Internet services more important than Long Term Evolution, says 3

09/05/2007

Mobile operators need to focus more on how to integrate their services with the Internet and less on new technologies, such as LTE, said Ed Candy, technology director at the European arm of 3 parent company Hutchison Whampoa.

"When you put a new technology in, scale goes down and costs go up," Candy told delegates at an LTE panel session at the 5th International Base Station Conference in April. "That's not what we want at the moment."

He said that the mobile industry was still at a very early stage in the adoption of 3G services and that it had plenty of capacity and time. "What we really need is the scale to get the costs down, where everyone can have a reasonably priced handset and flat-rate services," he said.

In the same session, Richard Kramer, managing director of research company Arete, agreed that the focus still needed to be on creating profitable applications on existing networks, rather than on investing in new networks. He said that LTE was "entirely a technology push."

"Our problem is not the radio side," he said. "3G is good there. We need a flat architecture, and we need to improve backhaul. That's where we need some work."

Also at the conference, Vodafone Global Networks' Andrew Dunkin questioned the necessity of making an early move toward broadcast technology to provide mobile TV services. Mobile TV take-up is good and the feedback positive, he said, but delivering TV through unicast networks today is expensive.

"Do we need to make a big step to broadcast technology, or evolve our 3G networks?" Dunkin asked. "Maybe if you're in a market where TV is huge, the big step to mobile broadcast may be justified. In other markets, a more conservative approach may be warranted."

Herbert Mittermayr, vice president of marketing at Alcatel-Lucent Mobile Broadcast, said there are infrastructure challenges for mass-market mobile TV. The top 10 channels handle 80% of usage, he said. When users were watching a few channels at the same time, the only credible technology was broadcast, but that medium's big disadvantage was the high initial investment.

However, upgrading a cellular site to use S-Band DVB-SH technology would cost €25,000-30,000 (US$34,000-40,800), Mittermayr said. He also said that Alcatel-Lucent envisions a mass-market rollout of its terrestrial DVB-SH program, starting in early 2008.

In a typical nationwide implementation, the platform would be available to 60% of the population and offer 90% indoor coverage. The rollout would be followed by a satellite launch in early 2009, enabling Alcatel to provide service to the entire country.

Dave Tansley, a partner at Deloitte MCS, said that service providers face a tough choice between whether to focus on infrastructure, which is a "scale business," or be "size-zero service providers" and concentrate on content.

But Kramer cautioned that if OEMs were going to provide managed services, they should cut out proprietary interfaces and embrace IP/NGN rollouts. There is a need to "knock down the fortresses they have built up around their profitability," he said.

Tansley said he believed that the market for network outsourcing would be strong in the next few years, with network ownership ceasing to be a prerequisite for being in the business.

Tansley said that he envisions a handful of network operators whose core capability is managing assets. They will be "scale-led" and differentiated through operating efficiency, he added. The customer experience will be handled by providers whose core capability is relationship management, he said, and they would be brand-led and differentiated through user experience.

"Having the best brand is dramatically more important than having the best technology," Tansley said. "Owning and operating infrastructure will be the exception rather than the rule."

Tansley said that Deloitte was expecting to see some "game changing" deals in excess of £1 billion (US$2 billion) in the network-outsourcing industry in the next 12 to 18 months.