Telecommunications, Automotive and Market Research

More than 15 years in the mobile telecommunications industry and an industry analyst since 1998.

Tuesday, January 18, 2011

Netheads vs. Bellheads: Disrespecting "the cloud"

I continue to believe there's a big difference between Netheads and Bellheads, but there's something I heard this morning that really points out a huge disconnect between those two worlds.

What started me thinking was a sponsor message this morning on National Public Radio that promised improvements in business by taking advantage of "the cloud." 

Mmmmm... what a lovely image. Light drifting shapes that appear and vanish all by themselves,  with no intervention or control by those of us who live on the Earth. Who made the clouds? Nature. Who controls the clouds? Thermal currents, winds, humidity, terrain. Some might even attribute clouds to the benevolent Hand of God.  Farmers and their crops depend on clouds. The utility businesses of our cities and towns rely on clouds to supply drinking water and light. 
Real clouds

But listen more carefully to the use of "the cloud" when it comes to computing.  Folks, the computing cloud is anything but light drifting shapes beyond the control of those of us on Earth.  In fact the computing cloud was built and continues to be maintained by some of the biggest and most important companies in the world. Each of those links between servers, between your computer or smartphone and "the cloud" were built at great expense by telecommunication companies, some of whom rose and fell during the dotcom boom of the late 1990s.

What does that mean in this world? It points out the difference between those who use the network (the Netheads) and those who built the network... the Bellheads. Google, Apple, and others are building by attaching devices and services to either end of The Cloud but have little responsibility for the creation and maintenance of The Cloud.

Google and Apple can't live and can't thrive without The Cloud. Will they someday compete with and even replace the companies that provide The Cloud? I have my doubts.  I think the Nethead business case falls apart when the realities of the enormous capital and operating costs (as well as the pressures of providing world-class quality-of-service) is factored in. 


Monday, January 10, 2011

Ireland Axes Mobile TV Plans

An article by the GSM Association published January 10, 2011 indicates the Irish regulator is withdrawing its plans to offer mobile broadcast. The article, quoted in its entirety below, says:
ComReg, the Irish telecoms watchdog, said it will “not be proceeding further” with a plan to offer a mobile broadcast licence covering five urban areas of the country, stating that following a consultation period, “it became apparent to ComReg that use of the identified spectrum to provide a Mobile TV service in Ireland was not the subject of particularly strong interest to potential operators, and interest in the proposed procedure to grant the authorisation diminished.” After seeing further information on interest from stakeholders, it received just one response, from Vodafone Ireland, which agreed with the decision not to go ahead with the plan. The regulator says that it will “keep under review the potential for the identification of spectrum which would enable the award of dedicated licences for mobile TV,” and that future, technology-neutral awards of UHF spectrum could be used for mobile broadcast services.
The decision further highlights the lack of success for mobile broadcast services on an international basis, having once been seen as a potential “big thing” for the industry. The most high-profile failure was Qualcomm’s MediaFLO venture, which is to be closed imminently having failed to become a viable service. While there have been a number of pilot and commercial mobile broadcast launches globally, these have not led to significant subscriber interest, and in South Korea, which has been something of a market leader, ecosystem participants have struggled to monetise services. According to a Juniper Research study, the number of mobile broadcast subscribers will not reach 10 million globally “until 2013 at the earliest,” at which point more than 180 million subscribers will be accessing multimedia services via 3G, 4G and Wi-Fi networks. Trials are also underway of mobile broadcast technology which is more closely related to mobile standards.
DVB-H cellphone
It's certainly not the only place that this business model has struggled.  Operators have shut down operations in Switzerland and returned spectrum in France while mobile TV operations in Hungary and Germany are at a standstill

What's significant about this? The "operator" mentioned in the GSMA article is not a broadcaster but cellphone company Vodafone Ireland, which responded with a bored, "whatever" when told they might not be able to provide mobile television service.  This spectrum was intended to be broadcast to cellphones using the same business model attempted by MediaFLO in the US.

Are they ever going to get it right? Maybe. It's worth noting that ComReg is considering "technology neutral awards of UHF spectrum." In other words, perhaps it's not going to be dedicated to the cellphone-centric DVB-H service. DVB-H is intended to be offered on a subscription basis by cellphone operators, a business model which, the article points out correctly, has "... struggled to monetise services."

It points up what I've been saying all along... the local broadcasters are in the best position to offer TV, mobile or fixed and the cellphone-based subscription model will continue to struggle if not die off altogether.

Monday, January 3, 2011

Google Voice a Threat to Mobile Operators. We Mean it This Time.

How many times have we heard this? “A new technology that is starting to gain acceptance signals the death knell of the incumbent telecommunication operators.” Let’s see. What was that technology again?

And on and on and on. Now, in the article CNN Money by David Goldman, Google: Your Next Phone Carrier  breathlessly predicts Google will become a mobile operator by using its voice over IP application. Based on what evidence? The article cites the fact that Google might be buying dark fiber, might become an ISP and once bid on some wireless spectrum. But the key information is here:
“Google already allows people to bypass their mobile carrier's service. Google Voice lets customers send free text messages, and the new version of Android ("Gingerbread") supports VoIP Internet calling, allowing users to make calls over over Wi-Fi networks.”
Wow! It’s wireless Skype all over again, which has had exactly zero effect on the mobile operators. And hasn’t really cut the legs out from under the wireline companies, either.  And, really, all this talk ignores some of the most important facts out there: 
  • Wi-Fi isn’t a wide area network. Isn’t now. Won't ever be. Tried a couple of times and crashed (remember municipal wi-fi networks?”). Even Google’s own experiments in San Francisco have tanked.
  • If you’re going to have mobile access, you will have to use a mobile network. 4G doesn’t yet have enough footprint and will end up being controlled by the mobile operators anyway. 
  • It’s not easy to build a mobile network. The vaunted Verizon Wireless has achieved its current network coverage after more than 20 years of buildout. AT&T has also had 20 years and Sprint 15. People are still complaining about coverage.
A couple of scenarios:
“I’m going to replace my AT&T/Verizon Wireless/Sprint/T-Mobile with the Google network.” Assuming a deployment twice as fast as those companies were able to accomplish, it would be 2021 before there would be similar coverage. And, as rich as Google is, it still doesn’t have the financial resources of the telcos. Come back in 10 years. Oh, wait. It’ll be at least two years before they can complete the paperwork with the FCC and obtain nationwide spectrum. And all those communities who are already sick of putting up cell towers? They don’t want more. 
“Google Voice will replace the mobile operators because the price is zero.” OK, where are you going to get mobile access? From a mobile operator who is charging you a for a voice plan whether or not you use it. Or you could go with a data-only plan using a 3G/4G dongle for your laptop. Great: 1) you’re still tethered to a laptop, which is tough to use at the bar when you want your buddies to come down and 2) you’re still using AT&T/Verizon Wireless/Sprint/T-Mobile and paying $60 a month… about the same as a basic voice plan.
“I’ll use Google Voice on Wi-Fi.” Great idea. But where? Home, Starbucks, McDonalds, home, someone else’s home and… where else? Wi-Fi’s not a mobile network (something I’ve been saying since 2003). Terrible coverage. Not useful where you want to make calls.
What it really means: Nothing. Is Google going to become a serious mobile operator using its Android phones, some spectrum somewhere or Wi-Fi? Probably not. Skype didn’t. Vonage didn’t. Once again, Nethead domination of the telecommunication space will remain a fantasy. Bellheads, ultimately will be responsible for paying for, building, and maintaining very complex, very expensive networks. And consumers will keep paying – and paying a lot – for access to those networks.