[opendtv] Mobile operators hammer on costs
- From: "Manfredi, Albert E" <albert.e.manfredi@xxxxxxxxxx>
- To: <opendtv@xxxxxxxxxxxxx>
- Date: Fri, 24 Feb 2006 15:49:07 -0500
Mobile operators hammer on costs
=20
Junko Yoshida and John Walko
(02/20/2006 9:00 AM EST)
URL: http://www.eetimes.com/showArticle.jhtml?articleID=3D180204095
Barcelona, Spain -- If there was one overriding theme for this year's
3GSM World Congress here last week, Siemens Communications CEO Thomas
Ganswindt summed it up bluntly: "There is no such thing as easy mobile
money anymore."
Mobile operators are facing a huge shakeout as average revenue per user
(ARPU) drops dramatically for voice, and the only subscriber growth
remains in the emerging markets.
The irony is that the two hottest emerging markets--mobile TV and a
converged Wi-Fi and GSM phone using an unlicensed mobile network--can
work independently of mobile operators' network infrastructure. The
developers of these products have ways to bypass the network, unless
operators make it worth their while not to.
Mobile TV, typically on a Digital Video Broadcast-Handheld (DVB-H) or
Digital Multimedia Broadcasting platform, uses a broadcast network
separate from an operator's cellular net. And unlicensed mobile access
(UMA) technology provides access to GSM and GPRS mobile services over
unlicensed spectrum technologies such as wireless local-area networks.
Meanwhile, many new data services and multimedia applications promised
over the last few years haven't panned out. In the case of multimedia
messaging, a lack of interoperability and usability, combined with
ridiculously high fees imposed by the carriers, turned off customers.
Moving the venue of Europe's largest mobile-telephony conference from
its previous home in Cannes--a cozy town on the French Riviera where
industry executives hobnobbed on yachts with champagne glasses in
hand--to a huge former World Expo site in Barcelona seemed to change the
tone of the event from invincibility to introspection. An industry that
used to be all about creating new revenue and adding bells and whistles
has switched--in barely a year--to a focus on lower costs for everything
from network infrastructure and capital expenditures to handsets.
"The entire signal chain is pressured for cost reduction," said Doug
Grant, director of business development at Analog Devices Inc. Operators
are demanding that chip companies and network equipment vendors engineer
dramatic reductions in "component cost" and "energy cost" to build and
run third-generation (3G) networks, Grant said.
"How operators will cope with such emerging trends as voice-over-IP
[Internet Protocol] and broadcast technology still remains to be seen,"
said Gert-jan Kaat, senior vice president and general manager of mobile
and personal electronics at Philips Semiconductors.
In sum, the big boys, primarily mobile-network operators, are starting
to sweat.
Arun Sarin, CEO at Vodafone Group, acknowledged that only 9 percent of
his company's revenue is coming from 3G. More new services are coming,
"but they are still at a very early stage--things can turn on a dime."
Sarin added, "Costs are hugely important to us--to build a new paradigm
to attract new customers."
Wang Jianzhou, chairman and CEO at China Mobile, agreed. "If we can
control the cost, we still keep the very good money," he said.
Technology suppliers are frustrated with the lack of solutions that
would allow everyone, from chip vendors to tier-one handset suppliers
and network operators, to keep the gravy flowing. Mobile TV is "so
fragmented that its deployment is hindered," said Franz Fink, senior
vice president and general manager of the Wireless and Mobile Systems
Group at Freescale Semiconductor Inc., while UMA's business case for
mobile operators "hasn't been sorted out." These promising technologies,
Fink said, are "so messed up that no one can make money on [them] now,
unless we come up with a scheme where everyone can get a fair share on
services provided to consumers."
"Our industry will have to come to terms with moderate voice ARPU in the
future," said Siemens' Ganswindt. However, it's unclear whether a rapid
investment in 3G networks and a resulting increase in data ARPU can
offset the shrinking premium on mobility for voice.
As David McQueen, principal analyst for handsets and services at Informa
Research Services, put it, operators may no longer have "a God-given
right to get a cut from every transaction over their network."
Leap of faith
Whatever the uncertainties on the business side, technology companies
rushed to 3GSM with their latest wireless-LAN and cellular chips and
handsets. Further, more than 40 vendors--chip, handset, software and
broadcast equipment suppliers--had DVB-H-based mobile-TV demonstrations
on the air in three multiplexes, transmitted by Abetris Telecom. With
DVB-H not yet deployed commercially, Informa's McQueen called this trend
"a leap of faith."
Nokia announced it would cooperate with Sony Ericsson on
interoperability in DVB-H-enabled devices. This will "significantly
boost the prospects for mobile TV," said Jorma Ollila, Nokia's chairman
and CEO. To initiate interoperability with multivendor mobile-TV pilots,
the companies will use the Open Air Interface implementation guidelines
that Nokia made publicly available last August.
On the unlicensed-mobile front, Motorola Inc. and Nokia unveiled
UMA-enabled handsets that will start shipping this year. The Finnish
group said its quad-band 6136 will have myriad features, including a
1.3-Mpixel camera and 8x digital zoom. Motorola, for its part, will
start shipping in the third quarter a Wi-Fi version of the handset it is
already supplying to BT.
UMA enables subscribers with dual-mode UMA handsets to roam between
cellular and unlicensed-wireless networks. A UMA network controller acts
as a virtual basestation, handing off between cellular and Wi-Fi nets.
Nokia envisions a UMA convergence that includes both network equipment
and new handsets. "We are taking a complete approach . . . that offers
seamless handover of voice and data between GSM cellular and WLAN
networks," said Ollila. He said UMA was also "a useful approach to
extending GSM indoor coverage."
On the silicon side, Marvell (Sunnyvale, Calif.) said that its WLAN chip
based on IEEE 802.11 a, b and g--which is capable of handling both
high-speed data and UMA-compliant voice--has been adopted by several key
handset vendors, including Motorola and Kyocera Wireless. Marvell claims
to have gone beyond the high-level UMA spec to tweak its solution,
making sure the chip works with the handsets of many tier-one vendors.
"The UMA spec only deals with the high-level requirements," said Vivek
Mohan, applications engineer at Marvell. "Mobile-handset vendors often
optimize the timing for handoff between GSM and WLAN in a slightly
different manner, for various reasons, including a different operating
system they use."
A programmable arbitration unit inside the chip's media-access
controller makes "a packet-by-packet decision between WLAN and
Bluetooth, thus prioritizing it based on use-case scenarios," Mohan
said. "If one is using Bluetooth for voice, you want to give priority to
it, while one may want to give priority to WLAN when transferring a
large [amount of] data faster."
Technology companies differ hugely on when the UMA market will take off.
"Unlicensed mobile access is an important initial step to what we see as
the ultimate solution of networks connected through the IP Multimedia
Subsystem," said Henry Samueli, co-founder and CTO of Broadcom Corp.
Broadcom, he said, is "still at the R&D stage, and [we] are planning
prototypes and reference designs over the next couple of years. It's
debatable as of now whether there is a strong business case for UMA--but
it is important to get your feet wet in the convergence business."
Philips Semiconductors, for its part, was demonstrating UMA live in
Barcelona. The chip maker announced earlier this month that UMA-enabled
phones, based on Philips' Nexperia cellular system, will be available in
the United States from a major operator. The Dutch company is claiming
an early lead in the emerging UMA market as an independent system
solution provider, thanks to its partnership with Kineto Wireless and
Alcatel.
UMA pioneer Kineto supplies network controllers to infrastructure
providers and protocol stacks for handset makers and platform
integrators. Alcatel supplies infrastructure equipment. "Users will only
need to purchase one phone," said Paul Marino, vice president and
general manager for business line connectivity at Philips
Semiconductors. "They should be able to reduce their phone bills
significantly."
"You can see interest all around here at the exhibition," Ken Kolderup,
vice president of marketing at Kineto Wireless told EE Times. "And the
major announcements in Barcelona suggest Wi-Fi/cellular convergence is
gaining enormous traction."
Kolderup pointed out numerous partnerships that are being established to
ensure the technology gets deployed quickly. Kineto has deals with,
among others, Nokia and Motorola on the infrastructure side. It had
partnered with Alcatel until the French group opted to develop its own
UMA network controller.
Kineto is working with Cisco Systems Inc. on security
issues--specifically, to authenticate UMA-enabled mobile devices
accessing an operator's core network. The companies say they have tested
all the security features operators are demanding for access control for
UMA-based end-to-end calls.
"On the handsets side, two of the four suppliers that have committed to
deliver UMA-specification-compliant converged handsets use the protocol
stack from Kineto--Samsung and LG--and we are in close touch with the
other two, Nokia and Motorola," said Kolderup.
The key in the handset business is an "in" with the platform suppliers,
he said. "We are working with, for instance, TTPCom, Philips
Semiconductors and Infineon Technologies." While no official
announcement was made, Kineto was demonstrating a reference design from
Texas Instruments Inc. using Kineto's client software.
Although he acknowledged an element of hype and confusion surrounding
UMA, Kolderup pointed to numerous operator trials--at least 15 in all
the major countries in Europe. "There is also interest among the three
U.S. carriers that operate a GSM network, in particular T-Mobile," he
said. "And the feedback from the U.K. is that BT's Fusion commercial
UMA-compliant Bluetooth-based service is gaining momentum."
While praising advanced designs coming from chip suppliers such as
Philips Semiconductors, GCT, TI and the recently formed Quorum
Systems/ADI and Atheros/Qualcomm collaborations, Kolderup acknowledged
that "there is still a lot of work to be done by all the players in the
chain."
Will Strauss, president of market research house Forward Concepts
(Tempe, Ariz.), sounded a note of caution, however. "Even if your
technology works, it won't make it to market unless [mobile] operators
will allow it," he said.
All material on this site Copyright 2006 CMP Media LLC. All rights
reserved.
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