Cannes Soup

The 3GSM World Congress last month was the biggest ever held

On the first day the keynote speeches from Richard Branson and Douglas Adams stole the show. A fast-cut, low attention span, MTV-style multimedia presentation announced the arrival of Branson who lost no time warming to his theme of MVNOs as the agents of fundamental change in the cellular business model. MVNOs, he said, are "the way of the future." No operator could afford to ignore them or be without them.

He convincingly argued that MVNOs can enhance revenue streams, they are cheap to establish and they offer solid risk diversification. In the never-ending search for the winning data strategy, an extra operator on your infrastructure increases your chances of a satisfactory discovery, he said. He called forth examples from the motor and music industries where the virtual model has been a proven success. His words of advice in this area were clear: Shareholder buy-in from the host, decent distribution, a general rather than niche approach to the market and access to meaningful content are all pivotal elements of success.

He seemed to be sending out a 'networks know thy place' message, celebrating the fact that network operators are beginning to recognise that their "core competence" lies in running the network. Branson said that "networks which fail to embrace MVNOs...will ultimately suffer," and that all the soft brand work should be left to power-brand MVNOs who know what they are doing.

Douglas Adams, author of Hitchhiker's Guide to the Galaxy, got a series of big laughs from the audience as he delivered a mixture of technology-induced frustration and stratospheric future-gazing; he heralded the arrival of nano-technology and distributed computing. The full range of his presentation was vast but he did point out three rules of user-acceptance: 1) Anything that's in the world when you're born is normal. 2) Anything that comes into being when you're between the ages of 15-35 is new and exciting. 3) Anything that comes along when you're the other side of 35 just ain't right.

Hans Snook, from Orange, had a tough act to follow but he approached the challenge with relish. He painted an ambitious picture of a futuristic multimedia society, in spite of the shift in mood towards the industry brought about by recent disappointing mobile carrier IPOs - Orange's included.

He spoke of a "connected society" where Orange was "no longer a mobile phone company but a remote control for life." Although, he did concede that in the near future revenues would primarily be voice-based - Orange would probably see 50-60 per cent of revenues and 30-40 per cent of profits coming from the mobile internet.Cannes 1.tif

The carrier appears to have grasped that it needs to change the whole perception of its business if it is to succeed in a 3G environment. In line with these ambitions, Orange has added to its own portfolio acquiring Wildfire, Annanova and NewsTakes as part of a larger multimedia ambition.

The operator has 30 million customers today but plans to establish itself in 50 countries worldwide. Snook, like Branson, praised the MVNO model as a "cost-effective, speedy, revenue-rich entry into new markets" and confirmed that it remains a key plank of Orange's expansion strategy.

But he couldn't resist a dig at telecoms regulators. Among other gripes he complained of their practice of "pandering to the whims of politicians" and, in doing so, hindering progress and ultimately harming the customer.

He also said that high prices paid for 3G licences will ultimately prove conservative. Services were the name of the game throughout this year's Congress. All of the speakers on the second day of keynotes stressed the importance of service strategy over technology and outlined the need for mobile internet standardisation to push forward the development of services.

Openwave's president Don Listwin was eager to highlight the importance of "capturing subscribers now," regardless of current network data speeds. He stressed the importance of voice recognition technology and announced that the latest version of the WAP browser that Openwave has been working on has paid particular attention to the user interface.

But the optimistic message from the 'Advanced Service Enablers' seminar was that subscribers already seem to have been caught. There are now 2.8 million WAP pages in existence, up from 25,000 in January last year. The WAP customer base now consists of 14 million subscribers - but are they users?

Joel S Birnbaum, from Hewlett-Packard gave a useful talk about making wireless internet pervasive. He outlined HP's "view of integrated mobile e-services," talking of the e-bazaar project, which is doing much to further wireless applications development. The goals, he said, were to achieve global industry-wide agreement, with non-proprietary standards and true interoperability. He realised that there is "great uncertainty over what services the customer actually wants" and it is this that makes it difficult to standardise.

A similar message came from the 'Portal Strategies' seminar. Lars Reichelt drew applause when he pointed out that business models were missing out what the customer wants - and the customer, after all, is central to success.

The seminar debated ways that operators can use portals to generate revenue. The walled garden approach was seen as a unique opportunity for them to push their brand, but operators, it was agreed, should mainly focus on the 'usability' of their portals, with personalisation seen as key.

Good news came from EMC's 'World Cellular Review 2000-2005'; GSM continues to be the big man on campus. With 440 million subscribers at the end of 2000 placing it comfortably in pole position. GSM Association chairman, Jim Healy, sang the praises of the standard predicting that one in ten of the world's population will be a GSM user by the end of the year - following on from the reassurance that GSM is thriving in the US.

Regionally the numbers break down into Europe and Asia Pacific almost even with 289 and 219 million respectively. US/Canada have 109 million and the rest of the Americas, 62 million. The Middle East has ten million and Africa, 16 million.

The not-so-good news from EMC was confirmation of the continued decline in ARPU. At the end of 2000, world average ARPU was down from nearly $60 in 1997 to $39.31. Also falling is the world average airtime cost with peak minutes now costing just over 30 cents. Despite the apparent market domination of prepaid, it still only represents 36 per cent of the global market and GSM has 80 per cent of that market.

Iceland is still the leader in terms of penetration but Austria, surprisingly, edged out long-time leader Finland. Taiwan is fourth, followed by Hong Kong, Italy and Israel. The top market for total numbers continues to be the US with close to 100 million, but China is catching up fast behind.

China Mobile is the leading operator in terms of domestic subscriber numbers. Top new operator in 2000 measured by average monthly growth rate is Blu of Italy.

With content and applications taking the spotlight at 3GSM, perhaps the most interesting data from the EMC report concerns the world's top 15 mobile internet operators. Predictably the runaway leader was NTT DoCoMo with over 12 million subscribers to i-mode. The other operators in the top five were KDDI, J-Phone, LG Telecom and Sprint PCS. None of these are GSM operators - hopefully this situation will change as GPRS and 3G come fully on stream.

As operators scramble for ways to generate revenue, paid subscriptions to mobile music services could provide operators with a lucrative service. The Mobile Music Forum was launched at the pre-congress in Cannes with the aim of defining and promoting a specification for the secure and fair transfer of digital content across broadband communication technologies.

With its strong emphasis on security and ubiquity, it is clearly being marketed to appeal to wary music moguls and cash-hungry carriers. The symposium on handset testing cited a handicap to WAP. Whereas DoCoMo's i-mode service has benefited from the strong relationship between carriers and manufacturers, WAP is hindered by delays in handset production. Those members of the industry that work on testing and certifying handsets are coming under increasing pressure to work as quickly as possible. But, a constraint on time is caused by the fact that testing procedures and developments are being carried out in tandem with the standardisation process; meaning that the tests are "shooting at moving goalposts."

"Faster, better, quicker, cheaper - how do you do it?": the 3GSM technical symposium on 'Rolling out the Next Generation' posed this question. The answer: globally harmonising networks with the GSM Association providing the umbrella for a 3G operator-led group. Such a group would address the issue of having multiple competing operators. The group would have to respond to the needs of operators with different 2G systems and would need to be technology neutral.

The event also saw the sixth birthday of the GSM awards. There were five winners in the GSM in the Community Award category: Geocell Ltd (Georgia), MTN Networks (PVT) Ltd (Sri Lanka), Optimus Telecommunicacoes SA (Portugal) and Mobitai Communications Corp (Taiwan). The Best GSM TV Commercial was won by Geocell Ltd (Georgia). The Most Innovative GSM Wireless Service for customers was Smart Communications Inc (Philippines). The Best GSM Technical Innovation was won by PrivaCom (The Netherlands) and the GSM Association Chairman's Award was picked up by BT Cellnet (UK).