Mobile broadband is something you’re hearing a lot about today, partially due to the iPhone and Facebook, but mainly due to the fact that operators are finally starting to offer devices and tariffs at the right price point that are conducive to increased service adoption. Many operators have also recently starting upgrading their networks, or have announced plans to laugh “4G” networks. I recently had the opportunity to speak to Dean Bubley from Disruptive Analysis about mobile broadband and how operators are going to deal with the extra load their networks are going to bear once you’ll be able to buy something as powerful as an iPhone 3GS or Google Nexus One for free on a relatively cheap two year contract. That day will be here sooner than you think.
The interview is after the jump, and if you’re interested in information that’s a little bit meatier, and also have a corporate expense account, then pick up his recently published “Fixed and Mobile Broadband Business Models” report that spans roughly 250 pages.
Thanks for taking the time to speak to IntoMobile, Dean! I’ve personally been a long time reader of your blog.
[Photo above from Flickr user "duncandavidson"]
Can you introduce yourself to the IntoMobile audience?
I am an industry analyst and consultant with 18 years experience of covering the telecoms industry. My company, Disruptive Analysis, writes research reports and conducts consultancy projects on behalf of telecom operators, vendors of network infrastructure, software and devices; industry bodoes, regulators and investors.
In partnership with another advisory organisation, STL Partners / Telco 2.0, we have just published a detailed research study on new business models for fixed and mobile broadband. This examines the market potential of a broad set of novel strategies for broadband operators – providing better wholesale products, charging in different ways to simplistic flatrate or tiered plans, or partnering with governments and application/content provider to enable dedicated connectivity or services.
You study today’s mobile broadband across a vast number of countries, who has the best tariffs, who has the worst, and is any of that related to the quality of the network combined with it’s reach and the population density of people accessing it?
I don’t actually track tariffs – my focus is more on innovation in technology and business models for operators. One of the most important findings of the report is that the popular idea of fixed monthly tariffs for broadband is only one way of constructing a proposition. We already see a variety of alternatives – from prepaid mobile broadband, to one-off payments for WiFi hotspots, to the inclusion of data “for free” in devices like the Amazon Kindle. Over time, these models and others will become much more important for the operators, rather than standard monthly plans.
As an operator, why would I want to go to LTE this year, or even next year, when HSPA+ provides so much bandwidth?
It depends where the operator is, and what its existing technology base and spectrum holdings look like. In the US, Verizon is deploying LTE as an evolution of its current CDMA EV-DO technology, not HSPA. In Japan, NTT DoCoMo has always tended to lead the way in new technology deployment – but it has much greater control over its end-to-end ecosystem (including designing handset radios itself), so it is able to squeeze extra efficiencies.
In general, I believe that European operators will be circumspect about LTE deployments, focusing more on HSPA and HSPA+ for the next few years. There are many potential problems such as business case, indoor penetration of 2.6GHz frequencies, what to do about voice and so on. I do not expect LTE to become mainstream until 2014-15. Some operators may even opt to skip the current LTE generation and wait for LTE-Advanced (which is “proper 4G”) around 2016-2017.
Can you explain this looming spectrum crisis, and what, if anything, can be done to fix the problem?
There are three ways to get more overall capacity in mobile broadband networks:
- Better technology, going from 2G to 3G to 3.5G, using clever techniques to squeeze more bits into each Hz of available spectrum
- More spectrum to deploy in
- More cell sites to deploy on
The first option – improved technology – has served us well but is now getting close to the theoretical limits. We might get another 3x of improvement over the next 10 years. The third option is tricky, as getting new sites approved in many locations is time-consuming and expensive, although “small cells” provided by femtocells or WiFi offload should help. The other option is “more spectrum” but the problem there is that anything above 3GHz has poor propagation characteristics, getting absorbed by walls and so forth. So the mobile industry is battling with TV broadcasters, governments and satellite firms for access to the valuable sub-3GHz bands.
When do you think we’ll start seeing people consume as much information on their mobile phones as they do on their laptops and desktops today?
Short answer: Never
Data consumption is strongly linked to screen size / resolution, especially as video traffic tends to swamp everything else in terms of outright volume. So a home HDTV connected to an Internet video service might pull down 5 GB per. A PC used at home is more likely to be in the range of 10 – 200 MB per hour depending on the applications used, but again high-res video can be much more. Phones cannot really use that type of volume of data – and in any case would not have the battery life to do so consistently.
On the other hand if you define “information” more broadly than just GB of traffic, then some phones are already being heavily relied-upon by end users, and are certainly used /more frequently/ but for shorter-duration sessions.
In terms of innovative business models regarding mobile broadband, does any particular operator come to mind? What are they doing?
Not an operator as such, but M2M service provider Jasper Wireless acts as a data-centric managed service provider which works alongside operators like AT&T and KPN to embed their mobile broadband connectivity services into various embedded devices, sold through innovative channels.
In the UK, Vodafone recently announced a deal with a regional council to provide subsidised broadband for people beyond the “digital divide”
First Sprint, and then AT&T have done clever things with the Amazon Kindle
There is a fair amount of innovation in tiering and pricing going on around Europe – not just flatrate or simple tiered, but finer-grained based on time of day, speeds varying after certain thresholds and so on.
There’s this notion of “smart pipes” and “dumb pipes”, can you explain that from your perspective?
It is the ability of the data connection to provide a variety of ancillary “value-adds”
- prioritisation of certain traffic types
- collection and use of “meta data” on what the aggregate traffic flows are looking like, eg for marketing/advertising
- managed security
- optimised routing through the network (eg “breakout” of certain traffic to the Internet locally)
- provision of dynamic / variable bandwidth
- various optimisation / compression techniques
Basically it involves monetising various of the clever features on the routers or switches in the data path, rather than just selling “capacity”.
Do you think operators are wasting their time creating services that compete with companies such as Facebook and Spotify, who are both dedicated to making services work across multiple platforms, and of course across all operators?
Yes, except maybe in specific national markets where they have particular strengths and a concentrated market (eg perhaps Korea, or the level of control over handset architecture in Japan).
Realistically speaking, when do you think we’ll see mobile handsets from the likes of Nokia, Samsung, and Apple, come with LTE radios?
Some early ones will start to appear in late 2011, but they will likely be very “limited” in terms of performance, number of frequency bands, handoff, size & battery life.
I wouldn’t expect to see an LTE iPhone or a mid-range Nokia LTE featurephone (like it’s curreny 6xxx) series until 2013, maybe 2014.