Sunday, September 13, 2009

Mobile Operator Landscape 2014-18

During the recent weeks, I’ve had the pleasure of catching up with many industry “insiders” and the discussion has centered on what the mobile industry will bring in form of changes in the coming years. The following 5 topics capture my own take-away -- with some sprinkles on top.

US Mobile Landscape

  • The world has chosen the “convergence” technology of LTE which means that within the next 5 years (2014), Capex focus is on bridging CDMA with WCDMA – in a move towards all-LTE networks by 2018 (a point in time where all devices/MID have LTE capability.
  • The hundreds of millions of subscribers in the US will be swayed by operators offering Ethernet-like experience whether mobile or fixed.
  • Players: Verizon will become Vodafone and Sprint will become T-Mobile and China Mobile will enter into the market either as an MVNO or through partnership with AT&T. One alternative is China Mobile or T-Mobile buy spectrum assets from Clearwire & Comcast to create leverage for roaming partnerships (and access to the home). Regardless, we will see at least 2 new entrants into the US market within the next 2 years (some of the “moves’ just started overseas in the UK…with T-Mobile/Orange (DT/FT).

Smart Phone Evolution

  • The personal experience we will come to expect will demand (from device manufacturers and operators) full mobility, multi-Mb access/experience, inside and outside – with full access to full-motion video and a sensory communication – at a price below $100 per month/sub.
  • Smartphones will become ‘smarter’ and whereas some like to use MID or netbooks to access content, people-on-the-go want to dock their ‘phone’ to keyboard and monitors (and “juice’) at airports, Starbucks/Peets, stadiums and conference centers.
  • Applications? Yes, we want it all and we want it now. Apps and Widgets (“Blur”) which bring our designated social apps together, will prevail over stand-alone applications. Enhanced “Cloud” access for mobile workers will help reduce cost and complexities for small, medium as well as large businesses.

Network Coverage & Capacity

Today’s mobile operators are faced with a network capacity dilemma which will only become more critical as more smart phones and 3G-enabled laptops and devices are sold throughout the world.

The growing usage and penetration of high-speed mobile wireless services for both voice and data have created new challenges and opportunities for mobile operators, enterprises, and consumers. The requirement for always-on, high-speed communications both indoors and out is creating a capacity dilemma in the densely populated areas where enterprises are located (office parks) and high-rise office buildings in metropolitan areas. This capacity dilemma is not easily solved by adding more macro cell sites outside to ‘blast inside’ considering the expense and inefficiency of deployment in this way. So, will the operators build out more Macro sites or go inside with PicoCell and Femto. Do we care as long as coverage and capacity improves? No. ‘How’ targeted capacity is added inside the enterprise and in dense metro areas will be in form of a combination of buy/install to reduce churn and improve enterprise ARPU and through ‘managed network services’ relationships with established players and enterprise channels. We will see some instances where enterprise companies are willing to cover the Capex of install to improve mobile worker productivity (integrated with PBX/Centrex services).

Network capacity will be needed to most macro sites to withstand the capacity demands from hungry data users (aka iPhone, Cliq, Blackberry device users). The business dilemma for the operators will center around Capex vs Opex or Capex/Opex and ROI. Which brings up…

Mobile Managed network Services

Why Capex if you can Opex? The total market for mobile managed services will double from $250B to $500B within 2-3 years. The savings for operators 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 are 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)

In a previous post, I stated that the market will reach $1 Trillion by 2015 – which means we should all carefully review the emergence of NSN, Ericsson, Alcatel-Lucent and Huawei as major infrastructure players and possibly also as network providers to mobile operators. Point in case, as of today Ericsson manages over 300M subscribers worldwide (for operators). See previous post

Emerging Mobile Operators

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.

In a previous post I made a concluding statement (question/answer) that we should not be surprised if we someday see NSN, Ericsson and ALU branded mobile services.

So who will be my all-inclusive communications provider by 2014? In the US, I can imagine AT&T, Vodafone (after taking full ownership of Verizon FIOS and mobile spectrum) or possibly even T-Mobile (via Comcast fiber and Clearwire’s spectrum).

The landscape for mobile network services is changing. Today’s mobile brand may not be here tomorrow. As a consumer, all I care about is my experience and my monthly bill. As an insider, I care about eco system value creation. We can have our cake and eat it too.