Wireless Evolution

Wireless Trends Continued

Wireless Trends ContinuedThis is a continuation of our blog post on wireless trends.  We cover the last three topics that seem to be the foremost issues for wireless carriers which also impact consumers no matter were you live. One area we have noticed that only a few consumers are beginning to become aware of is free WiFi. Instead of having to pay for your data, many consumers are now taking advantage of free Wifi to gain access to the internet. You have to frequent coffee shops, restaurants even laundromats to find free Wifi, but many business are adding WiFi every day because they understand that it could bring them additional business. Starbucks and McDonalds have certainly learned this and have embraced the free WiFi approach.

It does not seem to matter what country you are in there are five wireless trends that all markets seem to embrace at one time or another.  Some countries are behind others are ahead, however they will adopt these trends at some point in time. These trends are :

  • The decline of voice revenue
  • The data crunch
  • Mobile broadband

In some countries as well, particularly Canada and the US , the data crunch is overtaking the ability of the carriers to provide capacity. There is a tremendous cost to augment their networks, however they seem to be following in the same direction as other countries have. Using a combination of rates and added capacity they seem to be managing the growth in their networks. More on this later.

Wireless Trends – The decline of voice revenue

Voice revenue is under pressure because many of the new carriers are offering unlimited minutes or so many minutes that it might as well be anytime minutes. This puts a lot of pressure on the traditional wireless carriers.

Combine this with unlimited texting, unlimited data and alternate services such as Skype and WiFi, and you see potentially a huge impact on the carriers revenue. Consumers are not stupid. They are switching, they are avoiding long term contracts and they are looking for better deals which allows them to control their monthly costs.

Wireless Trends – The data crunch

More and more people are switching to smart phones  which are gobbling up vast amounts of data on mobile networks putting a lot of pressure on the networks run by the carriers as well as causing some consumers to have large monthly bills.

As more and more people move to smart phones, data will continue growing at a phenomenal rate. Email, photos and video contribute to a large portion of what is being downloaded or sent. The amount of data traffic will only increase.

There are ways that consumers can limit their data bills and carriers may even encourage their customers to follow these sorts of solutions to take some pressure off the wireless networks. WiFi at work, at home, or at coffee shops is a great way of taking advantage of free data connections, which helps the consumer as well as the carrier. Data traffic is channeled to landlines when a WiFi connection is used for data.

Wireless Trends –  Mobile broadband

The future is clearly  mobile! Consumers love the convenience and also the freedom to check their email, send text messages and browse the internet while on the go. Riding the bus to work in the mornings, half of the bus riders are checking their email or staying in touch with family or colleagues. Same thing on the ride home. Anytime, anywhere is the motto for most people for voice , data and even video on their smart phones.

Feel free to leave your comments and opinions about our thoughts and ideas regarding wireless trends. Spam comments will be deleted. For more posts about wireless evolution, click here.

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Wireless Trends

Wireless TrendsIt does not seem to matter what country you are in there are five wireless trends that all markets seem to embrace at one time or another.  Some countries are behind others are ahead, however they will adopt these trends at some point in time. These trends are :

  • Fragmentation of the market
  • Wireless substitution
  • The decline of voice revenue
  • The data crunch
  • Mobile broadband

In some countries as well, particularly Canada and the US , the data crunch is overtaking the ability of the carriers to provide capacity. There is a tremendous cost to augment their networks, however they seem to be following in the same direction as other countries have. Using a combination of rates and added capacity they seem to be managing the growth in their networks. More on this later. The wireless trend is still evolving and mobile wireless smart phones will gradually take over the way we communicate.

Wireless Trends – Fragmentation of the market

Although Canada is nothing like the US in terms of number of carriers, the Canadian market is becoming more fragmented all of the time. There are the main carriers such as Bell and Telus who operate nationwide, however even they have their regional strengths. Bell is strong on Ontario and Quebec, while Telus is strongest in Alberta and British Columbia in terms of numbers of customers and revenue generated.

Then there are all of the local carriers such as Videotron in Quebec, and a number of other carriers that operate mainly in province. They are posing a great deal of competition to the incumbents with their focus on establishing themselves and acquiring customers. There is a transition while these new carriers establish themselves and capture market share, however in the long run they may become self funding or end up being acquired by one of the incumbents.

As more competitors enter the markets regionally and even locally in areas such as Toronto, there will be more fragmentation.  Consumers need to be careful of which carrier and plan they go with. If the only make local calls, they will be fine in most cases, however if they roam at all then they may not have coverage or pay higher fees than they were expecting. We have enven heard of some local carriers not covering an entire city, leaving some people without service.

Carriers use a combination of market specific pricing and termination fees to attract and hold onto their customers. Most people will find that the cost of services will be different in various provinces, even sometimes between cities in the same province.

Wireless Trends –  Wireless substitution

The existing incumbent carriers have a serious problem. They weathered the loss of long distance revenue when the internet and competition forced significant reduction to long distance revenues. Now the threat is wireless that is posing a threat to this revenue stream. Many people already have or are considering moving to wireless only, reducing the revenue that the big carriers get from land lines.

Companies such as Mobilicity, Wind Mobile and Public Mobile who have no land lines do not worry about this issue at all. In fact one of their key market thrusts is to people who want to reduce their overall costs and move to a wireless only home.

Gen X & Y  are cutting the chord. They might have grown up in a home which had a traditional wireline phone, however as they moved out of the house they went to a wireless only service to reduce costs as well as to take advantage of the convenience that wireless gives. With family plans for wireless subscribers, a wireless service can be quite effective.

Canada is somewhat behind other nations. The US is ahead of us, but well behind many European countries. We continue to expect some serious cord-cutting over the next few years. As a result many customers will avoid signing that bothersome 3 year contract with the wireless carriers.

Feel free to add your own comments to our blog about our thoughts and forecasts. Spam comments will be deleted.

Next weeks blog will cover the last three topics in our review of wireless trends. Stay tuned. For more posts about wireless evolution, click here.

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Wireless Revolution

Mobile Text Messaging MarketingThere is a wireless revolution happening and many people are not even aware that it is happening. Some people are being left behind since they are not adapting the technology at all. Other groups are early adapters and still they find that technology is moving much too fast even for them, bit they are having a ball trying to keep up. It is just creeping up on us and becoming part of our lives without us even realizing it.

Sure we have all seen the growth of cell phones and smart phones. This is really just the tip of the ice berg. Routinely we browse our email, keep up with social networking sites and surf our favorite web sites all with the help of our smart phones such as the iPhone, the iPod Touch, now the iPad, Rim’s BlackBerry products, Palm and Android.  Google is just getting into the act with their Android software which will appear in over half the mobile devices while Apple will probably have the other half.

You can rest assured that these titans of the mobile world and the computer software world will deliver more and more functionality. I consider myself reasonably tech savvy, however I was blown away after walking into an Apple store and purchasing an iPod Touch recently. For many people, they will say what is the big deal. For me and I suspect thousands of others it is a big deal.

Wireless Revolution –  Sales

I had the help of a nice young man who patiently explained the benefits of the iPod Touch and even demonstrated an app or two on his own iPod Touch that he carried in his pocket. This guy really had deep pockets with lots of room in them.

Once I decided to buy an iPod, he needed to check on inventory. Out comes  what looks like an iPhone and he quickly checks on inventory before heading back into the storage area of the store. Another device scans the bar code and recorded the information against a bill of sale which he downloaded to his wireless device and then displayed the price to me including tax.

Once I agreed, he ask for my credit card which he scanned into his wireless device ( smaller than the ones you see at the airport car rental checkin area) . After verification and confirmation he advised me that the sale had been completed and walked off to get a hard copy of the receipt which I had asked for. Apparently most people are satisfied with an electronic copy being sent to them via email.

Activating My iPod

This was the really easy part. With WI-FI throughout the store, the iPod quickly sync’d and we customized the iPod with my information and with the apps that I needed to get started. I have since added others over the past month.

Now this is just purchasing a simple iPod which really demonstrated how a well thought out sales process can integrate wireless capabilities to really simplify the transaction. Not once did the sales person need to go to the cash desk or punch in the information. It was all done from the store location were we met and the back office applications also probably rewarded him with whatever sales points he gets and updated the stores books re inventory, sales for the day, net profit and so on.

Wireless Revolution – New Integration Evolution

Now as Apple and Google pursue more features, more applications and functionality, rest assured that what I just discussed will find it’s way into many more applications and businesses.

Can you imagine walking into a store and waving your wireless device beside an item to find out the price, indicating you are willing to purchase the item and then checking out the item yourself. As you leave the store a scanner confirms that the item you purchased has indeed been paid for, updates the inventory etc.

This is just the beginning of the wireless revolution with much more to come. Actually North America is behind the rest of the world in adoption rates with countries like Japan leading the surge to a wireless revolution were you pay for everything using your smart device!!

Get ready , here it comes!

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End Appears Near for Minute-based Voice Plans

End Appears Near for Minute-based Voice PlansThe Rise of 4G means voice will soon run over all-IP networks. The technology platform that carriers use to provide voice services may change. It does not necessarily mean that the billing methodology will change for customers.  Some groups believe that once the conversion of voice to all IP networks is complete, the carriers will be forced to do away with minute based plans and move to data plans that are a combination of voice, data, text and video.

The white knight in this case is the rise of 4G wireless technologies such as WiMAX and LTE, both of which will eventually be able to deliver high-quality voice calls over an IP network rather than a traditional cellular network. This may mean that users might not have any monthly limit on the number of minutes they can talk on their phones; instead, they would pay a flat rate for monthly data plan that will encompass both voice and Internet services.

The wired world in the enterprise, voice has mostly moved to IP already.  In terms of wireless, cellular carriers don’t have enough dedicated bandwidth right now to support IP-based voice. But in future developments of LTE, it will all be over IP.

Redman notes that carriers are still likely to rely upon minute-based voice plans during the initial stages of LTE and WiMAX deployment, since it will take some time to make those technologies ubiquitous. Thus, users who don’t live in major urban areas will likely have to rely on cellular connections for wireless voice service for several years after initial implementation in urban areas. But once IP-based wireless networks are up and running around the country, it will no longer make sense for users to pay by the minute or at least that is the supposition of some writers.

What is evident with the new network technologies that are on the horizon is that it will be far cheaper to provide voice and data over these networks. The question will be whether these same networks will unlock the handsets to allow customers to make VOIP calls over competing VOIP carriers such as Skype and Truphone.

Even today, the Apple 3G  Ipod Touch can utilize WIFI to connect to the IP network and it allows calls via Skype to any phone or computer connected to the Internet. This is one of the first examples of mobile Voice moving to cheaper IP networks and avoiding the minute based plans that are currently in vogue. What really enables this particular solution is a handset that connects to the internet and is independent of any carrier service plan. Currently you cannot purchase a 3G Iphone which is essentially the same platform as the Ipod touch without also signing up for a voice and a data plan from the carrier.

Access to the network is the key and as long as the carriers own this access, they will be able to charge whatever they wish in the manner they wish, which includes voice based minute plans. If for example WIFI networks were to proliferate, then it may be possible to move to a data only plan or even a free network access plan. However even this scenario is problematic.

Most users do not want to look around for free access. They wish to have access at a moment’s notice were ever they are and this is the service that the carriers are so good at offering.  What is really needed is a competing carrier that offers a mobile service based on IP for a flat monthly rate regardless of what the content is. If a competing carrier were successful in capturing a significant portion of the business, the current carriers would be forced to change their plans and move from a voice based minute billing plan to a flat rate data plan.

We’re already seeing carriers’ revenue for long distance voice go down due to competing providers such as Skype and voice access decline in proportion to data while revenue for data goes up.

This poses a separate problem for carriers that have long feared being relegated to the status of “dumb pipes” that only transmit data and don’t provide any value-added services for their customers. We have already seen this phenomenon in the wired world with the decline of LD revenues.  Wired Carriers are seeing their only major source of revenue in the future will come from fees for users to access their networks. While carriers will still make money doing this, it is much less revenue compared to the sums they hauled in, in past years.

The mobile carriers will need to rethink their billing plans as customers have more solutions available to them. As loyal customers move from traditional networks to competing carriers who offer fixed rate data plans which include voice over IP, they will need to figure out how to replace these lost revenues. Will they move to advertising based solutions? Will they move to featured data solutions that add value to customers which they are willing to pay for? Voice mail applications, 3 way calling, conference calling, call display etc in the data world may still be chargeable in the VoIP world. There may be additional data services that customers will need which are still in the development stage. Whatever they are, the carriers will need to figure out a way to replace the lost revenue from minute based voice plans.

What it comes down to economically, is that it’s cheaper to do voice over IP and the questions is whether these savings will be passed along to the customer. Market competition will dictate how quickly this occurs and how much the customer will actually save.

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Iphone vs Android Wars

Currently as of this post BlackBerry maker Research In Motion (RIMM) commands 41.6% of the market, according to technology data tracker comScore. Apple’s iPhone OS is is second place with 25.3%, and phones that Iphone vs Android WarsAndroid Nexus Smartphonerun Google’s Android operating system are in 5th place with 5.2% of the market. The smart phone data market has been heating up for some time, however with the introduction of Google’s android, the market is about to heat up and perhaps change the dynamics as well. A year makes a huge difference. We just heard that Android is outselling iPhone outside of North America and Apple is very concerned. Rim is now a distant third and not likely to make it in the next 5 years.

What is really interesting is that Google and Apple are getting a lot of press with the introduction of the Android platform and the Ipad respectively, however they are not the largest smartphone makers by a long way. RIM is well ahead of the pack with over 41% of the market! RIM is probably quite happy for these two to fight it out while they continue to focus on building apps and selling their products.

Iphone vs Android Wars

However the real question is what is driving traffic on the network? Turns out that data from smartphones and specifically Apple and Droid phones is driving 86% of the data traffic to these smartphones.  Apple I-phones and Ipod touch devices already have over 100,000 applications developed with more being added every day. Android phones now have over 20,000 apps and there is a huge army of developers developing more. Unfortunately Rim has only just passed the 1000 mark for apps that work on the RIM smartphone products.

Revenue Streams

The future appears to be the development of applications and they drive several revenue streams for many companies. The developer makes money when his or her app is purchased. Even if they are just charging a dollar a download, there are thousands being downloaded every day driving revenue into the developers hands.

Compelling apps also drive hardware sales of the smart phones themselves for Apple and for any manufacturer of the smartphone using Android. In addition Apple is taking a cut of the revenue for each app, while google makes money through traffic and searches that are conducted via the smartphones.

Finally the telephone companies who run all of this data over their networks are seeing traffic sky rocket through the roof. Although they are spending millions to beef up their networks they are also collecting millions on increased data traffic and smartphone monthly fees as more and more customers  purchase monthly subscription plans from them.

In fact while voice stagnates in terms of revenue growth on cellular networks, and landlines are sliding, data growth represents one of the few bright spots for the telephone carriers.

The Contenders

There appears to be 4 main contenders for the OS systems driving smartphones.  Apple’s OS , Google’s Droid, Rim and Microsoft’s Windows phone 7 appear to be the main contenders. Rim is improving their browser and making it more internet friendly. Apple currently leads the pack with over 100,000 approved applications, Android is approaching 20,000 and Rim has just surpassed the 1000 mark.

Apple has the momentum and needs to bring out more functionality in their OS and support even more applications.  Google with its droid OS is new and has momentum as well simply because of its size and deep pockets as well as the popularity of existing applications that work very well on the computers of today. The question is can they morph this success onto the smartphone and catch the leader ?

What Are Their Strategies ?

Google has made their interface open attracting many developers of applications.  The data traffic runs on three carriers in the US and on 10 smartphones.

Apple on the other hand has a close standards approach to approving apps. It can take several months to approve an app which turns off many developers although it can be argued that you have better higher quality apps as a result. The OS runs on 3 devices, the sG S,  3G Iphone, and the Ipod touch.

5 ways iPhone and Android differ

Google is carrier agnostic while Apple runs on ATT’s network only.

Google is carrier agnostic while Apple lets carriers take a cut of the app revenues

Google is offering Android on more phones with varying price points, while Apples OS runs on 3 proprietary smartphones.

Google has an open standards approach while Apple is my way or the highway approach to smartphone apps.

Google’s strategy isn’t about keeping one carrier happy but about enabling mobility, hardware and software to a variety of different tiers, while Apple has focus on one carrier only.

Who Will Win the War

It is much too early to make a call on who will win the smart phone war.  Rest assured there will be lots of new smart applications  for consumers to play with and incorporate into their everyday lives. The main contenders are not going to sit back, they will do everything they can to grab their portion of the data market.s

If you are planning to purchase one of the new smart phones along with the monthly data plan, take the time to assess just how many apps you will be using and how much data you will send or receive. Data traffic with these smartphones will become the single largest expense on a monthly basis unless you have an appropriate plan from your carrier.

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