Mobile Broadband – New Applications and New Business Models

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Mobile Broadband – New Applications and New Business Models

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

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