Enterprise UMA: Dead on Arrival. Enterprise Femtos: Come back in 2012

There seems to be a sudden flurry of activity around enterprise FMC version 2.0. I'm expecting to see a large amount of further hype over the next few weeks, especially around MWC in Barcelona.

In my view, it's all smoke and no fire.

Meru Networks has inexplicably partnered with T-Mobile US to offer a corporate version of the dual-mode WiFi UMA system. Its "distributed single access point" architecture makes it slightly less unsuitable than the more complex WLAN networks from other vendors, that would necessitate AP-to-AP handoff. It is highly notable that competing WLAN vendor Aruba put out a white paper about UMA a year ago which I discussed here, but has been very quiet on the topic ever since.

Quite why T-Mobile is still flogging the dead UMA horse is a separate question. It doesn't take much imagination to guess why it's made no mention of subscriber numbers to Hotspot @ Home. If it was even slightly successful, it would be shouting from the rooftops.


I've written many, many times over the past 4 years before about UMA's deficiencies for the general consumer marketplace. In the enterprise, there are even more challenges - security, PBX integration (please don't give me the substitution pitch yet again), devices, roaming, numbering, operator lock-in, WLAN vendor lock-in, WLAN coverage, TCO, management, monitoring and above all channel to market and support. Then there's the question of how the enterprise can use the WiFi on the devices for non-carrier applications. Oh, and most of the most popular dual-mode WiFi smartphones (except RIM's) don't have UMA. It's not in the G1, most obviously.

The only upside I can see is that unlike most of the PBX-centric approaches to corporate FMC, you can actually get SMS to work OK.


In a nutshell, I'm surprised that Meru is wasting its time and money on this. Yes I'm sure there will be a handful of demo sites, and maybe even some sort of commercial launch. But I'm utterly certain that in a year's time it will have had precisely zero effect on the overall enterprise comms market.


Enterprise femtocells are another emerging hot topic - but one which has slightly more "legs" - eventually. I've been hearing escalating buzz about this for the last 6 months or more. I first wrote something on this in May 2007, when my conclusion was that 2012 seemed like a reasonable timeframe for massmarket commercial offerings. Maybe I'm being optimistic given the economy, but I still reckon that's about right.

What appears to be happening is that the femto guys seem to have learnt some of UMA's lessons, and "get" the complexities of corporate integration. I've heard talk about PBX integration from day one, awareness of the issues around firewalls and network management, and definitely some cognizance of the difficulty of getting and retaining a channel. I'm expecting the lead routes to market to be hybrid fixed-mobile operators with large integration units and an loyal established base of corporate PBX customers.

It's still not going to be easy though - there's all sorts of little hidden issues to sort out in large buildings / enterprises (eg access to ducts and cables, do you need power-over-ethernet for femtos, what are the compliance and Sarbanes Oxley implications of 3rd-party infrastrucure etc). I'm expecting some others to go for the other end of the spectrum and start talking about SMEs. In theory, yes, SMEs could go "all wireless". But in reality it's not that simple, and there's the usual challenges of 10,000 channels to get to the buyers, high cost of sale per customer for little margin, and niggly annoyances like integrating/replacing landlines for faxes and security alarms.

To give an example of the complexities - what happens if a business gets femtocells installed on its premises... and then one of them gets stolen? Or hacked? Whose responsibility is it? I see lots of revenue for lawyers....

There's also a little bit of fuzziness about how "enterprise" gets defined here, and I expect to see a few "corner cases" emerge before the real massmarket. In my view, the main categories are:

- SME sites (small offices, shops etc)

- Private large-enterprise sites (corporate HQs, warehouses etc)

- "Public" business locations with lots of visitors (big retail stores, government buildings, HQ lobby areas etc)


The first point to make is that femtos are very poorly-suited to visitor-heavy locations, as they are single operator only. I'm not sure that a council would want to improve coverage or costs for just 25% of visitors. Obviously, they could confine the benefits just to employees, though - assuming the signal doesn't mess up macro-network coverage for visitors with interferece, deep inside the building. There's possibly some clever stuff that could be done with roaming - so maybe deals can be cut which enable Big Corporation Inc to say "cheap calls for all our overseas vistors while on the premises" although that's not as easy as it sounds either.

There might also be some other "hotspot" business cases for cafes or hotels or airports (eg the "free mobile broadband" business models I discuss in my recent report). I could certainly imagine a sign on (for example) Costa Coffee, saying "Free HSPA access for T-Mobile users". Is that "enterprise femto" if it's the coffee chain paying the bill?


I reckon that ip.access knows more than most in this sector about the corporate market. After all, it was pitching the concept of enterprise picocells back when I first met them in 2001. I remember mentioning to the CEO at the time that it wasn't as easy as it looked, and that the usual problems of attaching an operator-owned box to the corporate-owned LAN would apply (demarcation points, VLANs, firewalls, support, management, monitoring again etc). Over time, I was proved right, and the majority of its picocells in business environments (I think) have been put in singly, often with a completely separate backhaul connection rather than sharing the LAN. They've done some analysis on picos vs. femtos which I'm inclined to agree with as it reduces the need for things like femto-femto handoff - but neither is easy, either technically, operationally or commercially.

So, I wouldn't be surprised to see a few instances enterprise-ish femtos appearing in 2010-2011. But I'm not expecting to see "Company X deploys Operator Y's femtos throughout its new campus site and integrates with IP-PBX vendor Z's infrastructure" for a long time yet. It's not just a case of hanging a couple of cellular access points off an existing LAN.

NFC vs ordinary RFID in mobile phones

I saw an interesting presentation today about RFID tags, mostly pertinent to industrial applications like asset tracking, logistics and so forth.

It made me start thinking about where the applications for NFC on handsets might stop, and "plain vanilla" RFID begin.

There are a number of differences here - NFC is more secure, but shorter-range. It is also being standardised and tied into various business models with operators. Conversely, RFID has longer range (passives work at up to 10 metres, and powered ones considerably more), but is generally a bit less secure.

The issue I see is that most of the NFC applications are heavily dependent on the slow churning wheel of industry standards, as well as (probably) being tied to mobile operators. This is fine in concept for some of the more "sensitive" applications like banking, but probably over-engineered for things like "smart posters" and the like. There is also a huge elephant in the room about how NFC links in to handset UI and applications. If I have a stored-value card like an Oyster "in my phone", I ought to be able to check my balance from the phone screen, look at recent transactions and so on. At present, the UI/app side of NFC appears woefully weak to me.

RFID on the other hand could have lots of simple applications - simply attaching a passive RFID sticker to phone could be useful for things like anti-theft, for example, or tracking an employee inside a building (where's the closest cardiologist to a patient in a hospital, for example).

I'm wondering if NFC is over-complicating the whole "short-range access" part of handsets, by having too much focus on (mostly pointless in the short term) applications like digital wallets.

Carnival post - some great other stuff as well

Thanks to mjelly for including my post on the economy vs. mobile in this week's Carnival of the Mobilists.

There's some other top-notch posts this week too, including one of Tomi Ahonen's on Nokia, Visionmobile on telco APIs, and Ajit Jaokar on privacy.

Check it all out here

Lots of talk about Spectrum Policy 2.0. Don't hold your breath.

In the last couple of weeks I've been pitched with various concepts and philosophies about next-generation spectrum management.  The general view of some of the more jaded members of the industry is that "auctions don't work". 

So first we've had some suggestions about revenue-share models for spectrum - which I reckon is quite cool in concept but a nightmare to implement, given the consultative and legislative processes in place.

Next up, Lee Dryburgh has a cool interview with Sascha Meinrath who espoused the "White space" argument of using the spectrum more efficiently by "opportunistic access" and a more democratic view of the airwaves by which people can transmit without being beholden to major carriers or operators. Frankly I'm unconvinced - it sounds pleasingly democratic but overlooks minor issues like economies of scale in device and RF silicon production. It's difficult enough trying to make power-efficient phones with the fixed bands we have today, let alone ones that have extra cognitive & tuning capabilities to sneak broadband into other under-used slivers of spectrum. Let's see how the current white space initiatives fare before imagining "end-user empowerment" utopias.  (It is, incidentally, last orders for the eComm 2009 early bird registration tomorrow, so head over to book yourselves in).

Then, I saw in today's Sunday Times that apparently the UK government is contemplating giving away some of the "digital dividend" spectrum band after analogue-TV switch off rather than auctioning it. However, it will come with "strings attached" - basically that the new owners have to commit to doing a fibre rollout in tandem with the wireless deployment.

I've also mentioned before the idea of band-sharing of government spectrum (eg radar bands), in a similar fashion to the white spaces concept.

Overall, my view is that this is all very worthy, and we're starting to get the various technological enablers in place. But it's going to be an exceptionally long haul - 10 years or more - before we see any radical shift in the way that frequencies are allocated and used. I think there are distinct risks that any notional efficiency we gain by getting access to "wasted" spectrum, or by selling it in new ways, will instead just be wasted in a different way through fragmentation and poor user experience. 

I don't buy into the concept of "democratisation of the airwaves" for its own sake. In general, I think that market forces + occasional heavier fist of regulation seem to be doing OK at driving the current incumbents to improve accessibility and useability of mobile. A lot of the "net neutrality" rhetoric is tedious and irrelevant in sufficiently competitive markets. Maybe a bit less in the US, where there's more of an ideological belief that "openness" is somehow special, but at the end of the day I think there's something to be said for scale and large companies that have resources to iron out the complexities, as long as it's possible to hold them to account. 

That said, I think that 2.4GHz WiFi has been pretty good at providing a balance - having at least some unlicenced / light-licenced spectrum has helped keep the other licencees honest. It has, however, highlighted that large-scale "grassroots" deployments don't work.

Victory for commensense branding - HSPA+

OK, so HSPA isn't the most snappy acronym on the planet. But most people in the industry have grown to recognise and evn like it.

There's been a bit of a spat about the next step though - some companies (notably Qualcomm) have been using the fairly clean and intuitive HSPA+ .

Others (notably Ericsson and the official standards-definer 3GPP) have been using clunky terms like HSPA Evolved, HSPA Evolution and the like.

Commonsense has prevailed - Vodafone's announcement has pretty much nailed shut the coffin on this Evolution verbiage. Why use four syllables when one will do?

Now I'm hoping they go one better and go back to call "that" Barcelona event by its proper name, 3GSM, rather than its current bland moniker....

Nortel - an lesson in economic realities

Yesterday, Canadian network equipment market Nortel filed for bankruptcy.

I don't want to address the specific factors that have led to its downfall, but rather the possible consequences for the wider industry, which highlight the "interconnectedness" of the telecom sector.

There are lots of direct and indirect consequences:

• According to Reuters, one of Nortel's main creditors is Flextronics, a contract manufacturer. Its own statement yesterday highlighted that it had been undertaking "risk mitigation" with regard to Nortel for some time. Expect a lot more "risk mitigation" to occur in the industry - requests for cash upfront, reduced payment periods, perhaps leasing rather than sale and so on.
• "Risk mitigation" is a lot easier for large, diversified suppliers like Flextronics. It will be less obvious what happens to Nortel's other suppliers. There's a good comment on supply-chain fragility here, which talks about the possibile impacts on specialist chipmakers. Airvana, which has an OEM relationship with Nortel for CDMA equipment, put out its own statement yesterday, referencing unpaid bills. Its shares fell 9% yesterday, against 6% for Flextronics.
• Personally, I'm thanking good fortune that I don't have any outstanding bills with Nortel, which has been a client in the past. Things are tough enough for small businesses without dealing with bad debts - and it makes me certain to be wary about any other clients that seem to have cashflow issues in future.
• Irrespective of plans for job cuts, there will be plenty of Nortel CVs out with recruitment consultants. Many suppliers and partners will find that key contacts are no longer in position - adding more friction and uncertainty even where business continues.
• Its enterprise customers seem sanguine at the moment. Lets see if that attitude lasts if the company's corporate business unit gets sold - perhaps any new future owner will have a different attitude to support or pricing.
• Nortel has equity stakes in a number of other technology companies. It is possible that these may be sold to realise cash - but at what price? Indian company Sasken, another of Nortel's suppliers, also has the Canadian firm as owner of about 10% of shares. Perhaps in anticipation of a fire-sale of a large chunk of equity, its share price tanked yesterday. Expect analysts to be picking through the shareholder registers of publicly-quoted tech companies in weeks ahead, to see who else is "exposed" in this way. Even for private companies, the anticipation of sales of stakes may negatively impact the valuations of the other owners' shares. Trapeze Networks, for instance, has Nortel, Motorola and Juniper as investors. If Nortel sells its stake at a discount, Motorola and Juniper's accountants will probably have to reflect a write-down in asset value themselves.
• This is going to intensify the attitude of operators to restrict their strategic supply contracts to large and well-funded vendors. Mid-sized and startup vendors are going to find it much trickier to cut deals with carriers, and will be forced to approach the "big boys" as OEM partners or channels, or just focus on Tier-2 and Tier-3 customers.
• Now Nortel has falled, everyone (especially in the investment world, such as hedge funds) will think "Right. Who's next?". As we saw during the financial crisis last year, this can precipitate the failure of other relatively-healthy companies. It's certainly not going to help anyone looking for credit in the telecom sector.

Overall, it's not good news at all. While at one level, it is going to be necessary for some companies to fail in order to allow the rest of the industry to consolidate and maintain profitability, this is not a panacea. As seen in other industries, the interlinking of supply chains and other relationships has significant knock-on effects.

I'm hoping that the mobile industry doesn't have the sort of dense layout of dominos seen in the finance sector. There is good cashflow coming in at the top, after all. But Nortel provides an object lesson to us.

Mobile industry in a state of denial about the economy

I'm increasingly of the opinion that many in the mobile industry are being insufficiently pessimistic about 2009.

I keep hear people saying "Oh, nobody will ditch their mobile account". Well, yes, in the same way they won't ditch food, either. But I wouldn't want to be selling foie gras, or running an expensive but undifferentiated restaurant at the moment.

In particular, I'm curious to see if the sudden burst of growth and enthusiasm around smartphones will be the unstoppable bandwagon that some observers believe. Generally in a recession, people like "cheap luxuries" (pizza delivery does well, for example). I'm not sure that top-end phones and ongoing data plans fit into that category.

I also think that there will be a big focus on the cost side for operators in 2009. Handset subsidy and increasing customer support and returns costs will be a major focus. Some operators will also try to position themselves as saving costs for their customers - we already see offers suggesting people can "save money after Xmas", by deferring handset upgrades for a few months in favour of receiving a large cut in their bills instead.

At a retail level, there will be more shopping-around. Customers will start to question whether they really need 600 minutes, or free video-calling credit they don't use. There has already been a notable shift to rolling monthly contracts, and a broad range of SIM-only propositions for use with unlocked phones. I've seen that 3 UK now has a 6-month contract - perfect for economy-worriers.

The other thing I've been discussing with people concerns investment and capex. This year will see a range of spectrum awards - 2.6GHz in various other countries, 3G licences in India and so on.

I'm particularly interested to see whether bidding for UK 2.6GHz spectrum is much more muted than it would have been in the past - or whether impending capacity problems for mobile broadband will make the operators grit their teeth and do it anyway. I spent a lot of time looking at this are for a governmental body last year, but before the full grip of the recession hit. What's now clear is that any potential bidder relying on debt to fund spectrum purchase or network build-out will be having second thoughts. I'm not expecting too many adventurous expeditions from North American or Asian companies fancying their chances in a highly-crowded market, either. On the other hand there are 5 operators - and 2500-2690MHz isn't enough for all of them to get 2 x 20 MHz for future LTE deployments.

My friends over Telco 2.0 have been musing about whether we'll see a push to make spectrum purchases more linked in to commercial success, perhaps by revenue-share arrangements. I think that's an interesting notion, but would probably take years of consultation and hand-wringing by all concerned.

My bet is that the UK auction will be moderately successful (if it goes ahead, given the interminable legal wranglings about spectrum & reallocation of 900MHz GSM frequencies which are currently blocking its progress). I'll have a punt that total receipts will be in the £1.5-2bn range - reasonably substantial, but nowhere near some projections I heard last year.

Overall, I think that the industry is going to have a couple of wake-up calls in Q1-Q2, as financial results start to unveil the grim realities. I don't think that some company's share prices have enough pessimism built-in yet - too many analysts and investors see the sector as counter-cyclical. I'm not seeing many signs that the much-vaunted fiscal stimulus moves by various governments will be of direct benefit yet - if anything, I reckon the fixed side of telecoms stands to gain more, by pushing state-funded fibre build-outs.

As I've said before, I'm not taking a glass half-empty view because I really want to. It doesn't do my own business any good if nobody is buying research reports or consulting services or speaking engagements. But at the same time, I think I need to be realistic - and I still meet quite a few others who seem to be enjoying the warm glow of their rose-tinted spectacles.

And lastly, getting back to the question of whether mobile use really is sacrosanct in a recession, a tip-o-the-hat to Patrick for highlighting a story about someone who actually has binned his phone outright...

Mobile social networking - how I'll know when it's going mainstream....

This falls into the category of "amusing personal anecdotes" rather than "rigorous industry analysis". But it also reflects on the complexities of getting user experience right, and mapping telecom and mobile services onto the way people actually live their lives.

One of my close friends is, for want of a better term, "a bit of a player". Trying to keep track of the various females in his life is a fulltime job. One thing is clear though - FaceBook is pretty important to him, as is SMS, MSN, Gmail and obviously mobile voice. He doesn't have a landline, and his Blackberry is strictly work-only.

But although he uses FaceBook as a hub for his busy social life, he does not really appear bothered (yet) about getting mobile access to it. He'll ask people he meets "Are you on Facebook?", remember their name or email address, and add it later via the PC.

I'm the same - even though I do look at FaceBook on mobile, I think I've only ever once "added a friend" on a phone - and that was in the relaxed confines of a conference, rather than in a noisy bar. (Note to readers: I don't have work contacts on FB, so please don't request it).

Conversely, if my friend wants to swap phone numbers, he'll type in the number and "give the other person a missed call" so they get the caller ID. Sometimes he'll just hand the phone to a new acquaintance and invite her to type her own name & number directly into it. He might also add an email address or IM nickname.

I've seen various people suggesting that mobile "will become the new social network". I'm not 100% convinced, especially because of the incumbency of Facebook / Myspace / Bebo etc. On the other hand, whoever gets the "add friend" experience working first is probably going to get a huge advantage.

When I see my friend say "Hey, you're really cool, we should meet up some time. Put your Facebook ID in my phone" I'll know it's really going mainstream...

Dual-SIM phones - separating voice and data?

There are already a few dual-SIM phones around on the market, like the Samsung D880 and LG KS660. They are particularly popular in markets for which there are advantages to arbitrage between different carriers' networks, especially for prepay users. Some tariffs do not include "cross-network" minutes, so it's easier for users to simply have multiple SIMs and numbers than waste money on off-net calls.

Most of these phones have been 2G-oriented, although there are some 3G ones emerging as well.

It strikes me that there could be a large market for dual-SIM devices which are optimised to work with one 2G (voice+SMS) SIM, and another for 3G data. So, for example, you could keep your existing voice service while roaming, but benefit from a local cheaper prepaid data SIM.

In fact, even when not travelling, it would be good to be able to disaggregate the voice and data plans, and purchase them from two different operators if that offered better price / coverage / speed. Yes, it would mess up some of the ideas that operators are trying to push with mobile social networks and IMS concepts like RCS, but as an end user I'm not really bothered by that.

Clearly, this wouldn't be for everyone - and there would definitely be value in operators and device vendors offering innovative fully-blended services to try to keep people bundling everything in a single contract. But it would be good to have healthy competition to keep them honest.

Really, the best outcome would be to do away with the legacy SIM card altogether, so you could sign up for the access provider(s) of choice more easily - and switch without hassle. Or perhaps the ownership model for SIMs needs to change, so that you the user (or a neutral 3rd-party) own it, rather than the network.

Notifications and "keep-alives" from mobile apps - the battery issue

I've written before about the issues of power management in smartphones using Web 2.0 and other applications. Web services and widgets that use Javascript to pull down content in the background, presence clients checking for buddies' status updates. Social networking apps looking for new data, and so on.

The problem is exacerbated with smartphones that allow full multi-tasking, as they may have multiple applications pinging the network. This isn't too bad with 2G GPRS/EDGE, because of the way the radio channels are set up. But with 3G, and especially HSPA, there's a problem, because the radio has two "active" states (lets say "full" and "standby"), with different levels of power consumption, as well as a third state which could be called "off".

(If you want the full technical explanation on DCH and FACH channels, Martin Sauter has a great overview here)

Keeping the radio in the either fully-active or standby-active state is a battery killer.

This doesn't just impact "over-the-top" third party apps either. At the moment, it applies equally to "through-the-middle" operator services like RCS too. In theory, the operator should be able to control this a bit better, as it knows the various timings for the states on its network, and should in theory be able to configure the application to work around this.

But this would then need the application to be aware of the network state, and/or vice versa. And it would be complicated where the user had multiple operator clients running on the device (say, both email and presence).

As per normal, the handset, network and application areas of the industry don't really talk to each other. As with other themes in the industry, there's still the brick wall when you suggest that applications should be "bearer aware".

One option is to have some sort of "notification broker" that bundles up all the "keep alive" messages and sends them together, at times that optimise for battery life on the device and/or impact of the sheer number of these short messages on the network.

The next question is who controls the notification broker. And whether it's in the OS, a higher-level client, or even the radio. I think this may turn out to be a future battleground for the industry.

One thing to ponder on: Apple has been working on a push notification engine, although it's been delayed. And it also doesn't like background applications running on the iPhone.

It wouldn't surprise me to see an operator-sponsored approach as well. Possibly it already exists in some of the more "controlled" OS/app stacks like DoCoMo's. But I suspect that this will be more about protecting the network, rather than the handset battery - one solution optimising simultaneously for both seems unlikely.

This has huge implications for application developers, Internet players, handset vendors and operators.

I suspect the optimum solution would be a full two-sided version run by the carriers, used for internal apps like their own presence, but also with a completely open and standardised API for 3rd-party developers and hosted MVNOs. It might even be a new source of revenue. The other option is one run by the OS vendors - but even then, it would be preferable to have some sort of coordination with both operators and each other.

One to watch in 2009, I think.

Disposable mobile broadband - my experience

Someone close to me is going into hospital for an operation soon. They want to take their Mac with them for web and email access while recuperating. And it turns out that the institution concerned only has a paid WiFi hotspot service, at the typical extortionate rates, with the usual clunky credit-card sign up. It's also unclear whether the WiFi has ubiquitous coverage in the building.

Solution - as an alternative/substitute, I got them a 3G dongle as a gift. Obviously that's also a little hostage to coverage issues, but I'm finding central London not too bad unless I'm in a basement. Also, it's not necessary to have multi-MB speeds for HD video, or huge file download limits, in this case.

Given their expected stay in hospital, their existing 20MB ADSL + 802.11n WiFi coverage, and relatively infrequent normal out-of-home PC use (and iPhone ownership), there was no point in getting an 18 / 24 month ongoing contract. A packaged, boxed, prepaid dongle was ideal.

I saw that Vodafone announced a standalone prepaid dongle a week or so back, for £39 including an inclusive 1GB data allowance. You can buy more at £15 per GB through normal prepay channels. This seemed pretty good. Unfortunately, and despite what the first Voda store I visited told me, it doesn't currently support Apple Macs. Luckily, that one was out of stock anyway, and the second one on London's Oxford Street had some more clued-up staff who gave me accurate information.

Being two days before Xmas, with hordes of shoppers in London, I wasn't exactly getting personal service at some of the other stores. My patience ran thin in O2 and T-Mobile and Orange stores. But anyway, none seemed to have nice, convenient prepaid "in a box" dongles that didn't need contracts or other hard work to sign up, at least based on the display info and brochures. I was a bit surprised, as I'd though that T-Mo had a similar offer, but I couldn't find it.

So, my last port of call was 3 UK. They've been heavily advertising the dongle-as-Xmas-present offer all over London, so I was pretty confident they'd have what I needed. And yes, they have three pre-packaged options, based on Huawei E160 modem sticks (HSDPA 3.6 only, but that's good enough). They offer 1GB, 3GB and 12GB prepaid boxed bundles, with the data "credit" lasting 1/3/12 months respectively. Apple support was indicated on the outside of the box.

I was in store for about 10-15 minutes, was dealt with by two busy-but-pleasant staffers, who helpfully pointed out that the midrange 3GB bundle was, in fact, discounted to just £50 instead of the indicated £70. (Compared to £30 or £100 for the 1GB or 12GB offers). They also offered me the option of black or white dongles - obviously white to go with the MacBook.

Sold.

I paid £50 (ie €52 / $74) for the modem and 3GB / 3 months of access. At that rate, it's essentially disposable. Whether 3 is making any profit on it, if most of the 3GB gets used up, but the account doesn't get topped up afterwards, is another question entirely.

As a side-note - given that some London hotels still charge £10 or even £20 for a day's WiFi, anyone coming to London for a week or more would be insane not to use the same approach.

My 2008 predictions - how did they turn out?

I know it's become a bit of a cliche among analysts and commentators to do an annual set of predictions, and a post-mortem on the previous years. But for once, I'm going to go with the consensus, and go ahead anyway.

So without further ado, I'm going to revisit my 2008 predictions, originally posted here

1) There is a notable shift towards non-operator unlocked 'vanilla' handsets

Yes and no. There's certainly been a healthy market of people buying SIM-only mobile contracts in Europe, either with new handsets or unlocked legacy ones. On the other hand, operator exclusivity and better integration/optimisation on devices like the iPhone, BlackBerry Storm and T-Mobile G1, and 3/INQ 1 have ensured continued use of carrier channels for smartphones. The picture varies a lot by country and region, though.


2) The European Commission cracks down on data roaming prices.

Yes. You can't say you weren't warned.


3) Mobile broadand continues its rapid growth - but 3G-embedded laptops lose out even further to USB-based 3G modems

Yes. Enough said.


4) At least one mobile operator will face an investigation over reported numbers

No. Unless I missed anything, I don't think there has been any major incident of slapped wrists. I suspect investors are becoming a bit more savvy about interpreting reported numbers like ARPU, data revenues and "subscribers" for themselves.


5) Android... hmmm, it's just another platform

Yes. "We'll be back here in 12 months saying that Google's Android might be a big deal in 2009". Quite.


6) Technologies for exploiting end-user context and state become the hot topic of the year.

Up to a point. Lots of talk and conferences on APIs and presence and context-awareness, so yes it's certainly been a "hot topic". Plenty of discussion about possible business models whereby telecom operators can monetise their internal knowledge about their subscribers' context. But not that much real revenue or really impressive service launches yet.


7) Operators realise that knee-jerk attempts to block VoIP are counterproductive.

Yes, by and large. Many mobile operators have recognised that VoIP simply isn't a big threat, given complexity of use, and the fact that competitive and regulatory pressures are exerting much greater impact on circuit voice pricing. It varies by operator and region, but the DPI vendors' rhetoric is now much more about throttling video and P2P than blocking Skype.


8) Femtocells have a year of ups and downs. Some niche success, but practicalities will mean it's H2'09 or 2010 before massmarket deployment.

Yes. We're getting there on standards, and we're seeing the first soft-launches, but there are still too many optimists with steep hockey-stick curves. My forecast for 2009 shipments is still below one million units.


9) OK, this might be wishful thinking, but I'm hoping to see more pragmatism & innovation around the concept of mobile multiplicity.

Yes! There's a fast-growing acceptance that people will have multiple devices, and multiple operators. Even Verizon is talking about a 400%+ target for penetration. We're seeing dual-SIM phones, options for multiple numbers or personalities on a single device and so forth. Bundled phone+dongle contracts, too. We've still got a long way to go to get shared data plans across multiple gadgets, but even that is being discussed regularly.


10) No, No, No, No, No

- Mobile search. Still pointless. Yes. I know it's contentious, but I still see no evidence that people "want to find, not search" on their handsets. Tell that to Google with all their searches from the iPhone....

- Mobile advertising will definitely grow - but it's not going to get beyond a few % of ARPU in the foreseeable future. Yes. Definitely growing, but it won't solve world hunger.

- Mobile centrex. Yes. Still stuck on case studies of 11-person media agencies in Stockholm. No sign of massmarket uptake among either large businesses or SMEs.

- UMA dual-mode services. OK, maybe we'll get to 2-3 million users in 2008. Yes. No recent hard numbers from Orange or T-Mobile US - but I'm sure they'd be trumpeting loudly if they'd grown significantly. If anything, we may still be below 2 million in terms of actual active users.

- Unfortunately, we'll still have mobile industry dinosaurs referring to handsets as 'terminals'. Yes. As I said, it's a good filter for who "gets" mobile in 2009. Do you reckon Steve Jobs ever refers to the iPhone as a terminal?

- Unlicenced-spectrum wide area wireless. Yes. Nothing happening yet, although the white spaces discussion in the US is interesting, but still a way from real-world usage.

- GSMA's IPX. Actually, this is an interesting one. There's been much less emphasis on the IMS-based QoS-driven parallel pseudo-Internet this year. Instead, they're doing useful interoperability stuff around things like number translation and carrier ENUM.


I'll be working on my 2009 predictions over the next couple of weeks.

"Third-party pays" mobile data

One of the themes that I've started to explore recently is where someone other than the end user pays for mobile data access.

We're all familiar with this is when we use "free" WiFi in hotels or cafes - the venue owner picks up the bill, or a conference organiser.

I also saw a very good press release yesterday from mBlox, talking about the need for content providers to pick up the tab for connectivity - he makes an analogy with the sender of a letter or parcel paying for the stamp (sender pays), rather than than the receiver. mBlox's chairman, Andrew Bud, is a regular speaker at events like Telco 2.0 and articulates the need for this type of model very well.

However, my view is that the content-oriented "sender pays" model is just a narrow slice of a much broader opportunity for sponsored / third-party data. In general, mBlox and Andrew Bud tend to be very focused on "packaged" mobile transactions and content - downloadable videos, premium SMS, MMS, ringtones, songs, games and so on.

While these are undoubtedly important, in my view access to more open Internet mobile services will vastly eclipse that segment over time. Packaged content should grow, but I expect that ultimate demand is tiny compared with that for mobile access to FaceBook, Google search and maps, general web access, VoIP, corporate remote access and assorted web-based applications and widgets.

There needs to be a generic mechanism for mobile data - on phones, PCs and other devices - to be sold on a wholesale basis by mobile operators.

There needs to be a "free HSPA" capability to mirror "free WiFi" for notebook users at conferences (or across whole cities).

There needs to be a way to get free mobile web access paid for by advertisers.

There needs to be an mechanism that spans multiple operators and roaming, so for example a local tourist authority could sponsor free access by visitors to websites of local attractions and restaurants on their phones.

There needs to be a way for a new social network site to offer free mobile access, across all operators, to new users for their first month.

There needs to be a way that I can get a "global subscription" to the FT on my mobile device, without worrying about one-off charges.

There needs to be a way to be a way for the government to provide free mobile data for unemployed citizens without PCs, so they can check recruitment websites on their phones.

There needs to be a way to buy a mobile backup service, without the "sender" (ie the user) paying extra.

At the moment, the way to do this is typically a bit of a cludge - perhaps using a separate mobile APN, or trying to use content-based billing based on IP addresses or "application type". Or more usually, just giving people a flatrate bundle. But not everyone has flatrate data, and in any case it doesn't cover roaming, or multi-operator deals. As usual, the SIM gets in the way, which means at the moment it's easier to do all these things via WiFi instead of the cellular connection.

EDIT: Ideally, there also needs to be a way for the service/content provider to choose between different data wholesale products. So there should be different per-MB costs for fast vs slow access, extra-low latency connections for games or VoIP, options for peak vs. off-peak times of access, differential rates for macro vs. femto vs. WiFi access, and so on.

So while I agree with mBlox that "sender-pays" is a useful concept, let's not over-focus on a name and vision that it solely geared around delivery of packaged mobile content. My over-riding belief is that new business models for general mobile access and communication is always more important than mere content, and it's certainly the case here.

I cover sponsored / third-party pays data in the recently-published Disruptive Analysis Mobile Broadband Computing report.

Interesting FAQ about the Vodafone Dell netbook

Some interesting questions and answers from the Vodafone UK's FAQ about its Dell Mini 9 netbook here, which highlights various of the upsides and downsides of this model. Will be interesting to see how these (and T's and C's) vary between operators once this approach has evolved a bit more.

Some pertinent ones:

"Can I run Microsoft Office?" - essentially, no, it doesn't have a CD drive or the processor clout to give good performance.

" If I switch network operator, can I still use my Dell netbook? : After your agreement with Vodafone has ended you can use the netbook with another operator. You will need a USB modem from your new operator and will need to re-configure the settings to be able to access their network."

"Can I upgrade the Dell netbook, e.g. larger hard drive, faster processor, more memory?" - No.

Ericsson as handset API broker?

According to this article, Ericsson is talking up a new developer initiative aimed at trying to establish a common API across a variety of different handset platforms.

At one level, this is a very sensible concept - I've been trying to convince network-side manufacturers that they take the phones for granted for years. Numerous network technologies - 3G, IMS, UMA and potentially femtocells - have been delayed or rendered useless because the infrastructure or standards folk thought that the phones "were the easy bit". And while implementing some of the "hard" nuts-and-bolts protocols is occasionally simple, that certainly can't be said for the "soft" user-facing applications and all-round experience. I wrote about delays in creating IMS-capable phones 2.5 years ago, and we're still waiting for things like RCS.

In an ideal world, the network would be "exposed" to handset-based apps, and the handset "exposed" to network-based apps. The network would know (for example) what the phone's battery level was like, or if it was on charge, set to "silent" or had limited available free memory - all valuable data for applications. And it could help guarantee security through certificates or other mechanisms. Conversely, a handset-resident app could query different networks' levels of congestion, speed, price and choose the best one (obviously a lot of server-side APIs are already standard, courtesy of the web).

My concern is that Ericsson may not be the best-positioned or most neutral broker - especially if its proposition is based on Java and IMS as this other article suggests. If there is to be a successful common API, it absolutely needs to work in BOTH operator-controlled and 3rd-party-controlled fashions.

As a baseline, it needs to be absolutely neutral towards the philosophies of "over the top" or "through the middle" application architecture. It's fine if its *implementation* can be skewed one way or another in different contexts, though. For a handset provided by and subsidised by an operator, you'd expect there to be optimised applications and control/billing suited to the carrier's preferred platform, whether it's IMS or something else. But for an handset provided through other channels - and especially if it is subsidised or provided by a non-operator player (maybe Apple, Google, Cisco etc), the converse should be true.

There's also an large open question about how this fits with initiatives like OMTP's BONDI, which is "addressing the problem that an application written for one phone must be rewritten again and again if it is to work on all phones" (sound familiar?), but which is using a web runtime and browser/widget world-view, rather than Java or IMS. That said, Ericsson's also a sponsor of OMTP, so presumably there's some alignment going on in the background somewhere.

I haven't heard full details yet, so I can't really give a comprehesive opinion. I'd love to be a fly on the wall in their meetings with Apple and Google, though...

EDIT:I just re-read the last paragraph of the EEtimes article, which talks about browser-based application environments, so I'm now a bit confused between the mentions of web, Java, and IMS involvement. I'll try to track this down.

Handset brands moving into dongle market

The new Disruptive Analysis report on Mobile Broadband Computing forecasts continued medium-term growth for external USB modems for PCs, albeit after a recession-based flattening of demand in 2009. One of the comments in it is that more handset manufacturers should consider entering the USB modem market.

So it's interesting timing to see that Nokia has just announced entry into the HSPA dongle marketplace.

This follow on from SonyEricsson doing the same earlier this year, and adding in extra functions like GPS and decent industrial design. Then LG, its LTE chipset announcement the other day, also mentioned that it is working on a prototype data card. And Toshiba does this cool-looking dongle/basic phone/MP3/memory hybrid thing called a G450.

I wonder if we'll see any cool-looking Apple-branded dongles at some point....

Two famous places

I was honoured to be a guest of UK ITSPA (Internet Telephony Service Provider Association - the VoIP trade body) this evening for their awards ceremony, for which I was one of the judges. Some interesting entries and hopefully, next year ITSPA will have a dedicated Wireless VoIP category in the awards, as well.

Hats of to the organisers for the choice of venue - The Members' Dining Room at the House of Commons. I'm ashamed to say that despite being a native Londoner, it was the first time I'd ever been inside Parliament, and I definitely need to go back for a proper tour. 

There were speeches by Ian Taylor MP, who is a common fixture on most UK parliamentary committees on technology, a representative of Ofcom, and most fascinatingly, the Director of Bletchley Park.

(As an aside, he was a representative of the awesomely-named sponsor, Magrathea Telecom. Those readers who are Hitchhikers Guide to the Galaxy fans will know that Magrathea was the planet with the voicemail message "It is most gratifying that your enthusiasm for our products continues and we wish to assure you that the two fully armed nuclear tipped missiles currently converging on your ship are part of the special service we extend to all of our most enthusiastic clients...." )

I knew vaguely about Bletchley, which was the home of British code-breakers during WW2 and was, arguably, the single most pivotal advantage in winning the war apart from the Spitfire. But I hadn't made the link between that and the birth of computer-based coding & encryption - and its eventual impact on all digital communications including VoIP. Really interesting speech, and congratulations to Magrathea for eschewing doing a corporate pitch and putting this in its place.

So now, in addition to the houses of Parliament, I certainly intend to visit Bletchley Park as well. If you can't visit, I certainly agree that its preservation is a worthy cause - and exhort you to make a donation instead.

Who pays for an unused 3G module in a laptop?

If a laptop with built-in 3G or WiMAX is used, there's some form of services revenue stream that can go towards offsetting the upfront cost of the modem. Whether it's a subsidy, a revenue-share, a bounty paid by the operator, or an extra amount forked over by the user at the time of purchase is largely immaterial.

The service is used, a modem is needed, money is paid by the subscriber (or a 3rd party) for the broadband. There's cash coming in, so in theory at least, everyone should be happy, with a bit of decent negotiation among all the parties.

Now consider another scenario.

A laptop is bought from a retailer or online, with a built in module. But the end user either has no intention of using mobile broadband, or perhaps will just try the free trial period included at the time of purchase. So no money is spent on broadband access.

But someone's had to pay for the module. Either an operator, the OEM, or the end user themselves. And whoever it is (or a combination of them) has wasted perhaps $50-100. The user is unlikely to be wearing the cost directly, especially if they've shopped around for competitively-priced laptops, or configured it online. That cash would go on a higher-spec machine, or stayed in their pocket.

If it's bought through a non-operator channel as a "vanilla" embedded PC, there's no clear way for a particular operator to be involved, as the user could put a choice of SIMs in it. There might be a small payment for a "trial" SIM to be in the box, much like AOL used to put a CD in with PC's back in the 1990s. But I can't see an operator paying for the full cost of the module for the privilege of marketing in this fashion.

Which means that for the modules included in "default" notebook configurations, sold through ordinary channels, the OEM is essentially footing the bill, if it never gets used.

Now according to this piece of research, the gross margin on a high-end notebook ($1300) is about 30%. But Dell's overall gross margin is currently 19%, and references to higher-margin products in the mix in its earnings call referred to things like storage and services rather than notebooks. And Asus has been making 20% gross margins on eeePCs, but they are thought to be falling to 15% - and it has now warned that shipments may be lower than expected.

So for the sake of argument, lets say gross margin is 20% for notebooks. Probably lower on an ultracompetitive netbook, and certainly higher on an Apple Macbook Air.

So on a netbook, the gross margin on the wholesale price is, perhaps, $50. And on a mid-range corporate or consumer notebook, $150.

I'm really not convinced that putting in an extra $50-100 cost of an unwanted, unvalued, unused 3G module is going to make those numbers look very pretty, from a CEO's or investor's eyes. Frankly, even if the wasted cost is $30 it's still not going to make people shrug in indifference.

Now, I wonder why Apple hasn't put any WWAN modules in Macs yet, given their continued targetting of an average 30%+ gross margin?

This is one of the reasons why I'm predicting slow uptake of built-in 3G (and WiMAX) in my new report on Mobile Broadband Computing.

The danger of "cutting the cord" - where's the femtocell going to go?

I see many references to people wanting to "cut the cord", and have an all-mobile home. This is particularly the case in the US, where it is positioned as a sort of aspirational goal by some, while in Europe it is (often) just something that applies to people either living on their own, or who are in lower socio-economic groups.

There's also another big difference. When Americans say "cut the cord", they usually don't mean "cut the cable TV cord as well". They just mean the copper telephone line. But in markets which are ADSL-biased for broadband, that's not a realistic option for most household. Instead, they may be able to use an "unbundled local loop", and keep their fixed broadband, but get rid of their PSTN telephone subscription.

However, with the rise of mobile broadband, many operators' marketing teams are trying to get rid of ADSL connections as well. Obviously in markets with fully-converged operators and quad-play, that's less likely, but for mobile-only operators, they're possibly storing up trouble for the future.

At some point, the operator is possibly going to want to deploy femtocells, WiFi, or some other offload approach - especially if you're a heavy "mobile only" user. And at that point, the lack of an existing broadband connection is going to be a problem.

Not only that, but your copper line will be disconnected at the exchange - and so even if they want to offer you a new fixed+mobile package with a home gateway including a femto, someone has to pay for it to be reconnected and tested. It's even possible that they'll need to send someone to your house to check the wiring still works OK. (When I moved into my current house 2 years ago, I needed an engineer to reconnect everything & install a new socket, before I could get ADSL provisioned).

So for operators, although cord-cutting sounds like a great way to get more fixed-mobile substitution in place, there's a longterm downside with regard to future flexibility for macro network offload.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Other findings from the report include:

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

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

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

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

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

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