Mobile Broadband – New Applications and New Business Models
Brough Turner
2
IMT-2000 Vision (for 3G) includedLAN, WAN and Satellite Services
Satellite
MacrocellMicrocell
UrbanIn-Building
Picocell
Global
Suburban
Basic Terminal
PDA Terminal
Audio/Visual Terminal
3
The Internet is the killer platform
• Mobile Internet access driving 3G data usage
• Future business models an open question
– Walled garden ?
– Advertising ?
– Other 2-sided business models ?
4
Leading Apps don’t depend on 3G
• Voice ― still the largest revenue source
– Bar none!
• SMS ― 2nd largest mobile revenue source
• Voice SMS, picture mail & video mail coming on strong
Content !
Mobile TV
Mobile social networking
5
Mobile Content
• More music sold on-line than off-line in both China and Korea
• Ringback tones– Created by SK Telecom in Korea in 2002; 30% adoption in
just 9 months
• Ringback tones today– Korea: ~55% adoption
– China: ~50% adoption
6
Mobile Content
• More music sold on-line than off-line in both China and Korea
• Ringback tones– Created by SK Telecom in Korea in 2002; 30% adoption in
just 9 months
• Ringback tones today– Korea: ~55% adoption
– China: ~50% adoption Any G,
1, 2, 3 or Fixed
7
Japanese Music Revenues
Source: Infinity Venture Partners
8
Mobile TV
70% of new handsets in Japanare Mobile TV enabled
Only Japan and Korea have multi-million Mobile TV subscriber bases
9
Mobile TV
70% of new handsets in Japanare Mobile TV enabled
Only Japan and Korea have multi-million Mobile TV subscriber bases
Broadcast services independent of 3G
10
Mobile Social Networking
Source: Benjamin Joffe, Plus Eight Star Ltd.
2000 2004 2006 2007Mobile launch:
11
Mobile Social Networking
Source: Benjamin Joffe, Plus Eight Star Ltd.
50 M 6 M 10 M 3 M
Mobile users:
2000 2004 2006 2007Mobile launch:
12
Mobile Social Networking
Source: Benjamin Joffe, Plus Eight Star Ltd.
50 M 6 M 10 M 3 M
Mobile users:
2000 2004 2006 2007Mobile launch:
Profit (USD):
$225M ~$100M ~$35M ($50M)
13
Mobile Social Networking
Source: Benjamin Joffe, Plus Eight Star Ltd.
50 M 6 M 10 M 3 M
Mobile users:
2000 2004 2006 2007Mobile launch:
Profit (USD):
$225M ~$100M ~$35M ($50M)
2.5G
14
“3G” Services
• 3G-324M Video telephony
• Location-based services
• Push-to-Talk (VoIP w/o QoS)
• Rich presence (instant messaging)
• Fixed-mobile convergence (FMC)
• IP Multimedia Services (w/ QoS)
– Video sharing (conversational video on IP)
• Converged “All IP” networks – the Vision
15
“3G” Services
• 3G-324M Video telephony
• Location-based services
• Push-to-Talk (VoIP w/o QoS)
• Rich presence (instant messaging)
• Fixed-mobile convergence (FMC)
• IP Multimedia Services (w/ QoS)
– Video sharing (conversational video on IP)
• Converged “All IP” networks – the Vision
Limited adoption
Limited adoption
Limited adoption
Limited adoption
16
“3G” Services
• 3G-324M Video telephony
• Location-based services
• Push-to-Talk (VoIP w/o QoS)
• Rich presence (instant messaging)
• Fixed-mobile convergence (FMC)
• IP Multimedia Services (w/ QoS)
– Video sharing (conversational video on IP)
• Converged “All IP” networks – the Vision
Limited adoption
Limited adoption
Limited adoption
Limited adoption
Bypassed !
No traction
Still waiting …
17
Mobile operators miss the boat
• Location-based services (LBS)
• Required in US for 911 services
• Fully implemented (after multiple delays)
• Not made attractive for 3rd parties
Result:
• All US location-based services based on alternate location approaches
– GPS, Cell ID, Navizon, Skyhook
18
Mobile operators slow the boat
• Billing Services
– Mobile operators have efficient billing systems & own the customer relationship
– DoCoMo showed (I-Mode in 1999) the enormous potential of affordable billing services
– Yet billing still offered only via premium rate #s
• Result:
– 3rd party content is paid for via 3rd party billing systems or (multiple) premium rate SMS(s)
19
Mobile Broadband Access
US prospects for “over the top”access to the open Internet
20
iPhone traffic per month
21
iPhone � glimmer of what’s possible
• Controlled eco-system
– Applications approved by Apple
– Must meet unpublished standards under contract between Apple & AT&T
– E.g., can’t run VoIP over 3G, only over Wi-Fi
But, $30/ month flat rate data plan(on top of $40+ phone plan)
• Explosive growth in web usage
22
Mobile Internet Access
• Available for PC’s with restrictions, e.g. no servers, no P2P, no substitution for private lines or frame relay
• AT&T: 5GB @ $60/mo
• Verizon: ditto
• Sprint: ditto
• No US operator offers flat rate unlimited plans
23
Breaking Oligopolies
• Four or more viable competitors is what it takes; more than four and it can be rapid
– Many examples in mobile voice telephony from around the world
24
Breaking Oligopolies
• Four or more viable competitors is what it takes; more than four and it can be rapid
– Many examples in mobile voice telephony from around the world
• 2009: Three established US 3G operators
– AT&T Mobility, Verizon Wireless & Sprint PCS
– Flat rate data plans exist; but with caps
– No unlimited open Internet access
25
Additional US 3G/4G Competition
26
Additional US 3G/4G Competition
• USA (well financed)
– Paid $4.2B for AWS spectrum in 2006 and committed additional $2.7B for initial rollout
– Currently spending almost $1B per quarter, 3G had reached 1/3rd of cell sites as of 3Q08
27
Additional US 3G/4G Competition
• USA (well financed)
– Paid $4.2B for AWS spectrum in 2006 and committed additional $2.7B for initial rollout
– Currently spending almost $1B per quarter, 3G had reached 1/3rd of cell sites as of 3Q08
• (build out partially financed)
– WiMAX on Clearwire and Sprint spectrum
28
Additional US 3G/4G Competition
• USA (well financed)
– Paid $4.2B for AWS spectrum in 2006 and committed additional $2.7B for initial rollout
– Currently spending almost $1B per quarter, 3G had reached 1/3rd of cell sites as of 3Q08
• (build out partially financed)
– WiMAX on Clearwire and Sprint spectrum
Potential for affordable flat rate mobile broadband in the US in 2010
29
Subscribers & Applications
• Historically, only applications pre-installed on handsets had any traction
– “On-deck” applications and content offers
• Apple iPhone application store is on-deck
– Provides access to 50K+ applications
• Andriod store, RIM, Nokia, Qualcomm, Palm, Handango, Adobe, Samsung, …
30
Subscribers & Applications
• Historically, only applications pre-installed on handsets had any traction
– “On-deck” applications and content offers
• Apple iPhone application store is on-deck
– Provides access to 50K+ applications
• Andriod store, RIM, Nokia, Qualcomm, Palm, Handango, Adobe, Samsung, …
Application stores are the new “deck”
31
Handset diversity
Remaining obstacle to widespread deployment of 3rd party applications
32
IMS doesn’t solve inter-operability
33
Handsets more & more diverse
• Browsers – Openwave, Opera, Safari, …
– Using: WebKit, Netfront, Presto, …
• Runtime environments as several levels
– Adobe AIR, .Net/Silverlight, Brew, JavaME, …
• Operating systems
– Symbian, WinMobile, Android, OpenMoko…
• Hardware capabilities
– CPUs, supported codecs, screen size, …
34
Mobile Software Frameworks
Source: Andrea Constantinou, ©2008 VisionMobile Research
35
Mobile Facebook by:
http://www.flickr.com/photos/philiphubs/
Internet will win in the end, but…
36
Important trends
• App stores!
– Easier distribution; Easier discovery
• More and more smart phones
• Richer browser capabilities
– Approaching PC browser functionality
• New access to device capabilities
– User data (contacts, logs, …), events (incoming calls) and core functionality
37
Uniquely Mobile Internet
• Phase 1 – cut down web, e.g. WAP
• Phase 2 – full web accessible on mobile
• Phase 3 – designed-for-mobile web
– Optimize the mobile user experience; speed ups
• Phase 4 – client-side mashups
– telephony, address book, location, camera…
• Phase 5 – apparent persistence
– Despite battery limitations; widgets; push; …
38
39
Challenges
• Handset diversity
• Pace of change
• User interface – minimum clicks; max speed
• Battery life – “chatty” apps drain power
• Application concurrency
– Manage events over browser, native & helper apps
• Persistent user experience across multiple applications
40
Dealing with handset diversity
• Browser-based application first
• Optimize for top N phones by market share
– For most applications, N likely equals 1-3, not 10-12
Source: StatCounter
SmartPhone market share
41
Smart Phones & Feature Phones
• Smart Phone adoption soaring
– Nokia, Blackberry, iPhone, RIM, WinMobile, Palm, Android, …
– Moore’s law suggests it will only get better
But
• 85% of US phones are “feature phones”
– Higher percentage in emerging markets
• Application environments emerge
– Java, Flash, Qt and ever richer web runtimes
42
Expectations are clear
Camera
Media Player
PhoneMobile
Telephony
Today
BrowserMobile
Web
43
Expectations are clear
Camera
Media Player
PhoneMobile
Telephony
Today
BrowserMobile
WebMobileWeb2.0
Browser
Camera
Media Player
PhoneMobile Telephony
Tomorrow
44
The initiative has passed to application developers
Biggest Take-Away
45
Dumb Pipes or New Service Opportunities?
How operators can profit while providing open mobile access
to the Internet
46
Advertising won’t cover lost voice $
Source: Telco 2.0 Manifesto, STL Partners Ltd.
47
Two-Sided Markets
• eBay connects sellers and buyers
• Nightclubs: women get in free
• Media
– Newspapers – low prices for subscribers facilitates sales of advertising
– Broadcast TV – free attracts viewers facilitating sales of advertising
• Akamai caching benefits
– Free to ISPs; Paid for by content providers
48
800 numbers
• The original telco 2-sided play
• Bell system provided retail phone service to essentially all US consumers
• Offered “800 service” to businesses, helping them connect with their customers and prospects
49
Billing Service
• Most operators cautious about partnering– Fear of “dumb pipe” � slow roll out of new services
• DoCoMo i-mode 2G data service launched 1999– Small screens, slow (9.6 kbps) data rate
• But i-mode business model was wide open– Free development software kits; No access restrictions
– DoCoMo’s “bill-on-behalf” with 9% commissions
• i-mode big success in first 24 months– 55,000 applications, 30M subscribers !
50
DoCoMo i-Mode: 2-sided business model
• Subscribers pay for data access (flat rate monthly bundles)
• Application providers pay DoCoMo for billing services
51
DoCoMo’s i-mode
• Open to any application developer
• Optional billing for a 9% commission
52
DoCoMo’s i-mode
• Open to any application developer
• Optional billing for a 9% commission
Results:
• Over 100K new applications in first 3 years
• Over 15K applications use billing service
• DoCoMo has highest data revenue per user, in the world, consistently for 10+ years
53
Operator Assets
• Brand, PSTN numbers
• Location (motion, context, …)
• Fine-grained billing systems
• User data
– Name, address, age, devices, …
• Rich presence
• Customer relationships
54
Telco Platform
Customers: Revenue Side 2
Customers: Revenue Side
1Developers
Retailers
Government
Brand Advertisers
Content Owners
Telco – Retail
B2B VASB2B VAS
DistributionDistribution
Source: Simon Torrance © 2008, STL Partners Ltd/Telco 2.0TM Initiative
Millions of Customers
Thousands of Segments
Millions of Customers
Thousands of Segments
$ $
55
Opportunities on all fronts
Rich mobile applicationsare coming
56
Opportunities on all fronts
Rich mobile applicationsare coming
but,
business models will change, significantly
57
Brough Turner
Ashtonbrooke Corporationhttp://www.ashtonbrooke.com
Blog: http://blogs.broughturner.com
Email: [email protected]
Skype: brough
Thank you !Thank you !
