Disruptive Analysis Will The Carriers Retain Control Ohead

Open Wireless Access: Will the carriers retain control? eComm, Mountain View CA, USA Dean Bubley, 14 th March 2008 [email_address]

So what does Open mean in Mobile?

Open OS & smartphones

Networks + unlocked devices

Devices + multiple networks

“ Vanilla” devices - no feature lock-downs

Off-portal content, apps & VoIP

Interop across providers & devices

No packet/app filtering in the network

Innovation in unlicenced spectrum, UWB etc

Open access & tech-neutrality in spectrum auctions

Cognitive or software-defined radio

Copyright Disruptive Analysis Ltd 2008 Mar 2008

But……

International differences

Slow pace of regulatory change

Consumer apathy & inertia

Laws of physics

Scale economies

Conflicting financial imperatives

Public safety concerns

Practicalities (eg antenna sites)

Two worlds in mobile Copyright Disruptive Analysis Ltd 2008 Mar 2008 USA Canada Japan Korea >90% handsets sold via carriers <10% prepay <10% Nokia Globally: 50% phones sold by carriers 70% prepay, 40% Nokia Mixed Pretty much everywhere else 0-80% handsets sold via operators >50% prepay >40% Nokia Carrier-control

How openness works in much of the world Copyright Disruptive Analysis Ltd 2008 Mar 2008 $30 from electronics store SIM “starter pack” c$5, inc $3 credit. Bought anonymously. No contract needed. Credit top-up from $1. Bought from kid leaning through bus window + + Downsides: Poor support for data, number portability, few “services” beyond voice & SMS

Openness in the UK Copyright Disruptive Analysis Ltd 2008 Mar 2008 Starting @ $20 / month for 1GB No roaming premium on-net Or prepay $200 for modem then $1 per day / $10 per month No restriction on applications Competing against 4 other networks with other cost/policy

Devices, arbitrage and IP Copyright Disruptive Analysis Ltd 2008 Mar 2008 THE PAST Cellular Operator Voice, SMS Internet 3G IP data Bluetooth THE PRESENT Smart OS Inflexible RTOS Memory card USB Complete control of all voice, data & content that goes to/from device WiFi

But do “Normobs” care about openness? Copyright Disruptive Analysis Ltd 2008 Mar 2008 On the shelves at my local branch of Carphone Warehouse in London last week 9 Types of Smartphone 11 Types of Pinkphone + 9 Brandphones – Prada, Armani, Ted Baker, Levis, Porsche, Mandarina Duck, D&G, JCB, Apple

“ Is Vodafone better than Orange? It’s just they have a pretty pink phone & I’m tempted”

Theoretical physics undergrad - Advanced software user who uses Mathematica on a PC to model fluid dynamics.

What normobs actually care about

Aesthetics

Camera

Bluetooth

Music Player

Battery life

And in some cases

Language support

Qwerty

Car kit

Memory slot

Video

Quad-band

3G

GPS

Touchscreen

Benevolent dictator or tyrant? Copyright Disruptive Analysis Ltd 2008 Mar 2008

The $100bn fly in the ointment of openness

SMS will be difficult to substitute

$100 billion revenues worldwide

2 billion active users (twice that of email)

3 trillion messages per year

Interoperability can be costly

Implies mobile numbers in many countries

For at least the next 10 years, SMS support is table stakes

Source data – credit Tomi Ahonen

Open wireless vs. Deep Packet Inspection

False positives

Legal & regulatory risks

Competition

Protocol obfuscation – eg VoIP in HTML

Encryption & VPNs

Reverse-engineering of policies

Proof & audit trail

Applications are moving to XML & browser

DPI / Anti-DPI war similar to viruses

PR & marketing risk to reputation

Convergence vs. Open multiplicity

One device?

One number?

One operator?

One identity?

One message box?

One phonebook?

One broadband?

One femto?

One social network?

Copyright Disruptive Analysis Ltd 2008 Mar 2008 … . users have complex, individual mobility preferences. NO This is not what convergence is about

Multiplicity: users have choices Copyright Disruptive Analysis Ltd 2008 Mar 2008 (2nd phone: close friends) Multi-tasking, multi-access, multi-operator, least-cost-routing software In bag: Old college friends Former colleagues Best mates Informal business contacts Parents Work Home: PSTN, DSL & VoIP (calling Granny in Australia)

Open spectrum? Copyright Disruptive Analysis Ltd 2008 Mar 2008 An Irishman stopped cutting the hedge, as a car drew up beside him and an English visitor enquired, "Could you tell me the way to Balbriggan, Please?“ "You know, sir, if I was going to Balbriggan I wouldn't start from here at all ." Source: http://www.abitoblarney.com/irishjokes.htm

A fundamental problem Copyright Disruptive Analysis Ltd 2008 Mar 2008

Radio signals >2GHz struggle to go through walls. So…..

Use more power

Use more sites

Indoor solution

Repeaters / antennas

Dual-mode

Femtos

Helped a bit by MIMO etc

And more problems……. Copyright Disruptive Analysis Ltd 2008 Mar 2008 1.1bn shipped in 2007 Opportunity cost of ‘elegant’ but complex & slow solutions

Steps towards spectrum openness

Tentative acceptance of UWB

Technology Neutrality / WAPECS

Spectrum Trading

Spectrum Usage Rights

White space reuse

Bandsharing in military / government spectrum

Wholesale models

Conclusions

About 10 definitions of “open”

Little public awareness of, or support for, abstract concept of openness in mobile in any of its forms

Inertia, apathy, convenience & familiarity are powerful forces

Competition should make it a non-issue

It’s happening already, but slowly

Utopian visions fail to provide a route from here & now

Full spectrum deregulation currently implausible

Plenty more flexibility & openness in spectrum & devices

Copyright Disruptive Analysis Ltd 2008 Mar 2008 Bottom line: Carriers & Governments will retain a lot of control…. but it will be earned, subject to competition & arbitrage, and not just by default

Don’t be a dumb pipe, be a tiger-stripe pipe Copyright Disruptive Analysis Ltd 2008 Mar 2008 (Huawei 3G HSDPA dongle modems, sold by 3 UK) $10 patterned sticker = higher margin than most services

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