Wireless Operator Strategies

Wireless Operator Strategies provides both a deep and broad perspective of the operator market, combining granular operator-level and market-level data with ecosystem-wide understanding of wireless operator challenges and opportunities.

Operators, RCS, Privacy, Regulation and Partnerships Top Day Two MWC
February 27, 2012 22:42 David Kerr

Day one of MWC was dominated by the usual array of sexy devices with ever increasing feature lists and ever diminishing true differentiation. Today, we saw more of the same with some more color on tablets plus Microsoft and Nokia driving down the Windows Phone specs and price points to potentially enable the next 1B smartphone users.

More significant for me today were the reactions and statements of leading operators. Operator alliances to promote TD-LTE as well as branding RCS under the Joyn moniker as well as significant discussions of privacy issues were all front and center in Barcelona today.

Joyn apps for Android are being shown off at MWC, and in the coming months they will be joined by iOS apps and devices with the capabilities built in.

There is clear consumer demand for enriched messaging and voice services, and Rich Communications provides mobile

network operators with solutions to address these consumer needs.

? Anne Bouverot, GSMA

We also see the industry moving forward on privacy guidelines issues today by the GSMA being a much needed initiative given the tsunami of apps and the inevitable rising tide of opportunities for abuse.

Further evidence of operators and service providers looking to partner to grow the entire mobility pie can be found in the m-payments arena where Vodafone was top of mind with planned global offering partnering with Visa for NFC.

The operator keynote panel which included China Mobile CEO Li Yue, Vodafone CEO Vittorio Colao, and Ralph de la Vega, CEO of AT&T's mobile business as well as Franco Bernabe, CEO of Telecom Italia painted a picture of an industry with significant challenges in declining arpu, escalating investment costs, growing competition from OTT players and of course those pesky regulators.

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FCC Plan enables Wireless to fill the US ‘Broadband Availability Gap’
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
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Google Nexus One after the dust settles
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.
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