Our usage of wireless data increases about 10% every month. Thankfully, our bills don’t increase 10% every month. Good for us – bad for the wireless network operators.

So what are the operators doing about it? Remember the unlimited ‘all-you-can-eat’ data plans offered by virtually every carrier? Well…read the fine print. There is an upper limit to the ‘unlimited’ data that you can consume. Some operators would completely block your data access once you had reached the cap. Others would simply charge an outrageous amount for the excess data over the cap that you had consumed. Still others would apply technology - such as rate-shaping of traffic - to degrade your quality of service and make your experience so unbearable that you’d stop downloading all those YouTube videos. These techniques are designed to decrease the total traffic in the network so that operators can serve existing users cost-effectively and pursue new data subscriptions – both of which are mandatory to sustain profitability.

Clearly, these ‘solutions’ are not ideal because of their negative impact on the user experience. Consumers become confused and frustrated, which defeats the original purpose of increasing the operator’s profitability. Consequently, operators are looking for other ways to lower the cost per bit transmitted over the wireless network in order to profitably serve the growing demand for mobile data. For example, many operators are experimenting with femtocells - little base stations that sit next to your Wi-Fi access point at home – or even Wi-Fi radio, which is supported right in the phone. Both solutions are designed to offload wireless data (and voice) onto existing (i.e., cheaper) fixed-line networks to serve users while they are at home or work, thereby reducing traffic on the wireless network. The bad news is that both solutions are complex – and require a change in user behavior.

That leaves us with the most obvious solution – make the wireless network less expensive to operate – which is why operators are planning to roll out LTE (Long-Term Evolution) networks. LTE is a great solution. Its spectral efficiency is roughly four times that of existing HSDPA technology. This means that for every bit transmitted over an existing network, LTE would allow four bits to be transmitted, thus reducing the cost per bit by a factor of four. Put another way, it would enable operators to serve four users at the current cost of serving a single user. Fantastic, right? What better reason for operators around the world to spend years in planning and billions in acquiring spectrum, radio infrastructure and cell towers - and even more years and billions in deploying and rolling out the technology. The savings on existing users’ traffic would be enormous, and the potential revenue from growth in data subscriptions would be even more substantial.

Of course, we can’t forget about the ‘years’ and ‘billions’ required before this is a reality. Did you know that the combined power of Bytemobile’s optimization solutions can reduce the cost per bit by as much as a factor of two? That’s 50% of the value of LTE - and it costs a fraction of LTE in terms of cash and management and deployment time. The principle is simple – rather than optimizing the way the radio uses the spectrum, Bytemobile solutions optimize users’ data. This means that they work on today’s network, require no changes in user behavior and actually improve the user experience – all the while reducing the cost per bit. No wonder Bytemobile has over 100 wireless operators worldwide as deployed customers.

Optimization is yet another solution available to operators in their attempt to increase utilization of available bandwidth and reduce the cost per bit. Operators will continue to invest in optimization for as long as they continue to invest in better radio technologies – and as long as users demand higher levels of service.

The relentless pressure to decrease costs, increase subscriptions and revenue, and improve the user experience not only demands optimization solutions today, but will also demand optimization solutions in the future LTE environment, and will further demand optimization solutions if and when 5G radio technology is invented. After all, the same forces that drive operators’ investment in radio technology also drive their investment in optimization.

-Joel Brand

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In May, Bytemobile sat down with Ronan de Renesse of Screen Digest to discuss the state of mobile media. This week, Ronan has been kind enough to answer some questions for our readers.

1) Screen Digest recently published a report on the state of the 3G mobile broadband market. Where do you see 3G mobile broadband fitting into the overall mobile ecosystem today, and where do you see it in three years? How does this affect what carriers are doing, aren’t doing or should be doing?
Mobile broadband today is worth more than mobile TV, mobile video, mobile music, and mobile games combined. The number of mobile broadband connections has multiplied by 10 between 2006 and 2008 and is still rising. Five years after the launch of 3G, mobile operators have finally found a way to monetize their 3G licenses. However, the real potential for mobile broadband is as a primary home connection, and today’s services work well only as a secondary broadband connection. As a result, growth is likely to decline over the next couple of years until mobile broadband can become truly competitive with fixed broadband.

2) You frequently cover mobile video and mobile TV. How would you assess the current state of the mobile video and mobile TV industries? What is the key driver that will increase adoption (network solutions, handset advancements, content)?
Mobile TV/Video is the mobile content category that has suffered the most from the economic downturn. In 2008, we experienced drastic changes in business models with the emergence of mobile content bundles such as SFR Illymitics in France and disruptive technologies such Telegent Systems’ analog mobile TV chipset. The industry realized that mobility by itself does not justify a subscription fee for mobile TV. Quality of experience (i.e., large screens, premium content, good QoS) is key in order to drive the uptake of paid-for mobile TV services. With the increasing availability of free-to-air services, the industry runs the risk of consumers thinking of mobile TV as a feature (like a camera or FM radio) instead of a service. In 2008, 76% of mobile TV users watched it for free.

3) How do you see the growth in adoption of mobile video and mobile TV affecting network infrastructure? Networks already seemed to be bogged down with data traffic. Are they ready for widespread adoption of mobile video and TV?
The rise of mobile broadband, added to the increasing popularity of smartphones (typically sold with flat-rate data plans), has certainly put a lot of pressure on 3G networks lately. Mobile operators are doing a lot to upgrade their networks as quickly as possible in order to accommodate the demand for mobile data. Fixed networks can only handle widespread adoption of online video and TV, and mobile networks are very far from it - especially considering that there are far more mobile connections in the world than fixed ones. However, there are other ways to get content on your handset than through the 3G networks. Over 90% of videos and music tracks on mobile phones are side-loaded from the PC. Taking control of this delivery mechanism and monetizing or reducing it is a big challenge for handset manufacturers and operators.

4) You recently published a report that discussed how, as the walled gardens come down, handset manufacturers are moving in to provide services to operators. Will handset manufacturers continue to drive and influence the wireless industry? Does anything threaten this influence?
The success of mobile broadband and flat-rate data packages has shown several mobile operators that they are better at selling access than content and that opening the walled gardens can work to their advantage. Mobile operators are therefore increasingly opening up to third-party service providers. Handset manufacturers, on the other hand, are suffering from a difficult economic context where mobile users opt for SIM-only contracts instead of handset upgrades. Handset manufacturers are therefore looking at alternative revenue streams and/or new ways to differentiate from their competitors, and content is coming up as a relatively good option. In addition, Apple has proved with its App Store that vertical integration of hardware, software and services works well in mobile.

5) Forrester recently published a report declaring that the term “smart phone” is dying off. Is there a future for mass-market handsets? Why or why not?
There is certainly still a future for mass-market handsets, which will be primarily driven by growth in emerging markets such as China and India. The recession has also helped to keep low-end handsets in the market. However, there has been cannibalization between feature phones and smartphones which are typically populating the mid-range and high-end device segments in Western markets. Smartphones have been taking market share from feature phones for the past 12 months, as smart phones become more accessible in terms of price and feature-rich. I would say that the term “feature phone” is more likely to die than the term “smart phone.”

Stay tuned for commentary from other key industry influencers on the trends and issues important to the mobile internet ecosystem. If you have any questions you’d like us to ask, feel free to leave a comment or send an email to sinfantino@bytemobile.com.

-Stacey Infantino

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On June 18, we conducted the second webinar of the 2009 Mobile Minute series – “Making a Better Mobile Browser”. Led by FierceWireless as part of its FierceLive! webinar program, the event attracted 317 registrations and 126 unique live visitors from Europe, the Middle East, Africa, Asia, Latin America, the U.S., and Canada. You can access a full replay of the webinar on the Mobile Minute page of Bytemobile’s website.

FierceWireless Editor-in-Chief Sue Marek moderated a panel consisting of (from left to right below) Mark Donovan, senior vice president of Mobile and senior analyst at comScore; Phil Parry, mobile browser interaction manager in the Design and Usability unit at Orange Group; and Adrian Hall, chief marketing officer at Bytemobile.

Mark Donovan began the discussion with a profile of the mobile market segments today, indicating that mobile media users – defined as browsers, application users and downloaders – had grown 24% from last year and now constituted the largest segment at 35%. The key drivers include device technology, network speed and adoption of unlimited data plans. Donovan noted that the U.S. had surpassed Europe in data plan penetration and that growth will accelerate as networks become faster and data costs stabilize. He cited browsing and social networking as the fastest growing mobile data activities, with the latter increasing 170% from last year, followed by applications at 111%. In the U.S., daily news and information access on mobile devices is overtaking the circulation of daily newspapers. Donovan concluded with a review of the leading smartphone domains, which are dominated by social networking and community services, news and information, and entertainment. Excluding social networking, web search, weather and news are the leading mobile browsing genres.

Phil Parry of Orange followed with the operator’s perspective on the mobile browsing platform and business model, noting the fragmentation of the market and the pros and cons of the PC internet experience and the mobile internet experience. Parry categorized the challenges to be addressed in closing this gap as user, economic (operator) and developer issues. He echoed Donovan’s point about smartphone penetration as a major factor in the evolution of web browsing technologies and then focused on the competitive landscape for web runtime platforms, which is moving toward service discovery and personalization. Within this context, Parry noted that today 58% of Orange subscribers search the Web through Orange World, the operator’s portal, while 78% circumvent the portal for direct access. He summarized the mobile platform and web-based application development environments and the balance between portability and performance. In conclusion, Parry stated that Orange would support the development of best-of-breed mobile web services with a unique operator-based platform and continued focus on the design of the user experience.

Adrian Hall’s segment of the panel played off of Donovan’s and Parry’s segments and shared Bytemobile’s experience in working with more than 100 operators worldwide on the evolution of their networks and data services. Hall underscored the importance of personalization to the success of the mobile Internet, highlighting Bytemobile’s Widget Bar as an example of a smart browsing tool that enables customization of the user experience from within the network and supports the implementation of new business models. He also reminded the audience that content adaptation has valid uses cases for all mobile devices – including even the highest-end smartphones, such as the iPhone and the new Android devices. Hall closed with a quick summary of Bytemobile’s product portfolio, again relating key points back to the comments of the other two speakers.

Following the individual presentations, Sue Marek took selected questions from the webinar participants. These questions ranged from the match-up between application requirements and browser capabilities to battery life, from the fragmentation of the mobile space to social networking opportunities and the impact of bandwidth constraints on application developers.

In addition, the audience was polled on the multiple-choice question heading the chart below:

The response emphasizes the fact that improving the mobile browsing experience is a multi-point solution – diversity of opinion notwithstanding, there is no single answer. Moreover, the Bytemobile product portfolio supports either directly or indirectly the key components of the solution.

Please note that the next webinar on mobile multimedia and the changing wireless traffic mix – also to be led by FierceWireless – is scheduled for July 15. You can register here.

-Jaishree Subramania

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The historical limitations of the mobile web browsing experience are well known to consumers worldwide. What can wireless network operators and their partners in the mobile ecosystem do to overcome these limitations and ensure customer satisfaction leading to increased data usage and reduced churn?

Please join Orange Group, comScore and Bytemobile at 11:00 a.m. EDT on Thursday, June 18, as we address these and other vital questions in the second Mobile Minute webinar of the 2009 season.

The June 18 event – as advertised above in selected FierceMarkets publications – will be led by FierceWireless as part of its FierceLive! webinar program. Editor-in-Chief Sue Marek will moderate the discussion among Phil Parry, mobile browser interaction manager at Orange Group; Mark Donovan, senior analyst at Comscore; and Adrian Hall, chief marketing officer at Bytemobile.

See here for details and registration instructions. The third Mobile Minute webinar on the changing traffic mix in wireless networks will be held on July 15.

-Jaishree Subramania

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