Connect-World ICT magazine, E-Letter, Telecom-events highlights

Connect-World eLetter
25th August, 2010
The latest from the desk of the Editor-in-chief - Fredric Morris

Looking back at Barcelona, smartphones and over-the-top

The view, looking back at this year’s Mobile World Congress (MWC) in Barcelona, seems very much the same as the view looking ahead to the challenges the mobile sector will face during this year. Close to 50 thousand people cheered, groaned and networked (live, pre-Web style) and the yearly mixture of money, anxiety, technology, confidence, fear, exuberance, exaggeration and hope filled the air - perhaps a bit heavier on the anxiety this year. Vendors and operators alike expect business to be better this year than last, but exuberant expectations, irrational or otherwise, were in short supply; most participants highlighted savings, performance and short term contributions to the bottom line as their goals. The emphasis was upon leveraging the platforms in hand to get through the tough times. The smartphone, fittingly, seemed to sum up sector concerns and hopes at the MWC. By next year, some predict, smartphones will overshadow PCs of all types as the principal Internet access device. Operators need smartphones and the applications they enable to drive data usage, provide value added services and to build revenues; they will market smartphones heavily. So, within the next three years there should be as many as 500 million smartphones in the hands of users and mobile Internet access will grow in proportion. Among all the glitz and electronic bling, smartphones - in amazing variety - were the star. Handsets from everyone, in every flavour, operating system and price level were on display and breakthrough chip sets priced right for the first sub-US$100 smartphones were announced. It won’t be long before the market is flooded with smartphone models even cheaper - especially in developing markets. In less than ten years, possibly much less, today’s smartphone will be the world’s basic phone. Dumb phones will survive for some time, but in niches - at the very low end of the market and for hardcore tech snubbers. The iPhone proved that well-designed smartphones offer the services and choices that consumers want; they give an extraordinary boost to value added service usage and build revenues. Still, while smartphones are a blessing for any reasonably savvy user, they intensify data usage incredibly - both a blessing and a bummer for most operators. Few mobile networks are ready yet to handle the data speeds that smartphone applications need to electrify users and few can accommodate the volumes of data that smartphone-based applications generate. In a bit more than a year, the Apple iPhone doubled the number of mobile Internet users in the United States. In Europe, where 3G (HSPA) services is available, studies have shown that iPhone usage has increased subscriber data usage by 200 per cent. “We’re seeing advanced smartphones like the iPhone driving up to ten times the amount of usage of other devices on average”, said AT&T’s chief technology officer, John Donovan, at the MWC. “Overall, wireless data traffic on the AT&T network has grown more than 5,000 percent over the past three years”. Early reports indicate that phones based on Google’s Android operating system are generating even more data traffic than the iPhone. Today there are overloaded mobile networks all over the world. In highly developed regions, mobile data overload is often pushed primarily by smartphones, but this is not the case in less developed regions where there is little fixed infrastructure for voice and broadband. In developing regions where there are few smartphone users, data dongles are the likely culprits for network blues along, I suspect, with anaemic backhaul networks. Smartphones and dongles may be the hardware of choice for overloading wireless networks, but the overload is comprised of applications and content and it is all-you-can-eat pricing is pushing the content that overloads the pipes. Upgraded, 4G, networks will be able to handle the data flood, but the economy is still shaky and major upgrades call for the sort of heavy investment that keeps CTOs up at night and worrying about how to simultaneously raise cash and keep shareholders happy. Although the level of capital investment probably won’t be significantly greater than it has been for, say, 3G rollout, the move towards 4G is complex and will take years to complete and years to generate smiley-face returns. Today’s 3G networks, though, if tweaked and stretched, can perform better. Upgrading to HSPA, using WiFi femtocells and picocells, and improved backhaul will absorb much of the traffic, but not enough, I expect, to keep service levels high enough to please users during peak traffic hours. It will probably take at least another two to three years before 4G network penetration reaches significant levels in most countries. At the MWC there was much talk of the need for more frequencies. No matter how much we tweak current networks, more spectrum will be needed to handle the coming data glut. Given the lack of spectrum, operators are doing their best to find ways to offload their traffic to Wi-Fi and WiMAX, use femtocells and picocells and do whatever they can to improve backhaul. Carriers everywhere, of every size, are after the governments in their regions to provide more spectrum and liberalise regulations regarding its use. Governments, though, cannot just invent new frequencies for 4G; they have to take them from someone else and this can be expensive - and politically tricky. As a result, the bands designated for LTE are fragmented - they are often those that are politically the easiest to get in each region - and device development is hampered. For full coverage wherever they may roam, users will need new handsets that can connect not only to LTE or WiMAX networks, but to 2G and 3G networks, in no less than 7 bands, just to cover North America and Europe (700 MHz, 800 MHz, 900 MHz, 1,7 GHz 1,8 GHz, 1,9 GHz and 2,1 GHz). Operators and other CSPs (communications service providers) are facing other important tests as well. Revenues are not growing as fast as data usage, and shareholders are pushing operators to do whatever it takes to boost earnings. Smaller CSPs have to face off against sector giants, sector giants face each other and new technologies that are rapidly changing the sector’s competitive structure, new players with lots of cash are nipping at the heels of established companies and every CSP is pushing as far into the services and markets of other CSPs as regulations and their resources allow. To compete, mobile operators need the sexy smartphone applications, but realistically, the next few years will not be a happy time for many mobile operators or their smartphone using subscribers. Mobile operators will need to upgrade their base stations, backhaul networks and support systems; new business models and a new ecosystem of service providers, applications builders, content providers is sure to emerge. To compound the operator’s problems, users, large and small, resist paying in proportion to what they use - the consumer’s love of net neutrality and all-you-can-eat pricing is a serious problem for CSPs. The availability of OTT (over-the-top) content and apps - available directly over the Internet, not bought through the operator - subverts CSP plans to control the customer, be something more than a bit pipe and generate revenue from value added services. Within four years, according to studies by Cisco and others, video will push two thirds of all mobile traffic data. Within those same four years, smartphones and wireless modems in laptops will generate ninety per cent of all mobile network traffic and over 400 million Internet users will access the Internet exclusively via a wireless, mobile, connection. According to Cisco’s study, by 2014 data traffic on the world’s networks will grow, mostly driven by video, to 40 exabytes per year -that is 40 billion gigabytes. Many of those at the MWC had good reason for worry, most of this traffic will be OTT and outside of their control. Content providers will increasingly go directly to users via the Web. OTT offers entertainment - streamed games and movies, but it also offers a wide variety - literally anything on the web - of services. OTT is also Google, Facebook -which during the entire week ending on March 13, 2010 registered more traffic than Google, You Tube, Skype and an uncountable number of other content and application sources. Even basic voice is increasingly going OTT. Since the MWC, Nokia announced Skype for its Symbian operating system. Nokia’s N900 smartphone now comes integrated with Skype and GoogleTalk VoIP. An iPhone version of Skype has been available for some time and a number of operators are starting to make Skype available to their clients. It is hard to imagine that operators happy about their need to join hands with Skype and give up some of their roaming and direct dial business. Have operators analysed their situation and simply decided to cooperate with the inevitable? Operators are also losing control of content. Hulu is a good example. Hulu is a joint venture formed by NBC Universal, Fox Entertainment and ABC/Walt Disney; it streams free, commercial supported, TV content and movies from NBC, Fox and a variety of other networks and studios. Hulu is currently available only in the United States. Hulu also provides Web syndication for other websites including Facebook, Yahoo!, AOL, MSN and MySpace. It is no wonder that operators and cable companies are concerned. How can they compete with this sort of content and how can they handle the traffic it will generate without being able to share the revenues or charge in proportion to usage? Time and time again, I have heard telco execs repeat that to variable tariffs are inevitable; someone has to pay the cost of building new higher capacity networks. Alan Greenspan is often quoted as saying, “There ain't no such thing as a free lunch!" Something has got to give; someone, somewhere, somehow has to pay the price. Despite operator insistence that those that use more pay more, I don’t think it will happen - I don’t see operators getting consumers to sign up for taxi-metered broadband megabits at least not directly. They are now trying to control the applications used on their networks enough to charge for them. The GSMA announced that 24 operators are working together to build a wholesale model for applications, but given the lack of details, it seems this is still very much a bit of work-in-progress and not yet a viable business. Usage-based pricing might prove to be the only way out and the world will bow to the inevitable. For the moment, though, wresting control of, and charging for, applications, content, services in the cloud or even services embedded in specific devices seems to offer CSPs more hope. There might even be a happy ending for bit pipes.



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Spotlight on: Asia-Pacific II 2010

	Author:	Owen Best
	Title:	President Asia Pacific
	Organisation:	Reliance Globalcom
	Topic:	Multi-carrier enterprise connectivity in emerging markets
	PDF link:	Download
	PDF size:	228 KB

Emerging markets are increasingly important to the plans of many companies. Efficient communications are essential not only to integrate the enterprise’s local operation with the rest of the company, but also to integrate it into the local market. Global providers with experience of managing multi-vendor global networks work closely with local carriers to select the appropriate best-of-breed suppliers for each emerging market location and to integrate the solution under a single contract, with a consistent Service Level Agreement (SLA).

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