What Is A Mobile Device Anymore?

Blog posting on cisco.com

What Do Consumers Want from Wi-Fi?

Until recently, most technologists and mobile industry executives viewed Wi-Fi as the “poor cousin” to licensed mobile communications. And they certainly never viewed any role for Wi-Fi in mobile networks or their business. The explosion of mobile data traffic has changed all of that. Most mobile operators now realize that offloading data traffic to Wi-Fi can, and must, play a significant role in helping them avoid clogged networks and unhappy customers. In addition, service providers (SPs) are struggling to understand new business models for making money from Wi-Fi.

In all of this strategizing about Wi-Fi, there is precious little research about how end users are actually using Wi-Fi, how they want to employ it in the future, and, more specifically, about what drives a user to connect his or her device to the Internet with Wi-Fi rather than “mobile.”

To learn more, the Cisco^® Internet Business Solutions Group (IBSG) conducted a survey of 1,079 U.S. mobile users to understand their needs and behaviors, current and future mobile usage, and level of interest in Wi-Fi and new forms of monetization. The study revealed some interesting findings, including people’s preference to connect their mobile devices using Wi-Fi, the predominance of mobile device usage in the home, and the fact that one-third of mobile users use a public hotspot at least weekly to connect their mobile devices to the Internet. The research findings are important because they allow SPs to understand the size of the opportunity, develop strategies for success, and differentiate their Wi-Fi offerings and initiatives to become more competitive.


Download the paper

Rethinking Flat Rate Pricing for Broadband Services

The telecommunications industry is facing a fundamental issue: on the one hand, increasing requirements for new investments in broadband Internet access and transport infrastructures that support continuous growth in broadband traffic; and on the other hand, reduced ability to exercise pricing power with customers and, thus, increase revenues.

Meanwhile, traditional voice and messaging revenues have strongly declined due to commoditization, and this trend is expected to continue. Therefore, operators are now relegated to connectivity products. The value that operators once derived from providing value-added services is migrating to players that deliver services, applications, and content over their network pipes.

If this is not enough, Internet access prices are dropping, sales volumes are declining, and markets are shrinking. The culprit: flat rate “all-you-can-eat” pricing. Such a model lacks stability—sending service provider pricing into a downward spiral—because it ignores growth potential and shifts the competition’s focus from quality and service differentiation to price.

Now is the time for the telecom industry to consider innovative pricing models for broadband services to enable a better match between the price customers pay and the value they derive from services. Successful pricing strategies will be essential to directly managing profitability for both fixed and mobile broadband operators.


Download the paper

Observations from CTIA Wireless 2012

I am just back from New Orleans where I was attending the CTIA Wireless 2012 conference and speaking on the Mobile Cloud panel.  The conference has a different feel than Mobile World Congress, with obviously more of an American perspective on what is happening in the mobile industry.  While many of the things that I observed at MWC in Barcelona were equally applicable in CTIA, I also observed a number of different items, or different slants on previous observations, in New Orleans.

 

The following are my personal observations and extrapolations from the show based on my conversations with operators, customer meetings, colleagues and walking the floor.  I thought that you might find it of interest? 

1. Three Little Words – “More Spectrum….Please” – It seemed that these were the first words out of every mobile executive’s mouth when they got on the stage.  They all made passionate pleas for why they needed more spectrum to be able to meet the huge customer demand and to continue to add value to the economy.  The FCC Chairman, Julius Genachowski, rebutted with a “yes but….” response.  The FCC will make more spectrum available but he wants to encourage competition and the use of technology and business practices to get the most out of the existing spectrum and any new space that becomes available.

2. Follow Me, I’m The Leader – The U.S. wireless industry, once the world leader in innovation and customer demand lost that position over the last decade as it battled amongst itself on competing 3G technologies.  With the early adoption of LTE, the American industry feels that it has regained its mobile hegemony.  The U.S. now has 105% penetration and 64% of all LTE subscribers.  Not to mention that innovation in mobile has shifted back to the U.S., with the likes of industry shaping giants like Apple, Google and Facebook calling the U.S. home.

3. Beyond the Mobile Operator – Unlike MWC, the CTIA show floor had a very healthy representation from all parts of the mobile ecosystem.  From device accessories, to back-up power solutions, to applications, to CNBC broadcasting live, and many things that I couldn’t understand, there were all there on the show floor.  It makes you realize just how big this industry is and how innovation across all parts of the value chain have fueled this phenomenon.

4. Is this an Election Year? – Listening to the mobile executives gush about their contribution to economic growth and the jobs that they have created you would think that they were on the November ballot.  According to CTIA the U.S. wireless industry invested $25 billion in Capex last year, and now has 283,000 cell sites across the country, up 12% from 2011.  More spectrum and approval on current deals (e.g., Verizon and Comcast) and future deals (TMobile-Metro PCS? or AT&T-Leap?) are crucial to the strategies of incumbent operators.  So, I expect industry lobbying to be elevated to election class levels.

5. Is the Wireless Bubble About to Pop? - The challenge from OTTs and their threat to relegate mobile operators to “dumb pipes” like their wireline cousins, continues to be the number one topic of conversation.  Increasingly, however, it seems that people are getting more concerned that if the economic model isn’t fixed, with more of a equitable arrangement between content provider and mobile carrier, then the wireless bubble may pop.  Mobile operators will slow down further investment, higher data charges will drive more users to Wi-Fi, and heavy users and bandwidth hungry applications will threaten the experience for all of us.  It is still unclear how market forces or legislative approaches are going to stop the party from ending.

6. The Wireless Mosaic – Not too long ago one would never have heard mention of alternatives to macro-cellular at CTIA, such as Wi-Fi or small cells.  These terms would never have passed the lips of executives and you would have had to wander to the far corners of the show floor, next to the massaging chairs, to find lonely vendors of these technologies. Today, the world of macro-cellular seems to be coming to an end and everyone is talking of heterogeneous networks that integrate these new access methods for better coverage and customer experience.  And, those lonely vendors are now in the middle of the floor and often found in the booths of the big vendors.
7. Beyond LTE … What’s a “4” Amongst Friends? – There was lots of banter amongst executives about the true definition of 4G and how creative marketing in the industry has confused the customer.  While MWC was all about embracing the arrival of LTE, with 64% of global LTE subscribers American carriers are declaring LTE hegemony and looking beyond their technical success to how they can drive true business value from LTE.

8. Is that a Phone in Your Wallet? – Technology and industry pundits continue to be perplexed as to why customers continue to want to carry around a wallet of cards and cash when they can fulfill all their payment needs with their mobile phones.  Once the domain of a number of innovative start-ups, the established players, such the 3 major card companies and the big banks, are making big bets on pushing the adoption to mobile payments.  Given the continued fragmentation, complexity and questionable customer value in many of these schemes I wouldn’t throw away my wallet just yet?

9. There Must be Life Out There Somewhere? – Mobile operators continue to search for the next thing that is going to augment declining revenues and avoid them becoming “dumb pipes”.  AT&T announced their new Digital Life home security offer, and there were many demonstrations and discussions around M2M and enterprise solutions as the new next thing.  And of course mobile cloud.  Judging by executive mentions, vendor demos and the packed room and lively discussion in my panel discussion, the industry definitely are looking to the promise of mobile cloud.  

10. Trust Me … I’m a Mobile Operator – According to a recent study from the Reputation Institute, the reputation of the wireless industry has dropped to the lowest of any major industry; even below banks and cable operators.  The Sprint CEO, Dan Hesse, made a passionate plea for the industry to address issues of customer trust, in order to best position the industry for future growth.  With mobile becoming central to people’s lives, trust, common privacy practices and an industry standard platform will be critical to the long term viability of the entire ecosystem.

Profiting from the Rise of Wi-Fi

New, Innovative Business Models for Service Providers 

The insatiable demand for smartphones, tablets, and other connected devices is generating staggering amounts of mobile data. In parallel, the use of Wi-Fi for Internet access is exploding as more mobile devices are Wi-Fi enabled, the number of public hotspots expands, and user acceptance grows. Service providers (SPs) now realize Wi-Fi must be an important part of their strategy to manage growing data loads on their networks and meet increased customer expectations. While operators are learning to accept the role of Wi-Fi, they still struggle with ways to turn a cost of doing business into profitable business models. .

Cisco Internet Business Solutions Group (IBSG) has consulted with leading SPs from around the world to develop and evaluate sixteen new, innovative Wi-Fi business models that can provide a reasonable return on investment (ROI). Opportunities for monetization fall into four broad categories: (1) business effectiveness, (2) end-user services, (3) inter-carrier wholesale, and (4) value-added services.

This paper describes and categorizes each model, quantifies the business value delivered, and aligns business models with industry segments.  Most important, it arms SPs with guidelines for setting priorities and determining which approach is best for making money without wires.

Download the paper.

Succeeding in the New Mobile World Order

As we have seen in  the three earlier articles, I believe that there are Eight Core Industry Disruptors that are driving key tipping points – The Mobile Seesaw – that are ultimately redefining the mobile ecosystem into one of two plausible New Worlds.  The Mobile Segments scenario is much a continuation of the world today – large players dominate each segment of the value chain, focusing on their core strengths and capabilities and cooperating with their fellow segment giants.  Conversely, Mobile Explosion is a world where most things are wireless, interoperable and cloud based, increasing competition and the blurring of the lines between the value chain segments. 

While it is impossible to predict the future, some of the current trends and early indicators suggest that the tipping points, or industry drivers, are pushing the industry in the direction of the world of Mobile Explosion.  Given this trend, players in the mobile value chain are rightly asking themselves what are the solutions to the key challenges and business choices that this new world presents?   And, most importantly what are the key strategies and considerations to ensure success in this new mobile world order?

The following are my thoughts on the top strategic considerations to ensure future success for each of the six key segments of the mobile value chain.

1.  Content Providers (e.g., Sony, Disney, New Corp.)

• Multi-Platform – ensure all content works on all devices, platforms and networks
• Multi- Rights Ownership – link content ownership to the person, not device or network
• Cloud Based Lockers- create protected cloud lockers to store and access owned content
• Alternative Business Models –e.g., targeted advertising, subsidized devices or connectivity
• New Distribution Models – e.g., direct to users, through internet service companies

 

2.  Mobile Service Providers (e.g., AT&T, T-Mobile, Orange, Verizon Wireless)

• Wi-Fi Integration – embrace Wi-Fi as an integral part of the mobile network architecture
• Advanced Pricing – using pricing/bundling to optimize network use and increase revenues
• OTT Collaboration – open up APIs,etc. to benefit from improving  the OTT offering
• Big Data – use advanced data analytics as a business tool and new source of revenue
• Network Costs and Performance Optimization – e.g., CDNs, cloud, IP consolidation
• Mobile Cloud – develop and sell new, innovative cloud offerings
• Vertical Solutions – incorporating M2M and other capabilities – e.g., healthcare, retail

 

3.  Equipment Providers (e.g., Ericson, Alcatel-Lucent, Cisco, EMC)

• Cost Reduction- e.g.,  reducing features, lower overheads, development, manufacturing
• Network-Data Center Integration – integrated products, operations and management
• Small Cell – future of radio access : need low price, innovative products
• Multi-Network Access- integrated network access in single products
• Lower Price – combat Asian competition and changing business and GTM models

 

4.   Software (e.g., Microsoft, Adobe, Oracle)

• Mobile Enablement – easily accessible and usable on all mobile devices/platforms
• Mobile Cloud – new services combining device capabilities, app and cloud delivery
• Security – beyond software – network, device, content access
• Vertical Solutions – solutions created from software plus other components 

 5.  Internet Services (e.g., Google, eBay, Amazon, OTTs)

• SP Collaboration – partner/pay MNOs to enhance offer through network capabilities
• Cloud – fundamental delivery model and new customer opportunities
• Value-Chain Integrators – become the “glue” between networks, content, devices and apps
• Innovation – new services, business and operating models, routes to customers

 

6.   Devices (e.g., Samsung, Apple, Nokia, RIM)

• Innovation – devices, form-factors and beyond – e.g., cloud, business models
• Beyond Handsets –non-human centric – e.g., M2M, sensors
• Connected Home – integration of devices, cloud , content and services
• Cloud Extension – cloud services integral part of device –e.g., services, storage
• Alternative Networks -  seamless optimization across heterogeneous networks

 

Future articles will explore these different strategies in more detail.

Observations from Mobile World Congress 2012

I attended the 2012 Mobile World Congress in Barcelona. The following are my personal observations and extrapolations from the show based on my conversations with operators, customer meetings, colleagues and walking the floor.  I thought that you might find it of interest? 

1. LTE- Where’s the Party? – Last year was the year of LTE.  Vendors were flouting it and operators were demonstrating how it would change the world.  Even Verizon Wireless (an operator which never shows up at these things) had a big display showcasing LTE.  I think that this year the cold reality is kicking in – now that we have built it (or building it) will people actually use it?  What is the killer app?  Will all of that projected mobile video really go over LTE or will it be accessed from Wi-Fi powered tablets?  And of course, the elephant in the room – what will Apple do?  Will it bless the industry with its next iPads and iPhones running LTE?  That one decision will probably shape the payback curve more than anything.  The growing consensus may be that LTE makes sense but it is going to be a much slower burn than the vendors and technology prophets trumpeted.
2. Wi-Fi Comes In From the Cold – The new buzz was definitely Wi-Fi.  A technology that might at best have been found lurking in the far corners of a remote hall at past MWCs is now being viewed as something that operators really need to understand and embrace.  Of particular interest is how it can help mobile operators offload traffic from their congested networks.  However, the discussion is rapidly evolving with many operators asking what are the business models for Wi-Fi.  They are also beginning to explore how they not only integrate Wi-Fi into their network architectures but their overall business model and value proposition.
3. Mobile Payments… Again and Again – Once again, more promise and more solutions for providing mobile payments.  While these solutions hold promise, many think that the future of mobile payments will now be very different than we know it.  Look for the banks and the credit card companies to finally come out on top, doing what they do best, with tried and true systems and business architectures, to collect and transfer money.
4. Mobile Cloud – More than Just Words – Last year mobile cloud seemed to be mentioned just in passing – the concatenation of 2 hot words.  This year there was definitely more meat on the bone.  Key note presentations explained how it was the future, not just of mobility, but of everything.  Vendors proudly displayed mobile cloud solutions and showed off how they were really much more than just apps.  Judging by the packed room of people who came to attend  the mobile cloud panel, in which I participated, mobile cloud has definitely come of age and people are looking for answers… and opportunities.

5. Dumb Pipe or Smart Pipe? .. that is the Question Where the wireline industry grappled with this age at the turn of the century, this is now the issue of the decade for the mobile industry.  Operators are increasingly fearing becoming the mobile equivalent of the dumb pipe.  Many of the talks and discussions focused on explaining why mobile operators are critical to the mobile ecosystem and on how their networks are more than just conduits for Facebook and Youtube.

6. Not a Good Place for a Regulator – I wouldn’t want to wander around the convention floor with the word “regulator” emblazoned on my badge.  They were numerous swipes and references from participants to the challenges that unsympathetic views that regulators had on spectrum, pricing, caps and of course, net-neutrality.
7. Pricing and Policy to the Rescue – Cisco’s graph of exponential mobile data growth has become de rigueur in key note presentations, combined with a revenue line trending in the opposite direction to show that operators are struggling to justify further network investments.  There was talk of the end of unlimited data plans and paying for what you use, like electricity (a utility?), capping heavy users and slowing down certain traffic and usage behaviours.  AT&T made an interesting announcement around creating the “1-800” number for data, with the content provider paying for the access to be included with the application.  Is that like buying a TV with the electricity included in the selling price?  At the same time Vonage and other OTTs were launching services to make free calls and messaging over mobile networks.
8. M2M - The Rise of the Machines – As usual, operators and vendors were showcasing lots of M2M solutions and, of course, mobile interactions with vending machines.  But there seems to finally be enough of a critical  growing to tip M2M into the mainstream.  Mobile operators are starting to aggressively push this as a partial solution to issues identified above – filling LTE networks and smarter pipes.  And, machines are much more grateful than their human customers whose true loyalty increasingly lies with the OTT providers.
9. What’s The New Thing? – 3-D televisions and gaming devices have gone.  The world of devices seems to have converged to iPhone and iPad clones.  There was an interesting revival of the old Palm Pilot with Samsung’s Galaxy Note, that lets you write and draw with a stylus taking from a hiding place in the device (everything old is new again).  Cool, but I am not sure if it will ever become mainstream?  For a company given up as dead, Nokia had an exciting booth with lots of buzz.  And it’s new Windows based device is nice and very different than the clones.  But knocking Apple off its perch will be one monumental task?
10. Small Cells – Is Femto Bigger than Small? – Femto vendors last year seemed to be relegated to the dark corners of the floor and never spoken of.   However, they have now been officially re-labeled “small cells.”  But unlike the femto cells of old, small cells seem to be about data, less voice, and providing access in public locations as a fill-in strategy for macro cell networks, rather than being located in the corner of someone’s basement.  Also, unlike femto, mobile operators are very interested in small cells, realizing that they are reaching the limits on placement of macro cell towers and need small cells to increase coverage and capacity.