often have some of the highest profit margins. And if they can drive the sale of premium-priced "core" products then so much the better.

But the real kicker here is iTunes. Physically connecting an iPhone to a PC means it can be totally and reliably updated and upgraded - not just in terms of the apps and OS, but also right down to the radio firmware and low-level internals. This is a lot less clunky than the over-the-air approach to device management elsewhere. The reach it gives into the installed base is hugely more than most other operator/device approaches.

I think there's more here to this. I think the notion that smartphones are somehow cheaper than PCs and will appeal to first-time users in developing countries is wrong. A second-hand $50 Pentium 3 can get a whole family online, show movies and be used for a broad set of applications. It will also last for years. (I know, that's exactly what a Sri Lankan cab driver told me in January when I asked him if he used the Internet on his phone).

In that scenario, the "cost of ownership" for a basic PC is less than $5 per person per year [excluding the connectivity, obviously]. Even a $50 secondhand unlocked Symbian device would be more expensive on that basis, given its expected working life and difficulty in sharing. There is no way that a $100-150 device would "get a whole family online" and provide anything like the functionality or useability of a PC.

Bottom line: The addressable market for smartphones is (to 80/20 accuracy) the base of people who already have a PC. The most interesting and relevant market share statistic would be the break-down of PC users who are also *active* smartphone users, with a data plan.

MWC Day 1 ... thoughts on offload, mobile data traffic, LTE and IMS

Quick post on some thoughts from Day 1 here in Barcelona:

As predicted, offload and data traffic management are top-of mind. Too much cheap traffic transiting expensive networks. Yes, people are paying for mobile broadband on laptops & smartphones, but shoehorning gigabytes of Internet-destined data across a network designed for in-house, data-sipping operator-controlled apps is clearly a recipe for disaster. What's striking, though, is that the "offload industry" hasn't yet mapped the various solutions onto a matrix of use cases and deployment scenarios. I think there needs to be a lot more thought here - how do you selectively offload certain applications, but route others through the core?

In particular, a lot of the network vendors don't quite understand what "applications" are on the network. Many will tell you that "video" is an application. It's not, especially from the user's perspective, which is where any policy or tariff changes will bite. There's a huge *perceptual* difference between watching a YouTube video in large-screen mode in a browser, versus watching the same YouTube clip embedded in your Facebook page, where it's been shared with you by a friend. Yet the network is unlikely to be able to spot the difference. One is "media consumption", the other is "social networking and recommendation", and I think that in users' eyes, they are very different. How you capture this behavioural component (layer 9?) is going to be a difficult challenge.

NSN had an interesting pitch yesterday - creating a smartphone-optimised network. This is pretty much a first, as normally the network vendors ignore the role and usage modes of devices in the real world, and vice-versa. I spend a lot of time pointing out to network vendors that innovations in infrastructure technology always have device-side implications (hence my work on IMS-capable handsets, femto-optimised devices and so on). NSN observed that although laptops create most of the data traffic on 3G networks, it is smartphones that are much more aggressive when it comes to signalling traffic, and that in some cases this is to blame in clogging the network. They're working on a 3GPP mechanism for reducing the signalling overload, called Paging. I'll delve more deeply into it on my return, but it sounds interesting.

One notable theme here seems to be that LTE is being viewed with more reality - it's conspicuous that both NSN and Ericsson are touting go-faster HSPA+ quite loudly, as it's becoming clear that many operators are going that route, especially in Europe. I have my suspicions that many might skip "beta" LTE (aka 3GPP Releases 8 & 9) and wait for the bug fixes to appear in LTE Advanced (Release 10). After all, the first versions of WCDMA were pretty useless until HSDPA arrived.

Add in the issues concerning LTE spectrum availability, devices, indoor coverage, voice & SMS, roaming, handover, power consumption and the lack of a new business case, and I think that we're looking at 2014-2015 for any real mass uptake. Apparently there's a few early handsets on the horizon, but I suspect they'll be provided with a free oven glove as an accessory.

During today I'm going to brave the dangers and gauge the state of the mobile IMS zombie. Yes, it's dead but still moving - but is it like the shambling creatures from Dawn of the Dead, or one of the scary, fast-moving vermin from 28 Days Later or I am Legend? The big question has to be whether it's already bitten LTE so hard it won't let go, and infected it. Anyway, I'm seeing the GSMA, the NGMN and various vendors with IMS-based products, so I'll try to avoid getting my brain washed (or, indeed, eaten).

MWC / 3GSM - start of the week

I've got a pretty hectic schedule in Barcelona, but I'll try and put a few posts up as I go along.

First thing to notice is that the mobile-related advertising around the airport and city is still nowhere near the levels of a few years ago - the recession is obviously still hitting corporate marketing budgets quite hard. This is also reflected by the absence of some "big names" in terms of stands, notably Nokia, which has instead set up shop (more cheaply) around the corner in the ONCE building for meetings and demos.

OK, one churlish comment: while I'm grateful to the GSMA for finally sorting out analyst registration as well as press, they *still* have the ridiculous photo-ID policy on *every* entrance and exit to the Fira grounds. Yes, I know security is an issue, but so is privacy. Some sort of PIN code or other authentication is much preferable to having to carry my passport around & show it on demand. I guess that given the GSMA's reputation for trying to centrally-plan the mobile economy, it seems fitting that they have their Stalinist henchmen (and henchwomen) demanding to see your papers all the time.

One other amusement is that the Media Centre at the world's largest mobile conference has around 300 fixed LAN connections and PCs. There's WiFi as well, but they're obviously worried it'll be as flaky as usual at the Fira, while insane data roaming charges will prohibit the use of mobile broadband for most attendees. (Footnote: Barcelona is one of those cities where it's usually cheaper to use a taxi to navigate to your destination, rather than using Google Maps over roaming).

There's going to be a zillion press releases and other announcements over the next few days, I'll cherry-pick the ones that made me curious, or made me wince to comment on.

First up in the firing line is Critical Path, yet another purveyor of "social address books" and various other attempts to force social-networking into the phone without the use of a proper Facebook app. Amusingly, their survey (release not yet up on their web page) claims that "94% of consumers in emerging markets would like to be able to automatically update all of their contacts with new contact information" while also claiming that "Operators are ideally positioned to help ease these frustrations".

The disconnect here seems to be that new contact information is usually associated with churning - especially in the prepay-centric markets the survey focuses on. People buy whichever new SIM card offers the best package and then tell all their friends their new number when they can't/don't port it. I can't really see how that can easily be an operator play or enhance loyalty - unless you separate the service from the access.

Edit: I'm chasing a few themes here in Barcelona, notably femtocells, broadband offload & traffic management (about which this post seems to have had quite a lot of attention), connection management, mobile VoIP and HSPA+/LTE/WiMAX competition.

I'm also hoping to have another shot at my perennial punchbag, IMS RCS. The initiative has 96 hours to show committment from big names like Apple, Google, RIM and Skype, or else I'll have to find time to write a full obituary.

VoIPo3G forecasts... I hate to say "I told you so", but....

I *did* tell you:

"The number of VoIPo3G users could grow from virtually zero in 2007 to over 250m by the end of 2012"

"It will be the operators themselves which will be mainly responsible for the push towards VoIP being carried over cellular networks"

"About 60m will be using independent or Internet-based solutions – many actually operated in partnership with carriers or retailers"

OK, yes, I missed a few things. At the time I wrote those comments (published in Nov 2007 and researched for the previous 6-9 months), I was still expecting CDMA to go beyond EV-DO and head towards UMB, rather than be usurped by LTE. And I also expected that the industry would have sorted out some form of standardised VoIP for LTE by now, rather than the current mess of CSFB, VoLGA, IMS VoIP, OneVoice and assorted others.

But given the imminent announcement of a Skype / Verizon Wireless deal (which seems to be rumoured as being VoIPo3G rather than call-through like 3's), plus the inexorable rise of VoIP and video like Skype on 3G-connected PCs, it looks like my general pitch is coming true. AT&T is allowing 3G VoIP on the iPhone, and most other operators seem to view it as an inevitability.

And, quite frankly, allowing customers to use VoIP on their mobile broadband means they'll spend less time downloading video and clogging up the network.

So, to various of the skeptics who suggested my prediction of 250m VoIPo3G users by end-2012 was unrealistic.... let's see what the next 3 years bring. I'm not anticipating most of those connections being what I'd call "primary telephony", but I can certainly imagine that a decent proportion of PC, smartphone and "connected device" users by end-2012 will be running voice at least occasionally.

Telefonica is playing with fire....

Interesting time for Telefonica to try and stick the boot into Google about net neutrality, a few days before Eric Schmidt gives a keynote at the 3GSM conference in Barcelona.

Apparently, Telefonica is "considering charging" Google for the bandwidth it apparently uses "for free".

I'd pay very good money to be a fly on the wall during a meeting of the two companies. I wonder how much Google should charge Telefonica to permit its subscribers to access its search & other servers "for free"?

Alierta is playing with fire on this - its customers are more likely to churn ADSL provider than churn from Google Search or YouTube.

If I was Google, I'd start threatening to give free adverts to competing Spanish broadband providers, for customers with Telefonica IP addresses.... in fact, I wonder if the big G could even negotiate a finders fee for directing switchers.....

Traffic management and offload - diverging solutions

One of the major trends I'm seeing at the moment is that of mobile network offload - typically "dumping" traffic onto WiFi or other networks to avoid congestion from mobile broadband.

I'm expecting it to be a huge feature of this year's MWC / 3GSM in Barcelona.

But at first sight the offload trend seems to be a confusing mish-mash of technologies and techniques, all designed to reduce the impact of bulk traffic on cellular networks, but applied in very different ways. I'm trying to start to categorise these various areas, and also work out how they are being prioritised.

One important fact to note is that "congestion" is itself quite complex. It can be congested radio (RAN) networks in terms of downlink capacity, uplink capacity or signalling. It might be congestion in the backhaul from a cell-site to an aggregation point or the core network. It could be various elements of the core itself - SGSNs, GGSN and so forth. It could be a supporting IT system that handles IP networking (eg the DNS), or the billing/rating engine.

And then we have the various classes of solution. I'm still thinking about a full taxonomy (and terminology), but an initial starting point might be:

- Macro offload onto femtocells (in homes, offices, hotspots or outdoors)
- Macro offload onto WiFi (in homes, offices, hotspots or outdoors)
- Local IP breakout for WiFi & femtos (in the premise or at the broadband DSLAM / cable head-end)
- Managed offload (eg where the fixed or cable access provider, used for the WiFi or femto connection, actively assists in the offload process)
- Macro backhaul offload (eg direct connection to a cache or CDN for "bulk" Internet video)
- Core network offload / bypass
- Content compression (eg video format transcoding)
- Traffic-shaping (eg selectively degrading / capping specific flows or traffic types - sometimes misnamed as "applications")
- Policy control (prioritising specific users / subscribers, or administering specific profiles to some)
- Optimisation of capacity utilisation at the IP level, by changing the TCP protocol or packet scheduling, or by introducing "scavenger class" traffic


EDIT - MAY 21st - New research paper published - see below.

I'm sure there are others - while these segments can undoubtedly be fine-grained more as well. The bottom line revolves around a reduction or delay in the need for capex to enhance network capacity, and as a corollary an improvement in the more nebulous quality of "user experience" - at least for the bandwidth non-hogs.

What's not clear to me is which of these techniques is the most effective or important overall. I suspect it probably varies by operator, maybe even by cell or time. From a top-level ROI perspective, which of them enables spending on network upgrades to be minimised? Or perhaps introduces new revenue streams.

My gut feel is that for networks dominated by *PC-based* mobile broadband, the best option is some form of radio offload. All notebooks have WiFi, and they also tend to have the most complex applications and mashups, as well as being able to spot any degradation of quality or operator "interference" most readily. Having a PC user say "hang on - why's this video performing better over my ADSL line than over my HSDPA, what's going on?" is likely to lead to damaging PR, if you're trying to present your mobile broadband as a direct replacement for fixed connectivity.

I reckon it's simpler and safer just to dump PC traffic to a standard Internet connection as close to the device as possible. For iPhones and some smartphones, the same may be true. But for other devices, it may make more sense to route the traffic via the operator core and play around with subscriber policies, or adapt traffic at the application layer. But I'm sure there are exceptions in both cases - for example, where a PC is actually an operator-controlled netbook.

I'm going to try and resolve the picture more clearly over coming months.

EDIT - MAY 21st - New research paper published - see below.

NEW Mobile Broadband Traffic Management Paper

NEW Broadband Business Models Strategy Report

Debating the use of the term "4G"

I'm noticing an increasing use of the term 4G to describe either WiMAX or LTE networks.

It makes me wince, (although I've probably fallen into the "convenience trap" myself a couple of times).

Yes, they're both different to current versions of 3G, and use techniques like OFDMA - but so what? That doesn't make them 4G any more than it made EDGE (part of GSM) into 3G.

From a purist point of view, 4G doesn't yet exist. 3G refers to the families of technologies covered by the ITU's definition of "IMT 2000". 4G is expected to be the term used for the forthcoming "IMT Advanced" specifications currently being thrashed out by ITU, for which there are two prospective main candidates - LTE Advanced and WiMAX variant 802.16m.

Any use of the term 4G at present is therefore pure marketing fluff. A lot of WiMAX and LTE operators and device/network suppliers are fluffing, in an effort to come up with a brand that conveys evolution and new-ness.

The irony that the WiMAX community a huge amount of time and effort to convince ITU that their technology was in fact 3G (and therefore allowed to use IMT-2000 spectrum bands) seems to be ignored.

My instinctive reaction is to "deduct some credibility points" from the offenders when I see their announcements, or talk to their executives. If they are that sloppy that they mis-describe their technology, then surely it's reasonable to assume they're also sloppy about other aspects of their business?

Yet after a while, the practice may become so entrenched that even the more sensible participants have to wince, take a deep breath and mis-use the term 4G as well, so as not to lose out in the marketplace. If you can't beat them, you have to join them.

So, some solutions:

1) Any operator launching HSPA+ should also describe it as 4G. Well, if it's got MIMO, then it's *also* different from existing 3G. If the OFDMA guys are going to pick arbitrary definitions, then they can hardly complain when you do the same.

2) An operator with a brave PR department (and possibly a good legal team) should publicly take rivals to task for using 4G, using terms like "misleading", "lying", "sloppy" or "false advertising". Potentially, some of the current providers are on thin ice with regard to consumer protection law - although as the ITU hasn't yet called IMT-Advanced "4G" the response is probably that there's no strict definition in place.

3) Lobby the ITU to hurry up and call IMT-Advanced "4G" while it still has the ability to do so, before it gets lost in the marketing waffle.

As for me - well, I'm going to rely on the body language and non-verbal communications of people I speak to. If someone says 4G when describing their new LTE or WiMAX gizmo, but slightly winces, or rolls their eyes, or grits their teeth... then I'll give them the benefit of the doubt. But if they brazenly, unashamedly and unequivocally claim the 4G label for their 3G goods, I'll definitely be looking closely to find what else they've glossed over.