Posts Tagged ‘iPad’

Mobile Data Overtakes Voice In Revenue

Thursday, June 10th, 2010 by Jon Linden

Only 18 months ago I was sitting with a mobile operator who told me that their main objective was to ensure that data services didn’t cannibalize their voice revenue. The reason was simple – data service generated about 5% of the revenue.

Fast forward to June 2010. The sun is shining and the World Cup in soccer is just about to kick off, but more importantly Softbank Mobile Japan announces that data services for the first time overtook voice services in revenue in Q1! Japan has always paved the way for mobile data services, and NTT DoCoMo are expected to follow suit during the second half of this year.

But Japan is no different (at least not in this specific sense) than any other country in the western world. I see mobile operators here in Sweden spend the majority of their TV advertising on promoting mobile data services. It has become a differentiator and a big enough piece of the pie. We will shadow Japan and probably break the 50% marker in 2011 in many cases. Mobile data is a $50bn+ business this year in the US according to Chetan Sharma Consulting; a significant business where minor changes and adjustments in packaging, pricing, production cost and ARPU has a substantial impact on bottom-line.

Chetan Sharma also said that the US mobile subscription penetration was approximately 94% at the end of Q1 2010, and past 100% if we take out the demographics of 5 yrs and younger. Growth won’t come from winning new voice users, but from making the ones you have more profitable and to steal customers from the competition – e.g. with compelling data offerings. And you’ll have to control production cost since they’ll constantly expect more at the same price.

The conclusion is that mobile operators must take a seriously look at the packaging of their data services. “All you can eat” is not the best for (almost all) your customers, and it’s certainly not the best for your business case – especially as access speeds go up. That’s why we see more and more mobile operators moving away from flat rate data packages, as Cam referred to in his recent blog post. Tiered services are happening – thank God!

Eventually we will have options for people with different needs. But let’s stop for a second and consider what you’re trying to accomplish. Tiered services can either be a customer incentive or a cost insurance – or both. Don’t get too introvert in controlling potential exceptions with caps and limitations. This will add complexity, customer concern (even if they’re not even close to any limit/cap), and you’re up against some serious competition out there. But still, as said, small changes can have a big impact. Offloading peak hours to better utilize your network, attract new customers, or offer added value services that can boost ARPU can boost your profitability and ability to invest even more in your services and customer support.

I hate to say it, but we know from experience that devices (e.g. iPhone launches or subsidiesed phones) actually sell more subscriptions than any packages we produce. But service packages will support the devices and add to the differentiation. Make sure you know who your customer is, where he is, what applications he’s running, and what device he’s using – in order to accommodate his then current and general needs. Make sure your information is reliable since accurate intelligence enables proper business decisions.

So what are my recommendations? I’ve said it before (Do’s and Don’ts in Bandwidth Control) – keep it simple! Your biggest challenge will be to communicate it, implement it, and justify it (“is YouTube video or web?”). Know your customer. Define your target group and offer applicable services. Serving young savvy nerds with the same offering as unsophisticated 65+ Internet users won’t work. Don’t become too technology-driven and introvert in your business model. And avoid too many options since they will cause confusion.

So, do I need to say that we know this space and offer the solution you’re looking for? Well, we are, and we’re darn good at it! I look forward to you reaching out to me to discuss this further, but in the meantime I’ll kick back and enjoy some seriously good World Cup soccer. Sweden didn’t qualify this year, which gives Swedish mobile operators another four years to work out a business model that supports the network being flooded with real-time streaming video. Good luck (no irony intended).

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DPI – We’ve got an app for that!

Thursday, May 20th, 2010 by Cam Cullen

As you can tell from my past blogs, I am a bit manic about devices and applications. The new business models created out of thin air by Apple – starting with iTunes, carrying forward with the iPhone, and now the iPad – have either saved or revitalized the music industry, small application/game developers, and the mobile handset market. There have a been a number of articles written on these topics, so I won’t dwell on it, but I think it is fair to say that entirely new options exist for innovation and revenue now that these products are on the market. They also inspired other vendors to attempt to compete with Apple, and the overall market for similar devices has grown as a result (the size of the smartphone market alone has grown at astounding rates).

What does this have to do with DPI? In the past, DPI was used to manage traffic (Peer-to-Peer mainly) and to provide visibility into what was happening on your network.

But this is not your father’s DPI …

With the advent of subscriber management for DPI systems, network operators have an entire new universe of possibilities on how to use DPI. We have operators around the world that have come up with very clever uses of DPI that enable them to operate their networks more efficiently, comply with regulatory mandates by governments, or generate additional revenue. It has also allowed them to create new types of service plans, not only ones that cost more money for subscribers, but also ones that SAVE money for subscribers.

A perfect example of this might be a service plan that voluntarily restricts the bandwidth for file sharing or video streaming in exchange for a lower monthly fee. A provider could offer this plan for potentially half (or less) the cost of a normal plan, because that user would introduce a much lower load on the network than a “normal” user.

Another hot topic is flat rate plans versus usage based plans, with some users being extremely vocal and speaking with their wallets. Why not combine the two? Offer a flat rate for web browsing and email, but usage-based pricing for streaming video or file sharing? This would increase the overall market for data services, as more casual users would be willing to purchase these data plans versus being afraid of the big leap in price for an “unlimited” data plan. This could even be extended between mobile service providers for reduced data fees for roaming – a huge sore spot for smartphone and data users that travel internationally.

An interesting application is the ability to offer multiple services simultaneously for each subscriber. Hmmm….what exactly does that mean? What if a subscriber wants a Parental control service, a managed security service, and to take advantage of a video caching service all at the same time? In most current network architectures this is not easily achievable – especially if the decision is made per-subscriber and per-application (i.e. Parental Control only on web browsing, video caching only on streaming video, and email to the virus scanner). DPI understand both applications and subscribers, and can effectively re-direct traffic as needed to the correct service (and even load balance between the servers!) – vastly simplifying the network operations, and enabling a service combination that is not possible today for operators.

We love it when our customers bring us new ideas. More than one customer has taken a look at what capabilities we have inside our LiewView application and came up with an entirely new idea for a service plan or a new network report that directly led them to a new service offering since they can better understand how their subscribers are using the network.

Got any ideas?

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iPad – Telecom Armageddon or Savior?

Monday, April 19th, 2010 by Cam Cullen

I was having a discussion with a service provider (wireline broadband, interestingly enough) and he asked me if I thought that the iPad would have a significant impact on his network. My initial reaction was no, but as we talked through the issue, my opinion shifted.

When asked that question, my first thought was that the iPad would not affect a wireline broadband network that much, right? It is only a small number of devices (relatively speaking), and it is not like it can be used for file sharing. Sure, it can stream video, but how often are you going to sit and watch video on an iPad?

Then I started thinking about the real impact of the iPhone. Although the iPhone is a great device, and has certainly caused ATT issues in the US, and other operators abroad, as users take advantage of the media capabilities of the phone, it had a much broader effect on the industry as a whole (that incidently led directly to the iPad). Before the iPhone, phone-based data usage was mainly email (ala RIM and Blackberry devices) and light web browsing. The long lasting effect of the Blackberry was that people became used to being connected, and with the scarcity of Wi-Fi hotspots, people began to want always on mobile broadband, and business users began to purchase the data plans from mobile operators. Once the iPhone was released, it kick started the smartphone market like never before, and brought more users to the mobile broadband buffet. Every vendor wanted an “iPhone-killer”, and Android, Palm, Microsoft, and other operating systems began to proliferate on handsets at reasonable prices. These devices gave users a taste of what high quality media and browsing experiences could be had with mobile platforms, and even a taste of some really useful applications (phone-based GPS and mapping applications) that took advantage of the mobile data connections – including some streaming media and VOIP applications. The advent of flat rate mobile data plans (at least in name) for reasonable prices has spurred the demand for mobile broadband, and with so many devices able to connect to the mobile broadband network, has driven operators to invest heavily in the infrastructure to meet the increasing demand.

So the impact (I think) of the iPad will be similar. The “iPad-killer” race is on, with HP, Dell, Google, and many others racing to release devices based on Android or Windows that will compete with the iPad. There have already been application releases for Kindle and Netflix on the iPad, and more streaming applications will follow on these alternative platforms. I am not sure I want to watch all my TV on an iPad-like device, but it is easier than watching on a laptop or an iPhone. Add a camera and a USB port (hint, hint) to a device like this with a 10 hour battery life, and the potential for a truly portable media device is not a future – it is the present.

This is the future I see coming out of the iPad – one that has the potential to dramatically increase the usage (especially streaming media) on both wireline and wireless broadband networks. People will use their wireless at home and mobile broadband while traveling. If you are a heavy media consumer, traveling with an iPad and a laptop makes sense – I can read or watch movies on the plane with the iPad, do email on the laptop, and even multitask in hotel rooms – watching media on the iPad while working on the laptop.

So if you are a provider that is ready for this – and can deliver a high Quality of Experience to your users (and monitor it to make sure that you are delivering a high QoE) – you have a bright future ahead of you.

Me – I can finally have a data pad like I always saw on Star Trek.

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