Alternative to pre-provisioning can boost sales and customer contact

Stuart Cochran, CTO of Evolving Systems, has advised that mobile operators consider a new technique to help drive up the activation of SIMs distributed through wholesale markets.

Cochran told Mobile Europe that the range of devices with embedded SIMs now includes devices such as laptops, notebooks and netbooks, personal navigation devices (PNDs), personal media players (PMPs), MP3 players, e-readers, high-end digital cameras and smartphones. This brings with it a new chain of players involved in the distribution and provisioning process.

But that isn’t necessarily good news for operators, according to Cochran.

“For the mobile network operator, these wholesale channels tend to result in a low SIM card conversion rate. The number of SIM cards distributed through these channels that convert into revenue-generating subscribers for operators tends to be lower than where the operator simply sells the phones, SIM cards and other devices directly through its own stores or via the Internet.

“So operators are finding that with the new distribution model, the overall cost of pre-provisioning SIM cards in the network is becoming ever higher. At the same time, operators risk being sidelined, if they can’t cost effectively support the distribution approaches demanded by consumer electronics manufacturers, mobile computing vendors, and industrial applications like M2M,” Cochran said.

An additional problem is that such embedded use is likely to drive greater pre-paid users – potentially making it more difficult for operators to engage with customers.

“Typically, if they are using the traditional pre-provisioning model for SIM cards, operators have no effective way of marketing to the end user at the point of first use. As no formal contract document will have been completed, the operator will have little relevant user information to drawn on,” Cochran wrote.

Evolving System claims to offer a solution to these issues through its process known as Dynamic SIM Allocation.

“Dynamic SIM Allocation (DSA) enables new SIM cards to interact with the provisioning process via the mobile network, despite not having previously been provisioned. It allows operators to eliminate upfront costs typically incurred using the pre-provisioning model. In particular, it helps them avoid the need to buy and commission more network platforms than required, merely in order to accommodate SIM cards that may never be used nor generate any revenue” Cochran claimed.

DSA allows the SIM cards to be activated when the customer’s mobile phone is first switched on and used. Decisions such as allocation of a phone number and selection of supported services are made at this point of first use, and any required information is collected from the customer via their mobile device.

Mobile phone numbers may be allocated automatically with the option of enabling customers to choose their number – either from a standard list or by adding a vanity golden number to their account. It’s even possible to allocate regional numbers based on the customer’s needs and location.

Although a relatively new solution, Evolving Systems said it has activated seven million SIMs through DSA, including four million in the last four months, and has three customers in live production – 3UK, MTN South Africa and Telefónica Móviles México. Two Southeast Asian customers are due to implement the solution in the first half of this year, with a further African operator expected to follow later in 2010.

“By provisioning at the time of first use through DSA, they have an immediate opportunity for engagement and interaction and can gather missing information and deliver tailored marketing messages as a result.

“Critically, in the new age of mobile broadband and connected devices, using DSA enables operators to be both device and location aware. After all, there is a major difference between the kind of marketing message suitable for delivery to a feature phone connected to a GPRS network and that which is appropriate for a mobile broadband network connected iPad with a large colour screen and multi-touch capability,” Cochran concluded.

Everyone makes a profit, and performance is best in class

Ubiquisys has said that it can profitably support the production of sub-$100 femtocells. Ubiquisys announced this week that SerComms’s G3-mini is the first example of a “new generation of low-cost femtocells” that can come in at under the $100 mark.

One competitor had questioned how Ubiquisys can support that number profitably. “I thought it was a strange thing to announce,” the industry player said to Mobile Europe. “Is it achievable, can anyone make money at that price today? It’s not enough to stay in business at today’s volumes.”

But Keith Day, VP Marketing Ubiquisys, said that the company’s hardware and software designs can support manufacturers in the profitale production of femtocells that fall “well within” the $100 mark without compromising performance.

He added that the number has been reached without factoring in massive volume production. The first order to attain that sub $100 mark was for 100,000 units, he said.

“We make healthy margins at below $100. We are a small UK company that does nothing other than make femtocells. We have to answer to our shareholders and be sustainable. In fact, we deliberately waited to talk about this because we didn’t want it to appear as just a publicity stunt before we started to implement it with manufacturers, get a robust product, and get orders.”

“How do we do it? The process is fairly clear. We have encapsulated the radio bit and a lot of femto deployment expertise into our Femtocell Engine software. By doing that we can help manufacturers deliver femtocells without the need for them to have 3G radio or software expertise,” Day said. “They can also benefit from efficiencies of production through our customizable hardware designs.”

Day added that performance need not be affected. Some competitors have proposed that cheaper products can be produced with less sophisticated RF designs, where operators can deploy femotcells in a sole carrier. But Day insisted that the Ubiquisys femtocell has been designed “from the outset” for use in shared carriers.

“I see people writing things like that on blogs and articles and it makes me want to jump in… We think the G3 mini is best in class. It is eight calls and has real time continuous self-organisation,” Day said.

One industry source also raised the issue of whether the sub-$100 selling price includes IPR licenses due to the likes of Qualcomm and Ericsson.

Day said, “That’s a more complicated question to answer. The answer is, it depends. The IPR is given to whoever’s brand is on the femtocell, which is sometimes our name and sometimes not. But IPRs wouldn’t put our femtocell over that $100 mark in any case.”

Colibria keeps hold of SIP/SIMPLE assets

Synchronica has bought Colibria’s IMPS business, plus its social networking gateway, Windows Live Messenger Gateway, and its App Centre.

Synchronica CEO Carsten Brinkschulte told Mobile Europe that the key aspect of the deal is to acquire the operator customer base, as well as future revenues.

The transaction will see Synchronica take over responsibility for Colibria’s 13 operator contracts, as well as 46 people. It is paying $750,000 in cash, plus two tranches of new shares, for the mobile-IM focused business assets of Colibria.

OMA IMPS (Internet Messaging and Presence Server) is a standard protocol used to provide mobile IM and presence-enhanced messaging services. It is specified in the GSMA PIM programme for interoperable mobile IM, meaning that some operators building their own IM communities have used IMPS with a view to interoperating with other communities. But IMPS presence servers and gateways can also be used to open up online communities, such as GoogleTalk, to interoperate with users of “operator” mobile IM communities.

Colibria’s technology will give Synchronica a ready-made and proven mobile IM technology to add to its Mobile Gateway 5 product, which includes push email as well as an OMA IMPS compliant presence server. In time, Brinkshulte said, the two products would be combined.

Colibria will keep hold of its SIP/SIMPLE assets, with which it addresses pre-IMS and IMS opportunities, including support for operators committed to the GSMA’s Rich Communications Suite path.

Brinkschulte said that he saw IMS and SIP/SIMPLE deployments as more geared towards mature markets, whereas Synchronica wants to take its services to the emerging markets. Operators’ “own brand” IM is seen as particularly relevant in emerging markets, though not exclusively in emerging markets. Telecom Italia and Optimus are two European operators with IMPS-based services.

Brinkschulte confirmed that as well as the IMPS assets, Synchronica has bought Colibria’s Windows Live Messenger mobile gateway technology.

“Microsoft has special requirements around the UI and technical protocols,” he said, “and carriers need to know that they are complying with Microsoft’s legal requirements.”

Mobile Europe has been waiting since this morning for a comment or statement from Colibria. When we have that, we will bring it to you.

Here’s Synchronica’s own list of what it has bought:
* Transfer of 13 carrier contracts, including two large carrier groups with an addressable market of more than 320 million subscribers.
* 46 Colibria employees, who will become part of the Synchronica team, ensuring the continuous development of the acquired products and support for transferred contracts.
* Transfer of two reseller agreements with a tier-1 network equipment provider and a leading messaging infrastructure software provider related to the acquired IMPS products.
* Colibria’s Instant Messaging and Presence Service (IMPS), which provides a complete, scalable and OMA standards-compliant mobile operator messaging service.
* Colibria’s Windows Live Messenger Gateway, which allows users to mobilise their Windows Live Messenger service.
* Colibria’s Social Network Gateway, which enables operators to provide an interactive and inclusive mobile social network service as part of an integrated mobile experience.
* Colibria’s dedicated App Centre, a collection of ‘software as a service’ solutions designed to add instant value for the user and boost revenues for the operator through increased traffic, premium services and advertising.

Less traffic per user, says comScore analyst, but much wider adoption

The mid to low tier was the fastest growing smartphone sector in 2009 in Europe, according to stats just released from comScore. comScore found that the fastest growth for smartphone adoption was for tariffs below €50 in France, Germany, Italy and Spain, and £35 in the UK.

Although adoption of high-end tariffs also showed good growth in the UK (60%) and France (43%), across the board it was the mid to low tier segment that topped the charts, with adoption of sub-€50 contracts growing 52% in France, about 40% in Germany and Spain and 14% in Italy.

That means that although operators are seeing a widening smartphone user base, they will not necessarily see the same lift in data loads – and with it the same data-profit gap – that they have seen with high end smartphones.

Despite recent offers for the iPhone at lower monthly tariffs, Alistair Hill, senior mobile analyst at comScore, said that tariffs at that range tended also to come with mid to low tier devices, typically Symbian devices or perhaps Android, although Android still has a very low market penetration overall.

“We are seeing that people who pay less on a monthly basis are also less intensive data users,” Hill said. “Yes, they are using smartphones and data services but these types of devices are not quite iPhones. They tend to be Symbian based devices that are not quite as smart as the iPhone.”

To support that, Hill said that 20% of users in the mid-low tier use their devices for data every day, against 32% of high end users.

82% of all users pay less than £35 a month, Hill added, so addressing that market with smartphone devices that drive mobile media use will be critical for operators.