Wireless Networks & Platforms

Covers market sizing forecasts, best practice case studies and the insights to guide profitable mobile broadband growth.

December 30, 2010 22:12 suerudd
Skype today launched Video for iPhone, iPod Touch and iPads. This new version of the Skype service application software lets users make and receive video calls from iPhones, iPod touch and iPads, with instant messaging for other Skype users, over both Wi-Fi and AT&T's 3G network. Was it a test for this iPhone video application that brought down Skype's Video Network Last week? The story going around last week was that a new release for Apple software - possibly the Skype iPhone Video application announced today - had a problem and triggered the Skype server failure when installed first on one and then several Skype 'supernodes'. But don't blame the Apple software application. Skype's supernodes act as both offline message (IM/SMS) relays and as Skype's Chief Information Officer noted yesterday "a directory, supporting other Skype clients, helping to establish connections between them and creating local clusters typically of several hundred peer nodes per each supernode." The initial crashes brought down 25% to 30% of the Skype supernode servers - just before the normal daily peak. This in turn led to traffic overload that created extensive delays in the support servers responsible for offline instant messaging. This resulted in long response delays to some to Skype Windows clients and 20% of these had an old software bug that then caused them to crash. The official Skype story was released yesterday by Lars Rabbe, Skype's Chief Information Officer, who describes the "snowball" effect that blocked most Skype users for 24 hours on 22nd.- 23rd. December 2010. "50% of all Skype users globally were running (an older) 5.0.0.152 version of Skype for Windows, and the supernode crashes caused approximately 40% of those clients to fail. These ... included 25–30% of the publicly available 'supernodes', (that) also failed as a result of this problem." "The failure of 25–30% of supernodes in the P2P network resulted in .. massively increased... load as (supernodes) reconnected to the peer-to-peer cloud... just before our usual daily peak-hour (1000 PST/1800 GMT)". As users tried to reconnect to the system, they generated "traffic to the supernodes that was about 100 times what would normally be expected at that time of day" and overwhelmed the remaining supernodes bringing the whole system to a standstill. It is interesting that some sources focus blame on Microsoft, not just Skype's network, servers and software, but maybe the problem is more profound. P2P Server Architecture. Serious questions need to be asked about a network service architecture that allows:
  • Application software to crash what should be 'carrier class' servers performing network functions
  • P2P software that causes both network and user device based clients to crash as a result of network overload problems
  • Network server problems that spread automatically across a large number of supernodes
Network servers need to be especially resilient and intelligent in how they 'fail-over' in a distributed networking environment; but a robust Service Architecture is always a pre-requisite. Let other P2P and 'Cloud' service providers beware. On a positive note Skype brought in massive extra capacity to stabilize the network and was also able to restore Group Video Calling functionality in time for Christmas. Software Release Deployment Lars Rabbe also committed to review Skype's "testing processes to determine better ways of detecting and avoiding bugs which could affect the system.". Hopefully this promise includes:
  • 'Old fashioned' regression testing of all old versions of client software
  • Large scale network testing that does not impact live users - especially at peak traffic times!
These are rules that traditional service providers have followed for decades. Perhaps a little more respect for the "old fashioned" network operators and their software release processes is warranted.

September 23, 2010 22:09 David Kerr

September 23, 2010

While there has understandably been a lot of attention given to consumer apps post iPhone and the plethora of application stores that have emerged, business mobility and enterprise mobility offer huge potential from horizontal to vertical applications and from smartphones to iPads and tablets to superphones.

In both NA and W. Europe, business customers account for under 30% of users but are the dominant streams of both revenue and profits for operators. On the device side, premium priced models from RIM, Nokia, and Microsoft Mobile licensees as well as the iPhone have long been key drivers of profits in a market where low single digit margins are the norm.  The explosion of smartphone choices has led to the battle ground moving beyond the corner office, to other executive and now increasingly the midlevel manager.

With a new range of devices competing for space in the corporate market, the issue of corporate versus individual liable has become an increasing priority for IT decision makers. Add on the complexity of managing an expanding list of OS (Android, iPhone, Windows Mobile, Symbian, Palm, MeeGo, Bada from Samsung) and the growing importance of mobile portable devices with access behind the firewall and one can already feel a corporate migraine forming…. And that’s before we even discuss device management, mobility policy, device retirement etc. etc.

I am looking forward to CTIA Fall (San Francisco October 5-7) and in particular to the Enterprise Mobility Boot Camp moderated by Philippe Winthrop of the Enterprise Mobility Foundation. The boot camp spread over two days will address many of the issue listed above with our own Andy Brown featured in an analyst roundtable on October 6th.  I look forward to meeting you there. Don’t hesitate to contact Philippe for passes to this the deep dive enterprise mobility event.

David Kerr

David Kerr
Snr. VP - Global Wireless Practice
Tel: +1 617 614 0720
Mob: +1 262 271 8974


August 11, 2010 16:08 suerudd
August 11th 2010 Doing the FCC’s job? On Monday August 9th. Verizon and Google issued a joint ‘suggested policy framework for lawmakers’ which reads as if it had come from the FCC, leading to an appropriate response from FCC commissioner Michael J. Copps that it is “time to reassert (FCC’s) authority”. The framework endorses all the good ‘motherhood’ concepts - openness for legal content, nondiscrimination that does not block or degrade the Internet, and transparency for both wireline and wireless. And it addresses some of the traffic and network management concerns raised in my blog of May 27th . But the sting is in the tail. The fifth and sixth points posted in the expository blog carve out two major markets. The ‘Carve Out’.Two key markets are carved out for minimal FCC oversight and therefore would not be subject to many ‘net neutrality’ and access requirements. First area is ‘differentiated online services’ that integrate application services with bandwidth – “healthcare monitoring, the smart grid’ etc. i.e. vertical markets where performance and security must be guaranteed. The proposed Verizon and Google approach allows each application to be ‘nailed-up’ to a specific network - rather than the Virtual Private Networks VPNs) with Service Level Agreements(SLAs) that operate today. This could lead to significant innovation – if only it were not based on exclusive bi-lateral transport and applications vendor deals. Haven’t we been here before? Didn’t this lead to the original Enhanced vs. Basic Services split of Computer Enquiry II.  And it recreates the comparatively unsuccessful ‘Walled Garden’ approach to applications. Second ‘carve out’ is wireless broadband which is claimed to have “unique technical and operational characteristics” and to be “more competitive and changing rapidly”, so “in recognition of the still-nascent nature of the wireless broadband marketplace” Verizon and Google recommend against applying any of the “wireline principles” except transparency. Broadband is Broadband is Broadband….Although wireless has historically had special treatment, mobile broadband is rapidly reaching parity with wireline speeds and quality. Over the next two years applications will operate seamlessly across wireless and wireline networks and many users may not even be aware which network they are on. To users Broadband is Broadband. All applications require an appropriate class of service at a competitive price. Special value added networks and mobile broadband cannot and should not be carved out from the general area of FCC broadband service oversight. Reactions and Furor on both sides of the ‘pond’ In the US, Wall Street Journal welcomes this ‘Traffic Plan’ and TIA notes that the “Verizon and Google…rightly addressed important issues such as the need for network management welcoming it as a “step in the right direction … and a possible solution to the uncertainty created by the Comcast decision.” But bloggers and the New York Times Opinion page started discussing carrier/search engine business alliances and making jokes about ‘VerGoogle’ that have now prompted a strong tweet denial from Google “We've not had any convos with VZN about paying for carriage of our traffic. We remain committed to an open internet.” Wired magazine however, describes the ‘differentiated online services network’ as a “left-field proposal to anticipate an entirely new information highway for ‘fast lanes’” and believes that “Google and Verizon have proposed creating a second, paid-access-only internet” “over an unspecified global network”. Could that be Verizon’s new Packet Optical Transport Platform (P-OTP) network? Across the pond reactions are still evolving. Financial Times subtly points out that “industry insiders on Capitol Hill and at the FCC are questioning Google’s motives for an apparent about-face on its position as one of the most powerful advocates of net neutrality.” Others reflect the stronger view that the EU is taking on Net neutrality.with one blogger warning that “An obvious outcome … is that when Google is dragged backwards through an antitrust investigation by the EC or DoJ, it will find no favours from civil society after this betrayal…..Good luck, Google - you thought China was sticky in terms of political support, you'll find that was a storm in a delicate teacup.”

May 27, 2010 20:05 suerudd
Throttle or Choke.‘Net Neutrality’ proponents argue that there should be no restrictions by service providers on any type of end-user access to content, equipment or modes of communication but in April a U.S. Court of Appeals ruled that the FCC had exceeded its authority when it told Comcast not to ‘throttle’ BitTorrent’s peer-to-peer video exchange and related applications - even though BitTorrent was ‘choking’ performance for other Comcast users. FCC is now proposing additional regulation and Congress is getting in on the act. Lurking behind the partisan rhetoric of ‘Net neutrality’ are serious issues. It is time to deal with them. Issue 1. Harm to the Network. Ironically Comcast was trying to protect its customers from ‘harm to the network’ as the Communications Act requires. Many service providers - including many mobile operators - are struggling to manage the disproportionate traffic demands of a few heavy duty users whose peer-to-peer or high bandwidth applications slow down performance for everyone else. Solution: Some equitable form of network management is not only reasonable but essential for the broadband networks to function. Issue 2. Service Quality at a Fair Price. Insistence by ‘Net Neutrality’ advocates that everyone get the same access with the same ‘class of service’ leads rapidly to a lowest common denominator for all. When video ‘bandwidth hogs’ block more time sensitive or more valuable, low bandwidth applications there is a good case for throughput guarantees. Solution: In both fixed and mobile broadband markets, tiered classes of service for different user applications with different bandwidth requirements and different priorities at different prices will enable operators to balance broadband traffic demand with new capacity expansion. Issue 3. Exclusive Walled Gardens. The owners of broadband access have been tempted recently to consider exclusive deals with preferred application and content providers – like Google and YouTube. Often there are only one or two access providers, so small new or innovative vendors are concerned they will be relegated to a lower class of service. This is not just a US issue. In April European Union telecoms commissioner Neelie Kroes suggested that “users should be able to access and distribute the content, services and applications they want”…”Nor should telecommunications providers be allowed to block services provided by direct competitors.” Solution: Toll highway operators should not choose the customers’ automobiles. Nor should the automobile companies pay the user tolls in advance for the fastest highways. A primary reason for communications regulation is to prevent access providers from extending their power to control access to limit content choice or overcharge for services. Networks need a clear and neutral boundary between transport and applications so that choices are separate and made by end users. Let’s deal with the real challenges to delivering broadband for all - instead of firing political rhetoric at one another

March 24, 2010 22:03 suerudd
Newton MA.USA. The size and bureaucratic tone of the FCC’ s ‘Connecting America :The National Broadband Plan’ conceal some exciting implications for broadband wireless. So here is the crib sheet.The new pro-active US Federal Communications Commission has decided to follow the example of other industrialized countries - that have been aggressively promoting Broadband - and has proposed a Broadband Availability Target (BAT) for every household and business location in America to have access to affordable broadband service with download speeds of at least 4 Mbps and upload speeds of at least 1 Mbps with good quality of service. 14 million people in US today do not have access to a terrestrial broadband infrastructure capable of meeting the BAT. FCC projected potential broadband revenues from these 14 million people and subtracted the required capital expenditures and ongoing costs for terrestrial fixed broadband. The difference is the Broadband Availability Gap (BAG) which has a 2010 present value of $24 Billion. “The gap is greatest in areas with low population density” where, the FCC says “service providers .. cannot earn enough revenue to cover the costs of deploying and operating broadband networks, including expected returns on capital… there is no business case to offer broadband services in these areas.” So what role does the FCC assign to broadband wireless to help fill this gap? FCC notes that as of November 2009 3G service covered only roughly 60% of U.S. land mass. And although FCC politely questions the spectral efficiency and services of current Fixed Wireless technology and timing of 4G wireless it boldly announced new plans to: Make 500 MHz newly available for broadband use in 10 years, of which 300 MHz is for mobile use within 5 years as follows:
• 20 MHz for mobile broadband use in the 2.3 GHz WCS band • 10 MHz Upper 700 MHz D Block for commercial use compatible with public safety broadband services • 60 MHz in AWS bands • 90 MHz of Mobile Satellite Spectrum (MSS) for terrestrial use • 120 MHz reallocated with compensation from the broadcast bands television (TV).
And the FCC recommends allocating funds for the plan in stages as follows:
Stage 1: 2010–2011 - FCC will establish Connect America Fund (CAF) to support the provision of affordable fixed broadband and will begin to switch up to $15.5 billion from the Universal Service Fund(USF) to CAF. CAF funding is planned to be “technology and carrier neutral”. FCC will also establish new Mobility Fund for specific locations that are lagging significantly behind in 3G wireless coverage (and to establish) the basis for the future footprint of 4G mobile broadband networks. Stage 2: 2012–2016 - FCC will assign approximately $4 billion from Inter-Carrier Compensation (ICC) reforms and CAF to Mobility Fund and related activities. FCC will also provide funding of up to $6.5 billion to support deployment of a nationwide, interoperable Public Safety mobile broadband network. Fixed wireless broadband will compete with terrestrial broadband for CAF funding.
Our recent TRS report ‘Gambling on Telco Returns - Telco CAPEX and Risk in Six Countries’ calculated that today fixed broadband capital investment cost per subscriber in the US, is approximately $250. This compares to approximately $70 per subscriber for today’s wireless networks and potentially twice that for 3G+ or 4G. Wireless broadband is likely to require significantly less FCC subsidy than terrestrial broadband to fill the FCC’s ‘Broadband Gap’, especially in the underserved low density rural areas of the US. Tariff and Revenue Strategy Service analyzes how service providers can balance their fixed and mobile broadband capital expenditures and price new broadband services to achieve profitable ubiquitous operations. Sue Rudd, Director Tariff & Revenue Strategies – srudd@strategyanalytics.com

March 3, 2010 18:03 suerudd
March 3rd. 2010, Newton MA. USA Tariff and Revenue Strategy(TRS) service looks at the financial outlook for service providers in 2010 and 2011.  Although growth will be slow, TRS expects telecommunications to outpace the economy. The glass is definitely ‘half-full’. Real US growth is beginning to come from the manufacturing sector. US Federal Reserve has announced that January 2010 was the 7th. consecutive month of US manufacturing growth. Output of business equipment rose 0.9 percent in January, and information processing equipment increased 1.7 percent. In UK today’s strong service sector report is stimulating talk of positive first quarter GDP growth; and the February US numbers show stronger than expected service sector growth and continued manufacturing expansion. For the telecommunications sector in 2010 the substitution of telecommunications for travel and of messaging and email for business transactions should continue to increase penetration as a percent of overall industry activity. Because telecommunications increases labor productivity it will continue to outpace the slow economic recovery, even if there is little job growth. Slowing rate of job losses has not been great news – though this is exactly how things look just before the economy turns up . Think ‘sine wave’ and ‘positive first derivative’. The slow recovery is not slow enough however, to totally depress Communications Investment. Capital expenditures (CAPEX) for telecommunications equipment and network deployment are expected to recover significantly in 2010, even if the level may not get back above that of 2008. Even as operators are laying off thousands of employees to improve competitive efficiency, they are optimistic enough to announce significant 2010 CAPEX for broadband telecom (fixed and mobile) over the next 18 months. These operators expect next generation IP based infrastructure to leverage the hardware volume of the information industry and lower their overall cost of operations. BTW: It is hard to quantify the exact impact of these savings on operator financials – but TRS is working on it. In 2010 and 2011 we expect that mobile broadband and IP based infrastructure will have the performance to begin to fill the ‘Broadband Gap’.  Mobile Broadband at 2- 20 MBps may actually be the cheaper, better way to deploy broadband services in rural and low density areas around the world. This infrastructure deployment will itself stimulate further economic growth. As April comes and the weather improves the glass may very slowly start getting fuller. Sue Rudd - srudd@strategyanalytics.com

January 11, 2010 22:01 David Kerr
Afte the inevitable wave of irrational exuberance has come the equally inevitable correction and flow of negative comments regarding Google Nexus One.
  • We are now seeing a huge rebound of criticisms about customer service, implementation and execution, moaning and complaining for existing t-mobile customers who have to pay more than a new customer to get a cool device and strong complaints from developers about availability of SDK and support.
  •  Naturally, the questions about Google's ability to execute on direct sales are being raised but these shall pass very quickly in our view.
Within our wireless team we had divergent opinions from network centric, application focussed and device driven analysts but ultimatlely we arrived at the following key perspectives:
  • Consensus is that Nexus will be successful by high end tier Smartphone levels (single digit volumes in 2010 but upside potential when it rolls out beyond TMO in US and to more open markets in Europe). Nexus is likely to sell more through operator channels than direct overall. Handset volume though is not the metric by which Google will measure Nexus success nor should operators as Nexus sales are a means to an end.  If Google is successful and Nexus ends up driving usage and value for operators, they will support it with subsidies.  Otherwise, operators can passively watch Google evolve its own-branded offering with little to lose. Tier One handset vendors (SAM, LG) may have the most to lose as Google’s marketing muscle and brand coupled with compelling devices and experiences will be a strong competitor for Operator slots, subsidy dollars.
  • Handset revenues and profits are a nice to have for Google. Key to their success and long term ambition is too boost the mobile browsing ecosystem. More open devices capable of browsing/search/maps from Google or others is positive for Google.  Google needed to update and get close to parity in terms of an engaging, fun, easy browsing UI with competitive links to key apps like maps, media etc and this device achieves that goal. Google is great at creating a buzz and the media is ready to talk about something other than Apple.
  • Google Nexus and indeed the whole Android approach is not about controlling/owning the user (contrast this with Apple). Google’s key metric is advertising revenue. Google's vision is well publicized: the browser is how they will deliver services, even on mobile, and apps are a stop-gap measure as far as Google's strategic vision is concerned. Google is banking on HTML 5 as their solution to fragmentation but we believe they are drinking too much of their own coolaid here and underestimating the importance of apps. Google’s key goal is to increase eyeballs and advertising.
  • Some key elements that have not been addressed which we believe are key in Google’s future evolution and will be key to watch relate to Voice and what Google does its Gizmo5 acquisition to push Google Voice into a full VoIP proposition. This is where Telcos should be most worried and where we have yet to see all the pieces positioned on the battlefiled.