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Mobile operators hammer on costs

Posted: 03 Apr 2006 ?? ?Print Version ?Bookmark and Share

Keywords:Junko Yoshida? John Walko? Siemens Communications? Thomas Ganswindt? mobile TV?

If there is one overriding concern for the mobile business these days, Siemens Communications CEO Thomas Ganswindt summed it up bluntly: "There is no such thing as easy mobile money."

Mobile operators are facing a huge shakeout as average revenue per user (ARPU) drops dramatically for voice, and the only subscriber growth remains in the emerging markets.

The irony is that the two hottest emerging markets!mobile TV and a converged Wi-Fi and GSM phone using an unlicensed mobile network!can work independently of mobile operators' network infrastructure. The developers of these products have ways to bypass the network, unless operators make it worth their while not to.

Mobile TV, typically on a DVB-H or Digital Multimedia Broadcasting platform, uses a broadcast network separate from an operator's cellular net. Unlicensed mobile access (UMA) technology provides access to GSM and GPRS mobile services over unlicensed spectrum technologies such as WLAN.

Meanwhile, many new data services and multimedia applications promised over the last few years haven't panned out. In the case of multimedia messaging, a lack of interoperability and usability, combined with ridiculously high fees imposed by the carriers, has turned off customers.

Shift of focus
An industry that used to be all about creating new revenue and adding bells and whistles has switched to a focus on lower costs for everything from network infrastructure and capital expenditures to handsets.

"The entire signal chain is pressured for cost reduction," said Doug Grant, director of business development at Analog Devices Inc. Operators are demanding that chip companies and network equipment vendors engineer dramatic reductions in "component cost" and "energy cost" to build and run 3G networks, Grant said.

"How operators will cope with such emerging trends as VoIP and broadcast technology still remains to be seen," said Gert-jan Kaat, senior VP and general manager of mobile and personal electronics at Philips Semiconductors.

In sum, the big boys, primarily mobile-network operators, are starting to sweat.

Arun Sarin, CEO at Vodafone Group, acknowledged that only 9 percent of his company's revenue is coming from 3G. More new services are coming, "but they are still at a very early stage!things can turn on a dime." Sarin added, "Costs are hugely important to us!to build a new paradigm to attract new customers."

Wang Jianzhou, chairman and CEO at China Mobile, agreed. "If we can control the cost, we still keep the very good money," he said.

Technology suppliers are frustrated with the lack of solutions that would allow everyone, from chip vendors to tier-one handset suppliers and network operators, to keep the gravy flowing. Mobile TV is "so fragmented that its deployment is hindered," said Franz Fink, senior VP and general manager of the wireless and mobile systems group at Freescale Semiconductor Inc., while UMA's business case for mobile operators "hasn't been sorted out." These promising technologies, Fink said, are "so messed up that no one can make money on them now, unless we come up with a scheme where everyone can get a fair share on services provided to consumers."

Shrinking premium
"Our industry will have to come to terms with moderate voice ARPU in the future," said Siemens' Ganswindt. However, it's unclear whether a rapid investment in 3G networks and a resulting increase in data ARPU can offset the shrinking premium on mobility for voice.

As David McQueen, principal analyst for handsets and services at Informa Research Services, put it, operators may no longer have "a God-given right to get a cut from every transaction over their network."

Nokia announced it would cooperate with Sony Ericsson on interoperability in DVB-H-enabled devices. This will "significantly boost the prospects for mobile TV," said Jorma Ollila, Nokia's chairman and CEO. To initiate interoperability with multivendor mobile-TV pilots, the companies will use the Open Air Interface implementation guidelines that Nokia made publicly available last August.

On the unlicensed-mobile front, Motorola Inc. and Nokia unveiled UMA-enabled handsets that will start shipping this year. The Finnish group said its quad-band 6136 will have myriad features, including a 1.3Mpixel camera and 8x digital zoom. Motorola, for its part, will start shipping in Q3 a Wi-Fi version of the handset it is already supplying to BT.

UMA enables subscribers with dual-mode UMA handsets to roam between cellular and unlicensed-wireless networks. A UMA network controller acts as a virtual base station, handing off between cellular and Wi-Fi nets. Nokia envisions a UMA convergence that includes both network equipment and new handsets. "We are taking a complete approach that offers seamless handover of voice and data between GSM cellular and WLAN networks," said Ollila. He said UMA was also "a useful approach to extending GSM indoor coverage."

On the silicon side, Marvell said that its WLAN chip based on IEEE 802.11a/b/g!which is capable of handling both high-speed data and UMA-compliant voice!has been adopted by several key handset vendors, including Motorola and Kyocera Wireless. Marvell claims to have gone beyond the high-level UMA spec to tweak its solution, ensuring that the chip works with the handsets of many tier-one vendors. "The UMA spec only deals with the high-level requirements," said Vivek Mohan, applications engineer at Marvell. "Mobile-handset vendors often optimize the timing for handoff between GSM and WLAN in a slightly different manner, for various reasons, including a different OS they use."

A programmable arbitration unit inside the chip's media-access controller makes "a packet-by-packet decision between WLAN and Bluetooth, thus prioritizing it based on use-case scenarios," Mohan said. "If one is using Bluetooth for voice, you want to give priority to it, while one may want to give priority to WLAN when transferring a large amount of data faster."

Technology companies differ hugely on when the UMA market will take off.

"UMA is an important initial step to what we see as the ultimate solution of networks connected through the IP Multimedia Subsystem," said Henry Samueli, co-founder and chief technology officer of Broadcom Corp. Broadcom, he said, is "still at the R&D stage, and we are planning prototypes and reference designs over the next couple of years. It's debatable as of now whether there is a strong business case for UMA, but it is important to get your feet wet in the convergence business."

UMA solutions
Philips Semiconductors announced earlier this month that UMA-enabled phones based on Philips' Nexperia cellular system will be available in the United States from a major operator. The Dutch company is claiming an early lead in the emerging UMA market as an independent system solution provider, thanks to its partnership with Kineto Wireless and Alcatel.

UMA pioneer Kineto supplies network controllers to infrastructure providers and protocol stacks for handset makers and platform integrators. Alcatel supplies infrastructure equipment. "Users will only need to purchase one phone," said Paul Marino, VP and general manager for business line connectivity at Philips Semiconductors. "They should be able to reduce their phone bills significantly."

Ken Kolderup, VP of marketing at Kineto Wireless said that "major announcements suggest Wi-Fi/cellular convergence is gaining enormous traction." He pointed out many partnerships that are being established to ensure the technology gets deployed quickly. Kineto has deals with, among others, Nokia and Motorola on the infrastructure side. It had partnered with Alcatel, until the French group opted to develop its own UMA network controller.

Kineto is working with Cisco Systems Inc. on security issues!specifically, to authenticate UMA-enabled mobile devices accessing an operator's core network. The companies say they have tested all the security features operators are demanding for access control for UMA-based end-to-end calls.

"On the handset side, two of the four suppliers that have committed to deliver UMA-specification-compliant converged handsets use the protocol stack from Kineto!Samsung and LG!and we are in close touch with the other two, Nokia and Motorola," said Kolderup.

The key in the handset business is an "in" with platform suppliers, he said. "We are working with, for instance, TTPCom, Philips Semiconductors and Infineon Technologies." While no official announcement was made, Kineto was demonstrating a reference design from Texas Instruments Inc. using Kineto's client software.

Although he acknowledged an element of hype and confusion surrounding UMA, Kolderup pointed to numerous operator trials!at least 15 in all the major countries in Europe. "There is also interest among the three U.S. carriers that operate a GSM network, particularly T-Mobile," he said. "And the feedback from the U.K. is that BT's Fusion commercial UMA-compliant Bluetooth-based service is gaining momentum."

Note of caution
While praising advanced designs coming from chip suppliers such as Philips Semiconductors, GCT, TI and the recently formed Quorum Systems/ADI and Atheros/Qualcomm collaborations, Kolderup acknowledged that "there is still a lot of work to be done by all the players in the chain."

Will Strauss, president of market research house Forward Concepts, sounded a note of caution, however. "Even if your technology works, it won't make it to market unless mobile operators will allow it," he said.

- Junko Yoshida and John Walko
EE Times

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