Author Archives: Simon Rees

What is LTE and what will it bring to Ireland?

4G LTE is slowly seeping into the Irish consciousness.  Eircom’s launch announcement seems to have gained most of the attention, although Vodafone and O2 have been rolling out LTE in Ireland too.

So what exactly is LTE?

LTE is a complex set of evolving standards, but suffice it to say that it makes mobile data speeds a whole lot faster, and should provide a more reliable and consistent mobile data experience, too.  Testers in the UK are reporting download speeds from 8Mb/s to 25Mb/s, and healthy upload speeds.  It (obviously) requires a LTE-compatible handset, like the  Samsung S4, and it will usually require a specific 4G subscription – at least initially.  LTE data also exhibits less latency, so the customer experience of some real-time data services will improve.  Voice can be carried as packet data over LTE, which presents some opportunities (and headaches) for telcos. It seems that initially at least, voice calls will be carried by 3G and 2G networks.

Some readers will remember that 3G used to have the alternative name UMTS, which stood for universal mobile telecommunications system – which it wasn’t.  While the Japanese & Europeans agreed a 3G standard – in itself a step forward- the Americans largely went with a different version of 3G, a problem that bedevilled the Vodafone-Verizon relationship.  LTE should end that problem too.  However, one issue with LTE is that it uses a wide range of different frequencies in different countries, resulting in some early compatibility issues.  It seems that handset manufacturers are addressing this by increasing the number of radio frequencies supported.  Another is that running 4G is reported to reduce battery life. Finally, don’t confuse LTE with 4G, which (outside the technical standards organisations) can refer to LTE, to 3G HSPA or to WiMax.

And what is LTE for?

A cynic might say that the purpose of LTE is either a) to raise revenue for governments or b) an excuse for some telcos to charge extra for mobile data.  Let us put those thoughts aside.  UK regulator OFCOM has published an interesting report on future services enabled by LTE. It is worth quoting:

  • Personal services will be enhanced with contextual information so that technology becomes more and more deeply embedded into our daily activities.
  • Enterprise efficiency applications will continue to grow, with big data techniques extracting insight from unstructured data, and digital business changing the way many companies serve customers.
  • Public infrastructure − city, transport, health and so on − will become more connected and intelligent, allowing more efficient utilisation and helping society to deal with challenges such as the ageing population

Which is all good news, I’m sure you will agree.  It also identifies two potential new applications:

  • New mobile data services for the emergency services – essentially an upgrade path from the TETRA networks that the UK emergency services have been running.  Data speeds on TETRA are pretty poor.  Perhaps Irish government TETRA users will migrate to LTE when networks are built out.
  • New mobile broadbast services.  LTE defines a mobile broadcasting service – eMBMS.  The report is sceptical about the consumer demand for such services in the UK.  Ireland has fewer terrestrial TV channels than the UK, which might increase the chances of a new broadbast technology, however many countries are seeing a decline in broadcast TV viewing, particularly among the young as TV streaming services and the regular internet prove increasingly attractive.

So – when LTE appears in your area, it won’t necessarily usher in any fantastic new services – but it should improve the mobile data user experience considerably.

Q3 Comreg report reveals interesting developments in Irish telecoms

Comreg’s latest quarterly report, published just before Christmas, makes for interesting reading.  Here, in aid of brevity given the evening that’s in it, are some observations on the report and what it means for us in the Irish telecomms industry:

  • Telecoms is still getting cheaper – see chart 1.4.1.  This is probably driven by quad-play, in part, but we await the next quarterly report to see whether prices continue to decline with the consolidation in the mobile industry.  This tallies with Figure 4.5.1 which shows that mobile ARPU continues to fall.
  • Eircom’s loss of fixed line market share continues, albeit at a reduced rate. It is too early to say whether Eircom TV is starting to arrest the decline.  Certainly, as chart 2.2.3 below shows, most of the growth in fixed-lines seems to be coming from UPC.  This is backed up by the growth in triple-play services shown in graph 2.2.4.  Apologies for the poor quality graphic – the original (here) is a little more legible, though still hard to read.
Q3 2013 223

Green = Eircom, light blue = UPC, orange = Digiweb, red = Vodafone (fixed), purple = Imagine, dark blue? = Sky, maroon = OAOs & black = total subscriptions (right axis)

  •  Chart 3.1.2 shows that fixed broadband is substituting for mobile broadband.  Overall growth in broadband penetration seems to have plateaued – surely have we not reached saturation?  Chart 3.3.1 shows that Ireland is well below the European average on broadband penetration, and the days are gone when one could argue that household size was a significant factor there.   This is a real issue –  how can Ireland become a knowledge economy if we don’t get the people using computers?  Some of the research findings suggest that home broadband in Ireland is expensive (fig 3.5.1), whereas other charts suggest that price is not the main issue.  However, according to research published elsewhere, our broadband is also too slow.  Research published here shows that Irish broadband upload and download broadband speeds are towards to bottom of the list of European countries.

And what of mobile?

  • For the first time in a long time, the proportion of postpaid (vs. prepaid) subscriptions fell, albeit slightly – as evidenced in fig 4.2.1.  Are consumers or operators pulling back from great deals on postpaid smartphones at the bottom of the market?
  • Chart 4.3.1 below tells an interesting story. It will come to no surprise to telecoms heads that SMS volumes are falling through the floor as Over-The-Air (OTA) services grow.  Whatsapp has over 400 Million users!  Of course, mobile data volumes are growing fast – they almost doubled in the last 2 years, as the chart shows.

Q3 2013 431

  • Chart 4.3.5, when taken with 4.3.1 above, shows that the growth in mobile data volumes comes from both the number of users and the volume per user. No surprise there.
  • Comreg are doing a good job of keeping us abreast of the new field of machine-to-machine (M2M) communications.  Figure 4.6.1 shows that Vodafone and O2 have most of the market between them.
  • Fig 4.3.2 shows the breakdown of mobile outgoing calls.   Another first for Q3 2013 – the volume of mobile international and roaming calls outstrips that of mobile to fixed numbers for first time.  So punters are taking fixed lines (2.2.3, above) but they’re probably not giving the numbers out, and if they are, their friends are electing to call them on the mobile.
  • Figure 4.3.4 shows that about ⅔ of mobile voice minutes are on-net. Research has shown that people tend to choose the same network as their social group – this phenomenon is much more marked in countries (e.g. Portugal) where the price advantage for calling on-net is stronger.

Overall, another interesting report and a couple of firsts for this quarter.  One request to COMREG, please: can you publish the report as a higher-resolution pdf please?  Some graphics (e.g. 2.2.3) are difficult to read.

Happy New Year to all!

The rise of quad-play in Ireland

Quad-play is the buzzword of the moment in Irish telecoms – and with good reason.  What’s it all about?

In the old days, traditional telcos offered landline services and newfangled mobile companies offered their mobile services.  Even when the fixed network owned a mobile network, these were run as separate entities (usually sharing nothing except a mutual loathing and an ultimate owner).  TV wasn’t mentioned in the same breath as telecoms.

Then we started to hear about triple-play: companies offering landline (PSTN) phone lines, fixed internet and mobile telecoms – all on the same bill.  Telcos started buying smaller players in order to offer triple-play.  Converged services (as they were known, then) were slow to catch on, partly because the services weren’t very compelling and partly because of the internal challenges that many European telcos faced in integrating the systems and cultures of their two arms.  Many who did not own both a fixed and a mobile operator became a bit-player in the other marketplace through an MVNO on mobile or reselling the landline services.  Uptake was slow.  Nobody working in a telco wanted to be on a triple-play project.

Then three things happened:

  • Some TV companies started offering fast broadband based on superior infrastructure (e.g. Virgin in UK, UPC in Ireland). Word started to get around customers.  Market share ensued.
  • Mobile markets hit saturation. Where was the growth going to come from?
  • The industry learned that the more services that the customer bought, the lower their churn rate.

Suddenly, the telcos wanted triple-play and even quad-play.  It suits everyone.  The mobile operators get to grow again, the fixed telcos get to arrest the decline of landline penetration in favour of mobile calls and mobile broadband (landline penetration rose in the last COMREG quarterly report!), and the cable / satellite TV companies get to actually take advantage of the decline of TV in favour of the internet.  So now we have Vodafone buying Kabel Deutschland and planning a big shift in favour of ‘multi-screen’ aka quad-play, BT spending more than a billion euro to hoover up the rights to Champions League football, Sky aggressively marketing their broadband…

And in Ireland?  Well, since their TV launch Eircom have the full deck, Sky are missing the mobile service, Vodafone are just lacking a TV offering, thanks to their investment in Perlico & BT Ireland, and O2 / Three stay focussed on mobile.  UPC have three, and could easily set up a MVNO.  How might Vodafone realise their stated strategy in Ireland?  The near future should be interesting.

And is this a good thing?  Well, yes and no. Yes, because it will become easier to buy all these products from one supplier, which may help simplify our lives – and there are discounts to attract us to these bundled offers. And no, because if quad-play becomes the norm, there will in effect be fewer vendors offering the suites of products that customers expect.  The new concept of ‘service portability’ (discussed at length at a recent conference) threatens to reduce barriers to switching your quad-play offering to another supplier – but honestly, it’s hard to see it succeed in Ireland.  Let’s see.

Ireland ‘the most expensive of the competitive telecoms markets’

A report just published by consultancy Rewheel compares pricing of benchmark mobile tariffs across the EU and beyond.  The good news is that Rewheel categorise Ireland as one of the more competitive markets.  The bad news is their find of Ireland as ‘the most expensive of the competitive markets’.

Mobile telcos worldwide are facing the threat of losing revenue to so-called over-the top services (like WhatsApp, Viber, and the granddaddy of them all, Skype). The battle for superior functionality in traditional telco products is all but lost (MMS, anyone?) and  attempts to compete by launching services like Joyn are struggling  to gain traction.   Many telcos have turned to tariffs to try stop the slide towards becoming a dumb pipe: the development of price plans offering unlimited voice and SMS, but charging heavily for data access has become almost ubiquitous across the OECD.  Many of these tariff plans can be shared across families, thereby increasing the lock-in that we see when entire family is on the same network.  And because these plans are so similar to each  other, they can be directly compared.

This month sees an interesting report from mobile data consultants Rewheel entitled ‘Price benchmark of smartphone tariffs with unlimited minutes & SMSs in EU28, US, Switzerland and Norway – October 2013’.  The ‘executive preview’ (a teasing selection of the findings) is available to download here.

Rewheel country comparisonThe report describes mobile internet (at the risk of hyperbole) as ‘the fuel of digital economies’ and finds that pricing for these bundles in Europe’s ‘protected oligopolies’ (e.g. Germany, Spain, Greece and Hungary) is up to 2200% higher than the the EU’s most competitive markets (UK, Sweden, Finland, Denmark & Austria).  It also finds that big EU telcos tend to charge more.  No surprise: there is no point investing millions in a multinational brand if you can’t leverage it by charging a premium for services.

insight_17

And where does Ireland fit into this picture?  The report says “Ireland ranks as the most expensive competitive market (i.e. markets where a challenger like Hutchison is present). The price for a 2GB smartphone tariff with unlimited minutes and SMS is €35 which is slightly above the EU28 average.”  The graph below shows that Ireland shares this honour with another unnamed country.

Rewheel Ireland graph

This analysis tallies broadly with Comreg’s figures in the figures as described in their latest quarterly market report: pp. 65-69 of the report shows low-spending & prepaid Irish users paying rather more than average, and medium and high users paying the average price or a little less.

So what of the future?  With the recent purchase of O2 Ireland by Three, Ireland’s market is hardly going to become more competitive anytime soon.  Perhaps this consolidation will move Ireland from its position as the most expensive of the competitive economies to being one of the cheaper of the protected oligopolies!

The full report is available for purchase from Rewheel for €3000.

Whither Eircom eVision?

So, Eircom have announced their eVision TV service.  Initial reports are that the user interface on the eVision set-top box is rather good, and the channel lineup – while not suiting everyone – is a decent basic service.  Pricing is aggressive.  It runs exclusively on their eFibre network, so bandwidth should not be a problem.

And why are Eircom getting into the TV business?  Well, telecoms and broadcasting have been converging for some time now.  The Irish telecoms regulator also regulates broadcasting transmission networks (as does its UK counterpart, OFCOM).  Some telcos (e.g. Virgin Media in the UK) have offered TV for many years.  However, there is a strong trend today towards converged services (which is basically selling a range of similar services to the customer).  The holy grail is quad-play: combining mobile phone service, fixed telephone, broadband access and TV services.  In Ireland, UPC have offered a triple-play service (fixed line, broadband and TV) for years and Sky have recently brought broadband and landline service to the Irish market for their own triple-play service.

Converged services offer a number of benefits for the telco.  First, the opportunity for growth. Most OECD mobile markets are saturated and fixed line penetration has been falling for years.  By adding an extra service, the telco can grow revenues.  More importantly, the more services a customer takes from a single provider, they less likely they are to churn (i.e. switch providers).  Telcos refer to this as ‘increasing stickiness’.  In the UK, BT (who we might mistakenly think of as similar to Eircom) have offered a TV service for some years and in 2012 succeeded in buying the rights to a number of English Premier League matches. BT offer mobile service to businesses as a virtual operator on the Vodafone network and last week announced the replacement of that deal with a new partnership with EE, the new company formed from Orange and T-Mobile in the UK.  Will BT move to offering consumer quad-play services?

So will Eircom succeed?  Suddenly, TV has become a highly competitive market. TV homes by reception method. Source: COMREG quarterly report Q2 2013

TV homes by reception method. Source: COMREG quarterly report Q2 2013

 

The chart shows that the 71% of households receive TV from one of the main market cable & satellite provides (UPC, Sky, plus a few others).  The report from which it was taken also states that only about 10% of houses receive only terrestrial Irish TV – all the rest have some form of cable, satellite or foreign terrestrial (Freeview or Freesat) service.

Moreover, TV is changing fast.  Advertising revenues, the lifeblood of a TV channel, are falling fast as advertisers switch to new media.   Sky have a crucial grip on sports programming.  It’s also worth pointing out that whereas telecoms is highly regulated and Eircom are bound to allow wholesale access to their eFibre network, TV content is hardly regulated at all.

Eircom has a huge challenge – to take large numbers of customers away from 2 providers, Sky and UPC, who have strong brands, powerful marketing and a reputation for quality.  To do this they will need a strong channel lineup and a fully-featured set-top box that is easy to use (note the negative reviews of BT TV here) as well as powerful marketing.  Sky have set the bar high in Ireland with quality programming, exclusive sports and great usability, and UPC have the advantage of a fast broadband network – and have already announced a new basic package to compete with eVision.  On the other hand, Eircom have a massive database of most of the landlines in the country.  Their eFibre infrastructure reaches half a million homes at the moment and will reach many more in a year – and their brand – if not ideally positioned for TV – has has almost universal recognition.

Time will tell whether the eVision brand has the muscle and the proposition has the ruthless focus on programming and service quality to take a decent share of the Irish TV market at decent margins.  One thing is for sure – this is good news for the TV consumers of Ireland.

Insights from the IQPC number portability summit 2013

Carin

Carin Johansson giving an excellent overview of the state of number portability worldwide

I had the privilege of attending the IQPC Number Portability Global Summit earlier this month.

Number portability has been important for the development of competition in telecoms.  The conference addressed a wide variety of topics around the subject.  Here are some of the points that resonated:

  • According to one well-respected speaker, 75 countries have implemented number portability (NP) on their fixed (FNP) or mobile (MNP) networks.
  • Many others, including Jamaica, Trinidad, Afghanistan, Armenia, Togo and Tunisia are likely to implement number portability by the end of 2014.
  • Some countries, e.g. Russia, are struggling against technical, commercial and political obstacles to implementing number portability
  • User experiences of MNP vary widely.  In Portugal, callers to ported numbers are greeted with a message warning them that the call may cost more.  In countries like Ireland, Ghana and Israel, mobile numbers can be ported in under an hour, whereas in some other countries it can take weeks.
  • In some countries (e.g. UK) the customer approaches her current network and requests porting (this is known as donor-led porting).  Best practice, followed by many countries, is that the customer requests porting from the network to which they wish to port (recipient-led porting).
  • The technical platforms and processes underpinning porting continue to evolve, in response to customer needs (or rather operators’ new product opportunities), technical advances and the pursuit of efficiencies.

 

My talk to the conference covered three areas:

1. The evolution of in the importance of number porting

Mobile numbers will continue to be an important way to be reached by almost all mobile users, but callers can now find and contact at least some of their targets on social media.

Porting

The evolution of the importance of number portability

Against that, the cost and difficulty of porting is now very low in most markets, so porting will continue to be popular for the foreseeable future.When truly portable mobile phones arrived (first for businesses, then with the advent of prepaid, for the mass market), the mobile phone number filled a need left unfulfilled: a simple reliable means of reaching someone anywhere, anytime.  Porting was introduced to improve the free functioning of telecoms markets.  In 2003, the value of porting to the Irish economy was estimated at £IR 129M.

More recently, social media has emerged as a far superior way to find and contact people.  Although it has limitations, it removes many of the costs of changing the mobile number.  However, in parallel the costs (monetary and service interruption) to users of porting continue to decline, and many operators incentivise port-in.  Number porting is here to stay.

2. Insights based on analysing porter data

Idiro has analysed data relating to porting customers in a variety of markets.  I presented a number of insights (anonymised, of course) on the characteristics of porters based on multiple markets.  I also described in detail the phenomenon of porting contagion.  The power of word-of-mouth results in many consumers following their friends when they switch networks.  This accounts for a high proportion of porting overall.  Big thanks to my Idiro colleague Lorcan Treanor for the analysis behind these insights.  Please contact Idiro to learn more about these insights.

3. How Idiro SNA helps meet the challenges of porting churn

The SNA analytics service from my employers, Idiro, is a perfect fit for the marketing problems around mobile number porting.  Idiro scores can be used in Member-get-member acquisition campaigns and in retention campaigns to reduce porting churn.

 

Freddie McBride

Freddie McBride of CEPT presenting on service portability

I was chairman on the second day of the conference, which focussed on Service Portability.  There is great interest in this topic – where the customer ports not only their fixed and mobile numbers but other elements of their package as well, up to the entire quad-play bundle.

Though the concept is an appealing one, in practice the challenges are large.  Imagine being a customer with a home phone, mobile phone, TV and broadband bundle, and moving it to a competitor.  Every provider’s service bundle is different, and porting the entire bundle will require the customer (or the recipient operator) to make careful choices.  In addition, speakers pointed out that the delay in porting different services will vary, so during a transition period the customer will be receiving some services from the donor operator and some from the recipient operator.

There are challenges aplenty there and it is clear that there is no consensus over the best way forward.  One might (at the risk of overestimating the similarities) say that the discussion on service portability is where the number portability was 25 years ago.

 

Overall, the conference was well-organised and the  speakers well chosen.  However, as with many other telecoms conferences, the voice of the customer was hardly heard at all.  Quality was mostly described  in technical telecoms terms, rather than the quality as measured by the user.  Almost no primary or secondary research on customer experience was presented by regulators, operators or vendors.  At the end of the conference (I missed one talk) I had learned nothing about consumers’ expectations for porting and how well they were being met.

If the voice of the consumer is not heard, how will their needs be met?  It was ever thus in the telecoms industry – or at least, it has been for the last 25 years – and it is a reason that OTT services like Whatsapp are eating SMS and MMS’s lunch.  Despite being excellent in what it did cover, by its omissions this conference reminded me again of why the telecoms industry needs to cop itself on and develop a passion for the customer, or risk its share of customer communications being progressively eroded.

(a version of this post appeared on the Idiro blog)

Children are turning away from mobiles and social media: OFCOM report

Ofcom

OFCOM, the telecoms and media regulator across the water, has just published a comprehensive 200-page report entitled ‘Children and Parents: Media Use and Attitudes‘.

It covers childrens’ use of mobile phones, social media, TV and the internet and their parents’ approaches to same.  Among its findings are:

  • Significantly fewer children aged 5-15 have mobile mobile phones than last year (43% in 2013 vs. 49% in 2012)
  • Usage of tablet computers has tripled among the same age group
  • There are fewer TVs, radios and game consoles in children’s rooms than last year
  • Fewer children have social media profiles than heretofore, and the variety of social media platforms has increased

So has the tide turned? Is the growth of mobiles and social networking among children driven to some extent by fashion?  Certainly, one swallow does not make a summer – we will need to see whether these findings are borne out elsewhere – and moreover there is a lot of detailed information in the report behind these headlines.  Time will tell whether this is a future trend.

Broadband Commission Annual Report 2013 – just published

The Broadband Commission was set up by the ITU and UNESCO in recognition of the importance of broadband.  As they put it:

Affordable broadband connectivity, services and applications are essential to modern society, offering widely recognized social and economic benefits.

The Commission has just published its Annual Report 2013, which is a much more interesting read than the average corporate annual report.  Its focus is very much on the developing world rather than Ireland, but for anyone with a professional interest in broadband, it is an interesting read.  It contains some interesting statistics –

Broadband market share by technology, Q1 2013. Source: The Broadband Commission

– but it goes further:

  • It sets out the state of broadband across the world.
  • It iterates the benefits of broadband to human development and specifically to the UN’s Millennium Goals.
  • It describes how governments are being pushed to commit to broadband development plans.
  • Finally, it tackles questions around how to make broadband available to all.

A useful document – not least for reminding us in Ireland of how lucky we are to live in the first world.

Comreg’s latest quarterly market report is just out

The latest COMREG quarterly telecomms market report is out.

These reports are useful for anyone in the Irish telecoms industry.  They cover fixed voice, mobile voice, broadband and broadcasting.

A few points stand out in the mobile section of the latest report:

  • Overall Irish mobile revenue is down 1.2% in the last twelve months (p. 6).
  • The mobile penetration rate was 118.3% including mobile broadband and Machine to Machine subscriptions, and 99.5% excluding mobile broadband and Machine to Machine [M2M] subscriptions (p.8).
  • Fixed voice subscriptions have grown 3.9% in the last 12 months (That seems counterintuitive – perhaps it’s being driven by the growth in converged bundles?).
  • Two-thirds of all voice call minutes are from mobile (p. 12). No surprise there.
  • There are 340k ‘Machine-to-machine’ subscriptions within the mobile base (p. 49) which equates to 7.4% of the lit SIMs. O2 have the lion’s share of the market (p. 60). Well done O2!
  • Fig. 4.2.2 suggests the growth in postpay subscribers is coming from M2M and broadband subscriptions – interesting.  It seems that if we exclude the data-only SIMs, prepaid voice is declining a little, and postpaid voice is falling faster.

    Prepaid and postpaid

    The impact of M2M and broadband subscriptions on prepaid and postpaid subscriptions. source: Comreg

  • Fig 4.3.1 shows that voice minutes continue to decline, and SMS messages outnumber voice minutes for the first time.  This has been a long time coming.  I had lunch with a former CEO of Eircell last week, where he reminded me of the surprise in the telecoms industry when Eircell achieved half a million text messages a month.  How far we have come!  Moreover, the uptick in SMS volumes gives the lie to the notion that over-the-top (OTT) services are heavily cannibalising SMS traffic.

    Voics SMS MMS volumes

    Voice, SMS and MMS volumes over time. Source: Comreg.

  • Eircom (Meteor & eMobile) report a 1% jump in market share in the last quarter (p. 62).
  • Vodafone’s and Three’s ARPU outstrip that of their rivals (Compare the traffic market shares with revenue markets shares on pp. 62-63).
  • Since mobile number porting started nine years ago, nearly 3 million ports have taken place. That’s over half today’s number of subscriptions.

Overall, the quarterly report is a handy resource for telecoms industry professionals, and is worth a look through each quarter.

Joyn, the GSMA’s answer to OTT services, seems to be struggling

Joyn is the GSM association’s attempt to offer a telco-controlled competitor to over-the-top (OTT) services like WhatsApp and Viber. As described in this article, the survey reports that most telcos so not believe it is the answer.

http://www.telecomtv.com/comspace_newsDetail.aspx?n=50361&id=e9381817-0593-417a-8639-c4c53e2a2a10

It’s rather sad, but I guess, as the article, points out, any new product that relies on the cooperation of the majority of mobile telcos worldwide is highly unlikely to succeed nowadays. Back in the 1990s, roaming and SMS were implemented across the GSM world – but would the same happen again if they were developed today?

Perhaps the best hope for a telco response to OTT services would be a basic OTT service that worked anywhere but that gave enhanced features & benefits where supported by a participating telco.

Finally, let’s remember that this is a survey of the telcos. Far more important would be the opinion of the market!