New Applications and New Business Models Whether it's LTE or WiMAX or local WISPs using combinations of Wi-Fi, WiMAX and other technologies, we are on the verge of having affordable mobile broadband in the US (it's already available in the UK and Scandinavia and becoming available elsewhere in the EU). What services can be provided over the top and what services need or can benefit from operator capabilities (QoS, security, ...)? The iPhone store, Android store and similar initiatives suggest power is shifting away from the operators and into the hands of application developers and the end user. How can operators leverage their core capabilities (QoS, security, billing, customer relationships, call detail, ...) to provide applications and remain relevant to their customers?

1. Mobile Broadband – New Applications
and New Business Models
Brough Turner

2. IMT-2000 Vision (for 3G) included
LAN, WAN and Satellite Services
Global
Satellite
Suburban Urban
In-Building
Picocell
Microcell
Macrocell
Basic Terminal
PDA Terminal
Audio/Visual Terminal
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3. The Internet is the killer platform
• Mobile Internet access
driving 3G data usage
• Future business models
an open question
– Walled garden ?
– Advertising ?
– Other 2-sided business
models ?
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4. Leading Apps don’t depend on 3G
• Voice ― still the largest revenue source
– Bar none!
• SMS ― 2nd largest mobile revenue source
• Voice SMS, picture mail & video mail coming
on strong
Content !
Mobile TV
Mobile social networking
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5. Mobile Content
• More music sold on-line than off-line in both China
and Korea
• Ringback tones
– Created by SK Telecom in Korea in 2002; 30% adoption in
just 9 months
• Ringback tones today
– Korea: ~55% adoption
– China: ~50% adoption
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6. Mobile Content
• More music sold on-line than off-line in both China
and Korea
• Ringback tones
– Created by SK Telecom in Korea in 2002; 30% adoption in
just 9 months
• Ringback tones today
– Korea: ~55% adoption
– China: ~50% adoption Any G,
1, 2, 3 or Fixed
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7. Japanese Music Revenues
Source: Infinity
Venture Partners
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8. Mobile TV
70% of new handsets in Japan
are Mobile TV enabled
Only Japan and Korea have
multi-million Mobile TV subscriber bases
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9. Mobile TV
70% of new handsets in Japan
are Mobile TV enabled
Only Japan and Korea have
multi-million Mobile TV subscriber bases
Broadcast services independent of 3G
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10. Mobile Social Networking
Mobile launch:
2000 2004 2006 2007
Source: Benjamin Joffe, Plus Eight Star Ltd.
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11. Mobile Social Networking
Mobile launch:
2000 2004 2006 2007
Mobile users:
50 M 6M 10 M 3M
Source: Benjamin Joffe, Plus Eight Star Ltd.
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12. Mobile Social Networking
Mobile launch:
2000 2004 2006 2007
Mobile users:
50 M 6M 10 M 3M
Profit (USD):
$225M ~$100M ~$35M ($50M)
Source: Benjamin Joffe, Plus Eight Star Ltd.
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13. 2.5G Mobile Social Networking
Mobile launch:
2000 2004 2006 2007
Mobile users:
50 M 6M 10 M 3M
Profit (USD):
$225M ~$100M ~$35M ($50M)
Source: Benjamin Joffe, Plus Eight Star Ltd.
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14. “3G” Services
• 3G-324M Video telephony
• Location-based services
• Push-to-Talk (VoIP w/o QoS)
• Rich presence (instant messaging)
• Fixed-mobile convergence (FMC)
• IP Multimedia Services (w/ QoS)
– Video sharing (conversational video on IP)
• Converged “All IP” networks – the Vision
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15. “3G” Services
• 3G-324M Video telephony Limited adoption
• Location-based services
• Push-to-Talk (VoIP w/o QoS) Limited adoption
• Rich presence (instant messaging)
• Fixed-mobile convergence (FMC) Limited adoption
• IP Multimedia Services (w/ QoS)
– Video sharing (conversational video on IP) Limited adoption
• Converged “All IP” networks – the Vision
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16. “3G” Services
• 3G-324M Video telephony Limited adoption
• Location-based services Bypassed !
• Push-to-Talk (VoIP w/o QoS) Limited adoption
• Rich presence (instant messaging) No traction
• Fixed-mobile convergence (FMC) Limited adoption
• IP Multimedia Services (w/ QoS)
– Video sharing (conversational video on IP) Limited adoption
• Converged “All IP” networks – the Vision
Still waiting …
16

17. Mobile operators miss the boat
• Location-based services (LBS)
• Required in US for 911 services
• Fully implemented (after multiple delays)
• Not made attractive for 3rd parties
Result:
• All US location-based services based on
alternate location approaches
– GPS, Cell ID, Navizon, Skyhook
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18. Mobile operators slow the boat
• Billing Services
– Mobile operators have efficient billing systems &
own the customer relationship
– DoCoMo showed (I-Mode in 1999) the enormous
potential of affordable billing services
– Yet billing still offered only via premium rate #s
• Result:
– 3rd party content is paid for via 3rd party billing
systems or (multiple) premium rate SMS(s)
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19. Mobile Broadband Access
US prospects for “over the top”
access to the open Internet
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20. iPhone traffic per month
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21. iPhone glimmer of what’s possible
• Controlled eco-system
– Applications approved by Apple
– Must meet unpublished
standards under contract
between Apple & AT&T
– E.g., can’t run VoIP over 3G,
only over Wi-Fi
But, $30/ month flat rate data plan
(on top of $40+ phone plan)
• Explosive growth in web usage
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22. Mobile Internet Access
• Available for PC’s with
restrictions, e.g.
no servers, no P2P,
no substitution for private
lines or frame relay
• AT&T: 5GB @ $60/mo
• Verizon: ditto
• Sprint: ditto
• No US operator offers
flat rate unlimited plans
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23. Breaking Oligopolies
• Four or more viable competitors is what it
takes; more than four and it can be rapid
– Many examples in mobile voice telephony from
around the world
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24. Breaking Oligopolies
• Four or more viable competitors is what it
takes; more than four and it can be rapid
– Many examples in mobile voice telephony from
around the world
• 2009: Three established US 3G operators
– AT&T Mobility, Verizon Wireless & Sprint PCS
– Flat rate data plans exist; but with caps
– No unlimited open Internet access
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25. Additional US 3G/4G Competition
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26. Additional US 3G/4G Competition
• USA (well financed)
– Paid $4.2B for AWS spectrum in 2006 and
committed additional $2.7B for initial rollout
– Currently spending almost $1B per quarter, 3G
had reached 1/3rd of cell sites as of 3Q08
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27. Additional US 3G/4G Competition
• USA (well financed)
– Paid $4.2B for AWS spectrum in 2006 and
committed additional $2.7B for initial rollout
– Currently spending almost $1B per quarter, 3G
had reached 1/3rd of cell sites as of 3Q08
• (build out partially financed)
– WiMAX on Clearwire and Sprint spectrum
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28. Additional US 3G/4G Competition
• USA (well financed)
– Paid $4.2B for AWS spectrum in 2006 and
committed additional $2.7B for initial rollout
– Currently spending almost $1B per quarter, 3G
had reached 1/3rd of cell sites as of 3Q08
• (build out partially financed)
– WiMAX on Clearwire and Sprint spectrum
Potential for affordable flat rate
mobile broadband in the US in 2010
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29. Subscribers & Applications
• Historically, only applications pre-installed on
handsets had any traction
– “On-deck” applications and content offers
• Apple iPhone application store is on-deck
– Provides access to 50K+ applications
• Andriod store, RIM, Nokia, Qualcomm, Palm,
Handango, Adobe, Samsung, …
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30. Subscribers & Applications
• Historically, only applications pre-installed on
handsets had any traction
– “On-deck” applications and content offers
• Apple iPhone application store is on-deck
– Provides access to 50K+ applications
• Andriod store, RIM, Nokia, Qualcomm, Palm,
Handango, Adobe, Samsung, …
Application stores are the new “deck”
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31. Handset diversity
Remaining obstacle to widespread deployment
of 3rd party applications
31

32. IMS doesn’t solve inter-operability
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33. Handsets more & more diverse
• Browsers – Openwave, Opera, Safari, …
– Using: WebKit, Netfront, Presto, …
• Runtime environments as several levels
– Adobe AIR, .Net/Silverlight, Brew, JavaME, …
• Operating systems
– Symbian, WinMobile, Android, OpenMoko…
• Hardware capabilities
– CPUs, supported codecs, screen size, …
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34. Mobile Software Frameworks
Source: Andrea Constantinou, ©2008 VisionMobile Research
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35. Internet will win in the end, but…
Mobile Facebook by:
http://www.flickr.com/photos/philiphubs/
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36. Important trends
• App stores!
– Easier distribution; Easier discovery
• More and more smart phones
• Richer browser capabilities
– Approaching PC browser functionality
• New access to device capabilities
– User data (contacts, logs, …), events (incoming
calls) and core functionality
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37. Uniquely Mobile Internet
• Phase 1 – cut down web, e.g. WAP
• Phase 2 – full web accessible on mobile
• Phase 3 – designed-for-mobile web
– Optimize the mobile user experience; speed ups
• Phase 4 – client-side mashups
– telephony, address book, location, camera…
• Phase 5 – apparent persistence
– Despite battery limitations; widgets; push; …
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38. 38

39. Challenges
• Handset diversity
• Pace of change
• User interface – minimum clicks; max speed
• Battery life – “chatty” apps drain power
• Application concurrency
– Manage events over browser, native & helper apps
• Persistent user experience across multiple
applications
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40. Dealing with handset diversity
• Browser-based application first
• Optimize for top N phones by market share
– For most applications, N likely equals 1-3, not 10-12
SmartPhone market share
Source: StatCounter
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41. Smart Phones & Feature Phones
• Smart Phone adoption soaring
– Nokia, Blackberry, iPhone, RIM, WinMobile,
Palm, Android, …
– Moore’s law suggests it will only get better
But
• 85% of US phones are “feature phones”
– Higher percentage in emerging markets
• Application environments emerge
– Java, Flash, Qt and ever richer web runtimes
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42. Expectations are clear
Today
Mobile
Telephony Phone
Mobile
Web Browser
Camera
Media Player
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43. Expectations are clear
Tomorrow
Today
Mobile
Telephony
Phone
Mobile
Telephony Phone
Mobile
Browser
Web Browser Mobile
Web
2.0
Camera
Camera
Media Player
Media Player
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44. Biggest Take-Away
The initiative has passed to
application developers
44

45. Dumb Pipes or
New Service Opportunities?
How operators can profit while
providing open mobile access
to the Internet
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46. Advertising won’t cover lost voice $
Source: Telco 2.0 Manifesto, STL Partners Ltd.
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47. Two-Sided Markets
• eBay connects sellers and buyers
• Nightclubs: women get in free
• Media
– Newspapers – low prices for subscribers
facilitates sales of advertising
– Broadcast TV – free attracts viewers facilitating
sales of advertising
• Akamai caching benefits
– Free to ISPs; Paid for by content providers
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48. 800 numbers
• The original telco 2-sided play
• Bell system provided retail phone service to
essentially all US consumers
• Offered “800 service” to businesses, helping
them connect with their customers and
prospects
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49. Billing Service
• Most operators cautious about partnering
– Fear of “dumb pipe” slow roll out of new services
• DoCoMo i-mode 2G data service launched 1999
– Small screens, slow (9.6 kbps) data rate
• But i-mode business model was wide open
– Free development software kits; No access restrictions
– DoCoMo’s “bill-on-behalf” with 9% commissions
• i-mode big success in first 24 months
– 55,000 applications, 30M subscribers !
49

50. DoCoMo i-Mode:
2-sided business model
• Subscribers pay for data access (flat rate monthly bundles)
• Application providers pay DoCoMo for billing services
50

51. DoCoMo’s i-mode
• Open to any application developer
• Optional billing for a 9% commission
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52. DoCoMo’s i-mode
• Open to any application developer
• Optional billing for a 9% commission
Results:
• Over 100K new applications in first 3 years
• Over 15K applications use billing service
• DoCoMo has highest data revenue per user,
in the world, consistently for 10+ years
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53. Operator Assets
• Brand, PSTN numbers
• Location (motion, context, …)
• Fine-grained billing systems
• User data
– Name, address, age, devices, …
• Rich presence
• Customer relationships
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54. Customers: Customers:
Revenue Side 2 Revenue Side
1
Developers
Retailers
B2B VAS
Millions of
Government Telco Customers
$ $
Brand Platform
Advertisers Thousands
Distribution
Content of Segments
Owners
Telco – Retail
Source: Simon Torrance
© 2008, STL Partners Ltd/Telco 2.0TM Initiative
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55. Rich mobile applications
are coming
Opportunities on all fronts
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56. Rich mobile applications
are coming
Opportunities on all fronts
but,
business models will change,
significantly
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57. Thank you !
Brough Turner
Ashtonbrooke Corporation
http://www.ashtonbrooke.com
Blog: http://blogs.broughturner.com
Email: broughturner@gmail.com
Skype: brough
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