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Monday, July 26, 2010
Vendor-managed offload?
However, it's made me wonder if there is mileage for an Android offload service (run by Google), rather than a tether, which is essentially the opposite.
It is already well-understood that perhaps the most difficult part of WiFi offload is the on-device client and connection management experience, especially given the heterogenous nature of WiFi APs, between home, hotspot and work domains. There's a minefield of user interface, behavioural issues (eg switching off WiFi), log-on screens and so forth.
Joining the dots with some of Google's WiFi efforts that I see in places such as US airports, it made me wonder whether it might be in the interests of Google, Nokia, Apple and others to start knitting together their own grids of WiFi offload partnerships.
Apple and others already make it easy to connect to home WiFi on smartphones - and, generally, it is a better experience for most data applications than relying on 3G, as long as the fixed broadband connection is robust. It also generally means that traffic goes directly to the Internet, rather than being routed via the operator's core.
As a thought experiment, consider this:
A hotel has a WiFi network run by a company such as Swisscom or BT Openzone. As well as the normal SSID, it is also set up with dedicated Android, Apple, Nokia and BlackBerry SSIDs (and, perhaps, Samsung, Acer, Huawei, HTC or others).
The hotspot operator can work on various business models with these vendors - for example revenue-share of adverts viewed onsite, or music and apps downloaded.
The devices come with clients that do auto-logon or simplified log-on (free, or even charged to your iTunes account). The user is happy to have a fast connection that doesn't count against the data cap (or worse, data roaming).
Their host operator has a more mixed view - they get the benefits of offload, but are disintermediated, unless they happen to own or partner the hotspot network themselves.They lose out on possible overage charges, but protect their macro network investment. They also likely get better coverage in indoor locations, improving customer satisfaction.
We already see Skype cutting a deal with WiFi providers (Skype Access). How much more sense to see Android Access as well?
[Actually, I've just remembered, the first(?) device vendor to push this type of model was actually Nintendo]
Monday, July 19, 2010
Yet more mobile data traffic management options
The main pitch of the document was that so many silos have evolved so quickly, that very few network operators are able to view all the options holistically. There are numerous cases of one "fix" simply shifting the problem elsewhere in the network - unintended consequences abound.
Yet on an ongoing basis, I'm being presented with yet more alternatives to either manage data traffic, or avoid its existence in the first place.
Among the things that have caught my eye recently have been:
- Routing of offloaded WiFi traffic back via the operator core, usually with the rationale of allowing the operator to maintain "control". One approach is the I-WLAN standard, advocated by companies such as IntelliNet, although I'm really not convinced that operators want extra load on their core networks, even if they can mitigate the 3G and backhaul congestion. It's also far from clear what this would mean for the connection manager on devices - WiFi needs to be able to operate in both "private" and "operator" modes, from the user perspective.
- Accuris is focusing more on the problems of WiFi offload needing the user to log on, often in cumbersome ways. It's pitching various forms of roaming-enabled WiFi offload, either using SIM-based WiFi authentication with EAP-SIM authentication [of which I'm a general disbeliever], or a new standard being developed by the Wireless Broadband Alliance called Wispr2.0 . Sounds interesting, but given the general lack of sensible pricing for any form of mobile data roaming, the Devil will be in the details. In particular, it's going to need to work around the issues I identified recently , where extensive partnering by hotspot providers may mean the user can attach to WiFi at a given location through various different affiliations. I'd be annoyed if data was charged (or set against my quota) automatically by my phone or PC, if I could get it for free on the same access point, with another of my services.
- I'm quite struck by Sycamore Network's IQstream approach to mobile broadband optimisation. It uses some combination of intelligent caching and video management - but in the radio network, rather than in the core network,. This is quite a contrast to the ByteMobile / Flash Networks / Vantrix / OpenWave / Acision approach to video compression and similar actions.
- More generally, there seems to have been much more interest in busy-hour, or busy-cell traffic management, rather than catch-all policy management or optimisation. I'm increasingly skeptical of any solutions that don't have some links into the radio network - in particular, I'm expecting to see more regulators follow the Canadian stance on mobile net neutrality. This seems to be an extremely smart approach, which sits comfortably on the fence between "pure" neutrality, and a free-for-all allowing any form of policy management that operators want to apply. If I'm reading it correctly, it says that traffic can be shaped *if* the network is congested - Ars Technica describes by saying that policy: 'must not be "unjustly discriminatory nor unduly preferential." Management must "be designed to address a defined need, and nothing more."'
I think that sounds like a sensible compromise, especially if it is combined with a requirement for transparency - it should be a requirement to publish network policies, and not just in meaningless broad-brush terms. If I get a chance, I'm intending to put in a comment to Ofcom's ongoing consultation in the UK about Net Neutrality.
The other trend I've been observing is more about influencing user behaviour and psychology. Clearly, a lot of the pricing tiers for the new group of data plans have gone through a lot of research and analysis. Some are cynically designed to be heavy-handed and force an upsell - especially by pitching tier thresholds just below or around average iPhone data usage. Others are more nuanced and fair-seeming or generous.
But the other thing that has struck me is the use of nannying "content control" software - ostensibly to protect children from seeing undesirable websites. However, I suspect a secondary purpose of reducing adults' downloads of adult content - a major contributor to fixed-line broadband traffic, presumably likely to be replicated in mobile. There's no particular reason for defaulting to content-moderated status where an operator *knows* that the user is not a child - yet by forcing users to make an awkward or embarassing call to a customer service agent to disable the block, they probably reduce disactivations - and therefore traffic - considerably. Depending on your views, this is either pragmatic, clever, sinister, cynical or illiberal - but probably quite effective.
Overall, it's fair to say that mobile broadband traffic management is still evolving at quite a pace - and is becoming more sophisticated. There is definitely a split between two philosophies, though:
- Reduce costs and limit / delay capex, by focusing on finding and solving specific congestion hotspots
- Increase revenues by pricing, tiering and policy - and also look for ways to get Happy Pipe revenues from "upstream" companies like content or media players, a la Telco 2.0
My current feeling is that operators should be splitting their focus about 70 / 30 between these two domains. Clearly, some initiatives span both - but I believe that the long-term future of "two-sided" business models is predicated on a lot more intelligence in the radio and transport networks. Nobody will pay for prioritisation or premium QoS - they will want an SLA, and a way to measure it. Also, even if regulators allow it, nobody will want to pay a premium when the network is not actually congested.
If you are interested in more detailed discussion and analysis of these topics, I would encourage you to purchase my research paper on Traffic Management. I have also been conducting a variety of client projects, presentations and workshops on these themes - please contact me via information AT disruptive-analysis DOT com if you would like to enquire about custom services.
Thursday, July 08, 2010
Policy conflicts on the horizon with offload?
[A discussion for another day, but I think there's a great business model for someone to work out how to charge back to operators, for their use of *my fixed broadband pipe*, in this scenario, as I become the backhaul service provider].
But beyond the billing argument, there is another tier of discussion about policy. If I use (say) a Vodafone femto over a BT ADSL line, or an AT&T femto via a cable modem, then we essentially have a situation where "policy stacking" occurs. The mobile core network policy engine, and whatever is on the fixed network before it breaks out a peering point.
In the base case, this means that the user receives the lowest common denominator between the two sets of policies - although obviously the femto offload data is buried inside a VPN tunnel, so the fixed DPI will find it hard to see exact details. (If you have local breakout via LIPA / SIPTO it becomes more visible).
But that may just mean that the mobile core looks just like an encrypted connection to a web proxy server, from the fixed network's point of view. And so may therefore fall foul of some policy rules itself.
I guess there might also be scenarios where you get some sort of "ping-pong" effect as the two policy engines try to adapt to each other's presence unwittingly. Added to some sort of intelligent connection manager client, there are all sorts of possibilities I'd imagine.
With WiFi offload, another possibility occurs - if the mobile operator has sold some sort of "content control", perhaps a parent buying a device for children, or just the default settings on many devices - that ceases to work in many cases when attached at a hotspot. Something like I-WLAN could bring all the traffic via the mobile core for secondary policy enforcement, although that requires it to be supported in legacy WiFi access points and devices, which seems unlikely.
It may also be very easy to develop applications which split packets *between* WiFi and femtocell accesses on the device, thereby making it impossible for either policy engine to reassemble a whole bit-stream and work out what the user is doing.
One solution is the type of "managed offload" I discuss in the Broadband Business Models report, in which the fixed/WiFi operator is somehow able to "import" the mobile policy rules and enforce them, instead of its own ones.
A topic to be continued, I suspect.
Wednesday, July 07, 2010
FAO PR people: how to avoid getting black-listed
So.... a combined rant and set of guidelines.
Now I need to be clear - getting relevant announcements, from relevant companies, is extremely useful for me. I willingly sign up to email lists, read specific mail in depth, and sometimes follow up for briefings or additional information.
But at the same time, I'm getting increasingly irritated by the flood of irrelevant bumph, especially from people or companies I've had no contact with in the past.
I'm getting to the point at which I blacklist specific individuals, or even entire agencies, if they repeatedly offend.
Before I do that, however, some ground rules:
1) If you've never contacted me before, send me a brief email of introduction, listing companies you, or your agency, represent, with a line or two about what they do. Do not just get my email from some web-based list of journalists/analysts and send me unsolicited releases.
2) My research themes are pretty obvious, if you read a couple of months-worth of my posts on here. If it's way off-beam and we don't have a relationship already, err on the side of caution and don't send it.
3) I'm am utterly disinterested in random iPhone or Android or other general smartphone apps or accessories. There are hundreds of thousands, and just because one developer has decided to spend money on a press release doesn't make it more relevant. Case in point: I had a recent spam PR talking about connecting guitars to phones, and another about a toilet-finder service. Cool. Maybe call me back when you've worked out how to network a toaster to a guinea pig.
4) Don't follow up with a phone call. I'll email you if I'm interested.
5) I'm really not that interested in knowing about mid-ranking appointments, unless you've hired Steve Jobs, Eric Schmidt or Megan Fox.
6) I certainly don't care that Executive X is speaking at Conference Y on Subject Z. Unless it's the CEO talking to the United Nations about a new way to solve world hunger. Believe me, Mr X wouldn't want to get a press release from me, every time I got in front of a projector or chaired a panel at an industry event - so I've got no interest in a pre-announcement of his pitch at the Global Widgets Summit either. And, frankly, I find it hard to imagine anyone else cares either.
7) As I've said before, I am not a blogger. So if you're the head of "social media relations", you should delete me from your email list right now - I am not part of your audience. Give my email address to AR, or the Chief Strategy Officer instead.
8) Similarly, I'm not a journalist or an editor. I'm not interested in "stories" and I'm certainly not going to have a guest post from someone trying to pitch a product or service.
9) If you're telling me about a survey, you probably want to check the methodology and interpretations are solid. I want to know the source data, the questions asked, the sample. If it's a fluffy "made for PR" survey, be aware that I'm more likely to do a scathing analysis of its flaws, rather than a reporting of the culprit vendor's message.
10) Don't bother sending me 3MB photos of the CEO smiling like Gordon Brown, or some unidentifiable bit of electronics
Apologies to all my friends and regular contacts in the PR industry - you know I love you guys. Just make sure you give all your fly-by-night colleagues a good smack, as they're giving you a bad name....
Tuesday, July 06, 2010
Challenges in measuring offload volumes
It's also struck me that there's going to be a world of pain in actually validating these claims.
On one side, there is the likelihood that the volumes will be over-stated, because they generate incremental, rather than just substitutional traffic. Generally the offload (WiFi or femto) will be faster and cheaper than the macro network, and so it might reasonably be expected that user behaviour will mean that it sees traffic that otherwise *would not have occurred at all* on the macro infrastructure.
I can quite believe that for every 100MB offloaded, an extra 200MB of "new" traffic might be generated. There probably needs to be a "control group" of non-offloaded users (with similar devices, original traffic and a similar extra software step) for the statistics to be interpreted properly. Before/after comparisons would also help, if adjusted for any underlying growth in data consumption.
On the other side, some WiFi offload will be under-reported, or at least difficult to distinguish from "normal" usage. For example, I've now managed to work out how to do the Vodafone offload to BT Openzone hotspots from my iPhone. But I'm currently sitting a Starbucks, where I can also use the free Starbucks-branded BTOpenzone splash page. Or the BT Openzone hotspot access included with my ADSL broadband package. Or the BT Openzone hotspot access included with my sign-up to FON, the WiFi sharing network.
Now, presumably BT knows which "entry point" to Openzone I use for a given session. But to me, they're all interchangeable, and I'll use whichever has the fewest clicks, or does auto-logon. Which is classified as offload from Vodafone's point of view? And is that a meaningful number given my other options for doing exactly the same thing?
I've been advising some consulting clients about other issues around offload recently. If you'd like to get more detail on Disruptive Analysis' work in this field, please contact me via information AT disruptive-analysis DOT com.
You may also be interested in my recent research paper on Mobile Broadband Traffic Management technologies, from $350. Details available here
Monday, July 05, 2010
Please participate in 2 surveys on Developers & SDPs, and the EU Digital Agenda
First, Mac's survey on developers:
Exposure of operators' network capabilities to third-party developers is something that I've long discussed, through my work with Telco 2.0 and more general business model innovation in telecoms. I probably don't use the term SDP (Service Delivery Platform) regularly enough on this blog, but it's clearly relevant here.
Service exposure long been part of the SDP promise. But what do operators really think about the opportunity? And will they ever be able to support and meet developers needs and demands? And what do developers think about operators? Mac Taylor of Moriana is running a survey on Service Delivery Platforms and operators' relationships with developers, which seeks to explore these issues.
The survey is *only* aimed at operators and developers - not vendors or SIs. It's been running for 2-3 weeks already and has generated some good responses. Mac claims that the replies and data are very interesting - providing a good insight into the future of telecom application development and service delivery. The survey closes later this week on July 7th.
All developers and operators get a Free summary of results, along with some other incentives like a chance to win a netbook.
OPERATORS click here: http://www.surveymonkey.com/s/CGNDZW6
DEVELOPERS click here: http://www.surveymonkey.com/s/CGGMPY7
Secondly, Ajit Jaokar is running a survey for questions to be asked to European Commission Neelie Kroes at an upcoming event about European policy.
Ajit's blog OpenGardens is here - a background piece and a link to the survey is here
I must admit I'd been pretty unaware of the contents of the latest round of proposed EU rule-making - the "Digital Agenda". Having had a quick scan of this, and some news coverage around it, it seems like a mixture of the worthy and the warped. Some of the things that the Commission does are definitely worthy of applause - such as action on distorted and egregious roaming wholesale rates for mobile data. Despite the operators' lobbying efforts, the reality is that nobody in the industry thinks they're fair and reasonable. I'm also certainly a fan of combating cybercrim, and extending broadband - although I'm wary about making blanket committments at a continent-wide level rather than nationally.
But I have doubts about the realism of other European Commission policies and concepts. In particular, it seems that the EU has become infected with the interoperability meme - the notion that closed and proprietary technological platforms are inherently worse, and less valuable to consumers, than open and fully-interoperable ones. Never mind the fact that consumers actually seem to *like* the fact that such platforms work well (iTunes, for example) - there is a view that standards and openness, set centrally and ideally by European bodies, must always be a good thing.
To my mind, this smacks of the EU still crowing about its success with the GSM Directive - and conveniently ignoring contrary debacles and failures, such as the ridiculous focus on DVB-H mobile TV in recent years.
Anyway, make up your own minds & fill in the survey. My suggested question is:
Despite the benefits of "openness" in technology, there has also been huge value and innovation from the speed and flexibility of "closed" or "silo" technologies in the past. How can you ensure that Openness rhetoric is kept in perspective?
Thursday, July 01, 2010
Death of the Kin - proof point that mobile social networking aggregation doesn't work
I maintain that one of the biggest myths in the mobile industry at present, is that users want to have some sort of master-app or UI to aggregate their various social networking and messaging experiences.
It's another classic case of technologists thinking that "convergence" is elegant and therefore cool, while actual user psychology is completely the opposite - divergence is cool, exclusive and personalised.
Convergence and standardisation in underlying enablers can be good, as long as they don't get in the way. Having (national) standards for electrical sockets is handy. Having a combined toaster and dishwasher, because they can share the same physical footprint, single power outlet and a common UI "look and feel" isn't.
For mobile social networking, I can see the world polarising into two extremes:
- Dedicated client or web page, run by the specific service. So either a Facebook app, or Facebook.com rendering well on the handset browser, depending on the specific device/OS. This is always going to be the best-performing version, as it comes from the people best-able to integrate and customise the experience - and who get the customer data and feedback, and are thus able to tune it progressively.
- Or, at the other extreme, very low-end phones getting status updates via SMS / MMS. Lowest-common denominator, doesn't need a data plan or 3G, should work out-of-the box for billions of people.
Operator-branded front ends to social networks? Do they add or subtract from the experience of "the real thing"? Maybe if there's something really special involving a mashup of operator and social-network APIs, I'll believe - paying for in-app microcredits through the carrier billing system perhaps - or automating SMS reminders for events.
Phonebook enhancements to show statuses and presence? Unconvincing - and risks de-valuing the proper user experience. My Facebook status is intended to be seen *in context* with the rest of my wall & posts, not abstracted as a solo item. If I decide to federate bits of my social world, I want it to be on *my* terms. Plus, as I've written before, the phonebook or contact list is a lousy repository for all your affiliations that are not people (events, groups etc). IMS RCS? You probably know my views - and I'm putting the final touches to my report on it, if you don't.
I'll make an exception for dedicated devices like the various INQ phones, which clearly have a lot of thought and collaboration involved. But they too will need to have a way to compete with the "updateability" of web pages and dedicated apps - something I suspect that the company's move towards Android reflects.
The short life and brutal death of the Kin is probably a reflection of other factors as well - notably pricing and the imminence of Windows 7 phones. But it is a salutary lesson on the concept of "social value" inherent in fragmented communications experiences. Device vendors and operators need to learn when convergence and "unified XYZ" is appropriate - and when it diminishes utility and flexibility.
In an era of multi-tasking, multi-channel, multi-device users, it surprises me that we keep seeing the same monochrome engineering-type view that combining applications or services must always be good.
Tuesday, June 29, 2010
Social media uselessness
I've discovered a couple of use cases that justify its continued existence for now:
- Highlighting new blog posts, although it doesn't seem to have generated meaningful traffic uplift yet. This one is pending.
- Something to do during slow conference presentations. It makes a change from checking Facebook or my email.
- Being rude about other lousy new social media services that don't warrant the effort of a full blog post.
For example, in less than 140 characters: "Foursquare: useless except to know where to avoid meeting social-media bores, the last group anyone sane would want to socialise with". The whole thing reminds me of the famous Groucho Marx quote "I wouldn't join any club that would have me as a member" .
Gowalla, on the other hand, is *so* bad that it possible merits more than 140 characters, just to give it the deserved dose of vitriol. I initially chose to install it rather than Foursquare on the basis that most of the social-network drones had ignored it, which rather suggested it was cooler. And the stylised kangaroo icon was kinda cute.
Wrong.
After checking in at the Post Office on Baker St and being awarded a virtual pint of beer, I've been scratching my head about why dumping the content of the Yellow Pages into an app and getting people to tick off the boxes is of any use to anyone. I also "checked in" at the statue of George V opposite the Houses of Parliament this evening too, and added the new "spot" of the Institute of Economic Affairs. Wow. My life is now complete.
It's not even very good at suggesting places. If I'm in need of nearby hostelry for a beer, I'm much better off going to the Google Maps app and typing "pub" into the search box and waiting for the hail of marker pins to rain down in a circle around my location. Gowalla has a random and incomplete selection.
Looking at the app while sitting at home, I'm now suddenly aware that I have an urgent need to visit the International Cheese Centre, which is apparently only 300m away. Or the tube station.
And it crashes hangs half the time as well.
Seriously, it's just another flawed way of doing the proven-useless task of local mobile search, with prettier icons. Yet another in a long line of things that are a bit like one of Google's functions, but don't work.
The notion that this type of thing represents the future of massmarket mobility is a total joke. If you're about to spend lots of money on a social media consultant, give me a call instead. I'll help you check in at the Emperor's palace and confirm that he's wearing no clothes. And I'll most likely be able to suggest something else that helps you engage with your customers and make more cash instead.
Friday, June 25, 2010
Mobile operators' future voice strategies decoded
I'm not going to spell out the answer here, as it's too valuable to open-source at this stage.
You may remember that a week or so ago, one of my consultancy & analysis peers released a study suggesting that some carriers might exit voice altogether.
Yes, I think that's an option too. But it's not an either-or, IMS/VoLTE or nothing situation.
I have identified at least six or seven different scenarios. In my view, the one defining feature about mobile voice in 2020 is that it will be *much* more heterogenous than it is today. We will definitely not all have the same "telephony" experience - or maybe even the same lowest common denominator.
Some people will have a version of today's voice - good coverage, pretty cast-iron reliability, excellent "reachability", quite expensive (especially roaming) and anchored in your existing operator's core network and billing plans.
But that will be only part of the environment. Others will be using VoIP of various types and qualities - some of which will be better than "traditional" circuit telephony. There will probably be a role for IMS in some operators, and Skype or Google in others, perhaps VoLGA in still more. Numbering and termination regimes will get more complex, not simpler. It certainly wouldn't surprise me to see some operators end up as so-called over-the-top providers of voice on other networks.
Luckily, the population is getting much better at multi-tasking and segmenting its communications experience. Multiple IMs addresses, logins, devices, numbers and other identifiers.
Despite the industry bodies crying wolf about the dangers of losing ubiquity, this is not a "tragedy of the commons" scenario. Fragmentation will add value and consumer utility, not reduce it.
As always, divergence will be more important than convergence. Multiplicity will rule, not unification.
Gateway vendors will do better than many of those dependent on integrated end-to-end standardised silos - although there will still be a few behemoths able to control particular value chains or geographic markets.
I'm not going to give away the full set of scenarios I see evolving in this blog post - or the impact on the existing mobile voice and VoIP communities, device vendors, messaging or social network providers and assorted others. In many ways, there are still plenty of variables anyway, especially regulatory ones.
I realise that many of my peers and rivals read this blog - and this is one area where I think I have a significantly different viewpoint from most of them. I also have a lot broader coverage - 2.0, 4G, spectrum, devices & OS's, operator business models, APIs, silicon, network policy & architecture, enterprise, cloud services - which are essential to pulling the pieces of the puzzle together in a meaningful way.
It means that I can consider factors like SMS, lawful intercept, indoor coverage, prepay, battery life, web/cloud voice integration, CEBP, HD voice, video, test & measurement, EU roaming & wholesale rules, Apple & Android, IP-PBXs, QoS, new devices...
In coming months I will be talking through my views about The Future of Mobile Voice with many of you in briefings, or at conferences. I will also be publishing some of the analysis in future research documents.
But if you want to get a heads-up in advance, or a more customised viewpoint, please contact me about ways Disruptive Analysis can help you move forward and position your company.
information AT disruptive-analysis dot com
Thursday, June 24, 2010
The risks of using someone else's numbers & forecasts
One thing that struck me is that I've seen the same set of Cisco VNI data traffic forecasts used by almost every presenter. I'm sure you've seen them too - 59x mobile data traffic growth 2009-2014, lots of it video. Exabytes, petabytes etc. About 5% of all Internet traffic going via mobile access and so forth.
Yes, it's good stuff. Really detailed, lots of interesting insight - there's a lot of work that's gone into it - I was on a analyst conference call with the VNI team recently and was impressed. But what rather worries me is that lots of people seem to be using it as a central part of their marketing, without appearing to understand what's in it, or how the forecasts have been constructed.
They certainly don't appear to have spoken to any of the VNI project's authors, understood the methodology or assumptions, or even to have bothered reading the fine detail. I upbraided one speaker today for citing the 66% of mobile data traffic which is video, as being a justification for needing more QoS, referencing things like videotelephony.
Yet the table in Cisco's data which describes this splits out the 2.3m TB/month of mobile video about 3/4 of the way down this page. 1.4m TB/mo is PC and tablet-based Internet video - basically YouTube, iPlayer and the like being watched over a USB modem or 3G module. The sort of application that can be expected to be buffered, rate-adaptive and so forth. The proportion likely to be QoS-based is tiny. Conversely, video communications (Apple FaceTime, Skype Video, the roughly 17 people using IMS video-sharing and so on) accounts for much less.
I sincerely hope that strategy and product planning folk at vendors and operators are being a bit more rigorous about finding *relevant* and specific addressable statistics for their own products instead of convenient data "soundbites" available for free on the web.
But given the number of pitches I hear using the same data deluge/wave/tsunami/apocalypse language to justify their femto or wifi offload, or policy-management products' value proposition, I'm starting to get worried.
Especially as none of them also bother putting up a chart of signalling traffic, which if anything is the cause of more problems to operator networks than the bulk of data downloaded. (NSN is the main exception I can remember seeing to show signalling growth trends - and I think they use their own data forecasts rather than relying on Cisco's too).
Another sobering example of mistakenly trusting web numbers is Amdocs, which is obsessed with the magical word "trillion" as a means of drawing attention to its (worthy) solutions for service providers - personalisation, billing, operational efficiency, business models and so on.
In last October they were saying "By 2015, if not sooner, experts project that the world will include a trillion networked devices providing consumers with a dizzying array of applications, services, connections, and experiences......... The business benefits could be enormous: managing (and charging for) customer access across a trillion interconnected devices, services, and locations; generating sizable new revenue streams from infinitely larger personal and community networks; and becoming the long-term trusted partner of millions of
At the time, I raised an eyebrow and challenged their executives to a spread-bet with me, at say 0.000001 cent per networked device at 31st December 2015. I'm a seller at 500 billion.
Now, they've upped their game in a recent white paper. "Within the next decade, the convergence of connected devices, predicted to reach 7 trillion by 2017 (World Wireless Research Forum, Technologies for the Wireless Future: Wireless World Research Forum,
Vol.3, November 2008), and customer demand for ubiquitous connectivity, and pervasive digital content and applications will give rise to the connected world."
7 trillion by 2017. 1000 devices per person. 3000 devices per person living in developed economies.
Time for a common-sense check. I can envisage a long, long term future with lots of RFID tags on products. Maybe massive distributed sensor networks, like the military's "smart dust" concepts. Even if it occurs, I'm pretty sure only the tiniest fraction will be of any relevance to Amdocs or its telecoms customers. When my car's indicators are controlled via wireless to the dashboard, to save on the weight of a wiring loom, I'm pretty sure I won't be being billed per corner by my mobile operator.
Not only that, but the heritage of that number is fascinating. It seems to have first surfaced in a book published by Wiley, and edited by Prof Tafazolli of the Wireless World Research Forum in 2004. It's mentioned in a 2005 presentation here on slide 26. It may well have been a worthy piece of work (unfortunately I don't have the underlying documentation) - and it seems to have been re-reported in the 2nd and 3rd editions of the same book.
But 10 minutes trying to track it down in detail yielded this other document from 2009 by WWRF, which contains the footnote "Originally, the vision was developed for the year 2017. However, work within WWRF has extended the time period to 2020". In other words, even the forecast's original authors now no longer believe it's true and have pushed it out three years.
Personally, I'm pretty skeptical of 2020 as a target for 7 trillion too, but I don't have sight of their full methodology, definitions or assumptions so I'll temper my criticism.
Come on Amdocs, drop the trillion nonsense. It's not helping your message. If anything, it does the opposite, wrapping something important and opportunity-laden, with a veneer of irrelevant and non-credible big numbers just for the sake of it.
Or of course, you can put your money where your mouth is, and take me on at my bet.
Now to be fair, this is all the "science" of marketing. But to me, it illustrates the dangerous ways that poorly-understood numbers get recycled, without people sanity-checking them, or thinking through the real implications if they're wrong.
I've got similar doubts about the oft-repeated line "the next billion Internet users will first get access on a mobile phone". I think that's fabricated rubbish - perhaps the largest myth in the industry. I'm not utterly convinced by assertions that 85%+ of mobile data will be used indoors in the home/office by 2013 either - although the vagueness of whether "mobile data" includes WiFi access to fixed broadband would probably let it scrape past. A lot of hysteria about mobile apps is based on irrelevant numbers too, as Tomi Ahonen dissects with forensic detail here.
Bottom line - be very, very, wary of people citing statistics when they don't know the original source and haven't made efforts to understand the definitions, methodology and assumptions.
Sales and marketing messages are *much* more credible when they're based on real, specifically-addressable figures - ideally developed on a custom basis to illustrate the point they're being used to make. Yes, it's always easy to poke holes in forecasts - including my own - but that's no excuse for skimping on validation of the source (or even just smell-checking for plausibility) wherever possible.
Monday, June 21, 2010
If mobile data billing takes too long to change, device-based intelligence will fill the gap
It reminds me of one of the problems with many implementations of earlier voice FMC services such as UMA or VCC - where a mobile call is terminated via WiFi and the user's own fixed broadband network rather than the inbound operator's cellular infrastructure, the justification for keeping the call termination wholesale fees the same diminish. In that case, the customer (and the originating operator) is paying not just for a network it's not using, but for spectrum as well.
The problem is that it's very difficult for billing and rating engines to take account of cost differentials involved in a given call or data stream - not least because most operators don't really have neat and accurate per-min or per-MB costs, and it can vary according to lots of specific circumstances. The cost of connecting to a voicemail server is different to connecting to a phone; the cost of a call in a rural area is different to a city centre and so on.
So operators just take a broad average, reflected in the retail and wholesale prices and hope that people don't nit-pick too much - at least not so much that the regulator gets involved.
While I think that's fair enough - we're never going to get precise cost-based pricing even if we want it - it doesn't excuse the most *egregious* examples of iniquity. The femto vs. WiFi traffic against mobile data cap issue does seem pretty egregious, because there's an immediate A-to-B comparison available to the end user.
The industry spends a huge amount of time telling us that "customers don't care what technology they use, they just want to get connected". Which is fine, but only if there's no glarig differences in price and performance.
This comes back to my assertion that there is a need for holistic approaches to mobile data traffic management - combining all the various bits of the puzzle to offload / charge / optimise mobile traffic so that this type of head-smacking event and potential PR/loyalty disaster doesn't occur.
Although we still haven't got a detailed comment from AT&T (and Vodafone does the same) about their billing system, it is not uncommon for any major changes to take a considerably long time to implement. That's especially true in cases, such as here, where AT&T was also moving its whole system from flat-rate charging to tiered-and-capped. They may well have been aware of the femto vs. cap unfairness, but decided that it would take too long, or involve too much risk, to address that at the same time as the more general switch-over in policy and charging.
This situation is likely to be repeated throughout the data traffic management arena, in various scenarios. It is *theoretically* possible to hook various bits of the policy/charging/optimisation infrastructure up to the radio network, or other bits of the carrier's machinery. But it's not easy, it's not cheap, and it's not quick.
That leads me to think that there will have to be some short-term workarounds that are easier to implement. Top of my list is smart connection-management clients for smartphones and laptops, which have awareness of tariffs, data consumption and different access methods. "Are you sure you want to connect via the 3G femtocell? I can easily register with this nearby WiFi if you want free connectivity".
It will be interesting to see if the slowness of creating sensible end-to-end traffic management and billing priniciples in the OSS/BSS leads to the device intelligence taking the lead again. I'm tracking a number of infrastructure vendors who are looking more closely at the role of the device as a key actor in determining mobile data routing, and I suspect their collective work will pay off.
For more detail on the technologies available for holistic mobile broadband traffic management (including device connection managers), please consider purchasing my new study, from $350.
NEW Mobile Broadband Traffic Management Paper
Sunday, June 20, 2010
Putting a value on customer data with reference to offload
Broadband Reports gives airtime to AT&T's rather unconvincing explanation:
"3G MicroCell is primarily intended to enhance the voice call quality experience in your home," AT&T's Seth Bloom tells us. "While it can carry mobile data traffic, that’s not the primary solution it provides," he says. "Wi-Fi is the optimal solution for home mobile data use. We encourage people to take advantage of Wi-Fi capabilities - that’s why all of our smartphones include Wi-Fi radios, and usage on Wi-Fi doesn’t count against your mobile data usage bucket."
Firstly, I rather pity Cisco, AT&T's supplier, for its client's diminishing of its carefully-engineered data offload capabilities. I suspect it hadn't expected to be relegated to providing voice-only coverage.
But the interesting thing here is that, unwittingly, AT&T is putting a value on collecting customer data. We all keep hearing that "subscriber data management" is a big deal, and that operators urgently need to find ways to monetise their customers' "social graphs" and aggregated web access records and behaviours.
But by telling its customers to prefer WiFi to femto for data traffic, it is sending out the message "Actually, customer data isn't really worth that much after all. They might as well connect directly to the Internet via WiFi - we're not interested in collating that usage for data-mining anyway".
Either that, or AT&T's core network is weirdly expensive, and they'd much rather have all the traffic bypass it and go straight to the web by the most direct route.
Again from Broadband Reports: Bloom goes on to insist that the Microcell "uses our core wireless network just like a call placed while driving down the highway uses the core wireless network." "The only difference is how that data or call gets there – via a MicroCell connected to a wired broadband connection instead of a cell tower."
Which is funny, because I always thought that the majority of an operator's cost base was the cell tower and radio network, rather than the core. And therefore "the only difference" for femto vs. macro is really just a cost-saving.
My gut feeling is that AT&T has either not thought this through - or has major problems in changing its charging / billing structure to accommodate femto vs. macro traffic differences. Perhaps it thought nobody would care.
A counterpoint to femtocells - are they really necessary?
As he points out, I'm due to meet him for a few drinks later on this afternoon, so I'm sure we'll drill down a bit more. In part, I agree with him - WiFi is much better for *certain* applications and use cases.
However, I'll make a few comments upfront.
Firstly, WiFi can be a royal pain to set up, especially on smartphones - and *particularly* where it involves a third-party login. It's also difficult to monitor and control - and expensive to support if someone calls in for assistance. For this reason, many mobile carriers are wary of trusting WiFi as a suitable mechanism for either coverage extension or capacity offload.
As an example: while I've got my iPhone set up for my home WiFi's security, I hadn't provisioned it for BT Openzone - which (in theory) I should get free access to, courtesy of Vodafone - which would benefit from the offload and coverage extension when I'm in places like Starbucks. Result - 30 mins of frustration trying to use the 3G connection & browser to log into Vodafone's personal account and self-care page. Firstly the usual forgotten-password thing. Then hunting around the self-care system trying to find "switch on support for BT Openzone". Then Google the question, and be told "First, log into your Vodafone account". Aaargh. I've given up. Maybe I'll bother trying it from a PC at some point. Or seeing if it's driven by the Openzone splash page.
Or maybe Vodafone will just put femtos in all the UK branches of Starbucks, and I won't have to think about it.
Yes, I'm sure I can get some super WiFi log-on app thing for my iPhone which would automate it all, but frankly I can't be bothered to go looking for that either. I'll just use the 3G, even though I'm sitting in a basement on the edge of coverage.
So.... point #1 for femtocells is the pain / laziness / ignorance factor around setting up WiFi on devices.
Point #2 is the difficulty of extension of operators' own in-house voice services over WiFi. Yes, it's possible with UMA or some of the earlier VCC-style SIP approaches. However, those are quite expensive and complex to deploy, test, maintain and support - not to mention having similar issues and dependencies on the connection manager as discussed above. My views on UMA have been pretty negative since 2004, so it's fair to assume that's an argument I don't need to re-hash - although at least it now (finally) supports 3G.
Now clearly, many of Andy's clients (and indeed Disruptive Analysis') are quite happy when operators cannot extend their in-house voice services, as they are providing alternatives. I'm also a fan of Skype, Truphone, fring and so on... but I also recognise that many customers still prefer their existing mobile operator's own-brand voice service, or cannot be bothered to shop around. There are also issues about porting mobile-specific numbers (especially outside the US) to VoIP providers.
So - point #2 for femtocells is provision of ordinary circuit mobile voice indoors at good quality: which is desirable for many users, and most carriers. On the other hand, as Vodafone found out this week to its cost, this only works where the user has a 3G phone and decent-quality fixed broadband. (Most femtos don't support 2G GSM - although the CDMA variants support 1x).
Point #3 is around regulatory oversight and the perception of mobile operators that they are being held to a higher standard of content/access/application control than fixed operators - especially in markets with anonymous prepay. Access via a femto takes the data traffic back to the core network, where it can have whatever policies the operator desires applied to it, in the same way as macrocellular traffic. If the fixed broadband is the operator's own, then clearly this doesn't apply as it has a policy enforcement point anyway - or if the fixed provider has enabled a "managed offload" service of the type described in my recent Broadband Business Models report.
A related opportunity, point #4 - also discussed in that report - is for femto data to be *faster* than WiFi (or prioritised), if the mobile operator cuts a deal with the fixed/cable provider. Let's say you've got an 8MB ADSL service. But the line is capable of supporting 20MB. In theory, the mobile operator could arrange for your femto to deliver *more than 8MB*, essentially turbo-charging it vs. your own WiFi, if they are prepared to pick up part of the bill, or pay the fixed-line telco a "two-sided, slice and dice" fee. That's very much a "happy pipe" strategy of the type I've been mentioning recently.
Other femto rationales:
- Open-access femtos offloading 3G data traffic without your need to have any WiFi setup or switching
- Femtozone applications and services
- Macro (outdoor) femtos providing extra 3G capacity in hotspot areas
- Managed connectivity & security for home-workers from their enterprise. Yes, this is do-able via WiFi as well, but I can see this being linked to prioritisation and other corporate-grade teleworking services, such as operator-provided cloud computing resources.
Incidentally - I'll be at the London Femtocell conference on Thursday, and the Femto Forum awards dinner on Wednesday. I'm also based 3 mins round the corner from the Landmark Hotel, so if anyone wants an off-conference meeting (or a beer) let me know.
NEW Mobile Broadband Traffic Management Paper
Saturday, June 19, 2010
Inter-technology competition and substitution - photo-sharing as an example
Fair enough, I can see the value in that as general idea. Whether it's boring friends with your holiday snaps, or showing Granny some pictures of the baby, I can definitely see that there is a valid user requirement to display photos on a big, high-res screen on occasion.
But that then got me thinking about the options for doing this, and the variables involved.
Without a comprehensive analysis, off the top of my head I could think of the following broad range of mechanisms for getting the image data from A to B:
- Beaming photos via Bluetooth from phone to TV
- Attachment via USB cable, or some proprietary cable from the handset/TV manufacturers
- WiFi transfer either peer-to-peer, or via your home gateway/router
- Memory card to a slot in the TV or set-top box (or perhaps in the remote control?)
- Some sort of integrated triple-play photo sharing service via the operator's core, conceivably across multiple operators if they interoperate
- Local break-out and sharing via a femtocell (3G from the phone, then ethernet to the TV)
- Upload to an Internet photo-sharing site, then access via an Internet-capable TV or STB
- MMS to an operator or off-portal service provider, then down to the TV via some sort of narrow-cast
- Various other options involving going via a PC as an intermediate step
And then there are numerous other variables involved:
- How technically-savvy are you?
- What sort of phone and OS is it?
- Does it have WiFi, 3G, RCS, Bluetooth some sort of photo-display software, and can you set them up and use them properly?
- What sort of TV or set-top do you have, and what are its interface and display features?
- Do you want to display the picture compressed or uncompressed?
- Single picture or a whole stream of them? What's the UI?
- How much control do you want from the phone? ("oops, better skip showing THAT pic to Granny")
- Do you want the photos persistently stored off the phone? Where? In the TV, in the operator's network, in your social network / photo website of choice?
- Do you want to edit or comment on the pictures? (eg comments, "like" etc)
- Do you want to display on other peoples' TVs & via their broadband? (eg Granny's) Do they have IPTV/triple play? Do they need some sort of "subscription" for this?
- Do you want to display on TVs when you're roaming?
- Is there adequate cellular coverage in the place you want to do this?
- How much latency will you tolerate in flipping from one pic to the next?
And perhaps most importantly - are you prepared to pay for this?
Not such an easy problem to solve, is it? There's a huge set of permutations, usage scenarios and technical options.
In this instance, without having analysed this particular problem in a lot of depth, my initial feel is that:
- sending uncompressed image files "tromboned" up through the cellular network and then down through the home broadband is usually going to be a bad experience
- many people will think "why bother?" and just either show the pictures on the phone screen (which is getting higher in quality), or use a PC or tablet as a display device instead. In future, the phone may also have a built-in projector.
- nobody is going to pay for this, unless it is such an utterly flawless user experience that it leave all the other options in the dust.
- if the photos are good, you'll want to put them up on the web somewhere anyway, for sharing in "non realtime" with all your other friends and relations
- an operator-mediated phone-to-TV photo sharing service, even if only the signalling traffic goes up to the network & the image is transferred locally, is going to be a pain to get working in many instances. Given nobody will pay for it, and it's feasible to do it in many other ways, it will neither generate revenues nor improve loyalty. Support costs may mean it's loss-making.
The question left outstanding is "how could the phone-to-TV photo display experience be enhanced and differentiated"? Clearly, ease-of-use and control is important - as is the ability to support many of the scenarios I list above.
But perhaps there's something more - a clever enhancement about comments/recommendation, or geo-tagging, or image analysis or whatever. Personally, I have no idea - and I'd be surprised if many telcos do either.
But someone will.
Which means that any added-value photo-transfer capability will almost certainly either be:
- end-to-end proprietary, eg from Apple or Sony or similar
- open to developers to do cool stuff at both ends of the connection
Incidentally - my RCS research paper is nearing completion. Details will be posted here and please contact me via - information AT disruptive-analysis DOT com if you'd like get pricing and the option of a pre-order discount.
Thursday, June 17, 2010
Doing a 180 on Vodafone 360
Basically, it came in various tiers - fully customised and integrated devices like the launch Samsung H1, as a client or icon on Voda's other devices, or as a download to anyone else's smartphone as an app or widget. And importantly, it was web-based, rather than using legacy IMS concepts of centralised telecom services.
I firmly believe that this general philosophy is absolutely critical, especially for social networking and cloud services. Interoperability of lowest common denominator capabilties is not enough for real, differentiated offerings - Operator A must be able to sell unique services to Operator B's customers as well, if it is to scale to compete with Internet players with a 2-billion strong potential audience.
However, the focus of 360 - network address books and aggregating social networks - together with its initial fully-integrated devices, have been a serious disappointment. Ewan at Mobile Industry Review is possibly more outspoken than me - his coruscating comments from end-2009 speak for themselves here and here .
The general perception among many I've spoken to is that the early execution was poor. I'm also not convinced that the social aggregator role is useful anyway, although doing it web-based at least makes much more sense than shoehorning it into IMS.
Given that the basic premise didn't seem to work well, there clearly hasn't been the opportunity to expand 360 beyond the dedicated-device stage. There's no 360 app pre-loaded on Vodafone's iPhones, although its People Sync is apparently available on the AppStore. There's certainly been no viral buzz.
BUT
In the past week or so, the picture has started to shift. It is becoming much clearer that 360 genuinely is a much broader software platform, and that the address-book / social network thing is just a small part. More importantly, I think it's central to Vodafone's broader Internet strategy, and explains its lacklustre enthusiasm for traditional, conservative, walled-garden telco stuff like RCS.
Two things brought this home to me:
- The launch of 360 Shop for Android - a Voda-branded app and content store, billable to the customer's own account. Even Ewan at MIR likes it.
- Re-configuring my replacement iPhone (the old one fried its baseband last week), re-doing my email settings. Looking online, I was advised to set my SMTP outbound server to smtp.360.com for which I needed a 360 registration and log-in.
Separately, Vodafone has persuaded me to register for its (currently non-360) online customer portal, so I can track bills and sign up for its WiFi offload, as I'm getting close to its 1GB/month cap for iPhone data.
In other words.... Vodafone is going all-out to get people to register via web with one or more of its 360 properties. Yes, that's web username & password stuff.
For all the rhetoric about SIM cards, telco subscriber data repositories and identity, the fact remains that many of the best-organised and *most useable* datasets about individuals are those linked to traceable web log-ins. They're structured from Day 1, not based on 20-year old legacy billing platforms and chunks of data locked in vendors' proprietary databases in diverse network elements.
Think about the company that Vodafone is hoping to keep:
- Microsoft Passport / Live / Hotmail etc. login
- Google Gmail / Blogger / Android /GVoice etc. login
- Facebook login
- Yahoo! Mail / Messenger / My etc. login
- Apple iTunes / MobileMe / AppStore login
- Nokia Ovi login
For all the value of the SIM card in the traditional combined (service+access) telco world, it's much less useful for operators wanting to monetise access-independent applications. It locks them into onerous wholesale and interoperability relationships such as mobile roaming agreements. It makes it much harder to launch and monetise services across operator bounaries.
Some form of password / cookie / federated ID + certificate approach is much more flexible in these cases, despite its detractors' comments on its clunkiness. In my view, the clunkiness of username/password is a price worth paying - as billions of Internet logins have proven.
I'd estimate broadly similar numbers of SIMs vs. regularly-used web passwords. 4-5 billion, about 3-4 per Internet user. That tells a rarely-spoken story.
The next logical step will be another attempt to push 360-branded offerings to the Internet at large, perhaps downplaying the Vodafone brand in some cases. It's not immediately clear if the 360 Android shop is available to non-Voda users, but that could help, although how billing would work is an open question. If 360 can get past, say, 100m username/password registrations in aggregate, it will be in the big league.
Wednesday, June 16, 2010
Will delays to LTE help or hinder VoLTE?
Given the huge diversity frequency bands, the need for extensive work on cost-optimisation and performance-tuning of silicon, as well as the need for broad deployment both outdoor and in, the probability of LTE powering "primary mobile telephony" before mid-decade seems slim, especially for mid-tier devices needed to get hundreds of millions or billions converted from 2G/3G.
What I'm uncertain about is whether this, ultimately, helps or harms the case for mobile IMS and solutions like VoLTE. On one hand, it allows the technology to mature and equipment prices to fall. But on the other hand, it gives huge opportunity for disruptive rivals to become entrenched.
The big risk I see is that something like Skype, Google Voice - or perhaps a still-unlaunched FacePhone, iTalk or OviVoIP - performs a classic "move from an adjacent market" before IMS-VoLTE becomes a real option.
Thinking through the usual pattern of IP-style application disruption, I'd expect to see something "low quality and niche" turn into "good enough" and then morph into "de facto standard".... rather than have some new and bulletproof "official standard" parachuted onto a willing audience in a single swoop.
One thing is certain - you can bet that people on the small new Nordic LTE networks are *already* playing with Skype. You can bet that someone loads up Google Voice on Day 1 of Verizon's LTE launch. DoCoMo might be a special case, but let's see how that goes at the time.
Yes, there will be problems. It probably won't do decent roaming, or properly handle emergency calls, will have poor SMS integration and may well drop at network handovers. But if it's got some other way of introducing "coolness" and virality, people won't care.
To me, this suggests that the IMS-VoLTE guys need to find ways to get their solution out "in beta" immediately, or at least in the next 6-12 months. Ideally with some "cool hooks" as well. Doesn't matter if it's a cludge. Doesn't matter if it doesn't have IMS-based QoS or even use all the core bits of IMS like HSS. Run it off a spreadsheet if you need to. Hell, maybe just rebadge a standard SIP client as "Pre-VoLTE" or something, and leave the proper thing to the version 3 update. Full interoperability can wait too.
In other words... I think there has to be operator-branded, imperfect VoIP (with features to make up for it) ready to go on LTE devices from launch. Might be "over the top" across operator brands, or "through the middle" from the network owner. Whether to extend it down to HSPA devices as well is a more tricky decision, but one I'd probably recommend as well.
But the bottom line is to try to get as many of early LTE adopters on board ASAP, gain experience, pick off the all-important social influencers and communications "hubs", open up some APIs for developers - and then use the advantages of being a standard as a differentiator later.
Repeating the classic telco mistake of going for interoperability first, finding the politically-expedient lowest common denominator, being a "late follower" in terms of service launch, risks being yet another failure to learn from experience.
As a central planning scenario, VoLTE advocates - until we get to mid-tier LTE phones with native VoLTE clients, expect 100% of LTE users to have already made a VoIP call with a 3rd party solution before yours. So, how will you get them to switch?
PRESS RELEASE: New study forecasts $416bn worldwide broadband access market, as operators adopt "Happy Pipe" strategies
London – June 16th 2010
Both fixed and mobile broadband markets will continue growing in revenues, up to $416bn in 2020, but operators face some hard decisions about future business models, according to a new study published by the Telco 2.0TM Initiative and co-authored by research & consulting firm Disruptive Analysis.
The new report, “Mobile, Fixed & Wholesale Broadband Business Models: Best Practice Innovation, ‘Telco 2.0' Opportunities, Forecasts and Future Scenarios” finds that telecom operators will benefit from both new types of broadband wholesale, and more sophisticated direct-to-user retail propositions and tariffs. Recent introductions of new tiered and capped wireless Internet data plans are early evidence of this trend.
Key findings from the report include:
- Global broadband access is forecast to increase from $274bn in 2010, to $416bn in 2020, an increase of 52% in revenue terms.
- More than half the revenue growth will come from wholesale and “two-sided” fees for improved access capacity and quality. This means revenue from parties other than the end-user themselves.
- By 2020, mobile broadband will be worth $138bn, or 32% of the total broadband access industry revenues.
- Three new revenue streams are identified: “Bulk Wholesale”, “Comes with Data”, “Slice and Dice”.
- New ‘upstream’ customers are forecast to generate over $90 billion in broadband revenues globally by 2020.
Today, many operators fear the supposed risks of becoming “dumb pipes”, but the study suggests the forecast market value means the term “happy pipe” is more appropriate for some. Certain telecom carriers will be able to add further value through enhanced “Telco 2.0” value-add services and platforms, but it is important to note that the basic carriage of data can itself be profitable and a source of substantial growth.
On the conventional retail broadband side, the big winners are fibre-based fixed services and mobile data plans for smartphones. Global ADSL and cable revenues will peak in mid-decade, and then decline with substitution from the progressive deployment of fibre. PC-based mobile broadband retail revenues will grow strongly in the short term, before being impacted by price competition and a shift from user-paid retail subscriptions to new wholesale-enabled models.
The ground-breaking study predicts that the wholesale market for broadband will evolve in three separate directions:
- “Bulk wholesale” is an evolution of today's approach to MVNOs and data roaming in mobile, or loop-unbundling and open fibre access in fixed markets. The report predicts an acceleration of this type of wholesale provision, as governments force greater openness on telecoms licencees, and operators look to alternative partnerships to supply new market niches with capacity. There is also a possibility for parties other than the end-user to pick up the bill for subscriptions – for example, some local authorities are now providing free broadband to disadvantaged communities.
- “Comes with data” business models have started to emerge recently, with devices such as the Amazon Kindle. Here, a product vendor or service provider contracts for data capacity with the broadband provider, and bundles it in a combined offer – the user does not have a subscription or direct relationship with the telco. The report expects this approach to be important for laptops, netbooks, tablets and various other new device categories.
- “Slice and dice” wholesale is more complex, and more controversial. This involves operators selling data capacity in fine-grained “parcels” to parties other than the user, who is typically also paying for some level of access. This type of “two-sided” business model could involve deals with consumer electronics vendors for extra high-quality streams over existing broadband lines, or to content/application providers where they pick up the bill for data transmission rather than the end-user.
The incremental revenue opportunity for new “slice and dice” wholesale business models in mobile broadband alone is forecast to be $21bn worldwide by 2020.
The report’s co-author and founder of Disruptive Analysis, Dean Bubley, said “Both fixed and mobile operators need to look beyond the traditional ‘end user subscription mindset’, and examine new and innovative wholesale opportunities. At the same time, they need to embrace radical evolution of their retail portfolios – for example, supporting prepaid fixed broadband, or offering innovative tiering and policy structures for mobile Internet access from smartphones and tablets. Whoever coined the term ‘dumb pipe’ has cost the industry billions in shareholder value through negative word-association; instead, “Happy Pipe” reflects optimism and some really interesting opportunities ”.
According to Chris Barraclough, co-author of the report and Managing Director of Telco 2.0, “Telco 2.0 is not about throwing away existing operator business models, but about evolving them to generate additional value. In new Telco 2.0 style ‘two-sided’ business models, there are ‘upstream’ and ‘downstream’ customers – upstream customers are typically enterprises or merchants seeking to reach their markets – the so-called ‘downstream’ customers.”
“As we show in this report, there are many creative ways that operators can add more value for existing downstream customers. However, it is also clear that those companies providing services over the Internet will increasingly seek to mash-up connectivity more tightly with their own offerings, for example by including connectivity as a part of their products. These new ‘upstream’ customers are alone forecast to generate over $90 billion in broadband revenues globally by 2020.”
The report, “Mobile, Fixed and Wholesale Broadband Business Models: Best Practice Innovation, ‘Telco 2.0' Opportunities, Forecasts and Future Scenarios” is available to buy from Disruptive Analysis and Telco 2.0. Details are available at New Mobile, Fixed and Wholesale Broadband Business Models and www.telco2.net
Ends