Six Key Themes MWC 2013

Mobile World Congress, more commonly known as MWC, took place in a new (larger) venue last week in Barcelona. Over 72,000 attended the event from 200 countries. This year, rather than display in partner stands, we decided to go it alone and have our own presence on the show floor. What a great decision! During the four days we had conversations with about 100 companies at our booth.

Based on the activities on the show floor and reports from executive panels at the event, popular topics included

  1. 4G/LTE,
  2. Cloud services
  3. EU wireless market
  4. Open mobile OS
  5. Connected home entertainment and
  6. In-car infotainment

4G and LTE

Not one day passed without CXOs from various companies discussing the importance of 4G/LTE to their business. In Europe, where 4G adoption lags North America, operators are engaged in a 4G roll-out race. Executives report that churn among 4G customers is lower and customers are taking to 4G like fish to water. UK Operator EE said over 25% of subs in its 4G-LTE footprint have upgraded to a 4G plan. TelefónicaO2 Germany is accelerating its deployment of LTE to keep up with Vodafone which already has 60% of its footprint covered by LTE in that market.

Telstra’s CEO said LTE is exploding in Australia. One in five Australian smartphone owners plan to buy a 4G handset in the next 12 months. As a value added service to its 4G users, Telstra, like Verizon, announced launch of LTE broadcast at sports venues in the next 12 months.

In North America where 4G adoption is much higher, carriers are looking at new value added services. Verizon is launching LTE video broadcast for sports events in the next 12 months. AT&T and GM have partnered to be the first to launch LTE hot spots in Cadillac, Buick and other GM cars as early as next year. Companies expect in-car infotainment to drive up usage of 4G and increase stickiness and ARPU.

Already there is strong posturing about the next wave of 4G evolution. Major players like Nokia and Samsung are backing both TD-LTE and FDD LTE to get a broader global coverage.

Cloud & Wireless Operators

There were numerous mentions by many wireless executives about the impact of cloud on their respective businesses and industries overall.  The impact of cloud services and LTE on wireless business is huge. According to AT&T CEO Randall Stephenson, fuelled by cloud and LTE mobile data, usage in the US is expected to grow by 30,000% from 2012 to 2017. This is on top of the 70,000% growth experienced due to 3G broadband adoption and iPhone presence over the last 6 years.

Many EMEA carrier execs (Telefonica, Etisalat, Deutsche Telekom, China Mobile etc.) called for deploying cloud services to launch new innovative products. Particular attention was paid to co-opetition with OTT TV providers and partnerships with companies leveraging cloud services to offer OTT TV-like services.

Competitive Wireless European Market

The European market for telecom is highly competitive and there are stiff price wars. This intense competition is benefitting consumers. In Europe, according to WSJ, wireless data plans are significantly cheaper due to price wars. In Italy, for example, Hutchison Whampoa (“3’) has a 2 GB data plan for just $13/month. In general, data plans in Europe are 50-75 percent cheaper than in the US.

While European consumers are enjoying low prices, operators say their margins are hurting. Operators suggest that given the margin pressure, they are unlikely to invest in network infrastructure! Average revenue per user (ARPU) among European operators declined over the last four years with Bernstein Research estimates it at $33.2/month a dip of 9%. For the same time period in the US ARPU increased by 19% to $49/month.

There is a lot of lobbying happening on both sides of the Atlantic to reduce regulation of wireless markets. European operators, especially, are looking to regulators for approving in-country mergers to improve their scale and operational efficiencies. In Europe today about 100 operators are fighting it out for 500 million subs across 27 European countries and they have to deal with individual telecom regulators in each of those countries.

Mobile OS race, third place is still Open

IDC data shows Android and iOS enjoy the first two positions in the mobile operating systems race coupled with the dominance of Samsung and Apple on the manufacturing side, is causing concern for wireless operators across the globe. Therefore, they are backing multiple new OSs to foster credible competition. Two of the OSs backed by carriers come from familiar established players – Windows Phone and BlackBerry 10. But carriers are backing two newly launched open source mobile operating systems from Ubuntu and Firefox.

Over 17 wireless operators including major brands like Telefonica, Sprint, SingTel, Telenor and Orange are backing Firefox OS. Device makers Alcatel, LG, ZTE, and Hwauwi are building devices with Firefox OS. Telefonica has committed to shipping one million devices in the first year, primarily in Eastern Europe.  Ubuntu devices are mostly targeting APAC.

Connected and seamless home-entertainment

Key device makers like Sony, LG and Samsung showcased their vision of a seamless connected home-entertainment experience at MWC.

Samsung launched an Apple TV like device and service called Homesync. The service allows easy sharing of content from mobile devices on to TVs. The product is launching in the UK first.

Sony, LG, Samsung, Hwauewi, and ZTE all featured a connected home entertainment experience where content was seamlessly transferred from smartphone to TV (for video) and to speakers for audio. The underlying technology used in most cases was Wi-Fi Miracast. LG devices in addition to Miracast also leveraged uPnP for enabling connected entertainment experience.

In-car Infotainment

Carriers and automobile companies are working together to bring automotive entertainment to the smartphone era. Audi, GM, Ford etc all had big presence at MWC showcasing their latest infotainment initiatives.

Ford announced a new partnership with Spotify. This enables Ford Sync to work with Spotify starting in 17 EU countries on new European Ford models. GM broke its long-standing relations with Verizon and is partnering with AT&T to install LTE hotspots in its top car models for 2014. Perhaps we can look forward to seeing AT&T U-Verse streaming services coming to cars. Data plans pricing for these hotspots is yet to be released.

The Connected Car Consortium (C3) also had a big presence at MWC with 70% of the automotive market and 60% of smartphone marketplace worldwide now backing their MirrorLink technology. MirrorLink enables apps on smartphones to work with HUD units in the car. It is a very effective way to stream audio to car stereo systems, even if the stereo system is an after sales installation. C3 also has an app certification process for approving apps for safety reasons.

It will be interesting to see how (or if) these themes spill over to CTIA and other industry events as the year unfolds and, of course, follow these themes throughout the year to measure their impact on the mobile industry at large.