Hi.
>> lately I hear only wireless horror stories from europe.
[snip]
>> But since it is ... complicated to get real insider
>> information ... from Europe, I wonder
>> if somebody can give us a short summary whats going on.
As this doesn't closely follow the list's charter "... web and JAVA(tm)
enabled mobile phones", I hope nobody is going to object me commenting. I
am a European telecomms consultant in Japan and I have been commuting
between Europe and Japan (and some other places as well) for the last 10
years, so perhaps I might be considered an insider both in Europe and Japan.
As I see it, what we are witnessing in the wireless industry in Europe is
the letting air out of an emerging bubble to prevent it from becoming a
real bubble, which is a positive thing and should be welcome.
For years the industry has been spoiled with what seemed never ending
growth. This has caused the players to introduce more and more services
faster and faster and up to a point this created real value, that is users
embraced the new services and were willing to pay for them.
Creating so much momentum, however means you got to keep going, slowing
down or even keeping your speed constant is a very difficult and rather
dangerous manouvre because anybody else is expecting you to keep
accelerating and everybody else will keep accelerating for as long as they
can. Even if you don't want to go any faster, the others will keep you
going.
So, what are you going to do if you are running out of steam ? You will
desperately try to find ways to create more steam and you will eventually
get so occupied with steam creation that you will loose focus of whether
anybody actually is willing to buy tickets for a ride on your super-charged
steam engine.
That's when the marketing cavalry is called in. Entire armies of marketeers
and lobbyists are on the move to convince the public that they got to be on
that new super-charged steam engine and for a while this will work and
creates some demand. Eventually however, people will get tired of various
things that turn out to have been more a matter of fashion and trendiness
and less a matter of necessity and convenience.
And this is what's happening right now in Europe. Almost anybody has got a
mobile or two. They have got a mobile small and light enough, even cute
enough. It can memorise as many phone numbers as needed or more. It's got
all the melodies and ringing tones one could possibly want. It's got cheap
instant messaging that works across operators and countries. It's got
multiple bands for use with various networks when travelling. It's got EFR
for superior ISDN like speech quality. Network coverage is good and
capacity is available for what most people are using their mobiles for
right now. What else is there one could possibly want from a user
perspective?
Yes of course you could go on the internet using your phone and in a number
of applications this would add real value, but few of those are noticeably
different from what people have got already available with SMS (GSM's
instant messaging).
Just now it was announced that Singapore Airlines provide flight schedule
information via i-mode to mobile phone users. Many people in Japan might
think this is a brand new state of the art service only possible because of
i-mode and therefore Europeans will not have such a service. The fact is
that SwissCom and SwissAir had introduced this service some time back in
1997 based on SMS and they may not even have been the first to do so. Even
earlier than that there was this famous Coke vending machine at Helsinki
Airport from which you can buy a drink without cash via SMS using a GSM
mobile phone. Weather forecasts, sports news, traffic information, stock
quotes etc etc etc all that has been around for years in Europe with SMS as
the transport medium and people are mostly happy with the services as they
are.
Only the more complex value added services will get a real boost from using
a protocol such as WAP or cHTTP (which is used by i-mode). This means, that
in Europe it is not really necessary to have WAP or i-mode in order to get
most value added services. The benefit of rolling out services based on IP
instead of SMS is mainly on the side of network operators. Instead of
proprietary IP/SMS interfaces, a native IP based service delivery method is
easier to maintain in the long term and it is easier to get third parties
to offer services to mobile phone users.
For the user it is not much of a concern how the delivery of information is
taking place. Sure, WAP and i-mode allow more interaction and a much nicer
user interface than SMS, but most services are available via SMS and
therefore WAP or i-mode simply represent a convenience upgrade. Then again
there is nothing wrong with WAP. What was wrong with WAP delivered services
was that those services were being charged by connection time and not by
quantity as SMS and i-mode delivered services are charged for. The charging
model however has nothing to do with the method of delivery.
In Japan the situation of value added mbile services is entirely different.
There has never been any short messaging service that allowed users to send
messages across networks or overseas. Unlike Europe, Japan has no mobile
phone messaging standard. Every network uses their own proprietary system
and they only introduced messaging very late. Therefore value added
services via mobile phone messages as seen in Europe were unavailable in
Japan. When i-mode was introduced in Japan, it was the first time that
users could send messages accross network boundaries and get value added
services that have been standard in Europe for years. This is why i-mode
became such a success. In Europe SMS is as much a success as i-mode is in
Japan but nobody talks about it because SMS is no big deal anymore, it has
been around ever since GSM was introduced. There have been more messages
delivered through SMS than there will ever be delivered through i-mode.
While Japan is experiencing it's boom driven by the introduction of
standards, Europe has had this boom with the introduction of GSM throughout
the 90s and is now facing saturation. This is happening at a time when
financial markets have become more cautious and don't throw money at any
business plan that contains the words "cellular" and "internet" as they
used to. Therefore, in Europe the cellular industry is trying to create new
demand, which is becoming increasingly different with most users being
happy with what they have got.
One result of this was the creation of 3G. While everybody agrees that 64K
is enough bandwidth for most mobile applications, the industry wanted to
compete with wireline and aimed for broadband wireless regardless of
whether it made sense or not for it seemed to be the only way to continue
on the growth spiral. The only problem is that there isn't any mainstream
application that makes sense in a mobile context that requires the
bandwidth 3G calls for. So, the few niche applications that do, such as
video clips on your phone and mobile video telephony (not to be confused
with video-conferencing) were being overhyped.
The public bought into it for a while, but as they say "You can fool some
people for some time, but you can't fool all the people all the time" and
these days it is becoming more and more apparent that 3G is there because
the industry wanted it, not because the users have a demand for it.
2.5G may have just been fine and the investments into 3G would have
probably been spend more wisely on broadband into every home, but the box
has been opened and there is no easy going back. And there will be no going
back, but there will be less hype and more rationality, which is what we
are seeing now. This should be welcome as good news and not misinterpret as
"wirless horror stories".
Imagine, some financial institutions in Japan had been behaving more
rational in the height of the bubble economy. Back then it might have been
dismissed as "nonsense" but today those institutions would probably be a
lot more healthy than the those who lacked any rationality whatsoever.
The difference is that in Europe it doesn't take as long for someone to
stand up saying "Wait a moment - What are we doing here ? Are we nuts ?
This doesn't seem to make sense anymore, we'd better slow down a bit." And
I am sure, the next time there is a danger of creating a bubble economy in
Japan, that many people will remember the last one and behave more
rational. In the Western hemisphere such bad experiences have been plenty
and the financial systems have evolved as a result to apply some checks
every now and then. The current slowdown in the wireless industry is a
result of one such reality check where the fincancial industry has found
that many of the promises made appear not well aligned with reality.
This doesn't mean that the wireless industry is in trouble or that they are
heading for chaos. Quite the opposite is likely to be the case, if they
wouldn't slow down a bit, then they would be heading for trouble. What it
means instead is that the industry has to operate like other mature
industries, more efficiently and with sustainable growth rates. The years
of pioneering where it doesn't matter how much money comes back as long as
there is growth, those years are over now. In other words the wireless
industry is growing up. Rating sustainable profitability over market share
is a sign of maturity, after all.
For Japan this means that it might be reasonable to also look into
alternatives to 3G, such as interworking between GSM and PHS. NEC once
built a dual-mode GSM/PHS phone, but they never manufactured it, because
the Europeans didn't license PHS as an alternative cordless standard
alongside the European DECT standard. PHS is widely adopted throughout Asia
and Latin America as a cordless standard and some countries also have
public PHS networks, i.e. China and Taiwan. Perhaps, the Japanese wireless
industry should hedge their bets and also push GSM/PHS hybrid technology,
after all DoCoMo has operational experience with cellular/cordless hybrid
techology through their Doccimo service.
What GSM is to the world of cellular, clearly PHS is to the world of
cordless: most widely adopted state of the art technology, affordable
through economies of scale. If 3G doesn't take off, PHS hybrid could save
the day for the Japanese industry but also for the Europeans, who didn't
want PHS in the first place.
Note, CDMA, the wireless access method used for 3G is said to be 3-10 times
more spectrum efficient [depending on who you ask] than TDMA, the wireless
access method used by 2G GSM systems. PHS is 10 times more spectrum
efficient than GSM [for a variety of reasons]. Perhaps the Europeans
shouldn't have been so foolish to block PHS in the first place just because
it rivals their DECT standard. Instead they should have been flattered,
because the Japanese, as one would expect, have designed PHS borrowing a
lot from other state of the art technologies, in this case they had
borrowed heavily from GSM. Had the Europeans embraced PHS, it could have
saved a lot of the pain the industry is now going through with 3G.
kind regards
Benjamin
email: benjk@mac.com
PS: As Winston Churchill once said before Parliament "I must apologise for
holding a rather long speech today, I didn't have the time to prepare a
short one".
[ Did you check the archives? http://www.appelsiini.net/keitai-l/ ]
Received on Tue Jul 24 13:45:13 2001