Mobile Broadband – New Applications and New Business
Models
Brough Turner
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IMT-2000 Vision (for 3G) includedLAN, WAN and Satellite Services
Satellite
MacrocellMicrocell
UrbanIn-Building
Picocell
Global
Suburban
Basic TerminalPDA Terminal
Audio/Visual Terminal
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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 ?
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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
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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
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Japanese Music Revenues
Source: Infinity Venture Partners
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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
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Mobile Social Networking
Source: Benjamin Joffe, Plus Eight Star Ltd.
50 M 6 M 10 M 3 MMobile users:
2000 2004 2006 2007Mobile launch:
Profit (USD):
$225M ~$100M ~$35M ($50M)
2.5G
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“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 …
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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
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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)
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Mobile Broadband Access
US prospects for “over the top” access to the open Internet
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iPhone traffic per month
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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
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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
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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
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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
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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”
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Handset diversity
Remaining obstacle to widespread deployment of 3rd party applications
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IMS doesn’t solve inter-operability
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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, …
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Mobile Software Frameworks
Source: Andrea Constantinou, ©2008 VisionMobile Research
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Mobile Facebook by: http://www.flickr.com/photos/philiphubs/
Internet will win in the end, but…
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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
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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; …
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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
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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
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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
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Expectations are clear
Camera
Media Player
PhoneMobile
Telephony
Today
BrowserMobile
WebMobileWeb2.0
Browser
Camera
Media Player
PhoneMobile Telephony
Tomorrow
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The initiative has passed to application developers
Biggest Take-Away
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Dumb Pipes or New Service Opportunities?
How operators can profit while providing open mobile access
to the Internet
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Advertising won’t cover lost voice $
Source: Telco 2.0 Manifesto, STL Partners Ltd.
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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
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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
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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 !
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DoCoMo i-Mode: 2-sided business model
• Subscribers pay for data access (flat rate monthly bundles)
• Application providers pay DoCoMo for billing services
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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
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Operator Assets
• Brand, PSTN numbers
• Location (motion, context, …)
• Fine-grained billing systems
• User data– Name, address, age, devices, …
• Rich presence
• Customer relationships
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Telco Platform
Customers: Revenue Side 2
Customers: Revenue Side
1Developers
Retailers
Government
Brand AdvertisersContent 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
$ $
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Opportunities on all fronts
Rich mobile applicationsare coming
but,business models will change, significantly
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Brough TurnerAshtonbrooke Corporationhttp://www.ashtonbrooke.com
Blog: http://blogs.broughturner.com
Email: [email protected]
Skype: brough
Thank you !Thank you !