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Mobile Analytics at Mobile Marketing Forum – LA November 10, 2009

Posted by chetan in : US Wireless Market , 1 comment so far

I got invited to participate in two compelling sessions at MMF in LA next week. The topic is something that is close to my heart – Mobile Analytics.

Mobile Analytics Workshop, Sheraton Downtown Los Angeles

Mobile Marketing Forum Workshop
Mobile Analytics Workshop, Sheraton Downtown Los Angeles
Monday, November 16, 2009, 2-5pm

The recent rise in mobile data uptake has not yet translated into increased demand for mobile advertising. Mobile carriers have long owned the richest source of raw data to drive effective targeted advertising. However, the industry lacks a proven method of turning the raw data into valuable insights and standardizing the interface between carrier and advertising systems. A contextually-aware data mediation platform is the essential link between carrier and advertiser – the spark the mobile ad marketplace needs to get rolling.
Sponsored by Openwave Systems, Inc.


Anurag Patnaik: Director of Product Management, Analytics, Openwave Systems, Inc. 
Eswar Priyadarshan: CTO, Quattro Wireless
Chetan Sharma: President, Chetan Sharma Consulting
Zaw Thet: CEO, 4Info
Mobile Analytics
Data Mediation and the Advertising Ecosystem
Sharing the Carriers’ 360-degree-view of the Subscriber with the rest of the Mobile Advertising Ecosystem
The recent increase in mobile internet usage is a result of the following key factors: flat-rate and pay-as-you-go billing models, which are easier for the subscriber to understand; larger, touch-sensitive screens pioneered by the likes of the iPhone and other smartphones; and netbooks, data cards, and other internet-ready devices. But this sharp rise in mobile data uptake has not yet translated into increased demand for mobile advertising.

One of the fundamental ingredients in an effective internet advertising solution is the ability to leverage behavioral data for optimal ad selection. Because of its close relationship with the subscriber, mobile carriers own the richest source of data to drive effective targeted advertising in any channel. However, the industry lacks a proven method of turning the raw data into valuable insights, and standardizing the interface between carriers and advertising systems.
According to Anurag Patnaik, Openwave’s director of product management, the mobile analytics platforms embedded in mobile carrier environments play a key role in translating rich behavioral data to actionable insights. More importantly, there has to be seamless mediation between such insights and the adverting marketplace.

Ad targeting systems should be able to leverage subscriber data in an anonymous way and optimize the match between specific ad campaigns and available profiles. The result will be higher eCPMs and a growth in the overall appetite for mobile advertising. A contextually-aware data mediation platform is the essential link between carrier and advertiser – the spark the mobile ad marketplace needs to get rolling.

In this session, Mr. Patnaik along with ecosystem partners will discuss the mobile data mediation opportunity. They will explore challenges the different players within the ecosystem are facing and possible solutions. The panel will address the following questions:

The next day, we will be doing a panel discussion

Panel: Mobile Analytics
The recent rise in mobile data uptake has not yet translated into increased demand for mobile advertising. Mobile carriers have long owned the richest source of raw data to drive effective targeted advertising. However, the industry lacks a proven method of turning the raw data into valuable insights and standardizing the interface between carrier and advertising systems. A contextually-aware data mediation platform is the essential link between carrier and advertiser – the spark the mobile ad marketplace needs to get rolling.
            Sponsored by Openwave Systems, Inc.

Moderator: Anand Chandrasekaran: Director of Product Management, Openwave Systems, Inc.
Zaw Thet: CEO, 4Info
Chetan Sharma: President, Chetan Sharma Consulting
Marcus Startzel: SVP of Sales, Millennial Media
Steven Rosenblatt: SVP, Quattro Wireless (invited)

Hope to see my mobile advertising friends there

Colleagues can register via the event website and include (25%MMF09) in the VIP Code box at:  www.mobilemarketingforum.com

In case you missed

Posted by chetan in : US Wireless Market , add a comment

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Xconomy – Highlights from FiReGlobal

TelecomsEurope – Getting it right on mobile broadband

RCRWireless – Defining Mobile Broadband

Mobile Marketer – Mobile CPM measurement standards are essential

US Mobile Data Market Update Q3 2009 November 9, 2009

Posted by chetan in : 3G,4G,AORTA,ARPU,BRIC,Carnival of Mobilists,Carriers,CTIA,Devices,European Wireless Market,Indian Wireless Market,IP Strategy,Japan Wireless Market,Location Based Services,M&A,Mergers and Acquisitions,Messaging,Mobile Advertising,Mobile Applications,Mobile Content,Mobile Ecosystem,Mobile Entertainment,Mobile Gaming,Mobile Search,Mobile TV,Mobile Usability,MVNO,Networks,Partnership,Speaking Engagements,Unified Messaging,US Wireless Market,Usability,Wi-Fi,WiMax,Wireless Value Chain,Worldwide Wireless Market , 5 comments


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Executive Summary

The US wireless data market grew 5% Q/Q and 27% Y/Y to exceed $11.3B in mobile data service revenues and thus exceeded $10B for the third straight quarter. As we mentioned in our Q1 2009 research note, given the strong growth in data revenues and overall service revenues, the worst is over for the US mobile industry. The US market touched 25% penetration of smartphones in Q3 2009, a new milestone.

While the flailing economy hit certain segments of the wireless ecosystem hard esp. the infrastructure and handset segments, consumers haven’t really pulled back on the mobile data overall spending. Additionally, the CAPEX spending has stayed strong in 2009 given the activity around 3G/4G deployments and trials. As expected, there was an increase of prepaid subscribers which dropped the overall revenues for some of the carriers. The US subscription penetration was approximately 91.3% at the end of Q3 2009.

As we mentioned in our last three research notes that this time around, the fate of the US mobile industry is more closely tied to the overall economy compared to the previous recessions. As the consumer sentiment improved over the last two quarters along with better than expected Q1-3 2009 earnings from corporations, the mobile industry is back on track. While the structural flaws in various industry segments remain, the outlook for the Q4 2009 and 2010 remains bright and we are expecting the overall data revenues to now increase by over 30% compared to 2008 with a record-setting Q4.

Q3 2009 reported a 3.5% increase in GDP compared to the 1% decline in Q2 and 6.4% decline in Q1, thus marking the official (technical) end of the recession. The GDP is expected to change by 3.2% for 2009 and the service revenues are expected to  account for 1.13% of the US economy by year-end. Note: For a detailed discussion of the US wireless industry in recessions, please see 2008 US Wireless Market Update.

So, what does this mean? Well, the markets can still be volatile, but overall the market seems to be feeling better about the economy than it was in February. The Conference Board Consumer Confidence Index though retreated from June is at a healthy 47.7.

What to expect in the coming months?

The high unemployment has slowed the growth in the data card segment but the smartphone consumers have more than picked up the slack. Also, as expected, there was a shift from postpaid to prepaid in some user segments. For example, for T-Mobile, prepaid accounts for almost 20% of their customer base compared to 17% from an year ago. The fight for the low-end customer is also having an impact on the traditional prepaid players and the price pressure is reducing their margins. It is quite likely that 50-60% of such consumers don’t go back to postpaid thus permanently lowering the ARPU base for such customers and carriers who have experienced more postpaid to prepaid shift will have to make up for the lost revenues elsewhere.

In fact, the churning in the last few quarters has distanced the top two (AT&T and Verizon) and the next two (Sprint and T-Mobile) by the biggest gap in the history of the industry. By the end of 2009, this gap will rise to 36% compared to 28% at the end of 2008 and 21% in 2002.The "Rest" category has essentially diminished from the market dropping from a dominant 43% market share in 2002 to 12% in 2009.

The trend of the landline replacement by Mobile continued in Q3 2009, now reaching almost 25%. In the third quarter, messaging growth slowed down. The messaging volume was up only 4% and messaging revenues were up 3% QoQ. With its expanding 3G network, T-Mobile like its peers has started to benefit from smartphone penetration reaching to 6% of its subscriber base. Overall, The increased use of smartphones and datacards is putting a pressure on carrier networks and accelerating their strategies to deploy LTE/WiMAX. We estimate that by end of 2009, the US mobile data traffic is likely to exceed 400 petabytes, up 193% from 2008. To truly tackle the problem head-on, operators will need to adopt a multi-pronged strategy to manage their traffic more effectively. We discuss mobile data traffic in much more detail in our paper "Managing Growth and Profits in the Yottabyte Era." We will have more on this subject in the coming days (You can also read our RCR Wireless columns on the subject – Defining Mobile Broadband and Solutions for the Broadband World).

We will be keeping a very close eye on the micro- and macro-trends and reporting on the market on a regular basis in various private and public settings.

Against this backdrop, the analysis of the Q3 2009 US wireless data market is:

Service Revenues (Slides 11-12, 17, 19)

ARPU (Slides 13-15)

Subscribers (Slides 16-18)

Applications and Services


Policy and Regulations

· Q3 also marked the start of an intense FCC scrutiny of the wireless industry. In outlining the four key principles of a) looming crisis of spectrum shortage b) removal of red tape c) enforce net-neutrality and d) open Internet, things have already started to change in the US Wireless Industry. Google has played the game of Armadaian tactics with Kasparovian acumen. The impact of the codified principles (and the subsequent court battles) can have a significant impact on not only the US wireless industry but the global ecosystem as well.


· While there has been much consternation around the word "Open," one is hard pressed to find a consistent definition what it might actually mean. One could provide access to one API and declare themselves an open heretic while others could end up opening up their business more than needed and yet be accused of being closed. Clearly, the degree to openness is in the eye of the recipient. There is no black and white, just shades of grey and that’s where the battles will be won and lost. In the end, it is all about "access" to the market and the "freedom" to earn profits. Rest is noise.

· It is worth debating as to what can be mandated to be open, do the rules apply just to the operators and OEMs, or we should extend the courtesy to software platforms, search indices, aggregated user profiles, billing engines, etc.

· It is also becoming obvious that we need to redefine the device categories. Featurephones are no longer dumb terminals, many empower the users with smartphone functionality. Devices like iPhone, Droid, Pre no longer fit the smartphone stereotype, they need a separate category for themselves – appphones, ddhmvcs (data devices that happen to make voice calls), platformdevices, mobilecomputers, geniusdevices, agilechips, astuteconceirge, you get the point.


We will be keeping a close eye on the trends in the wireless data sector in our blog, twitter feeds, future research reports, and articles. The next US Wireless Data Market update will be released in Feb 2009. The next Global Wireless Data Market update will be issued in Mar 2010.

Watch out for our end of the year survey and commentary on global wireless markets and trends for 2010.

Your feedback is always welcome.

Should you have any questions about navigating or understanding the economic and competitive icebergs, please feel free to drop us a line.


Chetan Sharma

Disclaimer: Some of the companies mentioned in this note are our clients.

RCR Column: Solutions for the Broadband World November 6, 2009

Posted by chetan in : US Wireless Market , add a comment

This column appeared on RCR Wireless earlier this week

In the last column I talked about setting the goals and defining mobile broadband. While we are still a ways away in defining what constitutes broadband, another key debate has emerged in the past few weeks and that is how do we go about the solving the increased capacity problem. FCC Chairman Julius Genachowski has done a masterful job of outlining the principles, of holding public hearings in an open and transparent manner, of creating the urgency of dealing with the broadband issue, and of embarking on a practical national broadband plan, and of getting support of his fellow commissioners and industry leaders, the four key principles being:

1. Most importantly he described the spectrum shortage as a looming crisis and that additional spectrum capacity is needed to handle the demand of data traffic from data cards and smartphones (something we have illustrated in detail in the paper "Managing growth and profits in the Yottabyte era")
2. Removing red tape to allow wireless carriers to build their network faster, for example, the work with cell towers
3. Codify and enforce net-neutrality policies
4. Open Internet

To some in the industry, the broadband capacity problem equates to the lack of spectrum. In fact, the Chairman has spoken out about the "looming spectrum crisis" in great detail on several different occasions. It is apparent that to achieve 50-100 Mbps, new contiguous spectrum is needed. However, it will be a mistake if the dominant solution for the broadband capacity crisis is more spectrum, for the following reasons:

1. There isn’t enough spectrum, especially the right spectrum
2. It takes 7-10 years to procure the spectrum for wireless use
3. By focusing on spectrum only, we will be just postponing the current crisis
4. By giving out spectrum too soon, industry won’t have the opportunity to learn to thrive within its means and let new technology and business innovation show the way to handle the increased data consumption.
Like with all tough problems, to find an effective and a lasting solution, one has to break down the problem into smaller bits and find solutions that address not only those individual pieces but the problem as a whole. We know the following for a fact:
1. Broadband data cards (external or internal) account for over 73% of the data traffic (2009)
2. Smartphones esp. with full browser and media capability account for roughly 24% of the traffic (2009)
3. There are a small percentage (< 3%) of heavy users who regularly have very high data consumption
4. Majority of the data usage takes place in an indoor environment (60-80%)
5. Video and browsing are the two biggest application categories for data consumption (accounting for over 70% share)
6. Consumers launch full applications (or browsers) to get minor updates because that’s the only way to get access to those updates on the mobile devices. Alternate strategies like the one implemented by INQMobile series of devices and Motorola Cliq are good examples of rethinking applications
7. There is no incentive for the user to change behavior on content consumption
8. To cope with the data congestion issue, all three major elements of the network need to be upgraded – RF, core network, and the backhaul. Only RF portion of the network is predominantly dependent on the spectrum allocation (while some backhaul solutions require spectrum, the direction of the industry is towards laying fiber or adopting solutions that don’t require any additional spectrum)
9. Competition breeds innovation, legacy spectrum allocation regimes might have an opposite impact
10. Doing broadcast video over cellular is not economically feasible
11. Number of devices/user is increasing, however, not all connections need high-speed real-time availability
12. True 4G bandwidths (50-100 Mbps) are not possible without additional spectrum
13. Backhaul requirements for LTE will increase in the 200-500 Mbps range within the next 5 years
14. LTE is not going to have a major impact on the data consumption problem in the short-run (2010-2013)
15. LTE smartphones might not be in the market until 2012-13

To address the data consumption issue in light of the above facts, one has to figure out a set of solutions that work in concert with each other. Just focusing on one solution only gets you so far, however, a range of viable solutions that address each of the above problem elements are likely to prepare the industry much better for the long haul. Some of such solutions are discussed below:

1. Offloading traffic without impacting the user experience or requiring user intervention. Leverage existing WLAN footprint and invest in femtocells and WLAN expansion.
2. Congestion management through caching and intelligent buffering
3. Incentivizing users to shift consumption to fill the network troughs
4. Implementing network optimization across all media and application types, especially, video and browsing
5. Adopting broadcast mobile video solution
6. Tightly integrating highly used applications like Facebook and Twitter into the handset
7. Introducing tiered pricing plans so that light users pay for broadband connectivity relative to their consumption. This will also bring in a new set of users into the broadband fold who have been sitting on the sidelines due to pricing
8. Upgrading of the backhaul capacity irrespective of LTE
9. Investing in analytics to better understand user consumption behavior at a micro level to plan appropriate strategies, solutions, and pricing plans
10. Creative bundling of data plans to bring more users into the data ecosystem.

By considering such solutions in parallel, the industry will be better off in the long-run. It is the only way to tackle the problem in the short-term since neither the additional spectrum nor the announced deployments of LTE are going to make any meaningful dent to the data usage costs and margins. Wireless is one of the industries where policy can have a significant impact on the direction of the industry. By focusing too much on the spectrum, we will miss the opportunity to cultivate a better network and business ecosystem and to invent new technologies and revenue models that will have a far stronger impact on the evolution of the mobile industry.

Chetan Sharma is President of Chetan Sharma Consulting and is one of the leading strategists in the mobile industry. He has served as an advisor to several Fortune100 companies in the wireless space and is probably the only industry strategist who has advised each of the top 6 global mobile data operators. His client list includes NTT DoCoMo, China Mobile, AT&T, Sprint Nextel, KDDI, Reliance, KTF, Sony, Juniper, Alcatel-Lucent, Qualcomm, Comcast, HP, and Disney. Chetan is also a leading authority and IP expert in the wireless industry, testifying in cases such as ITC – Qualcomm vs. Broadcom as well as the author of 5 best-selling books on wireless including co-author of Wireless Broadband: Conflict and Convergence (IEEE Press/John Wiley). Chetan has assisted many leaders in the global ecosystem in devising effective broadband strategies. He is interviewed frequently by global media and his research is widely quoted in respected publications such as NY Times, WIRED, Business Week, Fortune, WSJ, Reuters, AdAge, and MIT Technology Review. Chetan serves on the advisory committees of several startups. http://www.chetansharma.com