Assessing the Influence of Terminal Support Upon Data Offload Strategies

Martin Prošek, Telefónica O2 Czech Republic

17.11.2010

To what extent is Device Availability a Constraint for Operators Today?

Introduction

• Mobile Network Offload to WiFi

• Devices and Features• Real Situation in the Network

• Mobile Phones Manufacturers Approach

• Home Hotspot Issue• Solutions

Disclaimer: The opinions of the author expressed in this document do not necessarily state or reflect those of Telefónica company

Czech Republic Overview

• Small country, 10.5 million of inhabitants

• More than 14 million mobile subscribers

• 3 mobile network operators (MNOs):

• Telefónica O2

• Vodafone

• T-Mobile

• Several smaller fixed line operators (e.g .GTS Novera…) including cable TV operators (e.g. UPC…)

• Many small WiFi operators (more than a thousand) including amateur network CZFree.Net

About Telefónica O2 Czech Republic

Telefónica O2 Czech Republic, a.s. (TO2 CZ), is the first integrated operator in the Czech Republic, formed on 1 July 2006 by the merger of the leading fixed line operator, ČESKÝ TELECOM, a.s., and the strongest mobile operator, Eurotel Praha, spol. s r.o., into a single telecommunications organization. The organization is now operating more than six million lines, both fixed and mobile, making it one of the world’s leading providers of fully converged services.

Telefónica O2 Czech Republic offers the most comprehensive portfolio of voice and data services in this country. Special attention is paid to the exploitation of the growth potential, particularly in the data and Internet sector. Telefónica O2 Czech Republic operates the largest fixed and mobile network including a 3rd generation network, CDMA EV-DO and UMTS, enabling voice, data and video transmission. Telefónica O2 Czech Republic also runs the largest network of WiFi hotspots in the country.

Telefónica O2 Czech Republic Figures

2010 Nine Months Financial Results• Total mobile customer base 4,856 thousand.

• Contract mobile customers 2,819 thousand.

• Number of prepaid active customers 2,038 thousand.

• Total number of fixed telephony accesses 1,686 thousand.

• Number of ADSL accesses 777 thousand.

• The total number of O2 TV customers 131 thousand.

Press Release Nov 1, 2010• 98 % of the population covered by EDGE

• 40 % of population (74 towns) covered by UMTS

Mobile Network Offload

Just to synchronize…

Strategies• Offload the mobile network at any cost (e.g. move to fixed access…)• Offload by using an alternative radio access/overlay network (CDMA, WLAN, WiMAX…)

• Increase the mobile network’s capacity• Extend reach/coverage (e.g. access inside buildings by WiFi hotspots)

• Any other

Architectures• RAN offload• Backhaul offload• Core network offload• Any other…

Models for overlay network• Controlled by mobile operator• Controlled by ISPs in partnership with MNOs• Any other (including free networks…)

Let’s focus on WiFi offload

Mobile Network Offload to WiFi by Operator

• What to do with the excessive traffic on the radio network? Offload to WiFi (WLAN).

• OK, Core network is ready, WLAN is connected, but why nobody is using it?

• Because of terminals.

• The terminals either do not support the overlay WLAN hand-over and authentication or subscribers are leaking to other WiFi networks that are free of charge.

• So the terminal support is the key. And smart proposition of the operator as well.

Types of Mobile Terminal

Handset • Feature phones• Smartphones

PC• Laptop with USB dongle, PC card or modem

(including tethered handset)

• Netbook with integrated 3G modem

• Tablets, e-book readers, game consoles…Other – M2M• POS terminals, built-in modems…

MobilePhones

PCs Tablets,E-bookreaders

M2M

Role of Terminal

GPRS

UMTS

CDMAEV-DO

WiFi

• Connect to network

• Authenticate

• Provide mobility

• Allow handovers between networks

Key Terminal Features

Connect to network• Support of WiFi – IEEE802.11x

Authenticate• Support of IEEE 802.1x Authentication • Especially EAP – SIM, AKA*

Provide mobility• Not natively supported at the moment

Allow handovers between different networks• Can be done by use of advanced „diallers“

Also remote management • Settings provisioning – e.g. OTA

* This is extremely important for mobile operators. It helps to keep the subscriber on-board and prevent them leaking out from operator’s network.

Majority of users is unable to set even basic parameters

of their device

Situation in the Network

• Percentage of WiFi enabled phones is currently low • About 8 % in CZ (comparing to 15 % in UK)

• It is higher when counting only on-line phones (14 %)

• But still growing…

• Percentage of laptops with WiFi is almost 100 %• Some laptops has also built-in 3G modem

(netbooks)

• Impact of offloading phones is low – it is just about 20 % of data traffic• Off/loading to operator’s network might be easy

– user control is low

• PC traffic is much higher – 80 %• But the access to the network controlled by OS

drivers and „dialer“

96%

4%

Mobile PhonesPCs

7% 1%11%

54%

27%

WiFiSmartphonesWiFi featurephonesSmartphones

Feature phones

Feature phoneswithout data

Mobile phones in Telefónica O2 CZ network

Phones vs. PCs in Telefónica O2 CZ network

Situation in the Network

Market share vs. NW share

• Market share does not say anything about actual devices in the network

• The battle about smartphone market share does not have immediate impact on operators

• The NW load is mainly caused by boom of mobile broadband (= modems, dongles) and not smartphones

10%

71%

19%

Smartphones

Basic phones

Plain voicephones

Data from Telefónica O2 network

Q3 2010 Telefónica O2 CZ network shares

Terminal Manufacturers Support for Offloading

Mobile phone manufacturers do not care about operator based WiFi services enough.

Nokia gives relatively good support for operator controlled WiFi access (features built in to Symbian).

Massive push of Android (but with insufficient support of EAP-SIM)

PC equipment manufacturers feel no relation to operators at all

PC operating system makers are not used to support mobile operators

Vendors are primarily “feeding customers hunger” for cheap access to Internet.

Even Apple planning to bypass carriers?*

*Rethink Wireless: Is Apple planning an iPhone that bypasses carriers? Caroline Gabriel, 27 October, 2010

Users View on Mobile Network Offload

Do not forget:

Many users are offloading already now

Home hotspots – really big competition!

“Why do I need to pay anything when I can connect through my current Internet connection?”

Impact on Data Offload Strategy

Data offload to WiFi is technically doable, but:

• Limited availability of devices with good support

• Still too few WiFi enabled phones in the network• Features in the phones are insufficient

• Terminal manufacturers do not support it sufficiently

• Building WiFi overlay network is expensive

• Customers want to bypass paid operator network

So what is a solution?

Limited Availability of Devices

When there are no suitable devices with good support for WiFi offloading on the market the operators must push manufacturers to make them.

WBA a good candidate?

Operators should ally and define some kind of standard that will be communicated to mobile phone manufacturers.

In some cases the lack of terminals with good support of WiFi offloading is just a lack of sufficient information at manufacturer. In some cases it might be the strategy.

It should be also possible to push OS vendors (Microsoft or Linux distribution companies –RedHat, SuSE…) to support WiFi offloading in their products.

But it takes time…

Mobile Operator’s Combo Device/Dialler

• TO2 CZ currently offers several combo devices for UMTS/CDMA-EVDO. • Also provides several diallers that are used to deliver better customer experience with

CDMA modems and 3G USB dongles.• These diallers are able to detect WiFi as well. It should be possible to enhance them to

use SIM card for EAP-SIM authentication. Then it will provide (almost seamless) connection service across all connections available at the device (PC or phone).

MNO’sGPRS/UMTS

MNO’sCDMA

MNO’sWLAN

WiFi Alliances

Another solution supports the strategy of extending reach/coverage:• Co-operate with other mobile operators and ISPs

• Allow roaming between Public WLANs

• Support use of EAP-SIM authentication

MNO1WLAN

MNO2WLAN

ISP1WLAN

ISP2WLAN

ISP3WLAN

MNO2WLAN

A creative solution – use home hotspots with dual SSID and use the second SSID for operator’s WLAN .

Why should home user pay to operator for access via his/her own hotspot?

But why should home user open his/her own hotspot to others?

Why should home user allow dual SSID operation his/her own hotspot?

Why to lose full capacity of his/her connection in favor of others?

And even allow remote management of it by the operator (TR-69)? Because the home

user would get money from the operator for use of it

by other users!

Public WiFi Hotspot Run by Home Users

It is not just about the Network Capacity

WiFi offloading benefits include:• Mobile portal authentication• On-boarding PC users• Finding new models of operation – to compete with strictly Internet

players

Future:• If operators successfully unite for common pressure on terminals

manufacturer it might create another ground how to influence the future telco development*

But isn’t simpler just keep the mobile network architecture as it is? (“The do nothing strategy…”)

There is another reason…

*Not the case like operators made agreement with Apple about iPhone…

Current State is like Last Days of the Roman Empire

MNOs created „empires“

Huge revenues are funding their development

But now the „empires“ are under attacks of „barbarians“ from outside (the Internet…)

It‘s evolve or die…

Without gaining position on the WiFi networks the MNOs cannot survive in the Internet age keeping their current form

Not keeping the position means drastic reduction of their business – the „fall of empire“

Summary

Is device availability a constraint for operators today?

• Yes. Without proper support the offloading might lose the desired effect.

Operators data offload strategies should count with:

• Need of development and deployment of needed features to mobile phones.

• Creating cheap data access with solid guarantees, operators could be bringing new quality to current WiFi ISPs and keeping their place in the value chain.

• Offload should not be just disaster measure, it should be rather opportunity to bring new users on-board.

Potential business model to explore:

• Cooperation with home WiFi hotspots owners

Thank you