|Issue:||Asia-Pacific III 2010|
|Topic:||Who will lead in the age of wireless?|
|Title:||Senior Executive Vice President|
Tetsuzo (Ted) Matsumoto is the Senior EVP of Softbank Mobile, Corp; he started there as the EVP of Technology and Chief Strategy Officer of Vodafone KK – a company that had been already taken over by Softbank. Before that, Mr Matsumoto worked for Qualcomm, where he started as a consultant, and, then, served as President and Chairman of Qualcomm Japan, as well as Senior VP of Qualcomm Corporate, San Diego, responsible for Japan, South East Asia and Pacific. Prior to Qualcomm, Mr Matsumoto worked for the Japanese Conglomerate, Itochu Corporation, in a variety of positions, including GM of the Communication and Multimedia Business, and as Division VP of Aerospace and Information. Tetsuzo Matsumoto received a Bachelor of Law degree from Kyoto University in 1962.
Wireless usage is growing and with it the struggle to determine who will control the market. Mobile operators are discovering the need for fixed-networks and even WiFi and broadcast to offload a significant portion of their traffic. Device manufacturers, Internet providers, network operators, content providers, cloud service companies and more will all fight to own the customer. In the end, it might well be the traditional operators that have a well defined, billed monthly, relationship that will organise the market.
Wireless is our destiny. It’s because human beings are born not wired, but people are now facing the problem of how to deal with this destiny. Until very recently, people on move did not have the tools to connect themselves with other people and/or databases back at the office, but, once they got these tools, they kept using them even when not on move. It has become part of their lives to count upon the many things readily available via the tiny mobile device they always carry. However, this tiny mobile device will soon have the processing capability of a PC, and the data communication capacity it requires will be tens and hundreds of times of that needed in the past; this is starting to create serious spectrum shortage problems. Radio is a physical phenomenon ruled by Shannon’s law; there are always physical limitations to the communications capacity of any wireless device. If you could monopolize a given bandwidth, you would feel pretty comfortable, if not, you would have a problem. To overcome these limitations, the size of each cell has to be very small, so that users will not have too many competitors trying to share the available spectrum. People talk about wireless communication versus wired communication, but there are almost no pure wireless communication systems in the world, except for satellite communications. Most communications systems consist of both wired and wireless connections. In the case of the usual macro-cell based mobile system, the wireless part is bigger than the wired part, which connects each base station to the central facility. On the other hand, for femto-cell systems and WiFi, in which the wireless link consists only of the final 10 to 20 meters, the wired part is more important. For a long time, mobile communication carriers have looked down at fixed (wired) networks as old-fashioned systems. Now, mobile operators must embrace fixed networks as an indispensable part of the integrated network. For many years, mobile communication carriers hated WiFi, fearing it might take over their traffic. Today, mobile operators look at WiFi as a way to offload part of their overwhelming traffic burden. Sooner or later, everyone will carry around various types of portable devices for wireless communications with a variety of displays, audio systems, cameras, sensors, CPUs, memory, and batteries. These devices will be connected with each other, as well as with databases and applications ‘in the cloud’, through a variety of communications networks. These devices will largely replace many existing products, such as books, newspapers magazines, dairy books, cell phones, FM/AM radio receivers, portable audio devices, notebook PCs, tablet PCs, cameras, portable games and the like. These devices will also replace people’s wallets, documents, licenses, membership cards and credit cards. It would be easier to carry, easier to use, more sophisticated and more secure, and it would be much cheaper overall. The technologies to enable this already exist and are constantly improving. iPhones and other smart phones are already successful, and tablet devices like the iPad are likely to penetrate the market very quickly. The technology is improving rapidly and the improvement will accelerate driven by competitive pressures among the equipment and components vendors and service providers. Who will lead the changes? Many people think Apple and Google will; they dominate their market segments and have the money and the technology to grow and advance. Many think the success of the mobile operators – of the conventional cell phone business – is about to pass its peak and that mobile operators will soon become simple dumb pipe providers. Is this true? Will this happen? Not necessarily. Mobile carriers throughout the world can lead in certain market segments, as long as they clearly understand their business is to give users an entire value package not just communications. They must also understand that today’s high revenue telephony and SMS business models cannot be sustained indefinitely. In Japan, mobile communication carriers are more confident about the future, since they have always been at the core of a total ecosystem, which provides a total value package consisting of handsets, application services and the network. They buy and sell the handsets, which support various advanced applications, and handle most of the associated marketing, distribution and customer service. By doing so, users benefit from one-stop shopping, one-stop billing and one party to go to if anything goes wrong. This requires a lot of financial commitment, management skills and devotion – without which mobile carriers could not survive. We understand that survival means leadership, and conversely, leadership is survival. The essence of the business is to earn as much money as possible from the customer. Users only pay for what they see value in, so product suppliers and service providers have work hard to give users the best value possible. It is very important that users feel the cost they pay is reasonable for the value and enjoyment they receive. Handset performance and cost depend upon the handset vendors. Nokia has been leading the game for a long time, but now, Apple seems to be pulling ahead of all the others. It will not be easy, however, for Apple to keep their lead for long – their competitors are working hard to take the lead. The cost and the value provided by mobile applications depend on who develops and sells the application; the cost and value of services depends upon who manages the cloud and offers the services. At the moment, Apple and Google seem to be leading the game, but no one knows what the future will bring. Communications carriers control the networks. Fixed communications are mostly controlled by traditional common carriers, but recently, highly competitive mobile communication carriers have taken over a substantial part of the value chain. By leveraging their monthly billing relationship with users, mobile carriers are trying to take the lead in the handsets and service/application business. The nature of the network business, as we have said, is also changing. No one can satisfy users’ needs just by providing a single network service. To handle the traffic, which can grow dramatically within a very short period, network operators should provide the users with a bundled selection of network services consisting of various kinds of mobile communications, fixed service plus WiFi and broadcasting. Broadcasting? Yes, it will become an indispensable part of integrated communications packages. When many people are likely to access the content, it is better to broadcast it to the user’s handset, and cache it there for retrieval whenever the user wants. By broadcasting popular content, operators can obtain dramatic savings of both network transmission capacity and server delivery capacity. In the future, many different types of players will have to cooperate to create the best value for the users. These players will fight at times, seeking to control the user and the market, but generally, they will have to cooperate. Who, then, will organize the entire service package and offer it to the users? Marketing, distribution, billing and customer service are all important, but in the end, the player who has the best, most frequent, contact with the end user is the key. That is why we should never underestimate the incumbent communications carriers.