Femtocells – Are They Still Relevant for Data?

Data that smart phones represented 45% of all new U.S. mobile device purchases in November coupled with the fact that smart phone users now make up 31% of the total U.S. mobile subscriber segment got me thinking – did femtocells just lose their relevance for capacity augment? Let’s revisit the business proposition for femtocells – smart phones generate a lot of data at home/office/airport/doctor visit/shopping mall yada yada …Femtocells can offload the data away from the macro network, went the reasoning. But does this argument hold if every smart phone being shipped came with WiFi? According to a report from ABI Research, it will be difficult to buy a new smart phone that does not have built-in WiFi in the next few years. Currently, about half the smart phones sold have WiFi. By 2014, the forecast goes, about 90 percent of smart phones will have built-in WiFi.

Apple iPhone One of the primary drivers behind the whole femtocell business proposition was that very few 3G phones supported WiFi -  reasons ranged from battery life issues to operators’ concern about giving up control of the user to a WiFi/fixed network.  Increasingly,  mobile operators are willing to give up control as well. Heavy traffic loads on overburdened 3G networks are forcing the operators to actually encourage their customers to use WiFi hotspots. Case in point -  AT&T is encouraging all its iPhone subscribers to access its more than 20,000 Wi-Fi hot spots for free. The hope is that the company can offload some of the traffic onto the WiFi network by encouraging subscribers to use WiFi for data-intensive activities when they’re in range of a hot spot. In this age of data-centric multimedia phones, carriers have embraced WiFi technology as a way to offload traffic from licensed spectrum and improve the consumer experience. I know my iPhone 4 switches to my home and work WiFi networks automatically when I am in range – it also provides instant updates when I am traveling about new WiFi networks that I can sign onto.

While most cell phones today use WiFi technology based on older standards, the newer specification called 802.11n is gaining traction. And by 2012 ABI says it will become the predominant WiFi technology used in mobile handsets. The benefit of using 802.11n is that it offers up to five times the download speed of 802.11g. The newer 802.11n also doubles the range of a Wi-Fi hot spot from about 100 meters to about 200 meters. It also has a few other features built into the specification that will improve the experience for mobile users. For example, since data transmissions are more efficient with 802.11n, battery life lasts longer than with other forms of 802.11 technology.

To summarize, all the principal data guzzlers – smart phones, tablets, laptops – will support WiFi – the question then is do we really need a femtocell for data?

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3UK’s iPad Data Plan – Most Generous Yet

Folks on the other side of the pond can consider themselves quite lucky. Unlike at&t’s less-than-generous data plans for iPad ($25 for 2GB), users who subscribe to 3UK’s data plans for the iPad can get anywhere from 10GB to 15GB for UK£15 and UK£25 respectively. Stated otherwise, 10GB costs you roughly $25 per month (1UK£ equals roughly 1.5 US$) – five times the data for the same price!

No wonder that the 3G  version of the Apple iPad was the most popular among UK shoppers during the Christmas shopping season, according to the latest stats from market research firm Context. The firm found that 80 per cent of UK iPad sales recorded in November were for the 3G version, due to mobile network operator stores being a major outlet for sales of the device.

But at&t should watch out - rumors are swirling that Apple is planning to announce not 2, but 3 versions of the second-generation iPad including a CDMA version for Verizon Wireless, come April 2011. It will be quite interesting to watch how Verizon Wireless prices the data plans for the iPad 2!

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Mobile Broadband in Sweden – Still Growing

Last year, I wrote about the explosive growth of mobile broadband in Sweden. According to the  National Post and Telecom Agency (PTS), which publishes an annual report on the state of the Swedish Telecommunications Market, the number of mobile subscriptions via data plug-in cards or USB modems increased from 92,000 to 376,000 (a growth rate of around 309%) during 2007. The rate of growth in mobile data traffic was even steeper -  total mobile data traffic increased by over 1000% during 2007  (from 203 TB to 2,191 TB).

Well, the PTS has come out with the 2008 report on the Swedish Telecommunications Market highlighting the state of the mobile broadband in Sweden last year. The number of active customers with broadband in Sweden  increased from around 3.156 million to 3.782 million between 2007 and 2008, corresponding to a growth of approximately 20 per cent. Mobile broadband represented 80 per cent of this increase, proving once again that people with dial-up connections are choosing mobile broadband over fixed broadband.

Naturally, mobile broadband traffic continues to grow as the accompanying picture shows – traffic grew from 2191TB to roughly 9TB (a growth rate of over 310%). Sweden_traffic growth_2008

Source: Swedish Post and Telecom Agency (PTS)

But this growth is clearly not generating adequate incremental revenue to the operators – revenue per GB has decreased from SEK 3000 to roughly SEK 200 (SEK 1 = US$0.14), which amounts to US$28 per GB. In an earlier entry, I commented on the profitability of mobile broadband service – I used Informa’s cost estimate of 2-3 Eurocents per MB, or ~20 Euros per GB which translates into ~US$29.5. Clearly, mobile broadband in Sweden is not a profitable service yet. Sweden_revenue_decreaseSource: Swedish Post and Telecom Agency (PTS)

As the accompanying chart demonstrates, most of this traffic is being carried by 3′s network. The average monthly data  per subscription  has increased to 1.8 GB and there was a great variation between the various operators. In particular, 3 is carrying the bulk of this traffic with its average monthly data traffic per subscription as high as 4.5 GB.

Sweden_traffic_increase_operatorsSource: Swedish Post and Telecom Agency (PTS)

Btw, 3 Sweden is the only operator that I have come across that offers different price levels based on the speed of the modem. Three different price levels corresponding to maximum download speeds of 2Mbps, 6Mbps and 10Mbps are being offered – presumably, the choice of modem restricts the maximum download speed. It is an interesting twist to mobile broadband pricing where the predominant model is based on monthly usage quotas and throttling of user traffic once the quota is exceeded.

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Mobile Broadband Showing Cracks?

According to the latest data from the UK broadband comparison website Broadband Genie, only around one in ten (11 per cent) mobile broadband users are satisfied with the speed of their mobile broadband. The data claims that exaggerated advertising and unrealistic ‘up to’ speed claims have given the public an unrealistic expectation of mobile broadband that the service cannot  live up to. And of course, some operators are better than others as this comparison between Vodafone UK and   3 UK shows. At least from this person’s experience, 3′s mobile broadband service just does not work.

VFversus3

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Carnival of the Mobilists #174

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It is once again my privilege to host the Carnival of the Mobilists – the week before the Memorial Day Weekend out here in the States.

Let’s roll: MobileSlate has a two-header. The first one wonders aloud about Twitter’s endgame and provides several useful application scenarios. The second post makes a case for FaceBook Connect to cater not only to iPhones but to the Billions of feature phones that people carry around in the developing world. I couldn’t agree more.

Geoff Ballinger has a post on Blyk that discusses the latter’s plans to evolve from an MVNO to partnering with MNOs to get access to the operator’s customer base. He presents the pros and cons of the strategy, but it sure looks like a lot of investor money to prove out their ad-based model.

Tam Hanna leads with a provocative title, “iPhone’s Demise” - the premise of with which I don’t quite agree. People buy iPhones because they are perfect platforms for media and entertainment – Veblen’s effect not withstanding!

Here is a post on mobile web application that lets you send ordinary SMS with enclosed files.

Steven Hoober has an interesting entry (complete with a video clip) on a fictional touch-screen internet connected tablet – it looks pretty cool, make sure you check it out!

Ajit Jaokar talks about the myth of mobile design using some well-known examples – he argues that many of the factors which constitute a truly excellent design are currently not in the control of the designer.

Finally, Mobile Point View’s Paul Ruppert interviews Lisa Gersh, President Strategic Initiatives, NBC Universal and Managing Director of The Weather Channel, where she discusses NBC Universal’s mobile corporate development initiatives.

Post of the week

Tomi Ahonen in his own inimitable fashion argues here that phone input is superior to that of a laptop – completely counter-intuitive that I was skeptical when I started reading the article. Tomi does make some good points – sound input, motion sensors, video capture etc. – are not all things we usually think of when discussing “inputs”. But a phone cannot beat (and Tomi agrees) a laptop when you are writing a long blog entry (for which Tomi acknowledges, he used a laptop).

Mobile 2.0 Europe Developer Day on June 18 in Barcelona – Mark your calendars

http://mobile20.eu/developer-day/

For people who’d like to attend, it’s time to register now since the places are limited and nearly sold out!

http://mobile20.eu/2009/05/16/mobile-20-europe-developer-day-nearly-sold-out/

Any mobilist blogger who would like to attend the Mobile 2.0 Europe Conference (Developer Day and Event), please get in touch with Rudy De Waele via http://m-trends.org.

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iPhone – Boon to Admob?

Last year, I wrote an entry which looked at AdMob’s monthly Mobile Metrics report and concluded that smart phone platforms from Nokia, RIM and Windows Mobile had a higher share of ads served compared to that of Apple’s iPhone.  I pointed out that this was not consistent with the browsing market share numbers reported by Net Applications. Well, iPhone has addressed that discrepancy to leave absolutely no doubt whatsover! Just take a look at the March 2009 report from AdMob (left). I have included the March 2008 report (right) as well for easy comparison.

admob_march2009_top_handsets1

 admob_march2008_top_handsets3

 

 

 

 

 

 

 

 

The iPhone and iPod Touch together have a 22% share (more than the rest of the 18 platforms listed in the table) of the 7.65B ad requests made to AdMob – the distant third is the Motorola RAZR platform with a 2.7% share. Contrast this with March 2008 when the RAZR platform had a 5.6% share of ~2.86B ad requests. It is clear that the phenomenal success of Apple’s AppStore has a lot to do with the dominance of the Apple platforms. In fact, AdMob reports that applications have had a big impact on the growth of mobile data usage. According to AdMob, in March 2009, more than half of the total number of ad requests for the iPhone came from applications. It is clear that applications (especially the free variety) provide a tremendous opportunity to drive mobile advertising and will benefit ad networks such as AdMob.

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Is Mobile Broadband Profitable?

The consensus opinion is certainly that mobile broadband is not a profitable business (yet)  in Western Europe (especially in countries like UK) where mobile broadband prices are trending lower than fixed broadband prices. I have always wanted to do a quantitative analysis. 

The analyst firm Informa claims that fixed-line costs in Europe are near Eurocent 0.1-0.5 per MB, compared with Eurocent 2-3 for mobile networks. We can use this number to compare the cost basis for various operators’ quota-based mobile broadband packages. For example, 3 UK’s package is as follows:

3_uk_pricing_plans

So if you use the 2 Eurocent per MB number, 1 GB costs ~20 Euros (or 18 pounds) significantly more than the 10 pounds that 3 seems to be charging for the 1 GB package.  Assuming a user who signs up for a 7 GB package uses ~2 GB, the cost for 3 to support that user is ~36 pounds which is still a lot higher than 25 pounds. I am not sure about you, but I sure don’t see how 3 is making money on these mobile broadband packages.

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