Mobile Asia Expo is the Asian arm of GSMA’s Mobile World Congress run in Barcelona every February. I missed out on MWC this year due to a very busy project, so I went to MAE in Shanghai, in the last week of June.
This conference was an interesting alternative view for me. In the words of one of the executives presenting, I am from the world of internet companies, not from the world of telecommunications companies. This conference is primarily aimed at mobile network operators and handset manufacturers, and the companies who supply them.
Even though my involvement in mobile stretches back over eight years, I have always been building services to be made available over mobile networks — ‘Over The Top’ services, or OTT, as the operators refer to it — I have not been building networks or handsets. The world of this conference is one I’ve only ever seen from a distance. When you look at where the huge explosion in consumer use of mobile has come from it’s very easy to be dismissive of operators. I’ve tried not to think like that. I don’t understand their world: I’m sure there’s much I’ve missed.
My goal for this conference was to understand the world of carriers and to no longer ever worry about being dismissive. I failed.
At the beginning of each session a stinger video was played. This video was a potted history of mobile communications, intended to inspire. It finished with a list of demands:
- Harmonised spectrum; and
- A positive regulatory environment.
I had to look up what was meant by harmonised spectrum. I’ll come back to that.
The most interesting session for me was one titled “Social Media: Making the Networks Pay.” It was in this session that the executive from a US network operator divided the world into ‘telecommunications companies’ and ‘internet companies.’ His point was that on one hand the ‘internet companies’ (meaning companies building the internet and services available on it) have been really good at agility but really bad at standardisation. While on the other hand, ‘telecommunications companies’ (network operators, handset manufacturers and their suppliers) have been really bad at agility but really good at standardisation. From those assertions he went on to say that internet companies need to expect to cede more ground to telecommunications companies, and expect them to be more active participants in the services they wish to offer.
But are those statements accurate?
I think we can all agree that, largely, the operators are not agile.
Harmonising spectrum is the telecommunications companies agreeing to use the same bands for the same purposes across different countries. Historically, they haven’t done this and as a result we have had quad-band 3G phones. Phones with four radios to be sure they work in at least the majority of countries. That’s not very standard. We’ve also had the debacle of the network standards between GSM and 3G: they were all subtly different. It’s only now with 4G LTE that operators are agreeing on a long-term single network standard. None of that sounds very standard to me.
Internet companies are certainly agile. But are they really bad at standardisation? Over thirty years ago all-IP networks became the defacto standard. But that’s only one step up from the logical link layer. There’s also standardisation of TCP and UDP and even at the application layer with HTTP. In fact, when it comes to network standards the internet companies have been amazingly standard, for a very long time. These standards are so rich that we’re still exploring the capabilities of an all-HTTP inter-connected web. The network operators are also moving towards all-IP networks: adopting the standard of the internet companies.
Hmmm… It looks instead that the telecommunication companies are bad at agility and bad at standardisation while the internet companies are good at agility and good at standardisation.
How did this happen? The answer came from another participant at the same session, and references the other demand of the conference organisers: ‘a positive regulatory environment.’ Building a country-wide mobile network is hard. Dealing with multiple levels of government across different regions and states is also hard. These two things eat up pretty much all of the attention and effort of your average network operator. They simply don’t have the capacity left to innovate.
They are so far from innovating that they don’t even know what they have to work with. The CEO of a major operator was asked in a keynote session what he thought their biggest asset was. He stated that it was the network. That’s mistaken. The network is simply the price of entry: without a network you’re not a network operator. The real key asset is the billing relationship with their customers. This is something that operators have sat on and locked away. Who else remembers trying to offer SMS applications in Australia in the early 2000s?
Mobile phones came too late to replace credit cards, but the debit card should simply never have happened. We should be using our mobile phones to pay for things. There is a communication standard (RCS) coming from telecommunications companies. This is intended to replace the existing mish-mash of communications protocols (SMS, IM, SIP, XMPP, etc.) and to open up access to operator value-added services. I simply do not believe that the operators will allow it to happen. I spoke with an implementor of this standard. He explained that it does include the ability to bill a customer, using the operator’s billing systems. Just like in-app purchase on the iPhone. But he was pretty sceptical that operators would make it as easy for developers to use as Apple has.
The executive who complained about the standardisation of internet companies was also the only person I heard willing to give voice to the deep fear of all telecommunications companies: they are doomed to become just a dumb pipe. Unfortunately, after spending time in their world, that’s the only outcome I expect to see.
In 15 to 20 years time it will make as much sense to consider an operator participating in the consumer value proposition as it does for an electricity utility now. As I’ve said before, they’ve done this to themselves: do not mourn their passing.