Mobile Europe takes its annual look back at the stories and features that made the biggest waves in 2009. How was it for you?
At the start of the year, what did we think 2009 would look like for the mobile industry? It's always interesting to look back and revisit what we thought would happen, and compare that with what actually happened. For one, it looked like a waste of time trying to get mobile operators to invest any capital, but it didn't turn out quite like that.
Continuing a long "over the top" discussion, Nokia launched its mapping strategy.
"Nokia used its Nokia World event in Barcelona to launch its Maps on Ovi and Mail on Ovi services.
Both services extend its service capability within Ovi, and represent Nokia's latest attempt to tie desktop usage to mobile.
The services take the vendor into a head-on fight with Google and other web-based service providers for mapping, navigation and messaging services, as well as extending Nokia's competitiveness with mobile operators keen to do the same.
But there was also word from Nokia that it is looking for operators to support its Nokia Messaging service.The vendor also released details of the N97, its new phone, as well as saying it has completed its acquisition of Symbian."
And we reported that Vodafone was seeing a drop in service revenues, something related, of course, to the increasing challenge from others in the sector. This topic would run an run through the year, as operators sought ways to add value to the flat rate data tariffs that were proving so popular, but unrewarding. And on the other hand, there were cost savings to be made.
"Vodafone's ceo Vittorio Collao has said that its five prong strategy, formed in May 2006, is now no longer suited to current markets. The company has said it is going to cut £1 billion a year from its operating costs, reflecting a re-forecast missing £1 billion in future revenues.
And although the company is betting on future data revenues, there is still a substantial gap to make up to cover the impact of dropping voice revenues.
There is clear evidence of decline almost across the board in Europe in monthly revenues per user. In Germany for the quarter ended December 2006, total (ie contract and prepaid) average monthly mobile revenue per user (ARPU) stood at €20.9, with contract ARPU at €36.7 and prepaid at €7. Now, total ARPU is at €16.8, with contract ARPUs at €32.4 and prepaid at €4.6.
Across Europe, voice minutes have risen from just under 40 billion minutes in the quarter to December 2006, to over 48 billion minutes in the quarter just reported. But voice revenues dropped 5% on an organic basis for the quarter just ended. Overall service revenues declined in Spain, in the UK and in Germany. And rose only 0.9% in Italy."
February and so on to Barcelona, where the industry put on a dark suit and stalked the halls of Barcelona with a serious face. The green agenda pushed aside in place of concerns about financial survival. And operators began the long road back to a coherent content strategy. But the first question was – how many people would turn up to Barcelona. In the event, the number (47,000) was some way down on the GSMA's "same level" predictions, but not disastrously so.
"Certainly, when this article was written, the GSMA was officially stating that it expected visitor numbers to be up at the same level as last year, and that's somewhere around the 55,000 mark. Visitor pre-registrations were up, exhibition space was about the same, all was set for just as big a show as ever.
The GSMA's chief marketing officer Michael O'Hara, says, "We've seen no call down on space at all. Let's see what happens on re-bookings for 2010, but the signs for this year, in hotel bookings and registrations are that we are ahead of last year."
O'Hara says that although the economic crisis may not appear to be affecting people's travel plans for Barcelona this year, it has certainly pervaded the conference programme. Some late footwork sidestepped the original programme and swiftly headed off down the path called "Whooaah…", or rather, as O'Hara puts it, "At our leadership conference on the Monday there will be a key focus on how to sustain growth at times like this." Indeed. As for other areas, O'Hara says the GSMA and operators will be using the opportunity to bend a few regulatory and governmental ears on the 400MHz spectrum due to be freed up as part of the digital switchover. The industry wants 25% of that made available for mobile. "I think you will see a consolidated industry voice on that subject at the event," O'Hara said.The GSMA will also be pushing its line on next generation messaging, having brought the Rich Communications Suite item under its wing. The idea is to push the adoption of the idea of access to content and other services from the contacts book, using messaging as the driver. There will also be a programme on mobile advertising, and specifically on mobile advertising measurement, to drive the process of delivering to the media industry the measurements and analytics it needs to have trust and confidence in mobile advertising."
As for advertising, we held a round table debate to call for concerted industry action on the topic. The result? Only one person (Kieron Matthews) on that round table is still in the job they were in at the time we held the debate. Well that's some change we managed to effect there. It's worth quoting a lengthy passage of the debate to show how slowly this industry can move at times.
What's needed In 2009?
Keith Dyer: So what are your plans for 2009, and what do you require from others in the industry to make it work?
Kieron Matthews: From an industry point of view, what's missing is an appreciation of how big the market is. None of us knows. One of the things we are doing is measuring the size of the market – because seeing that growth pattern, seeing that pot of money grow, will make it more attractive to operators, agencies and advertisers. When they start to see this is a proper medium, we can sell that back into the industry and the quicker it can grow.
Thomas Curwen: One thing that will help accelerate it is offering flat rate broadband for PAYG, that's still a stumbling block. There are a vast group of people out there as yet untouchable. Make it easier for us, give us big statistics like the growth of adspend. Help brands understand what consumers are doing with their mobile. Somebody has to help our clients understand what people do with their mobiles and when they are going to be most receptive to a message. There are fantastic opportunities that we need to help the brands understand.
Kent Ferguson: When it comes down to it there are only two components that truly matter; the consumer and the companies that are paying the bills. Now the consumers are there, this isn't just hype that we are talking about. The mobile internet audience has grown by 36% in the last year. That's significant. The users are there and as long as you engage them properly this thing will grow.
James Macdonald: We will be making announcements that specifically address many of the concerns that have been raised here. There is obviously some huge value to O2, and without being specific we are looking to build on our very successful mobile advertising piece, O2 Active, and make that one of the major market leading sites for mobile advertising. And we will also be looking, in a judicious manner, to work with different channels and different opportunities throughout 2009 in a way that's relevant to our customers.
Andrew Grill: The first thing is, are we talking advertising language or mobile language – because we need to talk the language of the people with the money. It's not about mobile, it's about reach, relevance, all those sorts of things. The second thing is, let's get together.We want to give them the one place to help make mobile easy. Make it easy to buy and measure and they will spend more. So for 2009 it's about action, doing things collaboratively, and speaking the language of the industry and also of the consumer.
Into March, when the fallout from Barcelona was fairly severe. Predictions for the NEPs were gloomy- esopecially in Western Europe.
"The global telecommunications equipment market grew by close to 5% in 2008, a rate of growth that involved a shift in the contribution made by handset components and infrastructure hardware, according to IDATE.
"From a geographical standpoint, Asia was the prime source of growth – specifically China and India – which accounts for two-thirds of the increase in sales worldwide, while Western Europe and North America lost six and five points, respectively.
IDATE said that in mature markets, operators are tightening their belts further still to be able to maintain their margins, and are being particularly cautious about their investments. For equipment manufacturers, this means added pressure on sales, especially since the handset market, of which mobiles represent 90%, is also suffering a downturn after three to four years of double-digit growth. IDATE described these markets as having " lifeless services markets – worsened in recent times by the prospect of a looming economic crisis."
Yikes. And yet the operators themselves were in fact forging ahead with services that looked like the over the top services being launched by their rivals. Vodafone was the first to go DRM free on music.
"Vodafone has signed deals with Universal Music Group, Sony Music Entertainment and EMI Music to offer their tracks DRM free across Vodafone markets for both mobile phones and PCs.
The new deals are the first of their kind for a mobile network operator enabling dual delivery of DRM free music to a wide range of mobile phones and PCs with no need to sideload or synchronize. Customers will be able to play music bought from these three labels via the Vodafone Music store without any limit to the type of device provided they belong to the customer.
In addition, those customers who have already bought tracks or albums from Universal Music, Sony Music or EMI in WMA format (with DRM) will be able to upgrade them to MP3 at no extra charge within the existing download allowance. DRM free music will be available through a number of Vodafone countries by the summer and will complement Vodafone's current music offerings.
"Music is central to many of our customers' lives," said Pieter Knook, Vodafone Internet Services Director. "By Vodafone pioneering DRM free on mobile and offering MP3s on PC, they will now have the freedom to download tracks from their favourite artists without any device restrictions allowing them to experience their music however they want it, wherever they are."
April and May saw the industry being told that they faced oblivion unless they seriously changed the way they did business (it's not as if they haven't been trying, surely?) But the point was still being made that operators were in a sticky place. Solutions, please, people?
"Operators that refuse to adapt to the "post voice" world face "oblivion", the former Orange CEO and current Chairman of Augere, Sanjiv Ahuja, has warned.
Speaking at the TM Forum's Management World conference in Nice, Ahuja said that operators need to address the opportunities provided by the new way information and entertainment is accessed and distributed. But, he warned, failure to do so would result in several operators becoming either bit pipes, or losing market value altogether.
"We need to plan for post-print media life and work out how to deliver digital content. We are still delivering digital content in a linear way, and we need to be thinking of a different way," he said. "We have to figure out how we are going to monetise this infrastructure to deliver this digital content."
Ahuja said that telcos must reduce cost rapidly, even if that can't be the whole scope of their strategy.
"Cost reduction is an absolute imperative, and I understand that shouldn't be the sole strategic priority, but companies that don't retool themselves will find themselves going out of business. Several telcos will become dumb pipes and go back to what we have seen before," he added.
Ahuja said telcos need to take the take the real-time information and infrastructure that telcos have, the billing, authentication, location info, and monetise that.
"It's not that telco infrastructure providers don't see that, the challenge is it requires a complete transformation of their business model and that is very hard for successful businesses to go through. No company has truly succeeded in making that transformation of the business model happen," he said.
"What we in telcos have failed to do is take the data and truly turn that into business insight – and then transformed it into services our customers need and demand. That's where we as an industry are lacking, that's where we as OSS/BSS systems providers have tremendous opportunity," he said.
Keith Willets, Chairman of the TM Forum, said that the two-sided Telco2.0 business model is not a new idea, but that the challenge is in making it happen.
"The hard bit is taking the powerpoint slide and turning it into operational, technical and business reality. A lot of thinking is needed on where you differentiate and where you standardise," he said.
"There are areas where we can look for standardisation, in how content flows around at very low unit cost, in enabling advertising. Because this can't add cost, it has to make money."
Simon Torrance, CEO of the Telco 2.0 initiative, said that the time is ripe for the telco industry to seek investment, as it is seen as a defensive sector during a recession.
But it will require organisational change at all levels, he said, to align with the new business models.
"Often the metrics that drive activity within service providers are not aligned with the new business opportunity you are trying to create," he said."
A sign of the pressures this would place on the vendors came from Nokia Siemens Networks, which decided that it really had to do something about its support for IP services. It looks like a technical piece of the jigsaw puzzle, but it was a pointer to the fact that incumbent providers and operators needed to come to grips with new service and network platforms.
Nokia Siemens Networks has added MPLS and IP domain capability to its NetAct network management system, in a bid to enable operators to support end to end configuration of multi-vendor and multi-layer networks.
A deal with EMC Corporation means that EMC Smarts, an automated IT management solution, is being added as a component to NetAct.
Juhani Hintikka, Head of Operations and Business Software Business Unit, Nokia Siemens Networks, told Mobile Europe that operators need a single solution that enables them to configure their networks across all the multiple layers and domains that they operate. EMC's Smarts product adds the IP skills to Nokia's solutions.
Increasing network complexity, allied to a squeeze on revenues and growth in traffic, means that operators are caught in a vice. But by consolidating their network-specific management and fault management systems into a harmonized network management system, they can reduce annual opex by up to 80%, he claimed, whilst supporting demand for IP services and increased IP network utilisation.
The issue of providing assurance, performance management and network configuration across IP and TDM networks, as well as into the service and application layers, is one that mobile operators are now having to address in earnest, as IP service growth drives the need for investment in core and IP access networks.
NSN's view is that harmonising transport configuration management, is essential to operators' efficiency.
Hintikka said that NSN was well-placed to drive this harmonization as it is "number one" in this OSS space, and has broad experience of managing multi-vendor networks on behalf of its clients.
But others were less convinced.
"Smarts is a good solution, and we respect it," one competitor told us, "but who really views Nokia as vendor-independent. You're only going to buy the whole OSS thing from NSN if you are a major equipment purchaser as well."
The summer was now drawing on, and we saw further evidence in June of the impact the expansion of IP was having in the market.
"Ixia CEO Atul Bhatnagar told Mobile Europe that the company will buy again in the mobile and wireless space to fill gaps in its portfolio.
The company has a bid for wireless test vendor Catapult , a deal that sees Ixia move from its core market as an IP test vendor into the edge of mobile networks.
The reason for this strategy is the fact the operators are set to move to IP networks in an end to end manner, even if some investments in LTE may take a while to materialise. When they do so, they will not be able to manage and monitor services and applications in the existing manner, Ixia argues,
Bhatnagar said that choice of acquisition would be taken once Ixia had "learnt more" about the wireless market, and that "customers will drive this company now".
"We will start working out what the gaps are in our business, and then the next move will be to fill those. This is what you will see from us," he added.Mobile Europe's best guess is that the next step for Ixia would be to move further into the assurance space, particularly as operators compete to differentiate around class of service and service quality.
Ixia bought Catapult because it thought it had the best LTE strategy and development path, and history of investment, of the available wireless test vendors on the market. So any likely target in the future would more than likely need to mirror that focus on IP and 4G networks.
Not only this, but we saw NSN (them again) and Juniper establish a joint venture.
Juniper Networks and Nokia Siemens Networks (NSN) have said that they are forming a joint venture to provide carrier Ethernet products to the market.
The plan is to combine NSN's access products with Juniper's heavy-lifting routers, giving both companies wider coverage of the market.
Ethernet is increasingly becoming the choice for carrying mobile data and voice traffic back from cell sites to the core. Backhaul investments are currently increasing, one of the few growth areas for the NEPS at the moment in mature markets. The JV, to be based in The Netherlands, will combine Juniper's MX Series Ethernet Services Routers with NSN's A-series Carrier Ethernet Switches. The plan is for the new Carrier Ethernet solution to be sold by both companies with a targeted introduction date is the fourth calendar quarter of 2009s.
Away from the networks, we saw Sony Ericsson come under serious pressure, and promise more from its future handset range – including a branching out into teh Android OS and staying loyal to Windows Phone at the same time. How were those Xmas Satio sales, guys? Get the returns issues sorted out?
Sony Ericsson said it is aiming to play catch up with, and overtake, Apple and Nokia, with the three handsets it launched yesterday – the Satio (formerly known as the Idou), the Aino and the Yari.
With the phones offering tight integration to content services (BBC iPlayer, YouTube, Facebook) and applications (gaming, TV) the buzz from Sony Ericsson was around the "Communications Entertainment" experience.
Although Sony Ericsson has announced it requires funding and investment, Lennard Hoornik, Sony Ericsson's Corporate Vice President and Head of Marketing, who said that there is "massive confidence" in the company and that the staff working for the vendor have "a twinkle in their eye because they know what's coming".
"Operators are confirming that excitement that we have," he added, claiming that Sony Ericsson is on the march to creating "new experiences" in the industry. One of the issues he highlighted is making content and services more discoverable and easy to use.
What, we wanted to know, do operators make of Sony Ericsson's renewed focus on the services it can offer, up to and including a re-launched App Store that is coming soon? For instance, the Yari will push content to the idle screen, such as new game releases, that consumers can download. Do operators willingly give up that real estate on the handset?
"It's a good question. Two to three years ago specific operators were very much of a mind to be in control of customisation. But if you look at the last 18 months you can see that relaxing on their part. We've been very loyal to operators, and still are," Hoornik said. "Operators are very focussed on increasing the data subscriptions, and on the increased use of more services. A focus on improving the discovery and experience on the handset will speed these things up. So we work with them."
Hoornik admitted that the company is behind Nokia on its services strategy, behind Apple on its user experience focus, and as a smaller company struggles to make itself heard. "We have a lot of respect for Apple in the way that it reshaped the market," he said. "And we haven't done as good a job on our music service as Nokia [with Comes with Music]."
But he is confident that is going to change. He said that the coming app store is really a evolution of the existing content portal Sony Ericsson runs.
"We are confident we offer an easy path to monetisation for developers, and content owners," he said.
He said the company would have an Android-based device out soon, but couldn't go into any further details. He added that SE is also committed to the Windows Mobile platform."
Into the autumn and the great Nortel collapse and sell off was well under way – despite NSN's continuing failure to get a piece of the action.
"Nortel Networks has defended its plan to sell its CDMA and LTE assets to Ericsson, refuting the suggestion that the deal should be investigated by the Canadian government because Nortel is selling assets funded by Canadian taxpayers.
Following the July announcement that Nortel plans to sell the assets to Ericsson for $1.13 billion, Michael Lazaridis, co-chief executive officer of Research in Motion (RIM), asked the Canadian government to look at the sale, saying the transaction would deprive the country of a vital technology.
"The Nortel transaction as currently structured isn't in Canada's best interest," Lazaridis said."
The deal went ahead of course, followed by further sales of the enterprise, optical and GSM units. And Nortel, for so long one of the great networking companies, was no more.
There was also change at the operator level. Vodafone started the app game rolling with the launch of V360. And Orange was not far behind with its Apps Shop. Vodafone's was the more far-reaching announcement, as it went far beyond a mere app store annoucement, something that many missed at the time. The announcement also gave succour to those in the LiMo camp.
"LiMo will be used as the main platform for operators looking to provide a differentiated user experience from the iPhone and Symbian, Morgan Gillis, executive director of the LiMo Foundation, told Mobile Europe.
Gillis said that Vodafone's adoption of LiMo as the OS for its H1 and M1 Vodafone 360 phones from Samsung is proof that operators will move to the platform as the basis for a user experience that can provide operator and brand differentiation around the handset, and around access to applications and services."
Ad-funded Blyk's model proved confusing for many – as it rolled up its operations into host operators in the UK and Netherlands. Was this a sign that these operators wanted to reach Blyk's demographic, or that Blyk itself was struggling.
Ad-funded MVNO Blyk will cease operating as an MVNO in the UK, and will move its customer base to Orange outright, with the Blyk brand existing with Orange's operational base. The move mirrors Blyk's recent news that it will partner with Vodafone to bring the Blyk brand and media model to consumers and advertisers in the Netherlands.
O2 went a slightly different route, with a group of its executives splitting off to form giffgaff, another MVNO that would take a different approach to the market.
"Former O2 exectives have announced the launch of giffgaff, an MVNO that will target customers with a SIM only offering that will reward users who contribute most to the network. The aim of Mike Fairman, who has founded giffgaff as an autonomous unit, owned by O2, is to enable O2 to reach a different type of user looking for a different kind of user experience. Launch is scheduled for "before the end of 2009."
And of course we saw major consolidation in the UK?market with Orange and T-Mobile agreeing to pool resources, and form a 50-50 venture. Nokia Siemens and Ericsson announced more cuts, and we seemed, at the end of 2009, to be back where we began. Except, and it's a major exception, LTE is a year closer. And it is now live in Europe. Have a happy 2010.