The next 5 years will bring huge changes to the mobile network industry. Network operators will see revenue and usage from voice telephony & SMS decline, while new communications apps will mostly be driven by context & design, not 3GPP standards.
4G networks will continue to be deployed, with 5G coming into view - but data traffic may not grow to the degree expected. WiFi is growing in important - but will only have limited integration with cellular. Net Neutrality concerns will continue to rumble - but most of the new "ideas" like paid priority or sponsored data will fail.
We will also see "multi-stakeholder" issues coming to the fore, where regulators will need to ensure the telecom industry encompasses the needs of users, venues, app developers, IoT companies, brands & Internet players. That said, attempts by Apple and Google to enter the cellular space with SIMs and MVNOs will remain niche
Mobile Telecoms Tech & Market Disruptions - April 2015 Version
1. Mobile Telecoms Disruptions 2015-2020
Dean Bubley, Disruptive Analysis
April 2015
dean.bubley@disruptive-analysis.com @disruptivedean
2. About Disruptive Analysis
Tech/telecom analyst house & strategic consulting firm
Cross-silo, contrarian, independent
Forecasting & anti-forecasting
Consultant & advisor to telcos, vendors, regulators & investors
Speaker at 30+ events per year in Europe, US & Asia
Reports on Mobile Broadband, WebRTC etc
Twitter @disruptivedean Blog: disruptivewireless.blogspot.com
Copyright Disruptive Analysis Ltd 2015April 2015
Many of the topics covered in this report tie into more detailed comment
pieces on the Disruptive Wireless blog
3. Coverage of this document
Introduction – overarching trends & challenges in telecoms
Reshaping the comms, telco service & Internet landscape
Future of Voice (& video, messaging, WebRTC, context etc)
Service innovation / service curation for telcos
New roles & value chain (Apple SIM, Google MVNO etc)
The market, technical & regular battles for the mobile data
4G, WiFi, 5G networks
Spectrum considerations
Net Neutrality, zero-rating & sponsored data
Dangers of “creeping cellular-isation”
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This document does not give all the answers or cover all strategic
areas. Contact information@disruptive-analysis.com for a custom
private workshop or advisory engagement
4. Telecom Megatrends: Heterogeneity
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Standardised services Designed & differentiated
services
Standardised telecom
operators
Diverse stakeholders &
participants
Standardised
customers & metrics
Subscribers, users,
developers, Things
Standardised vendors
& eqpt
Cloud, NFV/SDN, IT
players, open-source
Standardised telephony
& SMS
Embedded & contextual
comms
Key question for telcos & regulators:
Embrace heterogeneity, or try to re-impose homogeneity?
6. Top-level strategic options & threats for telcos
Copyright Disruptive Analysis Ltd 2015April 2015
Mainstream
Evolution
Digital
Innovator
Vertical
Specialist
Diversified
Portfolio
Business
Services &
Wholesale
Focus
Evolved messaging
voice / video
7. Fragmentation & “OTTs”: The best tool for the job
Copyright Disruptive Analysis Ltd 2015April 2015
Telcos vs. “OTT” is a logical fallacy (false dichotomy)
Telecom industry thinks of “voice” & “messaging” as services
In fact, they are capabilities for a given use / purpose
10. VoLTE: Slow growth vs. contextual headwinds
Core business of telephony under threat
Competition from direct & indirect substitutes
“Official” new standard of VoLTE is too little, too late
Bundling & data-led prices just delay the inevitable
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Source: Disruptive Analysis
LTE uptake not mirrored by VoLTE use “Phone calls” slowly becoming obsolete
11. Peak telephony a reality in developed markets
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136%
74%
63%
40% 38%
15% 15%
5% 5%
1% 0%
0%
-7% -7%
-12% -14% -14%-20%
0%
20%
40%
60%
80%
100%
120%
140%
160%
IND CHN BRA RUS POL SGP FRA AUS JPN ITA KOR
GER NED USA ESP SWE UK
Source: Ofcom, IHS, Disruptive Analysis
Aggregate Fixed+Mobile Outgoing Voice Telephony
Volumes, Minutes, 2013 vs. 2008
12. VoLTE Status (GSA, Jan’15)
Copyright Disruptive Analysis Ltd 2015April 2015
• 50-100 VoLTE
networks expected live
by end-2015
• ViLTE video irrelevant
• RCS useless & unused
• Most will not reach all
areas / subs / phones /
usage
• Complex & costly
• Needs IMS, upgrade to
core network etc
• Telephony v1.1 not a
ground-up rethink of
voice
13. WebRTC: #1 catalyst for voice / video evolution
Puts voice/video into
browsers & mobile apps
Enables thousands more
developers to do comms
Can be used to extend telco
voice/VoLTE too
Oppo’s for telcos in PaaS,
enterprise comms, UC/DUC
But will be very fast-moving &
very crowded
Players include Google,
Ericsson, Cisco, Avaya etc
Leading telcos: Telefonica,
NTT, Telenor, AT&T, Tata
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0
1000
2000
3000
4000
5000
6000
7000
2011 2012 2013 2014 2015 2016 2017 2018 2019
Other (TV+M2M/IoT)
Smartphones
Tablets
PCs
WebRTC-enabled
devices, m installed
base, year-end
Source: Disruptive Analysis Q1 2015 WebRTC update
Next phase of voice/video innovation starting now
14. Two equal domains for telco service innovation
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Network-
based
services
(IMS, SS7,
IPTV etc)
Non-network
based
services
(Telco-OTT,
partners etc)
Internal telco APIs, NFV resources,
bundling, OTT extensions etc
16. New stakeholders in telecom services creation
Copyright Disruptive Analysis Ltd 2015April 2015
Telco /
MSO
End-user
Vendors &
standards
Services creation
Experiences
consumption
Experiences curator
Experiences designer
Experiences developer
Cloud
API
player
IT vendor
Platform creation
Open-
source
In-house
develop-
ment
Element creation
17. SIM-card evolution: Apple & beyond
Trend Likelihood / extent Impact on MNOs
Full Soft-SIM & MVNOs by Apple etc Limited / theory only
Major risk but likely far
off / never
eUICC for M2M Already starting Beneficial
Programmable / eUICC for tablets Apple SIM
Poss up/downsides,
sentiment hit
Programmable / eUICC for phones Maybe. No signs yet Risky but complex
Multi-IMSI M(V)NOs
Existing but niche eg
Truphone, Google
Minor impact
Multi-SIM devices Common Easy switching
MNC liberalisation, new MVNO models
Slow & patchy
changes
Unpredictable
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18. Google Fi MVNO
Announced April 2015
Interesting, but only trial stage & some good / some bad aspects
US-based, uses multi-IMSI SIM on T-Mobile US & Sprint
WiFi via a curated network – details of locations/partners unclear
Only available on $650 Nexus 6 device ($27/mo financed)
Not cheap for US domestic use at $20/mo + $10/GB + taxes
Good value for outbound US roamers as $10/GB in 120 countries, 20c/min
Allows multi-device telephony & SMS, but needs Hangouts for this
Unclear data/privacy implications – but auto-VPN use on WiFi is cool
Model is very hard to extend internationally (MVNO regulation & deals,
porting number to Google Voice/Hangouts, data/privacy etc)
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Overall: worth watching & some nice ideas, but not a big deal for now
19. Data traffic growth: is there really a “tsunami”?
Rapid growth of 4G user-adoption & continued network deployment….
… 500m+ subs, but next billion users will be lower-ARPU / data-users
Many forecasts overlook shift to prepay segment (& use of WiFi)
Mean data-use brought down by late-adopters (falling median)
“Congestion” just a convenient pseudo myth to persuade regulators / ITU?
Copyright Disruptive Analysis Ltd 2015April 2015
0%
50%
100%
150%
200%
250%
'11 '12 '13 '14 '15 '16 '17 '18 '19 '20
Subscriber numbers
Data per subscriber
Smartphone 3G/4G data traffic growth
Source: Ericsson, Disruptive Analysis
Dominated by
subs growth
Unrealistic view of
usage growth in
prepay-dominated
market?
0
500
1000
1500
2000
2500
3000
3500
4000
4500
'12 '13 '14 '15 '16 '17 '18 '19
Postpaid
Prepaid
Mobile data subs, year-end, m
Source: Disruptive Analysis Mobile Broadband report
Mostly fixed
monthly quotas
Incentivised to
use less data?
20. Traffic & spectrum forecasts overcooked?
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585% increase in 4G users
149% increase in 4G usage
Early adopters = heaviest
Late adopters use less
Traffic growth mostly subs #
Incremental use grows slowly
M2M/IoT mostly small
Only c10% cells congested
Source: Vodafone
21. Application-based mobile data models
Mobile Data
models
Neutral open
access
User pays
for all data
Certain data
zero-rated
Certain data
sponsored
Partial
Internet
access
Specific
applications
allowed
Specific
applications
blocked
Differentiated
Internet
access
Paid priority
“specialised”
services
Differentiated
Wholesale /
MVNO
Copyright Disruptive Analysis Ltd 2014April 2015
Many of today’s mobile broadband plans
“Fully neutral mobile Internet”
Data treated equally, charged
differently: “Grey Area”
Data treated differently by network
“Non-Neutral”
22. Neutrality, Zero-rating & “Specialised Services”
Ongoing debates in US, Europe, elsewhere. Asia more relaxed
No obvious major new workable sources of revenue
AT&T Sponsored Data very limited uptake. Bharti Airtel likely to be similar
Threat of future “Internet regulation” (eg TRAI) increases risk / uncertainty
Also mostly unworkable (encryption, definitions, mashups, WiFi, speed of change etc)
Prisoners’ dilemmas may drive lose-lose outcomes
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QoS, Sponsored Data etc have little
impact on potential mobile data revenue
Source: Disruptive Analysis Mobile Broadband report
Net Neutrality does not necessarily
impact investment: eg Netherlands
23. Sponsored data – attractiveness matrix
Copyright Disruptive Analysis Ltd 2015April 2015
Ads Web Apps BYOD
Ease of implementation
Ease of selling by telco
Ease of buying by client
Revenue potential
Impact on network
Reputational risk
Market maturity required
Workarounds/"gotchas"
Adjacent revenues/costs
Prevalence 2014
Prevalence 2019
Sponsored data for:
Good
Fair
Poor
Bad
Source: Disruptive Analysis “Non-Neutral Mobile Broadband” report, Dec 2014
Attractiveness for mobile operators vs. key criteria
24. Use of zero-rating will continue to grow strongly
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0
200
400
600
800
1000
1200
1400
1600
1800
2000
2012 2013 2014 2015 2016 2017 2018 2019
Global mobile Internet
users exploiting zero-rated
data, m, year-end, est.
Source: Disruptive Analysis “Non-Neutral Mobile Broadband” report, June 2014
Note: excludes non-Internet zero-rating eg of MMS & BlackBerry BIS data
25. Towards 5G - the underlying story…
“We need more spectrum to contain the forecast* growth of current
3G/4G mobile data uses & biz models.
We’re designing 5G to absorb many other uses, as well as
continued forecast* growth of the current ones, so we’ll need much
more spectrum in future too.
We’re not huge fans of WiFi & alternative mobile architectures that
consume spectrum, add competition & arbitrage, unless we can
integrate & control them. Or displace them entirely”
*rather aggressive & questionable forecasts
Copyright Disruptive Analysis Ltd 2015April 2015
26. The path to 5G
Lots of “visions”: 5GPPP, NGMN, 4G Americas,
GSMA, vendors, Japan, Korea, etc
Lots of politics: Telcos vs. Industry etc
Lots of hype & jockeying for position
Attempt by telecom industry to “own” WiFi & IoT
Lots of inter-dependencies on NFV, SDN etc.
Lots of “use-cases” or “profiles”?
Actual technologies way behind the promises
Key target date is 2020 Tokyo Olympics
Key interim point: Dec ITU World Radio Conf.
Copyright Disruptive Analysis Ltd 2015April 2015
Ultra-fast
mobile
broadband
Critical &
low
latency
Super-
dense
IoT
2015 2016 2017 2018 2019 2020 2021+
Use-cases &
requirements
Feasibility
studies
R&D,
prototypes
Formal
Standardisation
Early eqpt &
testing
1st commercial
deployments
New spectrum
& uses
27. Specifying 5G needs to be multi-stakeholder
Copyright Disruptive Analysis Ltd 2015April 2015
5G
MNOs
Govt &
cities
Large
Co’s
App/IT
Co’s
Users
Requirements
Telco
Vendors
M2M &
IoT
Acad-
emia
Web
Co’s
IT
vendors
Innovations
5G must not just be another telco/vendor-defined technology. Other parties –
Cities, App/Internet players, Transport & other players need to be involved
28. WiFi = multi-stakeholder & complex landscape
Copyright Disruptive Analysis Ltd 2015April 2015
User Mobile
operator
Venue
Fixed/cable
operator
App /
content
OS / OEM
Employer
/ sponsor
Many groups excluded
from standards /
regulatory discussions
Advertiser
/ brand
29. Do we need “WiFi Neutrality” regulations?
“Seamless handover” sounds compelling…
… until one considers that “seams” are decision-points users &
applications, about which network/biz models to use
Some early signs of concern among regulators about telcos dominating /
over-exploiting WiFi spectrum (eg Israel nearly banned WiFi offload)
Many 3GPP & related technologies aimed at integrating WiFi with cellular
(ANDSF, I-WLAN, EAP-SIM, Passpoint, HotSpot 2.0…)
Some add user utility & value, others reduce choice & options, or reduce
WiFi utility for other stakeholder groups
Who has “admin rights” over WiFi selection, on/off, preference lists etc. ?
Some arguments for specific instances (eg disallowing children access to
“fully open” 3rd-party WiFi, or enterprises choosing based on security)
Regulators have not addressed this issue so far. Little analysis of “3rd-
party WiFi as partial access competition to cellular”
Copyright Disruptive Analysis Ltd 2015April 2015
30. Other “Disruptive” trends & opinions
Privacy & encryption becoming more important post-Snowden
LTE-U / LAA has a lot of questionmarks, tech & regulatory
Lots going on with enterprise & cloud comms – watch MS
Lync / Skype4B, IM/social-centric & various PaaS
Trend to “disunified” comms out-stripping “unified comms”
Telco developer platforms struggle without “anchor tenants”
Security is a major oppo (& threat) for telecoms operators
SDN & NFV likely game-changers, but patchy & slow
IoT is important but fragmented. Watch low-power networks
Reach & impact of Apple, Facebook, Amazon, Google,
Microsoft cannot be underestimated. Watch capex & R&D
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