Making a Case for Mobile Operators

Mobility continues to shape and restructure our private and working lives in fascinating and incredible ways. Cellular networks and short-range technologies such as WiFi are its primary enablers. On the cellular front, mobile operators and wireless carriers have shouldered the immense cost of rolling out infrastructure and licensing spectrum. But are they participating in due measure as mobile opportunities expand?

The 2015 publication by The GSM Association (GSMA) called “The Mobile Economy” is a recommended read for anyone with a stake in this industry. The report takes stock of where mobile stood in 2014 and the direction it is taking as we move towards 2020. The real jaw dropper is the $3 trillion contribution from the industry itself towards the estimated $78 trillion worldwide GDP in 2014 (according to the World Bank). That’s almost a 4 % share towards our global GDP.

Operator revenue growth to slide

Looking ahead, the mobile industry is striding forth with confidence at an average annual growth rate of roughly 4 %. That’s good news. Unfortunately not for all. Mobile network operators’ (MNO) year-on-year revenue growth is predicted to fall from around 5 % as measured in 2012 to 2 % as predicted for 2020 by the GSM Association. In other words, MNO revenue growth is eroding. You might contend a slowdown in expansion is better than contraction per se. Answering these two questions might shift your perception however:

1. Who has invested the most to date in the mobile industry?
2. Who has empowered most of us with the anywhere-anytime paradigm over the past two decades?

How to rollout new network infrastructure despite dwindling revenue growth?

Acquiring costly spectrum from governments and rolling out country-wide cellular networks with the latest technology is an expensive business. In 2014 MNO’s spent over $200 billion worldwide (capex) to increase coverage and capacity for us all. Shouldn’t we give credit where credit is due?

The problem with 24-month contracts

Incredible but true: the data explosion on mobile networks fueled by smartphones ought to result in higher per-bit pricing until such time that capacity is in excess, going by the perennial law of supply and demand. One would expect operators to get an ARPU (average revenue per user) boost . Instead, price wars in fierce, competitive environments spur operators on to sell low-cost, tiered plans that offer megabyte/gigabyte buckets of monthly data based on 24 month contracts. It’s difficult to predict the behaviour of customers in terms of their data consumption habits over such a long contract period. One thing is certain though, empowered by ever new mobile devices and applications, their data usage is sure to increase over time. Consistent bandwidth on cellular networks is and will thus remain a sought-after commodity. As a result, MNOs’ are under more pressure than ever to upgrade their infrastructure and find novel approaches to avoid next-gen all-IP networks from being more than just “dumb pipes” that other providers use to rake in profits with higher-margin services.

Change is the only constant

Mobile network operators in developed markets are gearing up to the future and crafting new, sustainable business models by

• merging with other regional operators for network sharing and creating more negotiation clout when purchasing infrastructure through economies of scale
• moving from unlimited data plans to tiered versions and finally to value-based contracts
• making strategic acquisitions or entering partnerships to combine mobile services with fixed-line telephony, Internet access (cable/DSL), and TV in converging quad-play world
• treating data based on traffic type to ensure Quality of Service (QoS) and ultimately customer satisfaction
• working on deals with providers who wish to provide a consistent mobile user experience for their prized services
• slashing handset subsidies
• developing alliances, partnerships, joint ventures with market leaders in promising verticals such as M2M/IoT, Connected Car, Mobile Wallet, video streaming, location-based advertising and app development.

Proponents of the network neutrality who advocate the Internet’s continued success depends on a level playing field for all may not like any of this. Yet acquiring spectrum and rolling out wireless networks doesn’t come on the cheap and business models need to adapt to the changing markets.

Mapping out the future

Next to keeping their networks geared to next-generation technology, operators simultaneously need to identify the most lucrative business cases from the swath of opportunities unfolding. Conferences, forums and trade shows are ideal places to learn from peers in a complementary sector and rub shoulders with technology experts and thought leaders.

Conferences, forums, trade shows and seminars according to mobile/wireless topic over the past 2-years - Source: 2015 wi360 Event Guide

wi360 maintains a free wi360 Event Guide focused exclusively on the mobile and wireless industry which is continuously updated through the year.

MWC 2015 and the Connected Car

Ready for the self-driving car? With all the hoopla surrounding this hot topic during January's CES in Las Vegas, many observers have been foiled to believe we're almost there. 

With this in mind, I traversed the exhibition halls of last week's record-breaking Mobile World Congress (MWC 2015) in search of the automotive industry's latest answer to its autonomous future. On the Connected Car front, this is what I found at the show which was frequented by over 93000 visitors and featured almost 2000 exhibitors.

Into the Conceptual Future

The Tesla always stops attendees in their tracks and NXP Semiconductors stashed a range of boards and modules feautring their automotive ICs in its trunk. More than anything, NXP paints a conceptual picture of the car's future if you connect the dots of new and existing functions that their silicon addresses.

Automotive solutions from NXP include:

- a single-chip radar front-end transmitter for ADAS (Advanced Driver Assistance Systems) and collision avoidance

- car-to-car (C2C) and car-to-Infrastructure (C2I) communication based upon the IEEE 802.11p automotive WiFi standard

- a single-chip FM/AM/satellite radio with tuner plus further ICs that support digital radio such as DAB (+), T-DMB, HD radio and DRM

- in-vehicle networking using automotive-grade Ethernet PHY that complements existing technologies like CAN, FlexRay etc.

- a wireless "smart car key" using NFC hidden in an iPhone cover

Replacing mirrors with cameras and screens

Qualcomm and QNX showcase the future of automotive in a Maserati that uses cameras and displays where we usually find mirrors. The video feeds are delivered by two front cameras, one at the back, and one on the roof of the car. 

The development platform embedded in the car uses Qualcomm ICs built around its automotive grade Snapdragon 602A quadcore processor and the QNX operating system. The 602A integrates four Krait CPUs, one Adreno graphics engine, a Hexagon DSP, WiFi, Bluetooth, GPS, three USB ports and support for four camera connections by way of the MIPI standard. At the center of the driver's console is a large 12-inch infotainment display that reacts to touch, voice and gestures. Qualcomm's Gobi 3G/4G modem connects to the cellular network for communications and media streaming. It further serves the WiFi hotspot in the car for passenger entertainment. The center console also features a surface to wirelessly charge your cell phone based Qualcomm's WiPower solution based on the Rezense standard.

Connect to and control your e-vehicle

Porsche's Car Connect service is not a future concept but is something real and available today.

The Panamera e-hybrid vehicle is equipped with a telematics unit from Italian company Cobra, which Vodafone recently acquired. By way of a cellular "machine to machine" connection (M2M), the service features vehicle tracking, remote monitoring & assistance, as well as usage-based insurance. 

The smartphone app controls the electric charging of the Panamera and can also detect the car's location. Vodafone is the operator providing the cellular connection. The service's annual pricing ranges from € 145 to € 289. When buying a Panamera, the first year of service is free.

The best ager's dream come true

On Ford's booth visitors saw what is more akin to a connected bike than the Connected Car: an e-bike that folds and stows easily into the back of the car, with an accompanying smartphone app that finds bike-friendly roads, calculates the best route, and suggests convenient parking.

The MoDe:Me e-bike targets urban commuters who are wary of congested city traffic and thus decide to park on the city outskirts and use their 200-watt e-bike to travel to their final destination.

A carrier's automotive focus

From 2016 onwards, AT&T will provide all US Audi models featuring their Connect infotainment system with 4G LTE or 3G coverage allowing drivers to enjoy navigation, streaming and high-speed access to the Internet. 

An AT&T SIM card will be pre-installed in the telematics unit for customers who purchase a new Audi in the USA next year, enabling on-board Internet access for up to 8 devices.

AT&T works together with car manufacturers in its 5,000-square-foot innovation center in Atlanta called Drive Studio to create new technologies and services for the Connected Car ecosystem.

Something simple for the automotive after-market

Visitors perusing this year's MWC showgrounds will have noticed the VIP shuttles with a banner of Huawei's simple yet neat product called CarFi on them.

That's the Connected Car in its most basic form. CarFi plugs into a 12-volt cigarette lighter socket and allows any car to become a WiFi hotspot for up to 10 devices using a LTE connection that supports up to 150 Mbit/s. The device retails for roughly € 160.

Bold visionaries see the autonomous car traveling on public roads by 2017. That's hard to imagine right now. For the moment most of us will be able to get Internet into their car in one way or another.

MWC 2014 - Mobile World Congress Wrap-Up

It feels like the early morning rush of commuters at a train station on a key junction, yet I'm on the upper walkway that connects the 8 pavilions at the new Fira Gran Via expo grounds in Barcelona that is host to the Mobile World Congress. Over 85000 attendees flocked to the annual gathering of the worldwide mobile crowd this year (2014) to see the products and services of more than 1800 exhibitors. Now, a few weeks later, as the dust of announcements, trends and gossip settle, here are some memorable observations from media, analysts and others who visited the show, including myself.

Great expo, but what about the conference?

Those of you who remember the original location of MWC in Cannes (titled 3GSM) or previous versions of the event at Barcelona's Montejuic fairgrounds will miss the distinct charm, the ease of getting there, and strolling around a confusing maze of booths without ever being connected to WiFi. What you now get instead is a long train ride, blisters on your feet from doing the rounds, BUT an admiringly well-organized exhibition. Hats off to GSMA and the venue people! Yet the adjunct conference pales substantially in terms of content. Passes start at €2,000.00 which is asking a lot for a conference agenda that fits on to a few pages and primarily boasts key note speakers of notoriety who are broadcast anyway on the many wall-like screens scattered across the fairgrounds.

Wearables herald a new era for devices

Wearables were this year's big new theme with smart watches and health bracelets everywhere. Will the consumer who is accustomed to never bother about regularly charging "jewellery" accept this new burden every other day?

What’s inside the Sony smart watch? TechInsights	http://bit.ly/1gEYCHI
What’s Inside the Pebble watch? ABI Research	http://bit.ly/1mkpMvz
What’s inside the Nike+ Fuelband SE? TechInsights	http://bit.ly/1d6PzEu

Wireless charging by way of placing a device on a mat or specific surface is breaking through the ice with two consortia proposing different approaches.The Wireless Power Consortium is promoting it's Qi technology based on inductive charging whilst Rezence (formerly A4WP - The Alliance for Wireless Power) believes its magnetic resonance approach is more promising.

The Nokia X was launched at the MWC - notable in that it is a Microsoft device that uses Android instead of Windows' mobile operating system. A difficult balancing act lies ahead for Microsoft, and as Jim McGregor from Tirias Research notes, a clear downside its that it does not offer Google Play store, making the app side on the Nokia X rather unappealing.

Smartphone pricing is spiraling downwards in an attempt to capture lower-income markets segments. Case in point: Mozilla (mobile version of its operating system Firefox) teamed with Spreadtrum (Chinese mobile phone chip maker) to show a WCDMA/EDGE smartphone reference design that is expected to retail at no more than $25.00 owing to the low memory requirements of the browser. We'll have to wait to see if this promise is fulfilled.

Smartphone manufacturers are attempting new, innovative ideas to escape the unimaginative slate-life form factor. LG's new G Flex banana-shaped smartphone sports a large curved display with superior viewing qualities. Retailing at around € 800.00 this is not a smartphone for everyone, but certainly an eye-catcher.

LG's G Flex - Source: http://www.lg.com

Russia's Yota breaks the mold by featuring a second always-on, full-sized e-ink display on the back of its YotaPhone that opens up a set of never-thought-of-before useful features.

The YotaPhone with an always-on full.sized e-ink 2nd display - Source: http://yotaphone.com

Phone sizes are definitely on the increase proving the point that the shift from a device used primarily for voice calls to a browser/emai/messaging/entertainment platform is gaining further foothold. Apple beware! For the uninitiated it is indeed a weird spectacle to see users hold almost tablet-sized devices to their ears for that all important call. 
 

My next smartphone will be a 64-bit one

Ever since Apple introduced its 64-bit A7 application processor in the iPhone 5S, many other vendors have followed suit. The MWC had its fair share of announcements with Intel, Marvell, MediaTek, Nvidia and Qualcomm all announcing 64-bit chips with smartphones using these due towards the end of the year. The questions remains if bringing the performance of servers to mobile devices through a wide-bus architecture may be overkill. But remember, during the nineties many pundits were convinced that 8-bit mobiles would suffice forever. So the story goes on. 

64-bit mobile processors to dominate by 2018 ABI Research	http://bit.ly/1ooHGfd
Who needs 64-Bit mobile processors? EETimes	http://ubm.io/1egJKCG
Cellphone & Tablet Chip Markets Forward Concepts	http://bit.ly/1nB4Amx

 

Cost cutting in the infrastructure world

Virtualization of functions in the network, particularly on the packet core and transport layer, is on the agenda of most infrastructure vendors as cost cutting goes into its next round. As Caroline Gabriel of Rethink Wireless notes "battle lines are being drawn, and the players are placing big bets on unproven technologies and new architectures." Particularly smaller players are providing new solutions that will drive down costs of the network and they will certainly be the target of acquisitions during the months ahead.

Small Cells that solve the challenge of overcoming the data capacity crunch in urban, enterprise and residential areas with high subscriber densities are now becoming real and entering the deployment stage. Yet overcoming the high cost of backhaul (in relation to the cost of the cell itself) remains an issue, as an Informa analyst notes. In a similar vein, Frank Rayall of Xona Partners reported "Backhaul is the problem!"  last year.

Backhaul is the problem

Machine-to-Machine (M2M) and Internet-of-Things (IoT)

Enabling all electronics and industrial devices with cellular or wireless capabilities is a promising way forward for operator's to expand their revenues outside of their traditional subscriber-based voice & data services. The challenge in the M2M (machine-to-machine) sector remains that every usage scenario is application specific with particular deployment considerations and constraints. This does not scale well and thus monetization remains a formidable challenge for operators. Moving to the home, Glenn Lurie of AT&T envisages that  "anything that has a current going through it" as a potential IoT (Internet-of-Things) device. Stan Boland whose start-up Neul offers complete IoT wireless solutions, including endpoint modules, base stations and management in the cloud, states that "the price of modules needs to drop below $2.00 and they need be protocol-agnostic" for IoT to become a viable option for consumer device and white good integration.

Enterprise Mobility is big

Mobile collaboration and BYOD (Bring Your Own Device) are driving security and cloud services in the enterprise space.  According to Andrew Brown of Strategy Analytics, the global mobile workforce will increase from 1.3 billion this year (2014) to 1.6 billion in 2017 with the Asia-Pacific region being particularly vibrant. No wonder that Enterprise Mobility is a key theme at MWC, taking up increasing exhibition space. I was surprised to see Airwatch (recently acquired by VMware) to have a booth that seemed to be one of the largest at the show despite a worldwide headcount of only 1600.

Enter "The Connected Car"

New to the MWC are exhibitors such as Ford, BMW, and Volvo, and the operator Telefonica showing a Tesla Model S on their booth. The trend "The Connected Car" is more than just about infotainment and navigation inside the car. Automotive manufacturers are testing new waters by embedding modems in the vehicle enabling better management from outside the car, allowing it to become one further item to deliver useful information to its owner's smartphone. It's also all about tightening the bond between vehicle manufacturer and owner through remote diagnostics to the point that tomorrow's car might be viewed as a further asset of an automotive manufacturer's fleet.

OTT - just another acronym but with enormous operator implications

The $19 billion Facebook acquisition of the WhatsApp somewhat eclipsed many other exciting announcements at this year's MWC. That's a formidable valuation for a 5-year old company with just over 55 employees and a product that some view as better SMS messaging for a $1 subscription fee per year. Yet it certainly drives home the point that Over-The-Top (OTT) services such as WhatsApp require priority attention from operators who will certainly see their share of the lucrative $1 billion per year worldwide SMS business shrink as time progresses. 

See you next year

All in all it was time well worth spent in Barcelona despite dizzying overnight costs. Mobile World Congress does really draw the worldwide mobile crowd in every respect.