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Here’s Why Google and Facebook Might Completely Disappear in the Next 5 Years

25 May

We think of Google and Facebook as Web gorillas.  They’ll be around forever. Yet, with the rate that the tech world is moving these days, there are good reasons to think both might be gone completely in 5 – 8 years.  Not bankrupt gone, but MySpace gone.  And there’s some academic theory to back up that view, along with casual observations from recent history.

When I was a PhD student 15 years ago, I studied with Don Hambrick who is a scholar known for a career showing the effects of management teams and directors (for good and for ill) on their organizations’ strategies and performance.  One of the central tenets of this school of thought on organizations is that senior teams and directors have an outsized influence on organizational outcomes.  What’s more, their backgrounds (including education and career paths) have a big effect on how they see the world, various competitive situations and the choices they make.

There’s another school of thought which takes the opposite view called population ecology or organizational ecology which put forward that managers don’t really matter all that much.  This view grew out of sociologists who’d taken to study organizations in the 1970s.  They assert that organizational outcomes have much more to do with industry effects than who the CEO is and the choices he or she makes.  They study birth and death rates of populations of organizations, as well as the effects of age, competition and resources in the surrounding environment on an organization’s birth and death rate.  Most of these organizational ecology scholars come out of the University of California at Berkeley.

As a graduate student, I didn’t have much time for this ecology line of thinking.  I believed in the power of the individual executive to overcome all challenges in the external environment.  We can always point to dynamic CEOs as case studies, even though the sociologists would say those are the equivalent of celebrating the smarts of lottery winners.

As I age and watch what’s happening in the world of Internet and mobile, I can’t stop thinking of these ecologists though.

More and more in the Internet space, it seems that your long-term viability as a company is dependent on when you were born.

Think of the differences between generations and when we talk about how the Baby Boomers behave differently from Gen X’ers and additional differences with the Millennials.  Each generation is perceived to see the world in a very unique way that translates into their buying decisions and countless other habits.

In the tech Internet world, we’ve really had 3 generations:

  • Web 1.0 (companies founded from 1994 – 2001, including Netscape, Yahoo! (YHOO), AOL (AOL), Google (GOOG), Amazon (AMZN) and eBay (EBAY)),
  • Web 2.0 or Social (companies founded from 2002 – 2009, including Facebook (FB), LinkedIn (LNKD), and Groupon (GRPN)),
  • and now Mobile (from 2010 – present, including Instagram).

With each succeeding generation in tech the Internet, it seems the prior generation can’t quite wrap its head around the subtle changes that the next generation brings.  Web 1.0 companies did a great job of aggregating data and presenting it in an easy to digest portal fashion.  Google did a good job organizing the chaos of the Web better than AltaVista, Excite, Lycos and all the other search engines that preceded it.  Amazon did a great job of centralizing the chaos of e-commerce shopping and putting all you needed in one place.

When Web 2.0 companies began to emerge, they seemed to gravitate to the importance of social connections.   MySpace built a network of people with a passion for music initially.  Facebook got college students.  LinkedIn got the white collar professionals.  Digg, Reddit, and StumbleUpon showed how users could generate content themselves and make the overall community more valuable.

Yet, Web 1.0 companies never really seemed to be able to grasp the importance of building a social community and tapping into the backgrounds of those users.  Even when it seems painfully obvious to everyone, there just doesn’t seem to be the capacity of these older companies to shift to a new paradigm.  Why has Amazon done so little in social?  And Google?  Even as they pour billions at the problem, their primary business model which made them successful in the first place seems to override their expansion into some new way of thinking.

Mobile companies born since 2010 have a very different view of the world.  These companies – and Instagram is the most topical example at the moment – view the mobile smartphone as the primary (and oftentimes exclusive) platform for their application.  They don’t even think of launching via a web site.  They assume, over time, people will use their mobile applications almost entirely instead of websites.

We will never have Web 3.0, because the Web’s dead.

Web 1.0 and 2.0 companies still seem unsure how to adapt to this new paradigm.  Facebook is the triumphant winner of social companies.  It will go public in a few weeks and probably hit $140 billion in market capitalization.  Yet, it loses money in mobile and has rather simple iPhone and iPad versions of its desktop experience.  It is just trying to figure out how to make money on the web – as it only had $3.7 billion in revenues in 2011 and its revenues actually decelerated in Q1 of this year relative to Q4 of last year.  It has no idea how it will make money in mobile.

The failed history of Web 1.0 companies adapting to the world of social suggests that Facebook will be as woeful at adapting to social mobile as Google has been with its “ghost town” Google+ initiative last year.

The organizational ecologists talked about the “liability of obsolescence” which is a growing mismatch between an organization’s inherent product strategy and its operating environment over time.  This probably is a good explanation for what we’re seeing in the tech world today.

Are companies like Google, Amazon, and Yahoo! obsolete?  They’re still growing.  They still have enormous audiences.  They also have very talented managers.

But with each new paradigm shift (first to social, now to mobile, and next to whatever else), the older generations get increasingly out of touch and likely closer to their significant decline.  What’s more, the tech world in which we live in seems to be speeding up.  Tim Cook had an interesting line about the velocity of change in his earnings call last week:

through the last quarter, I should say, which is just 2 years after we shipped the initial iPad, we’ve sold 67 million. And to put that in some context, it took us 24 years to sell that many Macs and 5 years for that many iPods and over 3 years for that many iPhones. And we were extremely happy with the trajectory on all of those products. And so I think iPad, it’s a profound product.

Yahoo is already a shell of its 2000 self.  There is increasing chatter (including from me) about how Google’s facing a painful multiple contraction, once its desktop search business (still accounting for the vast majority of its revenues and profits) starts to fall off a cliff as users dramatically drop traditional search for new ways of getting information they want in a mobile world.  Is Amazon destined to decline?  There seem to be no signs of it today and people will still need to buy stuff in a mobile world, but the new mobile platform will certainly open the possibilities for new entrants that Amazon can’t even imagine today.

Facebook is also probably facing a tough road ahead as this shift to mobile happens.  As Hamish McKenzie said last week, “I suspect that Facebook will try to address that issue [of the shift to mobile] by breaking up its various features into separate apps or HTML5 sites: one for messaging, one for the news feed, one for photos, and, perhaps, one for an address book. But that fragments the core product, probably to its detriment.”

Considering how long Facebook dragged its feet to get into mobile in the first place, the data suggests they will be exactly as slow to change as Google was to social.  Does the Instagram acquisition change that? Not really, in my view.  It shows they’re really fearful of being displaced by a mobile upstart.  However, why would bolting on a mobile app to a Web 2.0 platform (and a very good one at that) change any of the underlying dynamics we’re discussing here? I doubt it.

What about Apple?  Where does it fit in to this classification scheme?

Apple is really a hardware company, so it’s difficult to put it into a bucket related to web apps.  It certainly seemed very Web 1.0 with its Ping social application.  Yet it’s succeeded in mobile from making the best hardware and software ecosystem for apps to proliferate on.  In some ways, as long as it has a successful iOS platform, it doesn’t care which Web 1.0, 2.0 and mobile companies fail or succeed on top of it.  Maybe that’s why so many non-mobile companies seem to want to emulate Apple.  Google bought Motorola Mobility (MMI) to get into the hardware business.  Facebook and Baidu (BIDU) are rumored to be launching their own mobile OS.

The bottom line is that the next 5 – 8 years could be incredibly dynamic.  It’s possible that both Google and Facebook could be shells of their current selves – or gone entirely.

They will have all the money in the world to try and adapt to the shift to mobile but history suggests they won’t be able to successfully do it.  I often hear Google bulls point to the market share of Android or Eric Schmidt’s hypothesis that Google could one day charge all Android subscribers $10 a month for value-added services as proof of future profits.  Yet, where are all the great social success stories by Web 1.0 companies?  I imagine we’ll see as many great examples of social companies jumping horses mid-race to become great mobile companies.

It’s a lot easier to start asking Siri for information instead of typing search terms into a box compared to thousands of enterprises ceasing to upgrade to the next version of Windows.  Google’s 76% market share.  Facebook’s 900 million monthly users.  They just aren’t as sticky as they seem.

And does anyone think the pace of change is going to increase in the next 5 years versus the last?  That we’re going to see fewer innovations, fewer start-ups trying more stuff on cheaper and more powerful processing power?  In all likelihood, we could have an entirely new way of gathering information and interacting with ads in a new mobile world than what we’re currently used to today.

The Googles and Facebooks of tomorrow might not even exist today.  And several Web 1.0 and 2.0 companies might be completely wiped off the map by then.

Fortunes will be made by those who adapt to and invest in this complete greenfield.

Those who own the future are going to be the ones who create it.  It’s all up for grabs.  Web monopolies are not as sticky as the monopolies of old.

 

Source: http://www.forbes.com/sites/ericjackson/2012/04/30/heres-why-google-and-facebook-might-completely-disappear-in-the-next-5-years/

Mobile Plumbing is Sexy – Background: the coming tsunamis

23 Apr

Given the commotion around things that sizzle at the recent Mobile World Congress (MWC) in Barcelona, you may have missed a critical revelation. It is not a subject considered sexy but it should be. Tekelec detailed its vision for a new Diameter Network and key customer wins. What’s Diameter signaling? Why is this important? Let’s take a look.

Background: the coming tsunamis

Diameter signaling is the lingua franca of mobile network operation. Think of it as being to mobile networking what signaling system #7 (SS7) was for the wired voice TDM, 2G and 3G mobile networks. Tekelec’s vision for a New Diameter Network, is that it will/must be the foundation for successful next generation (4G, LTE and IMS-based), IP end-to-end mobile networks.  The operative word is SUCCESSFUL.  We in the industry are worn out by warnings of the impending tsunami of data traffic. We get it.   

Mobile operators face threats to network performance, customer loyalty and profitability models.  Yes, we know mobile operators felt the earthquake and heard tsunami warnings. We also know they are addressing concerns about network capacity by migrating to LTE, offloading traffic to Wi-Fi, and deploying small cells.

Unfortunately, what has gone largely unreported is the equally significant second tsunami (Tekelec calls it a “storm”) of network signaling traffic. It is as, if not more, critical than the first. It is centered around the fact that signaling traffic on mobile data networks is growing 30 – 50 percent faster than the data traffic it is enabling and managing. The causes are:  the cumulative impact of device and application growth, personalized service plans, and an increasingly large and mobile subscriber base.

There is consensus that Diameter signaling is how network traffic will be managed, new services created, new business models effectuated, customers and their applications supplied differentiated experiences, personal and professional policies and rules enforced, etc.  However, it needs to be on new and not legacy versions of Diameter. In needs to be one optimized for the all IP world.

The signaling tsunami impacts are not some distant problem. Recent network outages caused by network congestion that have prompted bandwidth throttling abound. Just this past week Verizon had significant issues with it 4G LTE network. Additional context is to understand that always on and open social networking apps like Facebook, gaming and other apps generate tons of signaling events every time this is a change of state. Plus, the mere act of battery reactivation has significant impact. 

What does this mean going forward? As Diane Myers, directing analyst of VoIP and IMS at Infonetics Research, author of the just-released and first-ever report on the Diameter market, “Diameter Signaling Control Worldwide and Regional Market Size and Forecasts,” predicts, “As LTE networks expand, driving even more traffic to the network, the Diameter signaling controller market will take off rapidly: we forecast a 106 percent compound annual growth rate in vendor revenue through 2016, in line with global growth in LTE networks and LTE subscribers.” That’s a lot of growth and for good reason.

Note: It was just in 2011 that the Diameter signaling controller market has emerged as an important category. Hence the report and why the Tekelec vision for it commands attention.

The components of the New Diameter Network — what they are, where they fit and what they do

As the vision’s press release notes, the New Diameter Network provides three critical components:
 

  • The Diameter Signaling Router (DSR): Relays messages with all Diameter-based network elements in 3G, IMS and LTE networks. The DSR establishes a connection with each endpoint, relieving them of routing, traffic management and load balancing tasks — shifting intelligence from the network edge to the Diameter core, improving network performance, reducing complexity, lowering costs, and enabling new services. 
  • The Policy Server (PCRF): Sts real-time business rules for managing network resources, prioritizing subscribers, applications and devices, and defining innovative services. 
  • The User Data Repository (UDR): Personalizes these rules with subscriber profile, state and usage data. The UDR is the central, real-time repository for front-end databases, such as Home Subscriber Servers (HSSs) and subscriber profile repositories (SPRs), storing location, authentication, preference, service, identity and presence data in one logical system.

Two diagrams illustrate what this means in terms of where the components fit in the network and at what layer. The first is important to understand because it shows the centrality of Diameter signaling control elements – policy servers, charging systems, subscriber databases, gateways, and session and mobility management equipment. These all rely on the Diameter protocol to exchange network, subscriber, policy, and charging information. Other sources of Diameter signaling include LTE subscriber authentication, LTE roaming, and subscribers who move between LTE and 3G or Wi-Fi networks.

In the world going forward, this means not just facilitating basic service but also more sophisticated ones. Tekelec for examples cites things such as personal ads, or shared data plans which track usage across multiple users and devices. These will exponentially increase signaling traffic.

Tekelec’s EAGLE XG middleware platform is the engine of the New Diameter Network, providing three essential layers of scalability:
 

  • High message processing rates to handle spikes in signaling and data traffic
  • Databases that scale to manage the immense volume of real-time subscriber and device data
  • Diameter applications and use cases that can scale independently

In addition, the platform provides critical requirements such as geo-redundancy, congestion controls and overload protection to safeguard the network.

Where does the New Diameter Network fit? The figure below, while a bit of an eye chart, shows it well. IT is a dedicated Diameter control plane that puts service providers in the position to manage network resources and optimize subscriber services based on managing subscriber policies and profile data.
 

As Doug Suriano, Tekelec’s chief technology officer told MobilityTechzone, “The reality is that without Diameter signaling (specifically a formulation such as Tekelec’s vision) there could be no robust LTE. Every element in LTE network uses Diameter, security, monetization, etc. The network control layer eliminates point-to-point and meshed configurations and allows for the underlying 10X increase in traffic innate in LTE deployments as well as the extensibility to handle the explosion in signaling traffic all those smartphones and apps will generate.”  

Suriano added that it was clear that as part of the effort to control network congestion, it was clear that operators around the world, as cited above, were going to have to move to usage plans along with Wi-Fi and small cell off loads, and that, “each one of these adds to signaling traffic.” 

As noted at Barcelona, Tekelec announced five new customer wins for core component elements of its vision. What Suriano indicated was this not only brought the total to 12 publically announced wins but that the sense of urgency in the market meant there were dozens of operators expressing an intense interest. He noted that, “the race is on.” 

This was a reference to the fact that certain operators were already throttling back heavy users, in major part because of the signaling problems associated with network congestion as a whole, but also because of the signaling load those heavy user placed on the network because of the apps they tend to run. He also noted for example that Verizon, who is a leader in its 4G LTE coverage, is facing 40 million phones coming off their plans in the next two years with the high likelihood that most of those 2G and 3G phones will be replaced by 4G ones, especially if, as expected, Apple starts retailing a 4G iPhone and the exploding tablet population starts straining Wi-Fi and mobile hotspot resources. 

Who says plumbing isn’t sexy?

The Rise of Smart Mobile Services (Not Apps!)

23 Apr

A new generation of Smart Mobile Services is coming. We don’t need to wait for Google Glasses to build the next generation of world-changing consumer services. Many of the enabling features for these services exist in our smartphones today.

What do I mean by a Service versus an App?

Well, most mobile app developers have built their user experiences to look a lot like a desktop application jammed on a phone. I open up the app when I need something. I open up Outlook on my desktop to check email (I am on Gmail, but work with me here), and I open up my Yelp app on my iPhone when I need a restaurant recommendation. Same, same.

I am either in it, or it is off. For the mobile apps running in the background (e.g., email), they currently don’t add any utility to my offline experiences and interactions. This will continue to work for many apps going forward, but there will be an entire new generation of Services (vs. Apps) that will run in the background, be with me, and add value to my daily flow, productivity and experiences.

What do I mean by “Smart”?

“Smart” means understanding a user and understanding their physical and mental state.

Smart services will process user information in the background to make accurate predictions around real-time user intention and will offer suggestions, results and different user interfaces/interactions based on their prediction of state.

Smart example: Google predictive search in mobile: By adding location data, Google can predict better search queries and search results – improving the user experience.

Very few apps today do any processing to figure out the context and state of the user. They could use passive location data, where I am, who I am with, web services and information, etc. to make assumptions about the user (e.g., Saar is at home now, or Saar is driving) and interact with me differently as a function of state.

A change in user interaction

Current mobile apps use the notification channel and SMS to bring me back to their apps. But very few have “smart notifications” that take advantage of my current context. These next generation services will only interrupt me when they have something valuable to add that is in-context. And they will do a much better job building different user interfaces based on my state.

As I think about what these new Smart Services will look like, here are some of the characteristics I have been noodling on:

  • The most disruptive ones will change our physical interactions and be additive to our offline experiences.
  • Services will process things in the background, predicting our state with a high degree of accuracy.
  • Many will primarily interact with the user through interruptions — and they only interrupt when they have something of value to add.  (e.g., for Uber: Your car is arriving now.)  They won’t feel “heavy” and bombard us with information overload – they will earn the right to interrupt with value.
  • The user interface will look very different from existing web interfaces for some of these apps — as they won’t have things to suggest/interrupt a lot of the time, but when they do they will be
    very helpful. Example: It is “ok” for the user interface to say: ”Close the app, we don’t have anything for you now.”
  • Understanding context will follow simple heuristics for some services and big data processing for others. As an example, many home automation applications may only need to know that I am in my house to
    automate music, thermostats, etc. But more sophisticated data analysis and processing will be required for more complicated interactions/recommendations/transactions (ala Square payments).

If I have lost a bunch of you on this post at this point, I apologize. Another way and getting to the point is asking: Why can’t I have the services below today?

Diet – When I step into the gelato place (and you have a high degree of certainty that this is in fact what I am doing), why don’t you ping me and encourage to walk out and go down the street for frozen yogurt instead?

Music and home automation – Why won’t Sonos turn on automatically as I pull into my driveway during reasonable hours?

Driving — Why can’t an app notice in my calendar that I have to get to SF from Palo Alto and ahead of time warn me that 101 is jammed? Why do I still need to check? Highlight potential hiccups and problems proactively and otherwise remain silent.

Discover —  If there is awesome location-based content (or people for that matter), how come it is so hard to discover?

(Any good brainstorm of location-based services will include these scenarios, and has for the past 10 years. But the enablers now exist for these services to become a reality.)

It is really early days and I am excited for what is to come. What do you think the most exciting smart services will do or look like?

Special thanks to Gentry Underwood from Orchestra for contributing many of the ideas and inspirations for this post.

Verizon’s Stratton: The Future of IT is Mobile and Cloud

19 Apr

, the president of Verizon EnterpriseSolutions, John Stratton discussed how technology shifts would transform the IT landscape with a group of Industry Analysts.   Verizon believes we’ve entered the next major era of computing that is based on cloud and mobility.  Stratton said we experience a 10X growth in number of users with each wave computing.  He told us that this wave will create a discontinuity in a company’s business processes and commercial models.  He likened it to the days of Wang and how a business must reinvent itself during each technology shift or risk destruction.   Verizon believes that its standing in networks, mobility and cloud will afford it the opportunity to reinvent itself as we move into this next generation of computing.

Stratton’s assessment of the new IT landscape is spot on.  Yet it’s unclear that businesses understand the order of magnitude shift that Mr. Stratton described.  I also believe that we’ve entered the Mobile Cloud era (MOCLO).   Mobile isn’t just an access method or a collection of cool devices.  The move to mobile has created new operating systems (OS) for tablets and phones but will also change the OS for next generation laptops and desktops.  In fact, this new foundation software will run across a wide range of connected devices that span phones to automobiles.  This is the Post PC era taken to a new level.  How?  Over time this new foundational software and these new devices will force a businesses to change how it builds applications and engineers its business processes.  Applications will be device aware, location aware and network/cloud aware.  Business processes will assume a multi-device landscape and data portability.  The M2M market is also evolving to a set of services to compliment connected modules.  In some cases those services are customer facing like “smart home” and “smart energy” services.  In other cases, services are business related such as reporting and analytics services based on monitoring items such as sensors.

The cloud is also more than just cheap storage and processing power that resides outside of the corporation.  Mobile devices and cloud technologies will shift IT’s vision of where data should be located and how it will be accessed.  Rather than an “on-premise” or “off-premise” dialogue, a business will build policies on where data should reside and how it should be accessed.  Mobile and cloud shatter the  “firewall/DMZ” approach where all data is locked inside the corporate walls.  In the MOCLO era, firms will create context-aware security profiles that allow data to move seamlessly and securely between the corporation, the cloud and devices.  These profiles will be based on items such as type of device, location, users, regulations and roles.

LAS VEGAS, NV - JANUARY 11:  President of Veri... President of Verizon Enterprise Solutions John Stratton

In the MOCLO era, IT will also leverage the cloud for real-time analytics and actionable business intelligence on the go.   Verizon provided an example of this when it discussed its cloud-based fraud management service for healthcare, which uses predictive modeling technology to examine health care payment requests and route potentially fraudulent claims to case managers for investigation.  This is just one example of many to come.  Identity  and real time analytics services that provide contextual and actionable information are nascent.  The possibilities for new connected devices and new services based on integrating the data from those devices with open data from the cloud are endless.  To participate in the MOCLO era, businesses and vendors must have APIs that allow the exchange of data between companies and services.  Verizon mentioned its focus on creating APIs to participate in the new world ecosystem.  These are just several of the changes that I believe will occur over the next 5 years.  Companies that understand and prepare for these tectonic shifts will deliver competitive advantage with technology.  What’s your perspective? Contact Lopez Research to share your thoughts on the MOCLO era.

Source: http://www.forbes.com/sites/maribellopez/2012/04/18/verizons-stratton-the-future-of-it-is-mobile-and-cloud/?goback=%2Egde_136744_member_108894750

Study: ATT, T-Mobile top network speed tests

18 Apr

The HSPA+ 21 network of T-Mobile USA and the LTE network of AT&T Mobility (NYSE:T) were the nation’s fastest “3G” and “4G” networks, respectively, among Tier 1 U.S. carriers, according to a new study from PCWorld.

According to the report, AT&T’s LTE network provided the best downlink speeds among 4G networks, topping out at an average of 9.12 Mbps. That bested Verizon Wireless’ (NYSE:VZ) LTE network, which had average downlink speeds of 7.35 Mbps. However, Verizon’s LTE network beat AT&T’s in uplink speeds, with an average uplink speed of 5.85 Mbps compared with AT&T’s 4.91 Mbps.

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The magazine conducted tests on the networks of the four Tier 1 carriers in 13 cities: Atlanta, Boston, Chicago, Dallas, Denver, Las Vegas, Los Angeles, New Orleans, New York, San Francisco, San Jose, Seattle and Washington, D.C. The tests were conducted by Novarum, a strategic wireless consulting firm, and used smartphones suggested by the carriers.

Both Verizon and AT&T claim that their LTE networks deliver average downlink speeds of between 5-12 Mbps. Verizon’s LTE network currently covers more than 200 million POPs while AT&T’s LTE network covers around 74 million POPs. According to the PCWorld study, T-Mobile’s HSPA+ 42 network, which covers around 184 million POPs, produced average downlink speeds of 5.53 Mbps.

Sprint Nextel’s (NYSE:S) current 4G service is delivered via Clearwire’s (NASDAQ:CLWR) mobile WiMAX network, which covers 130 million POPs. Clearwire advertises the network as providing downlink speeds of 3-6 Mbps. However, PCWorld found that the WiMAX network delivered average downlink speeds of 2.81 Mbps. Sprint will deploy LTE by mid-year and has promised speeds comparable to those of Verizon and AT&T.

Among “3G” networks, T-Mobile’s HSPA+ network performed the best, with average downlink speeds of 3.84 Mbps. AT&T’s HSPA+21 network came in second, with average downlink speeds of 2.62 Mbps. Verizon came in third with average speeds of 1.05 Mbps and Sprint came in fourth, with average speeds of 0.59 Mbps.

Many factors can contribute to observed speeds in network speed tests, including the traffic on a particular cell site and whether the test is conducted indoors or outdoors.

AT&T took the publishing of the test results to crow about its LTE network and its fallback HSPA+ network. “We made a decision to roll out ongoing upgrades and invest in our mobile network, on our way to more broadly deployed 4G LTE, so our customers could enjoy fast speeds and the best possible experience,” said John Donovan, AT&T’s senior executive vice president of technology and network operations. “It’s great to see the results of our 4G network strategy in PCWorld‘s tests and in the feedback we’re getting from our customers.”

Verizon, which recently launched a “4G Throwdown” advertising campaign to highlight its LTE network speed, disputed the study’s findings. “The vast majority of highly regarded third-party studies and tests consistently place Verizon Wireless 4G LTE network and data services ahead of the pack in terms of speed, quality, and reliability,” the carrier said in a statement, according to PCWorld. Further, Verizon said concerns that its LTE customers will fall back to a slower CDMA network will soon be moot because Verizon is rapidly expanding its LTE network; the company plans to cover more than 260 million POPs with LTE by year-end.

For more:
– see this PCWorld article

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The Mobile Elite – Meeting the growth challenge in the 4G era

5 Apr

By Scott Wilson and Phil Asmundson > Illustrations by Dongyun Lee

“A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be.”
— Wayne Gretzky

The hypercompetitive mobile sector

Mobility is everywhere. But with this growing ubiquity comes a set of unique challenges for companies riding the wireless wave of opportunity. Throw the impending arrival of the broadband 4G era into the mix and uncertainty levels are set  to spike as the scramble for competitive advantage reaches fever pitch. Given the current volatility of the U.S. mobile sector, it could be argued that a period of hypercompetition1 is engulfing the formerly stable wireless industry. Established markets are constantly threatened by new entrants with technologies  or business models that throw  traditional standards and rules  into flux, resulting in periods of prolonged market volatility.

Perhaps because of this heightened uncertainty, much of the established U.S. mobile sector still finds itself treading water, unsure of where and how to capitalize on new opportunities. Such companies can embrace the prospects of a more democratized digital world or staunchly defend existing businesses and protect traditional revenue streams. The decision is not so clear-cut, and now more than ever, the challenge is to do both. To begin with, incumbents must find new ways to compete against the waves of innovation emerging from Silicon Valley that have shifted the locus of creativity in mobile to the West Coast. But how should companies ride out this volatility? In the short term, viable pathways to growth need to be secured—or else the masters of old mobile risk being marginalized by a growing army of upstarts.

Welcome to the open mobile world

Currently, the core elements of mobile disruption are centered on a patchwork of seismic events unfolding around three pillars of change: the rapid acceleration of innovative mobile Web technology; rising consumer demand for new mobile products and data services; and an evolving regulatory policy debate pushed along by the U.S. Federal Communications Commission, which seems inclined to pursue a more open, competitive market environment—the likes of which the industry has yet to experience. Collectively, these elements are the cornerstones of the open mobile era—a macro-level phenomenon that reaches far beyond the boundaries of the traditional U.S. mobile industry, into the surrounding technology and media sectors and across myriad adjacent vertical industries adopting wireless technologies.

For a number of years, Deloitte’s* telecoms industry group has been researching the likely impact of the open mobile era and publishing a series of studies that offers incumbents guidance on how to capitalize on emerging growth opportunities. Findings from the latest study, focused on surveying a select group of senior executives in and around the mobile industry, once again point to growth and innovation as the dominant issues of the day. The gentle breeze of change is long gone, and in its place, a full-blown, Schumpeterian headwind threatens to leave a trail of creative destruction in its wake. The industry’s leaders are seemingly challenged on an almost daily basis by floods of new entrants. Many of these incumbents have limited experience in developing cutting-edge, mobile-technology-based business models, proving that experience in itself is not a harbinger of success in this  mobile era.2

Our research suggests that, in periods of market volatility, resources—often more so than market position—can be a determining factor of success. The pressing need for new organizational capabilities to compete and capitalize on new opportunities is evident. What is also apparent is the expanded role of platform leadership and ecosystem development to support top-line growth and innovation initiatives. However, the understanding of the roles that capabilities play in deploying these strategies remains inconsistent. At the heart of this issue is perhaps a growing tentativeness among incumbents to fully embrace open platform tactics. Mobilizing and managing new open ecosystems becomes crucial to business model innovation, especially in light of recent sector events that are rapidly redrawing the competitive landscape. But in which areas, and to what extent, should strategic approaches be built upon open methods of collaboration with third parties?

Mining for gold

The backbone of the open mobile growth era is the rollout of 4G (fourth generation) LTE (Long Term Evolution) and WiMax (Worldwide Interoperability for Microwave Access) wireless network technologies, which are gathering speed. The long-awaited network upgrade is set to address voracious U.S. consumer demand for higher download speeds and greater bandwidth capacity, which should provide enhanced mobile data products and services. On paper, 4G networks promise to usher in a new wave of mobile ubiquity, opening the door for innovation to increase across all areas of the mobile value chain and beyond. And although nationwide 4G coverage is still being developed, the network standards battle between WiMax and LTE has tilted in favor of LTE. The majority of U.S. wireless service providers have announced support for the LTE standard, which is designed to be backward compatible with 3G GSM and HSPA technologies, giving it a cost advantage over WiMax in the process. LTE will also provide network operators 2–5 times greater spectral efficiency than the most advanced 3G networks, reducing the transmission cost per bit and allowing better economics for carriers and end users.3 Recent market forecasts suggest LTE services will generate more than $11 billion in service revenue in the United States by 2015, and global LTE subscribers will number 303.1 million by 2014.4

From a growth perspective, the implications of the move to 4G are significant. Carrier voice revenue declined 7 percent over the last four years, while data revenue soared 132 percent and now accounts for 35 percent of the total revenue for the wireless industry.5 This trend is set to grow significantly over the short term and, with it, new revenue opportunities distinct from their traditional network services will emerge for incumbents. 4G is expected to provide the highway to this new value creation.

To begin with, much of the industry believes that an explosion in mobile services, distinct from revenue that comes from straightforward mobile advertising and software applications, will provide the greatest revenue opportunities in the next three to five years. Services, rather than hardware per se, are thought to represent a greater source of future value (see figure 1). It is important to define services in the context of emerging mobile business models in popular consumer and enterprise areas such as entertainment, social networking, mobile payments, mobile cloud services and productivity, and so on. The SoLoMo mantra (“social-local-mobile”) is becoming commonplace across the industry and growing louder by the day. Companies should expect to find opportunities in the overlap of social media platforms such as Facebook and location-based mobile services and mobile OS platforms such as Android or iOS. The startup successes of location-based mobile companies, including the likes of Foursquare and Gowalla, provide a perfect example of where future value could emerge in this category.

What will drive future mobile revenue opportunities?

The rise of the machines

In a similar vein, at the sector level, the emergence of 4G will accelerate widespread mobile business model innovation across a number of vertical industries such as healthcare and life sciences, which are already adopting wireless technologies. Others are quickly following suit, and industries such as consumer products and financial services are likely to experience higher rates of new  mobile business model growth over the next five years (see figure 2). This is generally in alignment with current market trends; the rise of mHealth and smart grid energy technology, in particular, offer huge potential revenue opportunities for mobile incumbents to expand top-line growth.

Machine-to-machine (M2M) wireless technology is often the cornerstone of these opportunities. Although M2M technologies are certainly not new to the industry, worldwide M2M connections are on a steady upward march forecasted to reach 225 million by 2014. Industry-wide M2M operator revenues is estimated to continue its rise from $4.3 billion in 2008 to $12.9 billion by 2012. On a global scale, the figures are even stronger; revenue from mobile connected M2M and embedded devices is set to rise to $18.9 billion by 2014.6

Which vertical industry has most potential for new mobile growth and value generation?

Smarter energy and smarter healthcare

Several forces are driving this surge in the M2M market, including the declining cost of mobile device and infrastructure technology; increased deployment of IP, wireless and wireline networks; and a low-cost opportunity for carriers to eke out new revenue streams by utilizing existing infrastructure in new markets. This opportunity will be most prominent across a number of enterprise verticals with energy likely to lead the way: Smart grid and smart metering technologies are set to experience the most growth in the M2M market. The Obama administration’s targeted economic stimulus package of $3.4 billion to modernize the nation’s power grid will further accelerate development of this market.7 At the broadest level, the emergence of smart grid networks will provide improved tracking of energy utilization, mainly in the form of smart grid metering, for real-time communication between consumers and the electricity grid. This will enable significant energy and cost-saving features not possible with today’s grid. Growth opportunities are significant; forecasts suggest the U.S. smart grid market will grow from $21.4 billion in 2009 to $42.8 billion in 2014.8 By 2014, 88 percent of this market is projected to consist of device and hardware manufacturers, software developers, and providers of communications infrastructure and equipment.

The healthcare sector is also set to gain from increased adoption of mobile technology, which should benefit carrier service revenue in the United States where the market for wireless home-based healthcare applications and services is estimated to grow at a five-year CAGR of 80 percent and become a $4 billion industry by 2013.9 Mobile Health, or mHealth, is emerging as a significant growth opportunity for companies looking to capitalize on advances in wireless healthcare utilizing M2M technology. Analyst forecasts estimate the potential value of the mHealth market to be approximately $4.6 billion as early as 2014.10 The driving forces behind this expected uptick are numerous. Mounting pressure to cut burgeoning costs in the U.S. healthcare system is a government-mandated objective; in particular, preventable readmissions cost an estimated $12–17 billion per year.11 On top of this lies the trend of an aging population, exacerbated by the size of the baby boomer demographic. Americans aged 60 or older represented 18 percent of the U.S. population in 2009, and this segment is expected to grow to 27 percent  by 2050.12

Wireless healthcare solutions offer a way to deal with these and other pressing issues. Advances in the area of remote patient monitoring (RPM) are expected to have a big impact across targeted disease areas where chronic conditions are a leading cause of the readmissions problem. RPM can equip healthcare providers with timely information about patients’ health while improving the speed and accuracy of diagnoses. Wearable body sensors and remote monitoring can keep chronic patients out of hospitals and improve their quality of life while significantly reducing admission expenses. Continuous remote monitoring of patients through wireless sensors and wireless networks also allows caregivers to detect and respond to intermittent problems and improve medical providers’ abilities to schedule visits. This, in turn, helps alleviate pressures pertaining to resource planning, especially problems related to unnecessary call-outs.

Improving disease management, despite an increasing incidence of chronic diseases, is a particularly promising avenue, considering seven out of 10 deaths among Americans each year are the result of chronic diseases; heart disease, cancer and strokes account for more than 50 percent of all deaths each year. In 2005 alone, 133 million Americans—almost one out of every two adults—had at least one chronic illness.13 Given this situation, the numbers are stark. Costs associated with chronic disease management accounted for more than four-fifths of the total healthcare expenditure, or $2 trillion annually by 2009, and are expected to increase 6.1 percent per year over the projection period 2009– 2019.14 But, if as expected, adoption of such RPM technology becomes suitably widespread, savings are expected to reach $197 billion over the next 25 years.15

With these opportunities only set to grow bigger, many mobile technology and wireless companies are planning to collaborate in high profile alliances with counterparts across the energy, healthcare and life sciences sectors. The immediate benefit will come from combining resources and knowledge to push the growth of wireless technology in these industries to the next level. The key challenge for wireless incumbents will be to position themselves at the center of new ecosystems and create differentiated platforms for growth that will allow them to exploit new business models in the process. But unlocking value in nascent markets will  require sustained collaboration, a problem area for many mobile incumbents.

One solution could be to learn from the software-driven “open” development tactics used by mobile’s new elite, which could help establish a roadmap to growth for traditional incumbents.

Software, the great disruptor

Perhaps the biggest element of mobile hypercompetition is the impact that so-called “Web companies” continue to have in transforming the traditional competitive landscape. A majority of Deloitte’s Open Mobile survey respondents, who were not affiliated with network carriers, believe Web-based companies are likely to have an increasingly dominant role in mobile over the short term. Google and Apple in particular continue to be the keystones of the new-wave vanguard in mobile that also sees the likes of Facebook, Amazon and Twitter—all giants of the Internet economy—exert more and more influence over the design and utilization of Web-enabled mobile devices and services. Google provides a prime example. Much of Android’s growth in mobile is driven by the one-two punch of its mobile search and advertising platform, which has increased revenue by more than 500 percent since 2009.16 Not to be outdone, key competitor Apple has aggressively pursued its own double whammy of leading-edge consumer hardware design, combined with world-class software development, to carve out its own commanding presence. Driven by the rapidly evolving iOS operating system platform and an expanding portfolio of mobile devices and tablets, the results have been overwhelmingly positive, leading to the July 2011 announcement that the company is now the number one global smartphone producer.17

The significance of this shift in the balance of power toward firms that leverage software and media content at the core of their mobile strategies cannot be overestimated. One of the biggest drivers of value generation in the open mobile era is the development and proliferation of mobile software applications, or simply “apps,” which rapidly blossomed into a multimillion dollar industry of their own. The app economy is booming and likely to be worth in excess of $2 billion by 2012 with fortunes undoubtedly being made and lost in the process.18 Significantly, some analysts estimate software innovation outpaces network innovation by a factor of five to one, meaning new product introduction lifecycles for mobile software can average three to six months while network service innovation can take 18–24 months.19 Not surprisingly, network services are often left playing catch-up with software innovation.

The incumbent challenge

From a carrier perspective, the rise of software in their network-dominated world poses interesting questions for the wireless incumbents, especially with regard to how they leverage collaboration to take advantage of growth opportunities in adjacent industries. With the “content is king” mantra ringing in their ears, there is little doubt that software innovation is driving platform innovation, which in turn is driving device adoption that ultimately helps fuel the growth of network data services. The challenge for incumbents will be to exert their still-powerful presence and compete in an area in which they have traditionally lacked expertise, allowing them to carve out new business models that extend beyond the boundaries of the traditional wireless sector. Responses from the mobile executives in our recent Open Mobile survey suggest this is a priority—a large majority believe carriers must make the transition from the walled gardens of the past to new organizational forms built around open ecosystems to enable enhanced collaboration with developers. Others suggest that the most likely route to sustained success may come from a managed open strategy— where carriers retain prioritized control over premium applications and assets but allow third parties access to core network functions.

The good news for incumbents is that this message seems to be hitting home. Only a few years ago, U.S. carriers were virtually impenetrable for the majority of software developers, but this is starting to change. Today, each member of “the big 3” is making a bigger effort to attract more developers to  collaborate and build out their ecosystems. For instance, both Sprint and AT&T have recently launched new initiatives focused on building out new centers of innovation and processes to facilitate co-development with third parties.20 This should help build platforms that could see new apps and services launched in areas such as messaging, geolocation and M2M. Beyond this increased network access, carriers are also looking to develop new app storefronts that will cater to multiple third party platforms and handsets directly linked to new external developer channels. This will offer developers a range of economic, technical, sales and marketing benefits in return for creating the apps with the best revenue potential to run on their networks. And perhaps in a nod to the likes of Apple’s WWDC program, each of the big 3 now hosts its own annual developer conference with the goal of growing a sustainable developer community to foster more collaboration. All of these steps suggest carriers are beginning to follow a collaborative product and services strategy to keep pace with threats from the likes of Google and Apple and win the prized developer mindshare. But in order to get there, an increased focus on developing appropriate capabilities is critical.

Does your company have an open mobile strategy in place?

Navigating the path to growth

Against the backdrop of change in mobile, the twin strategies of platform leadership and ecosystem development are central to capitalizing on emerging growth opportunities. Our surveyed executives agreed, and most indicated that their organizations were on track with planning and investing for the open mobile era despite the lingering effects of the recent economic downturn. The broader role of platform leadership within organizations planning for mobile growth seems to be taking hold. Digging deeper, the simplicity of applications development and user experience, cross-industry potential, open interface access and modular technology architectures, and the use of a vibrant ecosystem to support and develop the platform are considered the most critical elements for platform success.

Ranking the importance of organizational capabilities to compete in the 4G era (by industry)

The effectiveness of the formation and deployment of a platform-based ecosystem can differ between various sectors of the mobile value chain, but the building block capabilities of alliance formation, knowledge management, trust-building and collaboration in general are seen by respondents as the keys to developing platforms and ecosystems to stimulate innovation. Competence in each of these areas should be a top priority.

Follow the mobile elite

The call for incumbents to move toward a more open form of market competition has been a consistent theme throughout our research. Studying the strategies and tactics of the Silicon Valley elite may prove useful in constructing the path forward. Most surveyed executives seemed to believe that carrier competitiveness in the 4G era will be dependent on dismantling the closed platforms of the past and replacing them with more open forms of organization (see figure 5). This is considered essential to stimulate business model innovation beyond the walls of the traditional wireless industry and ensure new platforms will gain sustainable footholds amid market turbulence. In this market era, innovation in software drives OS and device utilization and boosts network asset utilization. Incumbents prone to exerting restrictive control and access over software applications, content, media and network applications should realize the risks to market share in doing so.

Despite a growing recognition that the move to open platforms is necessary, transitioning away from closed, proprietary business models is not easy. Winners in this era will be the ones who can astutely mobilize new ecosystems, manage highly distributed network alliances, build trust with new partners in the innovation process and generate value from mobile technology platforms that, in turn, will form the core of new business model development. Companies that fail in these key areas may struggle to compete.

Will carrier competitiveness in the 4G era be dependent on transitioning from “walled gardens.”

Run to where the money will be

For incumbents, finding new, nontraditional sources of wireless growth will become imperative to sustaining their leading positions. Companies active in areas such as wireless healthcare, smart grid energy management, financial services and retail are set to experience significant growth in the use of mobile technology. New business models with wireless technologies at the core of their platforms will drive value generation. Top-line growth will become increasingly dependent on how well incumbents, particularly carriers, can organize to collaborate with players in adjacent industries where they do not possess leading knowledge or prior experience.

Go toe-to-toe with the new wave

The art of innovation lies at the core of the incumbent challenge in mobile. The question becomes how to balance the daily grind of defending hard-won market share with the need to find unexplored opportunities. Our research highlights the strategies used by successful new entrants—the mobile elite—to focus on two main tactics: the development of astute open platform leadership and the mobilization of flexible innovation ecosystems. To seize the moment with emerging growth opportunities, incumbents should consider similar tactics to reenergize their innovation process.

The first step will be to focus on areas of the value chain that are still under-served by new entrants. Survey insights point to targeting innovation at the services level, across the adjacent vertical industries where wireless technology is set to disrupt established markets. By following a managed open strategy, wherein careful targeting of open platform development is balanced with retaining proprietary control of core value-generating assets, incumbents can go toe-to-toe with the new wave. Tactics should include extending third party developer collaboration in areas of promising value generation such as M2M in the healthcare and energy sectors. Fostering innovation in areas such as mobile cloud computing and mobile commerce, combined with making bold plays in the ever-expanding field of mobile social media, could also pay dividends.

By developing supporting innovation communities that use dispersed networks of development partners, drawn together from disparate geographies, companies can reconfigure talent, resources and capabilities to serve and feed their platforms and ensure innovation is regenerated beyond their own four walls, thus allowing incumbents to reach beyond the boundaries of their established footholds and strike out into new frontiers. DR

* As used in this article, “Deloitte” means Deloitte LLP. Please see www.deloitte.com/us/about for a  detailed description of the legal structure of Deloitte LLP and its subsidiaries.

Scott Wilson leads Technology, Media and Telecommunications research  within Deloitte Research, Deloitte Services LP.

Phil Asmundson is vice chairman and U.S. Media & Telecommunications sector leader of Deloitte’s Technology, Media & Telecommunications industry practice. He is a partner of Deloitte & Touche LLP.

Endnotes

1. Hypercompetition, as described by Prof. Richard D’Aveni, denotes hyper-inflated market competition that can emerge in sectors prone to rapid technological disruption with competitive advantage often difficult to sustain. See D’Aveni, R. (1994): Hypercompetition: Managing the dynamics of strategic maneuvering, New York: The Free Press

2. Charles S. Golvin, “A rebirth of competition in mobile connections,” Forrester Research, September 20, 2010; Thomas Husson and Julie A. Ask, “2011 Mobile Trends,” Forrester Research, January 24, 2011.

3. For more on LTE see Next Generation Mobile Networks (NGMN) < http://www.ngmn.org/home.html>; Also, GSMA http://www.gsmworld.com/technology/lte.htm>.

4. ABI Research “LTE Services in the US Will Generate More than $11 Billion in 2015,” ABI Research, December 16, 2010; Francis Sideco, “LTE Momentum Expected to Easily Overcome WiMAX Head Start,” iSuppli, February 3, 2011.

5. Jenna Wortham, “Skype-Style Calls Force Wireless Carriers to Adapt,” The New York Times, May 15, 2011.

6. “Embedded Mobile & M2M Connected Devices to rise to 412 million globally by 2014,” Juniper Research, January 19, 2010; “Embedded Mobile and M2M Device Revenues to Rise to $19 Billion by 2014,” Cellular News, February 9, 2010.

7. Michele Pelino, “The M2M Market Is A Blossoming Opportunity,” Forrester Research, March 16, 2010.

8. ZPryme Research “Smart Grid: Hardware & Software Outlook,” ZPryme Research & Consulting, December 2009.

9. “Wireless Home Healthcare to be $4 Billion Industry by 2013,” Park Associates, August 5, 2009.

10. Sophia Yan and Christopher Flavelle, “Boeing Blocks GE, Philips Wireless Spectrum for Patient Monitoring Device,” Bloomberg, July 22, 2010.

11. Stephen F. Jencks, M.D., M.P.H.; Mark V. Williams, M.D., and Eric A. Coleman, M.D., M.P.H., “Rehospitalizations Among Patients in the Medicare Fee-for-Service Program,” The New England Journal of Medicine. 360; 14, April 2, 2009, pp. 1418–1428.

12. Philip Seligman, “Industry Surveys Healthcare: Product & Supplies,” Standard & Poor’s, August 20, 2011. See also United Nations, World Population Ageing 2009, Department of Economic and Social Affairs, United Nations, December 2009 http://www.un.org/esa/population/publications/WPA2009/WPA2009_WorkingPaper.pdf>

13. Chronic Diseases and Health Promotion, Centers for Disease Control and Prevention, <http://www.cdc.gov/chronicdisease/overview/index.htm#ref1> updated July 7, 2010; HC Kung et al., “Deaths: final data for 2005.” National Vital Statistics Reports 2008;56(10) <http://www.cdc.gov/nchs/data/nvsr/nvsr56/nvsr56_10.pdf >.

14. Laurence C. Baker, Scott J. Johnson, Dendy Macaulay and Howard Birnbaum,“Integrated Telehealth And Care Management Program For Medicare Beneficiaries With Chronic Disease Linked To Saving,” Health Affair, 30:9, Sept. 2011, pp. 1689–1697; Centers for Medicaid and Medicare Services, National Health Expenditure, https://www.cms.gov/NationalHealthExpendData/25_NHE_Fact_sheet.asp>.

15. Robert E. Litan, “Vital Signs via Broadband: Remote Health Monitoring Transmits Savings, Enhances Lives,” October 24, 2008, Kauffman Foundation/Brookings Institution report. Available at: http://www.corp.att.com/healthcare/docs/litan.pdf>.

16. Additionally, the company reports 550,000 Android devices activated per day, while the Android Market has seen more than 6 billion apps installed. As of October 2011, Google had a cash reserve of $42.56 billion (Source: Google Inc, Q3 2011 Earnings Conference Call).

17. “Apple Becomes World’s Number One Smartphone Vendor in Q2 2011,” Strategy Analytics, July 29, 2011.

18. Strategy Analytics, “Strategy Analytics: Apple Dominates Mobile App Space with Content while Android Aims for Numbers,” Businesswire, July 21, 2011 http://www.businesswire.com/news/home/20110721005072/en/Strategy- Analytics-Apple-Dominates-Mobile-App-Space>

19. “Developer Economics 2011,” VisionMobile Research, June 2011.

20. Dan Hesse, Sprint CEO, Delivering on the Sprint Promise: Enabling the Developer Ecosystem, presented at the 2010 Sprint Developer Conference, Santa Clara, CA, USA, October 26–28, 2010; See also, E.B. Boyd, “Why AT&T is opening itself up to app developers,” Fast Company, September 14th 2011 available at <http://www.fastcompany.com/1779967/why-att-is-opening-itself-up-to-app-developers>; and, “AT&T ups the innovation ante with new collaboration center in the heart of Silicon Valley,” Fierce Mobile, September 15th, 2011, available at: <http://www.fiercemobilecontent.com/press-releases/att-ups-innovation-ante-new-collaboration-center- heart-silicon-valley>

 

Attachments

 

LTE Spectrum and Network Strategies: Strategic Options for Mobile Operators in Dynamic 4G Mobile Markets

3 Apr

The LTE spectrum auctions across Europe are the start of LTE becoming market reality. Operators are focusing on one

of two spectrum strategic options: major investments into 800 MHz or smart hybrid multiband solutions with >1GHz

spectrum on 1800, 2600 FDD and TDD bands. These options are linked to their network deployment strategies and are

increasingly implemented via network cooperation agreements. By choosing smart spectrum and network deployment

strategies, operators can improve their position in dynamic 4G markets.

Spectrum auctions in Europe indicate LTE will quickly

have a significant impact on market dynamics

In reaction to the explosion in mobile data traffic and to improve

access in rural areas, the European Union ensured that the Digital

Dividend, 800 MHz spectrum previously used by analogue terrestrial

TV, would be used for mobile data networks. Most countries are

auctioning off new 2600 MHz spectrum at the same time, and also

enable operators to refarm 900 and 1800 MHz bands for usage via

UMTS/HSPA or LTE. The availability of this new spectrum is creating

a range of opportunities for incumbent and challenger operators alike

to improve their competitive market position.

Arthur D. Little has identified auction patterns and a variety of smart

network deployment strategies. In this Viewpoint, we will review

the lessons learned and assess possible auction and network

deployment strategic options for mobile operators in 4G markets.

Auction results indicate operators highly value 800 MHz

spectrum, but alternative auction and spectrum strategies

have also emerged

LTE auctions have already been completed in Germany, France,

Spain, Portugal, Italy, Sweden, the Netherlands, Belgium, and

Switzerland (see Figure 1). Competition for the 800 MHz spectrum

has dominated auction results, especially in markets in which four

mobile operators compete for three licenses of 10 MHz each on the

800 MHz band. While prices for 800 MHz skyrocketed in Germany,

Italy and France bidders in other countries managed to keep the

auction fee rather low.

In Germany, e-plus chose not to acquire 800 MHz spectrum due

to the demanding obligations to cover remote areas, as well as the

high price. Deutsche Telekom, Vodafone and Telefónica Germany

(O2) paid €1.2 billion for 10 MHz paired

etcccccc

 

 

ADL_LTE_Spectrum_Network_Strategies

 

Future of 4G Technologies

28 Mar

 

This report defines 4G and provides an overview of the trends and drivers behind the

shift towards the new technologies. It explains how regulatory factors and industry

actions are shaping the deployment and adoption of the technology. It examines different

4G technology candidates and identifies the threats and opportunities for ICT players.

Finally, it examines how leading ICT players are exploiting 4G.

 

Features and Benefits

 

• Review the current technologies, regulatory factors and industry support impacting

the adoption of 4G technologies.

• Identify key changes in consumer usage behavior that drive the need for the greater

speed and spectral efficiency afforded by 4G.

• Review the current technologies, regulatory factors and industry support impacting

the adoption of 4G technologies.

• Identify the technology family best suited to a chosen 4G strategy based on each

technology’s characteristics and individual corporate circumstances.

• Identify the various initiatives in support of each technology candidate in order to

revise considered.

 

Highlights

 

Consumers are generating increasingly high volumes of mobile data traffic, which is

leading to congestion and network performance issues. 2G still accounts for most mobile

connections worldwide but increasingly high pockets of data traffic in some markets,

combined with changing user needs, are rendering current mobile technologies

inadequate.

Industry and consumers have a strong interest in pre-4G technologies such as Mobile

WiMAX and LTE that can increase data rates and capacity dramatically. Both

technologies are marketed as 4G despite not meeting the IMT Advanced requirements.

While Mobile WiMAX is already available in places, deployment of LTE is only just

starting.

A number of established network operators, handset manufacturers and infrastructure

providers have opted for a flexible 4G strategy tailored to their different markets. Real

4G is still at least 2-3 years away from full commercial deployment but when it hits full

swing 4G will have a lasting impact on the ICT environment.

 

Your key questions answered

 

• What are the major trends and drivers behind the adoption of 4G, what are the

main 4G protocols and what is their appeal?

• What technologies, products and services will influence the rollout of 4G, who are

the key players and how do they position themselves?

• What are the main threats posed by the deployment of 4G and how can companies

protect themselves?

• How can ICT vendors and consumer electronics companies exploit the

opportunities afforded by 4G?

• How will 4G impact the ICT market in the next 3-5 years?

http://www.vpgmarketresearch.com/Future-of-4G-Technologies.html?goback=%2Egde_136744_member_103843167#dialog

 

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