Future of networks is hot topic


The future of network, manufacturer and service provider relationships in light of the new wave of application development was discussed last month at the Westminster eForum in London titled ‘More than talk…the future of mobile’.

Speakers discussed the fact that before the surge in smartphone use and application development, the network was at the centre of the user’s experience; while now networks have increasingly less control over the content users consume via their mobile phone.

Executive chairman of mobile transaction provider MBlox Andrew Bud said: “What is going to happen to the networks?

“They have traditionally been service providers but the internet has destroyed this model. Services are now provided by those outside the network, for example, Skype and Google.

“Operators are getting less control of services, to those who don’t pay them anything to run their services over their network.

Ofcom competition policy director David Stewart added: “Mobile is becoming a more complex ecosystem. Previously the mobile network was at the centre of this. Now there appears to be a separation of the content and the pipe.

“Mobile content and apps are becoming web-based. Apps and services used to travel through the network through to the end user. Now it can go either way, through the network or around the network to the end user.”

Analyst firm Ovum’s practice leader for mobile Jeremy Green said future network business models would mean networks would have to accept, to a degree, being the content pipe rather than content provider. New business models would have to focus on being ‘SMART’; integrating services, management, applications, relationships and technologies.

He said: “This means taking responsibility end to end for the customer experience and bundling a device with content and connectivity. An example of this is the Amazon Kindle device offering. It is not being sold by a network, even though it uses network connectivity – it is all being bundled by Amazon. The connectivity provider is invisible. You don’t see Sprint’s branding anywhere.

“If there are minimum rates for market data services travelling through things like the Kindle, it’s B2B, not customer facing, so the networks need to provide services to an entity that then provides a service too.”

He also quipped: “For years operators didn’t want to become bit pipes, but then the iPhone came along and operators fell over backwards to become bit pipes.”

Phil Northam, global manager for Samsung Mobile Innovator, said relationships were changing between networks, application developers, manufacturers and service providers.

“The relationship has changed so companies are starting to understand what content people want and where. You have an end-to-end service model running on devices such as the iPhone and BlackBerry; an iconic device, with a killer service and killer apps.

“We are playing catch up to Apple as many other manufacturers are. We have developed relationships with application developers and are commissioning content driven devices for particular audiences.

“The winners of this new market will learn what content users value and provide it in a targeted way.”

Jean-Jacques Sahel, Skype EMEA director for government and regulatory affairs, said greater collaboration was occurring between networks and content providers; progressing from an initial “clash” of business models.

“Collaborating with mobile providers can be a good thing even if there is no commercial arrangement because it increases data take up – networks can ensure users take a data subscription to use these services,” said Sahel.

“Allowing external services allows choice for users and enhances what they can do online. 3 understood this and chose to actively partner with us. Other operators are starting to see the light. If we pass this transitional stage we will all benefit.”

Meanwhile, the issue of regulation of the mobile industry was also addressed. Some speakers said the mass development and uptake of applications could cause regulatory confusion, while developments such as Near Field Communications for mobile payments would also have to fall under some kind of regulation. PhonepayPlus chief executive Paul Whiteing said greater transparency was needed for the pricing of premium services such as text voting schemes on television programmes such as the X Factor.

However, Orange UK head of government policy and regulation Simon Grossman, said the mobile sector was already “tremendously over-regulated” and should not be subject to further regulation.

“Because of the sheer size of the industry, Ofcom can’t let it go, no matter how competitive it is, regardless of the fact that their own survey shows that 94 per cent of mobile customers are satisfied and that prices are going down. The risk of not regulating is too great,” said Grossman.

“The problem is that regulators don’t always understand the market, with the exception of call termination, which has been analysed to death. Roaming regulation is the most unintelligible piece of regulation ever imposed.”