A counterpoint to femtocells - are they really necessary?

I've just read Andy Abramson's long and impassioned blog post about the pointlessness of femtos.

As he points out, I'm due to meet him for a few drinks later on this afternoon, so I'm sure we'll drill down a bit more. In part, I agree with him - WiFi is much better for *certain* applications and use cases.

However, I'll make a few comments upfront.

Firstly, WiFi can be a royal pain to set up, especially on smartphones - and *particularly* where it involves a third-party login. It's also difficult to monitor and control - and expensive to support if someone calls in for assistance. For this reason, many mobile carriers are wary of trusting WiFi as a suitable mechanism for either coverage extension or capacity offload.

As an example: while I've got my iPhone set up for my home WiFi's security, I hadn't provisioned it for BT Openzone - which (in theory) I should get free access to, courtesy of Vodafone - which would benefit from the offload and coverage extension when I'm in places like Starbucks. Result - 30 mins of frustration trying to use the 3G connection & browser to log into Vodafone's personal account and self-care page. Firstly the usual forgotten-password thing. Then hunting around the self-care system trying to find "switch on support for BT Openzone". Then Google the question, and be told "First, log into your Vodafone account". Aaargh. I've given up. Maybe I'll bother trying it from a PC at some point. Or seeing if it's driven by the Openzone splash page.

Or maybe Vodafone will just put femtos in all the UK branches of Starbucks, and I won't have to think about it.

Yes, I'm sure I can get some super WiFi log-on app thing for my iPhone which would automate it all, but frankly I can't be bothered to go looking for that either. I'll just use the 3G, even though I'm sitting in a basement on the edge of coverage.

So.... point #1 for femtocells is the pain / laziness / ignorance factor around setting up WiFi on devices.

Point #2 is the difficulty of extension of operators' own in-house voice services over WiFi. Yes, it's possible with UMA or some of the earlier VCC-style SIP approaches. However, those are quite expensive and complex to deploy, test, maintain and support - not to mention having similar issues and dependencies on the connection manager as discussed above. My views on UMA have been pretty negative since 2004, so it's fair to assume that's an argument I don't need to re-hash - although at least it now (finally) supports 3G.

Now clearly, many of Andy's clients (and indeed Disruptive Analysis') are quite happy when operators cannot extend their in-house voice services, as they are providing alternatives. I'm also a fan of Skype, Truphone, fring and so on... but I also recognise that many customers still prefer their existing mobile operator's own-brand voice service, or cannot be bothered to shop around. There are also issues about porting mobile-specific numbers (especially outside the US) to VoIP providers.

So - point #2 for femtocells is provision of ordinary circuit mobile voice indoors at good quality: which is desirable for many users, and most carriers. On the other hand, as Vodafone found out this week to its cost, this only works where the user has a 3G phone and decent-quality fixed broadband. (Most femtos don't support 2G GSM - although the CDMA variants support 1x).

Point #3 is around regulatory oversight and the perception of mobile operators that they are being held to a higher standard of content/access/application control than fixed operators - especially in markets with anonymous prepay. Access via a femto takes the data traffic back to the core network, where it can have whatever policies the operator desires applied to it, in the same way as macrocellular traffic. If the fixed broadband is the operator's own, then clearly this doesn't apply as it has a policy enforcement point anyway - or if the fixed provider has enabled a "managed offload" service of the type described in my recent Broadband Business Models report.

A related opportunity, point #4 - also discussed in that report - is for femto data to be *faster* than WiFi (or prioritised), if the mobile operator cuts a deal with the fixed/cable provider. Let's say you've got an 8MB ADSL service. But the line is capable of supporting 20MB. In theory, the mobile operator could arrange for your femto to deliver *more than 8MB*, essentially turbo-charging it vs. your own WiFi, if they are prepared to pick up part of the bill, or pay the fixed-line telco a "two-sided, slice and dice" fee. That's very much a "happy pipe" strategy of the type I've been mentioning recently.

Other femto rationales:

• Open-access femtos offloading 3G data traffic without your need to have any WiFi setup or switching
  
• Femtozone applications and services
• Macro (outdoor) femtos providing extra 3G capacity in hotspot areas
• Managed connectivity & security for home-workers from their enterprise. Yes, this is do-able via WiFi as well, but I can see this being linked to prioritisation and other corporate-grade teleworking services, such as operator-provided cloud computing resources.

But the final one is operational. One thing I've observed recently is that many radio network planners and engineers are deeply, inherently conservative about their infrastructure. While many of them would prefer to maintain the "outside-in always wins" approach, building macro base stations and towers, there is an acceptance that this might have to change in some circumstances. In those instances, femtocells have a bit more control - and are a bit tighter-integrated into the mainstream network operations and planning - than WiFi. They use licenced spectrum, standardised security - and are likely to be provided through the same vendors and integrators. They are much more likely to *trust* femtocells than WiFi provided via unknown parties. Of course some operators - AT&T for example - seem to have grasped the nettle earlier than others. But do not underestimate the amount of WiFi-skepticism left in the RAN community. Femtos aren't seen as that much better - but at least in "greater femto" format (or picocells), they're closer to the real thing.

Incidentally - I'll be at the London Femtocell conference on Thursday, and the Femto Forum awards dinner on Wednesday. I'm also based 3 mins round the corner from the Landmark Hotel, so if anyone wants an off-conference meeting (or a beer) let me know.

NEW Mobile Broadband Traffic Management Paper

NEW Broadband Business Models Strategy Report

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Inter-technology competition and substitution - photo-sharing as an example

I recently came across a suggested use case for IMS RCS, which was essentially "display photos taken on your phone, on your home TV screen".

Fair enough, I can see the value in that as general idea. Whether it's boring friends with your holiday snaps, or showing Granny some pictures of the baby, I can definitely see that there is a valid user requirement to display photos on a big, high-res screen on occasion.

But that then got me thinking about the options for doing this, and the variables involved.

Without a comprehensive analysis, off the top of my head I could think of the following broad range of mechanisms for getting the image data from A to B:

- Beaming photos via Bluetooth from phone to TV
- Attachment via USB cable, or some proprietary cable from the handset/TV manufacturers
- WiFi transfer either peer-to-peer, or via your home gateway/router
- Memory card to a slot in the TV or set-top box (or perhaps in the remote control?)
- Some sort of integrated triple-play photo sharing service via the operator's core, conceivably across multiple operators if they interoperate
- Local break-out and sharing via a femtocell (3G from the phone, then ethernet to the TV)
- Upload to an Internet photo-sharing site, then access via an Internet-capable TV or STB
- MMS to an operator or off-portal service provider, then down to the TV via some sort of narrow-cast
- Various other options involving going via a PC as an intermediate step

And then there are numerous other variables involved:

- How technically-savvy are you?
- What sort of phone and OS is it?
- Does it have WiFi, 3G, RCS, Bluetooth some sort of photo-display software, and can you set them up and use them properly?
- What sort of TV or set-top do you have, and what are its interface and display features?
- Do you want to display the picture compressed or uncompressed?
- Single picture or a whole stream of them? What's the UI?
- How much control do you want from the phone? ("oops, better skip showing THAT pic to Granny")
- Do you want the photos persistently stored off the phone? Where? In the TV, in the operator's network, in your social network / photo website of choice?
- Do you want to edit or comment on the pictures? (eg comments, "like" etc)
- Do you want to display on other peoples' TVs & via their broadband? (eg Granny's) Do they have IPTV/triple play? Do they need some sort of "subscription" for this?
- Do you want to display on TVs when you're roaming?
- Is there adequate cellular coverage in the place you want to do this?
- How much latency will you tolerate in flipping from one pic to the next?

And perhaps most importantly - are you prepared to pay for this?

Not such an easy problem to solve, is it? There's a huge set of permutations, usage scenarios and technical options.

In this instance, without having analysed this particular problem in a lot of depth, my initial feel is that:

- sending uncompressed image files "tromboned" up through the cellular network and then down through the home broadband is usually going to be a bad experience
- many people will think "why bother?" and just either show the pictures on the phone screen (which is getting higher in quality), or use a PC or tablet as a display device instead. In future, the phone may also have a built-in projector.
- nobody is going to pay for this, unless it is such an utterly flawless user experience that it leave all the other options in the dust.
- if the photos are good, you'll want to put them up on the web somewhere anyway, for sharing in "non realtime" with all your other friends and relations
- an operator-mediated phone-to-TV photo sharing service, even if only the signalling traffic goes up to the network & the image is transferred locally, is going to be a pain to get working in many instances. Given nobody will pay for it, and it's feasible to do it in many other ways, it will neither generate revenues nor improve loyalty. Support costs may mean it's loss-making.

The question left outstanding is "how could the phone-to-TV photo display experience be enhanced and differentiated"? Clearly, ease-of-use and control is important - as is the ability to support many of the scenarios I list above.

But perhaps there's something more - a clever enhancement about comments/recommendation, or geo-tagging, or image analysis or whatever. Personally, I have no idea - and I'd be surprised if many telcos do either.

But someone will.

Which means that any added-value photo-transfer capability will almost certainly either be:

- end-to-end proprietary, eg from Apple or Sony or similar
- open to developers to do cool stuff at both ends of the connection

Incidentally - my RCS research paper is nearing completion. Details will be posted here and please contact me via - information AT disruptive-analysis DOT com if you'd like get pricing and the option of a pre-order discount.

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Doing a 180 on Vodafone 360

When Vodafone first announced its 360 service, I was pretty enthusiastic as it was one of the first examples of a major operator launching a so-called "over the top" service, decoupling access from service. It was theoretically available to anyone to download and register, irrespective of which operator they subscribed to.

Basically, it came in various tiers - fully customised and integrated devices like the launch Samsung H1, as a client or icon on Voda's other devices, or as a download to anyone else's smartphone as an app or widget. And importantly, it was web-based, rather than using legacy IMS concepts of centralised telecom services.

I firmly believe that this general philosophy is absolutely critical, especially for social networking and cloud services. Interoperability of lowest common denominator capabilties is not enough for real, differentiated offerings - Operator A must be able to sell unique services to Operator B's customers as well, if it is to scale to compete with Internet players with a 2-billion strong potential audience.

However, the focus of 360 - network address books and aggregating social networks - together with its initial fully-integrated devices, have been a serious disappointment. Ewan at Mobile Industry Review is possibly more outspoken than me - his coruscating comments from end-2009 speak for themselves here and here .

The general perception among many I've spoken to is that the early execution was poor. I'm also not convinced that the social aggregator role is useful anyway, although doing it web-based at least makes much more sense than shoehorning it into IMS.

Given that the basic premise didn't seem to work well, there clearly hasn't been the opportunity to expand 360 beyond the dedicated-device stage. There's no 360 app pre-loaded on Vodafone's iPhones, although its People Sync is apparently available on the AppStore. There's certainly been no viral buzz.

BUT

In the past week or so, the picture has started to shift. It is becoming much clearer that 360 genuinely is a much broader software platform, and that the address-book / social network thing is just a small part. More importantly, I think it's central to Vodafone's broader Internet strategy, and explains its lacklustre enthusiasm for traditional, conservative, walled-garden telco stuff like RCS.

Two things brought this home to me:

- The launch of 360 Shop for Android - a Voda-branded app and content store, billable to the customer's own account. Even Ewan at MIR likes it.
- Re-configuring my replacement iPhone (the old one fried its baseband last week), re-doing my email settings. Looking online, I was advised to set my SMTP outbound server to smtp.360.com for which I needed a 360 registration and log-in.

Separately, Vodafone has persuaded me to register for its (currently non-360) online customer portal, so I can track bills and sign up for its WiFi offload, as I'm getting close to its 1GB/month cap for iPhone data.

In other words.... Vodafone is going all-out to get people to register via web with one or more of its 360 properties. Yes, that's web username & password stuff.

For all the rhetoric about SIM cards, telco subscriber data repositories and identity, the fact remains that many of the best-organised and *most useable* datasets about individuals are those linked to traceable web log-ins. They're structured from Day 1, not based on 20-year old legacy billing platforms and chunks of data locked in vendors' proprietary databases in diverse network elements.

Think about the company that Vodafone is hoping to keep:

- Microsoft Passport / Live / Hotmail etc. login
- Google Gmail / Blogger / Android /GVoice etc. login
- Facebook login
- Yahoo! Mail / Messenger / My etc. login
- Apple iTunes / MobileMe / AppStore login
- Nokia Ovi login

For all the value of the SIM card in the traditional combined (service+access) telco world, it's much less useful for operators wanting to monetise access-independent applications. It locks them into onerous wholesale and interoperability relationships such as mobile roaming agreements. It makes it much harder to launch and monetise services across operator bounaries.

Some form of password / cookie / federated ID + certificate approach is much more flexible in these cases, despite its detractors' comments on its clunkiness. In my view, the clunkiness of username/password is a price worth paying - as billions of Internet logins have proven.

I'd estimate broadly similar numbers of SIMs vs. regularly-used web passwords. 4-5 billion, about 3-4 per Internet user. That tells a rarely-spoken story.

The next logical step will be another attempt to push 360-branded offerings to the Internet at large, perhaps downplaying the Vodafone brand in some cases. It's not immediately clear if the 360 Android shop is available to non-Voda users, but that could help, although how billing would work is an open question. If 360 can get past, say, 100m username/password registrations in aggregate, it will be in the big league.

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Will delays to LTE help or hinder VoLTE?

While we've seen a lot of noise about LTE "committments" and assorted trials and early rollouts, I remain unconvinced that we'll see much adoption before 2013, or for truly mobile devices (ie phone-type products) before 2015.

Given the huge diversity frequency bands, the need for extensive work on cost-optimisation and performance-tuning of silicon, as well as the need for broad deployment both outdoor and in, the probability of LTE powering "primary mobile telephony" before mid-decade seems slim, especially for mid-tier devices needed to get hundreds of millions or billions converted from 2G/3G.

What I'm uncertain about is whether this, ultimately, helps or harms the case for mobile IMS and solutions like VoLTE. On one hand, it allows the technology to mature and equipment prices to fall. But on the other hand, it gives huge opportunity for disruptive rivals to become entrenched.

The big risk I see is that something like Skype, Google Voice - or perhaps a still-unlaunched FacePhone, iTalk or OviVoIP - performs a classic "move from an adjacent market" before IMS-VoLTE becomes a real option.

Thinking through the usual pattern of IP-style application disruption, I'd expect to see something "low quality and niche" turn into "good enough" and then morph into "de facto standard".... rather than have some new and bulletproof "official standard" parachuted onto a willing audience in a single swoop.

One thing is certain - you can bet that people on the small new Nordic LTE networks are *already* playing with Skype. You can bet that someone loads up Google Voice on Day 1 of Verizon's LTE launch. DoCoMo might be a special case, but let's see how that goes at the time.

Yes, there will be problems. It probably won't do decent roaming, or properly handle emergency calls, will have poor SMS integration and may well drop at network handovers. But if it's got some other way of introducing "coolness" and virality, people won't care.

To me, this suggests that the IMS-VoLTE guys need to find ways to get their solution out "in beta" immediately, or at least in the next 6-12 months. Ideally with some "cool hooks" as well. Doesn't matter if it's a cludge. Doesn't matter if it doesn't have IMS-based QoS or even use all the core bits of IMS like HSS. Run it off a spreadsheet if you need to. Hell, maybe just rebadge a standard SIP client as "Pre-VoLTE" or something, and leave the proper thing to the version 3 update. Full interoperability can wait too.

In other words... I think there has to be operator-branded, imperfect VoIP (with features to make up for it) ready to go on LTE devices from launch. Might be "over the top" across operator brands, or "through the middle" from the network owner. Whether to extend it down to HSPA devices as well is a more tricky decision, but one I'd probably recommend as well.

But the bottom line is to try to get as many of early LTE adopters on board ASAP, gain experience, pick off the all-important social influencers and communications "hubs", open up some APIs for developers - and then use the advantages of being a standard as a differentiator later.

Repeating the classic telco mistake of going for interoperability first, finding the politically-expedient lowest common denominator, being a "late follower" in terms of service launch, risks being yet another failure to learn from experience.

As a central planning scenario, VoLTE advocates - until we get to mid-tier LTE phones with native VoLTE clients, expect 100% of LTE users to have already made a VoIP call with a 3rd party solution before yours. So, how will you get them to switch?

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PRESS RELEASE: New study forecasts $416bn worldwide broadband access market, as operators adopt "Happy Pipe" strategies

London – June 16th 2010

Both fixed and mobile broadband markets will continue growing in revenues, up to $416bn in 2020, but operators face some hard decisions about future business models, according to a new study published by the Telco 2.0^TM Initiative and co-authored by research & consulting firm Disruptive Analysis.

The new report, “Mobile, Fixed & Wholesale Broadband Business Models: Best Practice Innovation, ‘Telco 2.0' Opportunities, Forecasts and Future Scenarios” finds that telecom operators will benefit from both new types of broadband wholesale, and more sophisticated direct-to-user retail propositions and tariffs. Recent introductions of new tiered and capped wireless Internet data plans are early evidence of this trend.

Key findings from the report include:

• Global broadband access is forecast to increase from $274bn in 2010, to $416bn in 2020, an increase of 52% in revenue terms.
• More than half the revenue growth will come from wholesale and “two-sided” fees for improved access capacity and quality. This means revenue from parties other than the end-user themselves.
• By 2020, mobile broadband will be worth $138bn, or 32% of the total broadband access industry revenues.
• Three new revenue streams are identified: “Bulk Wholesale”, “Comes with Data”, “Slice and Dice”.
• New ‘upstream’ customers are forecast to generate over $90 billion in broadband revenues globally by 2020.

Today, many operators fear the supposed risks of becoming “dumb pipes”, but the study suggests the forecast market value means the term “happy pipe” is more appropriate for some. Certain telecom carriers will be able to add further value through enhanced “Telco 2.0” value-add services and platforms, but it is important to note that the basic carriage of data can itself be profitable and a source of substantial growth.

On the conventional retail broadband side, the big winners are fibre-based fixed services and mobile data plans for smartphones. Global ADSL and cable revenues will peak in mid-decade, and then decline with substitution from the progressive deployment of fibre. PC-based mobile broadband retail revenues will grow strongly in the short term, before being impacted by price competition and a shift from user-paid retail subscriptions to new wholesale-enabled models.

The ground-breaking study predicts that the wholesale market for broadband will evolve in three separate directions:

• “Bulk wholesale” is an evolution of today's approach to MVNOs and data roaming in mobile, or loop-unbundling and open fibre access in fixed markets. The report predicts an acceleration of this type of wholesale provision, as governments force greater openness on telecoms licencees, and operators look to alternative partnerships to supply new market niches with capacity. There is also a possibility for parties other than the end-user to pick up the bill for subscriptions – for example, some local authorities are now providing free broadband to disadvantaged communities.

• “Comes with data” business models have started to emerge recently, with devices such as the Amazon Kindle. Here, a product vendor or service provider contracts for data capacity with the broadband provider, and bundles it in a combined offer – the user does not have a subscription or direct relationship with the telco. The report expects this approach to be important for laptops, netbooks, tablets and various other new device categories.

• “Slice and dice” wholesale is more complex, and more controversial. This involves operators selling data capacity in fine-grained “parcels” to parties other than the user, who is typically also paying for some level of access. This type of “two-sided” business model could involve deals with consumer electronics vendors for extra high-quality streams over existing broadband lines, or to content/application providers where they pick up the bill for data transmission rather than the end-user.

The incremental revenue opportunity for new “slice and dice” wholesale business models in mobile broadband alone is forecast to be $21bn worldwide by 2020.

The report’s co-author and founder of Disruptive Analysis, Dean Bubley, said “Both fixed and mobile operators need to look beyond the traditional ‘end user subscription mindset’, and examine new and innovative wholesale opportunities. At the same time, they need to embrace radical evolution of their retail portfolios – for example, supporting prepaid fixed broadband, or offering innovative tiering and policy structures for mobile Internet access from smartphones and tablets. Whoever coined the term ‘dumb pipe’ has cost the industry billions in shareholder value through negative word-association; instead, “Happy Pipe” reflects optimism and some really interesting opportunities ”.

According to Chris Barraclough, co-author of the report and Managing Director of Telco 2.0, “Telco 2.0 is not about throwing away existing operator business models, but about evolving them to generate additional value. In new Telco 2.0 style ‘two-sided’ business models, there are ‘upstream’ and ‘downstream’ customers – upstream customers are typically enterprises or merchants seeking to reach their markets – the so-called ‘downstream’ customers.”

“As we show in this report, there are many creative ways that operators can add more value for existing downstream customers. However, it is also clear that those companies providing services over the Internet will increasingly seek to mash-up connectivity more tightly with their own offerings, for example by including connectivity as a part of their products. These new ‘upstream’ customers are alone forecast to generate over $90 billion in broadband revenues globally by 2020.”

The report, “Mobile, Fixed and Wholesale Broadband Business Models: Best Practice Innovation, ‘Telco 2.0' Opportunities, Forecasts and Future Scenarios” is available to buy from Disruptive Analysis and Telco 2.0. Details are available at New Mobile, Fixed and Wholesale Broadband Business Models and www.telco2.net

Ends

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"Comes with data" business model for TomTom SatNav

I just heard a radio advert for satnav vendor TomTom, for a device which comes with a year's free access to its over-the-air alerting service called HD Traffic. This is delivered via a GPRS module in the device - based on what appears to be a two-sided "comes with data" wholesale deal with Vodafone.

As well as traffic alerts, it apparently uses Vodafone's cell-ID capabilities to assist in location fixes - although it uses Google's local search rather than the operator's for added-value capabilities.

The promotion compares with the previous cost of around £8 per month after a free trial period. It appears to be a proper "comes with data" offer, in that there does not appear to be a need for a contract or subscription with the operator - the customer just purchases the device outright, and the manufacturer contracts for the connectivity with the operator, or one of its resellers.

"Your FREE trial of TomTom LIVE Services works straight out of the box and starts automatically when you first turn on your device, therefore you do not need to register to claim for the offer. From 9^th June onwards all devices will be updated to include 1 year FREE LIVE Services"

Technically, as this uses 2G rather than 3G, it's not a "mobile broadband business model" - but it certainly points the way to possible future enhancements, using HSPA modules instead. One of the variables that remains unclear is just how fast we will see a move from 2G to 3G for this type of embedded capability.

One risk to the operator is that a shift to 3G might see a sudden explosion in data traffic with minimal additional revenue - and also the risk that poorer 3G coverage reduces usability for such truly mobile products. However, fallback ability to GPRS, coupled with rate-limiting for the 3G radio could solve that. A satnav with (say) 384kbit/s or 1Mbit/s would still be massively useful - it needn't run at full speed. In a vehicle, it could also be equipped with decent antennas and receivers to reduce impact on cell capacity.

"Comes with data" is one of the new broadband wholesale business models identified and forecast in the new report I worked on with Telco 2.0 - full details are available here.

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Right up to the cap....

I see that O2 has become the latest operator to clamp down on mobile data usage - and at least has rather better-tiered offerings than AT&T's rather cynical options.

But I'm wondering if operators are making the same mistake as usual - assuming that, on average, people will only use xx% of their allotted quota.

Because I can forsee several scenarios in which people might use all of it, or at least 90.

It would not be very difficult to install an application which tracks your usage and the day on which it expires. Then, there could be the option to:

- wait until near the end of the month, then use any spare capacity to bulk-download and pre-emptively cache sites or content you might want to watch subsequently. There's probably a clever ad-supported model in there somewhere

- If you resent the imposition of the cap, you could be spiteful and just have the "up to the limit" app generate traffic for the sake of it. Added bonus: by visiting lots of random websites, you trash the supposed "customer data" that's being gleaned so you can be advertised-at

- Wait until near the end of the month, then offer any surplus data to friends / others via a tethering function. You could even try and create an auction application to attempt to resell it, although that would probably contravene a ton of T's and Cs.

- Donate spare end-of-month capacity to a charity - there must be *some* philanthropic use for a free mobile pipe.

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