Wireless News » 2008 » June - Wireless Federation

China’s fast-growing number of mobile phone accounts has risen more than 8% since the start of the year to 592 million, while demand for traditional fixed-line service is falling, the government reported.

The figures reflect a growing trend for Chinese customers to opt solely for mobile service. The shift has hurt fixed-line carriers, prompting Beijing to launch a massive industry reorganization to revive competition.

The number of mobile accounts in China grew by 44.8 million through the end of May, the Ministry of Information Industry said. It said the number of fixed-line accounts fell by 6.5 million to 358 million.

China has by far the world’s largest population of mobile phone users. But several million have multiple phones for personal and business use, so the total number of subscribers is smaller than the number of accounts.

The boom has turned China’s dominant mobile carrier, China Mobile, into the world’s biggest phone company by number of subscribers, with more than 400 million.

Meanwhile, fixed-line carriers China Telecom and China Netcom have seen subscriber demand and profit growth slump.

That prompted Beijing to announce an industry restructuring in May aimed at creating more robust competitors to China Mobile. It would create three groups based around China Mobile, China Telecom and China Netcom, each with a mix of fixed-line and mobile assets.

The government says the reorganization will clear the way for the long-awaited awarding of licenses for 3G mobile service.

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Paris-based ad holding company Publicis Groupe formed an ad network spanning all four major ad serving systems?Microsoft , Google/DoubleClick, Yahoo and AOL ?to tightly coordinate campaigns across these platforms. The announcement also included an additional deal with Yahoo for mobile advertising, which aims to help brands reach mobile consumers more easily.

The breakdown of the deal: Publicis will integrate its current media buying systems with Yahoo!’s Right Media Exchange (which also recently signed a deal with Publicis rival WPP’s GroupM), and with AMP!, Yahoo’s advertising management platform. Publicis Groupe’s mobile marketing agency, Phonevalley, will also lean heavily on Yahoo’s Blueprint technology which is the backbone of Yahoo! Go, a platform that supports widgets and third-party apps. Blueprint, in theory, allows developers to create an app once that can run on the Yahoo! Go platform, which is compatible with hundreds of phones around the world. Brands working with Publicis could tap into this capability, making it easier to develop one campaign that could work on various phones, carriers and across multiple countries. Phonevalley is claiming to be the first global agency to integrate Blueprint. In addition, Yahoo! and Publicis Groupe will work with Yahoo’s Smart Ads technology, allowing Publicis to create numerous permutations of a given brand’s message more easily.

This relationship may provide a much needed boost to mobile advertising. Often times, ad agencies don’t have the expertise in-house to roll out a campaign that may need to be adapted for hundreds of phones, carriers and countries. Of course, this is a pretty big win for Yahoo, which has been slowly setting up an empire of mobile search and advertising relationships around the world with carriers. Just last week, Yahoo announced five new partners, bringing the total list of carriers that uses its mobile search to 60 over the last 18 months.

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The world’s largest handset vendor’s bold announcement that it plans to buy the rest of Symbian has generated a lot of media attention, especially since the OS company holds two thirds of the global smart phone market.
The most popular analysis paints Nokia as a winner and Google as the loser. The deal is also seen as a victory for the open-source movement, with Nokia validating a business model pursued by competitors like Google’s Android platform and LiMo (Linex Mobile) Foundation.

But further interviews with Nokia and Symbian executives reveal more than a few bumps waiting in the “open” road to the Symbian Foundation.

Here are seven things you need to know in order to understand what’s behind the Nokia/Symbian deal and what it means for the industry:

1. It’s going to be a long process?
Don’t hold your breath. It will be years before Nokia can migrate all the associated properties and assets into the Symbian Foundation and then make its offerings available under the Eclipse public licence model.

Lee Williams, Nokia’s senior VP for S60 Software, explained a three-phase programme in an interview with EE Times:

In the first phase, Nokia will contribute to the Symbian Foundation—a new non-profit organisation—the core code behind Symbian’s operating system along with S60, Nokia’s user interface, middleware and everything that comes with its platform for Symbian-based smart phones. The goal is to allow handset vendors to execute their product development under the royalty-free licence programme.

But foundation members won’t be able to stop royalty payments to Symbian and Nokia until the first quarter of 2009. Those payments cover the use of Symbian’s OS, and Nokia’s S60 user interface. While Nokia wouldn’t disclose its fee for S60, mobile makers currently pay royalties as high as Rs.200.11 ($5) per unit to Symbian.

During phase two, members will start adding and integrating some assets from the Mobile-Oriented Application Platform used as NTT Do Como’s platform for its mobile phones and UIQ, a software platform based on Symbian OS, as complements to the Symbian Foundation’s offerings. This alone could take up to two years, according to Williams.

In the third phase expected to begin in 2011, the foundation’s offerings will finally start to evolve with the help of the open-source community. Development results will be released to the community under the Eclipse Public Licence (EPL).

Compared with other open-source licence models, Nokia believes that EPL, often known as a business-friendly free software licence, will make a difference. Williams said EPL can provide “proper protection for core source code,” allowing developers to do “derivative work” while giving licensees “strong ability for differentiation.”

2. No night at the Opera?
Despite all the talk about open-source development and freedom to add or differentiate on a platform, the Symbian Foundation’s offering may end up with just one target browser for smart phones.

John Forsyth, VP of strategy at Symbian, said: “One target browser covering most of the world’s phones is a good thing.” He noted that making a standard browser part of the platform will be “critical” in the foundation’s next phase. It will help to “cut tremendous cost, and it’s a healthy thing for application developers,” he explained.

The current Nokia Web browser is built on S60Webkit, a port of the open-source WebKit project for the S60 platform. WebKit contains core and components that Apple uses in its Safari Browser.

Does this mean there will be no room for other browsers such as Opera?

Forsyth stressed the strength of the open-source WebKit, while speculating that Opera may be seeking other embedded devices to promote its browser.

3. It’s all about “simplifying the software supply chain.”
The biggest issue with current mobile application software and service development is “fragmentation” of the platform. There are too many implementation paths, experts say. “We need to simplify a software supply chain and extend more value to our own products,” said Nokia’s Williams.

Symbian’s Forsyth agreed. “A question every OEM is asking today is: How do I change the ratio of commodity engineering and differentiation [of my products]?”

The hope is that the Symbian Foundation will take care of “commodity engineering.” By walking away from the current royalty licence model, Nokia hopes to eliminate “latency built in for participating in an eco-system,” said Williams.

4. Is Facebook coming to mobile handsets?
Ideally, implementing popular applications such as Facebook in the open-source model promoted by the Symbian Foundation should be simple—at least in theory.

Rather than each handset vendor negotiating individually with Facebook, Yahoo or Google, the foundation’s eleven founding members can act collectively. Along with Nokia, the members are Samsung Electronics, Motorola, LG, Sony Ericsson, STMicroelectronics, Texas Instruments, AT&T, NTT DoCoMo and Vodafone.

More important, once an asset like Facebook becomes available to the foundation, platform integration will follow for use by all members. Although Nokia’s Williams noted that the Facebook example is hypothetical, he added, “It should be very interesting.”

5. The power of semiconductor companies.
With most chip companies eager to participate in almost any mobile handset alliance, it’s no surprise to see names like Texas Instruments and STMicroelectronics among the founding members.

Indeed, observers of the latest Nokia-Symbian deal tout this as a huge win. Why?

Symbian’s Forsyth explained that the software integration necessary between silicon solutions and OS platforms is “really hard.” He added, “It has the biggest impact on the time-to-market.” Getting it right can take months of development time.

According to Frank Dickson, co-founder and chief research officer at MultiMedia Intelligence, “The major chip vendors will want to support every major OS as they cannot afford to be excluded from a significant group of new handset designs.” Obviously, OS vendors need semiconductor company support.

However, he added: “The chip vendors will not define the success. Chip companies will define protocols and standards to enable efficient implementations.”

6. Why is this open-source mobile platform better than others?
Nokia’s Williams insists that the Symbian Foundation will be a truly open foundation offering the EPL licensing model. Most important is that the foundation is built on an existing framework and is set up to exploit a collection of assets.

Dickson agrees. The foundation is “grounded with handset vendor DNA. This will be its greatest strength, he said. “The handset vendors are highly motivated to insure that they control their own destiny and thus have a vested interested in success of the Symbian Foundation.”

But the reality is that the fight has not even begun.

Dickson cautioned: “Android has Google behind it, looking to leverage the power of Internet-based services on the handset. Microsoft and Apple have powerful ecosystems and know a bit about making OS work. Linux has a rapid development community.”

Hence, the battle is far from over.

7. What’s the bottom line?
The Symbian Foundation is a huge development for the handset business. Dickson said “the implications for today are much less relevant than the implications for tomorrow.” He sees the deal as indicative of “the movement of handsets to replicate the PC model.”

This may not be exactly what all stakeholders wanted to hear, but the truth is that differentiation will be less about proprietary implementations. “Handsets will be standard platforms that run a standard OS,” said the analyst. “Differentiation will occur in form factors and applications that run on the OS.”

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Microsoft on Thursday announced plans to buy MobiComp, a Portuguese company that makes software for the mobile world, including mobile posting to Web sites such as Facebook.

Microsoft hopes the acquisition will further its mobile ambitions, particularly in building new mobile data protection and sharing services, the company said in a statement. The company also plans to use MobiComp to further expand its ability to provide compelling software that can be used for work and play with mobile phones, PCs and the Internet

Terms of the deal were not disclosed.

MobiComp offers several Web based software services. For example, its MobileKeeper Backup & Restore backs up mobile phone data, while MobileKeeper Sharing & Communities connects mobile phone to social networking sites and gain updates on entertainment and news.

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I have no experience with Virgin. I’ve never tried Virgin. I don’t know of anyone, personally, who uses Virgin. (heck, I don’t even like virgin daquiris or daquiris for that matter… but I digress)

I thought I’d put this offer out there for those of you looking for cell phone deals. Everyone out there has an unlimited plan offer out there, it seems. Now Virgin’s throwing its hat into the ring, too.

Virgin Mobile USA will unveil its new “Totally Unlimited” calling plan for $79.99 on July 1, the lowest priced and first unlimited nationwide calling plan without roaming charges or an annual contract that can be purchased by cash or credit. Bob Stohrer, chief marketing officer of Virgin Mobile USA, said, “It is simply not necessary to sign a two-year contract to get real worth with your wireless plan. This offer surpasses the regional carriers unlimited calling plans as well, as most addd on roaming charges that can cost customers as much as 79 cents per minute.”

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Microsoft Taiwan, mobile phone maker High Tech Computer (HTC) and several other companies on Thursday announced a mobile Internet service station in Taiwan called Pl@net.

The mobile Internet service platform puts a host of entertainment and shopping options in users’ hands via their mobile phone, including news, travel planning and purchase, as well as concert tickets and content from Warner Music.

Several Internet shops well-known in Taiwan also signed on to Pl@net, including an online bookstore run by Eslite and the HappyGoCard, a shopping discount and point card.

Pl@net formally launches on July 1.

HTC also announced the release of HTC My Connect 2.0, a new version of mobile software that puts a button on a handset’s touchscreen that users push for quick software downloads, to share pictures, and more. One button on My Connect sends users right in the services and entertainment offered on Pl@net.

HTC is the world’s largest maker of smartphones based on the Microsoft Windows Mobile OS.

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China has ordered phone companies to stop adding new customers in August so they can better focus on ensuring service for the Beijing Olympics, an Associated Press report said.

The moratorium on new phone and internet connections adds to sweeping measures, including traffic bans and factory shutdowns, that are meant to provide better conditions for the games, a major prestige event for the communist government, the report said, quoting employees.

“We simply won’t touch the network any more to ensure its stability for the Olympic Games,” said an employee of China Telecom, China’s main fixed-line carrier, who said he had seen an internal company memo on the subject. He asked not to be identified further because he was not authorized to talk to reporters.

The curbs will interrupt explosive growth in new business for mobile carriers, which the government says are adding 9 million accounts per month.

Existing customers should not be affected, said the phone company employees and a spokesman for the Beijing municipal phone regulator. They said the curbs apply to Beijing, several other cities with Olympic events and possibly additional areas.

Businesses have been warned for months of Olympics-related curbs on traffic, construction and other activities.

internet provider China Netcom Corp. distributed a notice to customers this week saying that they should not expect to add new accounts in August.

CNC will avoid installing equipment from August 1 to August 25 but might be able to open a new account if it requires no additional wiring, said a spokeswoman for the company who refused to give her name. The Olympics will be held August 8-24.

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European mobile operators face a 70% cut in the fees they charge each other for passing on calls from competing networks under draft guidelines published by the European Commission, a Dow Jones report said.

The report said the development led to sharp criticism from the industry.

European Union telecoms commissioner Viviane Reding argues that so-called termination fees, which account for around 20% of operators’ revenue, don’t reflect the cost of providing the service and are nine times higher than equivalent fixed-line charges, the Dow Jones report said.

Mobile call termination rates are currently around €.08 to €.09 euros a minute.

But the commission’s latest proposals faced strong opposition from the industry and some national telecommunications regulators, who may seek to block it, the report said.

The commission’s plans are “too drastic,” said Hamid Akhavan, chief executive officer of Deutsche Telekom’s T-Mobile wireless unit, quoted by Dow Jones. “That is a level that is significantly below what we expected,” he said.

Richard Feasey, director of public policy at Vodafone Group, said the commission’s proposal fundamentally changes whe way mobile operators cover the cost of operating a network in Europe.

Operators’ revenue is already under pressure from previous cuts to roaming call prices and increased competition, just as they face possible further regulation on text and data charges.

Industry body GSM Association, joining the chorus of criticism, said there’s little need to regulate an industry in which prices are already falling year on year, the Dow Jones report further said.

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Charles Darwin famously declared that “natural selection” was Mother Nature’s way of improving a species so it could advance.

Internet search engines are locked in their own Darwinian drama. Depending how it turns out, desktop brands such as Google (GOOG) and Yahoo (YHOO) could become sturdier versions of themselves, ensuring survival as more people bolt for the mobile Web. Or they could become the Dodo birds of the Net — outclassed by a new generation of rivals.

Born in the early days of the Internet, Google, Yahoo and smaller competitors help billions of people navigate the Web each day. Now, they’re scrambling to adapt their desktop services for the hard realities of the wireless world.

Today, about 1 billion people have PCs; about 3 billion have mobile phones, growing to 4 billion by 2010. A major driver is the growing popularity of Web-enabled devices such as the Apple (AAPL) iPhone.

One of the biggest challenges: dealing with the matchbox-size screens of cellphones and other devices, which aren’t hospitable to the ads that are the lifeblood of traditional search engines. Billions in potential ad revenue are at stake as social networks, location-based services and wireless search deliver instant answers to wireless users on the go.

“As hot as they are right now, Google and the others could become dinosaurs if they simply try to use their old business models,” says Roger Entner, a senior vice president at IAG Research in Boston. But if they can adapt, he says, they could extend their dominance.

Microsoft (MSFT) has been pushing its Windows Mobile operating system for years. Today, it’s available from 50 handset makers and more than 160 mobile operators worldwide.

Even so, it’s been tough slogging, says Phil Holden, director of online services for Microsoft.

“What we’ve learned is that loyalty on the PC doesn’t necessarily transfer to the mobile phone,” he says. The wireless world, he adds, “has a lot of different dynamics.”

One thing everybody agrees on: The mobile Web is an advertising gold mine just waiting to happen.

The fledgling mobile search industry generated about $700 million in ad revenue in 2007, JupiterResearch estimates. By 2012, revenue is expected to hit $2.2 billion and keep rising. Jupiter analyst Julie Ask says mobile search could eventually eclipse the traditional Web, which currently generates about $20 billion in ad revenue.

No matter how things shake out, consumers will benefit, predicts Ford Cavallari of Monitor Group, a consulting firm in Boston that specializes in technology. Search rankings based on factors that have little relation to the quality of a product or service, such as the number of daily “hits” a website gets, or a paid advertisement placement, are about to become history, he says.

Soon, word-of-mouth referrals from social-networking sites (think Facebook and MySpace(NWS)) and customized data made possible by instant messaging and other instant communications will rule, he says.

The upshot: In the near future, a restaurant “might actually have to be high quality and offer value” to patrons to draw customers from the Web, Cavallari says.

“In the next 12 to 18 months we’re going to see a growing segment of (consumers) using wireless services as the way to get on the Internet 95% of the time,” says Imad Mouline, chief technology officer of Gomez, which helps Facebook, Expedia (EXPE) and other companies improve the quality of their Web presence. Currently, about 16% of cellphone owners use handheld devices to access the mobile Web, Jupiter says.

Entner, for one, thinks the mobile Web could produce a mighty rival to traditional desktop engines, one whose core strengths are rooted in the unique world of wireless. Such a newcomer, he says, “could wind up doing to Google what Google did to Yahoo” and other PC-based search engines. Namely, it could trump them in the marketplace.

To be sure, Google, a Web monster with a market value of more than $200 billion, would be tough to topple. But it’s not impossible.

If it’s not careful, Entner says, Google could wind up following in AOL’s famous footsteps. AOL in the ’90s was an online juggernaut with a gold-plated brand name and more than 30 million subscribers. Today, it’s a free service with a dwindling base of about 8.7 million customers.

“Google is trying to replicate a 20-inch experience on a 2-inch screen, and that’s leaving them, inevitably, about 90% short,” he says.

Too much information

Making the leap to wireless is a lot trickier than it might appear.

For starters, there are those tiny screens. Internet search was designed for PC screens, which can easily accommodate loads of advertisements. The latter is critical, because search engines depend on ads for their financial survival.

In the PC environment, ads are abundant and constant. Paid advertisements are typically stripped along the right side of the PC screen, with premium spots at the top reserved for the biggest spenders.

Try that on a wireless device, and you’d quickly run out of room for anything else.

Similarly, the basic act of rendering searches also gets tough on a tiny screen.

In the online world, a single search request can result in a dozen or more pages of results. If results aren’t specific enough, you simply resubmit a query. After a few tries, you usually find what you’re looking for.

That entire process is a total non-starter in the wireless environment, says Sameer Mithal, a senior principal with IBB Consulting in Princeton, N.J.

Mobile consumers are typically on the run, he says, with little time or patience for typing on pint-size keypads. As for pages of search results — forget about it. There isn’t nearly enough screen space for that, Mithal says.

And advertisements? Approach with care; otherwise, you may offend customers and lose them for good, Gomez’s Mouline warns. “Not doing it thoughtfully can get you to a point where customers will abandon your entire brand.”

Traditional search engines, to some extent, are victims of their own success. Basic search algorithms are designed to do a massive Web “crawl” each time a search request is received.

In the mobile environment, however, such thoroughness can be the digital equivalent of using a shotgun to take out a housefly — way too much firepower for the task at hand.

“The desktop search engines are what they are,” Mithal shrugs. Even if you’re only asking for a very specific thing — a sports score, for example — “they still have to search overall Web content.”

Search engines, angling to win over mobile customers early, are racing to solve these problems. Their solutions, in some cases, are wildly different.

Yahoo’s solution is a nod to the social-networking craze. Its OneConnect service, which makes its debut this summer, integrates messaging and social-networking updates from Facebook, MySpace and the like in one spot on the phone. OneConnect ties directly to a user’s address book, letting people share information, social-networking updates and messages on the fly.

“On the phone, time is limited, so you really need to provide highly relevant and useful information,” says Marc Davis, chief scientist for Connected Life, the Yahoo unit responsible for non-PC services, including mobile.

That philosophy is the force behind “OneSearch with Voice,” which integrates voice-recognition technology with traditional search. The service allows users to simply speak their request into a cellphone — “Where’s the best craps table in Las Vegas?” — in plain English. Responses are sent back in text form, as in any other search.

The voice-recognition technology is “so good, it’s shocking,” Davis says, handling accents, continuous speech and verbal affectations with ease.

While all searches, mobile and otherwise, use the same search algorithm, there is one big difference: Yahoo says mobile search responses are provided strictly on the basis of relevancy, with no preferential treatment for ad-supported products and services. “This is about providing answers, not links,” Davis says.

Google says it sees no reason to change what it does just because it’s moving into the wireless arena. “We think that what we do is highly transferable to the mobile device,” says Matt Waddell, chief of mobile and developer products for Google.

The tiny screen isn’t a problem, he says. “It’s still as easy as typing.”

That said, Google is making a few accommodations. Instead of giving wireless users pages of search results, for example, it only offers “snippets” — Google-speak for the first few search results that appear at the top of the page. It’s also limiting the number of ads to one or two per search.

Waddell says the advertising opportunities in wireless are huge. One example: Say you’re in San Francisco, and you suddenly get an urge for pasta. Provided your device has Global Positioning System location technology, Waddell says, Google can offer up a list of Italian restaurants within a five-minute walk.

“Advertisers would probably be willing to pay more money for such an ad, because it would be much more targeted,” he says.

While such an approach might seem to subjugate the interests of consumers to advertisers, Waddell says that’s not the case at all. “We never think of advertising first,” he says, adding, “We won’t touch an ad with a 10-foot pole unless we think it delivers a better search experience.”

Google on the go

Google is taking other steps to make sure it doesn’t get iced out of wireless opportunities. The Web giant is pushing development of an open wireless operating system — dubbed Android — that would make it easier for consumers to use Google’s mobile services. Android-loaded devices are expected to hit the market later this year.

While the big incumbents duke it out, start-ups are nipping at their heels. That includes Medio, a Seattle-based company that hopes to turn itself into the Google of mobile.

Like Google, Medio’s service is geared around a simple “search box” format. That’s where the similarity ends, CEO Brian Lent says. Medio “was designed as a pure-play company for the mobile industry.”

Unlike Google, he says, Medio’s patented algorithm hones in on “mobile discovery,” producing far more relevant answers for users. Example: A search for a Madonna ring tone might also result in links to a CNN article about the singer, as well as V Cast, the mobile music channel offered by Verizon.

“That’s a lot different than crawling the Web” as Google does every time a query is received, Lent says.

Another difference: Medio is a “white label” company that works directly with big carriers such as Verizon and T-Mobile. Carriers, in turn, rebrand Medio’s service under their own names.

Lent has a very personal view of the Web’s biggest search engine. A data-mining expert, Lent was part of the academic team that worked on Google when it was still a lab project at Stanford. He left to take a job at Amazon a month before Google was incorporated.

Lent, who remains friends with Google co-founder Sergey Brin, says he’s hugely admiring of Google’s pioneering efforts. The Web giant, now a Medio partner, almost single-handedly raised the online search category to a new level, he says, introducing billions of people to the wonders of the Web.

But now it’s a new world, he says — a wireless world. “Everyone wants to bash the incumbent, but I’d rather take a playbook out of judo and leverage the strengths that they have” and build on top of that, Lent says.

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Wireless Federation

China’s mobile phone accounts rise to 592m (China)

Yahoo And Publicis Work Together On Mobile Advertising Initiative (USA)

Seven things about the Nokia-Symbian deal

Microsoft to buy mobile software maker MobiComp (USA)

Virgin Mobile’s “totally unlimited” deal (USA)

Microsoft, HTC Announce Mobile Internet Service Platform (USA)

China orders carriers to stop adding phone, internet customers (China)

EU pitches 70% cut in mobile call handling charges

Google and Yahoo look to mobile (USA)

Virgin Mobile USA to buy SK Telecom’s U.S. unit