For the moment, however, Dutch customers wanting faster mobile broadband are likely to be disappointed. Not only are most of the tariffs for business customers only, but the coverage, for now, is extremely limited – Ziggo’s offering is only available in three cities, KPN’s in five, and Vodafone’s LTE offering is currently limited to the city of Eindhoven.

In fairness, the first requirement was that each network must cover 80 square kilometres by the beginning of May, which they all appear to have met. But on closer inspection they don’t all seem to be the best deal.

For example, to get LTE from Ziggo, one must already be on the operator’s Internet Plus cable broadband subscription; again, fair enough, except that Ziggo isn’t providing the equipment itself. Users who want the tariff have to find their own 4G-compatible smartphone, dongle or tablet somewhere – probably Germany (it turns out Amazon.de delivers to the Netherlands and Belgium).

KPN, by contrast, does sell 4G dongles and SIM cards through its online shop. However, the service costs €67.50 per month, or €17.50 more than KPN’s top mobile broadband bundle, and users get a monthly data allowance of 8GB. Compare that with the 40GB per month that Telia Sweden offers consumers, for around €45. Or, closer to home, the 10GB that Vodafone is offering for €50 per month (with €180 charge for the modem and €10 one-off activation fee).

Of course, it isn’t completely fair to compare these initial offerings with those in countries, like Sweden, that have had LTE networks for a year or more. Sweden is a special case in that the existing 3G network infrastructure is so strong that the operators initially had trouble convincing consumers to take on 4G. By contrast most Dutch operators haven’t even introduced HSPA+ yet; KPN’s tactic seems to be to offload power users onto wi-fi networks. This isn’t a tactic that will hold up well, as customers demand more bandwidth to surf the web, stream videos, and generally do all the things their new smartphones and tablets are promising.

The sideshow ahead of the main event

The Dutch operators may have rolled out some 4G service in limited areas to satisfy the coverage requirements, but what they’re waiting for is the spectrum auction scheduled for later this year, which will dispose of the 800MHz, 900MHz and 1800MHz bands. Given that the regulator, OPTA, has reserved a certain amount of spectrum in the 800MHz and 900MHz bands for new entrants, and the entire 800MHz band is up for grabs, no operator will want to make any big LTE plans until they know what they have. As a result, it’s unlikely that Dutch consumers will see a nationwide network before 2014.

In the meantime, we’re getting a preview of how the market is likely to look after the auction: while the likes of KPN and Ziggo target business customers, Tele2 is taking the more disruptive route and offering LTE to consumers, at the lower price point of €30 for 3GB of data per month. If Tele2 does win sufficient spectrum in the fall, this is likely to give it a head start in rolling out LTE nationwide.

The latest research from Informa Telecoms & Media shows that revenues from pay DTH services in Europe will continue their slow upward trajectory for the next five years and top US$20 billion by 2016.

Europe, DTH revenues, 2011-2016 (US$ mil.)

According to Adam Thomas, Informa’s Media Research Manager “While DTH revenues continue to grow, the rate of growth is expected to be slower than in previous years. Much of satellite’s historic revenue increases have come from the premium sector. But, going forwards, the growth of low-cost rivals will put some downwards pressure on ARPU and so restrict revenue growth.”

Turning to Sky Deutschland’s financial results, announced today, Thomas added: “Sky Deutschland’s impressive results show that it continues to benefit from News Corp’s long experience of running successful pay TV operations.“

“But the company doesn’t possess a magic wand. In recent weeks, its stable-mate BSkyB reported only a fairly modest quarterly subscriber increase in the UK, while its Italian counterpart shed more than 80,000 customers. This clearly demonstrates that economic conditions continue to inject volatility into these markets, with a potentially significant impact on customer bases.”

Mobile phone users will, in 2016, on average consume 6.5 times as much video, over eight times as much music and social media, and nearly 10 times as much games as in 2011 according to the latest forecasts from Informa Telecoms & Media. There will be a big upsurge in traffic for most mobile data services over the next five years, largely driven by the spread of smartphones and a 23% increase in the number of mobile users.

In 2016, the average mobile user will be browsing six times as many web pages and downloading 14 times as many megabytes of applications on their handset as in 2011. Text (SMS) and picture (MMS) messaging traffic will continue to grow, but at a much slower pace than most other mobile data services. On average, mobile users sent 118 SMSes and two MMSes a month in 2011, compared to the 146 SMSes and four MMSes they will be sending in 2016

Usage of Internet-derived messaging services, namely instant messaging and e-mail, will see higher growth. For example, compared to the global monthly average of 31 mobile instant messages sent in 2011, users will be sending 118 in 2016. The services that put the greatest strain on mobile networks won’t necessarily be the ones that bring the most revenue.

“The top three data guzzlers on mobile phones over the next five years will be applications, video streaming and web browsing – in that order of importance,” says Guillermo Escofet, senior analyst at Informa Telecoms & Media. “Yet, the top revenue earners in 2016 will be web browsing first, followed by P2P SMS and applications. Video streaming will represent less than 1% of mobile data revenue in 2016, despite hogging a third of handset traffic.”

The growth in traffic will far outstrip the growth in revenues. Global mobile data traffic will grow from 3.89 trillion megabytes in 2011 to 39.75 trillion megabytes in 2016, amounting to a tenfold increase. By contrast, global mobile data revenues will grow from US$325.8 billion in 2011 to US$627.5 billion in 2016, amounting to a twofold increase.

And although the revenue pie will grow, the slice kept by mobile operators will shrink. If we exclude data and SMS/MMS – over whose sale operators have a monopoly – the percentage for operators of what users pay for all other data services – anything from downloading a song to making purchases via a mobile wallet – will drop from 56% in 2011 to 41% in 2016.

About the Mobile Content and Applications Forecasts report
The Mobile Content and Applications Forecasts report is the industry authority and is the only in-depth report that provides data, forecasts and analysis of the entire mobile content, applications and data services market. The report provides the most comprehensive forecasts on 30+ data services including mobile messaging (SMS, MMS, IM, e-mail), mobile entertainment (ringtones, ringback tones, music full-tracks, music streaming, mobile games, mobile TV and video), mobile Internet, mobile payments and banking, mobile social networking, location-based services and mobile applications.

About Informa Telecoms & Media
Informa Telecoms & Media (www.informatandm.com) is the leading provider of business intelligence and strategic services to the global telecoms and media markets.

For more information, please contact:
Denise Duffy
PR Manager, Informa Telecoms & Media
Mob +44 (0) 7500 330826
Email: denise.duffy@informa.com
Twitter: @informatm_pr

© Informa UK Ltd 2012. All rights reserved.

The Mechanics Magazine, 1829

Back in the early 19th century, the public debut of George Stephenson’s Rocket steam engine was a harbinger of the Age of Steam, which applied the technologies of the industrial revolution to transport with great success. Funded by eager speculators, railway infrastructure soon expanded across the world and eventually usurped canals as the main form of goods transportation.

Such technology-driven revolutions have occurred at surprisingly regular intervals in the last 250 years, according to economic historians. Steam, steel, electricity, mass production – all had dramatic impacts on world economies. Could smart cities be the next inflection point?

Smart city technology is live and effective in numerous flagship projects and in new-build showcases, such as Songdo in South Korea and Masdar in the United Arab Emirates. Yet history shows that mainstream technology adoption is always hostage to external factors, not least the availability of finance and readiness of institutions and people to adopt new ways of doing things.

So how did technologies of the past win political and public support, given that they, like smart cities, required a comprehensive overhaul of established institutions and processes?

More than a decade ago, Venezuelan economist Carlotta Perez drew attention to a simple but vivid pattern in the complex co-evolution of technological change and economic development (1). Every 50 years or so, since about 1770, a new technological revolution has taken hold.

Perez associates a ‘big bang’ with each revolutionary epoch. This is the crucial point when emerging clusters of innovation come together to produce a highly visible new product or event – for instance, the Rocket’s victory in the Rainhill speed trials in 1829. This immediately captures the attention of pioneers in finance and technology, attracted by the growth opportunity in cheaper, more efficient products.

A frenzied period of boom and bust results, accompanied by repeated challenges to existing institutions and ways of working. Eventually – and not without job losses and financial bloodshed – the new technology displaces the previously dominant technology, which by now is recognized as inefficient and costly.

This process of socio-institutional change lags technological breakthroughs by as much as 20-30 years. Hence, the overall 50-year cycle. Perez identifies Intel’s microprocessor as the most recent ‘big bang’ event. If the model proves to be predictive as well as historical, the next is due around 2020.

The next big bang

Will the next revolution come from smart cities, or bio-tech, or some other collection of technological enablers waiting in the wings?

Informa’s view is that truly revolutionary impact will come from closed loop control, when human oversight and intervention is minimal and machine communications really is ‘machine to machine’. Systems can then respond in real time and continually learn and optimize. In contrast today, even so-called intelligent transport systems are rarely out of direct control of human operators.

The challenge will be to make the benefits of closed-loop control visible in some way to investors and the public. Like the Rocket belching smoke and noise on its maiden voyage at 24mph, smart cities need to inspire the popular imagination.

(1) Technological revolutions and financial capital, Perez, C (2002), Edward Elgar Publishing

Informa Telecoms & Media has released new figures revealing that the High Speed Broadband (HSBB) network being built by Telekom Malaysia is comfortably outpacing other NBNs being deployed including in the region, including rival Singapore’s NGNBN as well as those being rolled out in Australia and New Zealand.

According to Informa, the HSBB – a 70/30 joint-venture between Telekom Malaysia and the government – had 310,000 subscribers by end-April and had passed over 1.2 million premises in the country (see below) – with the network set to be completed both on time and under budget.

The HSBB deployment has gone so well in Malaysia that there is now talk of extending the network beyond its original target of 20% of the total homes in the country and taking it into more areas outside the Klang Valley, with strong interest from several state governments in having the HSBB extended into their states.

The HSBB’s progress is way in front of Singapore’s Next Generation National Broadband Network (NGNBN) which has only around 130,000 subscribers so far and, although deployed to nearly 90% of buildings in the city-state, is still not available to the majority of households because of delays in completing the in-building wiring.

Meanwhile, network deployments in the Australian and New Zealand markets lag way behind the two regional front-runners with Australia’s highly controversial A$43 billion state-owned National Broadband Network having only around 7,000 subscribers while New Zealand’s Ultra Fast Broadband deployment has only around 500 hundred subs at present.

“There is no doubt that Malaysia’s decision to stick with the incumbent, Telekom Malaysia, in deploying its next-generation broadband networks is definitely bearing fruit at the moment,” says Tony Brown, Senior Analyst at Informa Telecoms & Media.

“The other NBN markets in the region have deployed more complex NBN models with new and independent entities created to build and operate their NBN networks – and that has taken a lot of time and created some significant teething problems, especially in Australia.”

Nonetheless, Brown says that, although keeping Telekom Malaysia as the key component of the HSBB deployment has facilitated a faster NBN rollout, the government’s decision not to create an independent wholesale network access operator, as is being done in Australia, could be a negative in the longer term.

In addition, Brown says that another problem facing the Malaysian NBN market surrounds content, especially the tight exclusive grip that pay-TV giant Astro has on much of the best TV programming.
“With video set to play such a huge role in the broadband market and with so many operators now launching IPTV services – including both Telekom Malaysia and Maxis – content rights are becoming ever more critical,” says Brown.

“As things stand, an operator like Telekom Malaysia is going to find it hard to really break through as an IPTV player unless it either spends a huge amount of money on content or the government steps in – as the Singaporean regulator did a few years ago – and bans exclusive content deals between programmers and pay-TV operators.

About Broadband-IP&TV Asia
Broadband-IP&TV Asia is the region’s largest broadband and media event attracting 2,500+ decision-makers from across the Asia-Pacific region and beyond. Now celebrating its 8th annual year, the event is the ONLY place to meet the whole broadband industry in one place at one time.

About Informa Telecoms & Media
Informa Telecoms & Media (www.informatandm.com) is the leading provider of business intelligence and strategic services to the global telecoms and media markets.

For more information, please contact:
Denise Duffy
PR Manager, Informa Telecoms & Media
Mob +44 (0) 7500 330826
Email: denise.duffy@informa.com
Twitter: @informatm_pr

© Informa UK Ltd 2012. All rights reserved.

From July 1, the retail cost of data roaming will, for the first time, be regulated in Europe. Most smartphone users today turn data roaming off when they travel because of the high costs and unpredictability of roaming charges. But over the next two years, the cost* of sending an email while roaming abroad will fall from, on average, Eur0.07 when the price caps come into effect in July, to Eur0.02 in 2014. The cost of five minutes on Facebook will fall from Eur0.35 to Eur0.10 while a five minute video on Youtube will fall in price from Eur3.50 to Eur1 (the price caps are “per megabyte and these figures are Informa Telecoms & Media calculations).

In addition to the new price caps for data services, voice and SMS, the European Parliament has approved new rules that will allow new players such as mobile virtual network operators (MVNOs) to enter the roaming market. However, Informa Telecoms & Media is sceptical that this will result in a significant increase in competition. The most likely new entrants, Informa believes, could be Apple and Google.

“From a consumer perspective the price cuts are great news, particularly when it comes to data services which will see some sharp price declines over the next two years”, commented Mark Newman, Chief Research Officer at Informa Telecoms & Media. “But it is less clear whether we’ll see many new companies entering the market to provide roaming services,” he added. “Roaming is an extremely complex business and there will need to be new investment in mobile networks to allow new players to provide roaming services. The cost of these network upgrades and the mechanisms by which these new players are allowed into the market have yet to be agreed”.

However, Informa Telecoms & Media believes that smartphone vendors and platform developers such as Apple and Google may be tempted into the market once new rules come into effect in July 2014 that allow consumers to buy their national and roaming services from different providers– while keeping the same number.

Most smartphone users turn their phones off while travelling abroad because they are scared of the huge bills that they could run up while they are roaming. Smartphone vendors are constantly looking to develop new services, features and functionality that allow them to keep up their prices and to differentiate themselves from their competitors. “Offering their users a data plan – via an app store – that allows them to use their favourite services while abroad at a much lower price than that offered by their home network would clearly be an attractive proposition”.

The new wholesale and retail price caps will result in a continued decline in operator revenues from roaming services within the European Union. However, the European (retail) roaming market as a whole will grow over the next five years. Outside of Europe there is little pressure on operators to reduce roaming prices and the growth in revenues from Europeans travelling to destinations outside of Europe will more than compensate for the decline in intra- European revenues. Furthermore, Europe is slowly recovering from a financial downturn which saw a massive dip in travel and the usage of roaming services in the period 2009-2010.

New research from Informa Telecoms & Media forecasts that the European roaming market (retail revenues from Europeans travelling both within and outside Europe) will rise from $10.1 bn in 2012 to $12.5 bn in 2016. Globally, the roaming market is expected to grow by 43% between 2012 and 2016, delivering revenues of almost US$60bn.

*Informa’s calculations assume that an email will consume 0.1MB of data and that five minutes of Youtube will consume 5MB of data. Our calculations for Facebook assume that each web page uses 0.05MB of data and that during a five minute period an average Facebook user looks at 10 web pages.

The interest of the Mexican giant in investing in KPN comes at a time when European operators are struggling. In recent months, we have seen emerging players investing in European markets, such as Russian operator Vimpelcom acquiring Italian assets, and Egyptian magnate Sawiris acquiring stakes in Telekom Austria. Like many of its European peers, KPN is a troubled company which makes it a good acquisition target for a buyer looking to turn around its business. In 1Q12, KPN saw its shares at their lowest level since June 2005 and had to cut the shareholders’ dividends. For cash-rich America Movil, this situation is an attractive opportunity to extend its reach. The Mexican giant has a history of investing in troubled regional operators to exploit synergies and turn them into successful companies. To date, America Movil has concentrated all its efforts in the high-growth emerging Latin American markets, but it has now become a good time to invest in the mature European markets.

From a competitive standpoint, America Movil’s biggest rival Telefonica already benefits from a presence in a variety of diverse markets, including its home market Spain, the UK, Germany and other European markets as well as Latin America. By investing in KPN, America Movil would go head to head with Telefonica beyond Latin America and into Europe. As European economies are struggling, Latin America remains the major strategic focus for both groups, but it is important for America Movil to build a presence beyond its core markets.

Bringing the know-how of an innovative European player such as KPN will also be an important asset for America Movil in terms of innovation. Telefonica has already been able to export innovative services from Europe to Latin America, for example cloud services for the highly strategic enterprise market. America Movil’s fixed arm Telmex has struggled to bring innovation to market and could certainly benefit from KPN’s know-how. Ultimately, bringing innovation means increasing the value of the customer base through the uptake of mobile data services which will boost the operator’s financial performance. This is a key objective for a player like America Movil as it is operating in markets with predominantly prepaid user bases with significantly lower ARPU and EBITDA than mature markets.

Nonetheless, we are not in a “gold rush situation” in Europe and not all acquisitions will eventually go through. What Europe brings to the emerging market operators is primarily know-how, but also the opportunity for industrial synergies and implementing best practices including cost-cutting.

Galaxy S III comes with a unique combination of the highest possible set of hardware and functionalities in the market so far. These include a 4.8” super AMOLED screen, an in-house built quadcore processor, 1GB of RAM, 8MP back camera, 2MP front camera for video recording, up to 64 GB of Flash storage, a micro SD extension, NFC, MHL/DLNA/WiFi/Bluetooth/GPS/FM connectivities, 2100mAh battery, and is filled with a number of sensors for advanced input/output recognition experience. All these goodies are packed in an impressive 136.6×70.6×8.6 mm and 133g form factor. The phone comes in two variants; one addressing HSPA+ market and another with an additional LTE connectivity targeting spectrum bands deployed in the USA, Japan, and Korea. The phone will also support an advanced and cloud based voice recognition through Samsung’s Svoice solution, something similar to Apple’s SIRI platform.

Hardware has been always a key differentiator for Samsung devices, so this not what makes this phone attractive in terms of innovation. But what is unique about this phone is the level of intelligence Samsung has created around its embedded features and sensors which takes smartphone innovation into another league. The device’s features are capable of communicating with each other and sharing information, enabling it to react intuitively and automatically to an action taken by the user. For example, the phone can recognise a face in a picture taken with the camera and will associate it with a contact saved in the address book. The phone will then automatically save the picture in a relevant file (e.g. family, friends, colleagues), tag it, and suggest you should upload it to facebook or Twitter. The phone also comes with a number of innovative features inherited from Galaxy Note, including animated applications and real-time updated widgets in the home-screen (e.g. wallpaper, photo gallery, favourite video, weather, Twitter, Facebook, email, etc.).

While the Galaxy S III will be highly desirable for enthusiastic and advanced users, Samsung will have to build on the already popular Galaxy brand and push it hard to various distribution channels before the iPhone 5 is launched. However, Samsung will find it hard to convince and educate the typical mobile phone user to adopt and use all the advanced experiences enabled by this phone. In this specific segment, Samsung Galaxy S III is unlikely to meet with great success, at least in the early stages after launch.

The casing of the Galaxy S III is another weakness, based as it is on the usual plastic casing found in most of Samsung’s phones, which doesn’t do justice to the device’s impressive features. Samsung needs to learn from the likes of Nokia and Apple which use high-quality materials and the best designs for casing their premium devices.

Galaxy S III could, potentially, also cannibalize sales of some of its popular smartphones including Galaxy Note, Galaxy S II, and Galaxy Nexus. Therefore, Samsung will have to come up with a well-structured price segmentation, where Galaxy S III addresses the premium price points while the existing Galaxy devices enter the lower price points to widen the audience of the overall Galaxy brand.

To reduce the risk of this happening mobile operators in Europe are keeping the cost of wholesale mobile data high enough to deter any MVNOs from offering a service that is attractive to heavy data users. Wholesale prices tend not to be regulated so it is pretty easy for operators to set a pricing structure that would prevent, for example, an MVNO from setting a high retail price for SMS and voice services and a competitive price for data.

But what if regulators did start setting price caps for data wholesale tariffs? Might this be enough to encourage the likes of Apple and Google to enter the MVNO business?

This is precisely what the European Union is in the process of doing for roaming services. And if new players such as Google or Apple enter the roaming data business, as Informa Telecoms & Media believes they will, might this not give them the appetite – and a backdoor into – the national mobile data market?

New EU roaming proposals

In late March the European Parliament, Council and Commission agreed to new wholesale and retail price caps for roaming services for the period July 2012 to June 2017. The glide path for data roaming will see the maximum price of wholesale data fall to €0.05 per megabyte by July 2014 compared with a retail price cap of €0.20 per megabyte. These prices are interesting on two levels. First, the difference between the wholesale and retail price caps means that there is a significant opportunity for new players to compete in the data roaming market so long as they can build enough volumes to justify the investment in setting up a roaming MVNO. Secondly, the price of €0.05 per roaming megabyte is, according to research by Informa Telecoms & Media, about the same price that many mobile operators are offering MVNOs for national data services.

The new EU roaming regulations – which will be ratified within the next few weeks – is designed to help both existing “national” MVNOs and future “roaming-only” MVNOs – to compete with operators in providing roaming services to end users. In the same way that national MVNOs buy national voice and SMS services at a discount of around 50% on retail prices, they will now be allowed to buy roaming services at a discount of 50-70% on the retail price cap.

“Roaming-only” MVNOs will be able to enter the market from July 2014 by offering (voice, SMS and data) roaming services to people who want to stay with their existing operator for their national services. The Commission wants the industry to develop a technology which puts a second identity (dual-IMSI) on mobile users’ SIM cards which allows them to have separate providers of national and European roaming services while retaining the same number for both. There is a variation on this approach which relates only to data roaming. The concept is called “local break-out” with the idea being that when someone crosses an EU –border they can then subscribe, on the spot, to a mobile data service provided by one of the networks in that country. The visited network operator would set the price for the service but it would appear on the bill provided by the user’s home network operator.

European regulators are still trying to figure out the best technical approach for allowing these dedicated “roaming” MVNOs to enter the market. There is some concern that the cost of implementing the dual-IMSI approach will outweigh the benefits in terms of lower costs to mobile users.

Data offers the best opportunity for new players

But the local-breakout option is relatively straightforward and easy to implement from a technical perspective. The real question here is who will have the brand, the marketing reach and the distribution channels to pitch their roaming-only services to end users. We are doubtful that many existing MVNOs can compete in this space because they do not have good enough access to those mobile users who might be interested in buying a mobile-only data service. Another possibility is travel companies, insurance firms or airlines who could offer roaming packs on intra-European flights. But we believe that the most likely players to enter this space are either the operators themselves or smartphone OEMs via their application stores.

Most smartphone users today turn off data roaming when they arrive (or before they arrive) in a foreign country. With an activated data connection many data applications run in the background without the mobile user even benefitting from using service. So, it is possible to run up a high mobile roaming bill even without using the service because most roaming data price plans are charged on a per-megabyte basis.

This is frustrating for smartphone vendors because it means that their customers cannot use their devices when, arguably, a data connection could be most useful to them. There is massive pent-up demand for data roaming services because when people are away from home they could use the Internet for a whole range of communications, information and entertainment services that they may be able to access at home using other media. In the case of Google, no data connection means no advertising revenues.

Data roaming could also be a lucrative opportunity for players such as Apple or Google. By the end of this year there will be close to 100 million Android and 50 million iPhone users in Western Europe. The profile of iPhone and Android users correlates closely with mobile roamers because they are mostly high-end consumers and business users. Furthermore, both Google and Apple would be able to market roaming services via their applications stores, Google Play (formerly Android Marketplace) and Apple’s Applications Store.

Neither Google nor Apple has commented on this potential new opportunity but we think it inevitable that they will assess its potential. The easiest way for them to enter the market would be either to set up an MVNO business themselves and go around negotiating deals with operators in each country or, what  is more likely,  to work with an operator or MVNO (or MVNE) who already has these agreements in place.

If Apple or Google do enter the market, and their customers like the idea of buying a service from them rather than the operators, it would only be logical for them to look to start providing services in national markets. As we pointed out earlier, operators can use wholesale pricing approaches to prevent an MVNO from being competitive in the retail market. But such is the level of competition between operators in many European markets that it is quite feasible that one operator would take the view that it has more to gain than to lose by acting opportunistically and becoming the preferred wholesale partner of a smartphone OEM. Once this happens then Apple or Google will have the chance to become fully-fledged providers of mobile services.