Global Mobile Data Market Update 2009 March 31, 2010Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, CTIA, Carnival of Mobilists, Carriers, Devices, Enterprise Mobility, European Wireless Market, Federal, Gaming, General, IP, IP Strategy, India, Indian Wireless Market, Infrastructure, Intellectual Property, International Trade, Japan Wireless Market, Location Based Services, M&A, MVNO, Mergers and Acquisitions, Messaging, Microsoft Mobile, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Traffic, Mobile Usability, Mobile Users, Mobile Wallet, Music Player, Networks, Partnership, Patent Strategies, Patent Strategy, Patents, Privacy, Smart Phones, Speaking Engagements, Speech Recognition, Storage, Strategy, US Wireless Market, Unified Messaging, Usability, VoIP, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 4 comments
The Global Wireless Markets continued to grow rapidly especially in India and China where the carriers (combined) are adding almost 30M new subscriptions every month. Amongst the two, India is outpacing China 2:1. China touched 750M subscriptions while India crossed 525M by the end of 2009. With 4.6B subscriptions, the global subscriptions penetration was above 68%.
The global mobile data revenues reached $220B and mobile data now contributes 26% of the overall global mobile service revenues.
As expected, the overall global mobile revenues stayed pretty flat for the year at around $1.1 trillion as many regions were hit by the recession and the competition pushed the ARPU lower for many operators. While the countries like US, Japan, China, and India showed very little signs of pullback, most of Europe and the developing world experienced a decline in overall service revenues in 2009. All the major markets have their data contribution percentages above 10% now.
For some of the leading operators, data is now contributing almost 50% of the overall revenues. However, the increase in data ARPU is not completely offsetting the drop in voice ARPU for most operators. NTT DoCoMo continues to dominate the carrier ranking in terms of the mobile data service revenues, Verizon Wireless which became #2 replacing China Mobile and is slowly edging towards the #1 spot and is likely to overtake DoCoMo within the next few quarters.
Though 4G as a standard hasn’t been defined yet, the discussions around LTE and WiMAX deployments grew intense. Telia Sonera became the first operator to commercially launch LTE. At CTIA, Sprint/HTC became the first players to launch a WiMAX smartphone and MetroPCS/Samsung took the honors for the LTE smartphone.
2009 also marked the year when the global data traffic (monthly) exceeded the global voice traffic. In the US, the yearly mobile data traffic exceeded the voice traffic for the first time.
We are also entering the phase of global mega-mergers in telecom. Bharti Airtel of India just acquired Kuwait-based Zain Group to become the 5th largest telecom group in the world (at the end of 2009, it was #9). There are now 14 telecom groups with 100M or more subscriptions. While China Mobile’s ARPU is 1/5th of its western counterparts, it operates its business at higher margin, around 51%. There are a number of global players mainly in Europe and Asia who have mastered the art of running lean operations and if they have good bank balance they are going to go shopping in the days ahead.
From the revenue perspective, the $50 billion revenue club is more exclusive with China Mobile, Vodafone, AT&T Mobility, and Verizon Wireless as its sole members.
As we sit at the cusp of the iPad era, there is a bigger transformation taking place and that is of the connected consumer electronic devices (CEDs). Few years from now, most popular CEDs will have connectivity. We are also approaching the start of phase where pricing of access will start to morph - we will see the introduction of family data plans (something we have been advocating for some time), ability to connect multiple devices to the same GB plan, more granular use plans (per session/day/week/mo/yr etc, roll-over GBs anyone?). As the number of connected devices/consumer increases, we will start worrying about Average Margin Per User (AMPU) or Average Margin Per Connection (AMPC) because ARPU won’t quite capture the dynamics of the industry.
Exciting times indeed.
Chetan Sharma Consulting conducted its semiannual study on the global mobile data industry. We studied wireless data trends in over 40 major countries - from developed and mature markets such as Japan, Korea, UK, and Italy to hyper growth markets such as China and India.
This note summarizes the findings from the research with added insights from our work in various global markets.
Impact of Global Recession
Telecom in general fared better than other industries. In some regions, it hardly caused a tremor. However, in most nations, the impact was felt by the operators. Amongst the 40 major operators we studied, SK Telecom, 3 Australia, KTF, T-Mobile Netherlands, Rogers, Softbank Japan, Singtel, Vodafone Italy, T-Mobile Germany, 3 Sweden, Telstra, China Unicom, and Vodafone Germany experienced increase in both the data ARPU and the overall ARPU during 2009. Some of increase was due to the fluctuation in international currencies e.g. Korea.
Looking at the data at a country level, most nations noted a decline in overall ARPU. Only Venezuela, Pakistan, Argentina, Bangladesh, Australia, and Poland showed positive increase in ARPU since 2008.
Rule of Three is kicking in most markets with smaller players having to consider the M&A option to remain viable. T-Mobile/Orange, Bharti/Zain tie-ups are just the start of that process. We are likely to see many international mergers in 2010 and beyond as power in the mobile ecosystem self-adjusts.
5 new players joined the 100M subscriptions club. The new members are: Bharti Airtel (India), MTN Group (South Africa), Orascom (Egypt), Etisalat (UAE), and MTS (Russia). The top 9 telecom groups in the world are: China Mobile, Vodafone, Telefonica, America Movil, Telenor, T-Mobile, China Unicom, TeliaSonera, and Orange.
- US extended its lead over Japan as the most valuable mobile data market in service revenue with US adding $44.56B vs. $32.5B for Japan in 2009. China with $20.3B was ranked number 3. US registered the highest growth amongst the top 3 with over 40% increase from EOY 2008 levels followed by Japan and China.
- The top 10 nations by service revenues are: US, China, Japan, France, Italy, UK, Germany, Brazil, Spain, and India.
- The top 10 nations by data service revenues are: US, Japan, China, UK, Italy, Germany, France, Australia, Spain, and Korea.
- NTT DoCoMo continues to dominate the wireless data revenues rankings with over $16B in data services revenue in 2009. Almost 46% of its overall revenue now comes from data services. DoCoMo also crossed the 95% 3G mark.
- NTT DoCoMo was followed by Verizon Wireless, China Mobile, AT&T, KDDI, Sprint Nextel, Softbank Mobile, T-Mobile USA, O2 UK, and China Unicom to round up the top 10 operators by wireless data service revenues.
- Each of the top 5 carriers exceeded $10B in yearly mobile data service revenues in 2009
- Data revenues for the top 10 operators now account for almost 43% of the global mobile data revenues.
- The biggest jump in data revenues was experienced by Verizon, Softbank, and AT&T. DoCoMo saw an 11% increase for the year.
- Most of the operators in the developed nations are contemplating future strategies to boost data revenues such that the decline in voice revenues is at least compensated for. There are very few operators who have experienced increase in overall ARPU.
- China reported approximately $20.3B in data revenues for 2009 and the percentage contribution from data services is around 32%, data ARPU is around $3.2. For India, data ARPU continues to stay below $0.50 as most of the new adds are voice only subscribers and there is continued price pressure in the market.
- China Mobile remains the most valuable telecom operator with over $195B in market cap. It is followed by Vodafone at around $122B. Telecom groups in mature markets are under enormous pressure to either come up with a global expansion strategy or accelerate their existing plans.
- In 2009, SMS’s vice like grip on data revenues continues to loosen a bit with many carriers seeing an increase in non-SMS data revenues. On an average, Japan and Korea have over 70-75% of their revenue coming from non-SMS data applications, US around 50-60%, and Western Europe around 20-40%.
NTT DoCoMo has been at the cutting edge of the mobile data evolution by creating new markets. They are exploring new technologies and social experiments ahead of almost anybody else in the market. Our long history with the Japanese and Korean markets has taught us that while the individual strategies in each market will differ, one should study the trends, technologies, and ecosystem dynamics in these markets to get a sense of what’s coming.
· From the revenue perspective, the $50 billion revenue club has limited membership with China Mobile, Vodafone, AT&T Mobility, and Verizon Wireless as its sole members.
- Most of the major operators around the world have double digit percentage contribution to their overall ARPU from data services. Operators like DoCoMo, and Softbank are over 46%. KDDI, 3 Australia, 3 Italy, 3 UK, Vodafone UK, O2 UK, Telstra, and 3 Sweden exceeded 35% and many others are on the verge of crossing the 30% mark.
- NTT DoCoMo reported the highest data ARPU for the year while Rogers took away the honors for the highest overall ARPU. Other notable percentage increases in ARPU were from 3 Italy, SK Telecom, KTF, T-Mobile Germany, 3 Sweden, and T-Mobile Austria. The Japanese operators saw a decline in ARPU by 3%.
- The biggest percentage contribution by data ARPU has been consistently registered (since mid 2002) by two Philippines carriers – Smart Communications and Globe Telecom with over 53% (or $2) contribution coming from the data services.
- Softbank of Japan looks set to be the first major operator (outside of Philippines) with more revenues coming from data services than voice.
Mobile Data Traffic
- We have been calling attention to the tremendous increase in mobile data traffic for some time. The discussion has hit mainstream and many operators are scrambling to nail-down their short-term and long-term strategies to manage the data traffic growth in their networks. See our paper on the subject "Managing growth and profits in the Yottabyte era." The recommendations discussed in the paper are slowly being adopted by various vendors and operators worldwide.
- The global mobile data traffic exceeded an Exabyte for the first time in 2009. In fact, the data usage is growing so fast that this year, the two territories experiencing the most growth - North America and Western Europe are both going to exceed an Exabyte in mobile data traffic.
- 2009 also marked the year when the global data traffic (monthly) exceeded the global voice traffic.
- For many of the superphone heavy operators, devices like iPhone and Android account for more than 50% of their total data traffic.
- 2010 will mark the first year when the total number of mobile broadband connections will exceed the total number of fixed broadband connections.
For more mobile data traffic analysis, please stay tuned for the second edition of our Yottabyte research
- India continues to be the hottest market on the planet in terms of net-adds with (again) a world record-setting month in Jan 2010 with 19.9 million net adds. To give you a perspective, this is almost 1.5 times the number of subscribers US added in the whole year. It is like adding a Canadian wireless market every month. For the year 2009, India added 177 million subs vs. 106 million for China. Combined, one year of growth in these two market is equivalent to the size of the third largest market - the US, to date. Making money on the net-adds is a different proposition all together (more discussion on the international market in our global market update later this month)
- Thanks to the explosive growth in the emerging markets, the global mobile market went past 4.6B in 2009 and is likely to cross the 5B mark in 2010. The global mobile subscriptions now represent over 68% of human population on planet earth.
- China crossed the 700M subscription mark in July while India’s total went past 500 in Nov. In the meantime, US crossed the 90% subscriptions mark in 2009.
- In the last 10 years, the growth patterns in the mobile industry have completely reversed. In 1998, the developed world accounted for 76% of the subscriber base, in 2008; the percentages have flipped with developing world now accounting for 76% of the subscriber base and are likely to increase to 85% by 2018.
- The top 10 nations by subscriptions are: China, India, US, Russia, Brazil, Indonesia, Japan, Germany, Pakistan and Italy.
- China Mobile became the first operator (and likely to be the only one for a very long time) to cross the 500M mark. It remains the #1 carrier in terms of the total number of subscriptions followed by Vodafone. Telefonica, América Móvil, Telenor, T-Mobile, China Unicom, TeliaSonera, Orange, and Bharti Airtel round up the top 10 largest telecom groups in the world.
· The total number of app downloads in 2009 reached 7 billion resulting in approximately $4.1B in revenues 12% of which was from mobile advertising.
· The number of non-carrier appstores jumped to 38 from 8 in the previous year.
· While Asia had the highest percentage of the download share, North America had the highest share of the apps revenue accounting for over 50% of the total revenue.
· The paid ASP in 2009 was approximately $1.9 and the advertising revenue generated from the free applications was approximately $0.09/user/app/year
For a more detailed analysis of the mobile apps market, please see our paper “Sizing the Global Mobile Apps Market”
- Messaging still accounts for the lion-share of data service revenues. However, other services such as Mobile Music, Mobile TV and video streaming, Voice navigation, PNDs, Mobile Games, IMS, LBS, Mobile advertising, and others have gradually chipped away the share from messaging. Alternate devices with wholesale cellular agreements are also flooding the market. In Japan, Mobile Commerce is expected to do much better than Mobile Advertising. Though not much talked about, enterprise applications are also being adopted widely esp. in North America as more workers become mobile and corporations seek efficiencies in their operations and supply-chain.
- Nokia dominated the year as usual but the revenue share is shrinking and so is the lucrative smartphone share. Apple, RIM, and Google are relentlessly attacking the top tier while Samsung, LG, and others giving a tough fight for the bottom tier. We see a new middle tier emerging that has the form factor of a featurephone and functionality of a smartphone. The smartphone category is getting further split into regular qwerty smartphones like Blackberry and the touch and full browser based superphones like the iPhone and Droid.
- The year was dominated by several blockbuster device launches like the iPhone 3GS.
- Next few years will be big for infrastructure providers as many countries both developed and developing get into upgrading their infrastructure.
- Willcom, the small Japanese carrier that started the flat-rate unlimited phenomenon filed for bankruptcy last month.
- In the US, the increase in messaging volume catapulted US as the number one texting nation by messages/user/month going past the long-time leader Philippines.
- Deployment of 3.5G technologies is in full swing. However, it is the discussion of 4G that is occupying the headlines, even though 4G hasn’t been fully defined yet and the current candidates for 4G are nowhere near the performance goals of 4G (150Mbps/50+Mbps). Many larger operators have laid out their plans for deploying LTE starting this year.
We are also seeing regulators playing an active role in making the markets competitive and attractive in the long-term.
· The velocity with which the smartphones are being introduced into the market esp. the western markets, one wonders if in five years, we will be using the moniker to describe devices and if the "dumbness" in the device market will be practically eliminated. Led by Apple’s Appstore success, significant investments are pouring into the appstore world. In parallel, the debate over apps vs. mobile web is intensifying. The implications of the transition will be significant on the ecosystem on many levels.
2010 will be a critical year on many fronts. As usual, 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 May 2010. The next Global Wireless Data Market update will be released in Sept 2010.
Your feedback is always welcome.
Disclaimer: Some of the companies mentioned in this note are our clients.
CTIA Roundup 2010 March 26, 2010Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, CTIA, Carnival of Mobilists, Carriers, Devices, Enterprise Mobility, European Wireless Market, Federal, Gaming, General, India, Indian Wireless Market, Infrastructure, Intellectual Property, International Trade, Japan Wireless Market, Location Based Services, MVNO, Messaging, Microsoft Mobile, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Traffic, Mobile Usability, Patent Strategy, Patents, Smart Phones, Speaking Engagements, Strategy, US Wireless Market, VoIP, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , add a comment
CTIA hosted its annual networking party in Vegas. I can appreciate what Bill Murray must have felt like in ground hog day for sometimes I can’t tell which year we are in at CTIA. Of course, things are moving forward with all the advances and services but the messaging and value props reappear from the dead. In any case, it is always good to reconnect with colleagues and wander around on the show floor to get the pulse of the industry. The highlight of the show was the release of the HTC Evo 4G device by Sprint to mark the entry of the first WiMax smartphone. Not to be outdone, Samsung announced SCH-r900 (who comes up with these names) - the first LTE handset to be launched later this year on the Metro PCS network. Like at the Mobile World Congress, it was clear that industry is courting the “developers” though few have figured out how to help them with a healthy revenue stream. There was a lot of discussion on 4G, Mobile Advertising, Mobile Web vs. Apps, Femtocells, Smart Driving Solutions (it had its own pavilion), HSPA+, A/V Reality, Spectrum, Congestion management, National Broadband Plan, Taxi lines, and more. This note summarizes the observations and opinions from the event, discussions, and briefings.
My trip started early as I was moderating a panel on Mobile Advertising at the packed Mobile Web and Apps World forum. I am finding that the pre-shows generally have better attendance than sessions during the show. MTV’s Joe Lalley mentioned that the number of RFPs that require mobile advertising as a component have grown 3-4 times in the last 6-12 months. One of the areas that has been lagging is the “industry consensus on metrics” as without consistent numbers across all ad networks and service providers, many in the advertising industry will stay on the fence or will work with only select players in the ecosystem. Gary Schwartz, who is on IAB’s Mobile Marketing Committee updated on the collaboration done between IAB and MMA and we should be seeing some of the work soon. To some extent the story of mobile advertising is playing out exactly as we had imagined in our Mobile Advertising book and once many of the pieces are in place, the use of mobile in advertising will become so pervasive that we will wonder what took so long. And as I mentioned before, Apple could help redefine mobile advertising.
It is good that CTIA is thinking of some diversity when designing their keynotes. Iñaki Urdangarín, René Obersmann, Padmasree Warrior, Michelle Caruso-Cabrera, James Cameron, and Biz Stone were a welcome change not that there is anything wrong with other speakers. It is better to look at the industry from multiple angles. However, the lack of developers on the stage was acutely felt. The consistent message across all keynotes was: tremendous growth ahead and we are barely scratching the surface. That was hardly in doubt, the question is who benefits from it and who goes home.
T-Mobile announced the launch of its HSPA+ upgrade along with many smartphones to launched soon. Per Cole Brodman, CTO, T-Mobile US, this makes T-Mobile the US operator with the fastest network (did you know T-Mobile has more cellsites than Verizon?). With WiMAX and LTE smartphones coming in the next few months, we can expect a good tussle for mindshare. However, as the FCC quoted in its National Broadband Plan from our paper “State of The (Mobile) Broadband Union” - there is a difference in advertised vs. actual speeds especially on smartphones. We will be doing some more research on the topic later this year.
The highlight of the show was Sprint’s release of the “mother of all smartphones” (from the spec point of view)- the HTC EVO 4G. Consider this: 1GHz processor, 8/1.3MP camera, 720p HDvideo, HDMI out, Hotspot capability (upto 8 devices), 3-6 Mbps (wimax)/.6-1.4 Mbps(evdo), 1GB ROM, 4.3” capacitive display, etc. Full specs here. Of course, the pricing and street performance will determine its success but clearly a milestone for the industry. The device came to the market earlier than most expected and will let the competitive fervor to go up a notch.
A couple of days later, Samsung announced its SCH-r900 (who comes up with these names) - the first LTE handset to be launched later this year on the Metro PCS network. Had it been on Verizon or AT&T, it would have gotten more attention. In any case, Metro PCS is trying to cement its place for the bragging rights. We can expect a number of new LTE smartphones coming into the market early next year. Voice and actual performance are still an open question.
Congestion management remains a big issue for the industry. I was glad to hear that the industry is coming around to the realization that “a holistic approach” is required to solving the problem, something we first outlined in our widely referenced paper “Managing Growth and Profitability in the Yottabyte Era.” Ralph de la Vega, speaking in his capacity as the Chairman of the CTIA and executive at AT&T embraced the principles of a sustainable model - complementary technologies, application efficiencies, network efficiencies, and available spectrum. We should add pricing efficiencies into the mix as well. Chetan Sharma Consulting will be releasing an update to the Yottabyte paper in the next couple of months, so stay tuned.
There was clearly a lot of focus on developers and attempts at giving them more voice and attention. As I alluded to in my talk on the appstore ecosystem at last CTIA, the various appstores need to focus on how to make their ecosystems more vibrant and profitable for the developers, else, we will start seeing them drop like dead flies in the not so distant future. A week prior to the CTIA, we released our research on the appstore economy which was well received. While a number of developers had booths at CTIA, there was no useful traffic. Better forums were organized WIP Connector and OMS.
With the imminent arrival of iPad next week, there was plenty of discussion and display of eReaders/tablets and how it might drive another category. While we won’t see the iPhonesque like sales numbers, it is clearly an exciting introduction to couch computing. I will have more to say on the subject once I get my hands on the device next month. It is also quite apparent that the category of extending the display beyond the device is going to take shape this decade. The interactions and content doesn’t need to be in the confines of the small display. 3D video also surfaced as something many players are working on.
Video was touted as the killer app for 4G though I wondered who will be the hunter and the hunted. I remember the same argument for 3G and mobile video went from the darling of the show to a pariah that no one wanted to touch in a matter of two years. Is video over cellular really the best use of resources? Am sure, the debate will continue for the foreseeable future.
Activity in the mHealth segment is picking up. It was mentioned several times in the various keynotes as well as the number of startups tackling the capture and processing of medical data is increasing. One of them was Mobisante which presented on a VC panel I moderated. They are building a low-cost ultrasound imaging device that uses smartphones.
Some of the other news worthy items were:
As expected, the wireless industry lauded the call for more spectrum in the National Broadband Plan. My column “National Broadband Plan - A Work in Progress” was published by Wireless Week during CTIA.
The role wireless communications can play in emergencies was highlighted from the rescue efforts and lives saved in Haiti. John Stanton proclaimed the country to be the first copper free telecom nation
Androids keep multiplying like gremlins
CTIA released its semi-annual industry survey results. Highlights: $22B in data revenues (second half), 50M smartphones, 257M datacapable devices, 1.5T Txt messages, 24.2B MMS, 285 subscriptions, daily MOU 6.1B (boy! Do we talk a lot). Our 2009 year roundup here.
Ericsson announced that the data traffic globally grew 280% during each of the last two years and exceeded global voice traffic in Q4 2009. We announced similar trends in our 2009 roundup earlier this month
Probably the biggest M&A news - Amdocs bought MX Telecom for $104M
There was buzz in the M2M segment
Cisco’s Chief Technology Officer Padmasree Warrior said, there will be 1 trillion devices, 1.5M apps, 5.7M security threats, and 486 Exabytes of data consumed by 2013
An interesting startup I ran across was Invensense - motion based device interaction
Ericsson had its connected tree on display. In case you were wondering how we get to 1 Trillion devices ..
Femtocells are trying to remerge after a disappointing year - it’s the pricing _____!
Obermann: US growth is far better than that of Europe. US T-Mobile is performing much better than the other properties of Deutsche Telekom so why sell.
The word revolution was used 45 billion times during the conference.
We will be discussing many of the future topics in much more detail at our upcoming conference “Mobile Future Forward.” More details to come.
Disclaimer: Some of the companies mentioned in this note are our clients.US Wireless Market , add a comment
Last week, the FCC unveiled its long-awaited “National Broadband Plan.” The plan gets a number of things right and there are some tasks that need more attention.
First of all, the FCC must be commended highly for the process of arriving at a broad set of recommendations, for making the proceedings as open as they can be and for inviting participation from all players - big and small through a variety of forums including face-to-face meetings. I attended one such meeting in person and caught several online and can attest to the quality of the debate and the openness of the forums.
Second, by putting a goal for the nation, there is a visible target that everyone can rally around. One of the best thing the plan does is to equate the necessity of a broadband infrastructure to that of electricity and begins the plan by saying “Broadband is the great infrastructure challenge of the early 21st century.” Hopefully, this will magnify the urgency of developing a plan that enables sustainable leadership in broadband infrastructure for the US. And challenge breeds opportunities.
Third, by defining the plan as a work in progress, FCC affords itself the flexibility based on the conditions on the ground, be it continued spectrum shortages or the introduction of new technologies.
Fourth, one of the key elements introduced was “transparency” and “measurement” of broadband variables in the market, something we have advocated for a long time (see our paper “State of the (Mobile) Broadband Nation” which was referred in the FCC’s national plan).
Finally, the document does a good job of integrating the plan into specific verticals esp. the ones that the government can have a major impact on, namely - Health, Education, Energy, Public Safety, Governance, and Economic Opportunity in general.
The main highlights of the plan are:
1. The plan sets the goal of 100 Mbps for 100 million households (practically everyone) by 2020
2. It sets the goal of 1 Gbps to anchor institutes like schools, hospitals, etc.
3. It seeks to expand broadband coverage to 90% of the nation
4. It ups the broadband definition from “faster than dialup” to “at least 4 Mbps” (significant improvement)
5. It looks to make the broadband connectivity affordable to rural communities, etc, through the use of the Universal Service Fund
6. It seeks greater transparency in performance, pricing, and competition
7. The plan recognizes the shortage of spectrum and seeks 500 MHz spectrum by 2020 of which 60% should be available in 5 years
8. It looks to provide enough spectrum and infrastructure for the first responders and public safety
9. It seeks to reduce the red tape and expedite reviews and approvals that the government is responsible for
Setting ambitious goals is laudable. However, the devil is always in the details - the hows and whens of the plan. The biggest challenge for the commission is going to be in procuring the spectrum in a timely fashion. It will run into both legal as well as political challenges.
As we go about refining the plan and executing on the recommendations, the industry will need to keep a few things in mind. First of all, the additional spectrum is not going to be the panacea for the mobile broadband consumption, especially in the short-term. By the time the first batch of spectrum becomes available, the consumption would have more than quadrupled, so the industry needs solutions for the immediate future.
Next, industry needs to figure out ways to build the infrastructure that is not utterly dependent on the additional spectrum. So, we must invest in R&D that provides breakthroughs in using existing spectrum more efficiently to provide more throughput. Also, fiber penetration will matter a lot as it can be used to off load a good majority of the mobile data traffic on an as needed basis.
The plan does a good job of connecting the critical vertical industries to the broadband infrastructure. However, this is where the other sectors need to step up and enmesh their evolution with progress in the broadband infrastructure. For example, unless the health industry fundamentally changes the way it goes about doing its business, any amount of bandwidth will have no impact. Almost all of the medical institutions don’t even communicate to its customers via TXT, using broadband as a tool is too farfetched for many of the old guards. The situation is similar with education, public safety, energy, and governance.
The plan will also benefit from more intermediate milestones, so we can measure the progress. If the goal is to make the nation competitive and progressive, then, the congress needs to be onboard ASAP. The FCC perhaps needs more regulatory authority to navigate the maze and help prioritize the various efforts during the course of this decade. If this effort is not coordinated well and if we spend too much time on debating rather than doing, we will still be bickering about what broadband means in 2020 while the Japanese go past 100 Gbps.
Chetan Sharma is President of Chetan Sharma Consulting a premier management consulting and strategic advisory firm in the mobile space. He is also the author of 5 books on mobile including “Wireless Broadband: Conflict and Convergence.” www.chetansharma.com
LTE May Heat UP Mobile Net Neutrality Debate March 19, 2010Posted by chetan in : US Wireless Market , 1 comment so far
Talked to Stephen Lawson of the IDG News Service about LTE/PCRF and he does an in-depth article on the subject which appeared in several places including the NY Times
Published: March 18, 2010
Fine-grained network controls that are coming with next-generation mobile technology could make some demanding mobile applications such as video perform better but may also raise net neutrality concerns.
LTE (Long-Term Evolution), the fourth-generation mobile technology expected to be most widely adopted by carriers around the world, is designed to boost wireless data speeds and more efficiently serve subscribers. But along with that standard come others that define the IP network behind the cell towers. One of them, called PCRF (Packet Core Routing Function), will give carriers much more fine-grained control over how well applications and services perform.
PCRF has also been extended to 3G, and some vendors and carriers want to use the new technology to deal with growing demands on mobile data networks. On Thursday, Alcatel-Lucent extended its PCRF software, which was introduced last year, from LTE to 2.5G and 3G infrastructure. The company said Thursday that its 5780 Dynamic Services Controller, which can perform PCRF for both 3G and LTE networks, is in trials and will be available in the second half of this year. Alcatel is only the latest in a long line of vendors to offer PCRF software, which is part of a set of network management technologies called EPC (Evolved Packet Core).
EPC is very new technology — it has generated no measurable revenue, according to market research firm Dell’Oro Group — but all the drivers are in place for it to be widely deployed over the coming years, said Dell’Oro analyst Greg Collins. Demand for mobile data is growing fast, and carriers would like to control how the applications offered on their mobile networks perform. PCRF could have a major impact on carriers’ businesses and subscribers’ mobile experiences. Among other things, the technology could be used to give certain applications and users better performance than others. Carriers could even sell preferential treatment to application providers, where that practice is legal, vendors and analysts say.
But because the technology can define grades of service for both subscribers and content providers, it may run headlong into the growing debate in the U.S. over wireless net neutrality. For example, the idea of selling priority to certain providers of over-the-top applications and services, even if that priority were offered to any providers that could pay, has drawn the ire of some net neutrality advocates.
The need for tighter network management is growing out of the rapid increase in demand for mobile data services, the same trend that made LTE itself necessary. As more wireless subscribers try to use ever more bandwidth-intensive applications, carriers want mechanisms to ensure that the most important or sensitive uses of the network don’t get trampled. EPC gives them tools to control, to some degree, the speed or QOS (quality of service) of individual applications.
"I can allocate QOS to a voice channel, or a data channel … or a television service, for example," said William Guinn, chief technology officer of Amdocs, which makes back-end systems for carriers. "If you’re downloading movies, for example, I might want to make sure you get [good] voice quality even if your downloads may take a couple of seconds longer."
Carriers could use PCRF in a variety of ways, according to Chetan Sharma, an independent mobile analyst. It defines nine levels of quality of service based on network delay and packet loss, four of which are guaranteed, he said. When the network is heavily loaded, users with a more expensive plan could get their Web pages and videos faster than those with lower-priced plans. In addition, the carrier could dial back performance for certain types of applications, no matter who was using them. And when subscribers reach the monthly download limit on a particular plan, their connection performance could be dialed back.
Software vendors are developing a variety of tools for controlling services based on policy. Bridgewater, a mobile network management vendor that already offers PCRF software for both LTE and 3G, says it can extend policy-based controls out to the radio access network. Later this year, Bridgewater plans to introduce software that can selectively offload cellular traffic onto faster networks where they are available, said Joanne Steinberg, Bridgewater’s marketing director. Customers with higher-grade plans might find their data connections automatically shifting to Wi-Fi when the cellular network becomes congested, if the carrier considers that a benefit, she said.
Managing users’ performance based on policies could allow carriers to smooth out the peaks in data demand, producing annual cost savings of more than 10 percent for U.S. operators by 2013, according to analyst Sharma.
As long as the terms of those "gold, silver and bronze" plans were clearly spelled out, it would be legal to offer them in most places, Sharma said. The main barrier would be consumer expectations in countries such as the U.S., where all-you-can-eat service has been the norm. For that reason, shoppers are likely to find separate classes of service in Europe first, he said.
Priority for over-the-top application providers could be a trickier proposition. Using PCRF, a carrier could put certain applications or services on a higher tier to ensure a smooth user experience even at busy times, Sharma said. For that assurance, carriers could charge a fee or a percentage of the application provider’s revenue, Alcatel and other vendors acknowledged.
"I can negotiate with a carrier to get the type of service I’m looking for," said Amdocs’ Guinn, giving the hypothetical example of a health-care company that gives patients medical monitors that send data over a mobile operator’s network.
As long as the carrier didn’t use the policy tools to give its own applications an edge over those of third parties, it wouldn’t violate current net neutrality rules in the U.S., which involve blocking or impeding a particular company’s service, Guinn said.
However, to some critics, this idea raises the specter of carriers as gatekeepers on what should be an open marketplace of online applications.
"That has incredibly harmful impacts on competition and … consumer choice … and innovation," said Chris Riley, policy counsel for Free Press, a U.S. media reform group that has fought against blocking of certain applications by service providers. Also, if a carrier can charge for priority access to a congested network, it has less incentive to invest in a fatter pipe, he said. "They are managing scarcity and creating an environment of scarcity to sell this enhanced access."
The FCC’s net neutrality guidelines only cover wired networks today, but the agency is now considering stronger rules, including ones that would extend into the wireless world. The FCC is already proposing rules that would ban carriers from charging third-party service providers for better performance, Riley said.
"There’s a good argument to be made that this kind of prioritization does basically disadvantage new entrants" to the mobile application world, said Fred von Lohmann, senior staff attorney at the Electronic Frontier Foundation. That argument and others about wireless net neutrality will probably play out over the next three years or more, von Lohmann said. "We’re not going to get a clear, final answer for some time," he said.
Copyright 2010 IDG. All Rights Reserved.US Wireless Market , 1 comment so far
Coverage of our Mobile Apps Economy Paper and this is just from the first day
o Hundreds more
· BusinessWeek online http://www.businessweek.com/the_thread/techbeat/archives/2010/03/americans_pay_m.html
· Communities Dominate Brands http://communities-dominate.blogs.com/brands/2010/03/so-what-do-we-learn-from-chetan-sharmas-report-on-mobile-apps.html
· Mobile Burn http://www.mobileburn.com/news.jsp?Id=9014
· Mobile Entertainment http://www.mobile-ent.biz/news/36394/Mobile-apps-to-outsell-CDs-by-2012-claims-GetJar
· Msearchgroove http://www.msearchgroove.com/2010/03/17/podcast-report-by-chetan-sharma-first-to-map-app-economy-getjar-reveals-strategy-play-to-monetize-apps-plus-why-app-shortcuts-could-be-the-real-money-maker/
· TechDigest http://www.techdigest.tv/2010/03/mobile_apps_to.html
Millennial Media’s SMART numbers March 18, 2010Posted by chetan in : US Wireless Market , add a comment
Millennial Media released their monthly numbers today. Some interesting data that caught my eye – cause marketing and fund raising is on the raise in large part due to Haiti and Chile disasters. This might have some tangential benefits to the industry – consumers getting used to paying with mobile (in addition to of course helping the cause and raising money)
The second interesting point was the rise in Android impressions in a month. Could it be Nexus One or Droid or both?
You can download the full research at www.millennialmedia.com/research
from the release -
Special Section – Mobile Cause Marketing:
1. We featured a third-party study focusing on the growth of mobile fundraising and its audience’s demographics. The study conducted by Convio, Edge Research and Sea Change Strategies analyzed findings from a national survey of US charitable donors that was conducted the week after the earthquake in Haiti occurred.
2. According to the research, “Prior to January 12, 2010 little more than $1M had been raised via mobile text…close to $50M has now been raised though this channel” in the aftermath of the earthquake in Haiti.”
Engagement & Targeting:
1. Mobile behavior trends saw an uptick: January’s average user session time of 4:57 (min:sec), increased to 5:14 (min:sec) in February, the longest session time we have seen since our June ’09 S.M.A.R.T.™.
2. Advertisers continued to heavily leverage mobile-specific campaign actions such as Application Download, Place Call, Subscribe Purchase, M-Commerce, and Store Locator. Application Download and Place Call represented the top two in February with 31% and 29% of calls to action respectively.
3. Together, Traffic to Site and Application Download represented 65% of all campaign destinations on our network, further validation that advertisers continue to develop a persistent mobile presence
1. Two new Quick Stats were added to our February S.M.A.R.T.™ - RIM and Android network impressions. Android impressions increased 25.3%; the largest month over month increase the OS has had on our network.
2. Apple increased once again and remained the number one device manufacturer with approximately 39% share of impressions.
3. Following Apple’s impression share lead, the Touch Screen category increased 17% month over month within the Device Input Method mix and led with a 54% share of impressions.
4. Wi-Fi also retained the largest impression share of the U.S. Carrier Mix in February and held 26% share of impressions.
Mobile Broadband Revisited March 17, 2010Posted by chetan in : US Wireless Market , add a comment
I am working on a piece on the “National Broadband Plan” but thought it might be useful to revisit a couple of articles I wrote for RCR Wireless. Some more thoughts in the next few days.
Mobile broadband is the network connectivity environment, where networks of different shapes and sizes collaborate to provide users unfettered access to the information they seek, the content they want to engage in, connect people in new and exciting ways, where time and distance are all but collapsed to provide access to anyone and anything, faster than the speed of thought. At least, that’s the vision.
In 1991, the late Mark Weiser of XEROX PARC, considered the father of ubiquitous computing, dreamed of an always on, always connected world in which humans and computers are seamlessly united. In 2002, my friend and coauthor Dr. Yasuhisa Nakamura, then CTO of NTT DoCoMo wrote in our book that his vision of mobile broadband is when wireless infrastructure becomes indistinguishable from air - omnipresent. It is just there without us consciously searching for it. Here we are in 2009, where the FCC is engaged in the noble task of defining broadband and various players are quibbling over a few kbps speed requirements. But as the national debate on broadband reaches a fervent pitch, one has to come back to the task at hand and figure out what defines "mobile broadband."
FCC’s current definition of broadband is stated as "The term broadband commonly refers to high-speed Internet access that is always on and faster than the traditional dial-up access." Faster than dial-up doesn’t really conjure up an image of a 21st century ready infrastructure, so, how do we go about defining mobile broadband, what benchmarks are meaningful, and most importantly, what factors would yield sustainable competitive advantage to service providers.
First of all, we shouldn’t mix wireless and wireline for some time. The inherent cost structures, economics, and physics of the two mediums are quite different. By expecting wireless to deliver wireline performance and pricing, we are setting ourselves for disappointment.
Real speeds, coverage, and spectrum
The speed of the network has long been the main benchmark for mobile broadband, esp. the peak rates possible using a given technology. For e.g. in the GSM family of technologies, GPRS roughly equates to 114 Kbps, EDGE to 474 Kbps, UMTS to 2 Mbps (stationary), HSPA to 7.2 Mbps, HSPA+ to 28 Mbps, and LTE to 100 Mbps (of course, there are differences in upload, download, peak, off-peak, min, max, etc.). However, the real-life network speeds experienced by average consumers are typically 40-60% of the peak rates. During peak traffic times, the speed drops even further.
We should be looking at the bandwidth requirements from the eyes of the consumer. Someone living in Bellingham, Wash., only cares about the coverage and the average bandwidth available to them at any given moment. What ultrafast networks are deployed in Washington, D.C., is of little interest to them. So, we need to measure coverage and consistency in performance across the nation. Also, one needs to keep the spectrum scorecard for we can deliver 100 Mbps but the spectrum required under current set of technologies is just inadequate. Hence, the benchmarks for mobile broadband need to be closely correlated to the national spectrum dedicated to mobile.
As a first step, we need to take the discussion away from peak rates to average rates and measure the average throughput at any given time across various markets. Any issues with the backhaul network will also be reflected in these numbers and thus will help us understand the state of the mobile infrastructure at a more granular level. Japan, Korea, and Australia are investing heavily in upgrading their national mobile infrastructure to stay ahead of demand. Progress in these countries will clearly serve as a guiding principle for the U.S. and other economies.
As we move into the 3.5G and 4G mobile network arena, latency (along with jitter) will start to become an important benchmark as well. Reduction in the time to fetch content enables better user experiences. An all-IP network introduces a flatter network architecture which in turn reduces the latency in the network. Better user experience paves the way for more usage and higher content consumption which in theory yields informed citizens and higher productivity.
We should also keep track of the average bandwidth being consumed by users on a monthly basis. By keeping an accurate measurement, the ecosystem can plan better. Some other regulatory agencies like the Hong Kong Telecommunications Authority regularly publish mobile data usage. While the task is much bigger in the U.S., some measure of the pace of growth is necessary for the ecosystem to appreciate the risks and the opportunities.
Next, we need to keep track of the average price paid by consumers for mobile broadband and mobile data consumption over time and the choice of providers available to consumers on a national basis. The above also needs to be measured from a demographics point of view by looking at the numbers for a wide variety of user populations. Additionally, these measurements need to evolve over time as our understanding of what’s important to the consumer changes.
Finally, while the debate is focused on how to deal with the data growth, little attention is being paid to how to use the terabytes of data that is being generated. In other words, there is a lot of focus on data creation but little on intelligence extraction. Most service providers are consumed by network upgrades, move from WCDMA to HSPA+ to LTE and so on and so forth but little investment is going into understanding the consumer and their mobile data behavior - how are they consuming data? what are their preferences and unmet needs? how do you tailor content, value added services, and pricing plans at a subscriber level? how to leverage mobile as a media channel? etc.
Don’t get me wrong, carriers absolutely need to build a robust network that can stay ahead of the consumer demand but they also need to continue to innovate on several key fronts. By focusing too much on network build out and too little on building intelligent platforms that can harness the power of these networks, many service providers are leaving the door open for others to extract more value out of these network upgrades. Sustainable competitive advantage can only be built by understanding the consumer better, mobile affords that opportunity. Players who are focusing on measuring intelligence of their networks are the ones who will be able to withstand emerging business threats better than those who are investing little in building out the platform. And, intelligence is something the FCC can’t regulate but consumers will see the difference.
Solutions for the Broadband World
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.
Links to the original articles3G, 4G, AORTA, ARPU, BRIC, CTIA, Carriers, European Wireless Market, Gaming, Indian Wireless Market, Japan Wireless Market, Location Based Services, M&A, Mergers and Acquisitions, Messaging, Microsoft Mobile, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile Traffic, Mobile Usability, Partnership, Smart Phones, US Wireless Market, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 6 comments
Sizing up the Global Mobile Apps Market
Industry Study Commissioned by Getjar
Mobile applications (apps) have been around since the late nineties and the apps stores have been available for a quite some time as well. Operators have been offering content and applications on their appstores for most of the last decade. But it wasn’t until the launch of Apple Appstore that the appsworld started to blossom in earnest. First, it fundamentally changed the revenue model in favor of the developers which has become the current defacto standard (70/30) in the mobile apps business. Second, it brought more developers into the ecosystem as it fostered the notion of focusing on just 1-2 platforms rather than the entire device ecosystem to be relevant. Third, the time-to-market equation changed for developers so that they can get the application from conception to market in a fraction of a time of what was possible in the past. Finally, the importance of a seamless end-to-end user experience to increase usage and monetization became a core principle in the mobile apps space.
While Apple has played a significant role in reenergizing the mobile apps space by bringing more consumers and developers into the ecosystem, there is significant activity outside the iPhone or smartphones space that is often not discussed. The purpose of this research study is to take a holistic look at the mobile apps space across all platforms and on a global basis to get a sense of the size of the mobile apps market and the direction it is headed.
The overall mobile apps downloads are expected to increase from over 7 billion in 2009 to almost 50 billion by 2012 growing at the rate of 92% CAGR. The revenue from mobile apps which includes both paid downloads and revenue from advertising and virtual goods is expected to increase from $4.1 billion in 2009 to $17.5 billion by 2012 at the rate of 62% CAGR. Though ondeck (operator managed) mobile apps sales exceeded those from offdeck in 2009, by 2012, offdeck is expected to hold the lion share of the mobile apps revenue.
The dynamics of the app market are quite different in emerging nations where to effectively monetize the significant app momentum (app downloads/active user and growth rates in some of these countries exceed those from the western markets, irrespective of the device type), creative strategies are needed to attract new consumers and different business models will be required to make the regional ecosystems viable.
Overall, by enhancing discovery, improving user experience, dropping price barriers, and increasing developer revenue share, the apps ecosystem can continue to prosper. The paper presents the results of the study in more detail as well discusses the future of mobile apps and how the app economy is likely to evolve.
My thanks to Getjar for supporting the research.
Disclaimer: Some of the companies mentioned in this note are our clients.
National Broadband Plan – first thoughts March 16, 2010Posted by chetan in : US Wireless Market , add a comment
The long awaited National Broadband Plan was finally unveiled this morning. It is quite a piece of work. FCC should be commended to put forth a vision and doing the due diligence to create a document that everyone can discuss and debate.
I haven’t had a chance to review it cover-to-cover but will do so sometime this week. Off the bat, designating broadband as a key infrastructure element is commendable. We have argued that in our Wireless Broadband book. Put putting the focus and energy of the political leaders to think connectivity as a necessity is a critical first step. The bulk of the heavy lifting will be done by the private sector but if the regulators can create an environment of increased competition, reduced red tape, and mandate transparency and accountability, we will be in good shape.
It is also good to see that the Commission has tied the broadband plan to several vertical industries – Health, Education, Energy, Public Safety, Governance, and Economic Opportunity in general.
Our paper “State of The (Mobile) Broadband Union” made a couple of appearances in the broadband plan
Evaluating network availability and performance is much
harder for mobile than for fixed broadband. For instance, the quality
of the signal depends on how far the user is from the cell tower,
and how many users are using the network at the same time.
Therefore, the fact that users are in the coverage area of a 3G network
does not mean they will get broadband-quality performance.
Still, as with fixed broadband, it is clear that the speeds experienced
on mobile broadband networks are generally less than
advertised. Actual average download speeds have been reported
to be as low as 245 kbps, while speeds in excess of 600 kbps are
advertised. Actual average upload speeds as low as 106 kbps have
been reported, versus advertised rates of 220 kbps or higher.
Mobile data users typically receive download speeds ranging
from hundreds of kilobits per second to about one megabit per
Thanks to our colleagues at Root Wireless for assisting with this study.
I will be analyzing the plan and write pieces as i get through the tome.
National Broadband Plan Preview March 15, 2010Posted by chetan in : US Wireless Market , add a comment
Well, the day has arrived. The plan is going to be presented tomorrow to the congress. FCC has released highlights and preview of its recommendations today.
The Plan’s call for action over the next decade includes the following goals and
- Connect 100 million households to affordable 100-megabits-per-second service, building the world’s largest market of high-speed broadband users and ensuring that new jobs and businesses are created in America.
- Affordable access in every American community to ultra-high-speed broadband of at least 1 gigabit per second at anchor institutions such as schools, hospitals, and military installations so that America is hosting the experiments that produce tomorrow’s ideas and industries.
- Ensure that the United States is leading the world in mobile innovation by making 500 megahertz of spectrum newly available for licensed and unlicensed use.
- Move our adoption rates from roughly 65 percent to more than 90 percent and make sure that every child in America is digitally literate by the time he or she leaves high school.
- Bring affordable broadband to rural communities, schools, libraries, and vulnerable populations by transitioning existing Universal Service Fund support from yesterday’s analog technologies to tomorrow’s digital infrastructure.
- Promote competition across the broadband ecosystem by ensuring greater transparency, removing barriers to entry, and conducting market-based analysis with quality data on price, speed, and availability.
- Enhance the safety of the American people by providing every first responder with access
to a nationwide, wireless, interoperable public safety network.
I think the commission gets very high marks for engagement. Perhaps the most open and interactive proceedings and exercise in its history. I personally attended over web and in person various proceedings and I think Commission went over above and beyond to be inclusive and transparent. Chairman made himself available at various industry forums for direct Q&A.
Information for the plan was gathered in 36 public workshops, 9 field hearing, and 31public notices that produced 75,000 pages of public comments. The debate went online with 131 blogposts that triggered 1,489 comments; 181 ideas on IdeaScale garnering 6,100 votes; 69,500 views on YouTube; and 335,000 Twitter followers. The task force augmented this voluminous record with independent research and data-gathering.
I also like the fact they have set a 2020 vision and 100 Squared initiative so everybody knows what we are shooting for. As always, the devil is in the details esp. regarding the route to go there. Much has been made of the “spectrum crisis” and the additional 500 MHz spectrum that can be made available. Regular readers know that I am not a big fan of throwing more spectrum at the congestion problem. Of course, more spectrum is better and since it takes time to get it, it is better to start now. However, by doing that we are training the industry to keep coming back for more spectrum whenever there is congestion again, clearly a short-term approach. I would have liked a more holistic approach (and this still might be case .. don’t know since haven’t seen the details) of additional technologies and solutions (in which additional spectrum is just one more tool and not the primary tool).
Last week, I had the opportunity to host and talk to the former FCC Chairman Kevin Martin in detail about the proposed plans and he also agreed that by having a deeper roll out of fiber so that the mobile data traffic can be offloaded asap is a plan worth considering more seriously at the national level. That would mean a different kind of network architecture and requirements. Summary of the event here.
One of the challenges we are going to face is the opposition in securing additional spectrum from the broadcasters and public safety as well as on the price tag. Once the politics enters the mix, it will get even more complicated. My hope is that the leaders will have the wisdom to think long term so that we can get on with the plan and not get held up in red tape and bureaucracy and make real progress in the short-term otherwise we will still be debating the same issues in 2020.US Wireless Market , add a comment
18th. Seattle TiE – Mobile - Where is the Money? Some good discussion around the monetization opportunities in mobile.
22nd. CTIA, Vegas
My friend Ajit is chairing “Mobile Web & Apps” world forum at CTIA. It is a packed house. I will be moderating the mobile advertising panel at 1:00pm
1:00-1:50 SuperSession Discussion: Media and Advertising
Chetan Sharma Consulting, President – Chetan Sharma Consulting
Joe Lalley, Senior Director of Product Development for Global Digital Media - MTV Networks
Gary Schwartz, President and CEO - Impact Mobile
Jerry Rocha, Vice President of mobile Media- The Neilsen Company
Jerry Rocha, Vice President of mobile Media- The Neilsen Company
Peggy Salz, Founder - mSearchgroove.com
Vijay Chattha, President - VSC/AppLaunchPR
24th. CTIA. Vegas
My friend Jai Jaisimha is hosting a developer pitch summit at CTIA and I will be moderating the Raising Money panel at 4pm
Presenters will pitch their product to a panel of the best minds in mobile venture capital.
Tim Chang, Principal, Norwest Venture Partners
Tom Huseby, Managing Partner, Seapoint Ventures
Len Jordan, Venture Partner, Madrona Venture Group
Nagraj Kashyap, Vice President, Qualcomm Ventures
Mitch Lasky, General Partner, Benchmark Capital
Scott Raney, Partner, Redpoint Ventures
Moderator: Chetan Sharma, Chetan Sharma Consulting
Mobile Breakfast Series Event Roundup March 12, 2010Posted by chetan in : 3G, 4G, AORTA, ARPU, CTIA, Carriers, European Wireless Market, International Trade, Japan Wireless Market, Location Based Services, MVNO, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Traffic, Music Player, Privacy, Smart Phones, Speaking Engagements, US Wireless Market, VoIP, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 3 comments
Wednesday Morning we hosted the third edition (sold out) of the Mobile Breakfast Series and were grateful for the time and insights from two outstanding speakers. Thanks to our sponsors for the support: Motricity, Openwave, WDSGlobal, and Clearwire
First up was Kevin Martin, former FCC Chairman and current co-chair of the communications practice and partner at the leading law firm of Patton Boggs in Washington DC.
Second speaker was Rob Glaser, Chairman and Founder, Real Networks. This was his first public appearance since he stepped down as CEO of Real Networks.
Kevin talked about the National Broadband Plan that is going to be released this coming tuesday and Rob opined on the opportunities in mobile. I had the good fortune of asking and moderating the Q&A after the initial presentation.
Summary of his comments:
- In response to my question if we are becoming too dependent on the spectrum as a way to alleviate data congestion issues, he said that spectrum should be viewed as a renewable resource, however, we should look for expanding fiber as close to end point as possible, look for alternate ways to offload traffic (something I agree with completely)
- Technology advancements are allowing for more efficient use of the spectrum
- Current carriers have about 450 Mhz, broadband plan seeks to double the spectrum by adding another 500 Mhz though it will be hard to get given the constraints
- Broadcasters can make some spectrum available for auction and share the proceeds
- We are still early in the Open Access process but full impact is yet to be felt
- Beyond the carriers and airwaves, the regulatory authority of the FCC is limited as we go deeper into the ecosystem
- Wireline infrastructure shouldn’t be looked as a separate entity. Since there will be a lot of wireless traffic that will go over wireline, it is part of the same infrastructure
- USF could be used to expand the broadband services to the masses
Rob’s talk (embedded below) was about the opportunities created by the introduction of smartphone/superphones over the next 34 years.
- •“Digital Persistence”
- •Universal Access across Devices
- •Making Discovery Easy
- •Empowering Social Expression and Engagement
- •Leveraging The Global Nature of These Trends
and of course challenges are:
- •Delivering solutions that scale with variable bandwidth and device capabilities
- •Creating commercial models across an extremely complex value chain
- •Vertical versus horizontal industry structure
- •Media industry adaption of new business models
- •Educating users on privacy and social implications
- The Next Mobile Revolution is both a huge opportunity and a massively disruptive force
- §It will ultimately be bigger than the PC or Web 1.0 or 2.0 revolutions
- Cross-industry collaboration, while complex, is essential
- §“We must all hang together, or most assuredly we shall all hang separately”
After the intense 30 minute talk that the sold out crowd tried to absorb as much as possible, I asked him what Real would do if he were starting today. And there was a similar question from Andy Kleitsch from Billing Revolution about advise to startups. Here is some of what he had to say (courtesy: Techflash)
On the question of vertical vs. horizontal integration (question from Tricia Duryee of Moconews), he had this to say (courtsey: Techflash)
His presentation below:
We also announced the June 10th event that will all about Mobile Startups. Registration is open. It should be a great discussion with startup CEOs.
Also, announced the Sept 8th event which is of the long-form (day long) – Mobile Future Forward. Great speakers and useful discussion. Stay tuned for more details. We are working feverishly on the details.
Many thanks to our generous sponsors who believe in the vision behind the MFF event – Real Networks and Millennial Media. Your support is much appreciated.
Finally, a personal thanks to all those of you who helped out. You know who you are. We are a pretty lean operation and need assistance from our friends to make every event successful and useful to the mobile community.
Overall, we had as much fun hosting the event as we had in preparing for it. Please let us know your feedback.
Some pictures from the event:
Some additional coverage of the event by some of the most outstanding reporters in the industry - Seattle Times, Techflash, Moconews, GigaOM, and PC World. Thanks.
Coverage of Mobile Breakfast Series Event #3 March 11, 2010Posted by chetan in : US Wireless Market , add a comment
I will have an update later in the week, but you can check out the coverage of the event -US Wireless Market , add a comment
March 5, 2010, 1:06 PM
Do All Small Businesses Need a Mobile Strategy?
By LORA KOLODNY
Jon MartGoin’ Mobile: Richard Wong at the Mobile Premier Awards
At the Mobile Premier Awards — an international competition for mobile start-ups held last month at the Mobile World Congress — the message was clear: Web sites are old school, and mobile is a growing requirement for every industry and business.
Investors and entrepreneurs who judged and won at the M.P.A. competition were eager to offer tips and predictions to help all business owners — not just those with technology companies — prepare a mobile strategy. Here are some of their suggestions:
First, every company should try to become “visible” to mobile devices. “The idea is that if a consumer is looking for you on the run,” said Chetan Sharma, a mobile consultant who judged at the M.P.A. competition, “your info must be available in any format where they are looking to consume that information — or else you miss an opportunity.”
While smartphones can access most Web sites, the content in most sites isn’t coded to be read or found by people using devices on the go, with small screens and mobile browsers, search engines and operating systems. Smartphones, for example, can’t read Flash content, which many dance clubs and restaurants favor to create aesthetically pleasing sites.
Mr. Sharma recommends checking business directories, map and review sites and apps already popular with mobile users to see if your company is listed. If not, you can list basic details like your location, contact information and a short description free on many sites and apps. You should check Google Maps, Yahoo Local, Nokia’s Ovi Prime Place, Microsoft’s Bing Local Listings,Yelp and Foursquare.
You might also optimize your company’s existing Web content, suggestedDavid Harper, chief executive of Percent Mobile, a New York-based mobile analytics company that won a Gold Award for Early Stage Innovation. If you maintain a blog on WordPress, for example, you can use the free WordPress Mobile Pack to convert the blog to a format that is fast-loading and readable on a smaller screen.
Other free and affordable things you can do include building a list of mobile phone numbers for customers who are willing to receive text-message alerts or text-message coupons; creating a mobile microsite coded in XHTML, CSS or other languages easily read by new mobile Web browsers and devices; or building a branded app and mobile ads to promote it using the services of companies like AdMob, GetJar, Mofuse, Mippin and MediaLets.
All entrepreneurs should be able to develop or use more powerful mobile apps to their advantage soon, said Rich Wong, a partner and venture investor with Accel Partners in Palo Alto who invested in AdMob (and GetJar) early on. That’s because, Mr. Wong said, new mobile devices, from their hardware features to their more open operating systems, are serving as “a richer substrata on which to build apps.”
He predicts geo-location services and “augmented reality” will begin to figure more prominently for traditional businesses. Augmented reality uses a phone’s camera, GPS and compass capabilities to create a street-view image that is layered with real-time information and hyperlinks. (It’s reminiscent of a scene included at 0:25 in the trailer for the movie “Fight Club.”)
At the M.P.A. event, a company called Layar presented an augmented reality mobile browser that impressed Mr. Wong. For example, he said, “With an augmented reality browser like Layar, you can hold up your phone, scan the neighborhood around you somewhere in Asia, and get back information on stores in the immediate area, including prices with a currency conversion back to U.S. dollars, or listings and discounts for a film that’s about to screen in a nearby cinema.”
Despite all of the new technology, a basic function of the mobile phone is still making phone calls. But even that’s changing. Adaffix, an Austrian company that won a Best in Female Entrepreneurship Mobile Premier Award, is offering voice calls that use search listings and social media data as a supplement.
That means a mobile user with an Adaffix app running can call a taxi service and get no answer but know that, upon hanging up, three alternative listings will be presented. The taxi services can offer coupons to try to scoop up the business. It’s a high-tech way to advertise that could serve traditional Main Street businesses well, said Adaffix founder and chief executive Claudia Poepperl.
Most important, understand that mobile and Web audiences are very different, said Mr. Harper of Percent Mobile. Someone at a home computer who checks out your restaurant’s Web site may be interested in videos of your chef or a PDF menu. Someone accessing your site by mobile is more likely to need to get directions instantly or to see if you have an open table. If you know, Mr. Harper said, “how the majority of your users are accessing your brand on mobile — are they using iPhone or BlackBerry or something else? — and what content they mostly need, you can be sure that they have a positive experience.”
In case you missed … March 5, 2010Posted by chetan in : US Wireless Market , add a comment
Stories from Feb ..
Billing & OSS World - Mobile Data Doesn’t Have to be Expensive
Businessweek - The Truth about Bandwidth
TelecomAsia - Mobile Broadband: Still growing but realism sinks in
Connected Planet - Youtube dominates mobile Internet traffic; mobile VoIP on the rise
Business Journal - The Apple effect on AT&T brings good times and bad
Telemanagement - Cutting an operator’s mobile data costs by 60% a year
Mobile Marketing Magazine - Report explains how operators can slash data costs
US Wireless Data Market Update: Q4 2009 and 2009 March 2, 2010Posted by chetan in : 3G, 4G, AORTA, ARPU, BRIC, Carriers, Enterprise Mobility, European Wireless Market, IP Strategy, Indian Wireless Market, Intellectual Property, International Trade, Location Based Services, Messaging, Microsoft Mobile, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Traffic, Mobile Usability, Mobile Users, Mobile Wallet, Music Player, Smart Phones, Strategy, US Wireless Market, Unified Messaging, Usability, VoIP, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 2 comments
US Wireless Data Market Update - Q4 2009 and 2009
The US wireless data market grew 5% Q/Q and 24% Y/Y to exceed $11.8B in mobile data service revenues and thus exceeded $10B for each of the four quarters in 2009. For the calendar year 2009, the overall mobile data revenues for the US market grew 29% ending at $44 billion for the year (1% shy of our $44.5 billion estimate). For the calendar year 2010, we expect a 20% increase in mobile data service revenues accounting for over $53 billion in service revenues.
Verizon Wireless edged past China Mobile to become the second biggest mobile data operator by revenues.
The US subscription penetration was approximately 92% at the end of 2009. If we take out the demographics of 5 yrs and younger, the mobile penetration is 99%.
The messaging volume increased 7% from last quarter catapulting US as the number one texting nation by messages/user/month going past the long-time leader Philippines.
For the first time in the history of the US wireless industry, the data traffic exceeded voice traffic for the full calendar year. With almost 400 terabytes of data traffic, it exceeded voice traffic by a significant margin. We expect that the ratio between the two traffic sources is going to double in 2010.
Apple continued its iTunes juggernaut and if measured by billing relationships (of course not all accounts are mobile) Apple is now the 10th largest mobile operator in the world.
Q4 2009 reported a 5.9% increase in GDP compared to the 3.5% increase in Q3 when the recession technically ended. While the overall economy is sputtering towards growth, wireless industry in the US remains vibrant as is evident by the increase in revenues and net-adds which jumped more than 5 million for the first time in 2 years.
What to expect in the coming months?
Christmas quarter generally yields best results of the year. Though the US mobile industry came out pretty unscathed from the recession, it will benefit from the improving economy. As such we expect the US mobile data service revenues to gain 20% to reach $53 billion in 2010. Mobile data will continue to be the engine of growth for the ecosystem providing at least 33% of the overall service revenues by the end of 2010.
The furious cycle of device releases is accelerating and one wonders if the longevity of each device is starting to shrink as even the hit devices like Droid and Nexus One are not allowed enough room to fully capitalize on their initial momentum. The app economy has been expanding as well. Part strategic, part hysteria, everyone is jumping into the pool to tap into the app river to pull in some revenues or use it more strategically to sell more devices, services, or advertising. (Stay tuned for more research on the subject in the coming days)
Microsoft is attempting a comeback with its 7 series devices though the delay in handset release as well as the lack of backward compatibility gives enough time for competitors to plan their moves. We are glad to see the industry going past the “PC like icons” for mobile phones (something we have advocating for more than 10 years, most recently in our paper “The Untapped Mobile Data Opportunity.” This will enhance user experience and help in extracting true value out of the mobile devices.
From the various announcements this year, we can expect an action packed 2010. However, it will be also an year of shakeouts with several key M&A transactions that will winnow down the competitive landscape in many segments.
Q1 2010 will also be important from the regulatory point of view with the national broadband plan being unveiled later this month. With the looming spectrum shortage, regulatory bodies can have a significant impact on the competitiveness of a nation. For example, in India, regulators haven’t been able to get their acts together for the past 3-4 years and its citizens continue to suffer from 2G. Similarly, many countries in South America have imposed unnecessary spectrum caps. The industry and regulators need to work hand-in-hand to make progress beyond speeches and paperwork.
To start planning for 4G, 5G, and beyond, US should think about rolling a 50 year broadband plan. While more spectrum is always helpful, will we have all the spectrum we need in 2050? or do we need to invent new technologies and business models that use spectrum more wisely? This topic will keep the industry occupied for some time to come. (Former FCC Chairman, Kevin Martin will be headlining our Mobile Breakfast Series event on March 10th to discuss the Spectrum Crises).
2010 will also be the year of network expansion with HSPA+, WiMAX, and LTE all coming into play in the US. As we had anticipated last year, the mobile data traffic kept on growing disproportional to the revenues. At the end of 2009, the US mobile data traffic was almost 400 petabytes, up 193% from 2008. To truly tackle the problem head-on, industry will need to adopt a multi-pronged strategy to manage their traffic more effectively. We discussed mobile data traffic in much more detail in our popular paper "Managing Growth and Profits in the Yottabyte Era." We will be issuing an update later this quarter so stay tuned.
It is also good to see the mobile industry expanding into vertical segments like Health and Retail. More discussion to come on these topics.
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 Q4 2009 and 2009 US wireless data market is:
Service Revenues (Slides 8, 17)
- The US Wireless data service revenues grew 5% Q/Q to $11.8B in Q409. Compared to Q408, the data service revenues grew 24%.
- Verizon and AT&T accounted for 88% of the increase in data revenues in Q4 2009.
- The US mobile data service revenues crossed $10B for all the four quarters and stays ahead of Japan and China by a distance.
- AT&T experienced the most growth with over 7% increase Q/Q followed by Verizon at 5%.
- Verizon’s data revenues exceeded $4B for the second straight quarter and is only inches behind the global leader of over 10 years NTT DoCoMo.
- AT&T and Verizon now account for 69% of the market data services revenues and 62% of the subscription base.
- The average industry percentage contribution of data to overall ARPU is now 29%. US market is likely to pass the 30% mark in Q1 2010.
- Verizon edged past China Mobile to become the second biggest mobile data operator by revenue behind NTT DoCoMo. The top four US carriers are now a permanent fixture in the top 10 global operators by mobile data service revenues occupying #2, #4, #6, and #8 spot respectively. Apart from NTT DoCoMo and China Mobile, Verizon Wireless and AT&T are the only two other operators generating more than $3B in quarterly mobile data service revenues.
ARPU (Slides 9-12)
- Overall ARPU decreased by $0.45. Average voice ARPU declined by $0.98 while the average data ARPU grew by $0.53 or 4%.
- Verizon led in (blended) data ARPU with $16.24 followed by AT&T and Sprint. In terms of % contribution, all the top three operators exceeded the 30% mark (Verizon became the first operator to do so last quarter). T-Mobile ended the year with 22.2% of its revenue coming from data services.
Subscribers (Slides 13-15)
- In Q409, in terms of net-adds, the US market reversed the trend of the last 8 quarters and increased net-adds by 85% Q/Q to add approximately 5.1M new subscriptions.
- The messaging volumes in the US market now average almost 592 messages/subscriber/month thus becoming the number one texting nation going past Philippines.
- In terms of net-adds, thanks to the boost from the iPhone, AT&T led for the third straight quarter with 2.7M net-adds, edging its friendly rival Verizon which added 2.1M net subscriptions.
- T-Mobile and Sprint improved their net-adds from last quarter though it was primarily from the prepaid segment.
Applications and Services
- Non-messaging services continue to grab 60-65% of the data revenues for the US carriers.
- There are probably 18-20 sub-segments within mobile data services and consolidation looms. While the valuations are still high for rapid consolidation, we think that due to recession pressure, the M&A scene is starting to heat up esp. in mobile advertising with the acquisitions of Admob and Quattro Wireless.
- The usage and data consumption trends are enabling carriers to accelerate their 3.5G/4G plans and develop long-term business and technical strategies.
- Nokia sold 129M+ units in Q4 2009 including 21M smartphones. Samsung again had a solid quarter with over 69M devices sold maintaining its market share at 21%. LG Electronics at 10%, Sony Ericsson at 4%, and Motorola at 4% rounded up the top 5.
- The constant drumbeat of new devices continued with Droid, Nexus One, and the fabled iPad.
- The growth in smartphone usage is also putting pressure on the networks which are not able to handle the load during peak times in certain cities thus forcing carriers to look for alternate strategies to satisfy the demand for broadband.
Policy and Regulations
- Q4 was also notable for the 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. The US broadband plan is scheduled to be unveiled later this month and can set the tone of innovation and regulation in the coming years.
- The appstores battle is intensifying with OEMs and carriers are announcing their plans and some of them are opening their wares to woo the developer community. The number of non-operator appstores jumped 375% in 2009. In the midst of the appstores hoopla, Apple announced the passing of the 3 Billion download mark with increasing number of developers participating the ecosystem.
Data Traffic (Slide 16)
· For the first time in the history of the US wireless industry, the data traffic exceeded voice traffic for the whole calendar year. With almost 400 terabytes of data traffic, it exceeded voice traffic by a significant margin. We expect that the ratio between the two traffic sources is going to double in 2010.
- India continues to be the hottest market on the planet in terms of net-adds with (again) a world record-setting month in Jan 2010 with 19.9 million net adds. To give you a perspective, this is almost 1.5 times the number of subscribers US added in the whole year. It is like adding a Canadian wireless market every month. For the year 2009, India added 177 million subs vs. 106 million for China. Making money on the net-adds is a different proposition all together (more discussion on the international market in our global market update later this month)
- Willcom, the small Japanese carrier that started the flat-rate unlimited phenomenon filed for bankruptcy last month.
- Softbank of Japan looks set to be the first major operator (outside of Philippines) with more revenues coming from data services than voice.
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 May 2010. The next Global Wireless Data Market update will be issued in March 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.
Disclaimer: Some of the companies mentioned in this note are our clients.