WIMAX, LTE, Fixed, Mobile

I had an interesting insight today. In the constant debate between Wimax and LTE, realised one differentiating factor today - when it comes to developed market installations, its quite possible that WiMAX will be supported by fixed line operators and LTE will be the natural progression path for mobile operators. Fixed operators can use it for the last mile connectivity, last mile backhaul etc. For mobile operators, it would be the technology of choice only in greenfield implementations which are relatively fewer. For example, remote India wherever long distance coverage is needed - there is no fixed network, no mobile network - go WiMAX. (The fixed flavour of Wimax is 802.16d while the mobile version is 802.16e.)
I know there's Sprint Clearwire and their rollouts in Portland. But if you look at the UK market, the hype around the spectrum auction for WiMAX later this year is set to be utilised to the utmost by BT. No mobile presence (T-Mobile and 3 anyone?), lack of WiFi presence as well after the split with The Cloud, hot now cold now position as an MVNO - all factors that speak in favour of a WiMAX launch. But will the financials and market conditions allow it? The markets haven't been too kind to BT of late - their pension liabilities as well as poor performance in Global Services. But that may be made up with positive news from Ofcom on more flexibility for the openreach licensing to competitors.
But coming back to WiMAX and LTE - look at France. They had their auction launch almost two years ago with players like SFR, Neuf (then), TDF, Illiad/Free making the investments in spectrum. However, it seems only 15% of the anticipated installations are live. The failure - the focus on WiMAX replacing fixed connenctivity in remote areas rather than better and faster mobile connections. No - business models focused only on rural areas cant possibly be the answer.
And from an earlier post: http://attemptinglifewithoutdeadlines.blogspot.com/2007/06/new-technologies.html

M&A Implications of the move from content to applications to widgets

Historically, operators have tried to control not only data revenues but also content monetization by enabling easy reach and navigation to content via the mobile idle screen or via their self branded on-device portals. In the former, links to mobile applications and content are provided on the idle screen of the mobile handset providing one-click access to the user. However this space is increasingly giving way to downloads from the handset vendor’s app store (more on this later). In the latter i.e ODPs, a client application resides on the user handset providing access to content whether the user is online or offline. Content is synchronised at regular intervals with the operator’s portal website in line with user preferences.

However, as the availability of open web content tailored for the mobile handset increased, the importance of mobile browsers grew as well. Users have moved away from the boundaries of the operator portal on to the web which is no longer in the domain of the operator. A multitude of browsers are pre-installed on mobile handsets with their own search engines and functionalities.

Operators are gradually coming to the realisation that while they cannot stem the tide of users away from their portals, improving the user experience on the portal will certainly increase its monetisation capability. It can also serve to generate data on user behaviour and consumption patterns leading to a higher bang for the buck in advertising revenues.

One of the added functionalities for operators was to install IM clients within the ODPs to control advertising and the various sources of information that a user would frequently visit. This led to partnerships between ODP and IM vendors rather than cross acquisitions as may have been anticipated (other than Action Engine).

Another feature was to embed a search function within the ODP itself. Via the search engine (e.g. Google search box, Taptu), operators could control the rendering and branding of websites browsed through their network. However, in some cases, operators as well as web-to-mobile content adapters (e.g. Novarra, Infogin) faced a strong backlash from users due to the intrusive and non-relevant branding inserted while navigating the web on the mobile.

Gradually the move is towards embedding widgets within the ODP giving the user the freedom of personalisation. The user can now decide the content, applications and updates they would like to provision within the ODP on their handset. A small icon or widget on the on device portal will launch various websites, feeds etc. However, while ODP vendors like Surfkitchen have launched their own mobile internet platform aimed at providing operators with an application storefront, application launcher and a service creation environment, they do not have the range and ease of widget downloads as provided by an Ikivo or Qualcomm’s Plaza, for example. But will operators be willing to maintain two portals or storefronts to provision internet widgets and mobile content? Or will the integration be initiated by the portal developer? The same holds true for the ad serving platform. Operators like Orange are currently maintaining their own ad server to monetise the content on their portal. Can this be integrated within the services of the on device portal vendor?

Another factor which will structure the direction of integration is security. In the case of the application store, the security of the applications is monitored by the app store vendor. In the case of the operator, the responsibility is distributed. The ODP vendor can only integrate the ability to provision widgets in their platform. However, the widgets will need to be monitored by the operators or the third party provider they outsource the services to e.g. Plaza.

Fig. 1: The Mobile Operator’ Eco-System

These trends also apply to the mobile browser industry. Mobile browsers were traditionally focused on rendering websites for the handset. This area is still seeing a lot of innovation with start-ups like Skyfire not only improving the browsing experience but also allowing web page and page area bookmarking to ease frequent usage. Some search engines such as Taptu are tailored for the usage patterns on the mobile handset. Browser vendors are also increasingly provisioning widgets to be run via the browser which may become the first window of access for the mobile user. The early forerunners are Opera and Access. The aim is to provide users with access to frequently viewed and personalised content with a click. Will this entail integration with a widget serving platform or will the browser loose out between:

- the operator-focused ODP with search engine leading to the web or

- the handset/OS vendor focused application store which is invariably integrated with the in-house browser.

In this entire play, the only performer not mentioned yet is the handset vendor wanting to capture the ubiquitous nature of the mobile in the hands of the user – irrespective of place and presence. The first player to initiate the move into services and applications was Nokia – whether security, mobile wallet, music on the move, location based services, news and a range of other services. This was followed by Apple with their iStore and suddenly there was a storm in the development of third party applications for the mobile handset. Each application is represented by an icon aka widget on the handset idle screen which will launch a run-time instance of the application.

One of the first markets that the handset vendor app store will cannibalise is the idle screen content provisioning by operators.

However, initially, this may be a trend only in the smartphone category. Java phones in developing markets continue to be a target market for idle screen content and applications. To widen the value proposition, idle screen vendors are also upping the ante by providing an ad server platform integrated with their server to capture audiences across the geographies they cover.

In conclusion, there are two main channels of content delivery to the end user – the operator and the handset vendor. The various other players in the eco-system are only easing the delivery of content from the content publisher to the end-user – of content relevant to the user at the right time and the right place. For handset vendors, the selected path is the app store. For mobile operators, it has traditionally been the ODP. But for the ODP to continue to be the answer to the handset vendors app store, it will need to integrate with:

- Mobile application/ widget serving engine or platform providers

- Behaviour monitoring tool providers

- Ad serving platform companies

And these may be the integration trends to look out for.

Mobile Instant Messaging

Overview

Mobile instant messaging is real-time messaging and chatting between two or more people which has extended its presence from the desktop to the mobile environment. The instant messaging client is either embedded on the handset, prior to shipping, or can be downloaded from the service provider’s website. The instant messaging server is installed at the operator end and serves to enable communication and interaction between different instant messaging and presence service domains.

Traditionally, mobile messaging has been defined by text messages which are transmitted over the voice channel itself. The evolution of 3G networks, with high bandwidth availability, is leading it towards rich media messaging where users have much more control over the means through which they can communicate with others.

According to a new study by Forrester Research it is anticipated that the world wide mobile instant messaging (MIM) market will grow from 9m subscribers in 2007 to 66m subscribers in 2011. The European market is expected to grow from 8 percent (26.7 million subscribers) in 2007 to 24 percent (80 million subscribers) by 2013. The report goes on to state that Mobile IM will displace 13 percent of SMS traffic by 2013.

Simultaneously, the study has also attempted to allay the fears of operators stating that text messaging will continue to grow regardless of the increasingly popularity of mobile IM, despite the fact that some traffic will have moved to IM.

Capgemini’s telecommunications, media and entertainment strategy lab predicts that mobile IM revenue is set to reach between €775 million ($1.05 billion) and €800 million ($1.09 billion) by 2012.

The increasing acceptance of mobile instant messaging is being driven by younger users who are familiar with the desktop based IM and want the same level of services even while on the move. This is supported by the availability of higher bandwidths on third generation mobile networks, which is reducing the latency of real time communication driving better performance. The service is further being supported by the increasing number of IM enabled handsets which are now available on the market providing greater freedom of choice.

However, some of the obstacles for mobile IM are the lack of whole-hearted support from mobile operators fearful of loosing out on their cash cow – SMS; multiple protocols used by major IM providers; and the high pricing of operator data plans. Currently there are two business models being evaluated by operators for IM – the first is charging for instant messages along the same lines as a text message; the second is charging for the communication as part of a data transfer plan. Operators are realising increased ARPUs from the higher data transfers associated with IM thus increasing their support for the service. Interoperability has also been a major issue because IM vendors have pushed proprietary protocols that lock users into their IM service rather than support open standards.

The high pricing of operator data plans can be subsidised by mobile advertising and content-in-client models. Given the breadth of the mobile advertising channel, there could be a mix of pricing strategies ranging from cost per thousand for screen based ads, cost per click where fulfillment is via the mobile and cost per action where the mobile channel is used as a response mechanism.

The mobile instant messaging space is increasingly being defined by new players such as third party application developers and ad-networks, which will serve to increase the richness of the user experience on the IM client. A recent partnership between Neustar and Mobinex, demonstrates on-device portal functionality with an IM application. It allows users to access data services such as ringtones, videos etc while in an IM conversation, thus improving the user experience, while allowing for higher revenue generating opportunities for operators. Similarly IM providers and ad networks can also provide personalised and contextual advertising within the IM client in a wide range of options such as banners, product placements or branded information services.

Fig 1: Mobile Instant Messaging Environment

Trends

While operators played an important role in launching IM, increasingly the IM providers are playing a more important role. The user need only log on to the mobile version of the IM service providers website, identify the handset and the operator and download the client to the handset. A stronger penetration by software vendors and IM providers into the space has been seen in the recent acquisition of Danger Inc by Microsoft. Similarly, Google’s acquisition of social networking service provider, Zingku and presence sharing and activity stream provider Jaiku While the operators stand to gain from the data transfer, there is a loss of branding opportunity. Therefore, there is an opportunity for operators to provision integrated messaging platforms with an increased value proposition. One of the means would be to aggregrate the various IM providers enabling a single contact list for the user.