Europe Mobile News

Analyzing the world's 11 biggest handset makers in Q1 2012

Mike Dano — Fri, 25 May 2012 14:54:08 -0400

The numbers are in, and it's time to make sense of the data. ABI Research's Michael Morgan checks out the world's 11 largest branded cell phone makers in the first quarter of 2012, providing sales data as well as insight into their strategy and competitive position in the market.

Though most research firms only list the market's top five handset makers, ABI lists a full top 11 (and the firm is providing shipment numbers for all of the vendors listed).

A few notes: ABI's numbers represent "sell in," or phone shipments into the retail channel, rather than "sell out," or sales to consumers. Further, ABI's ranking only counts phones that carry the manufacturer's brand. Therefore, phones that bandy a carrier's logo without a hint of which company actually built the device are not counted.

And see ABI's first quarter 2009 rankings, second quarter 2009 rankings , third quarter 2009 rankings, fourth quarter 2009 rankings, second quarter 2010 rankings, third quarter 2010 rankings, fourth quarter 2010 rankings, first quarter 2011 rankings, second quarter 2011 rankings and fourth quarter 2011 rankings.

(And click here for a look at the first quarter earnings season, and here for a list of the top U.S. wireless carriers in the first quarter.)

First quarter 2012 market share by OEM

OEM shipments from first quarter 2010 to the first quarter 2012

Overall smartphone shipments vs. non smartphones

Analysis from ABI's Michael Morgan

Samsung	In Q1 Samsung took the handset shipment crown from Nokia which had held the No. 1 spot for over a decade. Additionally Samsung widened its lead in smartphone shipments over Apple with 42 million units shipped. With pre-orders of the Galaxy S3 already in the millions and the continued success of the Galaxy S2 and the 5” Galaxy Note ‘Phablet,' it appears that Samsung will only widen its lead over competitors in 2012.
Nokia	The No. 2 position is new territory for Nokia, as its handset shipments dropped 24% YoY and 27% sequentially. Nokia is not just losing share to competitors in the smartphone space where its shipments declined to 11.9 million from 19.6 in Q4 2011; Nokia’s portfolio low end of devices also saw shipments decrease by 23 million from the previous quarter. The problem is not just a regional collapse as every region except North America saw a precipitous drop in shipments. To put it in perspective, Nokia’s single quarter shipment decline is equal to ZTE and LG combined shipments this quarter. Two more quarters of this and Nokia will have to struggle to remain in the top ten. ABI Research believes it is time to put Nokia on death watch.
Apple	Apple’s shipment decline of 5% can be attributed to seasonality and the regularly expected drop in shipments from a post launch quarter. Although ABI Research estimates shipments will decline again in Q2, this should not be viewed as a decrease in demand for iPhones, but a buildup in demand for the next iPhone expected to be released in Q3. If Apple can maintain its current rate of growth with its upcoming iPhone, ABI Research believes Apple could become the No. 2 handset OEM by 2013.
ZTE	ZTE remains a bit of a dark horse in the global handset race, as it continues to show annual shipment growth and plans to double is smartphone shipments in 2012. ZTE continues to focus on becoming a globally recognized consumer brand and believes the U.S. will be its largest market by 2015. ZTE’s low cost handsets are ideal for the growing interest in prepaid smartphones, but ABI Research believes that by 2015, China will be ZTE’s (and others) best bet for smartphone sales.
LG	LG Shipments declined 44% YoY and the company continues to lose market share in the collapsing feature phone market. Despite LG’s continued decline in shipments, the company did something highly remarkable in the handset industry: after 7 quarters in the red, LG is back in the black! ABI Research notes that historically when a handset company with declining sales slips into the red, over 90% of the time, the company never recovers and is either acquired or goes out of business. It has been LG’s slowly improving performance in the smartphone segment that has taken the handset division off of life support, but ABI Research still believes this patient will require careful monitoring before a clean bill of health can be given.
Blackberry (RIM)	RIM has faced numerous challenges over the past year which has led to sweeping changes in its top management. RIM’s shipments continue to decline as its portfolio of devices continue to look somewhat archaic against its competitors in developed markets. While RIMs handsets continue to have a luke warm reception outside of North America, ABI Research believes that it was RIM’s loss at home that sparked its general global decline. Furthermore in Q1, RIM was not profitable, which when combined with declining shipments is the telltale sign of impending doom for a handset company. Despite all signs pointing to serious trouble, it should be noted that RIM does have enough cash to keep running for another year and that RIM will release new BB10 smartphones before time runs out. If RIM can deliver the type of smartphones that will win back North American consumers, RIM could be one of the lucky few to come back from the red. Considering early demonstrations of the BB10 devices, ABI Research is not fully convinced that RIM is down for the count.
Huawei	Historically considered a low cost Chinese handset OEM ,Huawei shares the international stage with ZTE and TCL/Alcatel, as a rising star from China. Huawei has leveraged its prolific set of carrier infrastructure relationships to deploy its low-cost handsets in nearly every region. Huawei continues to grow from low-cost handsets to low-cost Android smartphones and like its Chinese brethren is one of the few OEM's that can deliver a sub-$150 smartphone today. With China's appetite for Apple's smartphones increasing every day, Huawei is seeking to move up the value stream with its smartphones and hopefully get a peice of Apple's pie.
Motorola	As Google gains approval from China for its acquisition of Motorola, overall handset shipments continued to decline 2% YoY while smartphone shipments were up 20%. Despite the improved smartphone to feature phone ratio, Motorola failed to be profitable for the fifth consecutive quarter. With Samsung and Apple pushing other OEMs out of Motorola's primary U.S. market it will be increasingly important for Motorola to find greater success overseas. Motorola will need to depend on more than the U.S. market if it does not want to be a weight on Google's profits and OEM relationships.
TCL (Alcatel)	TCL is a well-known electronics brand in China that had formed a joint venture with Alcatel of France to leverage new markets and carrier relationships. For TCL this means strong growth of sales of entry- to mid-level devices in EMEA and LATAM. The Alcatel / TCL device portfolio is a mix of low- end candy bar devices and colorful clamshell devices with basic media capabilities. Most TCL handsets are designed to meet the universal needs of all regions served by Alcatel and TCL, allowing for greater production volume per device model. TCL's effecient prodcution has allowed it to offer low-cost 3G handsets that are sought after by consumers moving from 2G. TCL is continuing to leverage its low-cost production capabilities to offer sub-$150 Android smartphones, and remains one of the few OEMs that can do that today.
Sony Mobile	Sony Mobile Communications (formerly Sony Ericsson) will become the first handset OEM to fully complete a transition from feature phones to smartphones. While some issues are to be expected when simultaneously shifting product strategies and ownership, Sony has continued to grow its smartphone shipments but not its profits. ABI Research believes that with a 100% (currently at 90%) smartphone portfolio, Sony will have to begin finding its way to profitability in the very near future or its apperance in the top 10 list will be short lived.
HTC	While technically not in the top ten this quarter, HTC’s historic performance has earned itself a mention on this list regardless. HTC shipments experienced its second sequential 30% decline in a row. North America used to account for 50% of HTC shipments (currently 25%), but HTC’s rush to produce LTE smartphones for the U.S. has been halted by terrible battery life, mediocre performance and the iPhone 4S. HTC has all but conceded the North American market to Samsung and Apple and will refocus on developing its presence in China and its new One series devices that ABI Research believes are the most technologically sophisticated devices HTC has ever accomplished.

The raw data

2012 Q1 Handset Shipment Market Share by OEM
Samsung	25.8%
Nokia	22.8%
Apple	9.7%
ZTE	5.2%
LG	3.8%
Blackberry (RIM)	3.1%
Huawei	2.9%
Motorola	2.4%
TCL (Alcatel)	2.1%
Sony Mobile	2.0%
HTC	1.9%
Other	18.3%

Handset Shipments by Vendor World Market: 1Q-2010 to 1Q-2012 (millions)
	1Q 2010	2Q 2010	3Q 2010	4Q 2010	2010 (full year)	1Q 2011	2Q 2011	3Q 2011	4Q 2011	2011 (full year)	1Q 2012
Nokia	107.8	111.1	110.4	123.7	453.0	108.5	88.5	106.5	113.5	417.0	82.7
Samsung	64.3	63.8	71.4	80.7	280.2	70.0	74.0	85.0	93.5	322.5	93.8
LG	27.1	30.6	28.4	30.6	116.7	24.5	24.8	21.1	20.0	90.4	13.7
SonyEricsson	10.5	11.0	10.4	11.2	43.1	8.1	7.6	9.5	9.0	34.2	7.3
Motorola	8.5	8.3	9.1	11.3	37.2	9.0	10.6	12.9	10.3	42.8	8.8
Blackberry	10.5	11.2	12.1	14.2	48.0	14.9	13.2	11.8	14.1	54.0	11.1
Apple	8.8	8.4	14.1	16.2	47.5	18.7	20.3	17.1	37.0	93.1	35.1
HTC	3.3	5.4	6.8	9.1	24.6	9.7	12.1	13.2	10.1	45.1	6.7
Huawei**	6.1	6.7	6.9	7.7	27.4	9.1	11.9	14.2	16.3	51.6	10.5
ZTE**	8.0	9.9	8.6	9.6	36.1	15.2	19.6	18.9	20.0	73.6	18.9
TCL (Alcatel Mobile Phones)**	2.9	7.6	9.0	12.5	32.0	7.7	8.9	9.4	8.1	34.0	7.8
Others	45.3	47.2	59.0	63.1	214.6	72.5	88.8	75.2	71.4	307.9	66.6
Total	303.0	321.2	346.2	390.0	1360.4	367.8	380.4	394.7	423.3	1566.2	363.0

Deutsche Telekom quashes sell-off speculation, slams regulators

Paul Rasmussen — Fri, 25 May 2012 12:20:03 -0400

Deutsche Telekom has no plans to sell subsidiaries or shareholdings in other companies, according to Deutsche Telekom CFO Timotheus Höttges

Höttges

Speaking at the company's annual general meeting, the CFO pointedly denied any discussions that would see Deutsche Telekom (DT) exit its profitable Everything Everywhere UK joint venture with France Telecom. "We don't have a list of units we want to sell," Höttges said.

"We want to be there when demand for mobile data increases," he said, according to Reuters. "We want to participate in upgrading the network [to LTE]."

However, DT's CEO Rene Obermann left the door ajar with regard to T-Mobile USA. "We do not exclude any option for the T-Mobile unit in the U.S., also not a merger," Obermann told shareholders in Germany, according to Bloomberg. "A complete sale is unlikely. You understand that I can't say more in public on T- Mobile USA."

However, this attracted comment from Alexandre Iatrides, an analyst at Oddo & Cie in Paris. "We don't see any value creation by T-Mobile USA if it stays as a stand-alone company," he told Bloomberg. "The alternatives would be a merger or some kind of network-sharing agreement with MetroPCS or Sprint Nextel."

In an attempt to move attention away from possible disposals, Obermann outlined DT's four-point strategy: to become the leading telco in Germany, focus on integrated networks for the gigabit society, innovation through collaboration, secure cloud solutions and on keeping customers delighted.

DT said in a statement issued at the meeting that the company still needed to compensate for the decline in revenue from traditional telephony, which is caused by regulatory interventions and tough competition, by increasing revenue in other fields. According to Obermann, regulation is costing the company "vast amounts of revenue."

"Everyone is calling for high-speed networks in the furthest-flung corners of the country - ideally fibre-optic networks ... At the same time, however, politicians at the European level and the national regulatory authorities are taking away the incentives for investment," Obermann said.

The DT chief added that the United States and Japan already offer widespread LTE services which remain rare in Europe, noting that the UK has yet to even conduct its LTE spectrum auction, and French operators will only begin offering LTE in some cities next year.

Obermann indicated there was a clear link between the lack of European LTE and heavy regulation, and urged Brussels to reduce regulatory intervention. "If not, there will be no new stimuli for broadband rollout adding that regulators were giving cable network operators preferential treatment," he said.

For more:
- see this Reuters article
- see this Bloomberg article
- see this separate Reuters article
- see this DT statement

Report: Vodafone's M2M connections grew 47% in Q1

Paul Rasmussen — Fri, 25 May 2012 12:17:19 -0400

Subscriber numbers disclosed by major global operators indicate that the machine-to-machine sector has sustained strong momentum into the early months of this year, according to a new report from research firm Berg Insight. The firm claims that the high installation rate of new M2M subscribers will see year-on-year growth rates stabilising at around 15-30 percent. Vodafone leads all European operators in terms of the total number of M2M connections, according to Berg.

On a quarterly basis--of the operators that officially report M2M numbers--Berg Insight says that AT&T had the highest number of M2M connections in the world with 13.3 million for the first quarter of 2012, up 25 per cent year-on-year.

Next was Vodafone with 7.8 million subscribers at the end of the financial year ending March 2012, up 47 per cent compared to the number of M2M connections it had in the year-ago period. However, Berg noted that Vodafone's actual M2M subscriber base was higher as the declared figure excluded some devices in Vodafone's regional subsidiaries that are not connected to the group's centralised M2M platform.

Japanese operators NTT DoCoMo, KDDI and Softbank recorded year-on-year growth rates in the range 20-35 per cent and recorded between 1.9 million and 2.4 million M2M subscribers each.

But, for those operators that do not disclose M2M details, China Mobile is thought to have the largest installed base at around 15 million, followed by Verizon Wireless, T-Mobile and Telefónica at around 7-9 million

According to Berg, shipments of cellular M2M devices increased 35.3 percent in 2011 to a record level of 50.8 million units. Adjusted for churn, the research firm said this resulted in net additions of 29.3 million M2M connections in 2011, taking the worldwide number of cellular M2M subscribers to an estimated 108.0 million. The global machine-to-machine market is just getting going, and will soar to 359.3 million total M2M cellular connections in 2016, according to Berg.

Interestingly, the report found that due to the wide adoption of M2M across many vertical industries, a large portion of M2M device shipments is now due to replacement sales. As a result, Berg believes that the net increase of M2M subscribers will be substantially lower than M2M device shipments.

For more:
- see this release
- see this report (PDF)

LTE doesn't disrupt TV broadcasts, according to Swedish regulator

Paul Rasmussen — Fri, 25 May 2012 12:15:48 -0400

Only 33 Swedish residents have complained that their TV reception is suffering from interference caused by LTE operating in the same 800MHz band, and the Swedish telecoms regulator, Post & Telestyrelsen (PTS), has found no evidence that KTE transmissions will cause interference with TV broadcasts.

PTS issued LTE licences in the 800 MHz band in March 2011 to Hi3G, Telia, Telenor and Tele2 to expand coverage, according to Telegeography. The avoidance of causing disruption to TV channels operating in the same spectrum was one of the conditions of the licences.

However, the PTS has received 33 complaints from TV watchers, triggering the government body to conduct around 10 field measurement tests. PTS was unable to establish that the interference, under the definition set out in the LTE licence conditions, was caused by 800 MHz transmissions.

Separately, LTE interference is being taken more seriously in the UK with plans revealed by UK FreeTV that over 100 Freeview digital TV relay transmitters have been added to the 33 main transmitters already catalogued for retuning. The work to retune these transmitters will take place next year with the actual timing being dependent on when UK operators switch on their LTE services.

A budget of £180 million has been set aside by the operators to help digital TV viewers with the costs to retune their set-top boxes or move to FreeSat reception.

For more:
- see this Telegeography article
- see this UK FreeTV article

Orange UK unveils mobile ticketing trial, eyes nationwide service

Paul Rasmussen — Fri, 25 May 2012 12:13:45 -0400

Orange UK has partnered with rail and bus operator Stagecoach to trial a mobile ticketing service. If successful, the Cambridgeshire-based trial could lead to a nationwide rollout across select bus and rail services in 2013.

Orange UK partnered with Stagecoach.

Those involved with the trial can receive, store and validate tickets using handsets provided by Orange that run its NFC service Quick Tap.

Everything Everywhere CMO Gerry McQuade said in a statement: "We've already started a new movement in the way we make payments and receive retail rewards on the high street, so this really is the next step--providing customers with additional simplicity and convenience to help improve their public transport experience."

Results of the trial will be monitored by the UK Department for Transport and will involve measuring the level of customer convenience and technological effectiveness. The trial complies with the government's aim of enabling most journeys by public transport to use smart ticketing by the end of 2014.

Stagecoach group finance director Martin Griffiths said: "Once this trial is complete, we will carry out a review of the findings and assess the potential to expand the scheme further for our passengers."

A recent study from Informa Telecoms and Media forecast that sales of NFC-enabled devices are expected to accelerate from 2013 onwards. Total NFC handset shipments are expected to grow from almost 44 million in 2011 to over 630 million in 2015, representing 40 per cent of all new handsets, up from 3.5 per cent right now.

For more:
- see this release
- see this Mobile Today article
- see this Telecoms.com article

Huawei hopes to rescue operators OTT service threats

Paul Rasmussen — Fri, 25 May 2012 12:11:26 -0400

Mobile operators are coming under increasing threat due to over-the-top (OTT) players, according to the president of Huawei's carrier software and core network business unit, Deng Biao.

Deng maintains that OTT companies are now capturing a growing proportion of revenues that previously went to mobile operators. The Huawei executive stated that a few years ago text messages and ring-back tones were the most important services for China Mobile, but now "evenue is declining," as a result of competition from OTT services, Deng told Total Telecom at the TM Forum Management World in Dublin.

"Operators are not willing to be the dumb pipe;" they want a bigger share of the revenues, but OTT players are too strong, Deng said. Noting that voice revenues are continuing to decline, he warned ″many operators will go bankrupt″ if things do not change.

To combat the problem, Huawei believes its new value-growth solution (VGS) could help operators by optimising and monetising mobile broadband, helping operators to deliver greater bandwidth and better QoS for high-value end-users.

Deng pointed to VGS being deployed with reference customer MegaFon, as well as a number of others, and "many top operators are considering bringing our VGS solution into their network," he added.

For more:
- see this Total Telecom article

Social gambling via mobile devices will push market to $100B by 2017

Paul Rasmussen — Fri, 25 May 2012 12:09:53 -0400

A surge in social gambling activity, along with the introduction of intrastate casino and lottery services in the U.S., will help global annual wager via mobile handsets and tablets grow from under $20 billion (€16 billion) last year to $100 billion €80 billion by 2017. However, this new Juniper Research forecast notes that while sports betting currently accounted for the largest share of mobile gambling, it would be overtaken by casino gaming within five years. Dr Windsor Holden from Juniper, said: "Social gaming companies such as Zynga are seeking to move from play-for-fun casino games into real money gambling, while pureplay mobile casinos including Probability have begun to integrate with the Facebook mobile platform. In this way, consumers will be able to use their social networks to register for casino games, substantially increasing both the reach and engagement of such services." Release

Vodafone CEO details 'Supermobile' strategy to mimic Amazon

Paul Rasmussen — Wed, 23 May 2012 13:19:54 -0400

Vodafone CEO Vittorio Colao used the reporting of the operator's full-year results to quietly outline the company's direction for the next three years.

Colao said its plan, dubbed "Vodafone 2015: Supermobile strategy," includes replicating the success of online retail giant Amazon in terms of customer service. "Vodafone wants to be the Amazon of telcos," not in terms of selling but rather top-class customer service, Colao told reporters at a briefing, according to the Wall Street Journal.

In line with that Vodafone will be refurbishing 75 per cent of its 2,200 retail outlets across the globe by 2015 to give them an "experience-led store design." Colao said that the aim is to turn the stores towards being more like service centres, offering "fantastic service," as against simply a room full of cell phones stuck to shop walls. He added that customers should be able to purchase products online, and have the option to collect them in store.

Colao also said that as part of the strategy Vodafone will look to bolster its network capabilities and launch "healthy data pricing models" to ensure it differentiates itself from rivals. Other aspects of the 3-year plan include boosting customer loyalty and sustaining ARPUs, while at the same time improving average margin per user.

This mention of average margin per user (AMPU) would, according to Colao, becoming an increasingly important metric at a time when handset subsidies are putting operators' earnings under pressure. "We're moving to pull back on [acquisition and retention] costs," Colao told Total Telecom. "At the end of the day it is the margin that matters," he added.

This is not the first time Vodafone has touted "Supermobile" as a strategy. In fact, Colao expounded at length on the strategy in November 2010. "This is the whole set of things, and this is going to be a strong strategy based on covering technology, covering pricing, covering all the customer experiences and all the touch points that a customer will touch and, of course, covering all leading devices," he said at the time. "Our objective here is clearly to deliver data earlier and more profitably than what we thought under the old strategy."

Separately, Vodafone's 11 per cent drop in full-year profit due to higher taxes and weaker operations in Europe, left analysts largely unconcerned.

Will Draper from Espirito Santo told City AM that the outlook was slightly disappointing. However, in a sector context, the fact that Vodafone has reiterated a growing dividend should provide reassurance.

Jonathan Jackson of Killick & Co added that Vodafone's results were encouraging. "Although the reduced guidance on revenue for next full year is a little disappointing, we are comforted by the expectation for stability in free cash flow, given that is the driver of the 7 per cent dividend growth target."

For more:
- see this release
- see this Wall Street Journal article (sub. req.)
- see this Total Telecom article
- see this City AM article

Everything Everywhere slams rivals for not helping build LTE ecosystem

Paul Rasmussen — Wed, 23 May 2012 13:17:53 -0400

Everything Everywhere (EE) said it is ready to launch LTE this year but is being hampered by Vodafone and O2 not working to build the necessary ecosystem.

The operator, which has been lobbying the UK telecoms regulator, Ofcom, to allow to allow it to refarm is 1800 MHz spectrum for LTE use, said it's made the necessary investment to gain a head-start on it UK rivals, while they have instead focused on improving their 3G networks.

If Vodafone and O2 were to start deploying LTE now, they could do it in nine to 12 months, Tom Bennett, director of network services and device development at EE, told ComputerWorld UK. He said the operators need to work on creating the proper LTE "ecosystem," including device manufacturers, to support LTE.

"Compared to 3G [where the UK was ahead of the rest of the world], we are easily two years behind [with LTE]," said Bennett.

Adding to the criticism, David Salem, head of network strategy and architecture at EE, said: "Vodafone and O2 have had their opportunity to do the same [roll out LTE] and they have chosen not to champion LTE at this stage," he told CNET UK. "It's a choice."

"The 900MHz they have [they could have used for LTE]," Salem sadded. "They have chosen to reuse that spectrum for 3G [instead]. It is part of an efficiency drive." Salam maintains that EE is not looking at low cost strategies, but is intent on moving forward with LTE, and gaining an early lead in the UK, according to Computer World.

However, O2 has responded by claiming that the ecosystem EE was referring to didn't exist, and was unlikely to develop.

"There is so little 900MHz spectrum in Europe that it doesn't make commercial sense for the manufacturers to build the handsets to support it. And that is not going to change," O2 spokesperson told CNET.

Unwilling to accept this viewpoint, EE's Bennett told CNET: "The chipsets have supported 900MHz for a good year. As an operator you have a relationship with a vendor--you go to Samsung or HTC and you say, 'Are you going to assemble devices? I'll make it worth your while.' You create the market."

For more:
- see this Computer World article
- see this CNET article

Orange exec: Network sharing only option for LTE operators

Paul Rasmussen — Wed, 23 May 2012 13:16:12 -0400

Operators in southern Europe will be unable to afford the huge investment costs associated with LTE unless the current network business model is fundamentally changed, according to an Orange executive.

Duato

This stark message from Eduardo Duato, CTO of Orange Spain, prefaced a call for operators to move ahead rapidly and share active RAN and backhaul networks. The Orange executive said that using this approach on a 50-50 basis could see each operator saving 25 per cent of the total cost of ownership (TCO) of the LTE network, according to Mobile Europe.

While LTE is 100 per cent more spectrally efficient, and 30 per cent cheaper in TCO than 3G, Duato said that costs remain too high given the huge LTE deployments being called for.

Duato said that to monetise LTE services, operators will be required to make significant investments. "We keep doing calculations on how to monetise this service," he told delegates at the LTE World Summit, according to Mobile Europe. "Mobile broadband revenues are falling faster than costs, there is continuous margin reduction, signalling traffic is a fixed fee. We need co-operative architectures to reduce the impact."

Commenting on the comparison with other regions that are deploying LTE, Duato said that network sharing is the only way forward for the more than 100 operators in Europe compared to the handful in the United States. "It doesn't make sense to have this many networks [in Europe]" he said, according to Telecoms.com. "We have to move to LTE network sharing."

Duato called on national and European regulators to do everything possible to support operators intent on building pan-regional shared networks, as well as the vendor community. He also indicated that Orange could be willing to free up spectrum to enable this strategy, given the right circumstances. While he stressed that Orange has little to spare in urban areas, he said "we don't need all the spectrum we have in rural areas." Duato added that if operators were allowed to pool frequencies, then negotiations would be made easier.

For more:
- see this Mobile Europe article
- see this Telecoms.com article

Analyst: UK m-commerce usage rockets 4X in just two years

Paul Rasmussen — Wed, 23 May 2012 13:12:24 -0400

Mobile commerce uptake in the UK has quadrupled in the last two years, with 64 per cent of smartphone owners now using their mobile devices to shop online, according to a new study released by market research firm eDigitalResearch.

UK m-commerce adoption is taking off, according to eDigitalResearch.

Commenting on the results, Derek Eccleston, head of research at eDigitalResearch, said the data confirms that m-commerce has revolutionised the way in which we shop and browse. "The growth of mobile is completely unprecedented and the rate of change that we've tracked over the past two years is alarming."

Two years ago the market research firm forecast that smartphones were likely to play an increasingly significant part in consumer's busy lifestyles. While 2011 saw great strides being made towards this, "these latest set of results demonstrate that this trend is now irreversible," said Eccleston. "It is therefore essential that all retailers and brands make their mobile channels as accessible as possible to maximise the potential that m-commerce has to offer".

Of note, eDigitalResearch said the results indicated that the growth of mobile shopping shows no signs of slowing down. Almost half (44 per cent) of the 1,000 smartphone owners surveyed said they would use their devices to browse more often in the coming months, with one third (31 per cent) claiming that they would then go on to make a purchase.

The study also found that security, clear navigational links and quick browsing remained key features for mobile shoppers, who also rated functionality and usability higher than branding and design.

For more:
- see this eDigitalResearch release

Report: 70% of operators think LTE deployments make business sense

Paul Rasmussen — Wed, 23 May 2012 13:10:20 -0400

Momentum behind LTE is set to accelerate worldwide with the majority of operators planning to launch services this year or next, according to a recent survey by Informa Telecoms & Media. The study, a survey of operators conducted in May with 528 respondents found that almost 60 per cent of operators confirmed they would launch LTE services this year (33.7 per cent) or next (24.9 per cent), while over 70 per cent claiming there is a viable business case to launch LTE today. However, Paul Lambert, a senior analyst at Informa, warned: "Because LTE technology, at the moment at least, is an extension of the mobile broadband experience, initial evidence suggests that mobile users aren't prepared to pay a significant premium for LTE access." Release

Mallinson: Doubling spectrum capacity is not enough

Keith Mallinson — Tue, 22 May 2012 12:50:30 -0400

If mobile broadband growth is to continue at current triple-digit percentage rates, there will need to be much more than the doubling of current spectrum allocations, as, for example, slated for the upcoming UK auctions. With mobile broadband network traffic doubling every year and already dwarfing voice traffic, capacity growth must increase at a corresponding rate amounting to a 30-fold increase over five years. Improving radio technology, increasing cell site density (including small cells and Wi-Fi offload) and substantial amounts of additional spectrum are the three compounding supply factors that must all contribute to the required increase in network capacity.

Displacing incumbent spectrum holders

Cellular is a latecomer to the world of radio spectrum usage. It is in the arduous position of needing other users to become much more spectrum-efficient and relinquish most of their spectrum holdings. For example, despite demand for many more broadcast TV channels, increasingly in HD, exponential growth in mobile broadband requires that mobile operators obtain access to additional spectrum including some from broadcast and other frequency bands.

Modest progress is being made. For example, the original 850 MHz ("cellular") and 1900 MHz ("PCS") bands in the United States are being supplemented with the gradual commissioning of spectrum in the 1700 MHz ("AWS") and 700 MHz ("digital dividend") bands since 2008 and 2010, respectively. The Federal Communication Commission's national broadband plan sets goals for the United States to free up an additional 500MHz within 10 years and 300 MHz within 5 years. Whereas that will fall short of satisfying the world's leader in LTE, smartphones and tablet usage, the spectrum positions for UK operators are similarly constrained. These currently hold licensed spectrum in only three bands with a total of 300 MHz, as illustrated below. AT&T, for example, with a total of 82 MHz pled that it was significantly spectrum-constrained in justification of its proposed acquisition of T-Mobile USA.

UK Mobile Operator Spectrum Holdings

	MHz
Spectrum band	Vodafone	O2	Everything Everywhere	Three	Totals
900 MHz	2x17.4	2x17.4	0	0	69.6
1800 MHz	2x5.8	2x5.8	2x45	0	113.2
2100 MHz	2x14.8	2x10	2x20	2x14.6	118.8
Totals	76	66.4	130	29.2	301.6

Cellular represents only approximately 4 percent of a total of 7,500 MHz assigned in the UK, including allocations stipulated at an international level for maritime and aviation use. The majority of spectrum is assigned to defence, fixed/satellite, aeronautical/maritime and broadcasting, as shown in the next chart. Most of these allocations predate cellular's relatively brief 30-year history with highly-efficient geographic spectrum reuse, and before widespread exploitation of Information Theory according to Shannon's theorem, with digital communications since the 1990s, and massively increased and maximised information flows per Hz of radio spectrum occupied.

Overall UK Spectrum Allocations

Source: UK Parliament's Culture, Media and Sport Committee

In the UK and elsewhere in Europe, the 800 MHz spectrum (with excellent propagation that can provide wide network coverage), is being supplemented with 2.6 GHz band spectrum. The combined UK auction will deliver an additional 250 MHz of spectrum. The 800 MHz band "digital dividend" spectrum has been freed up as a result of the UK digital switchover of television broadcasting.

Spectrum crunch

Network capacity must at least keep pace with traffic growth if adequate service levels are to be maintained. If data traffic, doubling or more every year, as observed by Cisco and others, continues for the next five years, this will correspond to over 30 times more traffic over five years.

There are diminishing returns on what can be achieved in the radio link with so many sophisticated technologies such as advanced modulation schemes, interference cancellation and MIMO already being implemented. Substantially increasing the number of cell sites and connecting them with broadband backhaul is no mean feat either, with planning approval challenges and major costs in civil works.

That means that several times more spectrum than is currently licensed will be required in service within the next five years, and several times more than that by 2020 if demand growth rates can continue to be satiated. Increasing unlicensed spectrum for short-range access and offload, including Wi-Fi, will help relieve congestion in hotpots, but mobile users want ubiquitous connectivity that can only be provided by full-coverage mobile networks.

The spectrum shortage puts into question whether or not current data growth rates can be sustained beyond the next few years at most. Mobile operators are still in the process of deploying existing allocations such as AWS and 700 MHz in the United States, and refarming 900 MHz bands from 2G to 3G technology to increase data capacity in Europe. New allocations will also soon be used up at current growth rates.

Pricing to throttle growth

In the absence of sufficient spectrum, user demand will be curtailed through pricing. In disagreement with the FCC, AT&T believes its inability to complete the proposed acquisition of T-Mobile USA (due to resistance by the FCC and Department of Justice) is forcing it to set prices at levels that will limit demand growth below the levels it could have accommodated had been able to combine the spectrum assets of both companies.

Last year Cisco forecast a 26-fold increase in global mobile traffic growth between 2010 and 2015. After reporting that global mobile data traffic grew 133 per cent in 2011, Cisco expects annual growth rates to taper off to 90 per cent in 2013 and 78 percent in 2014, with a total 18-fold increase from 2011 to 2016. Ericsson expects only a 10-fold mobile data traffic increase between 2011 and 2016.

With sufficient supply of data network capacity I see no reason why demand growth should slow so soon. The smartphone revolution only began in earnest with introduction of the iPhone 3G in 2008. Following the heady days of fixed broadband Internet growth with fibre, DSL and cable modem deployments around the millennium, annual traffic increases of 100 per cent persisted throughout the tech sector collapse and ensuing economic slowdown in the early 2000s. User demand was driven by plummeting prices per megabyte consumed. Insufficient spectrum is a major bottleneck to cellular broadband growth. Its scarcity will result in high spectrum costs that will be passed onto end-users and moderate their consumption.

Keith Mallinson is a leading industry expert, analyst and consultant. Solving business problems in wireless and mobile communications, he founded consulting firm WiseHarbor in 2007. WiseHarbor is publishing an annual update to its Extended Mobile Broadband Forecast in May 2011. The new forecast will include network equipment, devices and carrier services to 2025. Further details are available at: http://www.wiseharbor.com/forecast.html. Find WiseHarbor on Twitter @WiseWarbor.

Smartphone growth to propel LTE to 1B connections by 2017

Paul Rasmussen — Fri, 18 May 2012 12:38:23 -0400

LTE connections will reach 90 million by the end of 2012, according to a new study by Strategy Analytics. The report said sales of LTE-based smartphones are expanding beyond early LTE hotbeds, including the United States, South Korea and Japan, and the technology will grow to 1 billion connections by early 2017.

LTE now has overwhelming support from global operators as their 4G upgrade path, said the analyst firm. Further, the technology will account for 15 per cent of all mobile connections in 2017, putting it on a faster trajectory than any other mobile technology. Article

German operators slam regulator over LTE approval delays

Paul Rasmussen — Fri, 18 May 2012 12:37:40 -0400

German wireless carriers are in an uproar over what they said is a delay by the German telecom regulator BNA in approving their applications to deploy LTE network technology in key German cities. According to the Financial Times Deutschland, BNA is sitting on over 8,000 applications made by Vodafone, Telefónica, E-Plus and Telekom Deutschland for LTE deployments, thus resulting in significant delays in building LTE in urban German areas.

The head of Germany's telecom operators association VATM, Juergen Grützner, has written to the BNA claiming that the statutory maximum of six weeks to process an application is often being exceeded by several months.

The BNA said the issue is due to not having adequate staff assigned to the task. The agency said new software will be implemented that should help alleviate the delays.

Grützner has told VATM members that, "We expect the new president of the BNA to find a quick and pragmatic solution," according to the Financial Times Deutschland.

Having been restricted by their 800 MHz LTE licence conditions to initially provide coverage to rural areas, the operators are now keen to deploy the technology into more profitable urban and city locations.

The operators are required to obtain permission from the BNA for each microwave and base station antenna prior to installation.

For more:
- see this Financial Times Deutschland (translated via Google Translate)
- see this Telecom Paper article (sub. req.)