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ABI Research Blog (116)

ISPs Looking to Charge Content Providers - A Cause for Imbalance

Dec 8, 2010 12:00:00 AM / by Admin

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ISPs (including mobile operators) are increasingly looking to grow revenue by taking a share of content companies' profits. They are complaining that they have rising costs to deliver the data, but that is why they charge end users monthly fees - so they can deliver Internet traffic to their customers who are paying for that Internet access. ISPs were more than happy before video picked up and their customers were underusing their networks but still paying the same monthly price.

Now that their customers are starting to use their Internet access more, instead of valuing that these customers will not jump ship for other alternatives (if available) that are much cheaper, these customers will increasingly value Internet access service that is faster and has lower latency. ISPs should be glad that these content providers bring value to Internet access. (Again, this includes mobile operators because mobile operators provide Internet acccess too - just over radio technologies for the last mile instead of wired solutions. There is no such thing as a mobile Internet - it is mobile Internet access to the very same Internet.)

The problem with this is that by asking content providers and content delivery network companies to pay ISPs (in addition to paying ISPs/telcos for their Internet connections between their serves and the Internet) is that it throws everything off balance. Content providers then have to pay twice for Internet access - their own Internet access and peering arrangements + extra fees to be allowed to peer with ISPs (which can multiple quickly), while ISPs make money not only to provide their customers with Internet access but also to act as a toll booth to content companies. This could destroy the profit margins of some content providers who are also paying for the content they deliver. They would be forced to then push those costs onto consumers who access that content. In the end, consumers pay twice while ISPs collect twice, and content companies will break even. But this will not work. Consumers will stop consuming that content. Content providers will go out of business. There will be less content on the Internet and thus less of a need for broadband. People will use cheaper, slower broadband connections, or they will just use their mobile devices and cut out home broadband completely.

Movile operators in Europe are talking about charging companies like Google and Apple. In the US, Comcast has forced Netflix to pay extra, which Netflix is doing temporarily under protest. I can see it playing out like this:

Content companies will get fed up and find a way to let consumers know what is happening, perhaps by redirecting to another page that says: "Your ISP does not provide reasonable conditions that allow us to be able to deliver our content to you. Here are other ISPs in your area who can: . . . "

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LTE Fragmentation in the 700 MHz Frequency Range

Dec 7, 2010 12:00:00 AM / by Admin

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Verizon voiced its concern recently regarding Cellular South-Samsung alliance'slaunch of LTE.Cellular South plans to deploy LTE in the 700 MHz range, frequency which has high propagation and in building penetration. Carriers that have frequencies in the 700 MHz band also include AT&T as well as Verizon.

This may seem like a good thing initially, since one would think 'Various carriers are starting to consolidate the700 MHz frequency for LTE in the U.S. This is good for the ecosystem as it will allow roaming!'. This isn't true since mobile device manufacturers have only been makingvendorspecific LTE devices that only support the specific 700 MHz bands that the large operators own. Currently,AT&T LTEdevices will only be able to use the AT&T LTE frequencies, and Verizon LTE devices will only be able to use the Verizon LTE frequencies.Cellular South and other small carriers that have won otherBlock A 700 MHz frequencies (not compatible with Verizon's or AT&T's LTE spectrum), have grouped and formed together a "Good Faith Purchasers Alliance" that petitions the FCC to avoid larger carriers from segmenting the 700 MHz spectrum, and impose these carriers to provide devices that will be compatible with the total 700 MHz spectrum.

This is a perfect example of how LTE spectrum fragmentation will hinder its growth and maturity.

  • All carriers and device manufacturers, large or small,care about their competitive advantage inproviding a product or service.
  • Atthis stage of LTE, device manufacturers will not want to risk putting out a full-band 700 MHz device for LTE, since it would add more variables to the equation and adding variables means more things that can go wrong. They will pinpoint their devices to meet the needs ofcarriers, limiting it tothe specific carrier’sband only.
  • Large carriers want to get a head start on their competition regarding LTE, and will use the best, most reliable and available device showcased to them. This in this case, will be a carrier specificmobile device.
  • Large carriers drive large volumes of these devices. Smaller carriers may see this as service providers usingtheir weight to hinder the 700 MHz unification, but it's rather the service providers committing to what is reliable as well as available at the moment.

The 700 MHz band will eventually unify, but this will take time. Larger service providers aren't pushing to hinder this, but byhaving largevolumes of band specific devices, it isn't incentivizing this either.Whenlarge carriers feel the needfor the full 700 MHzband devices(and in turn incentivize device manufacturers to produce them), or when device manufacturers are confident enough to release devices that support the full 700 MHz spectrum to have them available in their offerings, only then will this consolidationoccur.​

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Multi-Device Subscriptions: Rogers Quietly Touches Off a Sea Change for Mobile

Dec 7, 2010 12:00:00 AM / by Admin

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Ladies and gentlemen, the revolution has begun.

Friday, Canadian telecom operator Rogers Communications announced it was introducing “new data sharing plans that enable customers to seamlessly and easily share data from one plan across multiple devices. With these new plans, customers can take their existing plans and apply a data sharing add-on for as low as an additional $15 per month” (Canadian dollars, plus tax).
The release went on to sketch out Rogers’ vision for the media tablet as the command center for accessing all sorts of data and content, and how Rogers is seeking to enable consumers to access this data and content seamlessly across multiple devices. The concept of multi-screen access has been trumpeted for several years, but real life implementation has been hampered by billing capabilities – consumers don’t want multiple bills and subscriptions for all of their various connected devices. The utopia in that sense would be one data plan for all of a subscribers’ devices – smartphone, feature phone, laptop dongle, media tablet, perhaps even portable media players and gaming devices.

Watch your KBs, MBs

You can bet that nearly every mobile operator in the world will be watching Rogers’ initiative closely. And you can make another safe bet that consumers will absolutely snap it up – if they are comfortable in how Rogers explains the accounting. Consumers don’t know how to measure (nor should they be expected to) the data they consume, so Rogers must be very deliberate and show consumers the data consumption by device in this multi device subscription scheme. You would also assume the plans will include some flexibility in terms of changing plan amounts as consumers must build a history of usage to really know what total amount of data they will be using over time. The scheme will be a huge success, particularly with high value customers (who tend to have multiple devices already) if the plans are easy to understand and manage. If not, Rogers could risk losing some of their best customers.

I hope they’ve gotten it right. Because if they have, they will have launched a killer sticky service that is a perfect counterpunch to dumb pipe syndrome.

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Apple’s iOS 4.2 Brings Free Lost Device Location Tracking to iPhone, iPad, and iPod Touch

Nov 23, 2010 12:00:00 AM / by Admin

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Free device location tracking is one of the many new features included in Apple’s latest iOS 4.2 release. Previously the Find My iPhone functionality required a paying subscription to Apple’s MobileMe service at a yearly fee of $99. With iOS 4.2 all what needs to be done is adding a free MobileMe account and toggle the Find My iPhone settings switch to on.

Features include locating a device on a Google map either on the me.com website or via the free Find iPhone application. Clearly targeted at recovering lost iPhones, iPads or iPods it also allows remotely playing a sound to alert nearby persons, displaying a message providing information on how to return thedevice as well as remotely locking and wiping devices. These features will undoubtedly be welcomed by the enterprise market.
The Find iPhone app allows tracking multiple devices with devices able to locate each other mutually checking the location of a lost iPad on an iPhone or vice versa. While this is a great feature providing peace of mind for consumers owning expensive iOS devices, it can also double as a genuine tracking solution. All this is bad news for companies offering similar, paid services. While it would be easy for Apple to add additional features such as nearby friends alerts or other social location features, they are presumably refraining from this in order not to wreak havoc on the thriving third party iOS LBS developer ecosystem.

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No Funny Business...Broadcom Acquires Gigle Networks

Nov 23, 2010 12:00:00 AM / by Admin

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The Broadcom acquisition of Gigle Networks shows forward thinking on the part of Broadcom, as the company further strengthens its home networking portfolio. Broadcom is already a strong player in the Wi-Fi market, and has also integrated MoCA coax networking technology in SoCs. Entropic continues to be the market leader in MoCA, as well as holding a significant portion of the MoCA patents. The addition of Powerline networking means Broadcom can develop silicon to support connectivity in a broad range of devices as well as for worldwide markets. While MoCA is a strong networking technology in the United States, the availability of coax in other regions is not so widespread. Many operators in Europe and Asia have turned to Powerline networking to distribute video content throughout homes in these regions.


There have been several other announcements which illustrate the growing importance of connectivity options. In January 2010, MoCA and HomePlug Powerline Alliance entered into a formal agreement to coordinate efforts and share information between the groups. Atheros is supporting Wi-Fi and Powerline (along with Ethernet) in the company’s latest hybrid networking solution. The HomePlug Powerline Alliance and the Wi-Fi Alliance also recently announced cooperation to facilitate interoperability of smart grid applications. Through interoperability and cooperation, these types of cross-technology solutions offer a strong alternative to emerging technologies including G.hn and are based on proven technologies with years of trials and deployments under their belts. ABI Research expects to see continued cooperation and announcements between technologies, including HomePNA, MoCA, Powerline and Wi-Fi as operators and device manufacturers cover their bases and enable their services and devices to operate in the widest range of homes. The beneficiaries of these advancements will be consumers with additional self-install options and potentially lower cost of installation.

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Android Pulls Even with Apple’s iOS

Nov 18, 2010 12:00:00 AM / by Admin

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Android continues to make big strides in mobile advertising. The Google-backed mobile operating system has caught up to Apple’s iOS in terms of ad impressions, according to new data from ad network Millennial Media.

Details: Android and iOS were tied at 37% in October for the largest share of smartphone ad impressions on the Millennial network. Also, Android had a month-over-month gain of 8%. For the year, ad requests from Android devices are up an astounding 2182%. By comparison: Apple requests are up 32% for the year, and RIM’s have risen 243%.

So if you think all the action is on Apple’s devices, think again. Anyone targeting smartphone users with an ad campaign needs to have Android in the mix, as well as Apple iOS. And you shouldn’t ignore BlackBerry users either: RIM’s OS had 20% of the same smartphone pie in October.

On a somewhat related note: Open Rich Media Mobile Advertising (ORMMA) – which was formed earlier this year by The Weather Channel, Crisp Wireless and TringApps – has just released a set of advertising specs aimed at simplifying the process of serving rich-media ads into mobile apps. The idea is to make it easier to run rich-media campaigns across all devices and platforms. Why is this important? Because it should help drive larger mobile ad buys. And I’m all for that.

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Juniper's expands into WLAN

Nov 17, 2010 12:00:00 AM / by Admin

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Juniper is in the process of acquiring Trapeze networks in a $152 million transaction. Juniper networks has been busy in the Network Transport area behind both the Radio Access Network, as well as the backhaul Access Layer. With this acquisition, they could have a couple of things in mind.

The first thingis thatthis piecewise acquisition can be a simple add on to complete an end to end solution. Trapeze is an enterprise WLAN systems and management software vendor. Adding this to Juniper's network and telecommunications arsenal opens the door foradding an extra layer on to their solutions. They could start profiling a more tightly integrated end-to-end WLAN solution for service providers to consider. Since offloading data is such a key issue these days, offering this to service providers as an end to end solution, and not leaving the networkplanning to the service providers seems like a smart thing to do given their expertise in the subject matter.

Trapeze has an important position within the WLAN market, and it’s also associated to over 6000 customers that have invested in its mobility WLAN solutions. Further leveraging these customers to upgrading their backhaul and internal network equipment would definitely be a smart move. This could also be seen as having “a foot in the door” for their current networking equipment, as it would be easier to showcase their solutions through following up with WLAN equipment customers.

The acquired companyalso hasmanagement software as well for its WLAN specific purposes. Juniper through it'sown development platform, has theoption to providetheir own software orhave their clients and partners develop their own code for specific use to get the most out of Juniper'sproducts. Leveraging Trapeze’s software, and integrating it within their own is an added value since they could leverage thiscode, integrate it into their software. Building on the newly acquired softwareto enhance their software libraries for their clients and customers to innovate on are key value adders as well.

From many angles, thismove for Juniper seems to be a smart acquisition because of the ability for Juniper to leverageTrapeze's WLAN elements as well as their software.Juniperhas shown recently a lot of movement in expanding their solutions and market share in current areas, and with this acquisition,open up new ones. This foray into directly providing equipment for mobile offloading has a lot of potential for service providers with existing WLAN solutions, andenterprises that want to integrate WLAN. All this with the added value ofJuniper’s flexible softwaresuite at their disposition to adjust security and network management concerns and issues, amongst other applications.​
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2010 mHealth Summit Recap

Nov 11, 2010 12:00:00 AM / by Admin

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ABI Research attended the second annual 2010 mHealth Summit in Washington DC this past week, from November 8 through November 10. The conference drew attendees from 44 countries and exhibiting companies ranging from small startups (e.g. Telcare) to large established technology vendors (e.g. Qualcomm). There was also an interesting mix of the expected technology folks, along with policy makers, healthcare researchers, and care providers/NGOs.

What was clear from the conference that while “mHealth” is still a fuzzy term – many of the panels and presentations wrestled with just what the term encompassed – most of the attendees were focused on handset-based healthcare applications and the use of text messaging to convey health information and establish connections between patients and care-givers. This underscored to us the very nascent nature of the embedded cellular (M2M) healthcare technology market. While cellular connectivity embedded into various forms of gateways and healthcare devices were on display at the show, they were few and far between, and clearly an afterthought at a conference that regards mobile = handset. It will be interesting to see if/how this changes at future Summits.

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INRIX launches XD Traffic: Should TomTom, NAVTEQ, or MILE Traffic and Travel be Worried?

Nov 8, 2010 12:00:00 AM / by Admin

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Seattle-based INRIX chose Europe’s main Telematics conference taking place in Munich, Germanyon November 3/4 to unveil its latest traffic offer under the slightly cheesy XD label, clearly targeting TomTom’s flagship HD Traffic solution.

XD Traffic offers premium real-time and predictive traffic service optimized for the delivery of next generation connected navigation and driver services applications in the car, on mobile devices and online and will be available in Europe and the US in 20 markets. It will be used by Ford in SYNC-equipped vehicles from 2011. Main features and benefits include Busy Commuter (faster routes, best time to leave, travel time and ETA), speed predictions and traffic forecasts based on weather conditions, school schedules and local events, Traffic Ahead, Friend Ahead (social network integration), high accuracy (speed errors smaller than 5 mph 90 % of the time), TPEG Connect, and improved coverage.
While XD Traffic seems to improve on all major areas, the great marketing surrounding it does however not quite manage to shake off lingering doubts about INRIX’s access to large amounts of probe data. While competitors TomTom (Vodafone mobile phone users / connected Live PNDs) and NAVTEQ (Nokia Maps navigation users) are able to leverage tens of millions of probes, INRIX’s probe resources are much more limited, being based on partnerships with fleets and regional automobile clubs as well as its own traffic smartphone applications. However, INRIX at least partially compensates this handicap of limited real-time data densities with advanced predictive traffic modelling and technologies such as SpeedWaves to improve accuracy of traffic speeds on secondary roads.

With competitors TomTom (Renault, Fiat), NAVTEQ, and MILE Traffic and Travel (BMW) all recently having announced major wins in the lucrative car OEM market, INRIX had to react. While XD Traffic integrates some impressive traffic technology, its major strength resides in state of the art marketing which will keep INRIX’s (European) competitors on their toes for quite some time.
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Why Apple and Google are Talking to BOKU

Nov 5, 2010 12:00:00 AM / by Admin

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There are reports that both Apple and Google have had discussions with mobile payments player BOKU. BOKU, along with several other players, such as Zong, Danal (and their U.S. subsidiary BilltoMobile), Surfpin, MoPay, Billing Revolution and Fortumo are providing consumers with the option to pay for virtual goods bought in MMOGs ( Massively Multiplayer Online Games) like World of Warcraft and increasingly, social games like Farmville offered through social networks like Facebook by placing the charge on their mobile bill or in the case of prepaid, debited against their balance. These mobile payment companies are essentially aggregators, connecting mobile carriers and the broad range of digital content merchants who offer virtual goods. It’s big business – in my forecasts I have projected that global sales of virtual goods will reach $26 billion in 2015, with more than $10 billion of that paid via mobile. Of that $10 billion, more than 70% will come from the Asia Pacific region.

So by acquiring BOKU are Apple and Google interested in becoming a mediator of virtual goods? Perhaps to an extent, but I think it runs much deeper than that. I think the primary driver for both Apple and Google in this case is to expand their billing options past credit cards or PayPal for their app stores. The main attraction of BOKU is the carrier billing portion, the virtual goods business is simply gravy.
Apple drivers

BOKU will help Apple sell their devices to a broader global audience. Today, ITunes accounts must be associated with a credit card. And while Apple has more than 160 million cards on file, Apple is still missing a huge addressable market of individuals who don’t have a credit card or bank account. In most countries, youth under the age of 21 are a primary target for mobile apps and virtual goods, yet most have neither a credit card or bank account but do have a mobile phone. And while credit card usage is on the rise globally, credit card penetration is higher than mobile phone penetration in only six countries -- U.S., Taiwan, Canada, U.K., Norway and South Korea. Being able to make an app purchase through carrier billing, not only for an iPhone, but for an iTouch or iPad as well, greatly enhances the appeal of these devices to consumers in the global market.

Google drivers

BOKU will help boost a substandard Android Marketplace payment mechanism, which if fixed, will help keep app developers on board and help increase Android marketshare. Today, buying apps through the Android Marketplace is slower than Apple’s App Store. Both Google Checkout and PayPal require minimal but nonetheless more steps than the App Store. In July, Google announced they would begin implementing carrier billing, but acquiring BOKU would provide a nearly immediate solution compared to Google organically setting up carrier billing.

I think Apple has more urgency in this situation. Look for Apple to keep the pressure on, and don’t be surprised if they aren’t talking with Zong, Surfpin, MoPay, Billing Revolution and Fortumo as well, since all of them have sufficient carrier reach. Google might be less motivated to look elsewhere, as Zong and Billing Revolution have developed a work around for Android developers (but that’s another story).

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