Presence and the benefits of having interconnected IM user communities and services are about to radically change the way users relate to and use their mobile phones, Neustar executives tell editor Keith Dyer.
MOBILE EUROPE:
Jeff, NeuStar recently spent $139 million acquiring IP messaging specialist Followap, which we now know as your Next Generation Messaging (NGM) business. Clearly that represents a major investment in this market. What is it about mobile instant messaging that excites you?
JEFF GANEK
The most remarkable thing is going on in the communications industry today, and here’s what’s happening. There’s a huge end user demand for mobile instant messaging (MIM), and this is in our view the largest, most material, new revenue opportunity that the mobile network operators have. And that is reflected in a fundamental change in the way end users want to use their handsets. Mobile Network Operators (MNOs) are acting now to capture this opportunity and respond to market demand. Things are happening now in the networks and within marketing programmes to change the offering operators put before the end user. And already 19 of the largest MNOs in Europe have selected NeuStar’s NGM platform to deliver this innovative new wave service. This platform has capabilities not just to deliver MIM, which has a defined demand, but the MNOs see it as fundamental network component allowing them to deliver a new wave of IP-based value added services that are the future of mobile communications.
ME: So what is driving this end user demand for MIM?
MARK FOSTER:
SMS is essentially unchanged as a 10 year old product, and yet it is the second biggest revenue earner for mobile operators, with 1.2 billion active users. In other user communities, there has been wide adoption of other messaging technologies, and this has led operators to conclude they must upgrade this critical product to introduce new services.
So, for MIM what we are really talking about is SMS 2.0. And faced with the prospect of huge growth and innovation, from a current market of $63 billion a year, mobile operators are bringing IP capabilities to mobile messaging to replace SS7 and adding new features such as presence. That means that this becomes about more than text messaging, with the platform becoming a future environment for person-to-person communications in the mobile environment – for text, video, and voice.
ME: So which operators are we seeing deploying MIM services.
SIMON BROWN:
There’s a whole spectrum of operators using it now. On our platform, the ones we can name publicly of our 19 customers include Vodafone, Wind, SFR, Turkcell, and the Hutchison Group. And operators are signing up quite quickly right at this moment.
This clearly indicates that we believe that SMS platforms will be replaced by IM. And in terms of the end user, the services are the same but with the added value of presence. The number one SMS sent is probably “Are you there?” Presence takes that out. Users can have multiple threads running at the same time and IM keeps track of all those conversations at the same time.
JG
It’s interesting too that they turn to NeuStar for this because NeuStar is a very different kind of service provider. There’s nobody else quite like us. We built and operate the physical directory, and route every telephone call made, in North America. It’s that trust and responsiveness that is key to NeuStar and the NGM platform that they must have to meet the multi billion dollar end user demand for MIM.
MF :
Certainly that’s a natural role for NeuStar, not only do we operate the master routing database for US, Canada and Taiwan, but we also provide routing capability for nearly a quarter of the world’s internet traffic through our Top Level Domains such as .org, .info, .biz and .uk, as well as the global routing directory to route interoperable GPRS services between and amongst the GSM Association’s members. So this is the sweetspot of what NS does already today, in a way that is fully interoperable.
And that’s vital to the success of MIM – it has to be interoperable at the outset. You can’t do this on an isolated basis.
ME:
So what are the challenges facing operators as they seek to establish that interoperability between user communities?
SB:
When you talk about a MIM architecture there are two basic platforms. The IMSC – the platform of operator communities – and second the media messaging gateway, connecting to the internet portal providers. So for example, in 3’s case the deal we have there is to use our platform to provide MSN to their subscribers.
The acquisition of Followap by NeuStar in that way helped us. NeuStar’s charter is to stay a neutral third party, and that means we are also a neutral third party. So the advantages now begin to stack up quite healthily.
There’s already a large community of operators who know us and work with us. It’s very simple to connect to our interconnect platform, the expertise and resources that NeuStar brings to us, and the ruggedness and QoS we can provide is going to be second to none.
JG:
The industry for all its wizardry has not yet established a standard for interoperability for IM that has historically existed for all mobile handsets for messaging. The existing IM networks are not pervasive or interoperable. Here’s what the market is crying out for: 1.2 billion users of handsets worldwide need to be able to originate and terminate IM on any of the billions of network endpoints around the world. What will change the situation for the messaging market is an infrastructure that allows MNOs to talk to customers and say, “The handset you’ve been using for voice and SMS, use that same handset to send IM to and from any phone in the world.”
In Barcelona last February really for the first time we saw a coordinated launch of Personal IM services. And the interoperability aspect, in addition to all the enabling products and services, between and within networks and to internet portals is key to everyone’s collective success
ME:
Has the work within the standards bodies not mandated interoperability already?
SB:
There’s a range of IM platforms that operators could buy. But regardless of who you have bought your IMSC from, communities need to interconnect. For example we have connected Colibria’s product within Telefonica’s network to our platform, and it is our full intent to interconnect with other vendors.
The platform we have is able to support SIP, XMPP, or OMA/ Wireless Village, with real time protocol translation. This is how we manage to interconnect multiple communities together.
With internet portals, at the end of the day a commercial transaction has to be agreed between the operator and the portal, but the good news is that the technical and physical side is working. And as Mark said, the GSMA has an MoU with 30 signatories saying they will interconnect.
MF :
Interoperability problems between networks are often the same as problems within networks. It’s important to know how to route a service request within a network. If an IM subscriber wants to send a message to a non-IM user, how does that work in a seamless fashion?
ME:
And what is the role and value of an interconnect platform for the industry?
JG:
Our name, NeuStar, comes from neutral. It’s such an important part of our values that we put it in our name. We will never compete with a MNO or service provider customer. They can trust us to provide key deep infrastructure capabilities that enable network operators to deliver services from their network to any other network in the world. And there’s not another company in the world that is pledged formally and legally to act in this way.
MF :
As we talk about interoperability, we have to try and make the value of that tangible. First, look at MMS – a more recent service that is perceived largely as a failure by operators for the key reason of a lack of seamless interoperability when that service was launched. What they learnt was that initial poor experience of that interoperability soured consumer perception of the service
The value proposition we have is the ability to interconnect these disparate IM user communities today. The key to this is that this creates a clearly compelling business case and a core rationale for MNOs investing in the key element in an IMS architecture. It’s a very practical infrastructure to evolve into a true IMS next generation environment. And I think this is a very powerful value proposition.
ME:
When we talk about value, what is it about IM that you think will make it drive those next generation investments for operators?
JG:
IM has an attribute that is unlike any internet standard communications service, this is the attribute to change the way the communications users use networks. That attribute is presence, which changes the way we use communications versus SMS or traditional, conventional voice. Once users understand that presence is in the network, then they can apply that not just to IM but all kinds of communications. This is the first wave of the IP revolution in mobile communications.
SB:
I think there will be different flavours of communications on mobile, with email on a specific client for example. People talk about IP convergence and that is indeed what IMS should enable.
But IM on mobile is on a parallel path ahead of developments on other services. It’s working without IMS and is an example of a service that subscribers have a requirement for and interest in. We’re seeing a continued and rapid acceleration of IM traffic.
ME:
Is this a wave of IP communications that can deliver increased revenues to the operators, however? The experience in the fixed line world has not always been encouraging.
MF:
People have good reasons to be sceptical about the introduction of fundamentally new services.
But this is not a new service, mobile IM is an upgrade to the existing second generation revenue generating opportunity to operators.
JG:
There is a view that as soon as you stream IP to a handset the end users will use all the free services. What’s different in this case is that we are not talking about open access via broadband. Instant messaging is about putting into the infrastructure of MNOs an IP based capability that can deliver services and products that customers demand and want to pay money for that they can’t deiver with their old technology. It’s not academic. It’s three to four times less costly to provide than SS7 based SMS.
MF:
In the markets where these services are going live, the average message volume increase four to six times compared to text messaging. So that’s a very compelling metric on a cost and revenue basis.
SB:
The thing to realise is that this becomes about a range of different services on top of the basic IM service. Turkcell, which is one of the most forward thinking operators in this area, have found chat particularly successful and a great revenue earner as well.
And that’s not just about a subscriber’s friends, you can join a user group or forums and chat that way. Turkcell has a package price for IM and charges subscriptions for services like – the info buddies. All the leading operators have put in detailed investigation into this, and they have not observed cannibalization of SMS. The conclusion is that is it a different behaviour and it builds on top of text messaging type of practices.
The increasing selection and availability of 3G devices is due to improved 3G network coverage, lower device costs and a focus on mobile broadband services, the study found. Dedicated data-only mobile broadband devices – such as dongles and laptop datacards – represent around 15 percent of the total devices offered by global operators.
Wireless Intelligence’s handset portfolio research was conducted in the opening quarter of the year, spanning 36 key mobile operators in 19 countries around the world. The study is based on the handsets offered by operators via their online retail stores so does not reflect unit volumes or sales to end users. Despite the rise in compatible handsets on offer, 3G still only accounts for around a third of operator connections in mature markets and one in ten in emerging markets. According to our data, total global mobile connections reached 5 billion at the beginning of the month with 3G (WCDMA) connections accounting for 11 percent (approx. 550 million) of the total.
“It’s taken a long time for 3G devices to come-of-age as they have often suffered from high prices and poor design, but generous operator subsidies and unlimited data plans have helped to boost adoption in recent years,” said Joss Gillet, Senior Analyst, Wireless Intelligence. “Our new research shows that most mobile operators around the world are now heavily promoting 3G-capable devices in order to tap into new mobile data revenues and push into mobile broadband.”
Sweden was deemed to be the world’s most advanced 3G market, the study found. Over 90 percent of the devices offered by leading Swedish operators TeliaSonera and Telenor Sweden are 3G-enabled and both operators have more than half of their total customers migrated to 3G. This is significantly higher than the 3G share of total connections in Western Europe, which stands at 36 percent. Western Europe is also leading the way in HSPA, the faster version of WCDMA typically used for mobile broadband. The faster technology now represents 46 percent of the total WCDMA (Family) connections in the region, compared to 30 percent a year ago. Our study found that, on average in mature markets, the vast majority of 3G devices offered by mobile operators are HSPA-enabled, with only 5 percent of devices supporting only standard WCDMA. Meanwhile, in many emerging markets where fixed-broadband penetration is very low, HSPA networks typically provide the first means for consumers to access the Internet.
Despite the rise in 3G devices, most operators are still supporting widely-deployed GSM/EDGE (2G) networks via more affordable EDGE devices. According to the study, EDGE-enabled GSM devices account for 25 percent of operator handset portfolios in mature markets and 36 percent in emerging markets. In many cases, EDGE is still seen as a substitute for WCDMA networks as it benefits from better network coverage.
“In order to see 3G device portfolios grow to a level close to the most-advanced Swedish benchmark, network coverage will have to improve considerably in many markets,” added Gillet. “Even though only one third of devices catalogued by operators are GSM, the 2G networks still account for around two thirds of connections in mature markets, and as much as 90 percent in many emerging markets.”