Global Mobile Industry Continues to Invest, Profit, and Increase GDP

The mobile industry and its outlook is the envy of Wall Street and leads innovation in an era where wireline telecommunications generally has become a commodity business.

The global mobile industry continues to invest, profit, and increase worldwide GDP growth by 2 percent. Mobile operators worldwide have generated $1.5 trillion in revenues in the last 12 months, served 6.3 billion subscriptions and by 2015 will employ 10 million skilled workers.

The industry continues to invest heavily in LTE worldwide. Today, there are 90 commercially deployed LTE networks with 40 new LTE launches globally in Q2 2012. By year end 2012, there will be 150 commercially deployed LTE networks globally. The US, Japan, and South Korea today account for 9 of 10 LTE subscribers globally according to GSA. Within the next 12 months, these same markets will have completed deployment and enabled nationwide services. European LTE mobile operators are differentiating with speed-based tariffs. U.S. and Canadian mobile operators are focusing on enhanced services such as premium mobile video, RCS, and multi-device data plan pooling.

Looking forward to Q3 2012, areas to watch will be related to global development and mass usability/validation of voice, video, and rich content services over LTE networks. Apple’s release of iPhone 5 with much anticipated LTE support will create significant load and complexity on Verizon Wireless and other major operators with commercial LTE services. As the “iPhone effect” takes on LTE networks, vendors and operators will continue to focus on optimization, real-time network/data services management, and subscriber services awareness/differentiation.

Vendor	Rank	Market Share ($)
Cisco	1	40%
Ericsson	2	14%
Alcatel-Lucent	3	12%
NSN	4	9%
Huawei	5	7%

QUARTERLY TRENDS and DRIVERS HIGHLIGHTS

• Within five years, LTE networks globally will near one billion mobile subscribers.

• The US, Japan, and South Korea today account for 9 of 10 LTE subscribers globally.

• Europe is facing fierce competition in LTE, yielding some of the lowest data prices globally.

• As the “iPhone effect” takes on LTE networks, mobile operators will continue to fine-tune performance, capacity, and network operations.

• Q3 2012 will see mixed performance by vendors experiencing slow growth in 3G business as CapEx shifts to 4G.

For more information about ACGResearch’s mobility services click here or contact sales@acgresearch.net.

CTIA Returns to Normalcy

CTIA 2012 marked a return to normalcy in some ways. Last year, the big news was the intended takeover of T-Mobile by AT&T with Sprint coming out guns blazing. This year was relatively sedate, at least until the keynote began, featuring the CEOs from the four leading US mobile operators. 

A newly resurgent T-Mobile, flush with $4B of AT&T’s money and some spectrum, returned to its preacquisition role as the agitator in the US market. Speaking just before AT&T’s CEO Ralph de la Vega on the Operator keynote, T-Mobile’s CEO Philipp Humm showed the commercial of a pokey motorcycle representing the iPhone on AT&T’s network getting blown away by a sleek café racer representing T-Mobile’s 4G network. The intent was clear: T-Mobile is back. Regardless of the accuracy of the commercial (iPhones not being 4G devices), the US mobile market just got a lot more fun to watch.

The T-Mo resurgence also reopens the market for NSN to the tune of I estimate to be about $1B (ditto for Ericsson) to build out the LTE network. Lots of storylines here especially for NSN, which found itself outside looking in from an LTE (RAN) perspective.

With Service Provider Wi-Fi such a hot topic at MWC and Small Cells/HetNets similarly front and center at CTIA, for most of the vendors it is clear that SP Wi-Fi is quickly moving into the realm of the largest telecom vendors (ALU, Cisco, Ericsson, Huawei and NSN). Although early wins by BelAir and Ruckus provided needed momentum and drive, with BelAir now absorbed by Ericsson smaller providers such as Ruckus will likely be acquired or become access point OEMs (more likely the former than the latter). With the level of intelligence needed to operate seamless cellular/SP Wi-Fi networks, especially for any SON features and OSS/BSS interworking, we expect that operators will be less likely to operate truly heterogeneous networks in favor of their current cell model with different vendors targeting cities or areas of the network. This leaves the independent SP Wi-Fi vendor on the outside of these integrated network opportunities.

I am not sure what to expect from CTIA next year. AT&T showed us the digital home; ALU was missing; Nokia had only meeting rooms (but great meetings); and general (and unscientific) consensus is that the show is rapidly turning into a Tier 2/Tier 3 operator show with some of the Tier 1s providing some executive face time for the obligatory complaining about the lack of spectrum in the US. Show floor hours were painfully short (11:00–4:30, 11:00–5:00 and 9:30–2:00, respectively), squeezing meeting and demo time. 

Will I be there next year? Of course, as an analyst the meetings were great, but I would love to see the Tier 1 operators really duke it out on their network differentiators, service levels, customer experience management and performance.

To read more and download CTIA 2012 Wrap Market Impact, click here.

For more information about ACG Research's Mobile Infrastructure service, click here or contact sales@acgresearch.net.

Chris Nicoll
cnicoll@acgresearch.net
www.acgresearch.net 

CTIA: A Report on AT&T and NSN

Chris Nicoll reports on Day 1 of CTIA.

On Monday AT&T took us to one of the most beautiful private homes in New Orleans for its digital home demo. Stately, beautifully decorated with nearly 150 years of history, it was a good setting for a home of the future presentation. Unfortunately, the message was marred by poor execution of the demonstrations. The tour was not well organized, the demos were simple, and the value proposition was missing. One presenter could not answer the simple question of what happens if the power goes out. Can you not get into or out of your house? (Apparently there is a battery backup). The electronic door locks are large and clunky, the electrical device have X-10-style units (NOT attractive). What has changed since the 1990s?

The house was beautiful, but not sure what was the unifying message or value to AT&T. There really was no mention of how this is bundled in with any other service, and one presenter went to great lengths to explain how this was an added service. You didn't need U-Verse or any other AT&T service to make it work. I didn't see a reason to give up ADT.

NSN

NSN has weathered a couple of storms, coming through really without having to do very much to make it happen. They were the happiest company at the failed AT&T/T-Mobile merger (other than Sprint) and now that T-Mo is having to play catch up in the LTE race, NSN, along with Ericsson, got the contract to provide the LTE network for T-Mo. My estimate at the the value to NSN?  $1B.  Now if someone could just come up with a LITTLE BIT more spectrum.

The second storm? NSN indicated that ALU is vulnerable now that the US is getting its LTE built-outs complete, and now that it's Europe's turn, NSN incumbency in the EU operators puts them in a leading position for their LTE networks. ALU has corporate restructuring ahead in worker-friendly France. NSN got favorable terms from the German unions and is well on its way to a new, smaller, dress size. NSN also feels like its plan to shed itself of noncore business units puts it in a focused position to move forward from one that is sustainable. I think they are correct on that regard. 

Huawei is probably the only company in the world with pockets deep enough to maintain R&D across it full range of products.  I don't think ALU is in the position to do that and will need to downsize to address cost issues in the future. So, in this area NSN is ahead but now it needs to work on upgrading/updating some of its core products. NSN is looking strongly at struggling partner Juniper, but other Juniper partners have moved onto their own platforms (Ericsson).

Chris Nicoll
cnicoll@acgresearch.net
www.acgresearch.net

Partnering or Vendor Outsourcing: Speed Your Time to Market

All major vendors offer some limited to complete outsourcing capabilities in either advanced services or outsourcing of management of the network operations center. The goal of outsourcing is to allow a provider to focus on other priorities like; customer acquisition, increase value to customers and deliver value add services such as cloud computing or other up-sell services.

Service providers are either true telco or a carrier and tend to be very slow to move to a new technology or offerings potentially missing inflections in the market. Their internal silos and sales teams are set up to sell connectivity and access and less able to sell the advanced offers, such as unified communications, cloud offers and video services, demanded by the market.

• ACG Research investigated nine companies with unique profiles and ranked them on their ability to address key factors:

• Communication and Unified Communication: Offers which build on connectivity and take IP communications and convergence to the next level.

• Technology Portfolio: Virtualization end-to-end portfolio and technology that creates value and customer stickiness.

• Multivendor: Capabilities to address service providers’ environment to deal with outsourcing all or part of their infrastructures.

• Connectivity Capability: Knowing what the outsourcer’s capability is in providing robust connectivity to meet demands of providers as a customer.

• Customer Service: The ability to create value for on demand, on time resolution and coverage in the markets the providers do business.

• Change Management: What are the processes to change the current do-it-yourself in-house provider IT to outsourcing or out-tasking parts of the network? Does the outsourcer have change management processes tuned to carriers?

• SP Specific Offers: The outsourcer’s ability to have a dedicated team and tune multitenancy offers to handle the environment of the providers.

• System Integration Skills: The ability for the outsourcer to offer system integration to customers of the providers or to the provider to address gaps in migrating a customer or provider to a virtualized infrastructure or process.

• System Integration Experience: What use cases and customer lists can the outsourcer cite?

• Cloud Vision: What is the outsourcer’s ability to outline the cloud reference architecture and deliver technology, thought leadership and understanding of the provider’s cloud opportunity?

• Cloud Experience: In looking to an outsourcer for quick time to market there are requirements that dictate that the outsourcer has done this before and in many instances. What use cases can the outsourcer cite?

Our Outsourcing report covers the following: Cisco, HP, IBM, Globecomm, Avaya, CSC, Ericsson, Alcatel-Lucent, and NSN. For more information about this document contact ACG Research at sales@acgresearch.net.

Click here to download Gaining the Edge in Cloud Computing and other articles.

Click here to download Business Deep Dives.

Lauren Robinette
lrobinette@acgresearch.net
www.acgresearch.net