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ABI Research Blog (119)

Ericsson Makes Bold Move in Mobile Advertising

Sep 22, 2010 12:00:00 AM / by Admin

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Ericsson has just launched a one-stop-shop solution for mobile advertising called AdMarket, in a bid to remove complexity and frustration from the current ecosystem.
It’s a bold move for the telecom equipment giant, and at first glance seems like it has bitten off more than it can chew. Ericsson’s lead on this is Christina Bck, head of advertising solutions. She says AdMarket’s key differentiator will be the use of operator “data sets” – the vast amounts of information that wireless operators have on their subscribers that can be used for targeting.
T he company has done its homework. It hired international law firm Bird & Bird to study the legal ramifications of ad targeting, and it focused on 10 countries: U.S., Sweden, UK, France, Russia, Argentina, Saudi Arabia, India, China, and Indonesia. Moreover, Bck says the company has more than 70 signed partners, including operators, advertisers and agencies. Impressive, but will enough important operators buy in?
My take: this will work better in smaller markets that don’t yet have much going on in the way of mobile marketing or advertising. But for more developed markets, such as the U.S. or Western Europe, it’s likely to struggle. Why? For one, ad networks like Apple (Quattro), Google (AdMob), Millennial Media, Jumptap, and Greystripe – to name a few – already provide mobile ad inventory and targeting capabilities that have so far met the early demand. Plus, it will be difficult for Ericsson to get major competing operators to pool their data to give advertisers the cross-operator reach they seek. Finally, the ad business is not necessarily a mobile hardware vendor’s cup of tea. Nokia, for instance, has tried and so far failed to make a dent. It bought Enpocket several years back, and has yet to show much from that purchase.
So, welcome to the party, Ericsson. I like your bold move. Just make sure you have some alternative plans (including an exit strategy) for when things don’t quite go as planned.

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New iPods, Apple TV, iOS update, and Ping

Sep 1, 2010 12:00:00 AM / by Admin

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The September 2010 Apple event has come to close and with it comes a new lineup of iPods, updates to iOS, a revamp to the company’s “hobby” with Apple TV, and Ping – the social network feature integrated into iTunes. Considering this was a music centric event the question perhaps most asked was “how is Apple going to convince consumers to buy an iPhone and an iPod?” Did Apple answer this question with today’s announcement? In part yes, but mostly no.
Of the three iPod devices discussed in today’s event the Nano underwent the most changes with this new generation, with a significantly smaller form factor (approaching the Shuffle), multi-touch screen, and an iOS like interface. It will be interesting to see how consumers receive this new form factor. The Shuffle returned to a more practical (read smaller and return of the physical button layout) form factor – appealing to the active lifestyle (or those who want a minimalist design/operation). While one could make an argument for buying one of the smaller form factor iPods if you already own an iPhone (e.g. for exercising) the question remains for the Touch.
Features like the retina display, front facing camera (with FaceTime), iOS 4.1 and GameCenter (with multiplayer matchmaking) certainly help make a compelling package for the Touch, not to mention the thinner form factor, in the end it still does little to differentiate itself from the iPhone. The Touch remains a good solution for those consumers on different mobile carriers than AT&T and who want a full featured small form factor Apple device (iPad aside); however if new operators (like Verizon) start to offer the iPhone, this will add further competitive pressures on the Touch, limiting its value proposition. In addition more consumers are listening to online services like Internet radio, which requires a persistent link to the Internet, something the Touch lacks. While AirPlay creates a compelling dynamic in the home (especially when coupled to the new Apple TV device) again this isn’t unique to the Touch alone (AirPlay is coming with iOS 4.2).
Speaking of Apple TV, this was perhaps the most disappointing aspect of today’s announcements from Apple – not in terms of what was announced but what might have been. The rumor mill was quite active leading up to this event, with many pondering what Apple TV would look like with iOS. Naturally this could open up the doors to an expansive library of applications (and truly offer non-Internet connected TVs a quick upgrade, with a platform likely more robust that what is currently on the market) but perhaps more significantly complete (or complement) Apple’s presence in the game market. Steve Jobs made it clear that the iPod Touch is just as much a game platform as it is a media player – bringing this to the big screen (with dedicated controllers) could have made serious inroads into the incumbents market prospects. So while the changes and features to the device and service were positive (also the $99 price tag), it seemed like Apple TV could offer more. The addition of Netflix streaming was noteworthy, if only as an example where Apple TV has expanded its content library but also speaking to the broad presence Netflix has in this facet of the market.

The last part we’ll highlight is Ping. Adding social networking features to iTunes seems like a natural fit – considering the past success MySpace had with music/bands and the wide spread use of iTunes. Apple will however, have to move carefully or risk some of the fallout companies like Facebook and Google have encountered over privacy issues. There is also question if preexisting social networking service will integrate into Ping, or if it will remain a separate island (from a consumer perspective the former/integration would be optimal). With AirPlay, Ping and this generation of Apple devices Apple is offering a compelling unified experience in the digital living room (especially considering AirPlay on third party devices like speaker docks, AV receivers and stereo systems), perhaps more so than any company to date.
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Competition Heats up in Premium Video-on-Demand (VOD) services

Aug 30, 2010 12:00:00 AM / by Admin

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In the last few days, details have emerged of two new Video on Demand (VOD) services. YouTube (owned by Google) is said to be negotiating content deals to enable streaming of newly released movies -- about when they are released on DVD -- at a rate of approximately $5 per movie. Apple may or may not launch its highly anticipated iTV product on Wednesday, 9/1. Apple already has a good library of TV shows for sale at $2 and $3. Many speculate that they will allow customers to rent these for $1 per show, and are working to extend content licenses to include premium movies as well.

Pay Per View (PPV) and Video on Demand (VOD) have long been a small but highly profitable service operated by video operators (Cable, Satellite and IPTV providers) and by smaller operators for hotel chains. We define PPV services as those using broadcast technology (i.e., transmitted at a specific point in time) while VOD are typically streamed or progressively downloaded. With more connected video devices available content delivery is open to companies other than cable operators –leading to the increased pace of news in this sector. Amazon and Netflix’s video on demand services already are available on a number of devices, including Samsung Internet connected TV’s, Samsung and Sony Blu-ray players, Roku media servers and TiVo DVRs. Netflix continues to prefer to offer their customers the “simplicity” of all-you-can watch services and does not appear to be interested in adding a pay per performance VOD platform (like Amazon video on demand) to their service.

The pricing on all of these services is expected to remain premium pricing – content owners (HBO, MTV and the like) want to gain additional revenue from non-subscribers who want access to a very limited subset of their library, but would not otherwise subscribe to their services. Selecting any of these services as your primary source of content would be much more expensive than a cable subscription, even if you don’t watch very much TV. This also helps the content owners to keep some of their large customers – cable providers – happy and unthreatened.

One issue with the pay per performance VOD model is the cost/benefit decision must be made by the customer every time they decide to purchase a movie. It’s going to be easy to open your wallet (figuratively) for a $5 rental when you have 10 kids over for a pizza party. But watching the TV alone on a Wednesday you will probably select content included as part of an all-you-can watch subscription package. A hybrid PPV / Subscription business model (i.e., 4 movies a month for $10) may provide a middle group between video-by-mail services (Netflix, Blockbuster) and subscription-based services including Hulu Plus and cable’s premium movie channels (HBO, TMC).

YouTube has a few impediments to success in the movie business; first is that its brand name is synonymous with user generated content in most users’ minds. To overcome this, YouTube should differentiate the YouTube Movie’s brand from YouTube and provide good advertising. The YouTube Interface is also relatively search-focused and may need a better browsing interface to gain significant traction on the TV screen.

When Apple introduces a new iTV product and improves its video-on-demand library, it will need to decide whether to restrict this library to its own devices (remaining true to its “we control the experience” mindset), or whether it is willing to allow its software to run on other devices, such as connected TVs and Blu-ray players. The precedent for this would be the way iTunes runs on the Windows operating system. Today, applications running on the TV platforms are generally distributed by the TV manufacturers. Apple may have to give up a little bit of control and work closely with multiple chipset manufacturers and other hardware OEM’s (as Netflix and YouTube have), which could go against its larger business interests.

Also required for these services to take off beyond technology savvy always-online customers is easy browsing of the appropriate content on a PC. On my Sony Blu-ray player, Netflix watch-now relies on my queue being configured from the PC, which limits spontaneous watching. YouTube relies on top hits (which are user generated content focused) and searching (which is cumbersome on a TV remote control). New products, including slide-out qwerty remotes from TiVo and Vizio, are another approach at solving this problem. All of these sites could develop better ways of presenting content for the TV, including bringing customized recommendations and the benefits of social media to the TV.

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Cisco Bolstering Presence in the TV Everywhere Scene

Aug 27, 2010 12:00:00 AM / by Admin

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Cisco recently announced their intentions to acquire ExtendMedia, which operates in the white-label online video platform space. ExtendMedia’s main product OpenCASE offers an “end-to-end platform for the management, publishing and delivery of innovative content services to PCs, television, and mobile devices,” (from ExtendMedia’s website) highlighting a further move for Cisco into the “TV Everywhere” (TVE) space - the company had also previously invested in Digitalsmiths.
While Cisco has a strong presence in the CPE space (through acquisitions of Linksys and Scientific Atlanta) and the enterprise level segment, the acquisition and focus on content management platforms is a strategic move to more tightly integrate the two. As more operators rely on IP and as value-add services/features like OTT gain importance the business models, transactions, content protection/management and overall monetization of content will come to the forefront.
Recently quite a bit of focus has been devoted to TVE with operators like Liberty Global, Bell TV, Dish Network (DishOnline.com), Comcast, Verizon, Time Warner Cable, and others introducing TVE to their customers. In some cases, these services may not offer additional top-line growth (at least not yet) but it serves a more important purpose in the near-term by addressing customer retention. In fact amidst the recent downturn in US pay-TV subscribers (2Q 2010) Cisco’s strategy to bolster its position in the “TVE” or “TV Everywhere” space sounds like great timing.
Although it is true that this particular decline in US pay-TV subscribers (satellite overall and Telco TV were both up) is likely not a harbinger of things to come, nor can we necessarily attribute it to consumers jumping to online content and over-the-air. There are a myriad of factors including those tied to economic and housing issues that could have attributed to the decline, none of which necessarily portend a rapid change in consumer behavior. There is however some evidence that should compel pay-TV operators to advance their TVE efforts to better address shifts in consumer viewing habits.
For instance ABI Research conducted an online survey in June/July of 2010 and queried US respondents about their feelings about cancelling their pay-TV service in lieu of OTA and/or broadband media and 13.2% said “yes”, 26.5% “maybe,” 18.3% “not sure,” 6.4% didn’t have pay services and 3.2% said they had already cancelled their pay-TV service. Only 32.4% said outright “no,” this down quite significantly from a 2009 survey where 57.9% responded “no.” While this might sound “doom and gloom” we must remember that sentiments do not always translate into actions and in this instance that is likely the case, at least for now.
What it does mean however, is that as consumers gain exposure to connected devices, be it the Apple iPad, mobile phones, Internet connected TVs or Blu-ray players, consumers are starting to consider content delivery through alternative mechanisms. While it has been easy for content holders to keep a significant portion of the premium content on traditional platforms or under their terms, a time will come when the installed base of connected devices will start to have a greater impact on the decisions of when and where to offer said content.
Moving forward the industry as a whole will continue experimenting with different business models to monetize TVE content and companies such as ExtendMedia give Cisco and service providers a solid foundation. As thePlatform mentioned in a statement following the news, consolidation is expected in this space, particularly as companies seek scale and relationships, both of which Cisco bring to the plate. While this move does ratchet up the competition in this market (as other companies such as Brightcove and thePlatform remain active in the market), it is likely operators will select providers that best fit their individual needs, supporting a range of competitors – in other words there is little reason to believe TVE will be a “one-size-fits-all” market. And even as things evolve, Pay-TV is not going away, but there are changes potentially looming on the horizon and TVE is certainly key among them.

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Brazilian MMDS Operators, After 3 Years, Finally Get Some Clarity from Spectrum Regulators

Aug 20, 2010 12:00:00 AM / by Admin

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In Brazil, the last spectrum auction that occurred in 2007 was for 3G frequencies. Auctions for other frequencies were planned for 2008. That year, the auction was postponed to mid-2009, and in December 2009 it was postponed to mid-2010. MMDS operators owned 190 MHz of spectrum in the 2.5 GHz and 2.6 GHz range, in which they had wanted to, as early as 2007, deploy WiMAX and provide triple-play services to customers.



MMDS operators have been providing broadband services on these frequencies since 1997. So when claims that broadband couldn't be done over the air and that WiMAX wouldn't be able to provide this using these frequencies they argued otherwise. They pointed out that WiMAX would be much more efficient than the radio standard being used at the moment to provide these services.

Earlier this year, the country’s regulator announced that they were going to allocate 50 MHz to the MMDS operators. They contested, saying that they could not maintain themselves competitive with this amount of spectrum. In August 2010 the regulator announced 70 MHz of spectrum for their use. The frequencies allocated were 2 x 10 MHz of FDD spectrum, and 50 MHz of TDD spectrum. The regulator plans to auction the rest of the 120 MHz of spectrum in July 2013. MMDS operators can use the 190 MHz of spectrum until June of 2013. A time line has been given to the MMDS operators of 1 year to choose a technology, and 18 months to deploy it for use in these frequencies following this month's announcement.

This may seem like another tug-of-war of standards and/or incumbents trying to set roadblocks to a promising standard. It may also seem like a regulatory body also protecting the current incumbent mobile phone operators from a faster 4G technology from taking off, as well as securing a 120 MHz chunk of spectrum that will auction for a very good price to mobile operators. But the fact of the matter is, Brazil has many regions in which underserved areas would benefit greatly from broadband coverage. MMDS operators were very vocal during this 3 year plight of wanting some answers regarding their spectrum licenses and that they were not interested in mobility or competing with incumbent mobile operators. They wanted to provide the service and maintain competitive versus other types of technologies, as well as reach out and expand to regions where broadband was inexistent.

Had the regulator defined their situation previously, and allocated the spectrum to MMDS operators, they could have deployed with the assurance that they weren't going to lose their frequency licenses. These operators and the people of many regions in this country would have benefitted with this technology. Roadblocks like these have hindered an early deployment of WiMAX in developing countries from enabling broadband in regions that were underserved.


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RIAA and NAB Attempt to Force FM Receivers in Handsets

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

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In my recent report on Digital Radio, I made the case that “Smartphones are expected to include digital radio receivers starting in mid-2011, driven by carriers’ desire to offer users premium audio content while limiting the use of scarce radio spectrum”.This reason for adding radio to the cell phone is driven by market demand (to use the radio spectrum effectively) and based primarily on technical factors.

I was surprised to read other news that the Recording Industry Association of America (RIAA) and National Association of Broadcasters (NAB) are behind a push to mandate (through Congress’s Performance Rights Act (PRA) in the House and Senate) that portable devices, whichinclude portable media players (PMPs) and cell phones, require an FM radio receiver.Their motivation is to ensure that radio stations (in the case of the NAB) and music (in the case of the RIAA) continue to reach customers in the crowded world of content. This legislation is being proposed based on private parties' business interests.While it would achieve the same result, it shouldn’t be confused with market-driven inclusion of HD radio receivers into the handset.
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eZuce Stakes Its Claim in the UC Market

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

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Yesterday, I was briefed by the open source unified communications (UC) solution provider, eZuce. Their openUC is a SIP-based solution that combines a number of key UC functionalities such as voice, video, conferencing, instant messaging, presence and mobility. What is unique about openUC is that all its components, including call control, can be hosted in a data center environment without the need for an on-premise PBX infrastructure, unlike certain comparable solutions out there in the market today. I can see the product’s potential in centralized, private enterprise clouds where it can be coupled with SIP trunking for delivering enterprise-wide UC functionality at significantly lower costs. The TCO model they shared with me showed up to 75 - 85 percent cost savings compared to legacy systems.



Though the product can scale from 200 to 10,000 users, their sweet-spot is really in the mid-market segment. EZuce opened its doors to business only last week, but it has its origins in the SIPfoundry project founded way back in 2004. Initially commercialized by Nortel in response to emerging competition from Microsoft OCS, eZuce already has $100 million in R&D investments and significant installations up and running. So, definitely we are not talking about a product in beta. eZuce is banking on select Nortel, Dell and IBM partners to sell its value proposition among their mid-tier customers.I guess the timing is just right. It is an exciting phase for the UC market, as it evolves from legacy hardware model to software-based architectures. OpenUC, with its promise of deep integration with enterprise business processes and substantial cost savings, does present a compelling business case.
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Qualcomm sets expectation for 1.5 GHz dual-core Snapdragon processor availability

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

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Qualcomm unveiled its initial dual-core chipset strategy during the COMPUTEX 2010 tradeshow in June. The company announced this week that OEM system customers are expected to receive production-ready shipments of its 1.5 GHz QSD8672 Snapdragon chipset before the end of the year.

The first dual-core chipsets rolling out to customers fall into the MSM8x60 family intended for high-end smartphone handsets. One model provides HSPA+ protocol support while the other enables multi-mode HSPA+/EV-DO Rev. B. Both smartphone chipsets feature two CPU cores running at up to 1.2 GHz.

The top-end mobile processor offers specifications rivaling CULV architectures for low-end laptops. Utilizing a 45nm production process, each of the cores is rated up to 1.5 GHz. The QSD8672 is expected to appear in commercially available devices starting in early 2011.

Mobile devices incorporating dual-core processors should provide enhanced performance for video capture or playback up to 1080p high-definition, along with support for contemporary mobile broadband air interface protocols such as HSPA+, LTE and WiMAX.

The capabilities of mobile chipsets have increased so greatly over the last couple years that system vendors have considered using them for larger form-factor devices. In fact, the smartbook concept emerged from this realization. While it does pose a potential cost savings over systems using the traditional x86 architecture, OS choices for non-handset devices have yet to be widely adopted outside the Windows desktop platform.

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NFC Mobile Commerce? Verizon-AT&T Led Mobile Payments Consortium Faces Challenges and The Potential of Software-based Solutions

Aug 4, 2010 12:00:00 AM / by Admin

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It just goes to show you how much interest there is in mobile proximity payments (physical location mobile commerce, call it what you’d like) that the scoop Bloomberg had on the not-ready-for-primetime Verizon/AT&T/T-Mobile/Discover/Barclaycard initiative has set off so much media speculation. Yes, this initiative could be very big news for mobile commerce.

But as noted by Digital Transaction News, http://www.digitaltransactions.net/newsstory.cfm?newsid=2599 there are lots of hurdles facing the group, not the least of which is convincing merchants to participate. The biggest issues there – capital costs for point of sale terminals and lower card processing costs. The group does have a pressure point they can exploit if they are willing to charge less than Visa, Mastercard and American Express. In addition, the solution would most likely be a closed loop payment system, meaning consumers could only use the consortium’s “card” and not a debit card, general credit card or even a store credit card, such as Target’s or Best Buy’s. In addition, no NFC platform provider has been identified.

To be fair, the group will most likely address all of this speculation when they are ready to announce something concrete. But as we speculate and point out the barriers, it is also a good time to mention that some other types of proximity payment solutions are gaining ground – specifically software-based smartphone solutions.

Moonha/Quantexx/SAP in Germany, FaceCash in U.S.

Two separate mobile commerce initiatives are being trialed or rolled out that seek to enable consumers to use smartphone apps to make proximity payments that bypass NFC chips and hardware and mobile operators altogether. In both cases, merchants would require no capital outlay if they own a computer and use bar code scanners.

In the U.S., FaceCash/ThinkLink is live and ties a user’s bank account to a bar code. Android and iPhone users can download the FaceCash app. The user then goes online to FaceCash and enters their bank account number, social security number and a photo. They transfer funds into FaceCash and then the money is accessible via the barcode stored in the app. Participating merchants can the barcode to debit the account. Seems pretty easy for the consumer, and the allure for merchants is 50% less processing fee per transaction than the major credit card processors.

In Hamburg, Germany, Quantexx and SAP are readying a trial mobile wallet service called Moonha. Any consumer with a camera-equipped smartphone can download the Moonha app. It works similarly to FaceCash – the consumer creates a Moonha account and ties it to an e-money account. Company officials say they will eventually tie it to credit cards as well. The trial appealing because of the broad merchant availability, as it is with the city government of Hamburg, for everything from transit tickets to city-run venues and food vendors.

There are challenges to both FaceCash and Moonha. Smartphone only, signing on merchants, and maybe the biggest hurdle – convincing consumers why they should choose these mobile options. I think that is particularly important when neither at this point offer credit card as an option. Particularly in the U.S., consumers rely on credit card float. But any NFC option faces these same hurdles to a greater and more expensive degree and involve the mobile operators and mobile OEMs.

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Base Station Infrastructure vendor's 4G focus

Jul 28, 2010 12:00:00 AM / by Admin

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There has been a lot of talk surrounding WiMAX and LTE lately. Especially around companies that have had network deployments and experience around WiMAX in the past years.



WiMAX vendors that have stuck through the whole thick of problems and issues that have been associated with commercially developing, deploying and expanding a 4G radio access network, are now able to leverage this experience. Infrastructure vendors have planned on supporting WiMAX and LTE. This way, they can keep their WiMAX customers and maintain this market and expand their LTE customers.



In essence, there is a lot of re-useable hardware in a WiMAX base station that can be used for manufacturing an LTE base stations. They are using the same OFDM underlying technology for most of the radio access network. Creating LTE base stations using this experience can quicken the learning curve and help LTE mature faster. A possible dual mode WiMAX/LTE base station is not out of the question either.



With the recent news of NSN acquiring Motorola's telecommunications network equipment business, and after listening to an interesting Q2 earnings conference call from Alvarion today, a couple of things come to mind.



Telecommunications vendors can already have a potential LTE upgrade customer base with their previous and current WiMAX customers. They could offer a smooth transition for those interested in this shift. Alvarion announced plans like this during their conference call. A valid point was made in saying that although not all of their customers will want to move towards LTE, they do have this possibility for them in the future if willing. Service providers would have to consider their customer's equipment if they were to do this change. Moving towards LTE would require changing WiMAX user's CPE, dongles, and/or devices into dual mode LTE/WiMAX or LTE compatible devices.



During the call, Alvarion mentioned letters of intent with a major Indian operator with three of their local partners. They also mentioned their plans on expanding, stocking up inventory and are ready for a major deployment. It was unkown what type of 4G network they were talking about, but not a lot of details were shed on this topic. In any case, whether it be for WiMAX or LTE, business in a high growth market like India would be good news for them.



WiMAX has gotten the short end of the stick in many aspects. From negative press, to deployment issues with country spectrum regulators, to having to trudge through a economic recession. It's good to see that infrastructure vendors, whom drive the market and have an important say in what happens with it, share their decisions and choices in leveraging what they know and have, and offering their customers both options when they decide to go towards 4G.
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