The recent Mobile World Congress 2014 event was stocked full of news announcements, though thankfully a good selection of industry analysts and observers were in tune with the events to make sense of all the noise.
The biggest news to come out of the event seemed to be one that was officially announced just prior to the show’s opening. That would be Facebook’s $19 billion acquisition of messaging platform WhatsApp, which seemed to position Facebook more aggressively in the over-the-top messaging space. For the event itself, Facebook added that it planned to offer voice services over the WhatsApp platform, thus striking at another typical wireless carrier revenue stream.
“This news met with a mixed reaction,” wrote Emeka Obiodu, principal analyst at Ovum, in a blog post. “The Tele2 CEO, Mats Granryd, was unconcerned, given that his company already offers unlimited voice in all its markets, whereas the Millicom CEO, Hans-Holger Albrecht, worried about the 70% of his company’s revenues that still come from voice. Considering that [Telenor CEO] Jon Fredrik Baksaas wants the industry to invest $1.7 trillion in new high speed networks by 2020, any loss of revenue is a concern.”
Others noted the announcement would further pressure operators to change their business models, especially in targeting developing markets.
“The Facebook deal for WhatsApp, and more importantly its announcement of running voice services over the platform, will put more pressure on carriers to re-adjust their business models, especially for those looking to enter or grow their business in developing markets,” explained Fernando Alvarez, global head of mobile solutions at Capgemini. “Carriers will need to focus on their data efforts and will need to look to partner with application developers in attempting to target these OTT segments that consumers in developing markets are flocking to.”
Dan Hays, principal and U.S. wireless services advisory leader at PwC seemed to concur, noting he found a lot of operators struggling with adapting new models in order to continue driving revenues.
“Carriers are definitely having to look at new ways to monetize their networks,” said Hays. “They need to find ways to get away from the traditional monthly service-charge models.”
Software further defining the network
Software was also a hot topic from the show, with virtualization a growing part of the network deployment discussion. Software-defined networks and network function virtualization were talked about by many, including hardware vendors, as a way for network operators to trim operation costs while also speeding to market services that can be used to tackle the OTT threat.
“The emergence of the fourth wave and the competitive dynamics in the markets has put tremendous pressure on the operating margins of the operators,” noted Chetan Sharma from Chetan Sharma Consulting in a report. “In order to compete and make the organization more nimble and future-ready, one has to tackle the problem on multiple front – reduce the number of resources required to accomplish the tasks, get rid of the network architecture that is limiting and controlled by proprietary interfaces and vendors, drastically reduce the cost of operations, and enable the API layers for quick service creation and deployment. As a result of this pressure and desire to change, SDN and NFV took more prominence this year compared to the past and operators are urgently moving to cloud-based infrastructure.”
Device launches
Mobile devices also garnered some of the spotlight at MWC, with a number of new models announced, though perhaps more than the physical nature of the new models, observers highlighted the advanced internal capabilities. Jim Patterson, CEO Patterson Advisory Group and frequent RCR Wireless News Reality Check contributor, noted the newly unveiled Samsung Galaxy S5 included the ability to tap into divergent data streams.
“Of interest to telecom operators is the Galaxy S5’s ability to use Wi-Fi and LTE at the same time to download information (heretofore, the data transmission was a mutually exclusive choice),” explained Patterson. “While the underlying capability (merging access from two data sources into one) has been around for years, featuring it on smartphones on a global scale is very new (and complex). Samsung calls the feature “download booster.” How they will feature this capability in a commercial will be very interesting (not wanting to offend LTE or Wi-Fi advocates).”
“Wearables” also seemed to take a step forward, with a number of companies announcing new devices designed to monitor health or exercise, as well as Samsung announcing updates to its Gear lineup. Sharma noted that while a number of players, including Huawei, Motorola and Sony, announced new devices, broader consumer adoption seems to be waiting for another company to enter the space.
“On a larger scale, the industry is waiting for Apple to release its version of wearables and watches, create awareness, and hope that the rising tide lifts all,” Sharma said.
Network news
Network evolution was also a topic of conversation as infrastructure vendors announced advances in LTE, including increased use of carrier aggregation from both the equipment and chip side. There were also advances announced in the integration of small cells into LTE architectures as well as greater use of TD-LTE to support more traditional FDD-LTE deployments.
“Carrier aggregation and Wi-Fi-cellular integration is not new,” Sharma noted. “Vendors and operators have been talking about it for some time. Most of the LTE operators are in the process of implementing CA to boost the bandwidth and gain more efficiency out of their spectrum assets. Integration with Wi-Fi also gives a boost though there are some enhancements needed to fully utilize Wi-Fi. [Korea Telecom] perhaps had the most impressive demo with three CA demonstrating speeds of [400 megabits per second to 600 Mbps]. In a country where 100 Mbps is commonplace, it is no surprise that Korea is pushing the boundaries with LTE.”
Along those lines, PwC’s Hays noted that carriers were also looking at ways to migrate consumers off of legacy 2G networks to their newer 3G and LTE networks in attempts to reduce the costs associated with running less cost-efficient networks as well as trying to find ways to free up spectrum resources to bolster more advanced networks.
Hays added that another way carriers are looking to drive down costs was in greater use of Wi-Fi as a data offload solution, something that carriers have traditionally been challenged to implement. Hays explained that this model was one of many being included in the carrier “toolkit” as they attempt to take advantage of all possible capacity enhancement solutions. However, Hays added that challenge remain in regards to Wi-Fi, including wireless carriers potentially losing control over how consumers access their networks as well as issues with too much choice when it came to Wi-Fi offload solutions.
More comments from analysts on themes from the MWC 2014 event:
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