As for each edition, IDATE has been Analyst partner of the Mobile World Congress. A fantastic opportunity for our analysts and experts to interview many professionals coming from their Mobile planet to Barcelona for this intense and tremendous week.
Even though the concept of 5G is still very much under discussion (videos from KT, Huawei presented during conferences), NGMN (next generation mobile networks) Alliance published its 5G white paper which can be seen as the mobile operators “wish list” for 5G. Nonetheless, 5G is scheduled for 2020. Early trials should arrive in 2018, with projects scheduled for the Winter Olympic games in South Korea (4G became real in 2010’s, 3G in 2000’s). Key advantages of 5G over 4G would be a much lower latency (1ms compared to 40 ms in 4G and 100 ms with 3G), the capacity to connect billions of devices, faster response that will boost services like augmented reality, self driving cars and online gaming. Huawei mentioned that 5G should reach 10 Gbps (7 minutes to download a movie with 4G, 6 s with 5G).
5G should better take into account specific requests of vertical markets (healthcare, automotive, energy, government, city management, manufacturing and public transportation) and better manage the Internet of Things.
Equipment suppliers showed first demos of 5G air interface using millimetric bands (70 GHz - Nokia) and 15 GHz (Ericsson). New air interface techniques were proposed by Huawei with the non-orthogonal access technology based on Sparse Code Multiple Access (SCMA), and Filtered-Orthogonal Frequency Division Multiplexing (F-OFDM).
With the 5GPPP (Public Private Partnership), Europe is trying to accelerate developments of 5G with fundings of €700 million for R&D. It is expected that the industry will invest five times this amount. According to the 5GPPP, 5G should be based upon a HetNet (heterogeneous network) supporting various radio access technologies and frequency bands ranging from sub-1 GHz bands to 100 GHz. Various traffic profiles will have to be supported:
• Low speed-low energy for IoT sensors
• High speeds for video services
• Very low latency profile for mission critical services such as PPDR (Public Protection and Disaster Relief) and for transportation issues
Google will soon become a MVNO
Google confirmed during the MWC that the group is negotiating MVNO agreements with the US mobile operators. Light details on Google plans so far. Further information scheduled for months to come. Nova is not expected to compete directly against US MNOs. In addition, Google do not want to launch a network at scale.
The Google MVNO will only work with the Nexus6. “The focus of Google’s network could be on connecting devices other than phones, as watches, cars and other devices increasingly will include mobile connectivity features”.Mobile Identity
Different methods of identification and authentication, each suited to particular transaction types (from access to social network to official ID) ; biometric authentication as a new solution.
• Digital identity card exists in Estonia (with digital authentication), biometric card exists in middle east and Africa (Algeria, South Africa)
• Mobile authentication is a challenge for mobile operators, but the market is far from mass-market: demand is not ready for official ID authentication on mobile, standards are needed, as well as regulation.Mobile Id could be a leapfrog technology in emerging countries where people don’t even have identity papers, and have a mobile phone.
If mobile operators don’t manage to be positioned on this market, banks or social networks could.
Network Function Virtualization (NFV) appeared last year during MWC and is now close to commercial implementation by mobile operators. Telefonica demonstrated a full network together with ALU and HP. It will integrate a vRAN, vCDN, vEPC and vIMS.
A first implementation of vRAN was presented by China Mobile which is collaborating with Alcatel-Lucent and Intel on Cloud-RAN, which is seen as a first step towards virtual RAN. NTT Docomo is working with NEC on virtualization of the core network (EPC).
LTE-U technology is important and was present on many vendors’ booths. It will give free access to additional spectrum in the 5 GHz band currently used by Wifi. This will provide SDL (supplementary downlink) capability, providing extra capacity for downlink traffic, especially video. LBT (Listen Before Talk), the specific function which will allow smooth compatibility between Wifi and LTE in the 5 GHz band will be included in 3GPP Release 13 expected to be adopted in Q3 2016.
LTE and Wifi carriers can also be combined in order to provide higher throughputs but in that case, the benefits of LTE higher spectrum efficiency are not present.
Senior Consultant at IDATE
OTT communication service
will account for 6% of total
communication service revenues by 2020
will account for 6% of total
communication service revenues by 2020
In 2020, for the USA and EU5 combined, OTT communication service revenues will have increased to 15 billion EUR from 7 billion EUR in 2012. Yet they will still only account for 6% of total communication service revenues, with telcos accounting for the remaining 94%. The total market will decline, mainly due to the telcos’ devaluation of the market, rather than the OTTs taking their revenues.
Drawing on IDATE’s extensive work on the latest trends in communication services, this latest study, “Future of Communication 2020: Telco & OTT communication - market forecasts” delves deeper into our analysis and forecasts the paths which the market is expected to take between now and 2020.
The six key trends shaping the market
In this study, IDATE outlines the 6 key trends happening in the communication services market which will shape the market through to 2020.
1. The aggregation of communication types: IDATE notes that most communication service providers are aggregating and providing several communication types to the market. For example, Facebook is primarily a social network (which is a communication tool in itself), but also offers voice, messaging and file sharing services too. In the case of operators, they of course traditionally offer voice and messaging as their core product, but are now looking to diversify into file sharing too, either through cloud products or the GSMA-led RCSe (Rich Communication Suite enhanced) initiative, marketed as ‘joyn’.
* EU5: France, Germany, Italy, Spain, United-Kingdom
2. Beyond traditional communication for telcos: The telcos are now looking to offer more than simply voice and messaging, in order to remain competitive in the market and to remain more than a dumb pipe. IDATE sees three main ways in which telcos are striving to achieve this: providing their own OTT communication service (such as Telefonica with their TU Me app and Orange with their Libon app); partnering with OTT communication service providers (such as Verizon and H3G UK with Skype and H3G HK with WhatsApp); and joining the GSMA-led ‘joyn’ initiative, launched by the three principle operators in Spain (Orange, Telefonica and Vodafone), which aims to offer enhanced communication services across all mobile phones in the same simple way as traditional voice and SMS today.
3. Voice and messaging becoming a telco commodity: The need for telcos to offer more than the traditional voice and messaging service is largely due to the commoditisation of such services. These services are today taken for granted, and virtually all telcos offer them in abundance; that is to say for a certain fee, users get massive amounts of minutes and messages that in reality are hard to use all up, and there are also many cases of unlimited offerings. This means that the value of such services is decreasing. Another trend for telcos is bundling, from double to quadruple play. Whilst such marketing strategies are intended to increase user appeal and also reduce churn, the fee itself is normally reduced and hence further devalues the standard voice and messaging services.
4. Mobile data and WiFi makes strong case for OTTs: For OTT communication services to work on mobile, there needs to be Internet connectivity on the mobile. Especially with the exploding popularity of smartphones, this Internet connection is increasingly provided by both mobile data plans and WiFi. Unlike voice and messaging, unlimited mobile data packages are relatively rare with at the very least throttling usually involved. Especially in the case of messaging there are only small amounts of data involved and thus this poses no problem. Video communication, on the other hand, is often banned by operators, but is possible through WiFi; and in many situations where one wants to use video communication, the user is stationary anyway (such as calling loved ones far away).
5. The rise of video communication: IDATE also notes the increased interest in the market for video communication. The concept is hardly new since operators have in the past tried to market the service, but with limited success. In particular, one of the demerits of operator video-calling propositions was the high cost for users, but now OTTs have come in with a free proposition using WiFi, including the likes of Apple and Facebook. Further, the concept of WebRTC, which allows video calling directly from the browser to any other browser could potentially boost video calling; there is no need for users to download software as WebRTC is an API for developers.
6. Genuinely free OTT offers in exchange of user data: One of the obvious advantages of OTT services is that it often comes for free, or in some cases, a very low fee. As an overall trend in the Internet market, the advertising model is becoming standard and the advertising market is set to grow with better tools and analytics, especially for mobile. The communication market is no exception, and is set to profit from advertising. However, generally speaking, users see advertising as a nuisance, and there is also a market for low-cost services with no advertisements, as demonstrated by the highly successful WhatsApp application.
Project Manager: Soichi Nakajima
Soichi joined IDATE as a senior consultant in January 2009. His main area of endeavour is the mobile communications market, such as the mobile Internet, applications, contents and services, the analysis of strategies employed by the various players, scenario building and forecasts. He also works on other business potentials for the mobile Internet, such as smart grids and VoIP. Before coming to IDATE, Soichi worked for NTT DoCoMo, Japan’s largest mobile network operator by subscriber numbers, where he played a leading role in the strategic planning of the roll-out of Japan’s first 3G M2M data-only tariffs. Soichi holds a Bachelors degree in mathematics, from the University of Nottingham in the UK.
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