Mobile operators are now facing a plethora of challenges to maintain the high levels of profitability they are accustomed to. Issues including increased regulation, heightened competition from the traditional mobile value chain and new competitors from the Internet world are starting to seriously challenge operators.
Furthermore, internal challenges including the rapid growth of traffic – without the respective revenue growth – and saturated urban markets are making operators look for new areas of growth, particularly organic growth.
A new Medium-Earth Orbit (MEO) constellation now being launched by O3b is expected be a more suitable technology for rural backhaul since it is more cost-effective and it is well positioned for data services.
Informa Telecoms & Media performed economic modeling for a rural network with a variety of backhaul technologies and concluded that MEO-driven backhaul is the most effective technology, assuming that data services are significant in rural areas and require in excess of 2Mbps in backhaul capacity. Above this threshold, the superior opex performance of MEO backhaul performs better than the rest of the technologies assessed.
Bang! Bang! Twelve policemen carrying a huge battering ram barge down the doors. The lead investigator strides in wearing a long beige overcoat –like the one Columbo wears, waving his police badge, declaring: “This is a raid.”
Some of the workers try to flee, but it’s futile – armed officers have the entire premises surrounded. The detective confronts the baddie, and utters a cheesy action movie phrase – something along the lines of: “Today, is your data with destiny.”
Ok, that’s probably not quite how it happened. But the European Commission announced that it “initiated unannounced inspections” at the premises of a number of telecommunications companies. Such is the wording of the communication and as a result we’re left guessing what exactly happened.
Deutsche Telekom and Orange have confirmed that they were targeted with these “unannounced inspections” and the EC has given the reason that they “may have violated EU antitrust rules that prohibit the abuse of a dominant market position”.
News agency Reuters reported that a source at Telefonica has claimed the Spanish group was also targeted, but no others appear to have been implicated.
The EC’s suspicions appear to be concerning the throttling of data services for customers. Deutsche Telekom said that the inspections were “further investigations into internet traffic”, and according to the Daily Telegraph, it is due to operators crippling customer access to services such as Skype and YouTube.
The EC said that its officials were accompanied by their counterparts from the relevant national competition authorities. So in reality, it was most likely just a case of the investigator, accompanied by his colleagues, walking into an operator’s office reception, asking to see whoever is in charge, flicking through an issue of MCI while he waits, and then asking to see some paperwork. If it’s a Hollywood script, it needs some work.
Deutsche Telekom said it “is very surprised by the initiation of further investigations into internet traffic.”
“Allegations made to date have turned out to be groundless, which is why corresponding investigations carried out by national regulatory authorities which deal with the issue in great detail have been abandoned,” it said in a statement. “Deutsche Telekom faces intense competition on the global internet traffic market. The market is dominated by big US providers, and as such we are not the right target of these investigations.” The only time no one wants to be the big guy is when the competition authorities get involved.
Orange said that a number of its premises are “currently subject to inspection by the European Commission and these inspections could take several days to complete.
“We are confident about the eventual outcome of this matter, given the French Competition Authority decision regarding Cogent which exonerated our Group. The company’s business activities are continuing as normal during the inspections.”
Both operators added that they would fully co-operate with the EC while the investigations are ongoing. The EC stated that there is no legal deadline to complete inquiries into anti-competitive conduct.
Continuing the theme of shady dealings in the industry, Apple has been found guilty of fixing the prices of the e-books it sells in the US. The US District Court for the Southern District of New York determined that the iPhone maker colluded with book publishers and conspires to raise e-book prices, violating Section 1 of the Sherman Act; federal statute to limit cartels and monopolies.
The US Department of Justice claimed that the move was made in a bid to usurp online retailer Amazon’s dominance of the e-books market and limit e-book retailers’ freedom to compete on price.
“This result is a victory for millions of consumers who choose to read books electronically,” said assistant attorney general Bill Baer. “After carefully weighing the evidence, the court agreed with the Justice Department and 33 state attorneys general that executives at the highest levels of Apple orchestrated a conspiracy with five major publishers – Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster – to raise e-book prices.”
Apple can, and the Informer suspects it most likely will, contest the decision.
Perhaps these alleged shady dealings in the telecoms space stem from an absence of creative thinking. It could be that when you’re fresh out of new ideas, the pursuit of revenue and profit growth causes firms to turn to illicit or illegal measures to keep shareholders happy and their pockets lined.
Whether the allegations against Deutsche Telekom, Orange and Telefonica are true or not, mobile operators need to review their approach to innovation, according to Ovum. The research firm said mobile operators are “missing the big picture”, “exaggerating the threat from over-the-top (OTT) players”, and “misunderstanding the broader benefits of innovation”.
According to Emeka Obiodu, principal analyst in Ovum’s Industry, Communications, & Broadband practice, the pursuit to create the next big consumer facing product or service has been a futile one and operators had not accepted that their core role is in facilitating connectivity.
“We wouldn’t expect telcos to be the ones to be coming out with the next iPhone,” he said. “Telcos have finally come to that realisation and I believe we are coming to the ideal state for telco innovation, which is grounded in reality, and an acceptance of the telco’s role. It is grounded in the acknowledgement of the limitations of a telco’s capabilities and of what it can do within the ecosystem.”
Obiodu added that one way to encourage innovation is through partnerships with academic institutions, research bodies, start-ups, industry standards bodies, small vendors, OTT players and universities. However, he stressed that operators must take a more humble approach to partnerships than they have done so historically.
A separate report published this week by recruitment consultancy European Leaders suggested that the fact that the boards of the world’s ten largest operators are dominated by executives with legal, financial and engineering backgrounds has resulted in a conservative culture that “struggles to drive and nurture innovation”.
On the contrary, boards of OTT giants, which have large proportions of strategy, marketing and operations professionals, contribute to a more innovative culture, the firm argued.
“Operators have built strong businesses with healthy margins. But as competition for customers heats up, the make-up of most operator boards stifles their ability to compete with innovative, nimble and more aggressive OTT players,” said Philip Randerson, managing director at European Leaders.
“The ‘type’ of individual that dominates operator boards tend to create a more conservative, defensive and insular culture. Executives are more focused on maintaining the status quo than driving forward and taking calculated risks.”
The Informer wonders if operators need not concern themselves with innovative new products, services, or the next iPhone. Perhaps the focus for operators’ innovation ought to be in better fitting pricing models for customers, more efficient customer service and driving down cost per gigabit, by deploying LTE and LTE-A services. And just maybe, it is the people with legal, financial and engineering expertise that are best place to oversee this type of innovation.
It’s all open to interpretation, but the Informer concedes that OTT players are clearly doing something right – getting people to use their services. The number of global OTT mobile VoIP subscribers increased more than 550 per cent during 2012 to reach over 640 million, and is expected to approach the one billion mark in 2013, according to Infonetics Research.
However, most OTT mobile VoIP providers are making very little money per user, according to Diane Myers, Infonetics Research’s principal analyst for VoIP, UC and IMS.
“In 2012, the average revenue per user was a meagre $ 7.13 annually. Since this alone is an unsustainable business model, most providers are turning to advertising, third-party apps and wholesale arrangements with traditional operators,” she said.
The research firm also reported that Microsoft, through Skype, had roughly 40 per cent of all active users of OTT mobile VoIP services in 2012 and it projects that the number of VoLTE subscribers to grow at a 145 per cent compound annual growth rate from 2012 to 2017 Combined, over-the-top mobile VoIP and VoLTE services are expected to become a $ 16bn business by 2017, it added.
While Apple is busy trying to usurp Amazon’s dominance in the e-book space, the movement to usurp Apple, and Google’s dominance in the mobile OS space is gaining momentum. And it’s open source software developers who have their eyes on the two firms’ crowns.
Mozilla has announced that its official Firefox devices are now on sale in stores in Spain. Telefonica is selling the low-cost handsets in Madrid.
The ZTE Open is available through the operator’s Movistar stores for €69, including €30 of balance for prepaid customers and a 4GB microSD card. Poland, Colombia and Venezuela will see similar handset launches soon, according to Mozilla, and they will be arriving in further countries later.
Developers can upload and share their apps in the Firefox Marketplace, and the Firefox OS allows them to accept payments for apps and in-app purchases. Mozilla has also launched the Firefox OS Simulator, a tool to help developers test their apps quickly.
And the mobile OS made by Linux house Ubuntu received a significant boost this week as China Unicom signed up to the Ubuntu Carrier Advisory Group and potentially add its 300 million subscribers to the user pool.
Ubuntu parent and open source software developer Canonical established the Carrier Advisory Group for its Ubuntu smartphone OS last month. The group is led by David Wood, a former Psion engineer and one of the founder members of the original Symbian collaboration. A number of large operators, including LG UPlus, SK Telecom and Korea Telecom from Asia Pacific and Deutsche Telekom, EE, Telecom Italia and Portugal Telecom from Europe have already signed up.
Over in Australia, Telstra has announced plans to outsource 170 jobs from its cloud services division to India. The jobs will be primarily moved from the firm’s profitable and growing Network Applications and Services division, and will affect IT and resource management staff.
And in Croatia, the Croat subsidiary of operator group Telekom Austria, Vipnet, has acquired three regional cable network providers. The operator has finalised the purchase of OKI, Kabelska televizija Šibenik (KTS) and the residential customer segment of Metronet, which was spun off from the rest of the company.
Meanwhile, the US Federal Communications Commission (FCC) has approved Japanese operator SoftBank’s proposed takeover of US operator Sprint. The Commission decided that the transaction will serve public interest. The FCC noted that SoftBank’s decision to invest in the US market is very different to when domestic operators seek to acquire stakes in each other. SoftBank has no overlapping service areas or spectrum holdings in the US and therefore the transaction will not result in the elimination of an existing competitor, it said.
And finally, Huawei called on superheroes to help it launch its latest phone. It must be a tough sell if you need superpowers to shift the device. The P2 handset, which the Chinese vendor claims is the world’s slimmest phone (at the rate ‘world’s slimmest phones are coming out’ it’s a wonder we can still see them side on), was launched by real-life superheroes from Seattle at the Huawei Superpowers Symposium.
Having watched footage of these superheroes in action, the Informer is suitably impressed. They may be the heroes the industry deserves but are they the ones it needs right now?
In the era of Big Data businesses across the world are gathering huge quantities of information on their customers’ activity and their own operations every day. Mobile operators are no exception and are experimenting with new ways to collect and analyse as much data as possible to enhance their customers’ experience and gain a competitive edge.
However, operators face new layers of complexity as networks move from 3G to LTE. Historically the protocols used in telecom networks generated a lot of management information and networks could be polled regularly to get a full picture of what was going on. In 3G environments, as traffic passed through the network, the network engineer was always in full control.
However, Ethernet and IP have changed all that. IP networks are dynamic by nature and network and traffic flows can change in a matter of nanoseconds. But these transfer protocols do not yield a lot of management information so, in order to build a complete picture of what is going on in a network, the whole network needs to be monitored in real-time, says Dan Joe Barry, VP marketing at intelligent network adapter provider Napatech. “The problem with Ethernet and IP is that, once you’ve got it up and running it’s very hard to manage,” he explains. “The network is figuring things out for itself; it is dynamically changing all of the time, based on the situation. Algorithms are always working to optimise to adapt to what is happening in the network. That’s where solutions had to be created to provide insight into what is happening in the network.”
Barry explains that probes built with Napatech network adapters tap into the network at different locations to give operators a clearer view of whatever part of the network they want to look at. By using these probes, operators are able to view all the packets going back and forth. Such solutions are important in monitoring various scenarios throughout the telecoms network. Performance monitors at network and application level are the most common use cases for monitoring solutions, in order to view how the network is performing in general, or in different geographic areas. Probes are also useful in monitoring the network for certain vertical use cases, he says. For example, latency measurement solutions, which are often used in financial networks, try to determine how long it would take for data packets to get from one part of the network to another. This is vital knowledge for operators that have networks that are used for trading. Another key area is in security, where the operator has to protect against attacks and manage firewalls, intrusion prevention systems, event management systems and many other appliances and solutions.
“We see a lot of new and innovative products coming along every day that are designed to provide insight into what’s happening in the network for a specific purpose,” explains Barry. “The one challenge that all of those products create for operators is how to get all of the data from the network and have that available to me so that I can analyse it for the purpose I need to analyse it. That was the problem that Napatech was founded to solve. It turns out that that’s a very difficult challenge to solve.”
The reason it is so difficult, according to Barry, is that “in a normal communication situation”, an operator is only interested in the packet that goes between the user and the person they are communicating with. All the other packets on the network can be filtered out. However, when an operator wants to analyse a session, they are interested in every data packet in the network, and this can be difficult to manage.
“The basic proposition we have is that we guarantee delivery for all the data for analysis; zero packet loss. Not only at the adapter level but also through the system, through the server, and right up to the application that needs the data, we guarantee they get all that data. That’s the proposition and that’s what we’ve built a name on.”
And while one part of Napatech’s challenge is in designing the product, Barry explains that another is in enabling customers to use standard servers with reliability and ease of use.
“It is simply a case of plugging in the adapter, installing the software and off you go,” says Barry. “It’s reliable and we’re trying to make it as easy as possible for those guys to do what they need to do by using standard servers, and still not compromise on performance.”
He claims that one of Napatech’s key attributes is that the firm does not work directly with mobile operators, but exclusively with appliance vendors. The proposition for such vendors is that they are not lumbered with the task of building proprietary hardware and programming chips themselves.
“We say you focus on the software; get a server from HP, Dell or whoever you like, and you put our card in the slot and the hardware part is done. If you don’t even want to touch the hardware, we have system integrator partners and they can put the solution together.”
This means that appliance vendors can focus exclusively on the software development because the real value in those solutions is in the software, Barry argues.
“We focus on our job, which is data handling. So that leaves these guys who are security experts, who know about hackers, tricks, malware and algorithms, to handle that. That’s a very specific knowledge base to have, especially at that level. It’s not fair to expect them to know about the security details at that level and to also understand Ethernet technology and servers. Focus on what you’re good at. You do what you’re good at and we’ll do what we’re good at, and that’s the secret of success. Our customers who have gone down that path haven’t looked back.”
Barry also argues that the possibilities for the operator are endless once they have this information to hand. Firstly, by collecting and analysing data, operators can understand what is happening in their network. They can then make decisions based on that data.
Certain operators will use the data to focus on network optimisation and optimise the services they are offering. Others will be interested in using that information to create new types of offerings, and services, based on the behaviour in the network. “When you have a stream of real time data, you can store that and use it as historical data,” says Barry, “It can be a very reliable source of information about what has happened at any time in your network. We collect data on every single frame, every packet and you can recreate precisely what happened in the network at any point in time.”
He adds that this is useful for trouble shooting, but it is also useful for analysis. Operators can see how the network changes at different times of the day and how users behave throughout the day and on weekends and holidays. It can also monitor what kind of applications they are using. With that kind of information, operators can optimise their billing strategies, innovate with new pricing model and put together promotional offers.
According to Barry, real-time data enables real-time reaction. So, instead of engineers waiting hours or minutes to resolve issues, they can be addressed as they happen. And that’s only one side of the equation‑realtime data acquisition means that the data is complete and reliable for whatever post-event or real-time analysis an operator wants to perform. This, combined with real-time reaction, enables a number of exciting opportunities, such as the ability to predict problems before they occur and react immediately when a change or an anomaly occurs. It also allows an operator to plan more effectively based on reliable historical data. In short, it opens the possibilities of what can be done with networks and OSS/BSS systems.
“The key thing is having the insight. Once you have that, there are lots of possibilities. I think in general, carriers, like any other end user—are interested in finding out how they can use analysis and big data to run their business better. How can I use data to run my business better? This is one trend of all businesses at the moment—the feeling that if you can do this well, you will stay ahead of your competition. It enables you to base decisions on hard data, rather than intuition or feeling.”
The UK’s first LTE operator, EE, has announced the availability of shared pricing plans for its LTE customers. The plans, which will become available July 17th, were announced as EE switched on what it is calling “double speed LTE”; enhanced network performance enabled by an additional 10MHz of refarmed 1800MHz spectrum that gives the firm 20MHz of contiguous 1800MHz spectrum exclusively for LTE.
The UK network is now faster than the LTE networks of the US and Japan, said Olaf Swantee, EE CEO, and on a par with the best networks in South Korea. The enhanced service will be available in 12 UK cities initially. While speeds of 150Mbps have been achieved in EE’s labs, the average speed for users will be between 24 – 30 Mbps, Swantee said.
In a nod to operators in the US market, which has more than half of the world’s LTE subscribers, EE is introducing shared pricing plans enabling users to spread data consumption across devices or a group of people such as family members. Up to five devices can be connected to a single tariff with a supplementary cost starting at £12/month for SIM only and £22/month for an additional smartphone.
In a bid to stimulate greater uptake of cellular services for tablets, these devices can be connected at £5/month SIM only and £26/month for a new tablet. The firm claimed typical savings for a family of four could run to more than £900 over a two-year period.
“It’s now common for people to be using a PC, a smartphone, a tablet and perhaps other devices too. But apart from smartphones, the rate of attachment of these devices to the mobile network remains low in the UK,” said John Delaney, Associate VP for mobility at analyst firm IDC. “This suggests that people are being put off by the need to buy a separate mobile subscription for each device they want to connect to the mobile network.”
Delaney added that EE is right to be cautious in its expectations of uptake for its shared consumption plans, suggesting that the price of connecting each additional device might still be off-putting for consumers. “However, we believe that there is substantial latent demand for using a single mobile account to connect multiple devices (and people), and that packages that cater to this demand in an attractive way will see substantial adoption in the long run,” he said. “Unlike the LTE case, it will be easier for other UK operators to follow EE’s suit with shared data plans, and we expect some of them to do so soon.”
Streaming audio now accounts for 12 per cent of mobile data volume in North America, with internet radio particularly popular, according to a report issued by Citrix ByteMobile. Mobile audio accounts for just four per cent of traffic outside of North America but Citrix said that the recent announcement of Apple’s iTunes Radio is likely to help drive strong growth in what seems to be an emerging mobile data category worthy of note.
Other statistics from the report include the fact that mobile search has increased by an average of 25 per cent per subscriber since February 2012 while Facebook now accounts for five times as much data volume (five per cent of overall mobile data traffic) as it did in February 2012.
Given that a single YouTube video watched on a mobile device generates as much data as ten Facebook sessions, the number of Facebook sessions is clearly growing very quickly. Video accounts for over a third of mobile data traffic in the US and almost half in the rest of the world, with YouTube accounting for 82 per cent of all video entertainment traffic.
“Interestingly, operators typically make little or no revenue from this traffic beyond that associated with data usage,” said Chris Koopmans, vice president and general manager of Service Provider Platforms, Citrix. “The real-world data presented in this report validates the need for network operators to improve subscribers’ mobile experience in order to distinguish their service offerings and better monetise the increase in traffic volume.”