…A game of bluff but who has the most to lose?

Regular readers of this column, and there are surprisingly many, will know that the editor has been exposed to more Scottish football than is good for him, due to a Caledonian upbringing that left him with little traces of the accent but fond memories of football commentators Archie “Whoof” Macpherson and Arthur “Stramash” Montford. If boyhood Saturday nights listening to Arthur describe the latest event at Fir Park left any lasting benefit, it is surely the enthusiasm with which I endeavour to shoe-horn the word “stramash” into these regular observations on the mobile industry. But now two events have occurred which give me a real chance to invoke the spirit of Dundee United’s 1984 back four, and get stuck in. As aware as I am that the vast majority of readers are now searching ever-more frustratedly for the point, I will come to it. Digital Rights Management. Not, of course, the sexy end of the mobile content world. No, that is best illustrated by the type of content launches Orange held at the end of March, in which a corporate entity of increasing blandness seeks to appropriate a little Rawk coolness by slipping its partner record company an extra fiver to persuade its latest hot property to turn up to the launch, thereafter to play a “set” to assembled hacks, industry analysts and other leeches whose last gig was to see the pre-revival Duran Duran.

Not, of course, that the mobile industry or record industry has ignored DRM, indeed the seeming settlement of such issues was what lay behind several recent music download service launches and the shaking of hands and general agreement never to mention the ringtone debacle again. So imagine the music community’s surprise when it turns out that the licensing issues behind this new accord are far from settled. Indeed, the patent holders for the main DRM “standard” turned round and asked for a dollar a handset and a cent a transaction. Result? More howling than Aberdeen-era Fergie and Big Jim Maclean doing battle over a tense 1-1 draw at Tannadice. So back came the patent holders with a revised offer – namely 65 cents on the handset and 25 cents per sub per year. So if you have five million subs, and 10% of them use the DRM solution just once, that’s 125 big ones to you, Mr Operator, every year, just as an operational expense. Is that a better deal than a cent a transaction? Well, at a cent a go an operator would have to process 12.5 million transactions to reach the same number. Of course, there is no limit on the downside to the operator this way, but given the same 500,000 user base, that’s 25 transactions a subscriber, or roughly two a month, plus one for Christmas. This of course will all be worked out on something more than the back of a beer mat I have in front of me at the moment, as these things are, but michty me whit a stramash.

Content providers we have spoken to are reasonably surprised, some in fact expressed it in stronger terms than that. Ultimately, it seems licensing costs will have to come down. If not the patent holders face being ignored in favour of a range new solutions that the operators consider offer more equitable terms. It seems unlikely the powers that be at the OMA will be willing to let that happen. But the OMA patent holders know they have one trump card, which is that the operators and vendors have been hailing OMA DRM as the de facto standard, and swapping to a new mechanism is not as simple as all that. In the end, our best guess is a compromise and future work to develop more open standards beyond OMA 2.0. There’s surely too much invested on all sides to seek alternatives on a wide scale.

Charles Simmons is president of Spirent Communications’ Wireless Division, which provides test and analysis systems and equipment to mobile operators and handset manufacturers. His division helps wireless equipment manufacturers and operators develop and deploy networks and services more efficiently. Although Spirent is perhaps best known in its home market in North America, Simmons says the experience his company has will add significant value to European operators as they roll out more complex handsets and services on WCDMA and HSDPA networks. Keith Dyer heard how Simmons plans to help operators add new capabilities to their test programs and speed up time to market for handsets and services.

Mobile Europe:
Charles, as some readers may not be aware of Spirent as a whole, perhaps you could give us some idea of the structure and background of Spirent.

Charles Simmons:
Spirent plc has its corporate headquarters in the UK and is divided into three groups: Communications, Network Products, and Systems. Spirent Communications is one of the world’s leading suppliers of telecommunications test equipment and is made up of three business units. Performance Analysis – Broadband is based in California and is a leader in the testing of broadband network infrastructure, such as GigaBit Ethernet systems and wireless core networks. Next is the Service Assurance business unit, which specializes in service assurance solutions for network testing and trouble diagnosis.

The division I run is Performance Analysis–Wireless & Positioning, which offers equipment and systems for testing wireless and positioning devices. Our primary focus is mobile handset performance testing. A key area of focus for us is the air interface, the physical wireless link between the handset and the base station. Our RF channel emulator, for example, emulates the air interface environment to help test handset or base station receiver performance.  We have solutions for handset testing at the physical, protocol and application layers, as well as those that target specific services. At a services level, our UMTS Location Test System automates testing of the performance of a handset designed for use with the high-accuracy location technology Assisted GPS.

Mobile Europe: As president of the wireless division, how has the mobile market compared to other markets within which Spirent operates?

CS:
While the entire industry has had its ups and downs, our wireless business has really been positive from 2000 on. The wireless market in general may have had a downturn or two but nothing like what we saw in other communications sectors. Our division has stayed well-positioned through this realignment, and in fact 2002 and 2004 were exceptionally good to us. From the point of view of Spirent as a whole, the wireline business is still bigger, but it’s safe to say that our recent wireless growth has been higher in terms of percentage.

Mobile Europe: So what, from your point of view as a provider of test solutions and services, has been driving that growth in the wireless business?

CS:
In the wireless business the most growth in 2004 was due to high-speed data service deployment, in particular the roll out of EV-DO within the CDMA2000 market in Asia and North America. That rollout has had the add-on effect of accelerating UMTS development. For example, our experience in North America is that non-CDMA operators feel an urgent need to introduce competitive high-speed data services. So, the deployment schedule for WCDMA and HSDPA has become more aggressive, accelerating deployment schedules worldwide.

Mobile Europe:
So how does network and handset testing play in that background of operators being faced with faster time to market for high speed data services?

CS:
For example, operators carry out much of their handset testing on real infrastructure or they wait until they can do field-testing on a live network. But we have solutions that emulate a complete WCDMA network in the lab, which gives you a level of flexibility and control you could never have on the live network. Layered on top of that is our ability to carry out specific testing at the applications level – things like Location Based Services, Push-To-Talk or high speed data. This testing can be carried out on an automated basis in the lab, testing more functionality of the handset or terminal in a shorter time and helping to minimize problems when services are deployed.

Mobile Europe:
You’ve talked of your experiences in the US market, how will that help operators in Europe?

CS:
In Europe we have market presence in four different areas. First, our physical layer test products emulate the air interface, or the physical wireless channel, are used by both base station developers and terminal equipment manufacturers.

The second area is the conformance test market, where the 3GPP’s 34.121 RF test standard dictates test cases and pass/fail criteria. We’ve built on our deep CDMA subject matter expertise to develop our U-ATS system, which automates this kind of testing.  The third is performance testing. Here we go beyond the minimum requirements of conformance testing to determine by what performance margin that result was achieved. You can determine “break points” due to various conditions; you can characterize a product so you know whether its performance is good or marginal, or benchmark a wide range of handsets for comparison purposes.
The fourth area we are strong in is location-based testing for GSM and WCDMA as well as for CDMA. This is a key differentiator for us as we’ve leveraged Spirent’s leadership in GPS satellite system emulation and wireless network emulation.

Mobile Europe:
Could you expand on why greater depth in test methodology beyond conformance testing would be of interest to operators already hard pressed to ensure basic conformance of existing products?

CS:
Operators are very concerned about new products and services and making sure their associated user experience is positive. The general consensus is that every handset should be certified against conformance tests, but carriers are very interested in testing beyond that. Some carriers have their own acceptance test layered on top of the conformance test.

The complexity of WCDMA handsets and the services they must support goes way beyond what was needed for 2G – you didn’t have very many GSM operators testing beyond conformance. Operators are nervous about putting handsets on the market handsets just because they passed conformance testing.
An example is battery life — if the user expects three to four days’ use, and the battery dies after six hours, that subscriber is not going to be too happy about it. Performance testing can also find handset issues that aren’t even addressed in the current conformance specs and that could impact things of great interest to the operators, such as network capacity.

Mobile Europe:
You mentioned location testing as a differentiator, but the European LBS market is different from the US model.

CS:
Yes it is…back in 2001 in North America, the FCC’s E911 requirement forced operators and handset manufacturers to accelerate location technology development, and the flavor selected by CDMA operators was Assisted GPS, or A-GPS. GSM carriers selected a different approach that relies on measurements taken from the wireless network, not the handset. But the very nature of this technology means it is not as accurate as A-GPS.

In CDMA, Qualcomm has a market leading position and it made the decision to integrate A-GPS with its chipsets. In GSM and WCDMA there is a broader group of leading suppliers and we are seeing a wider variety of location technologies. Although I think we will see more integration of A-GPS into WCDMA/GSM devices, there is more work to be done here. We have sold significant numbers of GSM and WCDMA A-GPS test systems into Europe and believe that over the next two to three years you’ll see that much of the next-generation commercial LBS in Europe will be based on A-GPS.

Mobile Europe:
What do you think the impact of the introduction of high speed data will be on operators’ test methodologies?

CS:
There is clearly a push for high-speed data and the “killer applications” to take advantage of it. One “killer app” is LBS, as I’ve already mentioned.

A second potential “killer” service is Push to Talk (PTT), which hasn’t really taken off in Europe yet, though much European effort has been put into defining the PoC (PTT Over Cellular) standard. VoIP will drive a lot of new applications, and once you get HSDPA up and running you have huge opportunities for delivery of ‘triple play’ over wireless networks.

This puts Spirent in a good position…our Performance Analysis-Broadband division has a tremendous amount of expertise in triple-play and the underlying data technology and a lot of that core expertise can be brought to the testing of delivery of similar services over wireless. The same Spirent division has also developed expertise in performance testing of core network components such as GGSNs, which can become stressed as data volumes build.

Mobile Europe:
Once operators are faced with IP networks and services, their testing requirements are going to be far outwith their “known” GSM world.

CS:
It’s all about getting handsets and services to market with a high degree of confidence that they will meet or exceed subscribers’ expectations. Because operators have come to this market via GSM, some of them do not have a good feel for test issues for a CDMA-based handset. Many of the technology pressure points are new, and when you add high-speed data services over IP, and technologies like A-GPS, there’s a huge learning curve. To help transfer our CDMA technology test expertise to our customers, we provide professional services to help define and develop those test methodologies. We work together to develop test programs that go beyond mere conformance testing to ensure a great user experience of new services.

We have similar activities with CDMA carriers, and have been working for four to five years with the world’s largest network operators to provide that level of test product. What we’re seeing in CDMA is that operators are being inundated with handset models, applications and new software releases  to a point where it is difficult to keep up to date with testing requirements.  So we’ve worked with them to  automate this testing, and they’ve pushed more of it back onto their suppliers and saved a lot of their own time. As WCDMA evolves, we will see a similar phenomenon. Today the focus is on testing basic services, with not a lot on value-added services yet. That will ramp up quickly once we’re all past initial deployment.

The value we add to operators is in helping them accelerate their testing and deployment. The phase we’re in now with A-GPS is typical. We are able to work at the early stages of that technology and develop test methodologies and systems that align with handset manufacturers test needs.  When handsets are ready, there is already a test methodology available to the operators. This type of highly automated testing in the lab condenses test cycles and leads to a more successful deployment.

The number of devices supporting HSUPA (High Speed Uplink Packet Access) has increased 110% since October 2009 to 724 models, and more than half (364) support, or are easily upgradeable for 5.76 Mbps peak or higher data speed.

Smartphones are another strong growth segment, says GSA. Approximately 1 in 3 models of HSPA phones launched in the market today incorporate WiFi and GPS technologies.

Over 55% of HSPA devices support a peak data speed of at least 7.2 Mbps on the downlink (excluding notebooks and e-book readers). 50 HSPA Evolution (HSPA+) devices have been launched.

The HSPA mobile broadband devices eco-system extends to all the main cellular bands. A key trend confirmed by GSA in this survey is the boom in availability of HSPA devices which operate in the 900 MHz band (UMTS900), in support of mobile broadband network deployments in re-farmed (former GSM-only) spectrum. Excluding notebooks and e-book readers, 401 HSPA devices i.e. 19% can operate in the 900 MHz band, and user penetration is continuously building. This is an important point, particularly for markets in the Asia Pacific region, Europe, Africa and the Middle East.

While the main HSPA band globally is 2100 MHz, the 850 MHz band is very well supported by 940 devices (excluding notebooks and e-book readers), says the GSA.  The 850/2100 MHz frequency combination is supported by 806 devices, and 690 tri-band 850/1900/2100 MHz devices enable global roaming.

GSA recently confirmed that mobile broadband service is now commercially available on 357 HSPA networks in 148 countries. Almost 99% of WCDMA networks have implemented HSPA for fast mobile broadband connectivity, and approaching 1 in 5 of these networks have launched HSPA Evolution (HSPA+) for higher capacity and an improved user experience of mobile broadband services.

The gloves are off in the mobile broadband arena, with WiMAX and HSDPA ready to slug it out for dominance of a potentially lucrative market. Priscilla Awde takes a look at the contenders and their chances of victory

A battle royal is shaping up in the telecoms market driven largely by the hype surrounding the new disruptive broadband wireless technology, WiMAX. Although it has the support of some of the biggest equipment manufacturers, WiMAX is set to compete head-on with various fixed line architectures and with established 3G operators backing High Speed Downlink Packet Access (HSDPA), as the next network upgrade path.

Based on different underlying technologies, both WiMAX and HSDPA terminate traffic at megabit speeds on portable and eventually mobile devices, while improving performance and reducing costs by using wireless spectrum more efficiently. The question is whether there is room for both HSDPA and WiMAX or whether the critical mass already achieved by cellular operators will limit WiMAX to niche markets or as a means for fixed operators to add mobility.

Undoubtedly all major telcos are looking at WiMAX but to succeed it must compete against established technologies with easier upgrade paths and in which significant investments have already been made.

Developed from the older broadband fixed wireless access technology, WiMAX is interesting because different iterations of the IEEE 802.16 standard are designed for fixed (802.16d), and mobile (802.16e to be specified), networks. However, this wide ranging appeal could prove its downfall as it potentially addresses too many diverse applications and may lose its focus.
Amongst the more extravagant claims are that WiMAX supports data rates up to 70Mbps but, depending on the application, user experience is more commonly assessed at between 2-10Mbps.

Already WiMAX is evolving to carry high quality Voice-over-Internet-Protocol (VoIP), traffic so fixed line operators could be seduced by opportunities to offer mobile services in urban areas. Yet early deployments are unlikely to be able to compete either with the voice quality or the mass market already achieved by mobile operators. However adding voice to high speed data brings WiMAX into direct competition with 3G cellular systems which will be the real battleground for 802.16.

Fundamentally different

Based on Orthagonal Frequency Division Multiplexing (OFDM), WiMAX is a fundamentally different and new modulation scheme currently requiring new network build which immediately makes it a technology for competitive telcos or for those wanting access to new markets. Whilst WiMAX improves interference protection and supports higher throughput and therefore cost effective service delivery, existing mobile operators have already spent considerable amounts on building 3G networks and are therefore unlikely to invest again. It is easier for them to use HSDPA to upgrade their networks, increase capacity and speeds and achieve similar performance, economy and efficiency.

Most of the current debate is largely driven by silicon chip giant Intel which plans to incorporate WiMAX 802.16e into next generation lap top computers.

“The specification will be complete mid-2005 with products to follow in 2006, ramping up in 2007 for notebooks,” says Jim Johnson, Intel’s VP Mobility Group. “Putting 802.16e in city towers adds capacity for notebooks and PDAs. Mobile operators selling 3G want better data performance and can use the WiMAX specification transparently.

“The unique selling points for WiMAX are that it is easy to deploy and is based on IEEE standards so thousands of developers and engineers can create services. WiMAX will take off in similar ways to WiFi and Ethernet but equipment and subscription costs must be low. Every PC ships with Ethernet connections and soon all will incorporate WiFi and then WiMAX.”

Despite its very public backing of WiMAX, Intel is ultimately technology agnostic and therefore likely to support winning architectures including High Speed Downlink Packet Access (HSDPA).

As an evolutionary step needing only software upgrades to move from third to fourth generation W-CDMA (Wideband Code Division Multiple Access), networks, HSDPA is the logical choice for mobile operators. Using existing equipment and spectrum it increases the efficiency of downlink connections and the profitability of delivering multimedia content at high speeds. Expected in 2007, Enhanced UpLink (EUL), increases speeds and performance in the return path. As happened with the initial 3G launches, HSDPA will start with data cards for laptops and migrate to handsets as demand grows.

The first European HSDPA services are expected in 2006, although Japanese operators are expected to launch this year. Announced delays in specifying the 802.16e WiMAX standard and introducing equipment may ultimately affect its success. Fully mobile WiMAX services are not likely until at least the end of 2007 although services terminating on ‘nomadic’ or portable devices should be available earlier. However, by then HSDPA will have been launched for over a year and, if operators’ plans materialise, will already be supporting significant numbers of subscribers.

Believing customers care less about networks and more about convenience and cost, Alan Harper, Vodafone’s group strategy director nevertheless debates the merits of the different technologies. “HSDPA is an evolutionary step on the W-CDMA path and most major suppliers expect to launch early in 2006. Where does WiMAX fit? By the time it is commercially deployed in 2008, the first stage of HSPDA will have been rolled out delivering to customers at 1.5-2Mbps; then up to 4Mbps and between 10-12Mbps in the third stage,” he says.

“WiMAX and OFDM are more of a step change which can be built perhaps into the evolution of mobile architectures. They have potential in local access networks (base stations to devices), where an OFDM card could slot into existing base stations and antennae or become entirely new systems. There is a continual evolution of network technologies and a need to balance between actual customer demand and the business case.”

HSDPA, EUL and WiMAX 802.16e all improve the customer experience as well as the economics of delivering broadband mobile services. Although HSDPA and WiMAX are fundamentally different technologies it is likely both will have a place if operators are to maximise throughput, increase spectrum efficiency and meet the expected explosion in demand for broadband mobile capacity. Critical mass and easy upgrades make HSDPA and EUL the easy upgrade path for W-CDMA networks but mobile operators may turn to WiMAX for backhaul and redundancy.

Affected by WiMAX

It is not only the mobile sector which will be affected by WiMAX as the 802.16d version of the standard is a fixed broadband wireless technology capable of competing with Digital Subscriber Line (DSL), and cable. However, the falling costs of interconnect and of fixed line technologies combined with increasing functionality make last mile services in developed countries very competitive. Fixed operators with access to licensed 2.5-3.5GHz spectrum could use WiMAX to deliver up to 10Mbps symmetrical speeds in the last mile or for fixed/mobile convergence but most believe its applications will be limited to developing countries and niche markets.

Dave Murashige, VP of carrier strategic marketing at Nortel suggests 802.16d will create economies of scale making it a worthwhile alternative to DSL in niche sectors. “Fixed operators will look at 802.16d for wireless and to plan for 802.16e. Operators need to add functionality making the same dollar buy more speed, applications and features. The big battle now is to support cheap multi-megabit connectivity to any device.”

There is insatiable demand for broadband connectivity and low cost equipment in developing countries where wireless networks can be built anywhere regardless of geography. 802.16d also has applications in greenfield sites; for new entrants by-passing the public switched network or to backhaul fixed and mobile trunk traffic: all markets where it will compete directly with established global, two-way, broadband satellite systems. 

Already supporting unlimited capacity in the downward path and megabit return speeds, satellite operators supply fully managed end-to-end, high-speed global IP networks. The emerging DVB-RCS (Digital Video Broadcast-Return Channel Satellite), standard combined with smaller dishes, bigger spot beams, frequency re-use and economies of scale are reducing overall costs.

Whether WiMAX 802.16d competes or co-exists with satellites and fixed alternatives depends largely on competitive price/performance ratios and confidence in the standard.

Amrish Kacker, senior consultant at Analysys questions the WiMAX business case suggesting the fixed version will first be established in developing countries which have stopped building copper networks and then spill over into mature markets. On the mobile front, he believes: “Cellular operators could get into WiMAX to send data over another network, to expand capacity and avoid clogging up existing networks. Linked with WiFi networks in buildings, WiMAX could provide numerous broadband connections for homes and offices from one provider as well as portable data services. The end user business proposition in developed countries is not entirely clear.”

Bruno Potdevin, VP business development/marketing at Alcatel predicts WiMAX will move from niche to mainstream technology driven by savvy end users demanding always-on, high-speed broadband connectivity everywhere. “The next step is to combine broadband at home with mobility. Incumbents are moving to WiMAX for local loop services to give users symmetrical access. There will be a WiMAX connection to homes with in-building traffic dispersed via WiFi. Adoption rates depend on price which must be between DSL and GSM.”

In the final exclusive excerpt from their book, OpenGardens,  Ajit Jaokar and Tony Fish examine the mobile device’s role as the focal point of digital convergence

n the previous articles in this series, we have discussed the co-relation between openness and innovation. Specifically, we have discussed innovation from ‘garage developers’ working with the mobile Internet.

To recap, in this context, ‘garage’ means any entity not having a strong negotiating position with respect to the mobile network operators — i.e. they do not have a strong brand, manage a large community or have access to significant funds.  Also, as outlined in previous articles, openness implies ‘open platforms’, especially where platforms are hosted by the mobile network operator.

In this last article, we look at the wider issues related to openness, and the relationship between openness and digital convergence. 

Here, we argue that
a) The mobile device is the focal point for digital convergence.
b) That digital convergence will lead to a virtuous cycle, where operators will be forced to open their networks or perish

The convergence concept

Digital convergence is a much-maligned concept, but its time may finally have come, driven by the rapid digitisation of content, greater availability of bandwidth, increased processing power, and the Internet.

Digital convergence brings four previously distinct industry sectors in to contact with each other. The media/entertainment, PC/computing, consumer electronics and telecommunications industries are all collaborating much more closely with each other than before.

But crucially, they are also now competing with each other by deploying products that encroach into each other’s traditional domains; a TV can now function as a PC and vice versa.

Applications based around the mobile Internet now have a great deal of competition if they are to challenge for a share of the customer’s wallet.  The current strategy of the mobile operators seems to be to pen customers in to the ‘walled garden’ of content that they offer, but can the mobile Internet afford to remain closed in the hope that customers will stay within its narrow confines? If the network operators do open it up, can they hope that new entrants will not try to capture their traditional customer base? The biggest headache for the Mobile Network Operators is that ARPU will increase but not all of the extra income will come to them!

With all of the four sectors described above fighting for a greater share of the customer’s wallet, digital convergence has a direct impact on ARPU. 

Why mobile?

Looking at consumers’ consumption of technology and media today, mobile appears to be only a small part of the wider digital convergence domain.  When we wrote OpenGardens, we approached the topic of ‘openness’ from the perspective of the mobile Internet and the Mobile Network Operator. But, by its very nature, openness in mobility is a subset of the wider digital convergence across all sectors of technology and business.  Thus it seems restrictive to confine ourselves to openness on the mobile Internet.  So why do we say that an Open Mobile Internet (‘the open garden’) is crucial to the wider trend of digital convergence?

The answer lies with the consumer.  Consumers do not understand ‘digital convergence’; they are more interested in what they can (or cannot) do!  Though they wouldn’t describe it as such, what they see is ‘bi-centric’ convergence, i.e. convergence around two centres: the person and the home. 

The impact of bi-centric convergence is that the consumer is exposed to a range of devices and technologies all around them, and these devices have considerable overlapping functionality.  The consumer’s choice is between a specialised device (e.g. the ‘Stanley’ knife) or a generic device (e.g. a ‘Swiss army’ knife).

While specialised devices may provide the best solution for a specific requirement (such as taking a picture), the mobile device often provides a ‘good enough’ solution.  And the mobile device gets better each year. For example, the Samsung D500 is marketed as a mass-market phone but has a 1.3 megapixel camera, state of the art for a small, dedicated digital camera just a few years ago.  The mobile device is also ‘handy’; it provides an instant solution (‘capturing the moment’), which is good enough for most requirements.

With the mobile device becoming the digital ‘Swiss army’ knife, the basic functionality of a phone (voice calling) has been supplemented with an mp3 player, digital camera, radio, games player and even television. While the mobile device will never replace the specialised device, it will be the device most often used by consumers to access digital content, even though there are other devices that can provide a technically superior solution to a particular problem.

Thus, we believe that, starting with 3G, the mobile device will be the focal point of digital convergence purely because customers will use it most often to access digital content. It is this observation that makes the mobile Internet crucial to the wider digital convergence.

There is already increasing evidence to support this line of thinking: well above first estimates, the final count of cameraphones sold in 2003 was 84 million, almost twice the 46 million ‘traditional’ digital cameras sold. Nokia now sells more digital cameras on its phones than any camera brand. The estimate for 2004 is 169 million camera phones according to Strategy Analytics, meaning that in just three years, cameraphones will have surpassed the population of conventional digital cameras. (Sources: Business Week Apr 12, 2004 and TomiAhonen Consulting Estimates)

‘Openness’ — the impact of digital convergence

Given the importance of the mobile Internet in digital convergence, what impact will digital convergence have on openness within the mobile Internet?

The answer lies in understanding two effects of digital convergence:
a) The competitive impact of new entrants to the mobile Internet
b) The technical fragmentation from diverse and complex devices and standards

To examine the competitive impact, take the recent example of developments in the TV market.  In the UK, mobile operators are running trials of TV delivery to mobile devices (including O2 in Oxford), and the fixed-line telecoms players are also trying to enter the television domain through high-speed DSL lines. There is nothing preventing someone launching a mobile-only or DSL-only TV station.

The new competition will most likely lead to a greater number of channels.  Many smaller channels means more opportunities, and more pressure to create standards so that content translates across multiple channels and systems can speak to each other; an open garden.

A more diverse competitive ecosystem demands more openness.  And a more diverse technological ecosystem — many players, various devices, numerous content types etc. — tends towards the uptake of open source. Unless operators and manufacturers open up at least a part of their platform solution, third-party collaborators will not come in to tweak content for multiple devices. If there are few or no third-party developers tweaking the source code to cover a large number of devices, we are left with a fragmented marketplace, much as we have now. 

At best, this means a dumbed-down, lowest common denominator set of applications that may never achieve broad appeal. At worst it means a deeply fragmented marketplace with no chance of achieving the full revenue potential of the mobile Internet. We do not argue that there is no revenue on the mobile Internet. If that were the case, we would not have the numerous ringtone, games, and wallpaper etc. companies prospering as they are today. The problem starts when we explore the expansion beyond these traditional content types.

This fragmentation problem coupled with new entrants to the marketplace creates a pressure on the profitability of the entire industry. It affects the largest mobile operator and the newest entrant equally.

Coming back to mobile TV, anyone who has tried to deliver ‘polyphonic ringtones’ knows that there are multiple standards and devices that need to be addressed. This situation only got worse with the advent of MMS as screen sizes and data formats became even more diverse.

With mobile TV, the complexity increases by a further factor. So, rather than the service provider trying to cover every device, and every format on every device, would it not be better to release the API in open source so that developers could make the application work for the device of their choice?

Thus, the effects of digital convergence — competition from new entrants and technical fragmentation — will lead to more openness. Operators will be forced to open their networks, or perish.

In conclusion

The mobile Internet uses the same protocols as the fixed-line Internet, but that does not make it ‘open’.  The lack of openness on the mobile Internet is not a technological but a commercial issue. As we have outlined above, we believe it is in the industry’s best interests to embrace the OpenGardens philosophy. The commercial implication of increased digital convergence is a ‘larger pie’ and thus a chance for all players to gain.

The forces that inhibit the progress of Openness are many and are driven by deep vested interests. We do not advocate a free-for-all, Napster-like environment, but the current ecosystem inevitably leads to a fragmented environment, which can only be overcome by consolidation to a single monopolistic entity — a situation almost no-one in the industry wants to see. 

When viewed from this perspective, the move to an open approach becomes mandatory, rather than ‘nice to have’.  If the industry is to move beyond the basic ‘song and dance’ applications that we see today, then an OpenGarden must be the future.

We welcome your views. Contact us through www.opengardens.net