Thursday, 31 December 2009

Orange hopes for halo effect from launching HD voice

Orange UK has announced that it will be launching high definition (HD) voice, using the Wideband Adaptive Multi-Rade (WB-AMR) codec. Full nationwide roll-out will follow in 2010, as will compatible devices. Press release here.

Mobile operators have been flirting with high quality voice services for years but I'm healthily sceptical about demand. Clearly, with 70%+ of revenue coming from voice, Orange and other operators need to explore ways to differentiate that service. But HD voice isn't the way to do it. Users won't pay more for it and mobile operators should be looking at reducing, not increasing, the load on their networks.

The migration of traffic from traditional fixed line, where quality is best, to mobile and VoIP services (such as Skype) shows that sound quality is really a fairly minor issue for most users. Price and convenience are much more important. It's also interesting that having perfect clarity on telephone calls has proven to actually be disconcerting for users. If lines are too quiet, network operators insert artificial background noise (Comfort Noise Insertion) when the other party is not speaking so the caller knows they haven't hung up.

So if no-one cares and no-one's going to pay, why do this? PR. This is surely another way for Orange to continue banging on about the superiority of their network. Whether or not their network is superior (and for the average punter it's completely opaque) it's vitally important to have a message that yours is best. The concept of HD is linked to superior user experience, so this announcement is all about the halo effect. Surely Orange isn't expecting anyone to pay extra to take HD voice. In a world where no-one knows who has the best network, but network superiority is a good differentiator, it's critical to find ways to communicate how much better your network is. Being cynical for a moment, perhaps HD voice is one way of doing that.

Tuesday, 29 December 2009

Mobile broadband in Saudi Arabia: Mobily pass 1m subs but average usage only 50MB/month

I just saw this report that Saudi mobile operator Mobily had just reached 1m mobile broadband customers. In a country of 30m people that's an impressive feat. Furthermore that represents a four-fold increase (almost) on the subs base at the end of 2008. Tariffs aren't cheap either, with the cheapest option costing USD27/month for 1GB, up to USD94/month for an unlimited bundle.

Usage levels seem to be relatively low. According to the Zawya report, traffic for December 2009 stood at 50 terabytes, which equates to just 50MB per user. So either there are lots of inactive users or internet usage is very light in KSA, which would indicate that the vast majority of users are on the lowest tariff and there is very little use of peer-to-peer file sharing.

Monday, 21 December 2009

Retaining mobile broadband customers: it's all about inertia

Analysys Mason has just published a report looking at the thorny issue of churn management in mobile broadband. MNOs must put retention at the core of their mobile broadband strategy looks at the customer retention and churn reduction strategies that MNOs must pursue to be as effective as possible at retaining subscribers. In a nutshell it's all about recognising the importance of inertia (of which there's a lot) and looking for genuine customer acquisition opportunities (which have to be sought out).

This report was put together on the back of work done on retention and churn reduction in the mobile world in general. See here for more details.

Also published recently was Strategies for mobile broadband in CALA: forecasts and analysis 2009–2014, which focuses on the Caribbean and Latin American markets where mobile broadband threatens to be a real threat to DSL infrastructure and revenue opportunities are substantial.

Both excellent reads and I thoroughly recommend them.

Friday, 18 December 2009

France finally awards 3G licence to...Free

DSL service provider Iliad has finally been allocated France's fourth 3G licence. As the only applicant for the licence it was a fait accompli that they'd get it, but it's nice to finally get confirmation. Free Mobile (as the new operator will be known) will get the license in January 2010.

The implications? A shake up of a pretty stagnant mobile market and a particular focus on mobile broadband. They are a very strong #2 fixed broadband player (19% market share) behind incumbent France Telecom and they have a real opportunity to cross-sell mobile broadband services. This is particularly true given the established network of shared WiFi hotspots that Iliad has. There are 3 million households with Freeboxes which provide both private and public WiFi access, so Free Mobile effectively already has 3 million basestations. How they exploit this advantage will be the determining factor for how successful Free Mobile will be.

SFR has recent made such a move targeting their NeufWiFi subscribers. For analysis of that see here.

Tuesday, 1 December 2009

3 admits that mobile broadband can't meet user demand for video

Interesting to see this article about 3's concessions to people who have suffered poor mobile broadband services. Clearly, given the nature of MBB coverage, the service won't be suitable for some customers. Try-before-you-buy and no-quibbles money back guarantees should be a fixture in any operator's MBB offering.


What caught my eye though, was comments from Hugh Davies that mobile broadband was never intended for video downloading and streaming. A quick look at their website also shows that they're now stating that for video usage, fixed is best. The implication being that MBB is, and will remain, a complement rather than a replacement to DSL. If MBB can't meet user demand for video usage now, it's unlikely to be able to do so in the future. Usage will probably grow faster than supply.


Of course, I have always maintained that MBB is a complement to fixed (see here) but it's particularly interesting to see a mobile-only player admit that a subscriber's broadband needs can't be met by mobile!


Friday, 6 November 2009

Orange bigs up network as the iPhone looms

Orange is gearing up for their launch of the iPhone in the UK with a very sensible campaign based on network coverage (see right hand side of the graphic above). They have correctly identified that their big differentiator from O2's iPhone will be network coverage where they outstrip the former exclusive rights holder.
I doubt that O2 will be too badly burnt by the end of exclusivity. The difference between iPhone and no iPhone is substantially more than iPhone vs iPhone with slightly better coverage. There is very high inertia in the UK market and there probably won't be much impact on O2, other than the fact that they'll have to start sharing new converts to the iPhone with Orange, and soon Vodafone. That said high ARPU subscribers generally have a higher churn rate than average, so iPhone users will probably be less inert than the average. Nevertheless I think the risk to O2's existing iPhone base is modest.
I've been looking at the issues of retention and churn in some detail in a report that is soon to be published called Mobile customer retention and churn management.

Monday, 26 October 2009

Comes With Music sees very limited adoption

Music Ally recently published on its blog figures for Nokia Comes With Music adoption. A grand total of 107,000 users worldwide. In the UK after 12 months the total figure was a disappointing 33,000. Hardly tearing up trees but spectacular success compare with Italy where after 6 months in service there were only 691 users.

Mind you, given my experience of using CWM (yes, I am/was a user), I am not terrifically surprised. If the word of mouth reflects the user-friendliness (or lack of it) of the service then it's hardly surprising that people aren't signing up in their droves. Sounds too good to be true? With that clunky DRM, it is.

Ericsson estimates 1GB = €1

Apologies for the radio silence over the last 2 weeks. I've been on vacation in Jordan, which was spectacular. No mobile broadband-related anecdotes I'm afraid as I didn't go anywhere near any broadband connections for the whole time I was there. Clearly the mobile phone is absolutely critical to businesses there though. It was quite surreal sitting in the desert at Wadi Rum listening to the Bedouin guides taking calls from people wanting to book themselves onto tours. Anyway, I disgress.

The interesting thing that I missed during my absence was this report from Ericsson on the cost of deploying mobile broadband. The long and short of it is that they reckon that it costs less than €1 to provide 1GB of data. Obviously there's a whole host of assumptions in there. If you're interested, take a look at the original document. This clearly has implications for pricing of mobile broadband. My assumption was that MNOs were getting pretty close to marginal cost as it is. Looks like they have quite some way to go yet.

Friday, 9 October 2009

Gym babes: the iPhone killer app

Couldn't help but laugh when I saw this. Gym babes! It's the killer app for the iPhone.

Thursday, 1 October 2009

Ranking countries by Broadband Leadership

Fascinating report put out by the Said Business School and Cisco looking at which countries are ready for the broadband future and which...ahem...aren't. South Korea beat last year's leader Japan into second place. Sweden, Switzerland and Netherlands are Europe's leaders. Yokohama, Nagoya and (curiously) Vilnius, Lithuania were the top 3 cities. Check out the report. Makes for interesting reading.

Wednesday, 23 September 2009

Still thinking handset-as-a-modem will be big? Think again.

I keep hearing arguments in favour of handset-as-a-modem as a major device form factor of choice but I remain sceptical, for six main reasons:

  1. Laptops will increasingly come with HSPA module as standard. So, where's the market for a peripheral device of any sort?
  2. Handset manufacturers are hardly likely to start pushing their device as a dumb modem. Sure, if you're committed enough to finding a way to use it as a modem, you will, but it's not mass market.
  3. It won't provide as good an experience. Handsets will lag modems in terms of transmission speed. Probably not a critical issue for most people, but relevant.
  4. It's in the interests of the MNO to sell 2 devices. Why sell an add-on when you can sell a whole new 18m contract or dedicated prepay device which has its own credit?
  5. People mostly don't go for devices that can do everything. Who needs a phone, blackberry, MP3 player AND camera when your phone can do it all? No-one. Who has actually gone the whole hog and dumped all those separates? No-one, pretty much.
  6. You can't share your phone. You can share your modem. There's no way I'd leave my phone at home for my other half to use when she's working from home, but I'm happy to do that with the broadband. OK, so you also can't share an embedded modem, but that's another issue entirely.

If you want to know more, see the following report I wrote a few months ago - Mobile broadband devices: from USB modems to where?

Tuesday, 22 September 2009

Thoughts from Informa's Mobile Pricing, Retention and Loyalty Conference

I'm co-chairing a breakfast briefing at the Informa Mobile Pricing, Retention and Loyalty Conference in Oxford tomorrow, so I came up for the second day today. A few interesting issues cropped up:
  • Dynamic tariffing - The idea of charging according to network loading is a logical one, particularly in price sensitive markets. It allows for a great segmentation of subscribers into those who are willing to pay (e.g. business users) who will make the call regardless of price, and those who aren't, who will wait for cheap prices when the network is less heavily loaded. This is also applicable to mobile broadband, allowing that differentiation of business and consumer users which is critical.
  • Bundling of fixed and mobile broadband is vital even in low DSL penetration markets. We heard from an operator in Turkey, where DSL penetration is relatively low and even there the focus of MBB is on bundling it with DSL and public WiFi, provided by partner networks.
  • If you're going ot indulge in a price war, do it via a secondary brand. This allows some differentiation, even if it's artificial and the service is broadly the same.
  • Attract the customers you want to retain. Most people have low utilisation. Those P2P file sharers who generate all the traffic have very high utilisation and compromise the potential profitability of mobile broadband. Therefore MNOs should avoid acquiring these customers. Try to get the peer-to-peer file sharer to go elsewhere. So don't be the cheapest.

Interesting stuff.

Monday, 21 September 2009

Free report on LTE from the UMTS Forum

Interesting new report published on the UMTS Forum looking at the LTE ecosystem. To be partisan for a moment, obviously it would have been miles better if it have been put together by Analysys Mason. Nevertheless Ovum make a reasonable fist of it.

Find it here.

For the definitive view on LTE evolution, see our report Operator strategies for network evolution: the road to LTE.

Monday, 14 September 2009

Ongoing thoughts on T-Mobile/Orange merger in the UK

I've obviously been giving some thought to the implications of the T-Mobile/Orange merger in the UK. I'll be posting a selection of thoughts over the course of the next few days.

As a first off, the thorny issue of competition will have to be resolved. EU and UK authorities will probably get involved. I think that at an EU level the merger doesn't represent anything new. Across EU markets an operator with 43% market share* is hardly unusual. Most markets have such a primate operator, although usually it's the former incumbent. For more analysis of this, see the piece I wrote for Analysys Mason: Orange–T-Mobile merger brings UK competition levels into line with other European markets. At the UK level, it could be that this becomes a political hot potato. There are quite a lot of job losses implicit in the merger plans. We're in a recession. There's going to be an election in the next 9 months. That could scupper the deal, or at least delay it until after May's poll.

*The T-Mo/OR press release claims 37% vs 27% for O2, but that's a little bit naughty. You can't exclude your MVNOs for your subs figures if you choose to include O2 and Vodafone's.

Monday, 7 September 2009

Orange buying T-Mobile UK, right now! Apparently.

The rumour from Broadband World Forum is that the reason Didier Lombard didn't give the keynote this afternoon is that he's signing the deal for Orange to buy T-Mobile UK. Very very interesting.

Thursday, 3 September 2009

Deutsche Telekom chief predicts consumer cloud computing

DT CEO Rene Obermann said a few interesting things in his address to Nokia World this week and not all of them will fit well with Nokia's strategy. Article on Total Telecom here.

Some of the predictions were relatively tame but there was also the kernel of a game-changing shift in the market too. Clearly it's no surprise that future growth must come from mobile internet and other data services as voice and SMS become commoditised. He also rightly points out that non-messaging data services are focused on access, which is itself commoditised. However, the intriguing element of his speech relates to how the operator can break that commoditisation: with consumer cloud computing. He pointed out that most people thought their phones were too complicated and needed to be simplified. He also opined that users will want to store less, not more, content on their devices, instead opting to store and manage content in the cloud.

The need for device simplification might not chime well with Nokia who, let's face it, develop some pretty complicated devices. However, there is an underlying logic in the concept. The mobile phone, more than any device, is designed to be connected. It therefore logically follows that content and applications will benefit from being network-based. More so than in the enterprise PC space, where cloud computing is going great guns.

Tuesday, 1 September 2009

eBay selling Skype

Looks like eBay is going to offload Skype to private equity firm Andreessen Horowitz, set up by Netscape co-founder Marc Andreessen. Price tag rumoured to be $2bn, compared to the $3.1 billion that eBay paid in 2005. Google had reportedly been interested but may have been put off at the prospect of going up against carriers that will stock Android devices. Bit of a potential conflict there.

I was always sceptical that eBay would ever gain any synergies from Skype. The whole "call the vendor" business model seemed unlikely. Most vendors don't want to take numerous calls about their sales. Messaging works fine. What's more, eBay were always onto a loser when the purchase of Skype didn't include the enabling technology.

3 launches MiFi

As reported on this blog a couple of weeks ago, 3 will be launching the MiFi router in time for Xmas. They've just announced the launch schedule and the pricing.

The device (the Huawei E5830) will be available through telesales channels on the 17th September and stores a day later.

Pricing will be as follows:
  • ‘Broadband 5GB 1 month’ - a rolling contract including 5GB of data for £15/month. The modem costs £69.99.
  • ‘Ready to Go’ - PAYG version for £99.99 including 3GB of data.
The pricing seems a little high to me compared to the current prices for USB modems which are as low as £20 on PAYG now. Persuading people to switch to MiFi, which does provide a better service than a USB modem (at least in my experience), will be difficult.

Full press release details here.

Thursday, 27 August 2009

3 UK deploys mobile broadband advertising

Another source of mobile broadband revenue has reared its head today, with 3 UK's agreement to host advertising on its mobile broadband dashboard, i.e. the sign-in and status screen.

Yell has been signed up as the first advertiser. 3 UK advertised for partners in July. It has been successfully run in Austria with advertisers such as Honda, Suzuki and VW (yes, curiously automotive-oriented isn't it).

I'm a 3 subscriber and frequent, often frustrated, user. So I'll keep you posted on what it looks like and what the impact, if any, is on the service.
Oh, and before you ask, "Received Top" of 173.6kbps (on the graphic, left) after 15 mins is actually pretty good for where I live...in Central London.

Mobile money is THE growth area in emerging markets and Nokia wants a slice

Nokia has announced that it's getting into mobile money with its new, imaginatively named, "Nokia Money" initiative in conjunction with mpayment specialists Obopay. The new mobile wallet application, aimed squarely at the unbanked in emerging markets, will allow users to make payments, transfer money, pay bills and top up their prepay. They're also building a network of agents to allow users to deposit and withdraw cash.

In emerging markets mobile money is THE growth area. Mobile offers the only viable option for many financial transactions due to the lack of banking infrastructure. The average country in Sub-Saharan Africa, for instance, has less than one bank per 100,000 people, compared to about 1 per 3,500 people in the United States. Almost half of subscribers to one Kenyan mobile operator are registered for their m-payment service and they reported over USD200 million of funds transferred in March 2009 alone. Almost 8% of that company's ARPU is accounted for by m-payments and that figure is rising. In that context, it is hardly surprising that Nokia is looking at getting a piece of the action as they extend beyond devices and into services.

What's generally lacking in mobile payment systems is interoperability. Let's hope Nokia helps rather than hinders that. Let's not forget the importance that interop had in driving SMS. The same will be true of m-money, although being a bit less P2P it's not as critical.

For more on this area, see Analysys Mason's forthcoming report Sub-Saharan Africa telecoms market: regional overview 2009.

Wednesday, 26 August 2009

T-Mobile launches LTE test network

T-Mobile has announced the launch of live multi-user field trials for its first next-generation mobile network (NGMN) deployment. The 60-cell LTE network, supplied by Huawei, will be deployed in Innsbruck, Austria. The network will be capable of 50MBit/s uplink and downlink.

Tuesday, 25 August 2009

Short-term hire is the next MBB niche

Australia has recently been setting the standard for marketing innovation in mobile broadband and it's always worth keeping an eye on what they're doing down under. A recent development has been the launch of short-term dongle rental aimed at businesses.

The new Laptop Connect service from Telstra charges up to AUD10.95/day for 143MB (evidently based on 4GB/28 days). Charges fall depending on the duration of the rental: sub-AUD10 for anything over 5 days. Targeted segments include home-movers, business users attending events and holidaymakers.

As MBB penetration increases, subscriber growth will increasingly depend on finding niches. This looks like an attractive and high margin one, albeit a bit troublesome to manage. A lot will depend on distribution channels and ease of sign-up.

So, while their cricketers were being turned over at the Oval in the final Ashes test, they do at least have innovative MBB pricing as some compensation.

Monday, 24 August 2009

How analysts do their forecasts...

Saw this on Technobabble 2.0 and it rang a bell




Nokia launches first laptop

Nokia has announced its first foray into the laptop space with the "Nokia Booklet 3G", a Windows-based subnotebook weighing in at 1.25KG with 10" screen. It features 3G/HSPA, integrated GPS and, of course, a full Ovi suite pre-installed. No pricing details yet. We'll need to wait for the Nokia World event next month for that.

The interesting thing for me is that they've chosen to go with Windows, rather than launch a Symbian-based subnotebook. In a recent Perspective I wrote for Analysys Mason (Mobile OS developers will compete fiercely with Microsoft for presence on notebooks) I speculated about handset vendors extending their OSes onto notebooks. It seems that Nokia is not quite ready to make that leap.

This also follows hot on the heels of a Nokia agreement with Microsoft to support the Office suite of applications on Symbian phones as well as speculation (mostly from FT Deutschland) that they will junk Symbian altogether and use Maemo. Although I'm sceptical about the latter, all of this does betray a more pluralistic approach to OS.

Thursday, 20 August 2009

Mobilkom Austria looking towards joined up broadband

Telekom Austria has announced its results for Q2 2009. Its (i.e. Mobilkom's) mobile broadband subscriber base increased 43% y-o-y to 464,000 connections. Net adds during the quarter was 23,850. So growth is slowing somewhat. Of the 140,000 subs added in the last 12 months, only 17% came in Q2. Mind you, we can expect Q2 to be relatively slow anyway. Data now accounts for 35% of traffic-related revenues, up from 31% in Q2 2008.

Interesting quote from CEO Hannes Ametsreiter in the earnings call "I believe it's also important to have a look at not only mobile broadband and fixed broadband, but we are looking at total growth in future market broadband, there we can clearly see that we could increase our market share in that market." (Transcript at www.SeekingAlpha.com).

Telekom Austria has been keen to offer fixed-mobile broadband bundles, and indeed to also throw fixed and mobile voice into the mix too, under the "aon" brand. This is clearly a way to differentiate it from the keenly price MBB offers in Austria. As an example, the aonBreitband-Duo MBB/DSL plan costs €30/month including a free laptop. It's only a short step from that to the joined-up broadband that will become the de facto standard over the next couple of years.

Tuesday, 18 August 2009

Multi-SIM/multi-channel mobile broadband? Is there an opportunity?

I was chatting today with Raj Krishna at Manovega about their new mobile broadband product. Essentially the aim is to speed up mobile broadband connections by combining multiple (5-10)channels in a single device through the use of multiple SIMs.

This is an interesting approach to solving one of the critical issues for MNOs: How do you differentiate an enterprise offer? Currently with no differentiated service, enterprise customers are sensibly migrating to cheap consumer plans. Offering larger bundles doesn't really appeal to business users as enterprise apps are typically not that data hungry. What business users will pay for is speed. Unfortunately no-one has really managed to successfully address this requirement. The potential benefits to the operator of doing so are substantial in terms of higher rev/MB. Enteprise users are willing to pay, but they must receive a substantive benefit, i.e. faster or more reliable connection. By combining multiple connections (and potentially connections from multiple MNOs), this multi-SIM/multi-channel solution potentially offers an enterprise-grade MBB service. Or at least gets closer.

The challenges, however, are manifold, including:
  • Peripheral devices have a limited shelf life as modems become increasingly embedded
  • Operators typically push back against devices with multiple SIMs
  • Infrastructure vendors are looking at pushing a similar agenda, allowing MNOs to differentiate an enterprise proposition without the requirement for multiple SIMs

However, the principal is a good one: more bandwidth for those willing to pay. There must be a significant premium associated with this as effectively any user will be hoovering up 5-10 users' capacity. So at least a 5-10x premium must apply.

Monday, 17 August 2009

3 growth outperforms the market

In more 3-related news, the operator's parent company Hutchison Whampoa has announced that the group* had 3.8 million mobile broadband customers as of mid-2009, up 170% compared to mid-2008.

According to my estimates, over the same period in Europe as a whole, mobile broadband connections grew by about 104%, so 3 seems to be outperforming the market. That said, of course, the comparison isn't exactly fair as 3 isn't present in all the markets and they tend to drive a lot of the growth. So it would be fairer to compare with those markets in Europe where 3 is present (I don't currently have Israel or HK forecasts, they're coming soon). The composite growth figure for the Austrian, Danish, Irish, Italian, Swedish and UK markets is 100% over the year to June 2009, making 3's growth of 170% all the more impressive.

Full mobile broadband subscriber (and more) forecasts available here.

*Including Israel and Hong Kong subsidiaries as well as "3" companies.

Thursday, 13 August 2009

3 set to launch MiFi

3 UK is set to launch a MiFi router in time for Christmas (see press release here). For those unfamiliar with the device it's essentially a WiFi router but it uses HSPA for the backhaul rather than DSL. No pricing announcement yet.

As noted in an earlier blog post (here) I have a healthy degree of scepticism that these devices will have a long-term future, not least because the growth of embedded modems will eventually render peripheral devices (including dongles) redundant. That said, I have been very impressed with the Novatel MiFi device I've been using. Set up is easy and being able to put it anywhere means I can find a reasonable connection in my Faraday-cage-like apartment. Part of the improvement in the service (relative to my 3 dongle) could be down to better coverage from Vodafone.

Nevertheless I still suspect that the WiFi router will see only modest uptake. Three-quarters of users of mobile broadband (as indicated in the recent Ofcom Comms Market Review) use it as a complement to DSL/cable, rather than a replacement. As a complement it doesn't really make that much sense since for out-and-about use, it's unlikely that most users will need to share. The router is aimed squarely at the replacement market and then only if the owner lives alone or never moves it. There's nothing like taking the family broadband connection away on a business trip to really annoy a spouse/the kids. So there's a healthy opportunity there, but not massive.

For forecasts of mobile broadband adoption by device type, see Analysys Mason's recent report Mobile Broadband Devices: From USB Modems to Where?

Friday, 7 August 2009

T-Mobile selling iPhones in the UK????

Report here that T-Mobile has been importing iPhones to use as customer retention tactic for high value subscribers that are looking to migrate to O2. Wow!

Thursday, 6 August 2009

Orange set to spark price war in UK MBB with £5 tariff

Orange has introduced a 500MB £4.89/month mobile broadband offer. This is only open to existing Orange customers. Given that average utilisation is probably now comfortably below the 1GB/month mark there should be a lot of casual laptop owners interested in giving Orange a go. I await the reaction of the competition with bated breath.

Mobile broadband is highlight in Ofcom's UK Comms Mkt Review

This morning Ofcom published the Communications Market Review 2009 (here). Mobile broadband provides one of the few positives. According to the figures 12% of households have mobile broadband, giving 3 million connections and 75% of them are complementary, rather than replacement. I would advise caution over the figures. While GfK has a reasonably robust methodology and Mobile Today generally know what they're talking about, you can take it for granted that there is some margin of error in their figures quoted in the Ofcom report. However, I think they're very close to the truth. All of the figures are completely in keeping with the forecasts I compiled for Analysys Mason for the report Mobile broadband in Europe: forecasts and analysis 2009–2014.

The socio-economic analysis that Ofcom has done is quite interesting. Nothing we weren't expecting though I'd say: ABs have the highest penetration and typically use MBB as a complement; DEs have fewest connections and are proportionately more likely to use it as their main connection (reflecting the fact that they're more likely to be mobile-only households and the affordability of prepaid MBB).

Friday, 31 July 2009

Mobile broadband starting to take off in France?

I was over in The Hague this week and the message from the Netherlands is that mobile broadband is really starting to take off after a slow start. I'm glad to hear it because my forecast in the Mobile broadband in Europe: forecasts and analysis 2009–2014 report from Analysys Mason was that the market would see rapid growth this year. It's nice to be right.

Another market that I'm expecting better things from is France. Very low MBB penetration so far, but there is some reason to be cheerful based on Orange's recent KPIs. Their dongle subs in France increased 45% in the first half of 2009 to almost 800k subscribers. During the first half on 2009 they added almost as many connections as during the whole of 2008. All this means France is just about on target to hit the 93% growth rate that I predicted for 2009 as a whole. It may even exceed it!

Monday, 27 July 2009

Telenor/Huawei deal sets the trend for USB modem supply contracts

Apologies for the radio silence, I've been on vacation for the last 2 weeks. I should get around to reviewing everything that's happened in my absence.

In the meantime, what grabbed my attention was the announcement that Telenor would be doing a global deal with Huawei to provide 1.3 million modems to its opcos in Norway, Sweden, Denmark, Hungary, Serbia, Montenegro, Russia, Ukraine, Pakistan, Bangladesh, Thailand and Malaysia over the next year.

By my estimates, in that footprint during the next 12 months something like 8-9 million modems will be sold across all operators. With Telenor taking maybe a quarter of the sales it looks like Telenor is committing to Huawei as its main supplier, leaving other vendors to fish around for scraps here and there.

Given how difficult it is to differentiate USB modems it's hardly surprising that an operator would choose to strike such a deal. Prices will be lower and there's little downside from supporting almost exclusively Huawei devices rather a range from multiple manufacturers. I would expect other operators to follow suit and put all their (identical) eggs in one (discounted) basket.

Friday, 10 July 2009

A toll bridge over the digital divide

I was chatting with Nick Wood over at Total Telecom today about BT proposing extending the 50p levy to mobile. As discussed in last blog post I don't think this is great idea as the poorest in society rely solely on mobile for their connectivity. Charging a telecoms poll tax so that rural areas can be provisioned with some form of broadband is swapping one form of digital divide for another.

Actually there's a more general flaw with the 50p charge. It's putting a barrier in the way of people bridging the digital divide. The UK government is seeking to bridge the digital divide with a toll bridge. It's actually adding a barrier to digital inclusion (albeit a small one). Others have advocated using general taxation. I think there's some logic to this.

Monday, 6 July 2009

Extend the UK 50p/line levy to mobile? Ridiculous.

Houston Spencer, Alcatel-Lucent's vice president of marketing and solutions for Northern Europe raised an interesting issue (as reported on Total Telecom) about the GBP0.50/line levy recently announced in the Digital Britain report and intended to fund the roll-out of broadband to underserved areas. Why should this not also apply to mobile? After all, surely wireless technologies will play a critical part in bridging the digital divide, particularly in rural areas. So why shouldn't mobile operators also stump up for this? Particularly if the joint funded mobile roll-out is subsequently jointly owned and utilised. This surely would make it much more economically viable to provide services.

The answer is, of course, that such a levy would be passed on immediately to consumers and in many cases to consumers who couldn't afford it. The social consequences (and the ensuing political flak) would be unacceptable. As of the end of 2008 (according to Analysys Mason's Telecoms Market Matrix) UK monthly prepaid ARPU was GBP10/month. Putting a GBP0.50/month tax onto that line would effectively add 5% to costs. And that's for the average user. Many people spend a lot less on their prepaid phone but rely on it just as much. For the highly price sensitive, mobile, not fixed line, is the most cost effective option with zero fixed cost of ownership. Pushing up the monthly cost of highly price sensitive users by 10-20% could effectively widen the digital divide by depriving these people of access to any form of communications; exactly the reverse of what the levy was aimed at achieving.

Even if such charges were applied only to mobile broadband (and how would one define that anyway when it's possible to use a handset as a modem?) it would also be counterproductive. MBB, thanks to the availability of prepay variants, is much more affordable for price sensitive users than fixed line. Start enforcing higher charges there and you also risk undoing all the good work that MBB has done providing affordable broadband to the masses.

Wednesday, 1 July 2009

That didn't take long

As predicted in the last post, 3's competitors didn't take long to respond to their £1.25/MB international roaming rate.

Vodafone announced that a new data tariff will apply from today across Europe which will cost £9.99/day for 50MB, i.e. £0.20/MB.

Obviously the minimum charge is a bit of a pain, but I'd argue given the usual usage patterns of mobile broadband it's more price efficient for users than the 3 plan. How often do you only use 1MB during a session, let alone a day? If you've taken your laptop, you're going to use it and you only need to generate 8MB of data to make it worthwhile getting the large plan. Almost every session would do that.

Outside Europe the charge would be a slightly less palatable £29.99 for 50MB.

3 UK roaming comparison is misleading

On the 29th June (two days ago) 3 put out a press release claiming that on the 30th June (yesterday) it would be launching the cheapest roaming rates in the UK. This included, at £1.25/MB the cheapest MBB roaming rates. They were even kind enough to provide a handy-to-use chart, see below:

This is, at best, misleading. As of the 1st July (today) ALL mobile operators in the EU will be forced to abide by the EU roaming regulations as determined in September 2008. In the case of data rates the maximum chargeable rate established by that regulation is EUR1/MB, which is substantially below what 3 is charging. So we can anticipate that all of 3's competitors will be imminently slashing their roaming rates.

CLARIFICATION: the EUR1/MB is a wholesale rate, not a retail rate. For all the other services covered by the new regulations, a retail rate is mandated, whereas for data it's only wholesale. Nevertheless we'd expect to see substantially lower rates from the competition imminently as a result of the lower wholesale rate. If not, surely there's a requirement to mandate a retail rate for that too.

Of course all of this makes little difference to the average consumer for whom all of the prices quoted, including the new EU mandates maximum of EUR1/MB is still prohibitively expensive. Average Joe still won't be taking his dongle with him on holiday. Not if he has any sense.

3 Austria MBB subscribers seem happy (wait until they see "BrĂ¼no" on BitTorrent)

I spotted a news story today about 3 Austria's mobile broadband customers being the happiest in the land.

"38 percent of questioned 3 Austria customers were 'very happy' with their mobile broadband services, with a further 33 percent 'happy' with their service. Over 50 percent of customers actively recommend the company's mobile broadband service to their friends and relatives, with 7 in 10 customers saying their expectations had been met by the company."

These approval rates seem pretty good for mobile broadband. I guess that's what happens when you have 94% population coverage, 7.2Mbit/s and get 15GB of data for only EUR15/month. No wonder mobile broadband penetration is running at 12% at the end of 2008, comfortably the highest in Europe (and probably the world) according to Analysys Mason's report Mobile broadband in Europe: forecasts and analysis 2009–2014.

Tuesday, 30 June 2009

UK MBB tariff moves indicate a slowing market

I've been away for a few days. During that time, a stack of MBB tariff moves have been announced (or are rumoured) by the UK MNOs.
  • Vodafone introduces a 6 month contract at £15/month for 3GB. £29 upfront for the modem.
  • Orange has launched a new range of enterprise tariffs and a selection of new laptops.
  • 3 cut the price of some of their tariffs. Yet more evidence that growth is slowing down.
  • Not quite a tariff move this, but from late July O2 mobile broadband customers will be able to access BT Openzone's 3,000 hotspots as well as the 7,500 of The Cloud to which they previously had access. Article here.

The move from O2 isn't exactly a tariff announcement but it is a good move. O2 continues to work well to off-set the limitations of its HSPA network. The combination of attractive fixed/mobile BB bundles and WiFi should limit the user reliance on the macro network.

As for the other announcements, I'd applaud anything that offers greater segmentation opportunities, such as a 6 month plan. Also, the business segment has been frankly criminally neglected and needs addressing, although I don't really think Orange's announcement on that score is that earth-shattering. But, some of these moves are starting to look a little like desperation. Could it be that growth in the MBB segment is starting to slow and they're making up for it by slashing prices?

Glastonbury mourns the passing of a legend

I spent much of the last week having a great time getting muddy and sunburnt (as well as listening to some great bands) at Glastonbury Festival. Link here if you're unfamiliar.

If you've ever been, you'll know that various unfounded rumours usually do the rounds thanks to the lack of contact with the outside world. This year there was one monumentally earth-shattering rumour that no-one could believe. It seemed that a once beloved but recently tarnished superstar had met an untimely end.

A typical conversation went like this: "Have you heard the news?" says a teary-eyed reveller to a soon-to-be-blubbing friend: "T-Mobile may soon be bought out by Vodafone". I'm not sure we're all ready yet to mourn the passing of web'n'walk or Flext. It will take time.

I also heard a rumour that Michael Jackson died, but I'm not sure I believe it.

Tuesday, 23 June 2009

Vodafone to launch femtocells in the UK on 1st July

Vodafone is set to launch femtocells in the UK on the 1st July. Details here. The Vodafone Access Gateway can support up to 4 calls at a time and is compatible with all 3G handsets. The quote prices are a bit confusing but reading between the lines it's either bundled with certain price plans or for a stand-alone box it's either £160 up front or £5/month. Nothing specific on data but since it's 3G and the Vodafone press release promises the "full range of Vodafone services " I have to assume it includes browsing too.

Quite a bit of negative feedback on El Reg.

iPhone tethering creates headache for O2

Unsurprisingly a work-around has already been found for the need to buy an add-on for tethering the iPhone 3GS to use it as a modem. A downloadable app from benm.at will do the trick, although O2 have commented that this unofficial tethering is prohibited under its Ts&Cs.

In my recent report for Analysys Mason, Mobile broadband devices: from USB modems to where? I predicted that this handset-as-a-modem option would see only modest uptake for various reasons including the fact that it is rather too clunky to be user friendly and it's not in the interests of the MNO or vendor to push it. Of course, if it's free, that's a different matter.

The problem with the iPhone is the inclusion of unlimited data packages for free with all contracts. Where subscribers are being charged for flat-rate mobile internet tariffs the charges are typically more per-GB than for mobile broadband. So there's little problem for the MNO with tethering, permitted or otherwise. There's some minor revenue leakage as a result of users being able to share a bundle across MBB and mobile internet, but the implications are probably modest. However, there more of a problem where all the additional usage isn't generating any more revenue, particularly where the month fee is not that substantial and the plan is actually unlimited.

A typical iPhone 3GS user is paying £175 up front for a 600 minute/500 SMS/unlimited data package over 24 months at £34.26/month. This is only £15-ish/month more than the equivalent SIM-only offer which includes no free bundled data and (of course) no heavily discounted iPhone. This is fine for O2 as long as it isn't also cannibalising mobile broadband revenue which should also be generating £10-£15/month from the same subscriber.

Whether this becomes a problem depends on how stringently and effectively O2 implements their fair usage policy. It'll be an interesting test. T-Mobile has run into problems enforcing the no-Skype rule on its network and I suspect O2 might find itself in the same position.

Friday, 19 June 2009

Prospects for MiFi and other "home hub" MBB products

Over the last week I've met with a couple of interesting vendors. The first was Novatel that manufactures the natty MiFi device, which works as a WiFi router with HSPA/EVDO backhaul (left). Currently supplying to Verizon, Sprint and Telefonica. The latter were very enthusiastic about the prospects for the device the last time I spoke with them. Although it's a slick piece of kit and very user friendly, I can't avoid the thought that it's still a peripheral and ultimately peripheral devices become subsumed into the main device (think WiFi or Bluetooth card, screen, keyboard, mouse). So where's the opportunity for a standalone device? One interesting idea is that it offers a way for iPhone users in the US to roam onto other networks, using the iPhone's in-built WiFi to connect to the hub. Rather niche though. Another is to facilitate group connectivity through a single subscription, but ultimately MNOs can replicate this through group plans that are more flexible, e.g. because they allow the multiple users to be using their connectivity from different places. There is no immediately obvious killer application, although there are some juicy niches.

In my recent report Mobile broadband devices: from USB modems to where? (see here for Analysys Mason coverage of MBB devices) I was rather sceptical about the prospects for these "home hub" products making a breakthrough into the mass market. I have assumed that they will make only a minor dent in the dominance of the USB (and later embedded) modems.


More universal appeal depends on the usability. If it proves to offer a better user experience than the USB modem then it will gain traction. It can do this through offering a better user experience, not least by improving on the clunky PC client that is a frequent source of frustration to MBB users. Also, the fact that there is a built in Linux-based processor and expandable memory in the device itself adds to the potential use cases.

Monday, 15 June 2009

LTE, WiMAX and the end of history

For various reasons that I won't go into I spent a little while on Saturday afternoon sat in a beer garden in Notting Hill discussing the relatively positioning of LTE and WiMAX. Put very simply LTE will eventually win. It has a much more effective upgrade path for GSM/W-CDMA operators and has managed to rope in some of the most prominent 3GPP2/CDMA operators including Verizon Wireless. As a result it has huge benefits of scale which will eventually drive the price down to such a point that WiMAX won't be competitive. The big benefit that WiMAX has is time to market. It's available now and LTE will take a while to reach its full potential, not least because 3GPP operators can sweat their HSPA assets. What's increasingly apparent, however, is that the "4G" (for want of a better term) technology of choice will be LTE. WiMAX will have a niche role to play, predominantly providing DSL replacement services in emerging markets.

Excuse me switching from telecoms to political economics. This all sets me in mind of Francis Fukuyama's essay "The End of History?". As the Berlin Wall fell and liberal democracy (or capitalism, if you prefer) became all-consuming, the age old struggles between different forms of government were, according to Fukuyama, over. This was the "end point of mankind's ideological evolution and the universalization of Western liberal democracy as the final form of human government". Leaving aside how presumptuous this theory is, the idea that a single philosophy can dominate the world mirrors what is occuring in wireless technology.

In both worlds, the ideological wars of the 1980s are over and old enemies have become fast friends. Global homogeneity is all but guaranteed. There are a few outposts of alternative thought, but for the most part LTE (or liberal capitalism) dominates. But, as with political philosophy, the picture isn't quite that simple. There has become an increasing fragmentation in method of implementation. Some hurtle full pelt towards a pure version, while others tinker with hybrid models and China, as ever, does its own thing. LTE has challenges, not least in diversity of frequency allocation, but it has, to all intents and purposes, won.

Thursday, 11 June 2009

MBB users in the UK get 900Kbit/s on average

According to a new study by Epitiro (no, me neither), the average mobile broadband download speed in the UK is 900Kbit/s. On average users are receiving 24% of the advertised speed, web browsing is 34% slower than on DSL and latency is such that game-playing is not possible. The test seems to have had a pretty robust methodology. 1.4 million tests from 1300 users.

A couple of things spring to mind. Firstly, 900Kbit/s sounds OK. Certainly good enough for browsing. Not quite enough to comfortably stream over-the-top video or play games, but my assumption was always that people who wanted to use high bandwidth services would need to maintain a DSL/cable connection anyway. For these users MBB is a complement, not a replacement.

Secondly, I'm sure there is wild variation within that average. If everyone received 900Kbit/s 90% of the time and there was very little variance there would be a strong argument for MNOs advertising THAT rate. As it is, the variance is massive. Personally, if I could get a guaranteed 100Kbit/s on my mobile broadband, I'd be happy. For this reason the only logical approach is to advertise the theoretical maximum and attach caveats that the signal is likely to degrade due to various factors and you won't always get that, as per the recent announcement by the UK Mobile Broadband Group. Attempting to advertise actual speeds is impossible.

Interestingly the recorded speeds increased by 11% over the period of the study (Dec 08 to May 09) indicating that fears of demand massively outstripping supply have been unfounded. On a related note, Kenneth Karlberg of TeliaSonera commented yesterday at the Open Mobile Summit that data networks will crash if MNOs continue to sell flat-rates. Hence, presumably TS's decision recently to increase prices. This does not seem to be the case in the UK.

Open Mobile Summit - Is "open" really all it's cracked up to be?

I was at the Open Mobile Summit in London yesterday. There was some really interesting discussions and a lot of disagreement, which always makes for a lively debate. Much of it focused on what we really mean by "open" and whether that is "a good thing".

Take for example Christopher Schlaeffer of Deutsche Telekom. His presentation outlined a vision of convergence between fixed and mobile for all elements of the triple play: voice, internet and TV, with the ultimate destination of "Connected Life & Work". He also highlighted that partnering is what MNOs do, challenging the idea that MNOs are constantly in conflict with other parties in the value chain. He also pointed out that the app store is a siloed approach which is the antithesis of the open model. So far, so valid and interesting. But he then raised the idea of a single address book which should be accessible from multiple screens. But, it seems, openness only goes so far. Opening up that shared address book for third party service providers is a no-no.

This is really the rub. Openness is still all about self-interest. Everyone wants everyone else's part of the value chain to be open because it's better for business. They are being pragmatic, which is really the only way to be. But more than that, they're ensuring the quality of the user experience. How has RIM secured such a large chunk of the enterprise email market? How come the iPhone is now soooo important? Not because they're "open". Sure, they have 3rd party app developers. But they maintain some control to ensure the quality of the user experience. In many cases they're even the app developer themselves. During the afternoon's panel session 3's Carl Taylor commented that third party application developers rarely generate any revenue for the operator and often end up costing them money. All their best innovations have been done in-house. This is either an argument that developers haven't been nurtured enough, or that mobile is such a restrictive platform, and so fragmented, that the open model for app development just doesn't work. I suspect the latter.

Tuesday, 9 June 2009

Were you due to attend the Mobile Broadband conference in London on 17-18 June?

If so, I'm sure you're as disappointed as I am that it has been cancelled. I had been due to speak and chair the event and was looking forward to some interesting discussions.

If you had been planning to attend and you're still going to be in London on those days, I'd be happy to meet up to talk mobile broadband. Drop me an email.

Monday, 8 June 2009

Orange unveils animal plan for business: the "Trojan Horse" £10/month 5GB MBB plan

Orange has signalled an aggressive pursuit of the business MBB market in the UK with the launch of a £10/month 5GB plan. Minimum term is 2 years and the offer lasts until the end of July. Details here. This represents a significantly better deal that their consumer users get. The consumer £10/month plan offers only 1GB/month (albeit on an 18 month contract).

This goes counter to a lot of the arguments in my soon-to-be published Perspective for Analysys Mason "MNOs must differentiate SME and SOHO mobile broadband propositions from consumer offers". MNOs must take advantage of business users lower price sensitivity and they need to differentiate their offerings to provide additional value that will be appropriate to business users, e.g. sharer plans, customer service and ultimately superior quality of service.

Orange has in recent years gained a lot of attention for its eye-catching animal plans. It's surprising that they haven't termed this one the Trojan Horse. By simply going for the lower price, Orange is using mobile broadband as a way to sell other business services in the UK. It is a loss-leader. The price reflects that. At £2/GB it is surely well below a sustainable level of profitability. So it is assuming a very low utilisation rate by business users. Not unreasonable given that enterprise apps tend to be lower bandwidth. But they are indulging, potentially, in below cost selling.

It also raises the question of how successful this strategy will be. Cross-selling is much more difficult to achieve than MNOs might hope, without pursuing aggressive cross-discounting. SME and SOHO users have a much more haphazard approach to telecom purchasing than Orange might hope.

Wednesday, 3 June 2009

Orange did not make an offer for T-Mobile

On Tuesday I reported the news, 2nd hand from the UK's Observer newspaper, that Orange had made an approach to buy T-Mobile's UK assets but had been rebuffed.

Orange is now denying that any offer was made. Report is here.

Nothing yet about whether Vodafone really did offer its Turkish subsidiary in a swap deal for T-Mobile UK. Seems rather unlikely though.

UK Mobile Broadband Group issues Principles of Good Practice for selling and promoting Mobile Broadband

Last week I posted on how the Swedish MNOs had adopted a common set of guidelines for how they can promote mobile broadband. As of this week the UK operators have implemented something similar. A press release put out by the Mobile Broadband Group (which includes all 5 MNOs + Virgin) established a new set of guidelines. Unlike Sweden, they don't include any consistency about what speeds can be advertised, just that they must be "achievable by the user".

It's hard to argue with any of the points. They go just about as far is it's possible to go in ensuring the product does what it says on the tin. Ensuring people have info on out-of-bundle usage is creditable, roaming charges ditto. Likewise giving real-world examples should be useful. Most of these were already features of operators' tariff promotions anyway but maybe useful to have this codified.

What they can't get around the fact that mobile broadband is unpredictable. At least these guidelines will ensure that MNOs admit that unpredictability and give some guidance on why it varies. That said, however, it's not going to be much use to the average user who will have little idea how close they are to a base station, no idea what the contention rate is and no way of knowing what path loss they may see due to the characteristics of their location.

The MBG press release, reproduced, just about, in its entirety:

Principles of Good Practice for selling and promoting Mobile Broadband

Uptake of mobile broadband (i.e a mobile data service providing Internet access via a 3G modem) services is increasing rapidly. Customers appreciate the widespread coverage and convenience of being able to connect wireless devices to a 3G mobile network.

As the market is in a relatively new phase and in order to promote consumer awareness of the potential of mobile broadband, the UK’s mobile operators have agreed some good practice principles that underpin the way in which they and their customer service staff communicate information that is relevant when purchasing and using mobile broadband services. The principles cover: Coverage, Factors that determine download speeds, Pricing Transparency.

Coverage
1. Make coverage information available via a web site (e.g. a map or a post code checker).

Promotion of and factors that determine download speeds
2. Download and upload speeds that are given in advertising and promotional material must be achievable by end users and should be accompanied by an explanation that speeds are variable. An indicative range of download and upload speeds under normal conditions can be given.
3. The factors that determine download speeds should be explained (e.g. distance from mast, surrounding environment, number of other users, network connection).
4. A glossary should be made available describing technical mobile broadband terms used in customer literature and on on-screen indicators (e.g. 3G, HSDPA).
5. Translate raw data speeds into some real life examples such as: 2Megabits per second delivers a 5 minute music track in approximately 20 seconds.

Pricing transparency
6. Pricing information should set out the relevant tariff options, including a description of any fair usage limits. There must an explanation of the consequences of the usage limit or fair usage allowance being exceeded.
7. Where operators make references to Megabits, Megabytes and Gigabytes in close proximity, they should give an explanation of the differences. A description of what, for example, a Megabyte of data usage allows should be provided.

8. Pricing information should include either the roaming charges or a hyperlink to where the roaming charges are set out (which should also set out explanations of what a Mb of usage allows, description of fair usage limits and any other relevant information).

Tuesday, 2 June 2009

Orange launches £5 contract

A couple of weeks ago it was all Vodafone. This week it's already all about Orange.

I know it's nothing to do with mobile broadband, but headline-grabbing news #2 over the weekend was Orange UK's launch of a £5 3-year contract with 50 mins and 50 SMS. This recession-busting offer is the cheapest ever contract in the UK market. There are also new £10 (100 mins/300 SMS) and £15 (200 mins/unlimited SMS) options. This tells me two things. Firstly Orange is a little spooked by 3's £9 tariif and has felt the need to match (and indeed better) it. Secondly they're very worried about churn. Who wouldn't be. In a recessionary environment, inertia tends to evaporate. But is this really an option for contract customers? No, and they're already tied in. It's mostly a way to encourage prepay-contract migration.

Free handsets on the £5/£10/£15 plans are the Nokias 2630, 3600 and 6500 slider respectively. Subscribers will also get a free handset upgrade mid-way through the contract, although it'll hardly be in the interest of Orange to throw anything too expensive at these subscribers. It'll be interesting to see what devices these subs end up getting at the mid point. Seems a sensible way to clear stock of the 18m-old 6500 sliders which are gathering dust. Sales of mid tier devices (into which the 6500 fits v neatly) seem to have dried up a bit in the light of the recession. Orange probably have a lot to get rid of.

Orange bids for T-Mobile UK

Crashing piece of news #1 at the weekend was that Orange had bid unsuccessfully for T-Mobile UK. Sunday's Observer carried the news that Orange had been rebuffed and that Vodafone had also made advances, including proposing a swap deal for its Turkish operations (although even VF admit that Turkey needs a lot of work to turn it around). I have previously commented that I thought a UK consolidation was unlikely and I stick by that. It seems that the UK players aren't prepared to match DT's asking price. Unsurprising. Mind you, I would be surprised to hear that third parties hadn't at least made overtures about buying T-Mobile UK. It's worth knowing the sticker price.

Obviously this creates an interesting position for new incoming T-Mobile UK CEO Richard Moat, who was only installed a matter of weeks ago. No prizes for guessing where he came from. That's right, Orange. He was heading up their Romania operations after previous stints around the group including Denmark and Thailand.

Thursday, 28 May 2009

SME/SOHO MBB propositions show a staggering lack of differentiation

I've been looking at SME/SOHO MBB propositions this week and it's flabbergasting how little MNOs in Europe are doing to differentiate the offers from those for consumers. Worried about being a bit pipe? How about just offering a single flat-rate tariff to all your customers, regardless of who they are. Crazy. Segmentation is the key to profitably providing MBB. Business users are prepared to pay for reliability and additional features, so make sure you're selling them those tariffs rather than just a rehashed version of consumer tariffs. Admittedly operators in some markets, such as France, are still focusing largely on an enterprise market, so there is little risk of consumerization of enterprise customers. But in markets like the UK where the MBB market is consumer focused, putting in place an appealing set of SME/SOHO tariffs is absolutely vital to mitigate ARPU decline. MNOs have always been bad at selling to SMEs and SOHOs but it surprises me that there is such a lack of dedicated SME/SOHO-oriented tariffs.

I'm not going to point any fingers here as everyone's about as bad as everyone else. My dissection of individual MNOs' offerings is reserved for the piece I'll be publishing via Analysys Mason in the next week or two. It'll be called "MNOs must differentiate SME/SOHO mobile broadband propositions" or words to that effect. I'll also include some detailed recommendations about how to do it. For instance SME/SOHO plans should make use of some or all of the following: time-based pricing, sharer plans, bundled WiFi, dedicated customer care, additional service features and ultimately differentiated grade of service.

Tuesday, 26 May 2009

Swedish MNOs agree standard definition of MBB data rates

Mobile network operators have been dogged by criticism that they make over-inflated claims about their mobile broadband speeds, particularly compared to DSL.

Swedish mobile operators Telia Sonera, Telenor, Tele2 and 3 have sought to head of this criticism by agreeing to a set of guidlines about how they can promote their mobile broadband speeds. As of 1 September they will promote the 'practical maximum' rather than the 'theoretical maximum'.

The speeds are as follows:
  • 3G - (384Mbit/s) can be advertised as 0.3Mbit/s (surely that's the same!)

  • Turbo 3G (3.6Mbit/s) can be advertised as 3Mbit/s

  • Turbo 3G (7.2Mbit/s) can be advertised as 6Mbit/s

  • Turbo 3G (14.4Mbit/s) can be advertised as 10Mbit/s

  • Turbo 3G (21 Mbit/s) can be advertised as 16 Mbit/s
While this is a step in the right direction it doesn't go very far. In effect they've simply agreed to market the practical maximum as 70-80% of the theoretical. There's nothing more complicated than that. It's a gesture in the direction of reflecting reality, but it doesn't. In their defence, however, no definition is ever going to reflect reality as speeds are so dependent on local factors. The only way to do it is to let subscribers try it for themselves. That's facilitated by try-before-you-buy and, from now on, by bundling free connectivity with embedded laptops. This promises to be a massive marketing opportunity as outlined in the recent report from Analysys Mason: Mobile broadband devices: from USB modems to where?

Friday, 22 May 2009

New Commercial Models & Pricing Strategies For Operators 17-18 June

Another upcoming mobile broadband conference that may be of interest. I'm speaking on the first day at 4pm on the subject of "Forecasting Mobile Broadband Growth and the Evolution of Devices, Datacards and Dongles". Snappy title, I know, but it does what it says on the tin. I'm also chairing the whole of day 2.

With increasing pressure on the RAN it's critical for MNOs to manage the bandwidth demand of their subscribers, which makes pricing all the more important. There should be a lively discussion, helped by representatives of all the top mobile broadband operators including T-Mobile, 3, Vodafone, Mobilkom and Orange.

Thursday, 21 May 2009

Vodafone UK set to revamp MBB roaming rates

I know, I know, this is turning into a Vodafone blog...but bear with me.

It looks like Vodafone UK is going roaming crazy. Having shaken things up with the abolition of roaming charges for voice across 35 markets it is turning its attention to MBB. According to an article in ISPReview VF UK is scrapping its current international tariffs, the £60/month Euro Travel and the £95/month World Travel, which carry 200MB of data, due to "lack of take up". I'll wait with interest to see what they'll replace them with.

Vodafone seems to be one of the few operators that's actually paying attention to the enterprise MBB market in the UK at the moment. A few days ago I commented on their revision of their standard enterprise tariff. Everyone else seems to have forgotten about the good old businessman in pursuit of the burgeoning consumer market. A lot of that is to do with the fact that all those good old businessmen are abandoning the expensive business tariffs and "consumerising", or "choosing the cheaper option" as I prefer to call it. As a result, signing up a business user doesn't generate a lot more revenue than a consumer and they tend to be more difficult to get.

What's required, of course, is some way to differentiate the business offering to get those price insensitive users to pay more. The obvious option is differentiated grade of service, but that will be a few years down the line. It'll be necessary though. In the meantime, MNOs need to look at features that business users appreciate. Roaming is clearly one and it could do with a revamp.

Over the next 3 months I'll be focusing quite a bit on both enterprise MBB and the ways to differentiate MBB services. Keep an eye out for the reports.

Wednesday, 20 May 2009

Vodafone Greece and HOL tie-up - the shape of things to come?

I was particularly interested to see the news that Vodafone Greece is in talks to merge with ISP Hellas On Line (HOL) to allow the company to jointly market fixed and mobile services. The timing of this indicates that VF GR has recognised that mobile alone won't be enough to tackle most subscribers broadband needs. They need to combine fixed and mobile propositions to provide the best service and minimise network congestion.

Tuesday, 19 May 2009

Has 3 upgraded its network in London?

Mine has been a mobile-only household for more than 6 months now and I'm rather reliant on it, which made it very interesting for me to see that according to my "Connection Information" on the modem client, my 3 mobile broadband service is now giving me a maximum 2MBit/s uplink and 8.6Mbit/s downlink. Of course the average speed crawls along at sub-50Kbit/s most of the time but previously the highest download speed was 3.6Mbit/s. A higher maximum would indicate some sort of network upgrade. I've tried disconnecting and reconnecting to see what maximum I get, but after 15 mins all I've had is (a par-for-the-course) 86Kbit/s uplink and 147Kbit/s downlink, during which time I've been downloading emails, browsing and uploading pictures to blogger. So the poor general performance of my mobile broadband prohibits me from double checking the results I received before. I'll investigate further.

Vodafone results reflect challenging environment

I’ve just got off a call with Andy Halford, CFO of Vodafone about the financial results for the year ending 31 March. Overall revenue growth of 15.6% to £41 billion, with EBITDA up 10% at £14.5 billion looks really good but the acquisition of its Indian subsidiary and exchange rate fluctuations have played merry hell with their results. Pro forma revenue, including India, was up 1.3%. EBITDA margin fell from 37.1% to 35.3%. To break the figures down by region a little:
  • Europe: organic revenue down 1.7% reflecting economic issues and increased competition. EBITDA down 1.1 percentage points.
  • Africa and Eastern Europe: Organic revenue of only 3.9%. Strong revenue growth at Vodacom offset by problems in Romania and Turkey, the sick man of Vodafone.
  • Asia-Pac and Middle East – 19% pro forma increase in revenue, but lower growth expected in future and a reduced EBITDA margin.
  • Verizon Wireless – Revenue up 10.5%. Now contributing 30% of the group’s adjusted profit. It seems the decision to hold on to VZW has been vindicated.
  • Data revenue - increased from £2.1 billion to £3 billion, accounting for 8% of revenue, up from 6.4% the previous year. Notable because of the changing mix of subscribers, i.e. proportionately more revenue coming from emerging markets.

So, the figures don't look that great, but, the prospects are actually quite reasonable, with some interesting initiatives. At least, they’re talking the right language: acceleration of the £1bn cost reductions announced last year, new roaming business unit to exploit opportunities at a group level, new mobile data application development initiatives, extension of SuperFlat tariffs (which seem particularly appropriate to the current environment) to markets beyond Germany, and looking to exploit strength in the enterprise space.

As noted in my post yesterday, Vodafone needs to leverage its scale. It’s been good at doing that in terms of branding, but not much on the services side. It’s a shame it’s taken so long, but better late than never.

A few other issues also cropped up during discussions. It’s wait-and-see on LTE and they’re pleased to benefit from the learnings of Verizon when they deploy next year. There are no acquisition plans although they’ll keep an eye out. There aren’t many really distressed assets out there to hoover up although. they might look at opportunities as they come up. More focus on moves that can create value independent of acquisition, e.g. merger with 3 Australia.

Monday, 18 May 2009

I'm out of the country for 3 days and Vodafone gets very busy indeed

I was out of the country for most of the week and during that time Vodafone seems to have pretty much revamped everything they do. Some really exciting things in there:
  • Removal of roaming charges. Link here. From 1st June until 31st August contract and prepay users will pay no roaming fees to make calls from 35 countries (i.e. those where VF is present). Yes, that's "no roaming fees". New cheap international call charges will also apply. A trial run in preparation for EU legislation? Or a more fundamental shift in strategy to exploit scale?
  • New application development framework. Link here. A new developer-friendly central point of contact for developing applications for the whole Vodafone group and more access to APIs, such as location-based elements. Lower rev share too. Clearly a strike back against the recent flurry of apps stores and one that plays to Vodafone's advantages of scale, access to critical user data, such as location and availability of secure billing channel. I was tempted to refer to this as a new apps store, as many other commentator has, except that VF has had an app store since 2002. It's called Vodafone Live!
  • Mobile advertising rolled out to 18 countries. Link here. They'll keep on rolling out mobile advertising, as it represents a significant revenue opportunity, although to be honest, probably not for 3-4 years.
  • New enterprise mobile broadband tariffs. Link here. Much less earth shattering, but good that they're giving attention to an oft-neglected and potentially very profitable segment. Their counterparts seem to think that simply repackaging consumer tariffs for enterprise is enough. It's not. It's £18 for 5GB, but the removal of OOB charges makes for a more predictable tariff.

Over the course of the last 12 months I've been talking to MNOs a lot about mobile data opportunities. Put very simply the opportunity is in 3 parts: access, advertising and applications. With these announcements Vodafone has acted aggressively on all of these. Furthermore it seems that Vodafone is finally taking advantage of its scale, particularly with the international roaming offer. Thumbs up.

Of course, if I was being cynical I'd suspect that tomorrow's results won't be too good and this is an effort to distract attention from that. We'll see tomorrow!

I'll be writing at more length on these developments as part of the Analysys Mason research programmes.

Friday, 15 May 2009

Ukraine: a massive mobile broadband opportunity (eventually)

I’ve spent most of this week in Kiev (or should that be Kyiv?) talking to mobile network operators and various other interested parties. There’s a unique set of circumstances that makes it an interesting case study for mobile broadband. There’s only one UMTS licence awarded, to Ukrtelekom, incumbent PTO and now greenfield 3G operator. Meanwhile the other mobile operators are becoming increasingly frustrated, and rightly so, by the government dragging its heels over allocating the other 3G spectrum. This has had a real impact on 3G deployment as the economic downturn has hit the local currency hard with the result that infrastructure has become significantly more expensive. So the delays have had a possibly permanent impact on the deployment of UMTS.

As a result of the lack of 3G infrastructure is a very underdeveloped market for mobile broadband. Particularly depressing given the relative lack of fixed-line infrastructure. DSL is hampered by poor fixed line infrastructure. However, fibre-to-the-building deployments, both legal and questionable, are going ahead fairly rapidly. Kiev, for instance, is a city of tower blocks and fibre is a good way of addressing user demand.

So, does this leave mobile operators high and dry? Not at all. It just means that they have to be more creative. One operator, MTS, has reused its old NMT-450 spectrum for CDMA 1X-EVDO Rev A and deployed a mobile broadband (i.e. no voice) service using that spectrum. The others are squeezing the 2G network as much as they can.

Of course, they’re still crying out for more spectrum but given the current exchange rate it’ll be expensive to deploy mobile broadband. So we expect them – when the 3G licences are finally awarded – to focus on dense urban areas.

Despite all the problems, we’re fairly bullish about their potential. As outlined in the report Mobile broadband in Europe: forecasts and analysis 2009–2014 we’re expecting 10% penetration by 2014 and continuing growth after that.

Tuesday, 12 May 2009

Why WiFi doesn't work

I saw this report from Ofcom the other day on why WiFi doesn't work. Makes for interesting reading.

No time to comment right now. In the final throws of putting together my report on mobile broadband devices and off to Kiev tomorrow.

Friday, 8 May 2009

See you at Broadband World Forum Europe in Paris

Analysys Mason will be Analyst Sponsor of this year’s IEC Broadband World Forum Europe event in Paris, 7-9 September. Last year was my first taste of this perennial event (I’m a mobile guy venturing into broadband) and I found it very useful indeed. This year I’m looking forward to it even more. Mobile is now firmly established as a key issue for the broadband community so I’m expecting some fierce discussion.

But, mobile isn’t just a threat. It’s also a massive opportunity for broadband operators. It will be increasingly important for broadband providers to have a multiplatform approach spanning fixed, mobile and public WiFi. This is the subject of the session at which I’ll be speaking. The session, called "Capturing Value of Heterogeneous Networks with Smart Connectivity" (Wednesday 9th September 16.00-17.30) features luminaries from Nokia Siemens Networks, Ericsson and yours truly. I hope you can make it.

Wednesday, 6 May 2009

Exeter celebrates the digital switch-off (and promotion)

There were wild scenes of jubilation as Exeter became the first city in the UK to begin the switch off of analogue TV transmissions as the Stockland transmitter stopped broadcasting some analogue channels at midnight Wednesday. Full switchover will happen on the 20th May.


To celebrate the event, thousands of the city's residents (myself among them, Exeter is my home town) took the inexplicable step of trekking 250 miles to the Don Valley Stadium in Sheffield.

A football match was played as part of the entertainment, with Exeter running out 1-0 winners over Rotherham United, courtesy of a Richard Logan header in the 71st minute. As a result of the win Exeter achieved promotion to League 1, but clearly all the Exonians were really there to celebrate the switchover.

Tuesday, 5 May 2009

More UK consolidation rumours...but does it make sense?

This time it's Orange that the speculators have their eye on. According to a report in the Financial Times. Or 3, if you believe others.

The basis for the FT speculation was a comment by Rene Obermann that "We feel the UK market is competitive, and consolidation would do good for that market". True. A maturing market naturally consolidates. The question is how that is achieved?

At the network layer we're already seeing it, thanks to network sharing deals such as the MBNL jv between 3 and T-Mobile and outsourcing deals of which there have been many recently. Effectively this reduces the number of networks from 5 to 3 or 4. This makes operator level consolidation increasingly unlikely. If network operations are consolidated and outsourced, MNO operations focus on sales and marketing, creating "service providers" (SPs). There's certainly room for more than 3 or 4 SPs in any market.

The issue then is segmentation. MNOs/SPs tend to focus most of their attention on the same segment, high-end consumers, but in a very homogenous way. For there to be room for all the SPs they need to rethink their target segments, whether they be sub-segments of high-end consumers, or a different group altogether.

Friday, 1 May 2009

Further delays on 3G licence award in France

More government delay over the allocation of the fourth 3G licence in France. This time over whether too little is being charged for it. I guess there are procedures that need to be followed but it will be a blessed relief once it's finally awarded. If MBB is going to take off in France it needs a kick from someone disruptive. Free or Virgin are both frequently quoted as possible bidders. Both seem to fit the bill.

Thursday, 30 April 2009

...no, you mean "mobile internet"

Orange reported Q1 2009 results and the news wires are alive with stories of massive mobile broadband success. The headline-grabbing figure was that the "number of 3G broadband customers was up nearly 80% in one year, with 20.6 million customers at 31 March 2009".

To achieve such spectacular success, presumably the mobile broadband fever that has grabbed the world has finally infected France, like a tourist fresh from Cancun? But no. What they're referring to is all 3G and EDGE devices, the vast majority of which are handsets. Yes, they're including EDGE handsets as "mobile broadband".

I shouldn't criticise too much as it's a definitional issue, but really the industry should be looking for some clarity at the moment and "mobile broadband" is a term that should apply to laptop connectivity, not handsets. The GSM Association's Mobile Broadband Service Mark is predicated on providing some clarity for laptop users akin to the WiFi logo. If MNOs aren't clear on what mobile broadband is, there's no way that subscribers will be.

Another reason why I shouldn't criticise is that Orange is the first operator to publish any decent figures for mobile broadband (as I define them) subscribers. The actual "dongle" users are as follows:
  • France - 511k (+134% y-o-y)
  • UK - 228k (+280% y-o-y)
  • Spain - 223k (+153% y-o-y)
  • Poland - 379k (+38% y-o-y)

The reason they've started to publish these numbers? The numbers Orange are reporting aren't for the most part that spectacular, compared to some of the competition (although the Poland figures are good). Perhaps they're assuming that crowing about their success will encourage their more successful competitors to own up to how many MBB subscribers they have.

If you want to know how many mobile broadband subscribers there are in each of Orange's market, and further afield, I'd recommend taking a look my recent report for Analysys Mason: Mobile broadband in Europe: forecasts and analysis 2009–2014, which includes current market sizings for 30 countries in Europe as well as forecasts for each.

Wednesday, 29 April 2009

T-Mobile adds train WiFi to mobile broadband offer

One of the most appealing aspects of the the T-Mobile mobile broadband offer was the inclusion of unlimited access to their WiFi network. That network just got a bit bigger and more useful thanks to a deal struck this week to put T-Mobile WiFi Hotspots on Virgin's fleet of Pendolino West Coast Mainline trains. According to the T-Mobile press release: "The service will initially be rolled out on Virgin’s 52 Pendolino trains, and by mid Summer, the 21 Super Voyager trains will also be Wi-Fi enabled. Virgin’s West Coast Main Line services see around 22.5 million passenger journeys per annum."

There's a lot of common sense in rolling this out (and hopefully we'll see more). Intercity trains must be one of the highest usage locations for MBB outside the home/office, so better coverage and capacity is surely a great differentiator. Also, it guarantees a great QoS in areas where MBB coverage is usually lousy. I travel quite regularly from London to Cambridge and the network coverage for large parts of that journey is non-existent. Finally it reduces the need for the network to cope with all those connection set-ups and tear-downs that must be a nightmare for network management.

Now, if they could only do something about those British Rail Sandwiches*.

*"Joke" circa 1983.

Tuesday, 28 April 2009

BT's fixed-mobile bundle: not as good as Orange or O2's but a couple of nice features

BT has unveiled a combination fixed and mobile broadband package:
  • Option 1: £15.65/month for 10GB home and 1GB mobile usage, plus 250 minutes of WiFi.
  • Option 2: £20.54/month, 20GB/1GB, 350 WiFi mins
  • Option 3: £24.46/month, unlimited/1GB, unlimited WiFi
NBs - All based on 18m contracts and 8Mbit/s fixed connections. All the options benefit from a discount for the first 3 months. USB modem costs £49.99 for Options 1 and 2 and £9.99 for Option 3. Additional data charged at £10/GB or £20 for 3GB.

Bundling mobile broadband with fixed/WiFi is an obvious winner. It gives a differentiator to those players with the appropriate networks (e.g. LLU player or hotspot provider) and it offloads network traffic from the groaning macro network. BT recently did a deal with Starbucks to expand their WiFi footprint.

The first thing that struck me of course is: it's not as good value as O2's equivalent offer. Their £19.58/month deal gives a Standard home broadband package (8MBit/s connection and unlimited traffic) and a 3GB/month mobile broadband connection (including unlimited WiFi). Orange also has a similar offer at £20/month.

But, BT's offer has a couple of things to recommend it. Mobile broadband connectivity is provided through BT's MVNO agreement with Vodafone, whose network deployment and upgrade is somewhat ahead of O2's. Also, BT's offer has much better out-of-bundle charging for the MBB. O2 charges £0.20 per MB, the equivalent of £200/GB, where BT charges only £10/GB (or £20 for 3GB). With average usage dropping below 1GB/user, most subscribers will find the 1GB bundle perfectly satisfactory but with the flexibility to use more if necessary.
Backed up by Vodafone's network.

This further focuses the attention of UK MNOs on the viability of mobile-only offers. With fixed/mobile bundle offers from BT, O2, Orange and Virgin already on the table, the MBB market leaders 3, T-Mobile and Vodafone will need to look seriously at multi-platform offers.