Mobile Broadband – New Applications
     and New Business Models


           Brough Turner
IMT-2000 Vision (for 3G) included
    LAN, WAN and Satellite Services

                           Global
       Satellite
...
The Internet is the killer platform

                        • Mobile Internet access
                          driving 3G...
Leading Apps don’t depend on 3G

    • Voice ― still the largest revenue source
      – Bar none!
    • SMS ― 2nd largest ...
Mobile Content

    • More music sold on-line than off-line in both China
      and Korea
    • Ringback tones
       – Cr...
Mobile Content

    • More music sold on-line than off-line in both China
      and Korea
    • Ringback tones
       – Cr...
Japanese Music Revenues




                              Source: Infinity
                              Venture Partners
...
Mobile TV




        70% of new handsets in Japan
           are Mobile TV enabled
          Only Japan and Korea have
  ...
Mobile TV




         70% of new handsets in Japan
            are Mobile TV enabled
           Only Japan and Korea have...
Mobile Social Networking



     Mobile launch:
           2000        2004           2006                   2007




    ...
Mobile Social Networking



     Mobile launch:
            2000       2004           2006                   2007
     Mob...
Mobile Social Networking



     Mobile launch:
            2000        2004            2006                   2007
     M...
2.5G        Mobile Social Networking



     Mobile launch:
            2000        2004            2006                  ...
“3G” Services

     • 3G-324M Video telephony
     • Location-based services
     • Push-to-Talk (VoIP w/o QoS)
     • Ric...
“3G” Services

     • 3G-324M Video telephony Limited adoption
     • Location-based services
     • Push-to-Talk (VoIP w/...
“3G” Services

     • 3G-324M Video telephony Limited adoption
     • Location-based services        Bypassed !
     • Pus...
Mobile operators miss the boat

     • Location-based services (LBS)
     • Required in US for 911 services
     • Fully i...
Mobile operators slow the boat

     • Billing Services
       – Mobile operators have efficient billing systems &
       ...
Mobile Broadband Access




      US prospects for “over the top”
       access to the open Internet



19
iPhone traffic per month




20
iPhone         glimmer of what’s possible

     • Controlled eco-system
       – Applications approved by Apple
       – M...
Mobile Internet Access

                • Available for PC’s with
                  restrictions, e.g.
                  n...
Breaking Oligopolies

     • Four or more viable competitors is what it
       takes; more than four and it can be rapid
 ...
Breaking Oligopolies

     • Four or more viable competitors is what it
       takes; more than four and it can be rapid
 ...
Additional US 3G/4G Competition




25
Additional US 3G/4G Competition

     •                  USA (well financed)
         – Paid $4.2B for AWS spectrum in 200...
Additional US 3G/4G Competition

     •                  USA (well financed)
         – Paid $4.2B for AWS spectrum in 200...
Additional US 3G/4G Competition

     •                  USA (well financed)
         – Paid $4.2B for AWS spectrum in 200...
Subscribers & Applications

     • Historically, only applications pre-installed on
       handsets had any traction
     ...
Subscribers & Applications

     • Historically, only applications pre-installed on
       handsets had any traction
     ...
Handset diversity




     Remaining obstacle to widespread deployment
               of 3rd party applications


31
IMS doesn’t solve inter-operability




32
Handsets more & more diverse

     • Browsers – Openwave, Opera, Safari, …
       – Using: WebKit, Netfront, Presto, …
   ...
Mobile Software Frameworks




                Source: Andrea Constantinou, ©2008 VisionMobile Research


34
Internet will win in the end, but…




                        Mobile Facebook by:
               http://www.flickr.com/ph...
Important trends

     • App stores!
       – Easier distribution; Easier discovery
     • More and more smart phones
    ...
Uniquely Mobile Internet

     • Phase 1 – cut down web, e.g. WAP
     • Phase 2 – full web accessible on mobile
     • Ph...
38
Challenges

     • Handset diversity
     • Pace of change
     • User interface – minimum clicks; max speed
     • Batter...
Dealing with handset diversity
     • Browser-based application first
     • Optimize for top N phones by market share
   ...
Smart Phones & Feature Phones

     • Smart Phone adoption soaring
       – Nokia, Blackberry, iPhone, RIM, WinMobile,
   ...
Expectations are clear
               Today

      Mobile
     Telephony      Phone


      Mobile
       Web         Brow...
Expectations are clear
                                            Tomorrow
               Today
                         ...
Biggest Take-Away


     The initiative has passed to
       application developers



44
Dumb Pipes or
     New Service Opportunities?




       How operators can profit while
       providing open mobile acces...
Advertising won’t cover lost voice $




                  Source: Telco 2.0 Manifesto, STL Partners Ltd.

46
Two-Sided Markets

     • eBay connects sellers and buyers
     • Nightclubs: women get in free
     • Media
       – News...
800 numbers

     • The original telco 2-sided play
     • Bell system provided retail phone service to
       essentially...
Billing Service

     • Most operators cautious about partnering
        – Fear of “dumb pipe”    slow roll out of new ser...
DoCoMo i-Mode:
           2-sided business model




     •   Subscribers pay for data access (flat rate monthly bundles)
...
DoCoMo’s i-mode

     • Open to any application developer
     • Optional billing for a 9% commission




51
DoCoMo’s i-mode

     • Open to any application developer
     • Optional billing for a 9% commission
     Results:
     •...
Operator Assets

     • Brand, PSTN numbers
     • Location (motion, context, …)
     • Fine-grained billing systems
     ...
Customers:                                                         Customers:
     Revenue Side 2                         ...
Rich mobile applications
           are coming

      Opportunities on all fronts




55
Rich mobile applications
             are coming

        Opportunities on all fronts
                   but,
     busines...
Thank you !

      Brough Turner
      Ashtonbrooke Corporation
      http://www.ashtonbrooke.com

      Blog: http://blog...
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Mobile Broadband

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New Applications and New Business Models

Whether it's LTE or WiMAX or local WISPs using combinations of Wi-Fi, WiMAX and other technologies, we are on the verge of having affordable mobile broadband in the US (it's already available in the UK and Scandinavia and becoming available elsewhere in the EU). What services can be provided over the top and what services need or can benefit from operator capabilities (QoS, security, ...)? The iPhone store, Android store and similar initiatives suggest power is shifting away from the operators and into the hands of application developers and the end user. How can operators leverage their core capabilities (QoS, security, billing, customer relationships, call detail, ...) to provide applications and remain relevant to their customers?

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Mobile Broadband

  1. 1. Mobile Broadband – New Applications and New Business Models Brough Turner
  2. 2. IMT-2000 Vision (for 3G) included LAN, WAN and Satellite Services Global Satellite Suburban Urban In-Building Picocell Microcell Macrocell Basic Terminal PDA Terminal Audio/Visual Terminal 2
  3. 3. The Internet is the killer platform • Mobile Internet access driving 3G data usage • Future business models an open question – Walled garden ? – Advertising ? – Other 2-sided business models ? 3
  4. 4. Leading Apps don’t depend on 3G • Voice ― still the largest revenue source – Bar none! • SMS ― 2nd largest mobile revenue source • Voice SMS, picture mail & video mail coming on strong Content ! Mobile TV Mobile social networking 4
  5. 5. Mobile Content • More music sold on-line than off-line in both China and Korea • Ringback tones – Created by SK Telecom in Korea in 2002; 30% adoption in just 9 months • Ringback tones today – Korea: ~55% adoption – China: ~50% adoption 5
  6. 6. Mobile Content • More music sold on-line than off-line in both China and Korea • Ringback tones – Created by SK Telecom in Korea in 2002; 30% adoption in just 9 months • Ringback tones today – Korea: ~55% adoption – China: ~50% adoption Any G, 1, 2, 3 or Fixed 6
  7. 7. Japanese Music Revenues Source: Infinity Venture Partners 7
  8. 8. Mobile TV 70% of new handsets in Japan are Mobile TV enabled Only Japan and Korea have multi-million Mobile TV subscriber bases 8
  9. 9. Mobile TV 70% of new handsets in Japan are Mobile TV enabled Only Japan and Korea have multi-million Mobile TV subscriber bases Broadcast services independent of 3G 9
  10. 10. Mobile Social Networking Mobile launch: 2000 2004 2006 2007 Source: Benjamin Joffe, Plus Eight Star Ltd. 10
  11. 11. Mobile Social Networking Mobile launch: 2000 2004 2006 2007 Mobile users: 50 M 6M 10 M 3M Source: Benjamin Joffe, Plus Eight Star Ltd. 11
  12. 12. Mobile Social Networking Mobile launch: 2000 2004 2006 2007 Mobile users: 50 M 6M 10 M 3M Profit (USD): $225M ~$100M ~$35M ($50M) Source: Benjamin Joffe, Plus Eight Star Ltd. 12
  13. 13. 2.5G Mobile Social Networking Mobile launch: 2000 2004 2006 2007 Mobile users: 50 M 6M 10 M 3M Profit (USD): $225M ~$100M ~$35M ($50M) Source: Benjamin Joffe, Plus Eight Star Ltd. 13
  14. 14. “3G” Services • 3G-324M Video telephony • Location-based services • Push-to-Talk (VoIP w/o QoS) • Rich presence (instant messaging) • Fixed-mobile convergence (FMC) • IP Multimedia Services (w/ QoS) – Video sharing (conversational video on IP) • Converged “All IP” networks – the Vision 14
  15. 15. “3G” Services • 3G-324M Video telephony Limited adoption • Location-based services • Push-to-Talk (VoIP w/o QoS) Limited adoption • Rich presence (instant messaging) • Fixed-mobile convergence (FMC) Limited adoption • IP Multimedia Services (w/ QoS) – Video sharing (conversational video on IP) Limited adoption • Converged “All IP” networks – the Vision 15
  16. 16. “3G” Services • 3G-324M Video telephony Limited adoption • Location-based services Bypassed ! • Push-to-Talk (VoIP w/o QoS) Limited adoption • Rich presence (instant messaging) No traction • Fixed-mobile convergence (FMC) Limited adoption • IP Multimedia Services (w/ QoS) – Video sharing (conversational video on IP) Limited adoption • Converged “All IP” networks – the Vision Still waiting … 16
  17. 17. Mobile operators miss the boat • Location-based services (LBS) • Required in US for 911 services • Fully implemented (after multiple delays) • Not made attractive for 3rd parties Result: • All US location-based services based on alternate location approaches – GPS, Cell ID, Navizon, Skyhook 17
  18. 18. Mobile operators slow the boat • Billing Services – Mobile operators have efficient billing systems & own the customer relationship – DoCoMo showed (I-Mode in 1999) the enormous potential of affordable billing services – Yet billing still offered only via premium rate #s • Result: – 3rd party content is paid for via 3rd party billing systems or (multiple) premium rate SMS(s) 18
  19. 19. Mobile Broadband Access US prospects for “over the top” access to the open Internet 19
  20. 20. iPhone traffic per month 20
  21. 21. iPhone glimmer of what’s possible • Controlled eco-system – Applications approved by Apple – Must meet unpublished standards under contract between Apple & AT&T – E.g., can’t run VoIP over 3G, only over Wi-Fi But, $30/ month flat rate data plan (on top of $40+ phone plan) • Explosive growth in web usage 21
  22. 22. Mobile Internet Access • Available for PC’s with restrictions, e.g. no servers, no P2P, no substitution for private lines or frame relay • AT&T: 5GB @ $60/mo • Verizon: ditto • Sprint: ditto • No US operator offers flat rate unlimited plans 22
  23. 23. Breaking Oligopolies • Four or more viable competitors is what it takes; more than four and it can be rapid – Many examples in mobile voice telephony from around the world 23
  24. 24. Breaking Oligopolies • Four or more viable competitors is what it takes; more than four and it can be rapid – Many examples in mobile voice telephony from around the world • 2009: Three established US 3G operators – AT&T Mobility, Verizon Wireless & Sprint PCS – Flat rate data plans exist; but with caps – No unlimited open Internet access 24
  25. 25. Additional US 3G/4G Competition 25
  26. 26. Additional US 3G/4G Competition • USA (well financed) – Paid $4.2B for AWS spectrum in 2006 and committed additional $2.7B for initial rollout – Currently spending almost $1B per quarter, 3G had reached 1/3rd of cell sites as of 3Q08 26
  27. 27. Additional US 3G/4G Competition • USA (well financed) – Paid $4.2B for AWS spectrum in 2006 and committed additional $2.7B for initial rollout – Currently spending almost $1B per quarter, 3G had reached 1/3rd of cell sites as of 3Q08 • (build out partially financed) – WiMAX on Clearwire and Sprint spectrum 27
  28. 28. Additional US 3G/4G Competition • USA (well financed) – Paid $4.2B for AWS spectrum in 2006 and committed additional $2.7B for initial rollout – Currently spending almost $1B per quarter, 3G had reached 1/3rd of cell sites as of 3Q08 • (build out partially financed) – WiMAX on Clearwire and Sprint spectrum Potential for affordable flat rate mobile broadband in the US in 2010 28
  29. 29. Subscribers & Applications • Historically, only applications pre-installed on handsets had any traction – “On-deck” applications and content offers • Apple iPhone application store is on-deck – Provides access to 50K+ applications • Andriod store, RIM, Nokia, Qualcomm, Palm, Handango, Adobe, Samsung, … 29
  30. 30. Subscribers & Applications • Historically, only applications pre-installed on handsets had any traction – “On-deck” applications and content offers • Apple iPhone application store is on-deck – Provides access to 50K+ applications • Andriod store, RIM, Nokia, Qualcomm, Palm, Handango, Adobe, Samsung, … Application stores are the new “deck” 30
  31. 31. Handset diversity Remaining obstacle to widespread deployment of 3rd party applications 31
  32. 32. IMS doesn’t solve inter-operability 32
  33. 33. Handsets more & more diverse • Browsers – Openwave, Opera, Safari, … – Using: WebKit, Netfront, Presto, … • Runtime environments as several levels – Adobe AIR, .Net/Silverlight, Brew, JavaME, … • Operating systems – Symbian, WinMobile, Android, OpenMoko… • Hardware capabilities – CPUs, supported codecs, screen size, … 33
  34. 34. Mobile Software Frameworks Source: Andrea Constantinou, ©2008 VisionMobile Research 34
  35. 35. Internet will win in the end, but… Mobile Facebook by: http://www.flickr.com/photos/philiphubs/ 35
  36. 36. Important trends • App stores! – Easier distribution; Easier discovery • More and more smart phones • Richer browser capabilities – Approaching PC browser functionality • New access to device capabilities – User data (contacts, logs, …), events (incoming calls) and core functionality 36
  37. 37. Uniquely Mobile Internet • Phase 1 – cut down web, e.g. WAP • Phase 2 – full web accessible on mobile • Phase 3 – designed-for-mobile web – Optimize the mobile user experience; speed ups • Phase 4 – client-side mashups – telephony, address book, location, camera… • Phase 5 – apparent persistence – Despite battery limitations; widgets; push; … 37
  38. 38. 38
  39. 39. Challenges • Handset diversity • Pace of change • User interface – minimum clicks; max speed • Battery life – “chatty” apps drain power • Application concurrency – Manage events over browser, native & helper apps • Persistent user experience across multiple applications 39
  40. 40. Dealing with handset diversity • Browser-based application first • Optimize for top N phones by market share – For most applications, N likely equals 1-3, not 10-12 SmartPhone market share Source: StatCounter 40
  41. 41. Smart Phones & Feature Phones • Smart Phone adoption soaring – Nokia, Blackberry, iPhone, RIM, WinMobile, Palm, Android, … – Moore’s law suggests it will only get better But • 85% of US phones are “feature phones” – Higher percentage in emerging markets • Application environments emerge – Java, Flash, Qt and ever richer web runtimes 41
  42. 42. Expectations are clear Today Mobile Telephony Phone Mobile Web Browser Camera Media Player 42
  43. 43. Expectations are clear Tomorrow Today Mobile Telephony Phone Mobile Telephony Phone Mobile Browser Web Browser Mobile Web 2.0 Camera Camera Media Player Media Player 43
  44. 44. Biggest Take-Away The initiative has passed to application developers 44
  45. 45. Dumb Pipes or New Service Opportunities? How operators can profit while providing open mobile access to the Internet 45
  46. 46. Advertising won’t cover lost voice $ Source: Telco 2.0 Manifesto, STL Partners Ltd. 46
  47. 47. Two-Sided Markets • eBay connects sellers and buyers • Nightclubs: women get in free • Media – Newspapers – low prices for subscribers facilitates sales of advertising – Broadcast TV – free attracts viewers facilitating sales of advertising • Akamai caching benefits – Free to ISPs; Paid for by content providers 47
  48. 48. 800 numbers • The original telco 2-sided play • Bell system provided retail phone service to essentially all US consumers • Offered “800 service” to businesses, helping them connect with their customers and prospects 48
  49. 49. Billing Service • Most operators cautious about partnering – Fear of “dumb pipe” slow roll out of new services • DoCoMo i-mode 2G data service launched 1999 – Small screens, slow (9.6 kbps) data rate • But i-mode business model was wide open – Free development software kits; No access restrictions – DoCoMo’s “bill-on-behalf” with 9% commissions • i-mode big success in first 24 months – 55,000 applications, 30M subscribers ! 49
  50. 50. DoCoMo i-Mode: 2-sided business model • Subscribers pay for data access (flat rate monthly bundles) • Application providers pay DoCoMo for billing services 50
  51. 51. DoCoMo’s i-mode • Open to any application developer • Optional billing for a 9% commission 51
  52. 52. DoCoMo’s i-mode • Open to any application developer • Optional billing for a 9% commission Results: • Over 100K new applications in first 3 years • Over 15K applications use billing service • DoCoMo has highest data revenue per user, in the world, consistently for 10+ years 52
  53. 53. Operator Assets • Brand, PSTN numbers • Location (motion, context, …) • Fine-grained billing systems • User data – Name, address, age, devices, … • Rich presence • Customer relationships 53
  54. 54. Customers: Customers: Revenue Side 2 Revenue Side 1 Developers Retailers B2B VAS Millions of Government Telco Customers $ $ Brand Platform Advertisers Thousands Distribution Content of Segments Owners Telco – Retail Source: Simon Torrance © 2008, STL Partners Ltd/Telco 2.0TM Initiative 54
  55. 55. Rich mobile applications are coming Opportunities on all fronts 55
  56. 56. Rich mobile applications are coming Opportunities on all fronts but, business models will change, significantly 56
  57. 57. Thank you ! Brough Turner Ashtonbrooke Corporation http://www.ashtonbrooke.com Blog: http://blogs.broughturner.com Email: broughturner@gmail.com Skype: brough 57
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