The same old story, mobile operators are seeing that their revenue is not growing, even though they are upgrading their networks and introducing new features / technologies. The following is from Total Telecom:
The global telecom services market generated revenue of €1.12 trillion in 2012, although at 2.7% growth was slower than in the previous year, according to the 2013 DigiWorld Yearbook published by IDATE on Thursday.
The "DigiWorld" as a whole - which also includes telecoms hardware, software and computer services, computer hardware, TV services, consumer electronics and Internet services – recorded revenues of €3.17 trillion last year, up 2.8% on 2011. By 2016 that figure will have risen to €3.66 trillion, IDATE predicts, with telecoms services contributing €1.25 trillion (see chart).
Telecoms operators are experiencing flat growth, while over-the-top (OTT) providers are seeing revenues increase by 15% a year, Vincent Bonneau, head of IDATE's Internet business unit, told attendees at the DigiWorld Yearbook launch in London earlier this month.
Another interesting piece of news was that Viber has launched a desktop application which means it can now rival Skype fully.
Guess what, I would think that operators have more to worry from this news than Skype. I have stopped using Skype for some time now due to many issues I have with it and have moved to Viber for a few months. If you are a regular reader to this blog then you would have read my recent post complaining about the global roaming rates. When I am travelling abroad, I make sure there is WiFi and use Viber as a substitute for Voice and SMS. In fact I can send MMS and emoticons using Viber which would cost a fortune over cellular otherwise.
Sometimes it feels like the operators are sleepwalking into their own destruction by not innovating enough and fast to be a challenge for these OTT services. Not entirely sure what the solutions are but there are quite a few ideas around to start thinking in that direction. An interesting presentation by Dean Bubley I posted here is a good starting point. Another one from him and Martin Geddes is embedded below, which is quite interesting and intutive.
Some of the interesting findings from the conference include:
TD-LTE is gaining momentum, and its beyond WiMAX operators and China mobile, many APAC operators are considering it for unpaired spectrum and to efficiently meet the asymmetric capacity requirements of mobile broadband which is mainly download
Software defined radio and self-organizing networks are proving critical to manage operational costs
Single RAN is proving the best way to manage network performance
Signaling is in a mess - what is the good of standards when it creates such a mess?
IMS gaps continue - what is the good of standards when it doesn't meet basic migration needs?
The SS7 guys have reinvented themselves as the Diameter guys
Business model innovation - LTE is not just for mobile devices, LTE is for quad play and an interesting array of business applications
The 3G network of many operators is congested - forcing the move to LTE
CSFB (Circuit Switched Fall Back) works
VoLTE testing / roaming / network issues remain - given voice remains by revenue the core service, our industry should be ashamed we're having so many problems with VoLTE
A belief on OTT partnering, but not quantification on the OTT's willingness to pay for QoS (Quality of Service)
Many operators have a question mark on the use of WiFi off-load - its not a technology issue rather one of economics and customer experience, LTE-A and small cells in hotspots appears to be the focus.
Briefly reviewing the slides shown below:
LTE Data Points
96 Commercial LTE deployments mainly in the 1.8 and 2.8GHz bands
APAC has 40% of LTE subscribers, likely to be the high growth region
Drivers for LTE: Throughput, efficiency and low latency
TD-LTE: 12 commercial deployments, 24 contracts and 53 Trials
Streaming video dominates traffic on handheld devices, with YouTube being the top traffic generator at 27% of peak traffic
South Korea Data Explosion
South Korea has seen OTT explode, Kakao Talk 51 mins of usage per day
20 times smartphone growth in 2 years (28M in June 2012, 53% penetration)
60 times mobile data growth to 37TB per month in 2 years, 32% is from LTE devices
LTE subs use 2.9GB per month compared to 3G sub on average use 1.2GB
LTE subs reached 10M, 141% monthly growth
Customer drive for LTE is speed (37%) and latest device (31%)
Challenge Jan 2010 and Jan 2012 ARPU fallen from $48-$35 while data use risen from 180MB to 992MB
Focus beyond voice, messaging and data into VAS: virtual goods (Korean thing), ICT (Information and Communication Technology) and cloud services / solutions (focus on enterprise)
HK CSL Migration to LTE
3G is congested, LTE is not
Key is LTE devices available, unlike the early 3G days
Migrating customers away from unlimited plans to family and shared plans that deliver value
LTE sub uses 2-5 times the data of 3G subs
Average speed seen is 20 Mbps
Using Software Defined Radio, Single vendor RAN, Self-Organizing Networks
Migration to LTE-A, small cells and WiFi where appropriate
Starhub's migration to LTE (they launched LTE at the event)
50% of voice traffic is still on 2G
Using AMR to re-farm 2G spectrum to LTE
Site access is critical - drive to software defined radio to avoid site visits
NTT DoCoMo's VoLTE Evolution
70% devices in portfolio are now LTE
All smartphones support CSFB
Drive to VoLTE is simply to switch off 3G voice (2G already off)
BUT IMS has missing functionality / standards - migration from 3G to VoLTE is not easy - example of failing in standards on basic issues
Yes: Example of innovative converged 4G operator in an developing market that uses web principles for service delivery
Role of Mobile Identity in BYOD (Bring Your Own Device)
BYOD is as significant a trend if APAC as any other market
Provides a nice review of the approaches in managing BYOD
LTE Quad-Play in Emerging Markets: TD-LTE case study
Smartphone growth implications: Review of the signaling problem and mitigation strategies across 3G and LTE. Highlights challenge current standards process
Sometime back I created a OTT Stats, Facts and Figures presentation for the FWIC conference and in that revealed the shocking figures of how popular the OTT messaging have become and how its impacting the operators worldwide by cannibalising their revenue. Below is a presentation by Dean Bubley from Disruptive Analysis who believes that in light of the OTT messaging apps eating into operators profits, Telco-OTT strategies are inevitable. Its not the question of 'if' but 'when'.
@Peter_Whale: really stimulating 2 days. Head full of insights. Now the fun of connecting the dots; finding the takeaways; turning ideas into action
@vectafrank: well done@cambwireless - best yet!
@cambwireless = Cambridge Wireless official twitter account
@zahidtg = Zahid Ghadialy
@marekpawlowski = Marek Pawlowski
@Qualcomm_UK = Qualcomm UK
@JawadAbbassi = Jawad J. Abbassi
@najeebster = Najeeb Khan
@geoffmccormick = geoff mccormick
@ndahad = Nitin Dahad
@Alliantus = Kevin Coleman
@dw2 = David Wood
@RichardTraherne = Richard Traherne
@bensmithuk = Ben Smith
@roryponeill = Rory O'Neill
@rob_symes = Rob Symes
@BrianIsATwit = Brian Robertson
@eurocomms = eurocomms
@rupert_baines = Rupert Baines
@mattablott = Matt Ablott
@sdfriedner = Saul Friedner
@Brill_Brum = Stu
@rpctelecom = RPC Telecom
@evolaris = evolaris
@RichardTraherne = Richard Traherne
@Peter_Whale = Peter Whale
@vectafrank = Frank Morris
In case you enjoyed my effort in collecting the tweets please let me know by clicking the 'Very Useful' checkbox below.
xoxoxoxoxoxoxoxo Additional Information xoxoxoxoxoxoxoxo
As I mentioned in the beginning, Paul Taylor, Engineering Manager, Google, gave us a presentation and requested that we dont share information because of the Google developer conference. As this is over now, I am sharing the pics I took for his presentation. If anyone from Google raises an objection, I will take them down :-)
The 4th Future of Wireless International Conference (#FWIC) is 2 weeks away and the main theme of the conference is "The Reshaping of the Mobile Industry". In some of the recent conferences I have attended, OTT has been one of the main topic of discussion and a concern for the operators. The operators are at the top of the food chain, whatever affects them eventually affects the other players within the mobile industry. With this is mind, we have prepared a document that collects all the figures in one place to be used as a handy reference for quoting stats and figures.
Over the last few months we have been thinking of so many ideas around small cells and this is something that we thought. It looks very simple and straightforward and having talked to a few small cells experts, off the record, none of them seem to be able to see anything wrong with this concept. With the 'Small Cells World Summit' just round the corner I am sure this could be something worth a discussion.
I am explaining the concept using an HSPA+ setup but there is no reason why this would not work in an LTE Setup. This is a typical connection for HSPA+ Femtocell setup with the gateway acting as a concentrator for all Iuh connections and having a single Iu connection towards the core. I have not shown CS/PS connection separately for simplicity.
We propose a 'Virtual' or 'Invisible' Femtocell concept where we think that the Femtocell is redundant but the concept can be used to avoid the coverage and capacity problems faced by the operators and at the same time avoid the 'Signalling storm', atleast on the access network side. Now most smartphones have WiFi stack inbuilt. For this concept to work, WiFi in the phone is a must. Instead of having a Femtocell in between, a modified stack could be embedded in the phone itself. The output of the phone over WiFi are the Iuh messages that can terminate at the gateway and no difference would be needed from the core network side. This is illustrated in the picture below.
The phones would also need to have an enhanced UI to be able to allow a user to select only this option when roaming. You don't want a situation where the user thinks that he is camped on the 'Virtual' femtocell and making/receiving calls while he is not and run up a huge bill.
Advantages of this approach:
The Femtocells are no longer really needed and the end customer does not require to buy a separate equipment, which is different for different operators.
The phones can be working whenever a reliable WiFi connection is available, even if they are abroad without incurring costly roaming charges.
Some operators that do not have a lot of spectrum available avoid using Femtocells as they can cause interference and black holes in the coverage.
There is no worry of a femtocell being used abroad illegally thereby causing interference with spectrum in another country.
Some security issues can be totally avoided and it would be worth for the operators that the keys being used cannot be seen by others.
A lot of people use OTT apps like Skype, Viber, Whatsapp when abroad, being camped on WiFi to avoid costly roaming charges. This approach would mean that the normal Voice and Messaging becomes similar to OTT and can help operator avoid losing out to the OTT apps.
Disadvantages of this approach:
WiFi spectrum is already congested and does not always give reliable coverage.
Security issues would have to be looked in detail to make sure this would be secure enough. Since this concept is similar to creating a VPN between the phone and the gateway, I wouldnt think there would be any issues though.
Roaming revenues are a big cash cow for the operators, most of them would be unwilling to lose this if the phones are using this approach.
I think this concept is more suitable for the Residential Femtocells rather than the other Small Cells (enterprise, metro, pico, etc.) and there will always be a need for them. The main reason being that on a large scale, WiFi is extremely unreliable, prone to interference and not future proofed. A new device may cause interference that may take forever to resolve. Operating a small cell in the licensed spectrum would always make sense and the reliability would be much higher.
If you think this makes sense please click the 'Useful' checkbox so that I know.
As a company we are always looking to engage with other companies to discuss similar ideas. If you are a company dealing with Small Cells and are open to discussing similar ideas, please let us know.
'Joyn' is the brand name for the RCS services that have been around in the name for a long while. Yesterday someone sent this link for the Fierce Wireless article that had the link to the above Vodafone video.
In theory this sounds great but in practice it may be a bit difficult for operators to sell. One of the selling point for this service is that it is going to be part of the standards so independent of the platform. Android and iOS are the two most popular platforms and more and more users are adopting them. The OTT apps are now available on both these platforms, meaning that it will have mass market adoption. If some other platforms have to succeed then they have to make these most popular apps available on their platform or they will not survive. Microsoft has been rumoured to have paid Rovio to develop the first Angry Birds for the WP platform and they may have to do the same again since the new Angry Birds space is not available on the Windows mobile platform.
In any case, Joyn may be good and it can provide enhanced services but I have a feeling that it may be a bit too little and too late to succeed.
With Spectrum coming at a price the operators are keen to make as much money as possible out of the data packages being provided to the consumers. The operators want to stop users using over the top (OTT) services like Skype thereby losing potential revenue. They also want the users to stop using services that are offered by the operator thereby maximising their revenue.
As a result they are now turning to deep packet inspection (DPI) to make sure that the users are not using the services they are being restricted to use. AllOt is one such company offering this service.
I keep on hearing about OTT apps everywhere I go nowadays. I know roughly what they mean but I couldnt find a proper definition anywhere. Here is my attampt to write a bit about what OTT means.
Traditionally lots of services like Voice and Television for example is delivered in a conventional way where Voice was transferred via a PSTN or a Mobile network and similarly TV was delivered via Cable, Satellite, DVB-T kind of technology. With Internet becoming common and Broadband access available to everyone, easily and cheaply, new applications are available to deliver Voice and TV kinds of services. The most popular voice app is for example Skype and Youtube is an example of TV (even though its more like Video On Demand)
These apps cause two main problems. The first problem is that the companies using this traditional medium starts losing customers and their cost per person goes up forcing their profits down. At the same time the amount of data traffic for the ISP increases thereby increasing the number of bits/cent (bits/pence). This forces them to upgrade their infrastructure to provide the same quality of service (QoS).
What this would mean is that in future it would not be possible to get flat rate packages for Mobile broadband or there may be restrictions where certain applications wont run unless you pay extra.
The dilemma for carriers is that LTE’s all-IP architecture will create a more open environment for Over The Top (OTT) applications, including third-party VoIP services, which threaten to further commoditize the network. To overcome this threat and realize revenue gains from LTE, carriers will need to partner with content and application providers, develop application store-fronts such as Apple’s App Store, and perhaps deploy APIs that expose LTE’s value-added network capabilities to third-party application and content developers for a fee.
The only way to ensure profitability in this ‘cost-per-bit’ model is to maximise scale. We have seen this clearly in mobile telephony, where a lack of differentiation has led to intense price pressure, flat rate tariffs and a decoupling of the revenues from the costs. The mobile operator suffers the cost of deploying ever increasing bandwidth while the ‘value’ that this bandwidth enables – the access to over the top (OTT) applications and services benefits the OTT providers.
To avoid this commoditisation, service providers need to add intelligence to the way they deliver these bits. Adopting a ’value-per-bit’ strategy ensures that the value added over and above the simple transport of data is seen and desired by the consumer and by any upstream content or application provider.
This creates a tighter coupling between infrastructure costs and the revenue that infrastructure can attract, thereby ensuring a far more sustainable business model for the service provider. It also benefits consumers and application providers by providing them levels of security, performance and reliability appropriate to the transaction being carried out and the subscribed service.
Most of us wouldn’t dream of paying for a customized Internet experience on a tailor-made device from our broadband service provider. But that is the way we used to buy telephone service, and it continues to be the way we do things for mobile and video services. Over time, all of these businesses will follow a similar pattern, breaking down into their component parts so that the best adapted players win in each piece of the business. The only questions are: “Who are the best adapted?” and “How long will it take?”