Thursday, 30 April 2009, 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.

Thursday, 23 April 2009

Is T-Mobile putting UK, Poland and US opcos up for sale?

Deutsche Telekom issued a surprise profit warning yesterday, sparking further speculation that it will sell off problematic subsidiaries. T-Mobile UK saw revenue fall by 21 percent, while T-Mobile US and Polish subsidiary PTC also faced problems.

It's all very well to speculate that T-Mobile might be unhappy with the results at some of its subsidiaries, it's quite another to expect a disposal of key strategic business units. DT CEO Rene Obermann ascribed the poor performance to three factors: economic conditions, tough competition and currency fluctuations. That seems fair enough. There are a few other issues to resolve at T-Mobile UK, for instance, but the major problems facing the struggling opcos are not specific to them. That being the case, it would be premature to assume that DT now wants to dispose of those assets. Even more importantly, it's difficult to see who would be able to buy them.

Back in October 2007 T-Mobile paid €1.3 billion for Orange Netherlands, working out at about €625 per subscriber. In the current economic climate we would expect that figure to be lower, but even at €400/subscriber T-Mobile UK would cost €7 billion. Is there anyone out there with that sort of money? It's unlikely that any other European MNO would be willing to pay that much to step into the UK market, even if there were viable candidates. It's also unlikely that any of the other UK MNOs would be willing to buy them out to take a competitor out of the market. If they were willing to do that surely one of them would have taken 3 out of the market years ago to put paid to their disruptive influence.

So that leaves the UK fixed line players: BT and Virgin. BT clearly has ambitions to get back into the mobile market. Virgin is already an MVNO on T-Mobile's network and has been one of the more aggressive providers of fixed-mobile bundles. The acquisition of T-Mobile makes some sense for both of those. But with a €7bn price tag?

Wednesday, 22 April 2009

First Android netbook appears

I've been speculating on this blog about the likely imminent arrival of an Android-based netbook and the reasons why that's a great idea for Google. Looks like it was rather more imminent than I expected. Chinese OEM Guangzhou Skytone has announced the Alpha 680. All the specifications are available on the link above. No news yet on shipping dates. Also no indication of how good the implementation is. One suspects it might be a little rushed. I was expecting rather a longer wait.

Tuesday, 21 April 2009

3 defends mobile broadband strategy

An interesting article on Broadband Genie on Friday about 3's mobile broadband strategy. They chatted with a former colleague of mine, David Kerrigan, head of internet services at 3 at the launch of Gadget Show Live, a consumer electronics show here in London.

You can read the article yourself, but here are my main take-aways:
  • 3 receives more complaints for its mobile broadband service because it has more customers and they're "working really hard" to improve customer service. The customer service implications of MBB were always going to be one of the big headaches. 3 probably does have more MBB customers than anyone else, but it's impossible to draw any conclusions without being able to do a "complaints per user" calculation.
  • They've added 1,000 base stations over the last 8 weeks and will keep on ramping up the roll-out. I assume this is all part of the network share with T-Mobile. The pooling of 3G resources with T-Mobile will increase the number of base stations to which each operator has access. This will give both operators better coverage, but there will be fewer base stations in total as the companies rationalise their sites.
  • Focus less on headline rate and more on average customer experience and whether they can use the applications they want. This seems fair enough. The headline speed only goes part way in determining the user experience. Numerous other factors also play a part: quality of the CPE, distance from the BTS and contention ratio to name but three. This is particularly true if the high headline rate has a very limited geographical scope.

With regard to the last point, I draw the analogy with Blackberry who continued to sell a 2.5G solution when 3G networks and devices were available. It wasn't about the speed, it was about whether the application worked, which it did. With mobile broadband it's not simply about delivering the fattest pipe possible. There are surely smarter ways to deliver the service required, at a lower bandwidth, e.g. through content adaptation or local caching.

Thursday, 16 April 2009

Open Mobile Summit 10-11 June

This is a gratuitous plug for an event I'm speaking at: The Open Mobile Summit in London on 10-11 June 2009. It looks like it'll be a great event, with some interesting speakers including representatives from Orange, Telefonica/O2, Deutsche Telekom, TeliaSonera, Vodafone, 3, Google and Yahoo!. One of my colleagues spoke at the inaugural event in San Francisco back in November and was full of praise, so I'm looking forward to it.

I'll be presenting some of the recent research I've done on mobile broadband devices at 4pm on Day 1. Very much looking forward to it.

Embedded laptop announcements

There were a couple of announcements today related to launch of embedded laptops. Vodafone Italy announced the availability of the HSUPA Samsung NC-10 Internet Inside, while Dell has secured a deal with China Mobile to supply its Inspiron Mini 10, which supports TD-SCDMA.

The embedded laptop will (fairly) rapidly take over from the USB modem as the device of choice for mobile broadband. Across Europe it will account for the majority of sales by 2012 and the majority of the installed base by 2014. In some markets the evolution will, of course, be rather more rapid. However it's unlikely to be the operators who will dominate this market. They'll have a selection of devices, such as those announced today, but the majority of laptops will be sold by the IT channels.

Tuesday, 14 April 2009

Swedish 4G network sharing: signposting the new mobile broadband battleground

A press release just out this morning confirms that Telenor and Tele2 will pool their resources for a joint 4G deployment in Sweden. According to the press release: "The agreement includes the formation of a joint venture for network construction and sharing of spectrum for mobile communication". Other than specifying that the spectrum sharing will be in the 900MHz and 2.6GHz bands, there's not a lot else to report. This all sounds rather familiar. Tele2 is - of course - also a 50% shareholder in the Svenska UMTS Nät AB (SUNAB) joint venture with TeliaSonera, which runs the shared 3G network of the two operators.

As I commented in a discussion on UK network sharing in March there will be a complex web of inter-related network sharing and joint ventures between operators, aimed at reducing network overheads while at the same time ensuring the ability to differentiate. This introduces a new key success factor in the mobile broadband space: the ability to negotiate a network sharing deal. Having 'the best network' is no guarantee of providing the best service. In future, the #1 spot may go to the company with the most aggressively negotiated network sharing deals.

Wednesday, 8 April 2009

Telstra MBB sharer plans are a damp squib

Back in March I reported that Telstra would be launching sharer plans for mobile broadband. I think these have a lot of mileage, initially for SMEs but increasingly for households, particularly as we get more embedded modules and sharing a USB modem, or even a home hub, becomes less appropriate. I'm expecting sharer plans to drive a lot of the growth in "connections" (if not spend) in future. So, it was interesting to see what pricing they come out with.

According to IT Wire there will be three plans:
  • 5GB for $89/month
  • 9GB for $119/month
  • 20GB for $199/month

In addition to the traffic-based charges, each additional user (and you must have at least one) is charged at $40/month for a 24 month contract or $50/month for a rolling contract.

This doesn't compare favourably with the individual plans, where users pay $45/month for 5GB and $65/month for 10GB (both 12 month minimum contract). Furthermore, on the sharer plans all out-of-bundle usage is billed at $0.25/MB. For the individual plans there are no OOB charges on the 5GB or 10GB plans.

I can see almost no reason why a SME would choose to take these plans. There is some flexibility in the ability to add no-commitment users at $50/month, but this slim benefit is massively outweighed by the huge price premium. Assuming a SME has 5 users, all generating 1GB of traffic per month on average. If they all take a 5GB plan (just to be sure they don't go out of bundle) it will cost $225/month. To have 5 users on a 9GB plan (so with much less leeway built in) it would cost $279 and the users would be tied in for 24 months. With no tie-in it would be $319/month.

This is all a bit disappointing. I'd hoped for rather more from the first sharer plan. But, this is just the first attempt and they will try to skim the market with a high initial price point. It will come down substantially over the next 12 months, I'm sure.

Tuesday, 7 April 2009

EU announces cap on data roaming charges

Good news for the business traveller this week with the European Parliament's approval of the European Commission's proposed cap on data roaming charges. As of the 1st July mobile operators will be able to impose a maximum €1 per MB charge for data roaming. Parliament also moved to force operators to improve the transparency of charges.

This represents a significant improvement compared to the €5/MB (if I'm lucky) that I would usually expect to pay. But, in absolute terms it's hardly enough to make any impact on mass market usage. Instead of being hit by a €1,500 bill for downloading a half hour show via iPlayer while on my hols, it would only be only €300. Very reasonable.

Will this have an impact on business users? A modest one at best I would have thought. In these tough economic times I'd imagine most laptop users would wait until they get to the hotel, with it's (relatively) low cost WiFi, rather than accepting €1/MB charges. What will happen is that previously non-price conscious users will continue to use at the same rate and those who avoided using MBB while overseas will continue to do so. The result is a drop off in revenue for the MNOs. However, with other MBB revenue growing very rapidly, it's unlikely that MNOs will feel much of a pinch from lost enterprise revenue. The water-bed effect argument that is trotted out when voice terminations rates are cut is unlikely to be credible.

Friday, 3 April 2009

WiMAX = Betamax

Putting the cat among the pigeons yesterday was Nokia EVP Anssi Vanjoki who equated WiMAX with Betamax, the failed home video standard. The analogy is actually a reasonable one. The dominance of VHS was due to commercial forces, rather than technical superiority. This happens time and again in technology markets: it is commercial imperatives that determine choice of technology, not the technology itself. Think Blu-Ray vs HD-DVD or even GSM vs CDMA. The examples are numerous. Likewise with WiMAX vs LTE. Any operator that already has a 3G, or even GSM, network installed will find it cheaper to deploy LTE (although still very expensive). Any company thinking of deploying a greenfield WiMAX solution into an established market will face tremendous competitive pressure from the LTE operators. WiMAX has a potential home in markets with inferior 3G coverage but LTE will benefit from the scale offered by the migration of GSM and CDMA operators over the next 5 years.

Thursday, 2 April 2009

3 and T-Mobile adopt different approaches to their subscriber base

A couple of interesting developments in mobile broadband pricing in the UK over the last couple of weeks.

First, 3 increased the bundle on its £15 plan from 5GB to 15GB for anyone taking a 24 month plan. Or you could think of it as reducing the price on its 15GB plan from £30 to £15 for anyone taking a 24 month plan. Either way it's a whopping increase in value for money. 3 is clearly eager (to say the least) to sign up subscribers, particularly on 24 month plans, and seems unconcerned about increasing traffic. This is a risky strategy that could backfire. Clearly having the "cheapest" offer in the market for a virtually unlimited offer is a good place to be, but they need to be sure that the economics stack up. A £15 15GB plan will be very appealing to those high usage early adopters that were signing up in Q4 2007 and are coming round for renewal now.

Elsewhere, T-Mobile has cut the allowance on its Mobile Broadband Extra package from 10GB to 5GB for £25/month (also on 24 month plan). I tend to be a strong advocate of having a big plan available for big users, even if you have to charge a hefty fee for it. Admittedly this is a "fair usage" policy, so don't expect large out-of-bundle charges for heavy users. T-Mobile has looked at its base, looked at the bandwidth economics, and decided that 5GB will in almost all cases provide the required capacity for all but the heaviest users. Even where users stray beyond the 5GB limit, as long as they aren't a serial offender it won't be a problem.

This represents two different approaches to the issue of balancing subscriber acquisition and network economics. What's interesting is that a lot of it stems from the approach taken to out-of-bundle charging. 3 charges high rates, T-Mobile does not charge at all. This issue is explored in depth by my colleague Richard Thurston in a series of pieces he has been writing recently for Analysys Mason's Mobile Broadband research programme including Preventing mobile broadband network overload: strategies for excess usage charges and throttles.

At the same time as reducing the bundle, T-Mobile has allowed access to over-the-top VoIP services such as Skype. An obvious move really as PC-based VoIP never represented much of a threat of cannibalisation of voice services or a risk of network congestion. The question-mark was always over whether the latency was good enough to offer the service.

Wednesday, 1 April 2009

Ericsson's F3607gw puts another nail in the dongle's coffin

Ericsson yesterday announced the launch of a new mobile broadband module for laptops, the F3607gw, with Dell, LG, Lenovo and Toshiba all signing up to receive the new units. Laptops should be on the shelf by Q4 2009.

I've been watching the device area avidly recently, to follow the likely migration of the mobile broadband world from peripheral connected devices (e.g. USB modems) to embedded connectivity. Notwithstanding the additional simplicity for the end user of having an embedded device, Ericsson's announcement highlights a few features of embedded modules that I think will also help it gain the upper hand over the humble dongle.

Embedding the modem in the device makes for easier integration with the device. This benefit becomes more obvious when the OS is designed with a multi-radio environment in mind, as Windows 7 seems to be. So, obviously, support for Windows 7 is an important feature of the new device.

It was the "wake-on wireless" feature that really caught my eye. With substantially reduced battery consumption, the device can be always-on, even if it is in sleep mode. Users can then remotely wake the laptop from sleep mode. Fantastic. We've all seen software (Orb springs to mind first) that allowed users to remotely access files on their PC. All very well if you're prepared to leave your PC on, logged in and connected at all times, which most of us aren't. This offers a much more viable alternative. The particular functionality flagged up by Ericsson is the ability to connect via SMS to the Intel Anti-Theft feature and remotely disable the laptop. Of course laptop thieves will find some way around this, but having to remove the embedded modem from a device before you turn it on will make laptop theft that much less appealing.

This all demonstrates the kind of integration possible with embedded modules that just isn't feasible with USB modems. Does this device mean the end for dongles? Of course not. Is it indicative that embedded modems will gradually become more and more feature rich to the point where the dongle becomes obsolete? I think so. This is just the tip of the iceberg.

I'll be chatting with Ericsson next week about their strategy for embedded modules and I'll keep you posted on anything else interesting that they're planning.