3G services in Japan, April 2008

Cherry blossom in in Sapporo and Tokyo, April 14-21, revisiting my comments 2 years ago.

Growing mobile content services and networks
Mobile commerce and advertising are growing
Mobile video is still emerging
From 3G to 4G leadership

Growing mobile content services and networks
User generated content and messaging are the top usage : 25% of subscribers send more than 5 messages/day, and 10% more than 10, according to Impress. DoCoMo’s Decomail, service is popular with teenagers who use sites such as Decotomo.jp, Disney to offer purchase messaging personalization content. Social networking is growing : 10 million users (50% of teenagers, 35% of 20-30 year old) generate 20 billion PV/month on Dena’s Mobagetown, which offers free browser flash games, social networking and 10,000 digital items. 1.7 million users (25% of teenagers, 39% of 20-30 year old) generate 93 million PV/day on KDDI’s mikle.jp mobile community with 11 user generated content categories such as gaming (#3), love (#10) etc.

Internet providers have established strong partnerships with mobile operators : Web searches rank 3rd among the most popular mobile data services , behind e-mail and news. Google Search appears directly on the top screen of KKDDI and DoCoMo users with the banner enhanced by Google. Google also develops mobile applications with NTT DoCoMo, sharing behavioral mobile search data and splitting advertising revenues. Yahoo! Mobile , owned by Softbank is the country’s most popular Web portal with 18 million mobile subscribers and gets 4 billion PV/month. 14 million users (out of 82 million) access the internet exclusively from their mobile phone according to Impress R&D.

One additional driver has been the 9:1 on-deck revenue share for content providers. NTT DoComo’s i-Mode menu still drives 5 billion PV/month.

Mobile commerce and advertising have doubled
Mobile commerce is used by 36% of Japanese users and estimated ARPU of 300$ exceeds mobile content revenues according to Impress and Infinita. NTT DoCoMo provides Rakutenchi mobile auctions on the i-menu and Softbank offers Yahoo! Shopping and Auctions. For mobile payment , 30% of handsets support the Sony Felica RFID chip for contact less transactions at train and plane gates and with more than 70 commercial retailers.

Mobile advertising revenues doubled since 2006 to 620 M$ (62.1 ¥B) and 25% of Japanese companies use it . This is still only 10% of on-line advertising spending at 4.4B$ (443 B¥) and 1% of total advertising, according to Dentsu communication institute. Typical banner rates are 5’000-10’000$/week for 2-20 million PV and there is a large choice of options between these. Mobile advertising was the topic of the MoMo Tokyo meeting on April 21st at Google’s offices in Shibuya . An example of mobile online community using Mobile Adsense is mikle.jp. They have 129 million PV/month and 2.3 million users/month.

Mobile video is maturing
Mobile broadcasting branded “1seg” was introduced in Japan in 2006 and now reaches 25 million subscribers in Japan can receive broadcast TV on mobile , with a data link for mobile information or advertising. Check 1 seg on YouTube.
On the user generated video content, one service is My Tube from a mobile service provider called Key Life that provides video sharing aggregation ( from You Tube, Google Video, Ameba vision, Dailymotion), with a specific focus on for Japanese content. And there is a very small usage of video calling for similar video bloging experiences. In general, video calling quality was very good and international calls worked very well.

My Japanese colleagues showed demos of video convergence across TV screens, PCs and mobile handsets with the related issues of video adaptation and service control.


From 3G to 4G leadership
Japans counts over 90 million 3G subscribers (+30 million since 2006) according to Impress R&D :
25 million have usage-based contracts
38 million have flat rate contracts
25 million use 3.5G HSxPA

Throughout my visit I was impressed by the high quality of coverage, even in-building. Last month, NTT DoCoMo announced the result of their 3G long term evolution (LTE) tests in Yokosuka, south of Tokyo. They achieved downlink transmission at 250Mbps using a multiple input multiple output (MIMO) with a 4-antenna base station using the full 20MHz bandwidth (specifying 300 Mbps peak ) . They advertise this as “Super G” and talk about a first network roll out in 2010. Mobile gaming and mobile TV applications will be enhanced through the introduction of LTE, benefiting from < 10ms latency and high peak-rates. 70 million 4G subscribers are forecasted by 2013 (Europe 30 million, Asia Pacific 21 millions and North America 17 million) according to Informa.

Evolution of service infrastructure
In a panel in Sapporo we discussed service infrastructure, together with George Mc Gregor, VP of services at HP OpenCall, Dr. Suphachet Phermphoonwatanasuk, from AIS in Thailand , Martin Gutberlet, VP Research at Gartner. Gartner’s view of the top mobile business opportunities includes : mobile TV 40 B$, mobile music 31 B$, mobile broadband 28 B$, mobile advertising 14 B$. AIS discussed their target architecture to combine voice, music and video services using VXML and SIP application servers on 2G and 3G networks. In a following talk in Tokyo, I demonstrated mobile instant communications, video blogging and the use of web technology such as WSDL network APIs, JSR309 Java APIs, and SMIL) to provide interfaces to networks and create interactive video services.

Subscriber statistics update

DoCoMo 53.4 million
KDDI 30.2 million, slight decrease due to phase-out of Tu-Ka
Softbank 18.8 million, growing

3G evolution in Egypt, April 2008

I visited Dubai, April 13th for a meeting with executives from a mobile operator and review 3G multimedia services evolution in Egypt. The country may become as famous for its 3G deployment in emerging markets as for its pyramids .

The pyramids will oversee 70 million subscribers
Egypt is the largest emerging mobile market in the Arab-speaking world with 73 million inhabitants and a strong potential for growth. Mobile was launched in 1999 and penetration now exceeds 42% (probably <30 M subscribers due to multi SIMs) and is forecasted to double( estimate 68 million subscribers) in next 5 years as 3G brings cheaper voice services in the country . Compared to other countries in Middle-East / North Africa, Egypt has the highest annual growth at 170% but third lowest mobile penetration after Lebanon and Syria but may rise to the levels of Algeria, Morocco, Tunisia with similar GDP per capita. The other growth opportunity is in the fixed network development currently at 15% tele-density and 10.5% internet access. (Egypt ‘s 17 Gbps internet backbone access was disrupted in January 2008 by cuts in submarine cables.) As broadband wireless is an access option, the regulator introduced consultations on WiMax and issued 3G licenses .

End of duopoly : usage up, tariffs down
Competition has increased throughout the Middle-East with 3 mobile operators per country in Egypt, Saudi Arabia, Kuwait and Jordan. In Egypt, Orascom and Vodafone, controlled the market until 2007 when a new license was awarded to Etisalat. This resulted in a 50% cut in prices to 0.35 LE/min and a decline of ARPU from 15$ (82 EGP) in 2005 to10$ (58 EGP) in 2007. Mobinil and VFE blended ARPU fell by 20% and 12% respectively but low tariffs increased minutes of use to by 15% to MoU to .Again in April 2008, Mobinil announced new price cuts. We expect the operators will have to cut costs by sharing of investments in infrastructure or introducing MVNO retail channels. In addition, the fixed-line monopoly of Egypt Telecom is challenged by the regulator (NTRA) auction of second fixed-line license auction in June 2008. Etisalat and Orascom are possible candidates for this license. Egypt is also introducing number portability using infrastructure from Giza Systems and Telcordia

The following players operate in Egypt :

Orascom Telecom Holding (Mobinil)
48% market share
16 M + (Alohat per-second billing prepaid subscribers)
GSM 900Mhz, 1800Mhz and 1900Mhz, WCDMA 5MHz spectrum
Naguib Sawiris is the well known chairman and CEO of Orascom Telecom.

Vodafone Egypt Telecommunications
42% market share
14 M subscribers
GSM 900Mhz, 1800Mhz and 1900Mhz, WCDMA 5MHz spectrum

Etisalat Misr
10% market share (plans to capture 30% market in next 5 years)
2.0 M subscribers (3.5 M estimate mid 1008)
GSM 900Mhz, 1800Mhz and WCDMA 5MHz spectrum
Ericsson – based 3G HSxPA network covering major cities including Cairo, Alexandria, Zagazig, Tanta, Sharm el Sheikh, Luxor.

Telecom Egypt
Fixed : 11.2 M lines, penetration level < 15%,nhousehold penetration ~ 75%, ARPL ~10$
TE Data ADSL : 0.45 M subscribers (141% growth in 2007)
Internet 0.4 M subscribers (290 M minutes monthly usage, VoIP is illegal for consumers but it legal for corporate accounts through ISPs.)
Telecom Egypt owns 45% of Vodafone Egypt

3G internet + content for early adopters
Vodafone Egypt and Mobinil acquired a 3G license at a cost of 610 M$ each, 20% of Etisalat Misr 2G + 3G license cost. Like in other emerging markets, 3G business case in Egypt includes expansion of the voice capacity, internet access and new entertainment services.

3.5G allows internet access in the marekt underserved by Telekom Egypt (only 0.4 million ADSL subscribers). Already 24% of Egypt’s subscribers use their mobile to browse the internet according to Maktoob Research. Vodafone 3G offering for the for the enterprise sector includes “ mobile connect “ USB modem allowing a browsing and file exchange.

Early adopters are moving on to 3G data services and operators are promoting to high ARPU subscribers to compensate 2G ARPU decline. For an example of the interest by early adopters, check the blog of Tarek Ghazali in Cairo who hosted the carnaval of mobilists in Egypt

Vodafone launched its 3G in the youth segment with video calling, mobile TV (1¢/min or 2.5$/month for 5 hours), and music downloads. Kamera's Egyptian subsidiary SweGypt provides a suite of mobile TV channels, including the Arabic news channel ShortCut, the sports channel SportCall and the entertainment channel WOW! TV. Kamera will also deliver highlights from the EURO2008 football championship. But only 12% of Egyptians are comfortable with the idea of watching live television on their mobiles, based on Maktoob Research market survey. Here is one of Vodafone's adds for 3G video calls.


Mobile advertising is also emerging : Vodafone launched the "Please Call Me" message which comprise a link to video ads or IVR announcements. 52% of subscribers say they are interested in receiving advertisements on their mobiles according to Maktoob Research. And mobile communities are also on the growth path : Vodafone Egypt has launched a student competition to stimulate development of social networking and entertainment services .

Telecom convergence, Bled, Slovenia, April 3, 2008

Sintesio project is an NGN interoperability test bed. I gave a presentation at their last workshop on fixed mobile convergence.

Fixed-mobile convergence on the hype cycle
Sylvain Fabre research director at Gartner presented the technology cycle, with an update on unified communications, devices and broadband. Gartner hype cycles illustrate maturity of technologies in 5 phases:

Technology trigger : breakthrough, product launch including femtocells, 4G LTE standards
Peak of inflated expectations = over-enthusiasm and unrealistic expectations. For example fixed mobile convergence, LAN/WAN/ roaming, 802.16e WiMAX, PBX integration, IMS.
Trough of disillusionment = users abandon the technology : IPTV, Mobile TV streaming, location-based services,
Slope of enlightenment = users experiment to understand applications. For example unified communications moving fast, voice over WLAN and WiFi, FTTx, MPLS.
Plateau of productivity - benefits widely accepted, stable technology: WiFi 802.11a-b-g,

Unified communications disillusions
Enterprises are adopting unified communications but not anymore for cost reduction. FMC replaces fixed line voice calls, but augment cost from usage and devices. Users keep complementary fixed and mobile devices. Enterprises look for TCO, including benefits of collaboration not partial savings of an FMC implementation. The move threatens PBX manufacturers (Siemens, Avaya, Nortel), IT vendors (Microsoft, IBM and Cisco), and could drive new opportunities for Web 2.0 (Yahoo, MSN, Google, AOL).

High-end devices enlightenment
85% of handsets will be Web-capable by 2011 (90% in Europe). Handsets will support touch screens and HD video in 2008. The top 5 manufacturers have 80% market share. Note the Nokia focus on applications and services. Users will have 2 devices from notebooks, ultramobile PC (UMC) <1kg are emerging, tablets (no mass adoption), PDAs, smartphones (consumers devices creeping in enterprises, e.g. iPhone)

Mobile broadband trigger
Bandwith/latency evolution towards ubiquitous 10Mbit/10ms:
3G WCDMA 0.5 Mbps - 150 ms
HSDPA 1 Mbps /100 ms (European coverage is > 90% in 2008)
LTE and 802.16 100 Mbps /10 ms (Verizon and DoCoMo trial results)
Femtocells for SOHO from vendors such as Ubiquisys, Ip.access , Alcatel-Lucent BSR
Alternatives for corporate in-building : distributed antenna systems, Wi-Fi, Unlicensed mobile access (UMA) handsets (now named generic access network GAN),

Applications requirements are covered :
Download of 2.5GB : 4340 min on 1G, 744 min on 2G, 42 min on 3G, 8 min on 4G.
What is the 4G business case when 3G is challenged ?
Flat rate data is inevitable for service providers and backhaul investments are important. BBC iPlayer is a nightmare for UK ISPs .
[iPlayer, a TV archive of last 7 days, is 3% of internet traffic in UK and cost of upgrading networks is estimated at £831 million].
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FMC with softphones: video and SIM authentication
Mobitel showed their implementation of FMC with two softphone services presented by Rudolf Sušnik and Klemen Albreht of Mobitel

Videotelephony (m:komunikator)

using SIP phone-to-mobile, SIP phone-to- SIP phone evolution to video conferencing. Implementation challenges include : trans-coding of video.

VoIP roaming (m:contact)

USB stick with SIM authentication, client and drivers, PIN code. The VoIP service features single identity, mobile phone and soft phone sequential ringing, messaging (SMS, MMS, IM planed), Voice call continuity. Users gets a unique SIM identity on mobile and PC softphones, a unique bill with worldwide roaming at domestic price. Mobile operators reach extends to the ineternet and brings better service development features at lower OPEX. Implementation challenges include :
firewalls (resolves with session border controller), IN for paralell call alerting, number presentation, voicemail/SMS/MMS integration.

FMC with softphones : location enablement

We got a demo of location-enabled softphones with little brother, presented by Andrej Kos, from University of Ljubljana’s telecommunications laboratory This is a real-time location presence system. Location within 10-20m is acquired from USB Bluetooth dongles on laptops and low cost WiFi router Openwrt. Scan frequency is 10-60 second capturing signal strength, device name and MAC implemented

The presence is displayed on a web communicator/portal. Click to talk is implemented with SOAP request to Parlay X gateway interfacing a PBX. Microsoft Exchange integration is also used.

Presence information is published according to PIDF [RFC3863] and rich extensions [RFC4480]. This includes : personal (info), social (mood), location (coordinates, GeoPriv privacy preferences)

Presence protocols include : SIP-simple, XMPP Google Talk, Jabber, Parlay X Web API, XCAP rules and buddy lists

Future of internet Bled, Slovenia, April 2, 2008

EU’s search for the future of internet
In Bled, I reviewed the declaration of an EU R&D workshop on the future internet. Slovenia has the presidency of EU and hosted a group of EU FP7 projects there. EU budgeted €9.1 billion for ICT research for the FP7 and the projects attending the Bled workshop represented €400 million of that. Not surprisingly they declared themselves in favor of internet collaborative R&D actions. The past internet grew out of public research (DARPA, CERN) and it appropriate to assist policy makers encourage innovation. The debates covered : network , internet, media, security, enterprise (internet of things).I looked at presentations from the [public] telecom sector.

Connected home is a 50 years-old idea
Future scenarios such as the connected home are quite old ideas, argued David Kennedy,Eurescom director, showing a 1956 illustration from Fred McNabb.To make this a reality, Internet evolution should enable these communicating objects :
Multifunction handsets (keys, navigation, wallet, communications hub)
Sensors (ambience, context adaptive)
Intelligent content : (select the best display, digital rights attached to viewer for all devices)

Telecom operators will morph into on-line services
Antonio Manzalini from Telecom Italia Telecom Italia (TILAB) does not surprise anybody by stating that IP reduces the required network transport and access elements (that’s defacto fixed mobile convergence) and simplify application development (service development). This suggest to me that network service providers transform themselves into on-line value added services providers with new business models. He calls this model Telco 3.0.

Future users are far from Bled
For both Internet an the mobile communication industry, the new internet users are from the rest of the world as illustrated in these statsitics.