Paying for mobile QoS? Three thought experiments

A regular refrain from vendors I speak with is that content companies, or application providers, could be persuaded to pay for extra mobile broadband "quality". The argument goes that a video website or cloud computing provider would pay for guarantees of absolute or relative prioritisation, bandwidth levels, latency, jitter etc.

Irrespective of the legal situation - which in any case varies by country and over time, I have my doubts about the technical and commercial practicality.

I think it is much more achievable in the fixed world, where the operator doesn't have to contend with the vagaries of radio, and where the presence of a "box" like a gateway gives a much better chance of monitoring what is actually delivered. The WiFi or ethernet connection at the fixed-broadband end-point to a final end-device (PC, TV, phone, tablet etc) also gives a clear demarcation point of responsibility. The operator can say with confidence that their bit of the end-to-end system did its job - and any issues with battery life, memory, device configuration and so forth are your problems. That's much more difficult with a smartphone - if the extra-quality video doesn't work, whose fault is it? And does the video provider still pay?

Nevertheless, whenever I spell out my concerns about differential charging for applications, I get bombarded by vendors (and some operators) insisting that their DPI box can detect absolutely everything, right down to what the user had for breakfast that morning.

Rather than get to an impasse, I thought that as well as commercial, legal and technical reasons, I'd also have a try at logical flaws in the argument - and perhaps highlight some extra opportunities along the way.

First off is prioritisation of the operators' in-house services. Many mobile carriers have their own video streaming, music or other rich application/content platforms. I'm assuming that some measure of optimisation is typically used by the operators to ensure these perform well - obviously it will be easier to test inhouse, and senior management can ensure adequate cooperation between network and application teams.

But.... if "real" quality can only be achieved at the level of manageable network QoS... and if "serious" content providers are willing to pay for it,.... then why not set up an effective structural separation between the services group and the network delivery team? If it actually came out of their own budget and P&L, would the inhouse video content team really pay money to the other department for improved network access? Or would they instead use rate-adaption and other tools to work around the limitations of best-efforts?

I haven't heard of any operators running an internal QoS market, but I'd be fascinated if any readers have anecdotes.

The next thought experiment takes this concept a bit further.

Now, consider the situation once again, where the operator's video content team is willing to pay extra for QoS to ensure their streaming is delivered better than it would be from the open Internet.

And consider that another operator offers network-based QoS - perhaps in the same country, or perhaps elsewhere in the world. Given there's already an "open market" in video streaming via YouTube, Hulu and so on.... shouldn't that operator in-house team therefore be prepared to deliver its content via other carriers' networks? Let's say, for the sake of argument, Verizon providing its video service to users on Telefonica O2 in the UK.

Given that they are in-house teams within operators, surely *they* understand better than anyone the capabilities - and potential differentiation - that comes from network-based prioritisation and QoS? If Verizon paid guaranteed-QoS fees to O2, shouldn't it be able to create and market a class-leading video service that end users would pay for? And shouldn't the O2 network team also think that Verizon's video people are therefore much easier to sell QoS to than, say, YouTube?

In other words.... if operators (and their vendors) really believe that "premium" network QoS can enhance the competitiveness of applications and content, or raise ARPU and improve customer satisfaction... why don't they put their money where their mouths are? If Telco X is clever enough and network-savvy enough to create a QoS- managed service that should outperform YouTube.... why hasn't it happened?

My last point is not about prioritisation, but coverage. Often, the gating factor on overall Quality of Experience is not radio or transport or core resource, it's a simple lack of decent signal. (Yes, I know that in theory coverage is a bit dependent on other users in the same cell, but let's just assume the culprit here is a thick stone wall).

Certainly, Vodafone is marketing a femtocell in the UK under the name of "Sure Signal" - and getting users to pay a premium for an "enhanced quality network" in their home or workplace. While some of the customers are just buying the femto to get any reliable signal at all, there is some anecdotal evidence that a proportion want "better than normal" coverage "5 bars, all the time!" - for example if they live inside, but near the edge of a cell. This tends to support the argument that a certain (smallish) group of users might pay extra for "gold service" QoS, however that is defined.

So then the question is... for an operator wanting to offer an improved *average* experience, both in terms of absolute coverage, and higher performance throughout each cell - is the best and cheapest mechanism really through network prioritisation? Or might it be more effective to do some sort of national-roaming deal with competitors, where the phone switches to a rival's network at a given location and time, if that network has a better signal and uncongested capacity?

Wouldn't it make sense for the mobile industry to have the equivalent of the airlines' interlining and codesharing agreements? In those situations, you can get an end-to-end ticket issued on Airline A, which covers one leg actually operated by Airline B. Your luggage gets "handed off" seamlessly and Airline A takes overall responsibility for end-to-end quality. Airline A benefits from Airline B's better coverage or schedule at a local level, while Airline B gets incremental revenue and traffic from Airline A's better sales and distribution to end users. Interestingly, low-cost carriers like EasyJet and Ryanair generally don't participate in these type of arrangements, only the premium-priced airlines do.

The analogy is simple.

If a customer with the "nameplate" Vodafone service sometimes actually gets connectivity via the Orange or T-Mobile network, would they really care, as long as their average performance went up? And, in fact, might they not even pay a premium for it? Could there ever become a distinction between a "full service network" (which puts you on one of its nominal rivals' cells when it gives you better coverage, but charges you more to cover the wholesale fees), versus the low-cost network which is all-or-nothing, running just its own, silo'd coverage?

Is the answer to better QoS (which customers are prepared to pay for) not another box in the network, but just better/richer wholesale arrangements and national roaming? Can we go further than current development in network-sharing, and have a more generalised platform for deals?

[Note: I know that it's not that simple, either because of regulation or because it takes a finite time to find, register and roam onto another network. But they could be improved by a telecom effort to find a convenient codeshare/interline approach]

NEW Mobile Broadband Traffic Management Paper

NEW Broadband Business Models Strategy Report

Does the outcome of the Dutch 2.6GHz auction represent skepticism on LTE?

There are various spectrum auctions ongoing at present or the near future. The big ones are the 3G bands in India (2100 and 2600MHz), as well as a multi-band auction (800 / 1800 / 2000 /2600 MHz) in Germany.

But there is a smaller one that has just finished in the Netherlands, for the 2.6GHz band only. The outcome has been pretty lacklustre - just €2.6m. Martin Sauter has the breakdown of it here.

Trying to analyse this is a bit further, my current thoughts are:

- The two newcomers both have extensive fixed broadband assets - Tele2 has 431k subscriptions and the other (Ziggo) is a joint venture between cable operators. That potentially points to an "inside-out" strategy at 2.6GHz, plus Tele2 attempting to switch some traffic (data?) away from its MVNO arrangement.
- There are only three incumbents, which means that competition for spectrum in other bands is not as harsh as in other markets. Nevertheless, it seems odd that they only bid for 2x5 and 2x10MHz - although it's not immediately clear how those fit with the spectrum caps under the auction rules. The 5MHz is particularly strange, as it potentially means lower peak and shared rates for devices running in a "hotspot" 2.6GHz band location, rather than a wider macrocell.
- We can pretty much write off any opportunity for mobile WiMAX or TD-LTE in the Netherlands for the forseeable future, given the lack of bids for unpaired TDD spectrum.

One interesting possibility is that the Netherlands' very high fixed broadband penetration might mean that operators are looking to WiFi and femtocells rather than spectrum additions for capacity enhancement. The Dutch are already among the leaders in the deployment of picocells as well - both for public locations and for low-power GSM.

Another questionmark is around LTE. The results of the auction suggest that 2.6GHz (the main likely band for LTE in Europe) is not seen as particularly strategic - which may reflect reticence overally for the technology in Holland. I've suggested before that operators should lean on their vendors (and chipset suppliers) for support of 2.6GHz HSPA, which would seem to fit better with the allocations.

I'll try and catch up with the German, Danish and Indian auctions over the next week or so.



(There is also an ongoing 2.1 / 2.6GHz auction in Denmark)

Why I think the iPad won't change anything

At last week's Telco 2.0 summit in London, I crossed swords with financial analyst Richard Kramer of Arete Research.

He has a view that the PC industry (and specifically laptops) has failed to innovate for much of the last 10-20 years, and will be overturned by newcomers, particularly Apple's iPad and more generally a new wave of tablet-style competitors. He was less definitive about the role of telcos in supporting these devices, but definitely felt that they represented a step change in how people engage with the web and various forms of content. He singled out the newspaper and magazine industry as being a prime candidate for iPad-isation in similar fashion to the iPod and music.

I disagree strongly. I believe that the iPad is a side-show, albeit a glamorous one. I also have extremely grave doubts about the massmarket viability of next-generation tablets (or MIDs, or smartbooks or mobile computers etc) based on Android, Meego or Chome OS. I'm even less sanguine about the possibility that there could be a telecom operator model underpinning those ecosystems.

My belief is that the PC industry is guilty not so much of a lack of innovation, but a lack of cohesive marketing strategy. There is no "Windows PC Community" estimating the incremental GDP arising in the developing world from PC-based Internet access and software industries. There is no glossy marketing pointing out that sharks haven't bothered evolving for 300 million years, because they are essentially perfect for their niche.

Instead, the PC industry has gleefully taken the GSMA's shilling, hoping for a few extra crumbs of operator subsidy and extra retail outlets during the recession. At the time when banks and credit card companies were taking a dim view of incremental consumer purchases, mobile operators cleverly managed to disguise loans under the guise of "free" laptops. They have been complicit in pretending that "embedded 3G" was going to be pervasive, despite knowing full-well that most netbooks are sold through ordinary channels to people wanting a cheap PC for use on WiFi at home or in school, or clogging up the 3G networks with commodity traffic supplied via commodity dongles.

Let me switch to the iPad, and by extension other tabletty-type computers that might come next.

Yes, it's pretty. Yes, it's sold to quite a lot of the usual star-struck Apple-istas already. Yes, I'm sure there are plenty of uses for it. But there are plenty of uses for many cool gadgets which make them appealing to gadget-lovers. And I guarantee that every single one of them will own (a) a mobile phone and (b) a computer (PC or Mac) already, and wouldn't give them up if you paid them.

You'll notice that the iPad has been cleverly positioned by Apple so as to avoid any risk of competition with its Mac range. Jobs clearly believes that people will want a fully-open computer as well as at least one locked-down device. How many Macs would he sell, if he prohibited them from running Flash? Or only allowed apps or content that had been vetted by his censorship team? Or restricted the use of external media like SD cards?

Now, I certainly can't blame Apple for trying to create a potential new pool of profit from a cool gadget betwixt Computer and Smartphone. If it takes surplus cash away from people who'd otherwise be buying electric can-openers or new TVs, then fair enough.

But to claim (as some people do) that it either:

- a) renders netbooks and laptops obsolete, or
- b) heralds a mass switch-over from print media

sounds ridiculous to me.

Yes, netbooks are *mostly* used for web-based applications [such as my writing this post on my Samsung], but I definitely want a full suite of native applications as well, which I choose and install myself, not subject to the vagaries of Apple's appstore. I cannot imagine myself with an iPad writing this - with my email, streaming music, Skype and Yahoo Messenger running in the background, working on a number of office files as well.

Now that doesn't mean that I couldn't ever use an iPad myself as well - I already browse the web a fair amount on my iPhone, even though my netbook is just downstairs. So there is an argument that Internet usage will become more segmented by task type. If I want to move pictures from my camera to my hard drive, and selctively upload a few to Facebook, I'll use my desktop. If I'm on a plane, I'll use the netbook. If I'm in bed and want to check my email and overnight SMS's first thing in the morning, the phone.

So maybe it's a device for the 10-20% of Internet usage time when you don't have anything else to hand.

The print media thing is a bit different, and clearly is outside my main domain of industry coverage. And I understand that there's a whole world of pain in that industry at the moment. But I'm unconvinced the iPad is the answer for more than a tiny fraction of readers. I buy a fair number of magazines, a fair number of books, and I read a fair number of newspapers (some of them free and disposable, like London's Evening Standard). I'm expert at folding them to read on the Tube. I usually have reading material for flights. I've got a stack of old Wired magazines around home, and a few copies of Top Gear for anyone desperately in need of reading material in my bathroom. I have a bookcase full of Lonely Planets and Rough Guides - my traveller's equivalent of a trophy cabinet.

Yet I don't have a Kindle, nor have I seriously considered getting an e-reader. I've only ever seen three people with them in London, one of them a semi-famous TV celebrity who was in my local Starbucks, hoping people would first notice it and then recognise him.

I simply cannot see a situation where a large bulk of the world's readers of the FT or Cosmopolitan or Harry Potter go digital *in substitution* of their usual print media. It's not like music, for which the move from CD to MP3 reduced the fallibility and bulk of moving parts, and for which headphones insulate you from the vagaries of the environment. People read in places with no power, bright light, risk of theft, or where comfort and tactility are all part of the experience (armchair + book + whisky, or cafe + cappucino + newspaper in the sunshine). They may want to avoid carrying a bag - or baulk at the need to carry both tablet and PC together.

I can understand the appeal of interactiveness of a connected tablet for media owners and their advertisers. But I am just unconvinced that the user experience and intangible benefits of print has been given as much thought.

In summary, I can see a market for iPad-type devices of a similar scale to (say) personal navigation devices - maybe a worldwide target audience of perhaps 50m people. There are some fascinating niches - perhaps education, or gaming, or a few video applications. But I cannot see them replacing PCs (or Macs or netbooks), nor making a meaningful dent in the consumption of newspapers opr magazines. And outside a few metropolitan hotspots, I can't seem them heavily impacting operators' revenues or their networks either.

[Note: if you represent a company in the mobile industry that wants a contrarian view of device strategy and its impact on business models, please get in touchwith me via information AT disruptive-analysis DOT com]

Most commentators don't get RIM's strategy

I've seen a huge amount of comment over the past week about RIM supposedly being "behind the curve" on the latest version of its OS release - especially about it playing catch-up with Apple's huge developer base and app store, as well as Android's rapidly-increasing developer mindshare.

I absolutely agree that BlackBerry has suffered from a historically sub-par browser experience, and has certainly had less app support from some of the "sexier" (or more trivial) developers.

But much of the analysis I've seen has overlooked something small and exceptionally important - the reason why consumers [at least in some segments] seem to be buying BlackBerries. And, in particular, they overlook the killer app.

No, not email. BlackBerry Messenger, BBM - the evolution of PIN-to-PIN messaging.

While you can get to most social networks or messaging services on any device - Facebook, Twitter, MSN, IM and so on - BBM is unique to BlackBerries. And, perhaps surprisingly, it is becoming viral within certain groups. I certainly notice it among teenagers and students - but speaking to other people, it's also used in other widely diverse demographics. It's actually the exclusivity and silo nature of the service which *adds* value to it - completely contrary to the usual mobile industry hype about combining social networks into a single client application. I've been saying for some time that there is little rationale for combining social networks into a single interface on a mobile - and this appears to prove me right.

I've also said before that I'm unconvinced that zillions of apps are *that* important for the real massmarket of smartphone users, beyond a few must-haves like a decent Facebook client. I just don't believe that a billion people will follow in the path of the geek evangelists and load up their phone with pages of application jewellery.

I use just 5 apps on my personal iPhone, 3 of which are things like RSS that ought to be have been in the device OS to begin with anyway. I have no particular interest in looking for other ones, unless I have a very specific urgent need. The browser (and to a degree, browser-resident apps) is a different story - I think it will be pretty essential for far more users than a long tail of native apps.

So the decision for some customers is "Do I want a fully-loaded appstore, at the risk of missing out on the gossip from my friends on BBM?". Quite a lot of younger users are going for the gossip approach - as well as the cheapness of devices that fit with their preference for prepaid tariffs rather than contracts, something that the other smartphone suppliers are not really yet addressing.

The problem is that for industry observers (and developers) the idea of someone preferring a basic, text-based IM client over whizzy graphics and multi-touch UIs is very hard to grasp. But unfortunately, there's precedent here - SMS has huge "social value" even if its design "elegance" and sophistication is minimal.

In fact, BBM also has the rather more disruptive aspect of replacing SMS with a sometimes-cheaper (and more exclusive) alternative. Why do you think RIM has just introduced a new version of the Pearl 3G with a normal featurephone numeric keypad, suitable for the billions of users who are happy with multi-tap entry? BBM appears to be the mobile successor to MSN as the default messaging platform for a large swathe of the demographic landscape (and, anecdotally, somewhat skewed towards females as well).

Maybe the end-point will be leaving the SMS client for spam adverts and boring messages from parents or "that guy you met in the pub".... all the important and high social-value messages from friends could get siphoned off.

At the moment, I'm certainly not predicting a huge polarity switch in smartphones back from touchscreen to QWERTY, solely on the basis of BBM. But it is definitely a wildcard, especially among youth - Apple has abdicated the global 75% of users who use prepay and usually non-subsidised handsets.

So among the analyst and journalist and blogging classes, I can understand why RIM's perceived lack of "shininess" has led people to downplay its position against its peers, but I continue to believe it is a more formidable competitor than many think

IMS role in mobile will remain minor. RCS is dead.

OCT 11 2010 NEW REPORT AND BLOG POST ON RCS HERE
So, a day spent yesterday with the IMS part of the operator and vendor industry at the IMS World Vision event in Barcelona. The event is going on for a couple of additional days, but I'm back in London at the Telco 2.0 Brainstorm event instead now.

Wow. It's been quite a while since I heard the level of introspective, defensive groupthink I got bombarded by. Unreconstructed, old-world telco network views, perhaps occasionally spiced with a light flavour of Web 2.0. I lost count of the time I found myself shaking my head about how little some in the industry "get" what's happened. A highlight was Telefonica claiming that IMS was needed to "compete against Internet service providers" in basic communications services like voice, and will enable them to "really fight".

Which contrasted rather a lot with some of the vendors' more sanguine views that competing with Facebook, Skype et al wasn't the point of IMS today - that train has left the station, and instead IMS should be about assisting the Internet players and providing some form of glue to interface that world with the phonebook. (And of course, supporting VoIP on LTE or fixed broadband).

To me, the legacy thinking is summed up by the continuous usage of the word "terminal" throughout the day. It's like the network folk are stuck in a 1980s timewarp, back in the days of mainframes and green-screens. Let's forget that there are 1GHz Snapdragon-enabled devices out there, which are more than capable of gaming the access and core networks of the operators. Even more astonishing was the assertion that "the Cloud" is the same thing as the [operator] network.

Right, time to stop equivocating on one of IMS's main problem children. I've been writing about the lack of IMS-capable mobile phones for over 4 years now, criticising RCS for more than two years, and it's now appropriate to nail the coffin lid shut. RCS is dead. RIP. There's no business model, no justification for the battery drain, no clear plan to get clients onto the bulk of phones sold through non-operator channels, no prepay story, no MVNO story, no reason it should generate revenue uplift, as it just gives users access to a few websites that were free anyway. It might well cannibalise the sale of data plans by reducing the use of the browser and widget frameworks. It is also near-useless until it becomes cross-network capable - which means it just needs one or two operators in a given market to say "no" to completely destroy its theoretical value.

That said, although it's dead it's still twitching a bit. We'll probably see some half-hearted attempts to pretend it can be rescuscitated, in France and maybe Spain or Sweden during late 2010 or 2011. Japan and Korea might try some almost-RCS offerings. And then it will disappear. It reminds me of UMA in 2007.

Mind you, my views on RCS were positively benign compared to those of Paulo Simoes of Portuguese operator TMN at the conference. He launched the most comprehensive, coruscating annihilation of the hapless technology I've ever heard. He pointed out a large herd of elephants in the room - the paucity of use cases, the excessive power consumption, useablity, lack of "sexiness", the pointlessness and clumsiness of filesharing, the downsides of presence and availability, the lack of enterprise focus, the reliance on MSISDN and more besides. Mixing metaphors horribly, the elephants collectively make it a "lame duck". He challenged vendors to give him RCS for free upfront, as he was willing to pay a volume-based usage fee if it was actually used. Several delegates apparently compained to the organisers that his witty and surgical evisceration of RCS was "too negative" for an event they clearly hoped would be a happy-clappy evangelical conference of consensus.

The other big theme was voice on LTE, especially in VoLTE (GSMA / IMS) guise. I'm somewhat less negative about that, for two reasons. First, the ideas of a barebones version of voice-on-IMS for mobile makes sense, in the same way that using IMS for NGN VoIP on ADSL does - it's a straightforward PSTN / PLMN replacement. VoLTE doesn't depend on presence, doesn't mandate messing about with video or filesharing or pretence of being a social network - and, crucially, might be deployable in a fairly silo'd "in a box" version.

Unlike RCS, there is not a "prisoner's dilemma" situation that everyone needs to do it either - one operator in a country could deploy VoLTE with IMS, another could use VoLGA, a third could use Skype and a fourth could stick with circuit-switched voice via HSPA+. Interworking via gateways would be messy, but the voice industry is used to that already.


That said, I still think that VoLTE's immaturity is one of many factors that will delay LTE as a mainstream technology to 2015 and beyond.

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.