Right Now, "Speed" is the Killer App for LTE

Many observers would argue there will be no "killer app" for Long Term Evolution fourth generation mobile networks, though virtually everybody expects new apps to develop, at some point. No killer app?

It might be more accurate to say that, at first, the 4G killer app will be "speed and lower latency," compared to 3G. In that case, "speed" is not a "unique new app," but is the value driver.

In fact, speed is a "default" killer app, by design, in some markets where new networks launch with an exclusive focus on PC modems. In that case, the current killer app is mobile broadband access for notebooks and PCs, but "faster."

The largest LTE device segment will be PC modems through 2014, as operators initially focus on mobile broadband access for PCs, argues Pyramid Research.

But after 2014, the PC segment will be replaced by smart phone connections. In that case, one might simply argue that Internet access is the killer app, as it has been for 3G networks. But it also might be argued that entertainment video or various cloud computing services could emerge as key apps that require broadband access.

In 2016, Pyramid Research forecasts there will be 592 million  LTE subscriptions in service, equivalent to 7.3 percent of all cellular subscriptions at that time.

Orange's LTE/EPC Program Director Rémi Thomas says "LTE is not driven by a killer application, but it will essentially be driven by capacity needs," said Thomas. No Killer App for LTE


In other words, the killer value is simply "faster access" to the Internet. Perhaps that is all consumers will require, or that developers will build upon. But some think new apps specific to 4G capabilities could emerge, rather than being "planned for." Killer app is a myth


Other candidates for eventual killer apps might be those which are cloud-based and therefore offer better or new functionality; video services; gaming, telemetry or other "new" apps we haven't discovered yet. Some of us would say the unique "killer app" for 4G is the personal Wi-Fi hotspot. It's an app that is used on 3G networks, but arguably works much better on 4G networks. 


It would be perfectly fine, in one sense, for "faster" to be the unique 4G network value, at least initially. But there are good reasons why service providers would love to discover some novel app that becomes really popular. As was the case with text messaging, large new revenue streams would then be possible. LTE Devices and Applications

Execs Differ on "Simplicity or Value" in Mobile Pricing

Usage-based billing is not the ideal solution to manage usage of mobile broadband capacity, nor is it the solution consumers prefer, one study of European mobile consumers suggests. A separate study suggests that, despite those findings, mobile service provider executives would rather bill by usage.

In other words, although many suppliers believe service providers would be better off using more-complex pricing schemes, service provider executives tend to prefer simple usage-based mechanisms. To be sure, that reflects the industry’s heritage.

But many mobile executives seem to prefer simplicity, rather than “value-based” mechanisms. In recent days, there has been more thinking about how to manage mobile networks destined to face high congestion problems because of growing volumes of video consumption, for example.

So some think monetary incentives can be used to induce bandwidth-conserving behavior. For example,
the survey by Tekelec suggests that about 40 percent of respondents would prefer to have a plan that has restrictions on video usage, so long as the plan was about $5 a month cheaper than a plan without such restrictions, says Randy Fuller, director of strategic marketing at Tekelec. About 60 percent would buy such a plan for a $10 a month discount.

About half of respondents would consider buying a package costing about $5 a month more than a standard package, if it offered live video streaming, but did not count against a usage cap. Perhaps 43 percent would buy a video on demand service, if it did not count against a cap and cost about $5 a month more than a standard plan.

"It is amazing how many people ignore what consumers prefer, in terms of how they buy video," said Fuller. "Our hypothesis was that while video is between 30 to 50 percent of bandwidth consumption, it is less important than that, to consumers."

That’s one form of pricing according to value. "A lot of tiered pricing models head in one of two directions, buy a bucket, or allow consumers to make trade offs," said Fuller. "If you want to use more services that cost more to deliver, you pay for that, and that, essentially, is what we tried to think through."

At least for the European subscribers polled, video was fourth behind Web browsing, email and navigation services in perceived value. Instant messaging, music and social networking ranked higher than voice, in terms of perceived value.

In fact, when asked to rank the value of various applications as standalone applications, Web browsing was valued at $6.94 a month. Voice was valued at $2.91 a month.

“Pricing based on value now seems to make more sense to end users,” said Fuller. “Byte-based pricing is not optimal.” But the larger conclusion one might draw is that “there is no one rate plan that is best for different consumers,” said Fuller.

Mobile Internet offers should be segmented to match end user demand, said Fuller. In fact, that sort of thing is common in Austria, Germany, France and Poland, for example. Orange  in several countries has a “happy hour” plan where you get an hour of unlimited usage, no matter what plan you are on, said Fuller.

The point is that “people should have choices,” he said. The big difference between fixed and mobile is that mobile bits are more expensive to deliver, Fuller added. But the fundamental issue is that mobile networks will continue to be more expensive than fixed networks.

Mobile Internet pricing perhaps has to move to tiered pricing, but some forms are better than others, Fuller said. Plans designed for messaging could be different than plans supporting lots of video consumption, for example.

The simplicity of an unlimited plan will appeal to some people, but not to all. Others might be quite fine with plans that feature buckets of usage, so long as they have an easy way to track their usage and control it.
Segmentation will work, Fuller argues, and also will allow mobile service providers to match usage and the cost of meeting that demand. Many consumers in the study preferred unlimited Web browsing and limited video consumption, for example.

Still, mobile executives seem to prefer simplicity.

Leap Plans "Bursty" Pricing

Leap Wireless has announced it plans to launch session-based data services over its existing tiered data pricing structure, a move that will allow "Cricket" customers to purchase faster data speeds for short periods of time. The company said it will launch the service in the first half of 2012.


The ability to temporarily pay for expedited or faster access is one example of on-demand pricing, congestion pricing or value-based pricing. But Leap is relatively unusual among mobile service providers, most of whom do not yet see the need or benefits of moving to value-based pricing mechanisms. 

There always is a tension between operational simplicity and sophistication in retail customer packaging and network management. Simple approaches often are cheaper, but at the cost of forfeiting creation of more-nuanced subscriber plans.


Likewise, policy management tools that can prioritize and shape bandwidth consumption can help service providers alleviate congestion and provide higher end user experience, where regulators allow such tools to be used. But there appear to be lots of trade offs.


Most executives would agree that flat-rate billing for unlimited use is a difficult and likely unsustainable retail packaging model for broadband access, especially in the mobile services realm. 


But what should be the replacement? That seems to be a tougher question. There always is a tension between simplicity and value where it comes to pricing, billing and retail packaging. 



As a corollary, executives must weigh “pricing by value,” or “pricing by application,” which means more complexity for consumers, or some simpler “pricing by consumption” approach.


Leap CEO and President Doug Hutcheson appears to believe that "pricing by value" will make sense for consumers, and also can be made simple enough that consumers will understand the value proposition. 


"The next big step for us that we believe is important is to add what's called session-based capability on top of that [tiered pricing]," Hutcheson said. "And that will give us a lot more rate plan flexibility."


Cricket might have more incentive than many other service providers to do so, though, as Cricket competes in the value segment of the mobile market. That suggests users frequently might prefer lower monthly charges, but occasionally have the need to consume more data, or occasionally ramp up speed. 


"Should you have a very low amount of data but want to buy more within a month, you'll have the ability to buy sessions or time periods where you can accelerate that speed, and it will be done very simply and very straightforward over the device or on a simple transaction with us," Hutcheson says. Leap to launch session-based pricing

A related idea is that applications have distinct and different value, and that pricing could reflect end user value. Few mobile service providers have been willing to attempt that sort of pricing, either. 

Mobile Coupon Redemption Rates to Outperform Paper Coupons 800%

Global redemption rates of mobile coupons will average at over eight percent by 2016, Juniper Research forecasts. "So what?" you might say, but consider that paper coupon redemption rates are about one percent.

North American and Western European markets are now beginning to follow the same growth path as the Far East and China and by 2016 there will be over 600 million regular mobile coupon users worldwide.

Though some would dismiss the whole mobile coupon business as a bit of a fad, with difficult economics for providers and few barriers to entry, others might say such "daily deals and offers" will be quite strategic for mobile payments platforms.

The reason is simple: mobile coupons address the question of "value" for retailers and end users to adopt mobile payments systems. Since few now believe new mobile payments systems will save retailers much money in transaction fees, and since in most cases check out using a "wave" approach does not necessarily save a customer much time, proponents have the challenge of showing where the value lies.

Juniper researchers argue that mobile coupons are particularly strategic for bricks and mortar retailers in their quest to regain ground lost to online retailers during the Internet revolution.

A mobile coupon bridges the divide between online and physical retailing and can be individually targeted to drive customers into stores. Mobile Coupon Redemption Rates

Apple’s Siri Feature Doubles IPhone Data Usage

Apple's voice recognition software, Siri, seems to encourage people to make more intensive use of data on their iPhones. In fact, some iPhone 4S users studies by Arieso seem to have doubled their data consumption as iPhone 4 users and three times as much data as iPhone 3G users, Arieso says.


And though one might dispute what it actually means, Arieso also finds that one percent of all mobile data users now consume 50 percent of all downstream capacity. In other words, extremely-heavy users now have become even heavier users of mobile data capacity.


Those changes in behavior illustrate the reasons there will never be “enough bandwidth.” As developers and users find they have more processing power, memory and bandwidth, new input and output methods and types of devices, developers create new apps and features that use those capabilities, and as Arieso has found, people respond.


Decades ago, serious cable TV engineers would scratch their heads when, about every five years, it was possible to double bandwidth. “What will anybody want to do with all that bandwidth?” they used to ask themselves. Telecom engineers probably can recall having similar thoughts. But it happens. Bloomberg notes that Apple’s Siri feature alone doubles data usage.


The point is that users seem to consume more mobile network bandwidth every year for a variety of reasons, ranging from heavier consumption of video to heavier use of their devices for other reasons, and sometimes because applications require more bandwidth.


Consider the shift from web browser operations to use of mobile apps. As it turns out, using a mobile app is itself more bandwidth intensive than the same operation using a Web browser. So virtually every trend in user behavior and application behavior is pushing towards consumption of more bandwidth.


Arieso's study of mobile bandwidth use also found that Google Nexus One users make twice as many data calls as iPhone 3G users. Arieso network study 


The Arieso analysis compares the data consumption of users of the latest smartphones against the iPhone3G as a “normalised benchmark”. The study found that different users and different devices exhibit very different demands on the network.


The most significant change in consumer behavior between 2010 and 2011 is the finding that iPhone 4S users download 2.76 times as much data as users of the iPhone 3G.


And while an Android-powered device maintains last year’s position at the top of the table for uplink data volumes, with HTC Desire S users typically uploading 3.23 times as much data as iPhone 3G users, the iPhone 4S falls just behind in this category with a typical 3.20 times as much data uploaded, Arieso says.


Using the iPhone 3G as the benchmark, though, many other devices place differential loads on mobile networks. In terms of data calls per subscriber, for example, three devices over-index compared to the iPhone 3G.


Since mobile networks are limited by spectrum allocations in ways that fixed networks are not, mobile networks are going to require more intensive management than fixed networks, irrespective of any “public policy” concerns about potential anti-competitive behavior on the part of mobile service providers. 


Some would say the most pernicious idea is that “all packets should be treated alike,” in terms of prioritization. But all bits are not equally valuable, nor are all applications equally tolerant of congestion and delay. Voice and video are good examples of delay-sensitive apps, but any user also will attest that when buying an airline ticket online, delay and latency are important issues.


Since mobile networks feature more latency than fixed networks network management is more crucial, to maintain end user experience. Bandwidth consumption is one genuine issue. But latency is the other important issue.

Visa CEO Says Mobile Service Providers Will Not Become Banks

Mobile service providers will not become full-fledged banks, Visa Chief Executive Joseph Saunders predicts, even though some are doing so, and others are looking at it.

At first blush, the notion that mobile service providers would think about becoming banks is not logical. But the burgeoning interest in mobile-facilitated commerce, with serious mobile wallet and mobile payment businesses, is the reason the idea is not far fetched.

If one assumes that large mobile service providers have to find sizable new businesses to enter as their voice, text messaging and broadband revenue streams mature, there is one over-riding concern.

Firms that earn scores of billions of dollars every year have a scale problem when considering new businesses to enter. If a firm seriously faces the challenge of replacing half its current revenue over a 10-year period, then a firm now earning $20 billion a year has to find replacement revenues of $10 billion a year.

Small business opportunities will not do the job. And most who have looked at the matter generally conclude that only a few opportunities actually have $1 billion a year potential for each and every firm that decides to participate. Among them are mobile banking, machine-to-machine services, mobile advertising and specialized services for business customers.

M2M services, including all sorts of telemetry services, could be a big and totally new business, with key utility and medical customers, for example. Specialized services for business customers, taking the form of embedding communications capabilities into key business applications, likewise is a logical and sizable opportunity.

Advertising already is a huge business, as is retail banking. Some will argue that some form of participation in payment transaction fees is interesting. Others will argue that business simply is not big enough. And that is why some believe mobile service providers, no matter what they now say, will have to consider banking, not just mobile payments.

In Africa, that already is happening. Mobile operators as banks

Keep in mind that Visa is a payments clearing network, not a "bank." Mobile service providers, if banks, would be customers for Visa, not competitors. That is not true of other participants in the mobile payments business.

Saunders also says Apple is a customer that could someday become a competitor, while PayPal already is a competitor, albeit one that also uses the Visa network to clear about half its transactions.

Visa Digital Wallet For Growth

Sprint Puts Investment in LightSquared on Hold

Sprint Nextel Corp. says it has put its investment in a partnership with LightSquared Inc. on hold, since LightSquared has not yet gotten approval from the Federal Communications Commission to redeploy its original satellite spectrum as the foundation for a terretrial Long Term Evolution mobile network.

“The companies have agreed to realigning our deployment timeline to coincide with potential FCC actions,” Scott Sloat, a spokesman for Overland Park, Kansas-based Sprint, said. Until approval is received, “both companies believe it is prudent to pull back on expenses,” he said. Sprint Puts Investment in LightSquared on Hold

LightSquared still has not managed to convince the GPS community or military users that its proposed use of former satellite frequencies can avoid interference with GPS receivers. Sprint deal hinges on spectrum approval

Tests continue to show interference issues, though. LightSquared is not the only entity proposing to re-purpose satellite spectrum to build new broadband Long Term Evolution fourth generation mobile networks. Dish Network also is asking the FCC for permission to build a network simialr to LightSquared.

The obvious potential here is the possibility that as many as three brand new LTE networks could be built in the U.S. market, in addition to the networks Sprint, Verizon Wireless and AT&T also are building. Some will argue that is too many 4G networks, but the business models and market segments might be different.

Dish Network will have a primary interest in providing mobile broadband services that augment its moves into new forms of TV distribution. Clearwire's LTE network, as will LightSquared's proposed network, are designed as wholesale platforms for other retail providers to use.