Tag Archives: MSP

Mobile World Congress 2008 Barcelona

Next week in Barcelona we have the yearly Mobile World Congress, the biggest event of the Mobile industry. The theme for this year is “Ubiquitous Mobile Services”, but could have been well re-named as “Ubiquitous transformation”, as the industry is more than ever in a continuous change.

What are the main axes on which the industry is transforming, on which there will be a focus in Barcelona?

Universal Broadband:Wimax, Long Term Evolution (LTE) and 4G. Femto cells as part of the Digital Home
IP Transformation: “all-IP” networks are a reality for the transport and the Core Network. Evolution to IMS to enable Multimedia Services blended with Internet and Web 2.0
Mobile Entertainment: Broadcast Mobile TV, Interactive TV and Advertisement. Monetizing the knowledge of your customers. Enabling UGC
New business models: MVNO, wholesale, RAN sharing
New handsets: convergent smartphones (mp3, phone, camera, PDA, video, wifi, email…) with iPhone as a reference, as well as future Android. Also new terminals for specific use bundled with applications: health-care, metering, surveillance, automobile, or Amazon Kindle

Mobile Operators are threatened by smarter phones, and by Internet players, to become dumb pipes or pure Mobile Connectivity Service Providers (MCSP). Many MSPs will show in Barcelona how they are transforming, or planning to, to avoid becoming MCSPs. We will report it from Barcelona next week.

MSPs towards Mobile Connectivity Service Providers

Nokia N81 ovi

In the past, Mobile Service Providers (MSPs) have successfully managed to keep full control -and get a share of revenue- over the premium content delivered over their networks. MSPs were determined to retain customer ownership, and so MSPs created walled gardens under their control.

Thanks to that model, MSPs have been enjoying good revenues from premium content downloads -ringtones, ring-back tones, logos, games, songs or videos-, premium SMSs and premium rate voice services (80x numbers). To get these revenues, MSPs have not invested much in promotion, advertisement or improvement of the premium services. So far, MSPs owned the customer billing relationship, and simply taxed content providers to reach the mobile operators customers, leaving many times the promotion on the content provider side.

As mobile data bitrates increase with 3G (UMTS, HSDPA or EVDO), and as handsets become more intelligent – iPhone, Android, Windows Mobile or Symbian-, MSPs premium content model is under threat.

MSPs does not seem to realize that if they do not invest in improving and promoting their own value added content services, they will be bypassed by Content Providers, and will be relegated to Mobile Connectivity Service Providers (MCSPs), or in short dumb pipes.

Recent news about Ovi (Nokia’s content services venture) rolling our N-Gage games confirm the threat. iPhone will kill any music download service an MSPs could have, to be swapped by iTunes. Google already has applications like Gmail and Google Maps, that can be installed in most smartphones. Unlike with RIM, operators do not get any revenues from the Gmail in mobile phones. This will not improve with Android.

Data usage is the only revenue MCSPs will be able to retain, but with the move to data flat rates, MCSPs will not even benefit from the growth in these services.

iPhone: Friend or Foe? Can Mobile Operators avoid turning into pipes?

There are two major conflicting trends in Telecommunications :

1) Internet driven: the intelligence and applications move to the end-devices (Smartphones, laptops, Servers…)

2) Telcos driven: Operators need to retain control of the Services delivered through their networks

On example of these two trends are: Skype vs IMS.

Skype corresponds to trend 1). The application is running on PCs or handsets, and the Service is offered directly by Skype, independently of the Operator that provides simply IP connectivity.

IMS (IP Multimedia Subsystem) is standardized by the telco industry – 3GPP and others-. It aims at providing multimedia services over an IP network, with the Service fully controlled by the network Operator that guarantees reliability, interoperability with other Operator’s networks and Quality of Service. Something that Skype can not offer, due to the nature of Internet.

So far, Mobile Service Providers (MSPs) have fought to retain control of their services and to own the customer, while opening their networks to Applications partners.  MSPs have been relatively successful in monetizing all premium content services delivered through their networks, including: ring-tones, games, wallpapers, logos, videos, TV-shows televoting and other SMS premium services. This business model is based on revenue sharing with Application/content partners.

While MSPs have successfully keept Service control, the usage of mobile Data Services has not gone into mainstream yet, mainly because the data capacity offered by GPRS/EDGE was too limited and charges were too high.

With 3G and HSDPA widely commercial in many markets, MSPs re-position their Data Services as Mobile Broadband with flat fees, volume capped to avoid congested spectrum.

Some Operators see the increase in data capacity as an opportunity to sell more premium content than before, including bandwidth intensive video applications, or music -e.g. KDDI selling music, Testra launching a Rich Media video service for 3G-. But some other MSPs seem to be giving up, as they accept a mere Internet Pipe role and give away the applications to Internet players, losing any option to monetize those applications offered through their networks. e.g. MS messenger, mobile Gmail, Google maps or even Skype for VoIP… and iTunes for Music.

Mobile Operators have a trusted billing relationship with their clients which should enable them to easily monetize any Services accessible through the mobile to the clients they own.
That was the theory over the past years. In reality, today Internet players are also building a trusted relationship and do not need the Operator anymore.

MSPs worldwide rush to sign exclusivity agreements for iPhone launch, but apart for the short-term gain of signing-up the higher-ARPU subscribers that will own an iPhone, Operators are giving Apple the full control of the applications .


iTunes songs will be sold over the MSPs networks, same as it is in fixed broadband today. What revenues will the MSP get from those songs sold by Apple? Zero.

With iPhone, Windows Mobile and Android coming into the picture, the situation is not likely to improve for MSPs.

Mobile Operators will get a higher demand for flat fee Data Access, which is already  good, but they can start forgetting about monetizing premium content, unless they seriously invest to reverse the trend.

Fixed Broadband operators with IPTV, are showing that the trend can be reversed. As Telefonica’s Imagenio IPTV Service illustrates, the Operator can play a key role in content distribution over their networks. Again, it requires vision and determination, as Telstra, KDDI or Telefonica have, to transform themselves and become a player in the entertainment industry.