Tuesday, April 28, 2009

NGN is the ‘ingua franca’ of the mobile world

Earlier this month operators, vendors and industry insiders gathered to discuss Next Generation Networks. Unlike WiMAX, Femto or WiFi oriented events, NGN is not a “love fest” where everyone focuses on what could be – but rather meet to discuss and hammer out what needs to happen or take place for NGN to become a reality. This sober approach is reflected in most of the presentations from over 25 tracks where the majority of the focus was on 3G-LTE (Long Term Evolution) or “4G” if you really want to differentiate between today and tomorrow and the indoor user experience.

First off, let me be clear when I say that there is no ‘line of demarcation” between “today” and “tomorrow.” There’s no switch or lever to pull to go from 3G to 4G. A better way to think of mobile technologies is…the English language: 

We have the Queen’s English, and then there’s us Americans and how we butcher the language and slang to our liking and then there’s English as the spoken word among businesses around the world (with differences in annunciation, pronunciations and emphasis) and the language has evolved from what it was hundreds of years ago with influence from Germany, France, the Scandinavian countries and Asia-Pacific to become the lingua franca of the modern era.

3G to NGN is an evolution which will go on for next decade

Yes, you may have heard of Verizon, Telia Sonera and AT&T talking about LTE in 2010-11 but that’s not the endpoint for a Next Generation Network. Today’s 3G networks are evolving due to subscribers’ needs for new and faster applications, better devices and the opportunity for operators to deploy profitable services. Several operators have seen network traffic triple and in some cases data traffic has increased over 500% in just one year.

    • 3G UK traffic data from February 2009 showed a tremendous traffic uptake:
      • 316 million internet pages viewed
      • 189 million instant messages
      • 94 million Facebook page views
      • 42 million Skype calling minutes 

Today's mobile networks may have the speed of a LAN in 2000 with applications developed for 2010 (Several operators are launching HSPA+ in 2009 for 21 Mbps peak downlink speeds and above). Within the next couple of years, the gap will be much closer and by 2015 the network experience is tied to the device and subscriber plans you have – and not limited by the network infrastructure. Home, work or at play – your device is the network.

The (missing) indoor subscriber experience

Today 70% of 3G capacity is impacted by signal strength inside. According to T-Mobile's own research, 43% of customers would switch operators for better home coverage. That’s a tremendous opportunity to steal market share – if you have a solution in mind.

Many operators have plans in place to test and trial Femto and other systems. Indoor as a barrier for a good mobile experience will be removed within a few years. Lower cost systems deployed closer to where the data consumption takes place, self optimizing networks and interference mitigation techniques will be put in place to help operators go after large enterprise accounts (Campus) and dense metropolitan areas.   

Capacity consumption is way up and operators need ways to reduce the cost of deploying networks, including site acquisition. To make this a reality, operators need to also solve the backhaul issues and they need more spectrum. Smaller, “built from the inside out” networks are the potential solution. What we may see are “islands” of LTE where people gather and spend time (and capacity) to augment the HSDPA/HSPA+ networks for mobility and travel. 

Therefore, do not expect to see LTE deployed across the entire spectrum in a country (700MHz, 800MHz, 2.6GHz) but in hotspots where capacity and coverage requirements are the highest.

By now you are asking yourself (unless you’re an operator) “but why not WiFi 802.11n and UMA (unlicensed/universal mobile access) solutions, they certainly have capacity – right?  Yes and NO. The big NO is from large operators who see WiFi as a “data only, fixed” system. Not a solution for mobility and seamless handoff between macro and inside radio systems to handle mobile communication. Telefonica O2 and BT reference “complexity” and “number of service calls” as reasons for not proceeding with UMA. In brief, mobility kills the business case – it just does not work (same reasons why WiFi + MESH did not take off for city-wide and metro networks in 2002 and beyond). WiFi is great for stationary data-only access (with QoS for VoIP).

As a side note, WiMAX was barely a mention by the large operators and vendors presenting at NGN. “(WiMAX) Time has come and has passed,” someone told me. On the bright side, Analysys-Mason believes 90% of all WiMAX deployments (primarily fixed) will be in developing countries (and continents such as Africa and South America). So where-to next?  

Next generation networks are evolving from within today’s 3G networks. 

  • We will have HSDPA/HSPA for many-many years and devices need to support 3G and LTE by 2012 (Over 93.5% of commercial WCDMA operators have commercially launched HSPA)
  • Some early deployments of LTE will take place in late 2010 (over 20 operators committed to LTE). An all-LTE network? Not any time before 2018.
  •  LTE devices: less than a handful of devices by late 2010 and into 2011. Do not expect lots of device options (availability) until late 2012 with FDD and TDD support closer to 2014)
  • Over 93.5% of commercial WCDMA operators have commercially launched HSPA with over 1400 devices option to choose from.

NGN is the lingua franca of the modern era and just like we grew up to speak English and our neighbor from France had his kids learn English in school, the next generation of people will travel and communicate over a seamless and transparent network within the next decade where the device is the network and we all speak the same language.




Tuesday, April 14, 2009

Managing our Future

In 2006, several leading industry firms predicted that the market for managed services for mobile networks would become a $50 billion market.  

Their predictions were spot on. This 'quiet' trend is changing the infrastructure landscape for vendors and operators alike. For vendors, the leading managed providers for mobile networks (Alcatel Lucent, Ericsson and Nokia-Siemens with Huawei slowly gaining traction) are increasingly becoming an important part of the selling cycle. Before, they were the vendors. Since 2006, they have emerged as a trusted "partner" (while keeping the hat on as 'vendor') for mobile operators whose vision is to become global communications providers of wireless and wire-line services. Most of the "big guns" (Vodafone, T-Mobile, AT&T) have been acquiring brands and networks for a period of five years and most (almost all) of these networks are indeed managed by NSN, Ericsson and Alcatel-Lucent.

Not counting the Nokia-Siemens merger, the top 5 players made over $20 B in acquisitions related managed network services during 2003-2008 (includes Alcatel-Lucent).  Ericsson posted service revenues of $3.3B in 2005. Last year, 2008 professional services revenue accounted for 25% of all revenue for the company - roughly $6B (doubling in sales). Overall, do not be surprised to find that 'services' account for 30-40% of revenue for many of these companies (and 20-30% margin or more) within the next 2 years. In 2008, Ericsson managed networks that served more than 185 million subscribers worldwide.

It's just a matter of time before China Mobile (world's largest by # of subscribers) decides to make a brand entry into Europe or North America by acquiring networks and assets (brand). Most likely, these networks will be managed by the top three or the emergence of Huawei as a service partner - creating a "4 horse race."

So why this trends of outsourced managed networks for mobile operators? 

We have seen the same trend since 1997 when it comes to managed enterprise networks (first finance and insurance, then the rest of the verticals). Very simply, the savings are tremendous and by outsourcing the communications networks, the company can focus on its core competencies (sell products and services it makes).

  • Customer savings range from 10-40% with outsourced managed services
  • Increase efficiencies for CAPEX and OPEX: Integrate new technologies and application without hiring specialists (multiple radios, network technologies, applications, etc). Simplify integration with networks, billing and outsourced application provider
  • Managed services is strategic to both operators and the managed network vendors: Vendor moves-up value chain from supplier to key partner (gains more control/influence). Vendors can sell hardware/software solutions for lesser margin and make it up with global service contracts
  • Consolidation in the industry secures scarce people resources to 3-5 key players (Operators are able to leverage vendors access to people, expertise and networks)

By outsourcing, operators will focus efforts on marketing the brand and differentiate with customer service in order to hold off price wars and customer churn.

This trend has created a new landscape. You could make the same argument NY Times did in their article last Monday when they raised this question:

"Which two European companies run the biggest wireless networks in the world, with a combined 355 million customers? If you are thinking of the top mobile operators — Vodafone, Telefónica, T-Mobile or Orange — you would be wrong. The right answer: Ericsson and Nokia Siemens Networks." See article  

As NYT's Kevin J. O’Brien puts it 

"...most subscribers are unaware that day-to-day management of their calls and text messages is being supervised not by local engineers but by managers in remote centers like New Delhi, Bucharest or São Paolo. In Britain alone, Ericsson manages significant parts, if not all, of the networks of 3, T-Mobile and O2. In March, Ericsson added Vodafone, its fourth mobile operator client in Britain. On the same day, Nokia Siemens said it had been hired by Orange, the mobile unit of France Télécom, to manage its British network."

This is a very powerful trend which impacts all the players in the infrastructure network. The day could come where operators and enterprise alike says to IT vendors... "Talk to my partner." The operator and the enterprise IT group just stipulate what they need in form of products and SLA (as in shopping) and for an agreed contracts, services are rendered without the customer touching the IT decision. Take this a step further. The operator can become the brand-facing Communications Provider for small, medium and large enterprise customers. The enterprise stipulate LAN-Wan and Wireless service needs and the operators then dictates to the "Managed Communications Partner" what they need to fulfill service contacts with hundreds or thousands of enterprise customers.

Managed Mobile Networks has changed the landscape for all communication, inside and outside. 

The day will come when AT&T, Vodafone, T-Mobile and China Mobile are you all-inclusive communication provider for IP-based video/TV/phone/mobility and e-commerce. No wonder the landline providers are wondering what to do next. BT, Comcast, and others may become part of the network and their brands disappear. Or, they go on the offensive and try to compete on a global scale as a consortium of players.

The managed network space (not just for mobile networks) is worth hundreds of $ billions every year. IBM is already a big player in this market as are many System and Solutions Integrators. The gravy lies with mobile networks. It remains to be seen if Cisco decided to get into this space as well, creating a global services organization for wired and wireless network services. Even Dell got into the SMB space for smaller network services. Managed Network Services is a strong trend for all communication services, for enterprise, consumers and mobile network operators alike. By outsourcing, the brand can focus on its core products and services and allow the infrastructure to be handles by the experts.

My prediction is that managed services (wired & mobile) will exceed $1 trillion in revenue by 2015 where the top 4 players account for 80% of the revenue.

I'm glad to see the New York Times article by Levin J O'Brien. He's on to the big news. I hope the CEOs read and internalize the article and conceptualize the impact on their organization during the next 3 years.


Monday, April 6, 2009

CTIA: "plus ça change, plus c'est la même chose"

"The More Things Change, The More they Stay the Same." (Alphonse Karr, 1808-1890).

Last week's CTIA was more subdued and not as exciting as it was a year ago.  As other insider have reflected, maybe change is needed?  CTIA, just 4 weeks after Mobile World Congress in Barcelona and CES the month prior, leaves us with little news and progress to report from CTIA. The themes sated the same: we all want a more open Eco system, LTE will happen and early deployments will kick off in the CDMA and WCDMA camps as early as 2010. Of course, device options will lag behind but that's what happens when a network evolution is kicked into high gear because some operators really-really want to be first. 

In this case, Verizon wants to lead the charge by evolving its CDMA EVDO Rev A network to include LTE capabilities. This means, devices need EVDO Rev A and LTE within for years to come. The multi-band, multi-technology chipsets will be in great demand for years from AT&T, Vodafone, T-Mobile, who will demand HDSPA, HSPA+ and LTE within to make sure they have backwards compatible devices on global networks. The big nothing at the show was "WiMAX." Even with an announcement that WiMAX development center would be set up and that WiMAX would (in essence) be free in Silicon Valley -- there was no interest. Funny enough, even a  senior Nokia person (and a big backer of WiMAX) said what everyone was thinking. "WiMAX is Betamax". It's now clear that Mobile WiMAX has lost out to (not LTE) HSDPA and HSPA. It’s just the matter of weeks if not months before the Clearwire ship will turn and maybe even become part of Sprint again - since spectrum is an asset and WiMAX has become a liability. Some big funds, after they are done being audited by Uncle Sam, will look to industry insiders as Scapegoats for their WiMAX negative return of investment (NROI).

The big take-away after the first two big wireless shows of the year (CTIA+ MWC) is that HSDPA and HSPA+ deliver a multi-meg experience with full mobility now and that these networks will pull-through voice, video and other rich content such as TV over these networks and thus creating a capacity crunch in the coming years as the industry grows to 1 Billion subscribers.

Maybe Taylor Swift's new song in 2010 will be about her experience as a mobile subscriber watching TV on the go in her music bus -- "the day my lifeline died" (much in common with "the night when the lights went out in Georgia") which explains the blog title "The More Things Change, The More they Stay the Same." (i.e., network strain will kill the phone).

With evolution comes conflicts and with conflicts - we experience turmoil. Progress is great, but it comes at a cost. We do not know what the cause and effect is until we experience it. When email and attachment became a way of doing life within the LAN, we had to move from 1 to 10 to 100M and then Gigh Ethernet and so on. As we got smarter and broadened the pipe, the users just sent more and more files. At each step of the way, we experience bottle necks as we bring "broadband to the people." If you give a mouse a cookie, you know the rest.

HSDPA,HSPA and LTE will enable more apps and more broadband experience which will cause new bottlenecks in the network. In this case, the mobile network. I can only imagine what the network architect at my "operator" think of me now that I am addicted to Slingbox on my mobile. I'm sure, if I can convince 3 or more people in my vicinity to also watch NCAA tonight on their phone in the same sector, our joint broadband experience will tie up Gigs of capacity for hours. This is good news for Cisco who has (correctly) predicted that mobile network capacity will be strained as more mobile broadband subscribers discover "crack TV" on their phone and understand that their 3G phone is capable of sending and receiving video.

So, the more we change to a mobile broadband connected world, we will discover the problems of the past presented in a new form but with the same logical conclusion: build out more, in a smarter way, while reducing cost and complexities - because  we need to.