Telcos' own-brand iPhone apps

Just out of curiosity, I decided to have a look through the Apple AppStore to see what other telco-branded applications are available.

So far, I've found:

- BT Exchanges local search and yellow-pages style app
- Orange UK WiFi Hotspot finder, plus also Orange Wednesdays movie application and "Your Orange"
- AT&T "Connect Mobile" conferencing app, Yellow Pages and NBC Olympics apps
- Telefonica Espana "123", O2 UK - My O2 account management app (useless without an O2 account), O2 Czech IPTV guide called "O2TV"
- Telstra's "Official V8 Supercars" apps for Australian motor-racing fans
- Portuguese operator TMN's "Pond" social media aggregation tool
- Taiwan operator Far EasTone's "Do U Love Me?"
- Four apps from Korean operator KT Corp, none of which I can understand
- Something from Softbank mobile in Japanese that I don't understand
- Various Vodafone apps including People Sync (part of 360), a multi-headed social network front end called "Vodafone Update", and others from various local properties including Omnitel (Italy) and its Turkish subsidiary

I guess we are moving slowly to a world in which operators start to become so-called over-the-top providers of applications, but there is still huge resistance from the corporate culture of blending access and service.

A problem with WiFi-based offload?

In general, I'm a fan of using WiFi to reduce load on 3G macro networks, especially for laptops used with 3G USB dongles and smartphones like the iPhone. Where the connection manager works well, there are various models which can permit the device to connect to home/office or public WiFi.

In particular, I'm seeing a fair amount of mobile operators use their own, or partners' networks of public WiFi APs. Most notably, AT&T acquired Wayport and has other footprint for use in iPhone offload, while Vodafone has cut a deal with BT OpenZone in the UK.

However, there is one problem as the density of such offload points increases. As well as the main public OpenZone points in London, I can also use the BT Fon "virtual hotspots" as an extension of my home broadband account.

While this is great for my laptop, it's causing me difficulties on my smartphone. The density of BT / Fon / OpenZone access points in central London is so high (in homes and offices or other locations) that as I walk down the street, my iPhone keeps attempting to register. But by the time I've got online, I've walked past it and onto the next one along the street with stronger signal.

If I walk 5 minutes from home to my local tube station, I need to switch off WiFi temporarily, if I actually want to use mobile data - otherwise I have a constant stream of pop-ups from the connection manager on-screen, and no reliable connection.

It probably wouldn't help with a high density of femtocells either, until there's a reliable way of doing femto-to-femto handoff as you walk down the street.

Food for thought.

NEW Mobile Broadband Traffic Management Paper

NEW Broadband Business Models Strategy Report

An open letter to Vodafone on data roaming pricing

Dear Marketing and Pricing Executives at Vodafone,

In the past, I've been pretty complimentary about you guys, especially with regard to things like Passport and innovations around third-party paid mobile broadband.

My attitude has just changed polarity.

In February, I switched my main personal mobile account to an iPhone on Vodafone UK. My main criterion for choosing Voda over iPhones supplied by O2, Orange or Tesco was specifically about international roaming charges. All the other pricing was much the same, and I thought that perhaps Vodafone's network might be less congested than O2's, without a million other iPhone users sharing it.

So I went to my local Carphone Warehouse, asked about the different international fees, checked online - and picked the Reds on the basis of a simple and intelligent charging structure, which seemed to be much less of a rip-off than the others.

We all know that most international data roaming is ludicrously-priced, and that it needed heavy regulation from Brussels to get European tariffs into the vague realm of sanity, with notification-of-charge and so forth. The whole industry privately agrees that data roaming pricing is a joke, even if few people at operators want to be seen killing the golden goose by acknowledging it in public.

But I thought that the costs on Vodafone - basically a flat fee of £5 per day for up to 25MB - were not too unreasonable. It's about half the price of a day of hotel WiFi, or perhaps 2 hours in an Internet cafe. Or 10x the price of Vodafone's UK prepaid daily tariff, which gives 25MB for 50p.

Expensive but acceptable, especially as I'm checking my business email. 25MB is ample for non-heavy use of an iPhone: email, catching up on blogs, a quick bit of Google maps and Facebook. Most importantly, I can be pretty confident that I can just use my phone normally, without double-checking the amount of data usage on the settings menu once an hour.

I know that the current EU-mandated wholesale price cap in Europe is €1 per MB, falling to €0.80 from July. I also know that Vodafone has its own footprint across Europe, so it's not as though it's getting stung for lots of wholesale data fees, as generally you're on-net anyway - so any disparities wash out on inter-country transfer pricing.

So, given that the only reason I'd chosen Vodafone in the first place was because of this tariff - and I'd recommended it to other people as well - I wasn't best-pleased to receive an SMS announcing:

"On June 15 data roaming prices are changing plus some countries will be moved into a different travel zone"

The new prices are £1 per MB, up to £5, then £5 for every 5MB after.

In other words, for 10MB the price has doubled, and for 25MB it has quintupled. For 25MB, that's 50x the cost of the domestic daily price. Apparently you get SMS alerts when close to 5MB and 10MB thresholds.

I see that the press release somehow manages to pitch the change as being positive for customers. I'm impressed that you seem to have managed to hire Alastair Campbell and Peter Mandelson so soon after the general election, to spin bad news for you.

I guess I'm back to using WiFi only on the iPhone when I'm travelling, and I'll go back to taking an unlocked Nokia and buying local data SIMs again.

I've double-checked this with customer service (your IVR system is broken, by the way) and asked to get transferred to someone whose job it is to deal with what I described as "high nuisance value" customers like me. Double-checked with her too, that this applies across the board, including iPhone tariffs.

So. My main (only!) reason for choosing Vodafone against its competitors has just been removed at a month's notice. Three months into an 18-month contract, so I can't just churn immediately as I'd like.

Honestly guys - I've heard Vodafone talk at various events and conference about customer loyalty, stickiness and so forth. Have you not worked out that if you show *contempt* for your own customers, that might work against you? You even got a plaudit the other day for smartphone customer loyalty - and up until 3pm this afternoon I would have given the survey a thumbs-up as well. Let's see what the next one looks like, eh?

[Edit: Note to all mobile operators: as long as you pull stunts like this, do you *really* think you can convince your customers to sign up for mobile payments/wallet service, or managed identity & authentication, or similar? How do I know you're not going to change the rules mid-contract to permit spam or charge extra? This whole idea of massive price changes to live contracts illustrates a huge amount of bad faith and a lack of business professionalism]

It's not as though you're increasing per-GB price for mass mobile broadband downloads either, where perhaps there's an argument that costs and prices are out of kilter. This is a per-MB roaming price - quite probably the single most overpriced, unjustifiable and most-hated item on operators' tariffs in the entire industry.

Now it's vaguely possible that this cost somehow reflects increased signalling through VLRs and RNCs, rather than actual data downloads, because of regular international data connection setups from smartphones. But if that's the case, you should say so - and frankly I can't believe anyone uses $20 worth of VLR resources per day. It would be cheaper for you to give users a local Vodafone SIM to switch to.

Overall, it's fair to say I'm furious about this. Oh, and I wasn't going to mention this before today - but your network in central London sucks too - the number of times I've been with friends with O2 iPhones who have coverage when I don't is amazing. As are the number of dropped data connections, mysterious "403" errors that need me to switch off & re-register and any number of other glitches.

I've written before about "Resentment Base Pricing" and "Active Customer Disloyalty". Looks like I've got a good case study.

So Vodafone people: any excuses? Is it genuine customer contempt, or just accidental?

Responses welcome either on this blog or via email.

Dean

(Note 1: journalists - feel free to quote me)
(Note 2: Google, you should probably work out a way to get the Maps app to send a GPS look-up via SMS when the user has data roaming switched off, returning with the nearest free WiFi cafe and a voucher for a discount espresso)

NEW Mobile Broadband Traffic Management Paper

NEW Broadband Business Models Strategy Report

From "dumb pipe" to "happy pipe"

Recently, I've been wondering exactly who coined the term "Dumb Pipe".

David Isenberg wrote a piece called "The Rise of the Stupid Network", in 1997, when he worked at AT&T. A copy is still available here, but although it uses the phrases "dumb bits" and "dumb transport", it doesn't mention the word "pipe".

The negative associations with this snappy, convenient epithet have probably cost the telecoms industry a trillion dollars. It is so unappealing, it seems to induce an almost visceral and irrational fear. You only have to look at the way that some vendors sneer "You don't want to end up a dumb pipe, do you?" to recognise that we're beyond cool-headed analysis and getting close to some legal form of discriminatory "-ism" here.

For the last couple of years, the term "smart pipe" has bubbled around, making a few people think a bit more closely about areas like policy, QoS and so forth. Yet it still does not appear to have dented the shield of fear or bias around the "dumb pipe" dystopia that many perceive to be encroaching. The frenzied and ridiculous appeals to the European Commission for a "Google Tax" are prime examples of this. In essence, the lawsuits appear to say:


"We are dumb.... so can you please tax the clever people for us?"

Recently, I've been using the term "Happy Pipe" instead, to point out some possible different futures - and also to confront the almost bigoted preconceptions that surround networks' supposed "dumbness". This applies to both fixed and mobile broadband - although the challenges, technologies and capacity are different, as are the business models emerging to monetise the happiness.

There are a few separate strands here:

• Today's networks are pretty far from dumb, and there is huge value in deploying and running them well
  
• The smartest networks are the ones which work collaboratively *with* Internet and content companies, not antagonistically against them. This specifically related to areas like policy management.
• There is much under-exploited potential for revenue around wholesale models. There are many potential business opportunities, both for "bulk" wholesale and "slice and dice" methods of deriving extra fees for capacity and value-added services.

It is conspicuous that it has required a range of new players in mobile data, such as Jasper Wireless, to develop extra functionality that translates between a carrier's wholesale offerings, and those consumer electronics and M2M firms that which to exploit connectivity in their new products. While some operators have innovated in their platforms (eg Telenor, speaking last week at Telco 2.0 about M2M), others have become introspective.

It is difficult for a camera manufacturer to think "I'd love to sell a new SLR with 1000 photo uploads included" and then find someone who could structure that deal, because it's not a "subscription". It's difficult for a hotel chain to shop around for a way to part-subsidise roaming charges for its international guests. It is difficult for an Internet video provider to get a "network congestion API" so it can cleverly rate-adapt its codecs during peak hours, or even just push a message to its users warning them of likely buffering delays.

There are so many ways that the capabilities of a broadband network - fixed or mobile - could be used to improve customer experience, work more effectively with upstream partners, improve traffic management without interfering with users' expectations and unlock new revenue streams.

I covered a large amount of analysis on these and other sub-themes in my recent report on Fixed and Mobile Broadband Business Models, published by Telco 2.0 (details are here or email information AT disruptive-analysis DOT com).

In it, the report concludes that operators have 4 main strategic choices:

- Becoming a full, Telco 2.0-style service provider with a broad set of retail, wholesale and "two-sided" propositions, engaging with users, developers, content providers and so forth
- Becoming a "happy pipe" provider, focusing more on wholesale propositions in addition to class-leading access and related infrastructure based value-added services
- Becoming a "government department" - ie running national broadband networks or critical infrastructure like electricity smart grids.
- Becoming a "device specialist" focused on creating user experiences and product/service end-to-end propositions in either fixed or mobile domains - exploiting Moore's Law, rather than betting against it.

These are not mutually exclusive, and certainly I would expect the very largest operators to have a foot in all camps, especially where they have multiple national properties, or dedicated wholesale divisions. Fixed operators with "structural separation" provide an interesting model for their peers in mobile.

One other missing piece of the puzzle is exactly what type of services can/should be offered on top of access - and how they should be charged. The simplistic attitude that YouTube / Skype / Facebook / Salesforce.com somehow act as predatory "over the top" providers, somehow disenfranchising operators from their rightful revenue streams is weak thinking.

There is no reason why Verizon or Orange or China Mobile could not have acquired YouTube instead of Google - except the telcos' historical inertia behind maintaining the link between access and service businesses. Despite the past 10 years, there is *still* a reluctance by network owners to offer services beyond the confines of their own access customer base - thus denying themselves the global scale required to compete with Internet-based providers. Yes, those services may well be *enhanced* over their own infrastructure, but that is not a reason to eschew pushing the widest possible distribution as well.

The bottom line is that we need to move away from this "dumb pipe" slogan. Separating connectivity and service is inevitable in a lot of ways - but that can actually add value to providers of both.

(In addition to the research report on business models , Disruptive Analysis also undertakes strategic consultancy for vendors and service providers in this area. This encompasses diverse aspects including management workshops, business plan review, competitive analysis, organisational development and executive coaching, and studies of market dynamics and forecasting).

NEW Mobile Broadband Traffic Management Paper

NEW Broadband Business Models Strategy Report

Mobile broadband traffic - be careful about language

I am currently writing a Disruptive Analysis research report on mobile broadband traffic management strategies. I have discussed various concepts on this for the past year or so - the relative merits of offload, compression, policy management and so forth.

One important factor for vendors and operators to keep reminding themselves is about the importance of accurate language, logic and semantics. The wrong words can drive poor decision-making, especially on "emotive" issues. Non-sequiturs and logical fallacies can lead discussions or engagements astray.

One of the most mis-used words is "capacity".

What triggered this post was seeing a sentence along the lines of "3% of mobile data users take up 40% of capacity".

This is almost certainly untrue - as very few networks (none?) actually run at capacity-utilisation rate of above 40% - especially when averaged across all cells. If that were true, there would be almost-permanant and geographically-ubiquitous congestion for mobile data.

Add in to this the fact that "capacity" is actually an ill-defined term embracing multiple separate variables (uplink capacity, downlink capacity, signalling capacity etc) and measurable at various points in the network, and it becomes even more useless as a description of the current state of affairs.

What I expect may be the more accurate statement is "3% of mobile data users account for 40% of aggregate downstream traffic".

Which is an interesting observation - but not in itself a "problem statement", and certainly not something that can immediately lead to conclusions such as "... therefore flat-rate pricing is untenable" or "... therefore it is critical to manage specific applications".

Those are examples of non-sequiturs which are potentially damaging. There is no direct logical connection.

Instead, it is critical first to understand what the problem actually is. So, 3% of mobile data users account for 40% of aggregate downstream traffic - but what impact does that have, either on the other 97% of users, or the operator's cost base?

If that 40% of traffic was confined to rural cells operating at much higher rates in the middle of the night, it is likely that the impact on other users would be zero, although it might have some variable costs associated with peering. If that 40% was instead concentrated in the busiest urban cells in the middle of the day, when existing capacity really is creaking, then there's a much more pressing problem.

But what if heavy users tend to download a lot at night... but then have usage during daytime that is broadly on a par with everyone else? They are then not using capacity in a way that causes any more congestion than light users. It could even be that a nominally light user, doing a sudden big burst of mobile video at 9.30am on the bus to work, causes more problems than another user trickling P2P traffic throughout 24 hours.

And in each of these cases, there are varying signalling loads as well. A smartphone user checking his email 10 times an hour might be causing more headaches than a laptop user watching 15 mins of video once a day.

My view is that until there is really good, really granular data on actual usage patterns (and scenarios and forecasts for how that might change in future), knee-jerk comments about "bandwidth hogs" are likely to cause more trouble than they solve.

Instead, I am working on a priority list of actions that operators can take to reduce the pressures on the network without creating unintended consequences in terms of user experience, customer satisfaction, or fixing "the wrong problem".

There are various actions - and technological avenues - that can be pursued without risking money on over-complex solutions. I am particularly skeptical of policy management approaches that stress focus on application differentiation, rather than (for example) time-of-day.

Watch this space for more extracts from the analysis.

(As well as the research study, I am also sharing my views and data on this in private advisory consultations. Please contact me for further details - information AT disruptive-analysis DOT com)

NEW Mobile Broadband Traffic Management Paper

NEW Broadband Business Models Strategy Report

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....)