If 2010 wasn’t a wild enough year in mobile news, hold onto your hats for 2011. While HSPA holds the 3G fort, LTE momentum will build, mobile video calling is set for a renaissance, iOS and Android will become the focal point for service convergence, mobile connections will see massive growth and mobile operators will hold firm on data usage policies. Northstream has identified these as the top five global trends in mobile for next year. See why …
26 November 2010: Stockholm, Sweden ‚ Independent strategic management consulting firm Northstream (www.northstream.se) has announced its annual top five trends for the global mobile industry in 2011. All five predictions are based on Northstream’s unique insight of the global mobile industry, as the company advises some of the world’s largest mobile operators, infrastructure vendors and device manufacturers on market strategy and sourcing requirements. Northstream’s five predictions are: 1. ‚LTE in 2011: Like Spring weather ‚ up and down, but with Summer coming up‚ 2. ‚ Mobile video calling will finally take off in 2011 ‚ but no thanks to the 3GPP video call standard‚ 3. ‚ In 2011, iOS and Android platforms become the focal point of service convergence‚ 4. ‚ Strong growth in mobile connections in 2011 will demonstrate that 10 billion global connections will be reached by 2015‚ 5. ‚In 2011, operators will discriminate on data usage policies in order to lower CAPEX, increase revenues and improve service quality ‚ the regulator backlash may take place in 2012.‚ Here are Northstream’s 2011 predictions in further detail: ‚LTE in 2011: Like Spring weather ‚ up and down, but with Summer coming up‚ LTE momentum is moving in to a period of sustained high pressure. There have been nine commercial LTE deployments this year and a further 44 additional launches are anticipated for 2011. In total, 113 operators have publically committed to the technology across 46 different countries with 43 LTE trials currently in operation. Despite this strong growth, LTE faces an unpredictable future in 2011 with its sustained global deployment being impacted by a variety of different factors. A vast majority of global Mobile Broadband momentum rests with HSPA as the technology continues to meet the requirements of a majority of mobile consumers. The current status quo is unlikely to last forever however as more and more operators hunt for additional capacity to satisfy the needs of an increasingly bandwidth-hungry mobile consumer. Enter LTE technology. LTE requires additional spectrum and the technology-neutral bands currently on offer are leading to widespread fragmentation, frustrating global chipset and device manufacturers. This fragmentation means that chipset and device providers are having to target specific regions where spectrum is available to support the delivery of LTE services to mobile consumers. There is no ‚one approach fits all‚ solution to the problem. Among markets launching LTE next year, larger countries like the US and Germany are likely to get the highest attention from device manufacturers while smaller markets may lose out near term. LTE terminals will continue to be made available in 2011 but will mainly consist of data-centric dongles and WiFi routers. These will be launched with premium pricing models that will reduce in time to provide mobile operators with a potential ‚DSL killer‚ within two years. Widespread LTE enabled smartphones will be available beyond 2011, when there will be sufficient choice to interest mobile consumers and a proven LTE voice solution will have been found. So to summarise, the global vendor and operator community will continue to contemplate LTE migration as they prepare themselves for future next-generation mobile broadband evolution. The LTE ecosystem will continue to build and drive LTE handset availability and choice at realistic cost points. A vast majority of global operators will continue to sweat existing HSPA networks in 2011 while the LTE marketing machine rumbles on. ‚ Mobile video calling will finally take off in 2011 ‚ but no thanks to the 3GPP video call standard‚ Although mobile video services were launched approximately ten years ago, a hopeless user interface on handsets at the time, coupled with high prices and inadequate network bandwidth meant they were set up to fail. Today, that has changed and the latest devices, including most notably the iPhone 4, now boasts impressive face-facing cameras, a large high-res display and interactive applications that can switch between a standard voice call and a WiFi-enabled video call by the touch of a screen. Note that Apple reversed a recent trend of not equipping 3G phones with front cameras. Can these improvements finally prove the use case for mobile video calling? Northstream thinks so. Despite just 1% of existing 3G calls being video enabled, Skype claims that its share of video calls stands at 40% of total customer interactions. This proves that an attractive market for video calling potentially exists. Furthermore, the number of video call enabled Apple devices alone is set to exceed 100 million over the next twelve months with equivalent applications from the likes of Tango and fring also expected to take off. Cisco is likely to launch a consumer version of its video conferencing system. On the mobile side, as the call is made either through WiFi or your unlimited data rate plan ‚there is no cost threshold hampering usage. These new mobile video calling solutions are attractive, perform well with crisp clear pictures and sound great too – it is now actually possible to switch between voice and video smoothly without hanging up. Next generation iPads and other tablets will further enhance and stimulate the mobile video calling experience by replicating the larger screen desktop/laptop currently on offer from the likes of Skype. Northstream predicts that Apple and its peers are about to achieve in one year what 3G operators have failed to do in 10. 2011 is the year that mobile video calling finally takes off ‚ and it will have nothing to do with 3GPP video standards. ‚ In 2011, iOS and Android platforms become the focal point of service convergence‚ For years, talk across the global mobile industry has been dominated by the acronyms FMS and FMC. Mobile operators frantically tried to drive fixed mobile substitution to grow their revenue streams. Fixed line providers became obsessed with fixed mobile convergence services that combined the convenience and practicality of mobility with the reliability and cost efficiencies of fixed line access.
Both IMS and RCS (rich communications suite) were introduced to further bridge both the fixed/mobile and telco/internet divides. The intention was to converge networks and services on to one joint, standardised platform that would liberate service development while safeguarding security and QoS. While these intentions were honourable, it ultimately left operators and vendors in a catch 22 situation. Device manufacturers became preoccupied with smartphone development, the operator community turned its attention to monetising and deploying mobile broadband and meanwhile the world’s largest internet players started to expand their services and target mobile users. The reality is that with the arrival of IP and the presence of WiFi, the latest devices have become the source of convergence for fixed and mobile services. Apple and Google have changed the paradigm of mobile Value-Added Services (VAS) and content sales. The iOS and Android platforms offer an efficient storefront, payment mechanism and distribution channel for content developers and providers. The market access they deliver is unrivalled by any mobile operator. iPhones and Android smartphones represent the latest incarnation of the famous Swiss army knife, with touch screens overcoming the physical awkwardness of early smartphones while maintaining their primary function as communications devices. Mark Zuckerberg, CEO of Facebook, recently claimed that the ‚iPad isn’t mobile, it’s a computer‚ . Northstream begs to differ, the iPad is both. These latest tablets offer an almost entirely software-based blank canvass that can support most use cases imaginable. In contrast, an iPhone is limited by its size and physical feature set ‚ it is by definition just a phone. A laptop is just a portable computer that can drive productivity and efficiency gains. A tablet is so much more ‚ it’s a mobile computer that can elegantly deliver communication while enabling media production and consumption. The iOS and Android platforms have thus not only changed the name of the game for mobile VAS and content, they have also firmly separated the use case from its dependence on access. The disconnection from access offers developers total freedom in the choice between direct and indirect revenues. As a result, multiple services can now converge on one platform, not in a mobile operator’s core or service network, but in the hands of the end user. Thus, convergence is larger than ‚fixed-mobile‚ and involves the (digital) convergence of multiple industries, businesses and use cases. The tablet phenomenon will further boost the ‚over-the-top‚ service revenues channelled through iOS and Android platforms. The iPad is the first mobile device with a cellular connection sold on a global scale, free from operator lock-in or subsidies. Some tablet manufacturers will decide to go to market through operator subsidies but Apple will lead the charge in disconnecting these devices from operator control. The application market continues to move away from mobile operators. Although Apple is generating modest revenues from its App Store, the total number of mobile broadband enabled devices has increased to more than 50% of the subscriber base in developed markets. Over the top app-based VAS revenues are in pole position to overtake existing ‚on-deck‚ operator App revenues. Operators would do well to abandon plans to establish their own App Stores and concentrate on enabling more converged devices like tablets. ‚ Strong growth in mobile connections in 2011 will demonstrate that 10 billion global connections will be reached by 2015‚ Northstream believes that increased Mobile Broadband availability will drive the global mobile market beyond 10 billion connections by 2015. In 2009, Northstream predicted that the M2M/connected device market will start demonstrating strong growth in 2010, and this is what is happening. AT&T has seen total growth in connected device take up of 137% from Q3 ‚Äò09 to Q3 ‚Äò10 ‚ strong evidence that the M2M market is set to explode. Last year Amazon’s Kindle was setting the pace, and new products in the tablet space, such as iPad, are also now driving the market. Market analysts such as iSuppli have re-checked their tablet sales estimates ‚ they originally stated that single function eReaders will enjoy 40% CAGR (’09-’14), but accept that devices like the iPad and its likes could experience ten times that growth. Gartner has also increased its forecast of 10.5 million tablet sales up to 19.5 million for this year in accordance with extraordinary demand. In order to grow from the 5.2 billion mobile connections we have today to 10 billion by 2015, the global mobile industry would need to achieve a CAGR of 14%. This may initially appear aggressive, but we believe the following factors will drive this growth: Sustained growth of voice subscriptions in emerging markets Growth in data-only subscriptions and the potential these could deliver in countries such as China and India Ongoing mobile broadband take up developed markets Growth of M2M deployments beyond consumer devices. More widespread mobile broadband take up will drive M2M applications across new vertical markets such as automotive, utilities and consumer electronics. Northstream believes that many of the current subscription estimates and forecasts for M2M technology are far too conservative. ‚In 2011, operators will discriminate on data usage policies in order to lower CAPEX, increase revenues and improve service quality ‚ the regulator backlash may take place in 2012.‚ Northstream expects that mobile operators will gear specific data price bundles according to specific high bandwidth services, content and applications. Almost all operators have started to introduce ‚fair use‚ policies and data caps in order to protect the quality of service delivered to its users. All major international operators have also purchased contracts with Policy Control and Rules Function (PCRF) device vendors to monitor usage even more effectively. Furthermore, according to Infonetics Research, 60% of operators polled planned to use such devices to increase ARPU and potentially deliver tiered pricing for some services. In Australia and South Africa, operators have introduced data caps, time based billing, walled garden networks and favour some content partners according due to their high transatlantic data charges. The European regulators seem content to sit back and let this happen ‚ for now. The European Commission recently stated that there would be no net neutrality legislation in Europe and highlighted examples of reasonable service differentiation occurring across Europe today. The market has therefore been left to regulate itself while the European Commission keep close watch. Northstream believes that while operators have dodged the net neutrality bullet for now, they can expect further intrusion from the European Commission in the not-too-distant future. The smartphone explosion has enabled a completely new market opportunity for over-the-top online service providers. Mobile operators will be sorely tempted to do all they can to block the competition and stop them from cannibalising their revenue streams. Tiered offers that limit user choice and restrict service competition, in combination with unjust prioritisation of paid content, will provoke regulators to step in sooner than anticipated. To preserve the golden compromise of self-regulation, operators must undertake a careful balancing act.
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