The Long Slow March towards a Utility Business Model: Mobile World Congress Summary 2009

Overall view of the show: Better than ever to do business.
The number of meetings, their quality, and the decisiveness of the people involved was up.  MWC (Mobile World Congress) has returned to the days where the focus is business not hype.  I hope they can keep this quality and focus in the years to come.  This was in part because the attendance numbers were down; 20% was the last figure I heard, which was aligned to my observations.  For example, at noon on Wednesday there were no queues at the sandwich shops in the central courtyard, which I’ve never seen in all the years MWC has been at Barcelona.  Also the GSMA daily newspaper appeared to have trouble finding content, repeating articles across the days.  At least 10 companies I met at the show only had meeting rooms, giving up on the stand.  Perhaps the old stand format is becoming obsolete given the availability of marketing materials on the internet?  But regardless of absolute numbers attending, the event was better then ever to do business.

Devices: Touch screen phones become ‘samey.’
There’s certainly no lack of choice of touch screen phones from LG Arena, Samsung Touch, Acer, HTC, Huawei, Blackberry, etc.  However, they are all becoming very ‘samey,’ very quickly.  Though with that said, the Vodafone Magic (HTC’s Android phone) appears to be distinctly lacking some of the user interface edge of its competitors such as 3D navigation, cute layering, and smarter touch technology.  And most surprisingly lacked significant service integration, which should be the principle reason for creating a ‘Signature device.’  This is a serious issue; telcos are focusing upon a service platform (mobile device) that’s increasingly outside their control; and critically lacking in pre-loading services that leverage their network (other than voice, messaging and internet access).

LTE (4G): Causes some suppliers to take their eye off the immediate UMTS/HSPA revenue opportunity.

According to In-Stat, Huawei has secured 42 new UMTS/HSPA contracts, representing 40.4 per cent of the total number of new contracts signed globally in 2008.  The ‘bright and shiny’ LTE has caused some suppliers to take their ‘eye of the ball.’  LTE will not see serious volume deployment until 2013, as discussed in this article.  So UMTS/HSPA is where the money’s to be made for the next 3 years.  Huawei continues its business acceleration through focus on what matters to customers; not materketeers.

4G services:  There’s no such thing as 4G Services!
With all the hype on LTE/4G, the marketing departments couldn’t help themselves but announce 4G service initiatives.  When HSPA+ provides 40Mbps (which we know well as Telstra likes to remind us they’ve got the biggest), and LTE gives 80Mbps; I’m struggling to see what new services are enabled, apart from a fatter pipe to the internet.

Mobile Advertising:  We’ve got to start learning from our mistakes
There was no mention of last year’s statement where Vodafone, Orange, O2, T-Mobile and Three announced that they would work together to develop a common measurement standard for mobile advertising.  The reason: because it failed, through a lack of agreement and also a lack of engagement from the advertising industry.  The cable and broadcast TV industries understand that to work with the advertising industry they need a common body, e.g. Project CANOE was created by the cable industry to enable targeted advertising to be introduced in a way that media buyers understand and can buy.  The media buyers have the cash, so the telco industry must treat them as customers, understand their needs and deliver on that; rather than today’s individual operator initiatives and self-focused processes/APIs.  Without exposing our mistakes at MWC how can we learn as an industry?  This leads me onto the creation of a similar mistake this year with OneAPI.

OneAPI: Repeating the mistakes of mobile advertising
The GSMA announced OneAPI, essentially ParlayX which has been around for years.  As explained in previous aticles based on extensive developer research; the API must be RESTful, stateless, and aligned to web developers needs.  As with the mobile advertising initiative mentioned above, the telco industry has created something based on its own needs without first clearly understanding what the customers (developers) need.  OneAPI is just a techy bit of a much bigger problem, as clearly set out by James Parton head of O2 Litmus who doesn’t talk about technology at all in his presentations, rather focuses on how to get applications in customers’ hands and making money for developers.  As discussed in this article the industry needs to act as a co-ordinated entity; and focused on needs of developers, not the current self-focused approach.

App Stores:  Multiple stores can survive, use all channels and let the customer decide
There was a rash of announcements from Microsoft, Nokia, Android, RIM, etc. on their application store plans.  Prior to MWC we’ve seen several operators make announcements on their application stores / widget platforms, e.g. Vodafone. The challenge operators will have is that the consumer electronics manufacturers (Apple/Nokia) only care about device sales, the app store is simply to add value to sell more devices.  Hence the current 30:70 split will likely drop to 20:80 with competition.  Apple iTunes only cares about you if you have a credit card, Nokia’s reach is much broader, Microsoft and RIM are more business focused, and Android will deliver to phone’s running its OS.  Whether other device manufacturers follow suit with app stores is unclear, but it’s likely at least half the mobile market will be served by the operator.  And operators should not forget to also use the device manufacturer’s stores for their applications, as discussed in this article.  In the limit it’s going to be the customer that decides whether an operator provides services or just connectivity, so operators have no choice but to get out there and use all possible channels to deliver cool, easy-to-use services.

One’s to watch.  A round-up of innovative companies at the show.

There is a long list of cool apps at the show; here are a few worth considering:
Home Camera, previously discussed in this entry, all operators I introduced to this application were impressed;
Nano Equipment, previously discussed in this entry, a common reaction from operators was they should be doing this already;
Dial2do, exciting integration of voice with the web;
Bubble Motion, voice messaging and so much more; and
Useful Networks, a range of interesting LBS that work across all operators in the countries they operate.

O2 Litmus was everywhere at the s
how, James Parton did a great job of promoting O2’s co-development community.  An impressive statistic is the first email inviting customers to join received a 27% response rate!  I’ve covered Litmus
in previous entries; it is an important initiative that is gaining momentum.  As an industry, we must help O2 Litmus succeed.

IMIMobile: Outsourcing Content Management
The operational issues in outsourcing the network continues to limit its potential savings, yet it is a current vogue.  However, for the lower margin content services no operator should own and maintain a content management platform, yet many still do.  IMIMobile through its acquisitions of dx3 and NSN’s music download service now has a complete converged VAS (Value Added Service) solution, as discussed in this article.  IMIMobile has achieved significant success in emerging markets, now is the time for operators in mature markets to evaluate their content operations and start improving margins.

Google Latitude: The location game’s up!
The location game’s up, for those happy to let Google own such personal data.  Google has bypassed the regulatory restrictions that have strangled LBS in countries such as the UK.  So will likely become a default location aggregation point over the years to come, bypassing operators’ networks.

Next Generation IN and Services Middleware.
I avoid using the terms JAIN/SLEE and SIP Servlet as it tends to encourage some people to become rather animated.  Suppliers in this field include Oracle, OpenCloud jNetx, IBM, Aepona, Red Hat, SailFin (Sun/Ericsson), Personeta, hSenid, and Argela.  Two more need to be included in this list: 4dK and APEX Voice, both are taking a unique approach, and both are ones to watch.

Revector: SIM (Subscriber Identity Module) box fraud is one of those ‘elephants in the room.’  It’s costing operators hundreds of millions of dollars a year, if not billions.  Yet awareness is low.  It’s simply using SIMs illegally to bypass international call charges.  Revector has been tracking down these boxes for years, if you’re not monitoring, then there’s money being left on the table.

Cloud Computing and Telecoms
Cloud computing has been around for a while in the IT industry, its now starting to impact telecoms.  IBM announced the formation of its cloud computing division which appears to be built from the brains of the Telco group.  It will be interesting to see if there’s a merging of the Telco and Cloud computing groups. There will likely be a dynamic tension between the cloud services offered by IBM, and those of operators.  And any operator serious about the future of its enterprise service will need to have a clear cloud computing strategy within the next 12 months.  In discussions with enterprise buyers at the show the emergence of thin clients (remember back in the early 90s!) appears to be gaining ground for cost and security reasons; so cloud computing will definitely be a hot topic for next year’s show.

Wadaro is now integrated into the SIMs of several manufacturers.  It uses the phone to monitor real performance of network.  Its surprising this isn’t done already. As mobile connectivity and cloud computing become pervasive it will mandate operators to extensively monitor their network as customers experience it.

5 thoughts on “The Long Slow March towards a Utility Business Model: Mobile World Congress Summary 2009

  1. Kevin Smith

    Hi Alan,
    Thanks for mentioning the GSMA OneAPI. Just to clarify, OneAPI does provide RESTful interfaces: currently for Messaging and Location; with more coming over the next few months. This is exactly for the reasons you state, namely simplicity and agility of development. We also provide Web Service bindings to give developers a choice; whilst these are based on Parlay X we fully recognise that such a heavyweight protocol is not suited to Web developers, and so we provide a greatly stripped down subset to make things simpler and quicker to use.
    Regarding the ‘non-technical’ part: so far we have completed our first phase, to produce an initial technical API. The second phase is to address the more complex area of developer engagement: AAA, payments reconciliation, compatible business models across operators, etc. AS you say James Parton is a forward-thinker in this area, and I’m very pleased to have him involved in the OneAPI. Meanwhile developers can also get involved at and help steer us to a genuinely useful and relevant API.
    Best regards,
    Kevin Smith
    GSMA OneAPI project leader

  2. Alan Quayle

    Hi Kevin,
    Thanks for your clarification. As OneAPI is in competition with over the top channels to market, its important for the industry to go out and engage the customers (web developers). Orange Partner is a great example of this. Web developers are unlikely to proactively get involved in OneAPI given it does not have a clear path to cash and given developers past experiences with operators. You need their involvement throughout your process, which requires operators are proactive. You’re leading an important initiative for our industry, and it requires things be done differently to avoid yet another ‘telco special.’
    I’d recommend a web developer steering board, and also a business stream to get the commercials, processes, and industry alignment sorted. At present the ‘beard and sandals’ (techy geek) ratio is too high – you need more trainers and ties involved 😉
    Best Regards,

  3. Kevin Smith

    Hi Alan,
    Yes, I fully agree (except for the sandals, not in winter ;). The second phase of the project will look at how best to engage developers/product managers in the commercial and technical shape of a cross-operator API, and in parallel encourage operators to support the initiative with live deployments.
    At MWC we talked OneAPI with developers/ product managers at the WIPjam session, and it is that kind of engagement that we need to formalise and maintain to ensure success – “a clear route to monetisation via a simple, portable API”.
    Best regards,

  4. Robert M. Juncker

    Hi Alan –
    First off, thanks for the well-written and thoughtfully constructed overview of MWC. I thought this years’ conference was extremely well put-together and despite the scaled back “festivities” due to the economic climate, showed that this industry is still moving forward.
    As a developer, I wanted to add some additional insight into the OneAPI entry. One of the biggest challenges that my organization faces is integrating into the operator’s infrastructure. As you mention, the ParlayX framework has definitely withstood the test of time, but even with that protocol in place today, we are on four different carriers that use ParlayX for Locating and Presence detection, and I have exactly four different implementations of the ParlayX integration due to differences in the way it was implemented and the conditions/errors it returns. – This standard is anything but a standard, and the difficulty that comes from managing multiple security interfaces to the calls adds another layer of complexity. What’s exciting to me about the OneAPI is the ability for me to write a single interface to the operator’s assets that I can readily replicate across other operators and know that I can get the data I want out, without having to handle different error conditions and mechanisms for communication. At the end of the day, I want my organization to focus on writing applications to run on the Operator’s networks and not have to worry about interfacing into it. — In the OneAPI sandbox, we managed to create an integration and retrofit it into our product in a matter of a handful of hours versus what normally was a multi-month process not to mention the certification that comes behind it. As a developer, we’re extremely excited about what OneAPI can do for our business and the path ahead as it continues to mature. Developers like me have been waiting for someone to standardize the standard, and make accessibility to the operators’ assets readily easier to access so we can focus on innovating as opposed to accessing.
    Rob Juncker
    Co-Founder and CTO
    Gearworks, Inc.

  5. Paul Golding

    Well, I usually wear sandals in the sandpit, playing around, and trainers on the basketball court, playing to win 🙂
    OneAPI is a useful starting point, but the critical issue is the business model and how far the MNOs will go in exposing their assets. MNOs still think in old telco (owning the customer) terms, not in Internet ones (owning the transaction). The OneAPI needs to be part of something bigger – ‘Operator 2.0 platform’ – open scalable platforms upon which to build social-connected apps. Pipes alone, even ‘smart’ ones (which is an oxymoron) can’t deliver.
    They need to read “What Would Google Do?” (Jeff Jarvis) and listen to clever chaps like Mr Quayle.
    NIce seeing you all at MWC!

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