3G promised us the mobile Internet but, as ever, the hype got ahead of reality. To be fair, by the time 3G was finally agreed upon and rolled out, the speeds it offered seemed rather pedestrian, and most industry watchers are now waiting on a 4G world for a truly global, mobile Internet with access speeds capable of supporting the kinds of applications and services that the iPhone is letting us glimpse.
And that might happen faster than we think. The 1.5 billion app downloads on iPhone – a tiny fraction of the total mobile phones in the world – has shown service providers everywhere that there really is a market for mobile content and applications.
Now I don’t really want to step into the debate over which flavor of 4G will win – LTE or Wimax – except to say that I think LTE will be a much simpler operational step for mobile operators to roll out and be able to play the same kind of staged deployment as they did with 3G where multi-protocol handsets ‘hide’ the initial patchiness of the network infrastructure.
The battle for 4G technology dominance aside, a 4G world will be a very different one from 2G and 3G because several key technologies and approaches are coming together: fast and ubiquitous mobile Internet; powerful smart devices and cloud-based services. Cloud-based services allow the edge of the network – the device – to be smaller, lighter and simpler yet still as powerful because all the heavy-duty applications processing and storage are done inside the cloud. To be useable, it needs fast and reliable communications anywhere the user might be, and hence 4G is a crucial enabler of this approach.
Apart from a large screen and keyboard, why would you need a PC when you have a smart phone and all of your information and applications available online anywhere you go? No wonder Google has targeted its focus on the handset (Android) and netbooks (Chrome). If this scenario came about, it would obviously have very big implications for the PC and software industries as we know them today.
But there are many new issues to worry about in a 4G world. It’s an all-IP network, so problems like VoIP security and service quality rear their head. In such a radically altered world, what are the implications for charging, settlements and so on? The operational headaches for service providers are likely to grow, so we need to crack on and solve them before these networks become high-volume reality. That starts with the basic infrastructure being manageable in a sophisticated and common way – not having to build different systems to cope with different manufacturers, for example.
But the implications of a 4G world go way beyond this. We may see a complete revolution in the business models underpinning these networks and services. Already we are seeing cracks with so-called over-the-top services bypassing the communications provider’s billing system. Do we see a separation between companies that operate networks and players that operate services and market those to end-customers? How will value chains evolve? Even the model for who pays for services may change – already we are seeing more and more ‘free’ applications and content on the iPhone supported by advertising.
The ‘spoiler’ called net neutrality
If we can take one lesson from history to understand a 4G world, it’s that the success of regulation on communications markets has been patchy at best. To me, that’s why the whole net neutrality issue looks like one more step along that rocky road where regulators generally regulate by looking back at markets we have had rather than markets that might exist in the future. Free markets usually work well, and ones that are distorted by ‘helpful’ regulators usually don’t.
If a 4G world is totally dependent on high bandwidth, always-on, IP connectivity anywhere on the planet, one of the inherent inadequacies at the heart of that structure will be the Internet itself. A 4G world will upgrade the fatness of the pipe, the device you’re viewing content on, and business models. But one thing that hasn’t actually changed is the design of the Internet and all of its flaws having to do with service quality and the debate about IPv4 versus IPv6.
There are solutions out there, but essentially we’ve got this ungroomed, unmanaged, uncoordinated world in the internet, and variable quality that will not lend itself well at all to tomorrow’s value-added services where people are depending on the availability of the network to support pretty much everything they do.
Net neutrality seems to rattle around and around. The bit I don’t understand, especially in such a free market country as the US, is why anyone would want to enforce legislation that would prevent those who wanted it to pay for better classes of service? If this were healthcare and President Obama said everyone were to get basic healthcare with no option for private plans, you can bet there would be rioting on the streets.
But that’s exactly what net neutrality proponents are saying about communications services: that everyone has to have the same thing. Is bringing everyone down to the level of the lowest common denominator really going to serve a world where people may well be prepared to pay for subscription services that give them sporting events on their phones in HD quality? So you have customers asking for this, but you as a provider have to say sorry, we can’t give that to you because the government passed a law that said we couldn’t.
I think the sheer possibility of a 4G world will make the current thinking we have about legislation and regulation seem pretty stupid, but then, that never stopped governments from interfering in the past.
We can only hope that legislators and regulatory bodies understand the potential of a 4G world and do their best to keep their hands off it. I think only then will real innovation happen and a real evolutionary leap take place.
Keith Willetts is chairman and CEO of TM Forum