Tuesday, March 31, 2009

Life on the Go-Go (CTIA)

After a tumulteous day with after many chats, meetings, bumping into people, and driving around - I finally sat down with a cup of Starbuck's coffee and reflected upon the last 2 days. In earnest, it became a reflection of the life we live in the wireless 'Fast Lane.'

Yesterday, CTIA's very own Mark Desautels (56) passed away in Las Vegas of an apparent heart attack. I'm sure we all feel for the family and our thoughts and prayers go out to them during this difficult and challenging time. http://www.ctia.org/media/press/body.cfm/prid/1810

So why a reflection on "life"? We all scurry around from conferences to business meetings, around the USA and some time outside to meetings in Spain, UK or wherever else our businss takes us. If we are lucky, we get to spend some time with family and friends in-between. As I reflect on the sad news, I can't help but think that I am missing my wife and my children back home. I did bring my videocam and will use it to "video home" tonight to tell them how much I miss them while hearing about their day at home and at school.

Living a life on the go, we will make use of devices and applications which will connect us with family, friends and business. And, ins ome cases "hack around" until we find a working solution. Today, I use my laptop for video and Skype calls and look forward to making 3G Skype calls soon (not restricted to Wi-Fi hot spots). It will happen because people will demand it (why make a Skype call using iSkoot if the call counts against minutes when I'm using a VoIP session?).  I have also tested TV over 3G handsets (Blackberry and iPhone) using Slingbox and other apps to connect to Comcast and DirecTV services. And it works!  I saw my Duke team go down in flames to Villanova - tearing apart my dream to see Mike Krzyzewski win his 4th NCAA championship.  And, I did so while at a family event (hiding behind the big tree in the park). Tomorrow's applications will just make my experience more interactive.

Life is about communication. We want to see when things happen and share our experiences in real time and talk to friends and family all at the same time. Texting becomes IM and IM become video IM and soon we will all be videocasting over mobile networks. Within the next 2-3 years, video-based communication will count for the majority of mobile and IP traffic (http://tinyurl.com/b9berc ). We'll be watching Duke beat Villanova in 2011 while "casting" our experience live to friends (yes, DRM lawyers will have to figure that dillema...these firms will do well for years to come).

So, with CTIA in mind. This week will be about how the industry is already building the infrastructure for years to come (HSDPA going to HSPA and then LTE). Sprinkle in some news about Femto and some new cool devices and 'open ecosystem' for applications and after-market chargers --- and what we have is" Barcelona in Las Vegas." I do not expect any big-big news this week.  In the midst if a down-economy, we look to some bright lights where some existing OEMs announce operator wins with HSPA and LTE and some new startups secure small Femto trials for Femto. Motorola and Nokia will toss in some new devices to show how "life goes on" and at the end of the day, we will look back at CTIA with renewed hope that the mobile industry will weather the economic storm and prosper next year.

Life goes on.


Friday, March 20, 2009

Live TV - When I Want It - on My Phone

On my way back to Silicon Valley, I spent some time reflecting some mobile trend data recently posted in blogs, twitter updates as well as in articles on popular web sites.

Cellular-news reported that “Mobile TV will reach 472 million by 2013” (source: Cantab Wireless). Until now, TV on mobile devices was strictly limited to video clips (downloads) or special devices embedded with tuners, etc. Sprint and Verizon were the early adopters using Qualcomm’s MediaFLO. To add complexity to the TV application, Qualcomm cleared the path for its customers by negotiating TV rights from ESPN and others while buying up spectrum in key markets in North America. This is a costly proposition and is most likely is why TV over Mobile did not take off as predicted in 2006 and 2007.

Recently, I’ve been talking to friends who live in the Bay Area, Boston, San Diego and New York, probing their TV over mobile experience. Most of them make use of 3G PC cards (USB) for wide area connectivity and subscribe to AT&T, Verizon and T-Mobile.

Here’s what I found out:

  • 1) 25% subscribed to an operator’s TV/video service. Usage was minimal (less than 1 hour per week) because the service was “cumbersome” and limited to the channels and programming supported by the operator.
  • 2) 50% did not make use of any TV over mobile. Why? “Not interested” or the service options “too expensive and too limited.”
  • 3) 25% did not subscribe to any service, but was indeed watching live TV (FREE) using their 3G device or 3G USB/PC card (laptop). These people either had Comcast, DirecTV or Dish Network DVR service at home or were users of freeware or beta software from Sling for use with iPhone, Blackberry Storm, Blackberry Bold and/or Samsung Android phones.

Here’s the big surprise. Usage was 300% higher than the people who paid for TV over mobile service. Note, these people have unlimited data plans and sure made use of every bit. Usage examples cited.

  • ·        Watch news or sports while at airport (using WiFi or 3G)
  • ·        Listen/watch news while driving in car
  • ·        Keep the kids quiet in car while driving (let the kids watch kids shows)
  • ·        Watch news while waiting for: dentist/doctor/car service/etc.

Note: where Wi-Fi was available, the laptop users used free service or service roaming partners of AT&T or T-Mobile to avoid buffering issues.

So, the big lesson for mobile operators and application developers is: do not make people re-learn how to watch TV or video. Much like Nokia found out in the early nineties, it takes 6-7 years for people to re-learn a new format (handset design where # actions button placements is critical). Make it simple. By allowing access to home services (DVR, cable, satellite), more people will watch TV in more places – thus requiring more capacity and better network services. The big question is…why on earth would operators allow this?  Because it will happen no matter what so they better prepare for it. I’m sure subscribers would not mind paying a small service fee to access home services or a higher fee if TV channels were provided by the operator’s own servers.

So, building upon my last blog, I’m now convinced that as more people start making use of TV/video services that we are faced with a barrage of data usage where TV, video and personal video casting (IM) will make use of every available bit and spectrum within a service area.

Some mobile data for consideration:

  • By 2013, 80 percent of global mobile traffic comes from 3G/4G mobile broadband handsets and laptop users (PC cards).  A single high-end phone like the iPhone/Blackberry generates more data traffic than 30 basic-feature cell phones. A laptop aircard generates more data traffic than 450 basic-feature cell phones. 
  • Almost 64 percent of the world's mobile traffic will be video by 2013. Mobile video has the highest growth rate of any application category.”  
Source:  Cisco VNI Forecast January 29, 2009. http://tinyurl.com/b9berc

Video, TV and personal video-casting will happen no matter what we do. 3G and LTE will enable more subscribers accessing more services and using more bandwidth – because they can and will make use of every bit and spectrum available.

So what did I learn?  I will use this weekend to download some freeware and start watching TV over my unlimited data plan and if all goes well, I will be watching Duke go to the final four during 'March Madness' – on my 3G phone.


Tuesday, March 17, 2009

The Tsunami is Coming: Mobile Operators, Brace Yourselves…

Why the use of the word Tsunami? Normally, this is a very scare phenomenon at sea. On land, we are faced with Thunderstorms, hail, wind, rain and so on. So, why ‘Tsunami’ in context of mobile broadband?  

The term 'Tsunami' comes from the Japanese, meaning "harbor" (tsu, ) and "wave" (nami, ). Source: Wikipedia. In the Tamil language, "Aazhi Peralai means “disastrous wave.” 

What mobile operators are faced with, for the next 5 years, is a series of waves when it comes to the increasing number of 3G subscribers, 3G enabled devices and laptops, application use and the enablement of video casting and photo sharing within social networks.

The first wave has already hit. Let’s call it the “Bold iPhone” wave of 2009

Last year, 30% of US consumers who purchased Apple iPhone 3G in the summer of 2008 switched from other mobile carriers to join AT&T. People want broadband and will make use of every bit in the network. In August last year, there were over 100 million 3G subscriptions out of a total of mobile subscriptions of 910.8 million in Europe (Source: Informa). It’s safe to predict that 3G subscriptions will reach 175 million by end of 2009 (iPhones , Blackberry BOLD, Android and other 3G phones).

Personally, I think the EO 2009 number will be closer to 300 million. According to The NPD Group, consumer sales of smartphones to US consumers represented 23% of all handset sales in Q4 2008 compared to just 12% in Q4 2007. By 2013, there will be 4.1 Billion subscriptions globally (source ITU). Of which 67% are 3G/3G+ capable (source: ABI).  That’s a staggering 2.7 million subscribers generating 80% of all global mobile traffic. 

Why is this scary? “A single high-end phone like the iPhone/Blackberry generates more data traffic than 30 basic-feature cell phones. A laptop aircard generates more data traffic than 450 basic-feature cell phones.” Source: Cisco Visual Networking Index (VNI) Jan 29, 2009:

Last week, it was widely reported that AT&T had network capacity issues due to heavy 3G usage in a central metropolitan location. We are talking about a few hundred to thousand subscribers congregating (imagine 60,000 people at Football game all using 3G to communicate and share video, photos, etc). Om Malik (Gigaom) predicted the impact on networks over a year ago. His March 16 post covered the AT&T network issue (See http://tinyurl.com/cn9pt8 )

The second wave: “the social broadband wave of 2010”

By 2011, we will most likely have over 1B 3G subscribers actively using multimedia to send/receive/share. In addition, 30-40% of the subscribers will watch live TV throughout the day, using mobile and/or Wi-Fi connectivity based on their location. This is reality today for some. Cable and Satellite TV can accessed vis phones and laptops (via DVRs, Slingbox and other services)

The third wave: “the TV/video wave of 2012”

Now, what happens when we have 2.7 Billion subscribers generating 2 Exabytes of usage, per month, by 2013?  We are talking about traffic doubling every year, a 66x increase per Cisco’s VNI where video accounts for 64% of all mobile traffic. http://tinyurl.com/b9berc

By 2013, the networks will crash unless something drastic happens. So what can be done?

  • Why can’t we just add more cell sites?
  • Why can’t we just add more spectrum?
  • Why cant’s we just limit the # of 3G subscribers?
  • Why’ can’t we just add Wi-Fi access points everywhere?
  • Why can’t we just add Femto access points everywhere?

The answer is ‘YES” to all of the above. But, there are restrictions.

  • Cell site costs can be as much as $500,000 in some cases. Even though AT&T is planning on spending $17 Billion on Capex this year, there are limits to how much an operator can afford to spend on network Capex, year after year. This is also why more and more operators are outsourcing management of their networks to Ericsson, Lucent, Nokia-Siemens, Huawei, etc – to reduce Capex. Of course, Opex increases but at least cost of equipment goes down. The net result is that the operators can demand better coverage and capacity from their service partners as demand for capacity increase from their subscriber base.
  • More spectrum is needed. Operators want more uniform global bands to  improve roaming across continents and to help reduce device BOM and price in the store.. Likely candidates for uniform bands for 2012 and beyond include 700MHz, 900MHz, 2.5 and 2.6GHz. Members of 3GPP and ITU are lobbying for more Spectrum from US and European regulators. From the time spectrum is awarded or freed up, it takes anywhere from 2-5 years to deploy sites and enable devices to work across the band in question.
  • You cannot limit the number of 3G subscribers, so take that option off the table (consumers have options with regard to operators)
  • Wi-Fi with 802.11n will help offload usage at home and within businesses much like Femto access points deployed strategically in suburban areas and within the enterprise. Today’s Femto products are yet not ready. Femto access points need more intelligence, interference management and scalability to help offload capacity from the Macro network to improve overall subscriber experience as they roam across the land. By 2010-11, we should expect solutions to these challenges and Femto, WiFi and Macro co-deployments will help add capacity in “3G and 4G hot zones.”

So when will the Tsunami hit?  Well, it already did with a small wave caused by iPhone and Bold subscribers. If predictions are only 50% correct, we will face significant mobile network issues as early as 2010.  If Capex money is available, 2010-12 could be good years for infrastructure vendors and mobile managed services providers.


Thursday, March 12, 2009

FEMTO Low-Price Market Penetration Strategy: a race to the bottom?

This week was filled with more doom and gloom predictions in the networking industry. In the midst of the forest filled with bears, AT&T made the statement that Capex is not down but slightly up as compared to 2008. Also bucking the trend, we heard supporting (positive) statements from IBM, Cisco, Google and Juniper as well as Vodafone. These companies are investing in people, companies and the future. So, overall, there are good news among a flurry of negative earnings and the Madoff scandal.

Some (perceived) sad news for the Femto players when RadioFrame finally confirmed that they will not be a player in the Femto AP market (rumors started prior to MWC in Barcelona). They will focus on the ASIC side of the business. But, is this bad news or good news?  Maybe RadioFrame decided that competing for business with basic access point BOM well above $200 and operator requirements for pricing at $200 going to $100 over the next 2 years -- was not a good idea. Can we fault that logic?

"We are trying to be prudent with our money in these tough economic times and we have pared back to a core set of businesses that will take advantage of our unique market position while maximizing our use of funds." - CEO Jeff Brown said in an email reply to Unstrung earlier this week.

I personally applaud them for making the tough choice. But, does that mean that the other players are running off a cliff? With enough funding and volume, a low-price, market penetration strategy can pay off (especially if your company name is Huawei and you have the entire China government supporting you). The dilemma facing Ubiquisys and ip.access (and now Airvana who is betting the future eon Femto) is that they are the first into a potentially enormous market that has enormous risks. Winning the future bid for $100 Access Points limits the intelligence and features you can place within -- before BOM hits $200+. By setting the price low, the perceived value is low. This year (2009) and 2010 will be challenging for the consumer Femto players. Their mission is to survive numerous trials and operators tinkering with the Femto business plan for consumers, while building strong relationships with major players who will ultimately be picked for the big roll-outs. Yes, that's how this market will roll.

Was it therefore a surprise when the same consumer players made a left turn and started to talk about Enterprise Femto? Of course not as these players need to find a profitable market segment where they can sell Femto APs at a higher price and therefore make up for the costly consumer business. However, the trap lies with the product strategy. The low-priced consumer APs cannot scale to the demands of the enterprise. You cannot simply name the consumer AP something else, paint it blue, and expect it to work within the enterprise.  A new board design is needed and advanced management and interference features demand a better product with tight integration with the gateway/aggregation router on or off premises. "Just" being a Femto AP vendor limits the control you have with operators and the enterprise alike. And, it gives you few cards to play with major OEMs. What's needed for the enterprise is: scalability, security and management features, QoS, advanced routing functions, local switching support and tight integration with the supporting RNC. In essence, the consumer Femto players need to design a radio network inside rather than a Wi-Fi-like access point.  The enterprise will demand that you include Wi-Fi.

This "left turn" requires a new approach and that requires more funding. The road to Femto success is very exciting but also riddled with "IAD"s (important access developments). It's great that the Femto market receives a lot of media attention. But, it takes more than hype to survive the economic situation of 2009-2010.

Today, ABI released its updated Femto vendor matrix (http://tinyurl.com/arsr2k). In light of RadioFrame's bold move to exit the AP business, the matrix could become an indicator of a race to the bottom. 

Show me the money, then I will believe in the Femto consumer business case.


Thursday, March 5, 2009

Can You Hear What I Hear, Can You See What I See?

Fellow Mobile Insiders

This evening, after spending most of the day catching up with long-time friends who are industry and financial analysts in our industry (people who actually know what's going on inside the mobile industry), I went to my favorite web sites to catch up on news and developments.

Many of these sites reported (again) about Mobile WiMAX big plan for the future and that "next year" it will be everywhere (something we have heard since 2004). The latest, Clearwire will spend $1.5B to build out more cities in US next year. Really? We believe this?

To quote an article I read, "Clearwire brought in about US$20.5 million in revenue and lost $118 million"".... which means that another $1.5B will be spent to secure another 1M subs over the next two years while burning millions of more cash every quarter? When are investors going to start asking serious questions about the business plan or lack thereof?

I continue to be surprised by such big plans -- which are void of any plans for profitability.

As a nationwide network technology option, mobile WiMAX is paddling behind the big smoky steamship and coughing from lack of Oxygen behind the "MS HSPA-LTE."  

Today, Nokia reinforced its support for LTE. Their support for WiMAX was over last October. Their strong support of HSPA and soon, LTE devices, means that Samsung will be next to debark the sinking (mobile) WiMAX ship. Please do not misunderstand the pragmatic criticism. I do not dislike Mobile WiMAX. The technology had its chance in 2004 and 2005 but failed to deliver.
On the bright side, Clearwire has spectrum which is a valuable asset to some operators. VZ, T-Mobile and AT&T will need more spectrum by 2011 in time for LTE build-outs. So, I question any serious intent to spend any Capex whatsoever. It's a bluff which is why they are slow-rolling any build-outs. So, if you can hear what I hear and see what I see, then do what Google and others have done, write-down (off) mobile WiMax and move on.