Professional Documents
Culture Documents
Open Mobile
company futuretext focussed on emerging Web and Mobile. His thinking
is widely followed in the industry and his blog, the OpenGardensBlog,
which was recently rated a top 20 wireless blog worldwide.
Open
The European Union, Telecoms Operators, Device manufacturers, social Twitter @AjitJaokar
networking companies and security companies in various strategic and
Mobile
Ajit lives in London, UK, but has three nationalities (British, Indian and
New Zealander) and is proud of all three. He is currently doing a PhD on
Privacy and Reputation systems at UCL in London.
Anna Gatti is the Head of International Online Sales and Operations for
YouTube. She is independent board member of the leading mobile media
company Buongiorno (Italy, MTA STAR: BNG). Before joining Google, Anna
was partner of the venture capital fund myQube, and advisor to major
telecommunication companies.
The ethos and vision of Open Mobile has been the foundation of
my work for many years. But only now, since the launch of the
iPhone and Android are we seeing that vision turn to reality. To-
day, there is no turning back. The rate of uptake of Open Mobile is
now unstoppable.
In fact, too rapid to keep pace with through a book!
So, the idea is to make the soft copy of the book free and seek
feedback. Currently, we don’t have a forum but soon we will.
The book is written from an NPOV perspective (i.e. neutral per-
spective) covering Telecoms, Web (Internet, Cloud), Social net-
working, Content, and Privacy. Inspite of the scope, already from
the time of writing, we have updates to this book and hopefully we
will capture more perspectives though this initiative.
Thus, Open Mobile is now available for free download under the
creative commons license.
To receive the latest copy and updates, please subscribe from the
Open Mobile Web site. To buy the paper copy, please see the
Open Mobile site
If you like Open Mobile, you may be interested in our report Mobile
network operator innovation in an open ecosystem - 2010 to 2020
by Ajit Jaokar and Chetan Sharma
Understanding the Impact of Open
Mobile: Implications for
Telecoms/Devices, Web, Social
Networks, Media and Personal Privacy
By
Ajit Jaokar
Anna Gatti
© Copyright 2009 Futuretext Limited
Issue Date 15 December 2009
Published by Futuretext
36 St George Street
Mayfair, London
W1S 2FW, UK
Email: info@futuretext.com
www.futuretext.com
All rights reserved. No part of this publication may be reproduced, in any form or
by any means, electronic, mechanical, photocopying, recording or otherwise,
without the prior permission of the authors.
Although great care has been taken to ensure the accuracy and completeness of
the information contained in this book, neither Futuretext Limited nor any of its
authors, contributors, employees or advisors is able to accept any legal liability
for any consequential loss or damage, however caused, arising as a result of any
actions taken on the basis of the information contained in this book.
All third party brands and trademarks belong to their respective owners.
ISBN: 978‐0‐9556069‐2‐2
The content of this book reflects the personal and individual
opinions of Ajit Jaokar and Anna Gatti. The book does not
represent any opinion or position of any company or
association the authors are affiliated with. Authors relied on
publicly‐available information in order to discuss the mobile
industry in broad terms.
A brief note from the authors
The idea for this book first arose when Ajit spoke at Stanford
University in late 2006 and met Anna through a mutual friend, Dr
Adam Tolnay. The book took more than two years to write .. And
with good reason. In that timeframe, much of the closed
ecosystem we once took for granted has now been transformed
by the Open Mobile mindset.
And recent events indicate that there is now no turning back…
We also explored the topic of Open Mobile from multiple
perspectives (Telecoms, Content, Web, Social Networking and
Privacy). In that sense, this book attempts to present a Neutral
Point of View.
Thus, this book has been written against a backdrop of rapid
change and we view it as ‘perpetual beta’.
We hope you enjoy reading it and please send us your comments
at ajit.jaokar@futuretext.com
Finally, we would like to thank Peggy Ann Salz for editing the
book.
Contents
PART ONE
Open Mobile: the principles of Open Mobile 1
The journey 1
Open: of cages and play frames 3
Painting a vista: the road to the promised land of Open
Mobile .. 4
Putting the customer at the centre of the mobile ecosystem 5
The traditional mobile value chain 6
The new mobile value chain 7
Defining open from the customers’ perspective 10
Options to openness 13
The inevitability of openness 15
Networks: a socio‐economic perspective 21
Networks and open systems: a sociological foundation 21
Of Silk Roads and bit pipes 23
Net neutrality 25
The symbiotic relationship between network value and
network growth 31
The impact of open systems on the mobile ecosystem 36
The taxonomy of open: open by any name… 36
Open source 39
Open standards 44
Open social networks 48
The network enablers: decoupling from the network 50
The rationale for decoupling network elements 50
Location 60
Billing and payment 72
Voice: phone number 86
Messaging 88
Identity 89
PART TWO
Open Mobile perspectives 91
Open Mobile: the content perspective 91
Introduction to the content industry viewpoint 91
The history of ‘content is King’ 94
The economic factors driving the content industry 95
Seismic shifts affecting the content industry 99
The impact of disintermediation on content 106
What about investigative journalism and unique content? 110
What about cases when citizens will create content which
is valuable? 110
Open Mobile: the Web perspective 111
The Web and the Mobile Web: a few basic concepts 111
From Web 1.0 to Web 2.0 116
Mobile Web 2.0 – an introduction 123
Open Mobile: the telecoms/mobile perspective 130
The network 130
The evolution of the network 140
The evolution of the device 151
Net neutrality: some additional thoughts 158
Application stores 165
How can the operator innovate? 166
Open Mobile: the social networking perspective 172
The emphasis on data portability 173
Impact on advertising 176
Open Mobile: the privacy perspective 178
The significance of privacy 178
The need for higher standards beyond a statutory
minimum 181
Brands drive technology advances – but not always to the
benefit of the customer 181
Governments: often part of the problem 183
Targeting minorities and ethnic groups 185
Pushing the boundaries: consumer kids 186
Impulse purchasing 187
Can advertising dictate content? 188
Profiles: individual vs. anonymised 188
Special considerations for mobile 190
Mobile as a tool for psychosocial development and
identity formation 191
Methods to empower the user: the future of privacy 194
Full disclosure 194
Vendor relationship management 194
Anonymity 196
Revocation 201
Conclusions: data and privacy 202
PART THREE
The disruptive impact of Open Mobile 205
Converged services spanning the Web, the mobile device and
the network 205
An introduction to convergence 205
Services 210
The future of search 217
Search 217
Search business models 231
Context and its relation to mobile search 237
Emerging developments in Web and mobile search 241
Cloud computing 250
A brief overview of cloud computing 250
The impact of cloud computing 251
Internet of Things 253
An overview of the Internet of Things 253
The Internet of Things as a platform 256
Business models 257
Conclusion 258
A summary of factors driving the future evolution of Open
Mobile 258
Dinosaurs and Jurassic Park 265
Appendix 267
The seven principles of Web 2.0 267
About the Authors 277
Ajit Jaokar 277
Anna Gatti 280
About the Editor 281
1
PART ONE
Open Mobile:
the principles of Open Mobile
The journey
‘The journey is the destination’ ‐ Zen proverb
This book explores the interplay between the world of the
Internet and the world of mobility. The Internet world is regarded
as being ‘Open’; however, as we shall see, ‘Open’ can be
interpreted differently depending on constituency. The mobile
world is supposed to be ‘Closed’. Thus, the interaction between
the Internet and mobile worlds extends beyond technology – and
into the realm of philosophy (Open vs. Closed). Driven by
customers and under the influence of the Internet, it is inevitable
that the closed mobile ecosystem is now ‘Opening up’. We call this
phenomenon ‘Open Mobile’.
This book explores the three drivers of Open Mobile:
● the Internet
● social networking and
● the creation of content (also called Web 2.0)
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We also consider the five perspectives of Open Mobile:
● the Internet/Web
● telecoms/devices
● content
● social networking and
● privacy
We then extrapolate the current and future impact of Open
Mobile in terms of:
● services
● business models
● Cloud computing and
● The Internet of Things
In the Web model, the money is in the links and not the nodes.
The Open ecosystem fits well into that paradigm by enabling the
creation of new links – between people, objects and content. The
mobile future, when it manifests itself fully, is bright. However,
getting to that future will mean a transformation of industries and
economies. We accept that different constituencies react
differently to the word ‘Open’, hence, the need to explore the
topic of Open Mobile from five different perspectives. These
perspectives are not aligned in their meaning and adoption of
‘Open’. However, by choosing to address Open Mobile from the
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We hope you will enjoy the journey.
Open: of cages and play frames
When we think of Open systems, we have to ask ourselves:
Are we building a cage for our customers OR are we building a
play frame?
Both the cage and the play frame would have a structure. In both
cases, it is not a ‘free for all’, but there is a critical difference. One
is limiting and stifling; the other allows for exploration and
growth. This principle, trivial as it may seem, is at the heart of the
Open philosophy. The value (and consequently the loyalty and
attention) customers attach to a product or service is directly
proportional to the extent to which they can use or reuse that
system in unpredictable ways (i.e. engage/play with the system).
Thus, any Open system becomes a platform. But a platform simply
‘enables’. Like a cage, a platform also has a structure, but, more
like a play frame, the Open structure is meant to evolve and grow.
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Who evolves the structure of Open systems?
The customers do of course.
How do they do it?
Only the customers will (eventually) know the answers, but only
as long as they can evolve the system. So, the primary goal of an
Open system is: it must allow the customers to evolve the system.
Painting a vista: the road to the promised land
of Open Mobile ..
Today, we all recognise that networks are ‘opening up’. To a
greater or a lesser degree, everyone claims to be ‘open’. But how
do we know that we have arrived? i.e. reached the promised land
of Open Mobile? We borrow from a vision by Fred Wilson1 – one
1
http://www.avc.com/a_vc/2009/07/the‐internet‐is‐alive‐and‐well‐as‐an‐
investment.html
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of the tech sector’s best known venture capitalists – and his blog
post Building a real mobile web:2
I believe it should be required that:
3 non‐malicious mobile apps should be able to run on
any device they were built for
It is points 2 and 3 that we ultimately strive for. When we have
those, we know that the promised land of ‘Open Mobile’ has
indeed been reached.
Putting the customer at the centre of the
mobile ecosystem
Open systems add most value when viewed from the perspective
of the customer. We can identify three main sectors in the
content market universe (see figure below) i.e. traditional
interactive content and services, new generation content and
services (mostly based on community/creation) and mobility.
2
http://www.avc.com/a_vc/2009/08/building‐a‐real‐mobile‐web.html
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The user is at the center of the new ecosystem, no matter how we
want to depict it.
Let us explore this idea further in the realm of the mobile
ecosystem.
The traditional mobile value chain
The traditional value chain of the mobile industry is rooted in
voice and also in the consumption of content. Thus, we see the
main players to be:
● the service provider, who creates a service
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The new mobile value chain
In the new mobile value chain the customer gains a new centrality
and role. She is no more only a consumer, she can (and wants to)
create content. Content providers and aggregators (and platforms
that enable UGC (User‐Generated Content) such as Twitter and
Facebook) are critical for the user and the Connection only one
part of the ecosystem, as we can see in figure below.
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Telecom operators have tried to avoid becoming a dumb pipe, and
they are still fighting to keep their oligopoly alive, claiming the
payback of the huge investment made in creating next generation
networks. It is still unclear which strategy will prevail (we will
discuss this topic more extensively later). However, it is clear that
the traditional mobile content aggregator strategy (portals) tends
to be significantly impacted in the world of UGC. Traditional
mobile content aggregators own no content, no communications
systems, and have no real audience of their own. They often
simply organise mobile content from a variety of publishers in one
place on mobile devices. Thus, the margins of the Portal strategy
are impacted and a more Open ecosystem is replacing the
traditional portals driven by User Generated Content.
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Since the rise of Web 2.0 and Mobile Web 2.0, we have seen a
fundamental shift in the mindset of the customer, which affects
the value chain of the industry. The main difference is: customers
are now creators of content and not merely consumers of
content. The customer (and the mobile device through which they
interact with the network) are at the centre of the ecosystem and
the value chain is no longer dominated by consumption but rather
by creation. In this scenario, we are seeing two forces at work.
One, value is being abstracted to higher levels of the stack /edge
of the network (e.g. app stores, Google Latitude) for Long Tail
applications. Two, the networks will find profitable niches in areas
which they can uniquely do − e.g. via services like Mobile
Broadband. The network can be the enabler to capabilities or
network capabilities can be decoupled from the network. In either
case, it is the customer who is the main driver for openness.
Defining open from the customers’ perspective
Thus, the best way to define open systems is to define openness
from a customer’s standpoint:
Definition of open: The freedom of choice for the customer
and the removal of commercial and technological barriers that
hamper free communication between people (considering
legal and statutory limitations).
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If we break this down into its component parts, then we get:
● The customer is the main driver.
● She should not be patronised.
● She has choice.
● She owns her own data (data portability).
By extension, this definition also means:
● Open systems are not synonymous with ‘free’.
● Openness is disruptive and will lead to new business
models which affect incumbents and create new
winners, losers and partners.
3
http://en.wikipedia.org/wiki/DVD_region_code
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● Privacy, identity, security, reputation and revocation
will be an important part of the open ecosystem –
especially on mobile devices.
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Options to openness
What are the options to openness? The end goal of open systems
to create interoperable systems. There are other ways to create
interoperable systems. A large vendor/monopoly is one way.
Government mandates is another way. There are even some
‘contra’ arguments against openness. For instance, one could
argue, and indeed some still do, that they don’t need third parties
at all (developers). They can do it ‘their way’ by themselves. In
addition, the results of opening up an ecosystem may be
unpredictable. Consider the example of Facebook. When
Facebook was opened up, we saw many frivolous applications
such as ‘throwing sheep’. Did they add value? One could also
argue that a closed system provides a better end‐user experience.
This is a well‐known argument but it tends to favour services
where the customer is merely consuming content and not creating
it as in the Web 2.0 world. Creation (user‐generated content) is a
form of communication and communication needs interoperable
systems and consequently open systems. Of course, closed
systems will always co‐exist with open systems, but we believe
that open systems will dominate since communication is the
primary motivation for most people.
In addition, there is the security argument (i.e., open systems are
said to be more susceptible to risks and threats). And finally, the
‘unknown business model’ argument especially when applied to
the mobile ecosystem – for instance, Long Tail services may work
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on the Web but they may not work on the telecoms network
where the upfront investment is a lot higher. We explore this idea
from the telecoms perspective below.
Whichever way we look at it, the argument between open and
closed comes down ultimately to a few recurring themes:
1 communication vs. consumption
2 interoperability
3 business models and
4 security.
When we consider the mobile ecosystem, the dilemma we find
ourselves in is symptomatic of a problem when devices take on
roles for which they were not intended in the first place. For
instance, the computer does more than merely ‘compute’ and
similarly, a phone has now morphed into something more than an
instrument for making and taking calls. It is something new and, in
doing so, has spawned a new industry − the mobile data industry
(i.e. non‐Voice communications via Mobile devices). We first saw
this phenomenon of the mobile data industry in Japan and Korea.
We (wrongly) thought that it would be mirrored in the West in the
same way. But close to a decade after the launch of the iMode
network by NTT DoCoMo in Japan4, we have not seen the same
4
http://en.wikipedia.org/wiki/I‐mode
Open Mobile © Copyright Futuretext Limited
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usage of mobile data in Europe and North America as we have
seen in Japan and South Korea.
In both Japan and South Korea, communications technology is far
more advanced. In many cases, we see convergence that we can
only dream about in the West. Apart from other factors like
cultural affinity to new technology, the biggest factor by far is a
‘managed collaboration’ (for the lack of a better word). In Japan,
for mobile devices, there has been a dominant player in the form
of NTT DoCoMo, leading to market cohesion. In South Korea, the
government has actively managed standardisation with
spectacular results. However, in the West – that is not likely to
happen. We will not see the American, British or German
governments actively intervening in specific directions (and nor
should they!). Instead, we are seeing a grassroots uptake of open
systems and open source which is leading to radical
transformation of the mobile data industry. Thus, in Western and
emerging economies, we see a dominance of open systems.
The inevitability of openness
When we talk of open mobile ecosystems, people often respond
by narrowly framing the problem in terms of ‘On‐portal/Off‐
portal’ (On‐deck/Off‐deck). This is very limited and it ignores the
real issues – for instance choice for the customer, low barriers of
entry for third parties, etc.
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But first, why talk of open mobile ecosystems? Why not continue
with the mechanisms that have worked before?
There are many reasons – the most important ones being the
drive from the customers (creation of content), the proliferation
of the Internet, and social networking. These themes recur
throughout this book.
To expand more on the inevitability and reasons for openness:
5
http://mobhappy.com/blog1/2007/11/27/verizons‐open‐announcement‐is‐a‐big‐deal‐
but‐not‐for‐the‐reasons‐you‐might‐think
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● The consumption‐based mobile content model (like
ringtones) is levelling off as user‐generated content
becomes more significant. As user‐generated
content takes off, the consumption of packaged
content (like ringtones) decreases. (The BMI
Forecasted Ringtone Market Down 8% in 2007 6. The
BMI is an American performing rights organisation
that represents more than 375,000 songwriters,
composers and music publishers in all genres of
music.) Nokia predicts 25% of entertainment by 2012
will be created and consumed within peer
communities7 and YouTube showed a surge of 18%
in traffic in the two months since the writers' strike
began in Nov 20078. All these trends are collectively
pointing to a significant shift in content/media – and
6
http://www.bmi.com/press/entry/534976
7
http://www.nokia.com/A4136001?newsid=1172517
8
http://www.guardian.co.uk/media/2008/jan/10/digitalmedia.television?
gusrc=rss&feed=media
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● The Mobile Web: As the Mobile Web adopts the full
Web standards (like CSS, JavaScript, etc), the Web
and the Mobile Web become synonymous. This
means applications (like widgets) can be deployed
both across the Web and the Mobile Web making
the notion of mobile‐only applications less relevant.
How do open systems benefit us? We can look at the benefits of
open systems from different perspectives: customer benefits,
developer benefits and ecosystem benefits.
Benefits to customers include:
● the ability to access any content (note this does not
mean free of charge and within a legal framework);
● a choice of services (not being restricted to services
from a specific provider).
Benefits to the developer include:
● a viable ecosystem and consequently an incentive to
create applications;
9
http://en.wikipedia.org/wiki/Carterfone
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● easy availability of technical information (SDKs, etc);
Some of the benefits to the ecosystem are that:
● innovation is boosted, based on the innovation being
driven at the edge of the network.
10
http://en.wikipedia.org/wiki/Sideload
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Networks: a socio‐economic perspective
Networks and open systems: a sociological foundation
Networks are everywhere – from a network of neurons in the
brain to a social network of friends and family. The Internet is only
the latest manifestation of networks in our lives – from road
networks, telegraph networks, canal networks, radio stations and,
of course, telephone networks. The Internet is a network that
connects computers and devices through the IP11 (Internet
Protocol). Like all networks, the Internet is about connecting
people, and it has built pathways across geography, race,
economic status, religion, etc. While road networks also create
connections, digital networks connect people globally in a much
more efficient manner.
11
http://en.wikipedia.org/wiki/Internet_protocol_suite
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Economically, the Internet can be viewed as an extension of the
free market. Adam Smith12 first defined free markets and included
the concept of ‘voluntary association’ in that definition. A network
of friends is a voluntary association network. Such free/voluntary
networks are currently alien to many of us because the
institutions we see today are, for the most part, structured and
regimented. By its very nature, a voluntary/open network cannot
be controlled – and people who try to do so (such as politicians)
find inevitably that they will fail, because new and alternate
connections can always be created to overcome the ones that are
‘blocked/walled up’.
The Internet amplifies the concept of voluntary associations on a
global scale.
The simple act of connecting people who have a common goal has
profound implications – be it as a support group for a specific
illness or for dating and relationships.
Aaron Ben‐Ze’ev author of the book Love Online: Emotions on the
Internet13, offers an explanation for the psychology of online
relationships in the context of dating in an article in Psychology
today:
12
http://en.wikipedia.org/wiki/Adam_Smith
13
http://psychologytoday.com/articles/pto‐20041210‐000008.html
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‘Putting themselves into words, getting replies while they're still in
the emotional state of the original message, relying heavily on
imagination to fill in the blanks about the recipient, people
communicating online are drawn into such rapid self‐disclosure
that attachments form quite literally with the speed of light.’
Clearly people value these networks even if they cannot easily
attach a monetary value to it – such as social support structures,
dating networks, etc. But what is the commercial value of such a
network? And how do the networks (and especially their social
aspects) drive business models?
Of Silk Roads and bit pipes
The net neutrality argument says that the value of the network
itself is low and the real value shifts to the edge of the network.
We will explore net neutrality in greater detail later; however, at
this point it can be summarised as ‘dumb pipes – smart nodes’.
The Internet is the best example of this phenomenon and can be
viewed as ‘All packets are created equal’. Of course, this argument
is not very welcome if you are involved in creating a network –
especially mobile networks which entail significant investment.
But a network in itself has no value. Value is created through the
activities that the networks enable. We see this from the analogy
of the Silk Road.
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The Silk Road is a series of trade routes that connect Asia and the
West. They were initiated around 114 BC by the Han Dynasty14.
Nomads, traders, thieves, pilgrims, monks, soldiers and others
travelled along the Silk Route exchanging ideas and wealth. The
Silk Road was the ‘Internet’ of its era (around 200 BC) linking Asia,
Europe and Africa (i.e. the pre‐eminent network). Chinese scholars
such as Hsüan‐tsang15 criss‐crossed the length of the Silk Road and
unified the ancient civilization of India and China. Hsüan‐tsang was
not alone. Recent archaeological discoveries in the Tarim Basin16
point to a ‘melting pot’ of cultures thousands of years ago.
There is a statue of Hsüan‐tsang at the Great Wild Goose
Pagoda17. However, history does not remember the builders of the
Silk Road – commendable as the achievement was.
What does this tell us?
Builders of roads (networks) are rarely the same as the traders and
intellectuals who use them. It is the traders and intellectuals who
add value through their use of the network.
Today the Silk Road has been metaphorically replaced by the
Internet. The traders are the eBay‐type sites and the intellectuals
are the Google‐type sites. But the principles remain the same from
the ancient times of the Silk Road. The builders are not the same
14
http://en.wikipedia.org/wiki/Silk_Road
15
http://en.wikipedia.org/wiki/Xuanzang
16
http://en.wikipedia.org/wiki/Tarim_Basin
17
http://en.wikipedia.org/wiki/Great_Wild_Goose_Pagoda
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people who add value to the network (Silk Road) – and a higher
value will be added by the traders and the intellectuals who cross
those pathways.
Why does this happen?
To answer this question – we have to divide it into two sub‐
questions:
1 Why is the network lower in value?
2 And why does value shift to the edge of the
network?
To answer question 2 – we have to understand the ideas of net
neutrality, and these principles apply uniformly to any network –
be it the Silk Road or the Internet.
Net neutrality
To understand net neutrality, let’s get back to the basics...
The Internet comprises of any device that uses the IP (Internet
Protocol). The most common user interface (service layer) to the
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IP is the Web. The Web is built using the HTTP (Hypertext Transfer
Protocol)18 which is primarily used to access HTML (Hypertext
Mark‐up Language)19 documents.
It might appear frivolous to explain the entire Internet and the
Web in a mere three sentences; but nonetheless – the Internet is
nothing more than a set of devices connected by the IP. Secondly,
there is no mobile Internet, just ‘The Internet on Mobile devices’.
Anything behind a ‘walled‐garden’ or a Network Address
Translation (NAT)20 or needing a separate Domain Name System
(DNS) (e.g. the GSMA IPX21) is an IP network or maybe even an
Internetwork (e.g. military networks), but it is not the Internet.
The primary goal of the Internet is to connect people and don't let
anyone convince you otherwise! For example, proponents of DRM
(Digital Rights Management) see the Internet as a massive channel
to distribute their content and see us all as passive consumers –
consuming all their content with no creation on our side – a myth
now exposed by the dominance of Web 2.0.
Hence, the Internet is suited to person‐to‐person communication
applications. The Internet is also a packet switched network22. In a
packet switched network, the message is broken up into a set of
18
http://en.wikipedia.org/wiki/HTTP
19
http://en.wikipedia.org/wiki/HTML
20
http://en.wikipedia.org/wiki/Network_address_translation
21
http://transnexus.blogspot.com/2008/06/gsma‐ipx.html
22
http://en.wikipedia.org/wiki/Packet_switching
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The philosophy of the Internet lies in the belief that ‘all packets
are created equal’. This is also known as ‘net neutrality’.
In other words, the network is dumb and intelligence shifts to the
edge of the network (i.e. to the nodes or the applications). This
philosophy of ‘dumb pipes and smart nodes’ has fulfilled the
vision of ‘let a thousand flowers bloom’ and has led to the
unprecedented innovation we have witnessed in the last decade.
We take this innovation for granted. But it’s worthwhile spending
a bit longer on some of the ideas of net neutrality.
The effect of net neutrality is so prevalent around us now that the
best way to understand it is to consider it as converse (i.e. what
happens if all packets were NOT created equal?).
In a scenario where all packets are NOT created equal, the
network becomes ‘smart’ (i.e. has some intelligence). In that case,
fewer new services will arise leading to a drop in innovation.
23
http://www.amazon.com/3G‐IP‐Multimedia‐Subsystem‐IMS/dp/0470871563
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Suppose you want to design a system where two players can play
chess over a network. Since this is a connected (networked)
application, to create this application, we need two things:
Now consider further, two scenarios:
1 The protocols of the network are free and open.
OR
Scenario 1 is the Internet.
With an open system like the Internet, the knowledge of the
network is openly available. In this case, the application developer
can focus on creating the best chess application. This is a case of
‘smart nodes – dumb pipes’ and the ‘intelligence shifting at the
edge of the network’ (i.e. to the chess application). It is what we
see on the Internet today and it is so common that we take it for
granted.
We get the converse effect when the network is not built on open
protocols.
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If the network is not built on open protocols, then we have a
‘smart’ network. By extension, this leads to a ‘dumber’ application
and less innovation.
Taking the example of chess, if knowledge of the network was a
necessity to create the application; then the person with the best
knowledge of the network (and not necessarily the best knowledge
of chess) would create the best application.
Obviously, the application created by the person who knows chess
best and operates in a scenario of open systems (i.e. he does not
need to know anything special about the network) will be the
superior application.
This is the crux of the net neutrality argument (i.e. all packets are
created equal and, by extension – intelligence flows to the edge of
the network and leads to an ecosystem where innovation
flourishes).
If the mobile Internet also mirrors the fixed‐line Internet, it will
display the same characteristics (e.g. a blooming in applications)
as the fixed‐line Internet. Admittedly, this is taking some time, but
the trends in this direction are very clear.
The above idea is worth thinking over before you proceed
further.
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protocols). With the global spread of the Internet, the telecoms
networks are also increasingly adopting the IP.
In a wireless network, we all accept that conditions are different
(and harsher) than on the fixed network. Hence, some form of
optimization (‘intelligence’) is necessary. In theory, that defeats
the principle of ‘all packets are created equal’.
The real question is: What is the basis of the ‘inequality’? If it is
truly for technical reasons, then it is fine. However, if commercial
considerations creep in, then we have a big problem. With
commercial considerations, the person paying the most will have
their packets moved faster. In any case, making the network smart
is a dumb move because it penalises the ‘chess experts’ (i.e.
domain experts) and ultimately is a reversal of the innovation
mindset we have witnessed in the last ten years.
Let us not take this blossoming of innovation for granted.
Competitive natures of whole countries could be decided on the
basis of the decisions we make today (both for fixed and mobile
Internet).
As these two worlds (the Internet and the mobile Internet) collide,
the mobile Internet is exposed to the open ethos of the Internet.
The impact of this collision is far reaching – and it is the theme of
this book.
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The symbiotic relationship between network value and
network growth
In the previous sections, we have seen that the network decreases
in value, especially in an IP‐based ecosystem. In this section, we
will discuss the rate of growth of a network (and especially an IP
network) and the fact that the rate at which new connections are
formed increases as the network grows. The accelerated growth
creates a virtuous cycle, which increases the value of the network
itself.
In a book first published in 1973 entitled Future Shock24, Alvin
Toffler describes the impact of ‘the rate of change’ – especially
rapidly increasing change. That vision is upon us and is powered
by the increasing connectivity enabled by networks – especially
the IP network.
Let us think about this some more...
The human race, as we know it, has existed for about 100,000
years25. The last ice age ended around 10,000 years ago, leading to
greater travel and interaction between people. The oldest traces
of civilization in India dates back 9,000 years (the Indus valley
civilization)26 and in China to about the same time27. The Bible
talks of a period about 4,000 years ago. The Renaissance is only
24
http://en.wikipedia.org/wiki/Future_Shock
25
http://www.bradshawfoundation.com/
26
http://en.wikipedia.org/wiki/Indus_Valley_Civilization
27
http://en.wikipedia.org/wiki/China
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about 600 years old28. The steam locomotives were launched in
180429; the 747 (Jumbo Jet) in 197030 as ‘... a great weapon for
peace, competing with intercontinental missiles for mankind's
destiny’. The ARPANET31 was conceived in the 1960s, and its
commercial manifestation (the Internet) has only been around
since 1988. The Web has only been around since the mid‐1990s.
In contrast, dinosaurs existed 65 million years ago!
All these developments are simply ‘connecting people’ to borrow
a phrase from Nokia and the rate of connections is rapidly
accelerating – more so with the Internet.
The rate of growth of such networks is governed by theories on
accelerating networks32 which study network evolution, and are
based on the idea that in a real world setting, the number of links
added per new node is not constant, but depends on the time at
which the node is introduced in the system – a finding which
mirrors the real‐life scenarios of connectivity between people as
outlined above.
This creates a virtuous cycle. As the network grows, it accelerates.
As it accelerates, it becomes more valuable; leading to even more
growth and value.
28
http://en.wikipedia.org/wiki/Renaissance
29
http://en.wikipedia.org/wiki/History_of_rail_transport
30
http://en.wikipedia.org/wiki/Boeing_747
31
http://en.wikipedia.org/wiki/ARPANET
32
http://www.iop.org/EJ/article/1367‐2630/9/6/181/njp7_6_181.html
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What is the value of a network?
The value of a network can loosely be defined to be proportional
to the more things you can do with added connectivity, such as
dating, buying books (Amazon), shopping (eBay) and so on.
Therefore, value depends on the context; it also depends on the
rate of growth. Both have a symbiotic relationship (i.e. growth of
the network fuels things you can do with the network, and the
more things you can do with the network – the more it grows).
Formally, the value of a network is governed by Metcalfe’s law33
(also referred to as the ‘network effect’), which states that the
value of a telecommunications network is proportional to the
square of the number of users of the system (n2). Today,
Metcalfe’s law is used to explain the rise of communication
networks, such as the Internet, social networking and the Web.
It’s been more than 25 years since Metcalfe’s law was first
formulated and we have the benefit of hindsight in explaining its
impact.
The impact of such laws lies in their physical manifestation over
time. Anyone can create ‘laws’ and even have some mathematics
behind them –but the acid test lies in checking if the law plays
itself out in real life. Originally, ‘laws’ were often created to
market or to explain a product – in other words to ‘sell’. Thus, it is
33
http://en.wikipedia.org/wiki/Metcalfe's_law
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interesting to see that there were other laws – also designed to
‘sell’ things – some of which worked and some of which did not.
Take Grosch’s law34; we don’t hear much about it... for a good
reason... it did not work!
Grosch’s law can be interpreted to mean that computers present
economies of scale: bigger computers are more economical. No
prizes for guessing where this law would have originated (i.e.
IBM). In contrast, Moore’s law is an inversion of Grosch’s law
(transistor densities would double every two years) – so smaller is
better. And again, predictably, Moore was trying to ‘sell’
microprocessors at Intel by explaining their impact in a formalised
way.
More than 25 years on, we can look back and see which laws
‘worked’ (Moore and Metcalfe) and which laws did not (Grosch).
What does this tell us? Given the right conditions, the same laws
could well apply on the mobile Internet with similar results.
So far, we have seen that the value of a network is governed by
the possibilities (more things that we can do with the network)
and its rate of growth – and that these two elements are
symbiotic.
But that’s not all...
34
http://en.wikipedia.org/wiki/Grosch's_law
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Logically, the same principles extend to devices as well.
Just as Web 2.0 encouraged people to become active contributing
nodes in the Internet, other developments are causing non‐phone
devices to be more connected (and, by extension, creators of
metadata as people were on Web 2.0). With the launch of the
Kindle35 on Amazon, this is a practical reality – and it is merely the
first step towards devices becoming active creators of metadata.
The Internet acquires yet another new dimension.
Hence, we conclude that the network and its value continues to
grow – both in the rate of growth and the dimensions of growth.
As you may also have gathered, we believe that open systems will
35
http://www.amazon.com/Kindle‐Amazons‐Wireless‐Reading‐Device/dp/B000FI73MA
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drive the growth of networks and will deliver greater value to the
customer. In the next section, we explore the impact of open
systems on the mobile ecosystem.
The impact of open systems on the mobile
ecosystem
The term ‘open’ means different things to different people. In this
section, we first outline the various interpretations of open (which
we collectively call ‘open systems’). We then specifically discuss
the impact of three specific facets of open systems on the mobile
ecosystem (i.e. open source, open standards and open social
networks).
The taxonomy of open: open by any name…
The Internet drives 'open' but open means many things to many
people:
2 Open standards – e.g. W3C standards36.
36
http://www.w3.org
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7 The ability to access any application (i.e. not just the
provider's application) – also called the classic
'walled garden' debate – on‐deck/off‐deck.
8 'Open' in relationship to the cloud.
9 Impact of open systems on developers and a shift in
value to the edge of the network.
10 Low barriers of entry for third‐party developers.
From a mobile perspective, 'open' in the purest sense means to be
‘like the PC’, that is, individuals are not tied to a network or to a
device. Anyone can simply log on to the network or device using
their credentials from anywhere. The various definitions of open
impact on the mobile ecosystem significantly, as we shall see
below.
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Some more thoughts:
1 We use the term ‘open systems’ collectively to refer
to the above definitions depending on the context.
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In the following sections, we discuss three of these elements in
greater detail (i.e. open source, open standards and open social
networks) due to their impact on the mobile ecosystem. We then
go on to explore the impact of open systems on the networks
themselves when we discuss how network elements are being
decoupled from the network due to the impact of open systems.
Specifically, we discuss the de‐coupling of location, billing, voice
including the mobile phone number, messaging and identity .
Open source
What is open source?
37
http://opensource.org/
38
http://opensource.org/docs/osd
39
http://opensource.org/licenses
40
http://www.fsf.org/
41
http://en.wikipedia.org/wiki/Copyleft
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words, if you modify software under the FSF licence, then the
derived work must also be released back into the community. In
contrast, depending on which licence you adopt from the Open
Source Foundation, derived works need not be released back to
the community (there is a secondary question of what constitutes
a derived work – but we will leave that aside for the moment).
Specifically, the Apache Licence v 2.042, covered under open
source, is not copyleft. In other words, any derivatives need not
be released back into the community (thereby preserving IP rights
of the person modifying it).
There are philosophical debates about this (and one can argue
that the copyleft principle is more viral in terms of the software
created). But the counter argument is that companies will want to
preserve their modifications for commercial reasons and there will
be no commercial incentives for people if you force them to also
release all derived works. Of course, none of the open source (and
for that matter the free software) licences mandate ‘commercially
free’ (i.e. you are free to charge people ‐or not‐ for the software
and derivatives).
What is the impact of open source on the mobile ecosystem?
42
http://opensource.org/licenses/apache2.0.php
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Why would companies want to contribute code under open
source?
In short, to facilitate interoperability and to grow the market. The
basic principle is: differentiation shifts to components OTHER than
that which is being open sourced. At the same time, depending on
the open source licence used, as discussed above, intellectual
property can still be preserved in the extensions to the code being
open sourced. This principle is even more relevant in mobile
devices, because development costs are high and differentiation is
shifting to higher levels of the stack. Hence, there are greater
incentives for companies to release code under open source to
create interoperability and reduce development costs and, at the
same time, maintain differentiation by releasing under an
appropriate open source licence.
As we can see below, open source is widely used in the mobile
ecosystem (Source: VisionMobile43)
● Linux support packages: Wind River (also one of the
most prominent integrators for mobile Linux stacks),
MontaVista.
43
http://www.visionmobile.com/blog/2008/12/mapping‐open‐source‐into‐mobile‐who‐
where‐and‐how/
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● Operating systems: For feature phones: Purple Labs;
For smartphones: Azingo, Access Linux Platform, A la
Mobile, OpenMoko; For MIDs: Intel Moblin, Ubuntu
Mobile. Also OKL4 is virtualisation (hypervisor)
software for mobile phones.
● Application environments: Android, Nokia’s Maemo,
Nokia’s Qt, Eclipse eRCP, Sun’s Java phone ME,
Motorola’s Java MIDP3, AOL’s Open Mobile Platform
and Nokia’s Web Runtime.
● Browsers: Apple’s WebKit (on the verge of becoming
a de facto standard for Web‐centric service delivery)
and Firefox Mobile.
● Development tools: Eclipse Foundation (manages the
Eclipse IDE, used as the basis for Nokia’s Carbide,
Wind River tools and many others). Plus RhoMobile –
a new set of Open source developer tools for
creating connected enterprise apps on smartphones.
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What is the impact of open source on devices?
The impact of open source on devices can best be illustrated by
the example of Android44 . Android is a software ecosystem (stack)
which combines a number of device software components which
are released under open source licences – for example, Linux,
Webkit and others. The goals of releasing the Android stack under
open source are to reduce the overall development costs,
encourage device manufacturers and network operators to adopt
Android, and make it easy for developers to contribute to Android
and to create and distribute applications.
In addition, when it comes to open source on mobile devices, yet
another factor comes into play, that is the BOM (Bill of material)
of the device. Software can play a part in reducing the BOM (i.e.
the combined hardware and software cost) – especially if it is
modularised. This was the original reason why Linux was ported to
mobile devices.
44
http://en.wikipedia.org/wiki/Google_Android
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Open standards
Having seen the impact of open source on mobility and devices,
we explore the impact of open standards on the mobile
ecosystem.
What are open standards?
Open standards45 are standards driven by consensus and created
by a consortium with some form of community/committee
process. The overall goal of open standards is to facilitate
interoperability and data exchange among different products or
services so as to encourage widespread adoption. The two
component terms of open standards (i.e. ‘open’ and ‘standards’)
have different meanings and hence, ‘open standards’ has a
different meaning depending on the choice, context and
standardization body. Governments and standardization bodies
have different definitions for open standards.
Some of the elements which comprise the definition of open
standards include:
● royalty‐free or ‘reasonable and non‐discriminatory’46
patent licensing fee requirements;
45
http://en.wikipedia.org/wiki/Open_standards
46
http://en.wikipedia.org/wiki/Reasonable_and_non‐discriminatory
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● fees for implementation. No royalty: open standards
are free for all to implement, with no royalty or fee.
However, certification of compliance by the
standards organization may involve a fee;
● level of detail of the standard and the ability for
different implementations to be developed on top of
the standard; and
● longevity of the standard.
What is the impact of open standards on the mobile ecosystem?
Open standards have an impact on the mobile ecosystem simply
because they harmonise the Web and the Mobile Web. In
addition, this factor grows significant as mobile browsers
dominate the mobile ecosystem. The use of the Web as a platform
is a key component of the Web 2.0 paradigm. A platform is an
agnostic way on which new services can be built. The original
definition of the Web has now been expanded substantially to
incorporate new technologies like offline browsing implemented
through standards such as HTML 547. As the Web becomes a
platform and the Web and the Mobile Web are harmonised, we
see many fundamental changes. Among these: cloud computing
47
http://en.wikipedia.org/wiki/HTML_5
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emerges as a major paradigm; widgets (i.e. browserless browsing)
become a part of the Web; and emerging markets play an
important role. Hence, there is a need to enhance the
standardization process to reflect these changes. Organizations
like the Open Web Foundation48 and initiatives like microformats49
are addressing this question in addition to the work done by
existing standardization bodies.
Open standards: the debate and evolution
As we have seen before, the goal of open standards is to foster
interoperability. In any consumer‐based service, we need
interoperable standards for the market to blossom. There are
three ways to enable interoperability − the first is by a monopoly,
i.e. a single standard controlled by one company. The second is via
open standards and standardization bodies and the third is via
open source.
The open standards process is now well known. For instance, W3C
is a standardization body and its process is outlined in detail50. As
with any standardization body, it comprises submissions,
committees, consensus, working groups, draft proposals – so on
and so forth.
This takes time, a lot of time...
48
http://opengardensblog.futuretext.com/archives/2009/04/the_open_web_fo.html
49
www.microformats.org
50
http://www.w3.org/2005/10/Process‐20051014/intro
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The result is, all standards from any standardization body have
three problems:
Besides this, there are other problems, for instance:
2 IPR management is also an issue.
The result is a slow, imperfect process, which does not always
work. Because of this, open source is a road many companies are
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taking especially in the mobile space as an alternative to open
standards.
Of course we have to reiterate that open source is not always
better than standardization and ultimately we expect that the two
will coexist. But certainly, it is a space to watch.
Open social networks
We have seen the impact of open source and open standards on
the mobile ecosystem. In this section, we will see the impact of
open social networks.
The Web is organised around content. Most people start with the
‘Search’ option when they start using the Web. With the rise of
Facebook, MySpace and other sites, online social networks have
become popular and have led to the creation of what we might
term as the ‘Social Web’. The Social Web is organised around
people (i.e. the participants in a social network), as opposed to
content; and we typically start our interaction with it by searching
for specific people. The content created by the participants in the
Social Web has given rise to a term called the ‘social media’ –
which is generally used to denote user‐generated content, or
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content created as a result of social communications. Social media
might include text, video, audio and pictures. Note that the phrase
‘user‐generated content’ is a legacy of an older system – and the
alternative term ‘social media content’ may be more appropriate.
What is a social network?
Social networks: the first point of contact for the Web
The emergence of social networks has had a profound impact on
the Web and the Mobile Web. Social networks can be seen to be
unifying the Web and mobile domains by an ‘umbrella’ ecosystem
(i.e. an overarching mechanism that spans the Web and the
Mobile Web). In this ecosystem, the mobile stack can be seen to
be extended beyond its traditional domains (i.e. we now see the
mobile stack as: the chipset, the operating system, the application
layer, the network, the cloud (spanning the Web and mobile) and
51
http://code.google.com/apis/socialgraph/docs/
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social networking. In other words, the cloud (spanning the Web
and mobile) and social networking are new additions to the
traditional telecoms stack and these unify the Web and the mobile
ecosystems. Hence, social networks and open social networks are
important to the ‘Open Mobile’ argument.
The network enablers: decoupling from the
network
The rationale for decoupling network elements
So far, we have discussed open systems with an emphasis on
specific elements of open systems, such as open source and open
standards. We have also seen that Open Mobile tends to shift
intelligence to the edge of the network.
In a nutshell, we are seeing two forces at work: value is being
abstracted to higher levels of the stack / edge of the network (e.g.
App Stores from the iPhone) – for Long Tail applications and, at
the same time, the networks will find profitable niches in areas
which they can uniquely do, for example, via LTE (long‐term
evolution of the network). Both will co‐exist.
There is one more important effect of open systems, especially on
the mobile ecosystem, i.e. Open Mobile is a catalyst for
decoupling of the network and the service.
To appreciate this factor, consider the impact of tightly coupling
the service to the network – which was the norm in the early days
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of mobile applications. At that time, it was common to discuss ‘18‐
month lead times’ to deploy applications. The most common
reason for this was said to be to ‘reduce the impact on the
network’. It was deemed to be a valid argument since the service
and the network were tightly coupled. Increasingly, we are seeing
that the network enablers (and consequently services built on
those enablers) are being decoupled from the network. This lends
to more services and more Long Tail applications. Thus the
decoupling of network elements and their impact on services
forms a key component of the Open Mobile story.
In this section, we study the network enablers that are being
decoupled from the network and are contributing to the
proliferation of Open Mobile applications. The impact of
decoupling network elements is profound.
When played out fully, open systems will enable us to see the Web,
mobile and TV ecosystems as one. Customers will increasingly see
a unification of the three platforms in the form of services which
are platform agnostic. Metadata (call it Web 2.0/Mobile Web 2.0,
etc) will act as the unifying glue of these services.
It is said that the Web tends to commoditise everything. Rather
one could say that the Web tends to make every entity either as a
platform or a provider of services at the edge of the network
(which is a logical by‐product of the de‐coupling).
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When the Web and the mobile ecosystems come together, the
Web sees the mobile/telecoms ecosystem as a platform because
the Web is itself a platform. The ‘platform effect’ is not unique to
the Web. Social networks are platforms. Twitter is a platform. The
iPhone is a platform (through the App Store). A platform enables.
It creates (unpredictable) services which have a business model
when (and if!) they are successful (and a vast majority of them are
not as per the Long Tail concept). The platform itself has a
transactional business model. So, the Web business model sees
the telecoms network as a platform. However, the telecoms
industry does not see itself in the same way. Telcoms sees
everything in terms of 'directly making money'.
In contrast, the Web sees the same entity as a platform and hence
sees intelligence at the edge of the network. This is already
happening. As network elements get decoupled from the network,
they become abstracted to higher levels of the stack. They
become global. They enable services which are also global and are
often not as 'perfect' as the equivalent 'telecoms' system (i.e. the
system created by tightly coupling to the network). The equivalent
telecoms system with tightly coupled network elements is costly
and not interoperable because it takes a long time to interconnect
globally at the network level. The corresponding 'Web' system is
free and global. It is not perfect (it is ‘best case’). But once the
'platform' emerges then the provider creates a transactional
model on top of it.
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We see the same story repeated over and over again.
● Cell ID databases (decoupling location)
● App Stores (decoupling billing)
● Skype (decoupling voice)
● Twitter (decouple messaging AND a lot more)
And that’s not all ... We will also see the same trend continuing in
future as the ‘Internet of things’ becomes a platform. The power is
in the links but only as long as we connect the links together. Links
will exist between people, between content and between devices
– which will in turn have links across them.
The result of this decoupling is: Open systems are challenging the
outdated business models today. These models are not sacrosanct.
They are only a few decades old.
Ultimately, there is no right or wrong way. Only the way your
customers will vote with their wallets. And that gives us cause to
favour open systems.
The blind spot: the telecoms perspective ignores the customer
There is a common mistake which many in the telecoms world
make. They view the world from the perspective of the operator
and not the customer. This is a critical blind spot especially since
the customer has a choice and is increasingly well informed.
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52
http://www.wsdmag.com/Articles/ArticleID/9426/9426.html
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Open Mobile and the K‐T boundary
We have come a long way when it comes to openness and the
telecoms network. In the relatively short time since 2002, we have
seen a major change from denial (confining to on‐portal/off‐portal
discussions although Open Mobile is much more than that), to
change (agreeing to fixed‐rate charges), to enthusiasm for the
word 'open', to actual revenue from open (High‐Speed Downlink
Packet Access or HSDPA), to even a conference on the topic of
smart pipes54
But, on a more serious note, we have come a long way as an
industry.
History will look at this narrow stretch of time between 2002 (post‐
dotcom) to 2012 as the K‐T boundary for the Mobile data industry.
53
http://news.bbc.co.uk/1/hi/technology/6246063.stm
54
http://www.smartpipesconference.com/
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(Note: The K‐T boundary55 is a geological signature, usually a thin
band, dated to 65 million years ago. In geological terms, it signifies
a narrow timeframe of mass extinction of an existing ecosystem –
dinosaurs – and the birth of a new ecosystem.) (Source:
Wikipedia)
In 2012 we will start to see significant deployment of LTE where
operators start to make money from the access network and thus
realise that they can make more money by enabling the
applications ecosystem rather than blocking it. So, the timeframe
between the start of Web 2.0 (user‐generated content) to the
dominance of a model where the telecom operators see revenue
from the access network is a narrow time slice. The first
indications of the time slice can already be seen with the success
of mobile broadband in 2007/2008.
Data is data: we cannot ban specific applications which are not
coupled to the network
The issue of decoupling and net neutrality comes mostly to the
forefront in the banning of Skype – a service which users want
based on their uptake of Skype applications from the iPhone App
Store.
55
http://en.wikipedia.org/wiki/K‐T_boundary
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Banning specific applications is hard to justify for the following
simple reasons:
1 Data is data. With IP all you have is data. Specifically,
there is no distinction between data tied to different
formats like TV, radio, Web, etc. Once it is in the IP
format, there are many ways to access it and the
data flows from one format to another, endangering
the existing business models which are largely
format specific.
2 Carriers already have limits on data in the small print
of their contracts. So banning specific applications
for the reason that they affect network performance
is not a viable argument.
3 When carriers introduce their own VoIP applications,
this reasoning will come back to bite them, i.e. how
can they ban Skype but not ban their own VoIP
applications?
Simple business logic would tell us that it is easier to sell to
customers what they want. The quantitative benefits can be
known as well considering the historical data.
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A change in the role of devices
The changes we are seeing from the Open Mobile mindset are
profound. We will see a majority of the changes to the ecosystem
play out by 2012. Consequently, the future may be quite different
from what we see at the moment and the initial changes are being
played out in the device value chain.
The device is at the edge of the network. Hence, by following the
decoupling of network argument and then by extension the
shifting of intelligence to the edge of the network, the device
becomes more important since it is at the edge of the network.
Specifically, the device becomes an integration point between the
Web services, the network and the capabilities of the device itself.
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Will device manufacturers choosing operators become the rule –
rather than the exception?
Will operators compete for the best devices – changing the current
model of devices deployed to many operators?
The iPhone launch was an anomaly ... because it was launched as
one device on one operator. This approach is in contrast to the
way devices have been launched prior to the iPhone, i.e.
previously, you had the same device (mostly) launched across
many operators.
So, we could be seeing the start of a new trend; both in the case
of the iPhone and probably followed by the Palm PRE (i.e. start
with one or limited number of operators).
If we were to be more radical – can we say that this trend will be
the norm?
The model itself is not so radical. But it is completely driven by the
customer. The question to ask is: Will customers queue up
overnight to buy a specific phone (as they did for the iPhone)?
Specific device features such as camera resolution are no longer
key differentiators and with increasingly larger numbers of (mostly
smartphone) devices. The device creates differentiation in the
form of new services. This is a deviation from the existing model
where supply chain efficiencies work best for simple devices with
mass market production.
Ultimately, customers will drive the change ...
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They have a choice and they will be increasingly selective, and a
deep integration of devices and services will provide the
differentiation.
In the following sections, we explore the decoupling impact on
specific network elements in detail and show how these can be
implemented at higher levels of the stack i.e. away from the
network (often on a ‘best case/imperfect’ basis). Based on the
above discussion, we now explore the decoupling of five network
elements: location, billing, voice, messaging and identity.
Location
Location‐based services: location as a platform
Let us start with location as a network element.
Nowhere does the ‘play vs. pay’ mindset become as apparent as in
location‐based services (LBS). Location is not very useful in itself
when it is tightly coupled to the network – but it can transform
services when viewed as a platform (i.e. as an enabler of services).
For years, network operators saw location as a key asset and tried
to keep it tightly coupled to the network. It turns out that location
is not an asset to be used on a ‘pay per use’ basis but functions
best as a platform for creation of new services. As with many
network elements, as location gets decoupled from the network,
we see that it becomes more easily available to developers and
users. As a compromise, it is sometimes a ‘best effort’ case – but
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nevertheless it is makes LBS widely available to all. The other
option, known as pay per location request, turned out to be
expensive, niche and a non‐starter.
As the coupling between location and the network started to
change through cell ID databases (explained below), GPS and
other initiatives – the LBS market truly started to take off. Today,
mapping services like Google Maps are some of the most exciting
manifestations of LBS. Google Maps is free. And it has led to the
creation of a whole new set of services including mashups which
benefit the user. The operator vision of LBS was to charge ‘per hit’,
i.e. per location request. As early as 2002, the capabilities for LBS
existed. But the network operator‐led business model (charge per
location request) was flawed. When location was ‘decoupled’
from the network, we start to see a whole new set of customer‐
driven services and new services like mashups.
Background
A mobile phone knows the user’s location at all times. It’s the only
mass‐market consumer device that does so. Hence, services based
on the user’s location (LBS) have been the chief differentiator for
mobility. LBS can include a range of services such as:
● Navigation (directions)
● Emergency services (911 services)
● Field services (vehicle tracking, fleet management)
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● ‘Find my nearest’
● Location‐based mobile advertising
● Child tracking
● Tracking pets
● Finding out the location of your ‘friends’
● Mobile multiplayer games, etc.
From an end‐user perspective, LBS delivers any content filtered by
location. Examples include: a dynamic map that mirrors a user’s
location, or a ‘find my nearest’ application that lists every fast
food outlet in a one kilometre radius. By definition, any mobile
service is location‐based, because the location of any mobile
device is always known to the subscriber’s mobile operator.
However, in most cases, the accuracy of the location is only to the
‘cell level’, and the size of each cell is not uniform. It is the greater
accuracy (for example, 100m) within a cell that can enable new
applications not currently possible.
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The hype
LBS has been one of the most hyped‐up services right from the
early days. Here are some statistics/market projections.
Retrospectively, they make interesting (and rather amusing)
reading.
March 2001: The LBS market will be worth about $20 billion by
2005, according to a recent report released by Ovum,56 a market‐
research firm.
Oct 2003: Overall, operators forecast average annual revenues of
$12 per subscriber from LBS in 2005 – growing to $35 by 2008 –
according to an in‐depth operator survey by Cambridge Positioning
Systems57 (CPS).
July 15 2005: Revenues from mobile LBS will more than double in
the European market in 2005, according to telecommunications
industry research firm Berg Insight.58 The firm projects a 153
percent increase in LBS this year to 274 million Euros, and they
forecast that the next five years will see an average annual growth
rate of 84 percent.
56
http://www.informationweek.com/827/ibm.htm
57
http://www.3g.co.uk/PR/Oct2003/5950.htm
58
http://www.windowsfordevices.com/news/NS6661129510.html
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June 2005, ABI research: "When it comes to LBS, we've moved
quickly from a walking pace to a run," ABI Research analyst
Kenneth Hyers.59
Nor has the hype been confined to market analysts. The biggest
culprits have been marketers and advertisers enticed by the
possibility of sending personalised messages to users. And these
are the legal ones! We can be sure that there are a whole bunch
of spammers waiting in the wings. Right from the outset,
advertisers have been drooling about the mythical ‘Starbucks’
application. (Note: As far as we know, Starbucks themselves have
never tried any such application. They have wisely stuck to more
useful applications like WiFi access from their coffee shops.) In a
nutshell, the application is supposed to work like this: as soon as
you pass a café, say Starbucks, you get a mobile coupon for ‘10%
off your next cup of coffee’. The implementation of this service is
not trivial and the application itself is not cost‐effective because
the profit from the coffee is not worth the discount. Hence, it
never took off. But that did not prevent the privacy advocates60
from crying wolf. All the hype cannot hide the fact that LBS was a
very complex application when location was tied to the network.
In addition, the insistence on upfront revenue prevented a
platform from emerging, which in turn meant that no new
services were possible. By ‘platform’ we mean the existence of a
59
http://www.techweb.com/wire/mobile/164902024 June 2005
60
http://www.privacyrights.org/fs/fs2‐wire.htm
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Features of a location‐based service
From a user perspective, LBS starts with the application. Thus, an
end‐to‐end view of LBS includes:
● The application that the consumer will interact with
from their handset.
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A location‐based service
As a first step, the mobile operator identifies the location of the
subscriber’s handset. The mobile operator is the only entity that
knows the user’s location (unless the mobile operator releases
that location to third parties that take location feeds from one or
more mobile operators). This location is then mapped onto a
content feed that the operator may take from a number of
content providers (such as a mapping company). The resultant
information is sent back to the end‐user.
We now look at the elements of LBS in more detail.
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Position determination techniques
Terminal‐based solutions
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Network‐based solutions
Cell identity: this technique is the simplest method and simply
provides the location within a given cell. However, the problem is:
cell sizes can vary. In cities, we have smaller cells, which are
densely packed. In rural areas, we have fewer cells covering a
large area. The accuracy of this method depends on the cell size.
The smaller the cell size, the better the accuracy. Accuracy ranges
from 10m (a micro cell in a building) to 500m (in a large outdoors
macro cell). This is a good and a low‐cost solution for proximity
type services (find my nearest) where high accuracy is not
required. The caveat, of course, is accuracy depends on the size of
the cell.
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Thus, in itself, the cell ID has limited use as a location technique.
However, the location provided within a cell can be enhanced
using a technique called timing advance (TA). Timing advance
indicates how far the user is from the base station within a cell.
TOA (Uplink Time of Arrival): is conceptually similar to E‐OTD and
uses triangulation techniques. It works by measuring the uplink
data (the data that is sent by the terminal) to three synchronised
base stations within range of the terminal (triangulation). Since
TOA positioning does not require any changes to the handset, it is
capable of supporting even legacy handsets.
Other methods: Both Bluetooth and WiFi can be used to
determine location around a certain hotspot/access point.
Cell broadcast is a mobile technology that allows messages to be
broadcast to all mobile devices within a designated geographical
area (normally a single cell). More information can be obtained at
the Cell Broadcast Forum61
Location‐based services: the issues
The elements discussed above are the basis of LBS. As you will
notice, this service is top down (i.e. it starts with the mobile
network operator installing a complex platform and then often
updating their network significantly). New handsets need to be
supported. All this takes time. On the other hand, the users
61
http://www.cellbroadcastforum.org/
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themselves may not be willing to pay a large amount of money to
support LBS. As the cost to the user goes up, the user will consider
other alternatives. After all, to find your nearest coffee shop, all
you may have to do is to look around! Thus, for a long time, the
value proposition for LBS was not clear.
In addition, there is the issue of ‘population of points of interest’.
A point of interest on a map is simply the result of a ‘find my
nearest’ query. How can all these ‘points of interest’ on a map be
populated? Indeed, there exist companies that are collecting this
information (e.g. UpMyStreet62), but it’s not cheap to map all this
information on a map and keep it updated. For the user, the
impact of populating and maintaining this information on a map
means more cost.
Location as a platform for creating new services
Let us recap the issues hindering LBS:
1 The lack of a value proposition for operators due to
the need to upgrade equipment, install new
platforms and support new handsets.
2 The lack of a value proposition for the end users due
to alternate sources of information and the high cost
of a location request.
3 Populating the points of interest.
62
http://www.upmystreet.com/
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We believe that for LBS to work, an organic approach should be
taken. Currently, by first trying to set up a mobile infrastructure
(including both the network components and the data), we are
missing out on the whole industry segment itself. The
conventional ‘top down’ approach does not seem to be working.
LBS also need the major players (often with conflicting interests)
to work closely together else the market fragments.
Google Maps for mobile provides an example of this approach
(this technique is generically called cell ID databases). It has a
feature called My Location63. Significantly, third‐party developers
have access to this resource and it is available through Google
Gears for Mobile and Android.
My Location enables users to pinpoint their approximate location
on a map even if their phone doesn't have a GPS chip.
The workings of My Location as per Google’s website are as
follows:
Wireless phones can make and receive calls because they are
connected over the air to a nearby cell tower. The phone knows
63
http://googlemobile.blogspot.com/2007/11/new‐magical‐blue‐circle‐on‐your‐map.html
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the ID of the cell tower that it's currently using. If the phone has
GPS, the Maps application on the phone sends the GPS coordinates
along with the cell ID to the Google location server. Over millions
of such updates, across multiple phones, carriers, and times, the
server clusters the GPS updates corresponding to a particular cell
ID to find their rough center. So when a phone without GPS needs
its own location, the application on the phone queries the Google
location server with the cell tower ID to translate that into a
geographic location, i.e., lat/long coordinates.
This simple technique applies Web 2.0 principles to the location
service and effectively decouples the location from the network.
Location becomes a platform. It becomes available to third parties
and hence more useful.
Billing and payment
Like location, m‐commerce (mobile commerce), billing and
payment systems have had potential but have not been fully
realised. There has been some success in the mobile space,
especially through premium SMS. Still, m‐commerce systems are
expensive and complex and are really not very easy to set up (in
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M‐commerce
M‐commerce: an overview
M‐commerce is driven by:
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Time critical purchases: promotions and special offers.
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M‐commerce: the players
Credit card companies are interested in the market for the same
reasons as the banks. Credit card companies are also interested in
using their existing network more effectively.
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then used for m‐commerce. Currently, there is some focus on m‐
wallet technology.
Pure play vendors: such as Paybox who are solely in the business
of providing a mobile payment platform.
M‐commerce faces many hurdles: legal issues, privacy, willingness
to pay extra for m‐commerce, standardisation and so on. The
present state of m‐commerce is neither stable nor mature.
The biggest problem is the implementation.
In Europe, the last attempt to create a ‘top down’ m‐commerce
body ended in disaster (Simpay)65. But Simpay was only the latest
disaster. There were many more previous attempts at m‐
commerce such as the Mondex trials with BT and dual chip phones
as early as May 1999 in Helsinki.
Implementation of m‐commerce systems
● third party platform‐led initiatives
65
http://www.theregister.co.uk/2005/06/27/simpay_halts_project/
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● premium SMS
● NFC (Near‐Field Communications)
The overall issue hampering the uptake of m‐commerce is the lack
of a single standard. The direct impact of no ubiquitous standard
is the biggest advantage of m‐commerce (i.e. impulse purchasing
is gone!). The issues surrounding m‐commerce manifest
themselves in two ways: firstly, retailers need to support the new
method of payment and, secondly, customers need to accept the
method of payment and need to be able to ‘transact with’
ubiquitously (with anyone on any network).
In practice, in the case of mobile operator‐led initiatives for
retailers, it means you must be able to receive payments by Visa,
Mastercard and by mobile operator initiatives, such as Vodafone
m‐pay, etc.
The same issue hampers third party initiatives. Consider the case
of a company called Paybox (which still survives in a different
incarnation today). Paybox approached m‐commerce from the
banking perspective reflecting their existing banking procedures
(Deutsche Bank backed the company). Paybox connected the
mobile phone to the bank. By making this connection it was
possible to pay for services and products (and to transfer money
to other people) using the phone. This is an example of the
'person to person model'.
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To pay for a services using Paybox, users had to first register with
Paybox.
Retailers had an integrated payment system with Paybox. When a
consumer wished to pay a bill, the retailer entered the consumer's
mobile phone number instead of their credit or debit card
number. Then Paybox called the user's mobile phone to request a
four‐digit PIN to authorise the transaction.
With the benefit of hindsight, there were a number of problems
but the most significant was the fact that retailers had to integrate
into the Paybox system. It needed a significant body of retailers to
make the system useful. Furthermore, how many such systems
should retailers integrate into? At what cost; and to what benefit?
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as we see below is with the ‘vendor/retailer’ first before we even
get to the consumer.
Premium SMS
The only success on the m‐commerce front: premium SMS. The
success of premium SMS was due to its simplicity and its ubiquity.
Premium SMS involves a special type of SMS message that is
chargeable. There are two ways to charge for a message, either on
the outgoing message or the incoming message. (Note: here
‘outgoing’ and ‘incoming’ are from the perspective of the mobile
operator).
Premium SMS MT (Mobile terminated)
The charging is done on the outgoing message. Premium SMS MT
is preferably used when a return‐text message is sent to the
consumer. Typical usage scenarios include applications where
content is consumed or delivered within the SMS. Also, Premium
SMS MT is highly suitable for subscriptions (one registration, many
premium deliveries).
Example: ringtone‐purchase, subscriptions and alerting services.
Premium SMS MO (Mobile originated)
The charging is done on the incoming message.
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Premium SMS MO is preferably used when a receipt or return‐text
message is not sent to the consumer. Typical usage scenarios are
applications where the content is not consumed in SMS.
Premium SMS
The success of premium SMS in many markets is encouraging but
it is used mainly to purchase items such as ringtones. M‐
commerce as a whole remains yet to be fully exploited.
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P2P m‐commerce
NFC: a new hope?
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The amalgamation of NFC technology in phones offers interesting
possibilities. Devices containing NFC technology are triggered by
proximity (a few centimetres). Think of swiping your Oyster card
on the London Underground. It's possible to equip a phone with
NFC technology for as little as £3.00. NFC operates in the 13.56
MHz range.
Currently, there are two technologies covering this sector FeliCa67
from Sony and Mifare 68from Philips. The value proposition of NFC
is to unite these two technologies. ‘Unite’ means to ensure that
readers of FeliCa can read Mifare cards and vice versa. This could
be VERY interesting. Obviously, the next step is to put in a mobile
phone and all sorts of applications are possible. Interestingly,
enough NFC founding members includes players from across the
spectrum, but the mobile operators are missing. Time will tell if
NFC will be a success or yet another initiative which will not take
off.
Interestingly, NFC is more than a pure technology. It has learnt
from Bluetooth. Bluetooth concentrated on creating only the
radio technology and left the applications to others.
67
http://www.sony.net/Products/felica/
68
http://www.semiconductors.philips.com/products/identification/mifare/index.html
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M‐commerce: successes(?)
With so many twists and turns, one wonders if there is any place
where m‐commerce has been successful. Ironically, the most
promising examples of m‐commerce successes come from Africa.
The lack of existing infrastructure (and consequently vested
interests) is a bonus. A more efficient infrastructure based on m‐
commerce could be created in such a situation.
A company called Celpay70offers mobile phone‐based virtual bank
accounts with features like account transfers, bill payments, cash
deposits, etc. It has created a large retail base (shops, petrol
69
http://www.octopuscards.com/consumer/payment/use/en/index.jsp
70
http://www.celpay.com/zm/
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Also according to the Feature72:
Celpay has also developed successful m‐banking business services.
This includes mobile phone‐based order entry with cash on delivery
payment functionality. Current users include Coca‐Cola, breweries
and a cement manufacturer. In DRC (Democratic Republic of
Congo) alone, there were over 80,000 transactions per day on the
Celpay system in November 2004.
Read that last statistic again ... 80,000 transactions per day! In the
Democratic Republic of Congo!
There is another big boom in voucherless top ups. The agent
simply enters the subscriber's mobile number, amount of credit
needed and the agent's pin and the subscriber's account is topped
up.
Of course, both Korea and Japan also show high m‐commerce
usage. In these cases, co‐operation has worked in favour of m‐
commerce uptake as a whole. In Japan, Sony’s FeliCa consortium
has been far more successful in creating consortia. In Korea, the
main operator (SK Telecom) is also an investor in petrol stations
and this has helped in the deployment of their technology to the
people.
71
http://www.fundamo.com/
72
www.thefeature.com
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In Europe, we see some companies like Scanbuy73 using camera
phones to take a picture of the barcode which they then use to
send competing offers. Another company that has made some
inroads in this space is Mobiqa74. Mobiqa focuses on concerts and
events where there is a need for speedy interaction with large
numbers of customers.
The App Store: de‐coupling the payment mechanism from the
network
Ironically, the biggest change to the payment system has been
through the iPhone App Store model which decouples payments
from the network operator. In this model the iPhone customer has
a billing relationship with iTunes (Apple) which circumvents the
sacrosanct billing relationship with the mobile operator. We see
this trend to continue to a greater or a lesser degree. At the time
of writing, many app stores are being launched. They provide
billing services in varying ways – either tightly coupled to the
network or more independent from the network. The issue of
billing ties to services in two ways: in the deployment of the
service itself and in the revenue share to the developers. The
more tightly coupled the service to the network in terms of billing,
the lesser the chance that it can be deployed widely since the
service is tied to the specific network operator by definition.
Additionally, mobile network operators have been very poor at
73
www.scanbuy.com
74
www.mobiqa.com
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sharing revenue. When the service is forced to use the operator’s
billing network, the developer may not get a larger revenue share
(on top of their service being restricted to the operator’s
network).
Voice: phone number
Like the location and billing elements which are tied to the
network, voice is yet another component that could be decoupled
from the network.
While it does not sound very obvious, a phone number is also a
connection to the network since a number binds us to a network.
We are all associated with multiple numbers, such as a home
phone number, mobile number, national Insurance number, etc.
However, ‘tags’ are a much more natural way to identify people
than numbers. Tags are descriptors that individuals assign to
objects. The ability to identify people by tags, and then contact
them through a Web‐based mapping of tags with a set of
numbers, will be revolutionary. A tag could be any identifier – e.g.
a name. A Skype ID is a form of tag.
Currently, we use numbers to find, contact and identify people.
The number may be a phone number, a passport number or a
social security number. In future, tags could perform the role
which numbers currently perform. A tag is a keyword which acts
like a subject or category. A keyword is used to organise Web
pages and objects on the Internet. Each user tags a Web page or
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image using his/her own unique tag. An image or Web page may
have multiple tags that identify it. Web pages and images with
identical tags are then linked together and users may use the tag
to search for similar Web pages and images.
We all have many numbers because we have historically signed up
to more than one provider.
How could this process be simplified?
Instead of worrying about using the telecom operators’ directory
search (not knowing which operator the person we want to
contact is with), could we use a Web‐based search engine?
Imagine, you type in a name, instead of responding with a bunch
of numbers, the search engine offers you a choice of what you
would like to do. It gives choices such as: Do you want to call the
landline number? Do you want to send a message? Do you want
to use a VoIP call? Do you want to call the mobile number? And so
on...
This choice could be refined by the search engine depending on
the exact location/preferences set by the person we are trying to
contact. (For example, if they are mobile, the mobile number is
returned first; if they are in the office, a landline number is
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returned; certain people do not have access to the mobile
number, etc.)
You click yes. The search engine has now become the operator, not
by offering infrastructure but by offering the directory resolving‐
feature.
So, now I am no longer a number: I am a tag75.
So, why tags? Tags are merely a taxonomy. But, it is a taxonomy
produced by ordinary folk – otherwise known as a ‘folksonomy’.
Tags are essential to user‐generated content because they allow
people to create their own definitions rather than the approach
being top‐down. This is a level of abstraction which is more
attuned to the Web. Many more relationships can be inferred
from tags by the Web than from numbers.
None of this depends on knowing a number or how connection
happens and it is certainly not fixed‐mobile convergence!
Skype also has similar features. We expect to see more of this
approach from other providers.
Messaging
We have included messaging here for completeness. While no
immediate initiatives exist for decoupling messaging from the
network, the rise of Twitter could provide a way for messages to
be sent in a manner agnostic to the network. In that sense,
75
Acknowledgements to www.tonyfish.com
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messaging from Twitter could compete with traditional messaging
services like SMS.
Identity
Unlike messaging, identity is strongly tied to the network. If
identity were decoupled from the network – then we should, in
principle, be able to ‘log‐on’ to anyone’s phone using our
credentials (just as we can use any PC). However, that does not
happen since the identity is tied to the network via the SIM card.
In some ways, this is understandable because, unlike the PC, the
phone is a personal device and the risks from malicious elements
are higher. Like the messaging function, we include identity here
for completeness. While at the moment there are no obvious
attempts (from a technological standpoint) to decouple identity
from the network, it is yet another network element that could be
agnostic from the network at some point in the future.
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PART TWO
Open Mobile perspectives
In Part One we covered the principles driving Open Mobile and
openness in general. In this section, we will see the vision of open
systems from five different perspectives: content, Web, telecoms,
social networking and privacy. In doing so, we see that there are
different viewpoints and varying impacts for each of these
segments. The objective of this section is for the different
segments to learn from each other. And while we discuss the
impact of these segments, let’s not forget that the customers will
drive all of them.
Open Mobile: the content perspective
Introduction to the content industry viewpoint
In this section, we discuss the content industry perspective. The
fortunes of the content and mobile and mobile industries are
intertwined since the mobile device is now a major creator as well
as a consumer of content. This is impacting the traditional content
industry. The content industry includes the creators of content
such as newspapers, television, movies, etc. The prevailing view in
the content industry is ‘content is King’. By content, they mean
the ‘non‐user‐generated content’, that is, content created by the
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industry for the consumption of the user. In fact, the term user‐
generated content itself approaches content from the framework
of the traditional content industry. Social media content is a
better term as we mentioned before since it is content created by
the social interaction between people.
We identify five key mobile content strategies, as summarised in
Figure below:
Let us explore the ideas that underpin the customer‐centric value
chain and the classic value chain.
The key impact on the content industry lies in the emphasis of
user‐generated content over traditional content. This shift also
impacts the mobile data industry.
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because the mobile data industry has become another distribution
channel for the media to deploy their content.
But, is content King?
We argue below that content is NOT king, a fact that has been
comprehensively proven. In his seminal paper dating January
2001, the mathematician Andrew Odlyzko (then at AT&T Bell labs,
but now at the University of Minnesota) introduced us to the
concept that content is NOT king76. The date of this paper is worth
noting (January 3, 2001), when we were in the height of the
dotcom boom when contrary viewpoints prevailed. He argues
successfully that contact and not content is the real differentiator.
The emphasis of content impacts all media platforms. We refer to
traditional media content, newspapers, TV and radio, etc, as
‘broadcast content’, and content created by user interaction as
‘social media content’. As social media content dominates the
content space, the power and emphasis of broadcast content
declines. The mobile device is present at the ‘point of
inspiration’77 and is thus ideally suited to capture social media
content. The Open Mobile ecosystem lends itself to social media
content since it helps more people to create, collaborate and
share content with others within their social graph and beyond.
Thus, the Open Mobile trends go together with social media. In
76
http://www.dtc.umn.edu/~odlyzko/
77
A concept postulated by Tony Fish (www.tonyfish.com)
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The history of ‘content is King’
Predictably, the idea that content is King is publicised widely by
Hollywood and other providers of packaged content. For those
who claim that content is King, ‘content’ means movies, sports
events, music and other pre‐ packaged content. However, Andrew
Odlyzko argues that the annual revenue from connectivity
(contact) is far greater than content when he says:
‘The annual movie theatre ticket sales in the US are well under $10
billion. The telephone industry collects that much money every two
weeks! Those “commodity pipelines” attract much more spending
than the glamorous “content”.’
While the idea of 'content is King' was widely publicised by the
movie and recording industry, it originated earlier than that.
Again, Odlyzko points to a much earlier incident with the US
government’s subsidisation of the newspaper industry in the early
19th century. Back then prevailing logic was: newspapers were
needed to keep the nation informed, engaged and educated.
Hence, newspaper distribution was subsidised by the profit from
letters (letters being a person‐to‐person contact mechanism).
However, according to the paper, there were reasonable
arguments that the preoccupation with newspapers harmed the
social and commercial development of the country by stifling
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The economic factors driving the content industry
Traditionally, the media/content industry has been very complex
with geographical variations in 200+ countries. Its business model
has been similar to companies selling products, with ‘content’
replacing ‘product’. Hence, the content industry is currently based
on specific products (e.g. a movie), complex distribution channels
based on physically shipping goods (e.g. movie theatres which
received film to play in theatres) and a marketing budget to
support the product.
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The value chain could be depicted as below. Note that, this value
chain mirrors practically any ‘physical product’.
For instance, film studios lose money on most films. New
productions are risky. According to the MPAA (Motion Picture
Association of America)78, the average cost to make and market an
MPAA film was $96.2 million in 2005. This includes $36.2 million in
marketing costs. Thus, the marketing costs were about 40% of the
movie's total costs. The high overhead, upfront cost of production
and high distribution costs stifles innovation. Thus, when MGM79
was bought by private equity firms, their remit was to focus on
the market exploitation of the archive (older films) and this limited
new productions.
The result is Hollywood has become a ‘winner takes all’ industry.
(The same logic applies to record labels.) This means, the current
product‐based value chain supports a few big hits and expects
many losses. In other words, the Hollywood system as it stands
78
www.mpaa.org
79
www.mgm.com
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cannot currently monetise the Long Tail, as we shall see below.
While Hollywood and the recording industry make all the waves in
terms of press coverage, the overall media industry itself is much
larger. The components of the global/infotainment market ranked
by size include:
● TV distribution
● newspapers
● broadcast/cable networks
● filmed entertainment
● Internet access
● magazines
● radio
● video games
● consumer books
● recorded music
Each component has largely existed in its own commercial silo,
following its own product‐distribution‐customer model. Thus, the
media industry as it stands today is burdened by overheads (e.g.
product managers for each segment) which originate from the
concept of selling physical products. Further inefficiencies exist in
the value chain when we look at other components like
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Thus, the media industry needs significant financing and looks for
ways to monetise its content to fund its rather arcane model. The
high investment in the industry is recouped from a number of
sources such as:
● Brands: Brands engender trust and hence command
a premium. Brands also protect against the
downside; hence, the premium paid to top actors
(who are brands in their own right). This model is
self‐fulfilling because the industry has a very high
cost base and inbuilt inefficiencies. It needs
assurance to recoup its investment. This leads to
high premiums for a few players.
● Copyrights and patents are another source of value
and a potential method to recover the investment in
the industry.
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To summarise the above discussion:
Seismic shifts affecting the content industry
We are now going to consider the three seismic shifts which have
affected the content industry.
The first seismic shift: the Internet (pre‐dotcom)
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The first wave of the Internet revolution spanned 1996 to 2001
(i.e. before the dotcom crash). From the media industry
standpoint, this was characterised by a dramatically more efficient
distribution model. The new model was low cost and removed all
the inefficiencies of the existing distribution model (bookstores,
product managers, etc). However, note that the general public
took a lot longer to get used to this change and they were still
using dial‐up connections to the Internet in a majority of cases.
Thus, the darling of that era was Amazon80, which capitalised on
an efficient distribution model but was still selling physical
media (books), given that selling electronic products was limited
by bandwidth.
This era also introduced us to the first glimpse of a business model
which could work in the future – advertising sponsored content.
Although the model failed in the first phase of the Internet, the
advertising model is making a successful comeback in subsequent
phases of the industry. This is because faster broadband means
consumers consume online services faster and in greater
numbers, thus making advertising more compelling.
The second seismic shift: broadband and broadcast
Despite the doomsday pundits, the Internet itself survived the dot
bomb. In fact, there is an argument that it became much more
useful after the speculators who had concentrated on traditional
80
www.amazon.com
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models exited the market. The two biggest characteristics of the
post‐dotcom era were ‘the rise of broadband’ and ‘a return to
communications’.
Broadband Internet access (or broadband for short) is a high data‐
transmission rate Internet connection. Typical broadband rates
are 256 kilobits per second (Kbps), which is about four times those
of the telephone modem (typically 56Kbps). Modern consumer
broadband implementations are up to 30Mbit/s. Meanwhile,
broadcast has been a major component of the
infotainment/content market. As broadband Internet becomes
more widespread, broadcast and broadband are increasingly in
collision. Broadcast and broadband achieve the same function –
serving content to the customer. But, they do it in different ways.
Broadband functions without the overhead and regulation of
broadcast. Broadband also offers customers a choice, which
broadcast does not because broadcast is predominantly ‘push’
media. The consumer sees broadband as a fast data connection.
But, broadband does more than provide a fast connection. It
connects cameras, moving image servers, producers and users
allowing the delivery and sharing of content at lower prices. Now
images, films and music may be delivered to/accessed by
consumers without the physical overhead.
This allows content to be shared in new ways. No longer is content
the sole province of the publisher and broadcaster. The new
distribution channels have meant that many producers can access
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The third seismic shift: Web 2.0
While broadband is a facilitating technical medium, Web 2.0 is the
shift in consumer behaviour. It is based on ‘harnessing collective
intelligence’ and could be viewed as the ‘Intelligent Web’. We will
discuss Web 2.0 in subsequent sections; however, there are two
facets of Web 2.0 that we will introduce in this section since they
pertain to content management: the Long Tail and the
'community as the editor'.
We discuss Web 2.0 in greater detail later, but for now, we
consider one specific aspect of Web 2.0 – the Long Tail. In most
situations, 80% of the revenue comes from 20% of the
products/services. Thus, the remaining 80% of the products have
low demand and low sales. These constitute the Long Tail. The
principle of harnessing the Long Tail argues that collectively in a
digital environment, where there is no limit on storage archives,
these low volume/low sales products can make up market share
that equals or exceeds the few bestsellers – provided the
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distribution channel is large enough and the per unit production
cost is low. The Long Tail is depicted shaded as below.
The Long Tail
The principle of the Long Tail manifests itself in many ways with
Web 2.0. For now, let’s consider its impact on the movie business.
We have seen previously that, according to the MPAA (Motion
Picture Association of America)81, the average cost to make and
market an MPAA film was $96.2 million in 2005. This includes
$36.2 million in marketing costs. Thus, the marketing costs were
about 40% of the movie's total costs.
However, at the other end of the spectrum are small, independent
films that have become hugely successful. These include: El
Mariachi ($7,000), the Texas Chainsaw Massacre ($140,000), Mad
81
www.mpaa.org
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The community as the editor
One of the criticisms of the Long Tail theory is its lack of selectivity
– the big media companies often argue that customers are faced
with too much choice and will not have the time to select the best
content for them. Hence, the need for an editor/selector/
gatekeeper (translation: media people!). Many Web 2.0 sites are
increasingly disproving this fanciful notion because the community
is becoming ‘the editor’.
82
http://www.empireonline.com/features/50greatestindependent/46_45.asp
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Two instances that show that the community can be an excellent
editor are:
We believe that this is a part of a larger trend where Long Tail and
community editing will complement each other.
The fourth seismic shift: Mobile Web 2.0
Following on from Web 2.0, Mobile Web 2.0 will amplify the
effects of Web 2.0 by capturing ideas at the point of inspiration.
Due to the initial success of ringtones on mobile devices, it was
assumed that mobile devices were just another avenue to sell pre‐
packaged content. Indeed, to an extent, that is the case. Thus, the
83
www.digg.com
84
www.youtube.com
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current focus of the media industry leans towards pushing content
on mobile devices.
As we shall see later, mobile devices are crucial to Web 2.0 for two
reasons. First, they are capable of capturing ideas at the point of
inspiration. Second, they are likely to be ‘most often used’ to
capture content.
The impact of disintermediation on content
The resulting impact of these changes is ‘content
disintermediation’. Before we address the mobile entertainment
industry, let us understand the issues of content disintermediation
in general.
By ‘disintermediation’ we mean that there is a new player who
faces the customer and thus disintermediates the existing
provider. Disintermediation is affecting content distributors.
However, disintermediation could ultimately benefit both the
customer and the content creator (artist). The mobile operator
portal is a type of distributor – and operator portals are feeling the
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Further, new media is talking about old media and this helps the
artist. For instance, a YouTube video of the singer Joss Stone85 has
received 2,254,268 views as at April 5, 2009. No PR agency would
have given that kind of coverage. The distributor would argue that
the artist did not receive royalties for these views. However, the
artist would not have received those views in the first place had it
not been for YouTube. The distributor could also argue that these
views prevent sales of the album. However, since YouTube is not
the richest copy of the album, it is likely that these viewers would
85
http://www.youtube.com/watch?v=TBH8o8XXnVM
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have bought the music in a traditional format (a CD). Finally, when
micropayments become common, it is likely that musicians would
claim that the micropayments would go to them (rather than the
intermediaries like PRS)86.
Today, no matter how you look at it, you cannot ignore the Web
aggregators. With 50 million MySpace unique visitors, MySpace is
comparable to the number of American households that tune to
Super Bowl. With 100 million YouTube videos every day, YouTube
is comparable to the top 15 primetime shows in England (100
million viewers) or the top 4 American shows. (Source: Navigating
the media divide: IBM Institute for Business Value87).
Similarly, newspapers are facing the same problem. The future of
journalists is not the same as the future of newspapers. A
86
http://www.prsformusic.com/about_us/pages/default.aspx
87
http://www‐935.ibm.com/services/us/gbs/bus/pdf/g510‐6579‐03‐mediadivide.pdf
88
http://www.guardian.co.uk/media/2007/jun/29/business.pop
89
http://news.bbc.co.uk/1/hi/entertainment/7037219.stm
90
http://news.bbc.co.uk/2/hi/entertainment/7384324.stm
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newspaper has three functions: capture of news, analysis of news
and the distribution of news. The Web makes the distribution of
news free. The capture of news is now increasingly done by a
range of sources, including bloggers and citizen journalists. The
analysis of news is also freely done by many in the social media
space (i.e. blogosphere).
Consequently, the death of a medium (newspapers) may not imply
the death of paid content or indeed the death of the artist (a
journalist being a type of artist). Similar to a star chef in a
restaurant, greater value will be attached to the skills of the
journalist than to the overhead of the newspaper. It is relatively
easy for top journalists worldwide to create a micropayment
system (e.g. a ‘subscribe only’ club). Thus, the future of the
newspapers may not be the same as the future of the journalist
(which may be brighter than the future of the newspaper).
In both cases, the issue is not about whether to pay – but rather
about how much to pay and to whom should the payment go (i.e.
fans of music and journalism would like to ensure that their
payments go to the artists rather than to the middlemen).
Ultimately, newspapers could become a platform and will create
APIs like the Guardian newspaper in the UK does91
91
http://www.guardian.co.uk/open‐platform
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What about investigative journalism and unique
content?
The above argument does not strictly apply to two special cases:
investigative journalism and unique content (e.g. wildlife
documentaries) both of which are expensive to create and
produce. We can divide content into two categories:
2 Editorial and analysis.
Original content will always have a value and that value being
assigned by the rarity and difficulty of reproduction. For example,
we can get breaking news from a number of sources. Not
necessarily from newspapers. For instance, the plane crash on the
Hudson River was widely reported by Twitter as breaking news92.
So depending on the value created, some content will always be
paid for on specific channels (such as cable).
What about cases when citizens will create content
which is valuable?
There are some instances when citizens will create content which
is valuable. The best example is the Battle of Kruger video93 (38
92
http://edition.cnn.com/2009/US/01/15/new.york.plane.crash/index.html
93
http://uk.youtube.com/watch?v=LU8DDYz68kM
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Open Mobile: the Web perspective
In this section, we look at the concept of Open Mobile from the
perspective of the Web.
The Web and the Mobile Web: a few basic concepts
Let us consider some basic principles to set the stage for our
discussion.
● What is the Web and what is the Mobile Web?
● Is there one Web or a separate Mobile Web?
● What is the Internet?
● What is the Mobile Internet?
94
http://en.wikipedia.org/wiki/Peter_Oakley
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While the answers to these questions seem obvious, they are not.
Many people view the Web as 'online'; however, with offline
browsing, technologies like Google Gears, etc, that is not the case
(i.e. the Web can be offline).
So, is the Web primarily about the browser?
The browser itself has evolved and with technologies like browser
plugins and widgets ‐ the browser becomes a different software
object than the one it started off as.
Things get much more interesting if we go to the Mobile Web.
What is the Mobile Web?
Again, we have some technological grey areas.
Widgets can be based on Web technologies but are not
necessarily invoked from a browser. Similarly, we are likely to
have offline browsing on mobile devices.
Hence, to come back to the initial questions:
How do we define the Web and the Mobile Web? And Is there a
separate Mobile Web or is there only one Web?
But first we ask ourselves:
What is the Internet? and What is the Mobile Internet?
We addressed this question before, but we will revise and extend
our arguments for completeness.
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Firstly, there is no mobile Internet, just ‘The Internet on Mobile’.
The Internet is the interconnected ‘network of networks’ that's
accessible via standard IP addresses. For instance, anything which
changes the IP protocol is not the Internet in the purest sense, for
example, Network Address Translation95.
The second question is to distinguish the Internet accessed from a
mobile phone vs. the Internet accessed from another device (PC,
MID, etc), connected via the mobile network. In our view, A
mobile phone is something that is (a) voice‐optimised, and (b)
small enough that you can also hold it to your ear.
And now, what is the Web?
The Web is built on top of the Internet and uses HTTP (Hypertext
Transport Protocol) to transmit requests and responses. The Web
itself does not mandate that a resource be in any particular format
(like Hypertext Markup Language or HTML) just that requests and
responses flow using HTTP. When the Web was first invented
HTTP was used to access HTML documents only. This is not the
case anymore
and has not been so since very early on. Many kinds of resources
are available on the Web:
image files (e.g. GIFs and PNGs); archive files (e.g. zip and gzip);
sound files, etc.
95
http://en.wikipedia.org/wiki/Network_address_translation
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in favour of URI (Universal Resource Indicator) simply because the
Web rapidly became populated with resources which could be
obtained over the Web (using HTTP), but might or might not
actually be located at that address. Thus, any item which can be
asked for via HTTP is a part of the Web and these things need not
be in HTML form (but they are in most cases).
The Web is largely based on open standards. As we discussed
before, open standards are standards driven by consensus and
created by a consortium with some form of
community/committee process.
Thematic consistency
W3C, the World Wide Web consortium, is the governing body
behind the Web. The Web as seen by W3C96 is more than
browsing but rather it is based on the usage of Web
technologies97, which are open and not controlled by anyone
(hence are interoperable).
The W3C see the Web to be beyond a 'Web of documents'98 ‘and
believes in the idea of the One Web which means going from a
Web of documents to a One Web of Data and Services on
96
http://www.w3c.org/
97
http://www.w3.org/Consortium/technology
98
http://www.w3.org/2006/Talks/1106‐sb‐OneWeb‐Mobile2/#%281%29
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Many people struggle with the idea of One Web because they
view One Web in context of browsing, whereas W3C views the
idea of One Web more like ‘powered by Web technologies’, at
which point it makes a lot of sense.
From a user perspective, the vision of One Web is to make access
to the Web on mobile devices as seamless, reliable, cost‐effective
and useful as desktop / laptop Web access unfragmented by
devices, browsers, operators, content providers, etc.
When we talk of One Web from a user interface perspective,
again there is considerable debate since people assume that it
means you must serve exactly the same page format for mobile
as for desktop use.
Of course, that would be silly...
What W3C/One Web really means is thematic consistency, a topic
explained by Jo Rabin in his blog post 'One Web – Why does this
stir up such emotion?'99
The key is thematic consistency (as per Jo's blog):
99
http://mobiforge.com/analysts/blog/one‐web‐why‐does‐stir‐such‐emotion
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‘A key point here is that One Web doesn't say that you must serve
exactly the same page format for mobile as for desktop use. That
would not be sensible. What it does say is that when you serve
content it should the [sic] thematically similar – i.e. that a page
served from a particular URI should be about the same thing, even
if the format or the exact expression is not the same on different
devices.’
In practice, according to the W3C, this means following the Best
Practices Guidelines100 and Device Description Technologies101.
From Web 1.0 to Web 2.0
Having explained the basic ideas and evolution of the Web and the
Mobile Web, let us now explore the evolution of the Web from
the perspective of content generation – specifically content
created by the community vs. content created by providers.
In usage terms, the Web took off globally from the mid‐ to late‐
1990s. Until the dotcom bust (2001), the Web was primarily
treated as a consumption medium. From 2002 onwards, we see
the rise of Web 2.0, which is based on the ideas of social media
and the creation Web.
Web 2.0 was outlined by Tim O'Reilly in his seminal document in
Sep 2005102. After its launch, Web 2.0 created considerable
100
http://www.w3.org/2006/Talks/1106‐sb‐OneWeb‐Mobile2/#%2817%29
101
http://www.w3.org/2006/Talks/1106‐sb‐OneWeb‐Mobile2/#%2818%29
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Figure: The blind men and the elephant © Jason Hunt103
The original seven principles of Web 2.0 are explained in the
Appendix but in this section, we consider a simpler way to explain
102
http://www.oreillynet.com/pub/a/oreilly/tim/news/2005/09/30/what‐is‐web‐
20.html?page=1
103
www.naturalchild.org
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the seven principles based on the diagram below which puts
harnessing collective intelligence at the center of the discussion.
If we reconsider the seven principles, we observe that the second
principle (harnessing collective intelligence) encompasses the
other six.
Thus, we can view Web 2.0 as ‘harnessing collective intelligence’
or ‘the Intelligent Web’. What kind of intelligence can be
attributed to Web 2.0? How is it different from Web 1.0?
Web 1.0 was hijacked by the marketers, advertisers and the
people who wanted to stuff canned content down our throats!
The dotcom bubble was the end of many who took the approach
of broadcast content. What’s left is the Web as it was originally
meant to be – a global means of communication.
The intelligence attributed to the Web (Web 2.0) arises from us
(i.e. the collective/people) as we begin to communicate. Thus,
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when we talk of the Intelligent Web or harnessing collective
intelligence we are talking of the familiar principle of the ‘wisdom
of crowds’.
In order to harness collective intelligence:
1 information must flow freely;
2 it must be harnessed/processed in some way – else it
remains a collection of opinions and not knowledge;
and
3 from a commercial standpoint, there must be a way
to monetise the Long tail.
Our essential argument is: if we consider Web 2.0 as Intelligent
Web or harnessing collective intelligence (principle two), and then
look at the other six principles feeding into it, Web 2.0 is a lot
clearer.
Since the wisdom of crowds is so important – let's consider that in
a bit more detail. From the Wikipedia entry for the wisdom of
crowds104
Are all crowds wise? No. They are not.
104
http://en.wikipedia.org/wiki/Wisdom_of_crowds
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The four elements required to form a 'wise' crowd are:
1 Diversity of opinion.
Conversely, the wisdom of crowds fails when:
3 Decision‐making is imitative – choices are visible and
there are a few strong decision‐makers who, in
effect, influence the crowd.
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Now, based on this background, let’s look at the seven principles
again:
1 The Web as a platform
The Web is the only true link that unites us all together whoever
or wherever we are in the world. Hence, to harness collective
intelligence and to create the Intelligent Web, we need to include
as many people as we can. The only way we can do this is to treat
the Web as a platform and use open standards. You can't harness
collective intelligence using the IBM ESA/390105, no matter how
powerful it is!
2 Harnessing collective intelligence
This now becomes the main principle or the first principle.
3 Data is the next Intel Inside
By definition, to harness collective intelligence, we must have the
capacity to process massive amounts of data. Hence, data is the
'intelligence' (Intel).
4 End of the Software Release Cycle
This pertains to 'software as a service'. Software as a 'product' can
never keep up‐to‐date with all the changing information. A Web
2.0 service includes code as well as data. Thus, software as a
105
http://en.wikipedia.org/wiki/System/390
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5 Lightweight programming models
6 Software above the level of a single device
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7 Rich user experiences
Mobile Web 2.0 – an introduction
Based on our understanding of Web 2.0, let us consider the
implications of extending the definitions of Web 2.0 to Mobile
Web 2.0. As we have seen previously:
Mobile Web 2.0 is focused on the user as the creator and
consumer of content ‘at the point of inspiration’ and the
mobile device as the means to harness collective intelligence.
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1 What is a restricted device?
3 As devices become creators and not mere consumers
of information – what categories of intelligence can
be captured/harnessed from restricted devices?
4 What is the impact for services as devices start using
the Web as a massive information repository and the
PC as a local cache where services can be
configured?
Restricted devices
A broad definition of a ‘restricted device’ is not easy. The only
thing they all have in common is – ‘they are battery driven’. But
then, watches have batteries?
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1 carried by the user
2 battery driven
3 small (by definition)
4 probably multifunctional but with a primary focus
6 personal and personalised BUT
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Extending the Web to restricted devices
It may seem obvious, but Web 2.0 is all about the ‘Web’ because
Web 2.0 could not have been possible without the Web. Thus, in a
‘pure’ definition, Web 2.0 is about ‘harnessing collective
intelligence via the Web’. When we extend this definition to
‘Mobile Web 2.0’ – there are two implications:
The seven principles of Web 2.0 speak of this accurately when
they discuss the example of the iPod/iTunes. The iPod uses the
Web as a back‐end and the PC as a local cache. In this sense, the
service is ‘driven by the Web and configured at the PC’ but it is not
strictly a ‘Web’ application because it is not driven by Web
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Thus, the characteristics (distinguishing principles) of Mobile Web
2.0 are:
Driven by the Web backbone, but not necessarily based on
Web protocols end‐to‐end.
Implementing Mobile Web 2.0: touchpoints between the Web
and mobile
A detailed implementation of Mobile Web 2.0 is not in the scope
of this book (and will be covered in a forthcoming book called
Implementing Mobile Web 2.0).
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However, we list below the 12 ways in which Mobile Web 2.0 can
be implemented:
● The handset implantation – Nokia Ovi, 3 INQ1, Nokia
N97, LG Prada, etc
● Identity and Security
● Using telecoms voice call data to create social graphs
– e.g. Xtract
● Real‐time Web – One click updates, Twitter, etc
● Social networks and cloud computing
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● Converged address book
Business models could be third‐party app store (Long Tail) OR
services (deep integration between Web, device and network).
Note: Both can be paid or ad‐funded.
Prevailing strategies of Web players and the role of mobile
Of course, mobile plays a key role in each of these strategies and
in particular in the prevailing one.
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Open Mobile: the telecoms/mobile perspective
This section explores Open Mobile from the perspective of the
telecoms/Mobile industry. It builds on the ideas explored in the
sections that explained the Web and content perspectives and
looks at Open Mobile from a more traditional telecoms/mobile
perspective. We also explore the changing role of network and its
evolution to IMS/LTE.
The network
From a customer standpoint, while there are many similarities
between Web‐based applications and mobile applications, there
are two obvious differences:
● the application is deployed on a mobile device and
● the application is accessed ‘over the air’.
This means, by definition, at some point – the content must ‘fly’
(i.e. must be transmitted over the air interface to the device
where the customer can interact with it). This is achieved through
the wireless network. When we are discussing wireless networks,
it's important to clarify some terminology.
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Wireless: simply implies connection without wires.
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The four classes of wireless networks are:
● personal area networks (e.g. Bluetooth)
● local area networks (e.g. wireless LANs)
● Satellite networks.
While satellite networks are beyond the scope of this chapter, the
first three networks can be classified into two broad subclasses:
● localised networks and
Localised network Wide area network
Based around an access Can be accessed anywhere
point/hotspot independent of a hotspot
Unlicensed band Part of a licensed spectrum
Example: WiFi, Bluetooth Example: cellular networks
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Localised networks
Localised networks are created around a hotspot/access point and
have a limited range within the proximity of that hotspot/access
point. These networks include the WiFi network and the Bluetooth
network. Unlike wide area networks (explained below), localised
networks operate in the unlicensed spectrum (hence, they are
‘free’). In contrast, wide area networks (RF networks) operate in
the licensed spectrum (hence, the high cost of 3G licences in
Europe). Since WiFi and Bluetooth are two common
implementations of localised networks, we shall discuss them in
some detail below.
WiFi or Wireless LANs is a term which refers to a set of products
that are based on the IEEE 802.11 specifications. The most popular
and widely used Wireless LAN standard at the moment is 802.11b,
which operates in the 2.4GHz spectrum along with cordless
phones, microwave ovens and Bluetooth. WiFi‐enabled computers
or PDAs (personal digital assistants) can connect to the Internet
when in the proximity of an access point popularly called a
‘hotspot’. The WiFi Alliance108 is the body responsible for
promoting WiFi and its association with various wireless
technology standards.
108
http://wi‐fi.org/OpenSection/index.asp
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The Radio Frequency (RF) network
In contrast to localised networks, the RF network is not confined
to specific hotspots/access points. The RF network is a ‘cellular’
service in the sense that the actual network can be viewed as a
honeycomb of ‘cells’. The basic cellular network has been used for
109
www.bluetooth.org
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1 by understanding their historical evolution, and
The historical evolution of networks (referred to in (a)) is more
familiar to the general public through terms like ‘3G’, etc.
Historical evolution of data transmission techniques
Cellular systems can be viewed as the generations of systems as
they evolved over time (2G, 2.5G, 3G etc). The main
differentiation across the generations is support for greater
bandwidth. Obviously, as you go towards 3G and beyond – the
bandwidth increases and the applications supported also become
richer. The first generation (1G) systems were analogue systems.
From 2G (second generation) onwards, the cellular systems have
110
http://www.t‐Mobile.com/
111
http://www.verizonwireless.com/
112
http://www.nttdocomo.com/
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been digital. We will not discuss analogue systems in this book
and hence we start our discussion with 2G systems.
2G systems
GSM (Global System for Mobile) is the most popular 2G system.
GSM originated in Europe and is the dominant mobile system
across the world. In some form, it is present in all continents
including North America. GSM (based on TDMA) is a digital system
with a relatively long history (the study group was founded in
1982) and is governed by the GSM Association113. The GSM
Association provides functional and interface specifications for
functional entities in the system but not the actual
implementation. Besides GSM, other examples of 2G systems are
cdmaOne (mainly in the USA), and PDC (personal data cellular) in
Japan.
2G technologies are typically capable of supporting up to 14.4Kbps
data. 2G systems are characterised by being ‘circuit switched’ (i.e.
a circuit is first established between the sender and the receiver
before sending the information and is maintained for the duration
of the session). The next evolutionary step (2.5G described below)
is characterised by being ‘packet switched’ (the data is broken into
packets and no connection is maintained for the duration of the
communication). Note that both circuit switched and packet
113
http://www.gsmworld.com/index.shtml
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2.5G systems
5G networks are an intermediate step undertaken by most mobile
operators in their evolution from 2G to 3G. The main functional
leap between 2G and 2.5G networks is the adoption of packet
switched technologies (in 2.5G networks) as opposed to circuit
switched technologies (in 2G networks). 2.5G networks are
capable of theoretically supporting bandwidths up to 144Kbps,
but typically support 64Kbps. GPRS (General Packet Radio Service)
in Europe and CDMA2000 1X in North America are examples of
2.5G networks. Applications such as sending still images are
possible over 2.5G networks.
3G systems
Most people have heard about 3G and have an opinion about it! If
nothing else, they know about 3G in terms of the high prices paid
by mobile operators for 3G licenses. However, from a mobile
operator perspective, there is a clear business case for investing in
3G because existing 2G networks are congested. 2.5G solutions
are a ‘half‐way house’ and will not cope with the increasing
demand (i.e. both the number of consumers and the richer
application types). From an application development perspective,
3G technologies are differentiated from 2.5G technologies by a
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From an end‐user point of view, the move from 2.5G networks to
3G networks is more evolutionary than revolutionary except in the
case of devices. 3G devices are significantly more complex
because of the need to support complex data types like video,
provide more storage, and support multiple modes. UMTS
(Universal Mobile Telecommunications System) in Europe and
CDMA2000 in the North America are examples of 3G systems.
Note that 3G systems are all based on CDMA technologies.
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Type System Characteristics
2G Capable of supporting up to 14.4Kbps data
‘circuit switched’
Example: GSM
2.5G Packet switched
Theoretically supporting bandwidths up to
144Kbps but typically support 64Kbps
Example: GPRS (General Packet Radio Service) in
Europe and CDMA2000 1X in North America
3G Packet switched
Theoretically capable of supporting 2Mbps but
typically support 384kbs
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The evolution of the network
Next‐generation networks: IMS, LTE, etc
The network can be viewed as the core network and the access
network. The core network is the heart of the network and
performs functions, such as switching, and the access network
connects the device to the core network. The core network is
implementing IP technology through an initiative called IMS (IP
multimedia subsystem). The access network is evolving through an
initiative called LTE (long‐term evolution).
The impact of next‐generation networks
IMS – IP Multimedia Subsystem
IMS brings an IP core to the telecoms network. This is needed
since the rest of the global ecosystem has already migrated to the
IP protocol. However, IMS is controversial in its philosophy since it
violates the principle that ‘all packets are created (commercially)
equal’. In other words, inbuilt within IMS is the functionality to
differentially charge for IP. Telecom operators have been
enthusiastic about IMS. Vendors have also been enthusiastic
about it in order to sell to the operators. The rest of the
ecosystem has given IMS a lukewarm response – especially device
manufacturers and the customers. There is really no need for IMS
from a customer standpoint. And IMS can be (with some
justification) seen as a ‘walled garden at the packet level’.
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In terms of its deployment – IMS provides a value proposition to
the operator since it reduces the operating expenses by having an
all IP core. In that sense, IMS is successful and useful. However, its
utility in the applications domain is far less clear. In other words,
IMS may well remain an IP core technology. There have been
attempts to create a service layer around IMS by creating an SDP
(software delivery platform) layer on top of it, but these initiatives
have not really taken off. Meanwhile, the telecoms industry
continues to promote IMS applications (i.e. applications that are
tightly coupled to the core network).
Typically, the list for IMS applications goes something like this:
● presence
● video sharing
● push to talk
● VoIP
● SIP‐IM
● list management
The question is: what do we need IMS for beyond the IP core?
What applications are possible? And further – why cannot they be
done by the Web? (i.e. where is the value proposition end‐to‐end
for IMS if the Web can do most of what IMS can do – but for free?
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IMS claims to provide QOS (quality of service) for a cost. This is in
the operator’s interest but not in the customer’s interest as we
discuss later. Most telecoms applications are person‐to‐person
(e.g. SMS). Here, IMS has some issues at the application layer.
The problems with P2P (person‐to‐person) IMS applications are:
3 Devices: no support from devices and customers.
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Much of the industry took an ostrich‐like view to this problem;
somehow they hoped that all operators would simultaneously
upgrade and all devices would be quickly capable of supporting
IMS (and devices will be operator ‘locked down’ so other means
like WiFi connectivity are not possible). Hopes were also high that
people would use the IMS‐enabled rich media service. For that
matter, to use video calling we strictly don’t need IMS at all.
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There have been some attempts to address the issue of IMS
interconnectivity – for instance, by initiatives like IPX network115
and RCS116, but for most part, we see IMS to be mainly a core
network initiative and not impacting the applications domain in
the near future.
LTE
For the most part, the access telecoms networks are evolving into
a terminology called LTE (long‐term evolution). The term ‘LTE’ was
first used in the 3rd Generation Partnership Project (3GPP)
standardization group for the study of the evolution of the 3G
114
www.qik.com
115
http://www.gsmworld.com/technology/index.shtml
116
http://en.wikipedia.org/wiki/Rich_Communication_Suite
117
http://en.wikipedia.org/wiki/HSDPA
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radio network. In this book, we use the term LTE and LTE services
in a more global scope and include the evolution of the core
network, applications and the re‐integration of fixed and mobile
access networks to enable a wide variety of new services that
benefit from anytime, anywhere Internet access to interact with
Internet, and home, network‐based services, information and
content. All the IP characteristics of LTE lend themselves to certain
unique applications from the access network standpoint.
In the short‐ to medium‐term, they will lead to many more
applications like mobile broadband and a greater adoption of IP.
Telecoms services: IMS, LTE and MMS and the end‐to‐end
principle
As we have seen from some of the previous examples, the
telecoms industry has made many attempts to tie services to the
network but with limited success because it ignored the end‐to‐
end principle118.
As we have said before, the end‐to‐end principle is one of the
central design principles of the Internet. The principle states that,
whenever possible, communications protocol operations should be
defined to occur at the end‐points of a communications system, or
as close as possible to the resource being controlled. According to
the end‐to‐end principle, protocol features are only justified in the
lower layers of a system if they are a performance optimization.
118
http://en.wikipedia.org/wiki/End‐to‐end_principle
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Unlike IMS services, LTE services have succeeded because they do
not violate this principle. When we talk of services we cannot
ignore the Web and the open mindset (i.e. if something is free on
the Web, then under what circumstances can it be paid for on
mobile? Currently, in the mobile ecosystem, value is being
abstracted up the stack rapidly (through mechanisms like Cell ID
databases, etc). By that, we mean that functions are being
decoupled from the network and are implemented at higher levels
of the stack in an ‘imperfect’ way. Consequently, it is important to
think of what functionality cannot be abstracted at higher levels of
the stack.
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Services like MMS and video calling illustrate the problem – very
high pricing, unpredictable pricing, unclear user experience (e.g.
capability of devices), not global, not roaming, etc.
In contrast, access network services, such as LTE / HSDPA, have
got off to a good start.
Some more thoughts about LTE services:
● LTE coverage will be in pockets of areas, so, point‐to‐
point services will not be possible again.
● LTE has no inherent voice capability. So, voice will be
Voice‐over IP (VoIP).
● Initial use cases will be ‘like HSDPA’ but with some
extra features.
● The role of devices is key. Unlike IMS which had little
support from device vendors, LTE does have support
from devices vendors.
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femtocells119, WiFi, but also by taking a next capacity ‘step up’ via
LTE. Hence, whichever way we look at it, LTE is important from a
network operator standpoint as a means to make money.
LTE will help drive adoption of Mobile VoIP. New video
applications, such as QIK, may benefit. ‘Third party paid data’ (i.e.
the content provider, advertiser, venue owner, etc) that pick up
connectivity charges for free mobile broadband, similar to
conferences offering free WiFi, will also be a potential business
model.
LTE is also suited to Amazon Kindle (type) services and initial
drivers will be PCs and non‐phone devices. LTE could complement
social networking by handling the constant Internet background
noise (e.g. constant e‐mail checking, status updates, location
information, etc. and the management and optimization of ‘keep
alive’ functions).
From the perspective of devices, they could be the gateway to
new services and tight integration to Web services and the
telecoms network. In doing so, the mobile network operator will
be able to offer an enhanced version of the service for which the
customers are likely to pay a premium version.
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seek to extend the LTE network into the home thus providing a
converged service. This strategy is different from the existing
Fixed to Mobile Convergence (FMC) since FMC traditionally
focussed on voice convergence – and, in contrast, LTE is based on
data convergence.
HSUPA122(High speed uplink packet access) which enhances uplink
of data (as opposed to HSDPA which focuses on downlink of data)
may also be a model, as the creation of content from phones
increases.
WiMax123 is a strong driver (i.e. the fact that there is now a
credible option to LTE, which will coexist).
The possibilities for LTE services include:
New services based on enhanced capacity of the network
LTE services could include:
● video streaming
● audio streaming
● home gateway
122
http://en.wikipedia.org/wiki/High‐Speed_Uplink_Packet_Access
123
http://en.wikipedia.org/wiki/WiMAX
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● non‐phone device‐driven (Kindle)
● HSDPA – laptops
● home gateway‐based services: e.g. switch on heating
on the way home
New role of devices to handle rich content and social networks
Devices will be able to provide extra services to social networks by
providing extra features such as rapid updates and handle other
traffic which is ‘bursty’ in nature.
Services unique to LTE and core networks
Thus, LTE offers possibilities for a number of new services which
could provide revenue to mobile network operators.
The evolution of the device
In most markets, the fortunes of devices and networks are closely
aligned because devices are subsidised by networks. However, this
124
http://en.wikipedia.org/wiki/Femtocell
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synergy is changing though. In addition, device manufacturers are
building their own brands, especially after the success of the
iPhone and the uptake of the App Store and other applications
stores specific to other device makers and mobile operators.
Device megatrends contributing to Open Mobile
The biggest changes we see for the device are as follows.
● Handsets are driving convergence.
125
www.surfkitchen.com
126
www.actionengine.com
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are likely to end up in a supporting role to the Mobile
Web.
● Open source (including Android) is a key factor which
unites the device stack.
There are two drivers to the significance of the devices:
First, customers are choosing better devices and that is driving the
whole value chain.
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Feature phones can be viewed as opposite to the smartphones
(i.e. relatively simple devices typically running Java). Nokia S40127
devices are an example of a feature phone. As a class, feature
phones dominate the mobile device ecosystem today. However,
from an upgrade perspective, smartphones are on the march.
There is greater choice of smartphones, and the motivation to
upgrade devices is driven by a range of new feature. While sales of
devices globally have fallen, sales of smartphones continue to rise
– as does the proportion of Smartphone devices128.
In addition to the above factors, there are a number of factors
that impact devices. We list them below; they are elaborated in
other sections of this book as applicable.
Overall developments affecting device evolution
● Network evolution including LTE and IMS.
● Cloud computing.
127
http://en.wikipedia.org/wiki/Nokia_Series_40
128
http://www.mobilemarketingmagazine.co.uk/2009/03/mobile‐sales‐fall‐while‐
smartphone‐sales‐rise‐says‐informa.html
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● Open vs. closed debate, including operator efforts to
open up networks and devices, the ability of the
network operator to influence the software and the
branding on the device.
● Open platforms.
● The coupling of the device to the network and the
carterphone principle (i.e. the ability of any device to
connect to any network as long as it does not harm
the network131).
129
http://bondi.omtp.org/default.aspx
130
http://gsma.securespsite.com/access/default.aspx
131
http://en.wikipedia.org/wiki/Carterfone
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Device technology
● More powerful mobile CPU/greater memory.
● GPS/LBS.
● Bluetooth, NFC.
● Powerful multimedia capabilities.
● Sensors (rotation sensor, gyro sensor, motion sensor,
speed sensor, light sensor).
132
http://www.modumobile.com/
133
http://www.inqmobile.com/
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User interface
● Ultra slim and lighter.
● Advanced materials and colours.
● Touch screen.
● Minimalism.
● 3D.
● Large external touch screen.
● HTML browsers.
● QWERTY keyboards.
● Mobile TV.
Impact of network evolution
● LTE embedded consumer devices.
● Impact of LTE on devices with new form factors.
● New SIM card technologies such as Smart Card Web
Server.
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Services
Integration of the device stack especially through open source
initiatives
Net neutrality: some additional thoughts
We have already explored the concepts of net neutrality in detail.
In this section, we explore other perspectives on net neutrality –
considering it is so important to the Open Mobile/end‐to‐end
principle. At the heart of this debate is the argument that 'all
packets are created equal'. This means a complete separation
between the network and the service. It means that IP traffic is
not charged for. It means that the (network) provider's services
are not favoured above others and, indeed, more generically, that
no service is favoured over another for commercial reasons. The
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The net neutrality issue is framed in emotive terms on both sides
and mixed up by lobbyists. We frame our thinking in a series of
questions/points which apply to this issue. This section also
considers the arguments from the telecoms side.
Why was neutrality NOT an issue when the Internet was
created?
If we asked the government to step in, we can definitely expect a
toll booth just like the ones we see on a highway. (In fact, that's
why the term ‘Information superhighway’ is often viewed with
suspicion. It conjures images of a toll booth). If governments step
in and start charging for IP traffic, then we have lost the argument
by default. Having said that, at the time of writing, most
governments do not have the money to invest in network
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infrastructure (due to the credit crunch and other factors). So, we
need a set of private companies to invest in infrastructure, which
in most cases, means network operators.
Why are we defending the rights of file sharers?
The current discussion on net neutrality seems to be focused on
the 'rights' of file sharers to share content. Most of us are not file
sharers and the emphasis on this segment clouds the wider issue
since it stalls the discussion and makes it emotive. Undoubtedly,
file sharing applications do have a major impact on the network
and most pragmatic people would argue for limits on file sharing
and the adherence to legal principles. Whatever your view, we
believe that the limits on file sharing should not be the cause to
hold up benefits to the wider public.
Can Twitter pay for undersea cables?
We have said many times before that a 'pure' platform merely
'enables' services (i.e. it is completely agnostic). Today, the best
example of a pure platform is Twitter (in the sense that you can
easily 'morph/reuse' Twitter in many different and unpredictable
ways). For instance, even Tower Bridge on the River Thames in
London has a Twitter feed,134 which can tell you the name of the
ship that passes underneath. The question is: can we fund
undersea cables (i.e. infrastructure) from a ‘Twitter‐like’ business
134
http://twitter.com/towerbridge
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model (which leans towards the Long Tail)? The answer appears to
be ‘no’. So, the platform argument cannot work in ALL cases.
The impact of video
The impact of video on networks is a more important issue (more
so than file sharing). We are already seeing the first discussions in
this argument in the UK with the BBC iPlayer debate135. The
principle being that video will have a higher impact on the
network than plain text.
In ‘Hidden Costs’ Of Watching TV Online, Ashley Highfield of the
BBC proposes a solution for net neutrality136.
‘5. There could be an industry standard for "high definition
broadband". HD Broadband (working title) would be a minimum
guaranteed speed of connection (probably 8Mbs‐1). All ISPs could
market the service (like Sky HD and Virgin HD) and drive up
revenue per sub.’
That could be one solution (i.e. a higher format like HD with a
guaranteed superior experience for the end user). In any case, the
impact of video is only now being felt and will be increasing going
forward.
135
http://opengardensblog.futuretext.com/archives/2008/04/net_neutrality.html
136
http://www.bbc.co.uk/blogs/bbcinternet/2008/04/hidden_costs_of_watching_tv_
on.html
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Who decides what to pay?
This is another important issue. In other words, it is a business
model issue and 'sharing of the pie' issue between two camps. We
see this over and over again, and it is important not to forget this.
It started with iTunes with 99 cent downloads, and with
newspapers and YouTube (most recently with argument with PRS
on royalty shares).137.
All these cases have in common that the Web companies indicate
the price point and that price point is different (both in terms of
the price and of the business model itself, e.g. iTunes) to the
prevailing model.
Are Web platforms always perfect/fair?
Web platforms also have a conflict of business models as we see
in the case of Amazon and Kindle (with added emphasis138).
But Amazon is in something of a catch‐22. Lowering Kindle's price
too much might threaten Amazon's print book business, says
Jeffrey Lindsay, analyst with New York‐based Sanford C. Bernstein.
"They don't want to antagonize the book publishers and they don't
want to cannibalize their own book sales," Lindsay says. He
estimates that the company makes around 5% to 10% higher
137
http://news.bbc.co.uk/1/hi/technology/7933565.stm
138
http://www.businessweek.com/technology/content/feb2009/tc20090210_262587
.htm
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margins on print books than it does on digital downloads to the
Kindle, which run around $9.99.
Content bias
Innovation at the edge
Innovation will continue to be driven to the edge of the network.
Think of it every time you use Google Maps. In some cases,
telecoms networks wanted 15 pence a map request of which they
wanted to keep 60%. Thankfully those days are now gone; never
to return. We will see an increasing trend towards decoupling of
the network from the service applications.
139
http://www.paidcontent.org/entry/419‐how‐to‐make‐money‐on‐youtube‐through‐
product‐integration/
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Customer – main driver
Customers will continue to be the main drivers. They can
communicate and create content, which means it will be hard to
suppress them. It is the customers who queue up to buy the
iPhone and will ultimately drive transparency and new business
models.
Conclusion
When we consider net neutrality from a holistic perspective (both
Web and mobile), we need to untangle different ideas, which are:
● investment
● network level interconnect
(file sharing is the simplest of these and the one
which gets most attention)
● QOS applications
● the conflict of business models
● innovation at the edge: increases when the network
and the service can be decoupled
● trust and transparency
● nexus between content owners and networks.
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Application stores
The most important factor affecting the idea of Open Mobile in
relation to the telecoms network is the proliferation of application
stores. Application or ‘app’ stores are an example of separation of
services from the network. By extension, app stores suit the
principle of the Long Tail.
After the success of the iPhone App Store, app stores are a hot
topic with everyone claiming to have one. This is much in contrast
to the many years of ignoring applications and developers. App
stores are a natural by‐product of the ‘edge of the network’
thinking and also lend themselves well to Long Tail applications.
However, in our view, they are not ideally suited to the network
operator. App stores are an ecosystem and all the elements of the
ecosystem need to be fulfilled to make the strategy a success.
In the purest sense, an appstore must have five characteristics
(source VisionMobile) i.e.
● Centralised billing , settlement, reporting
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● Provisioning (install upgrades etc)
Not all providers who claim to have an app store actually have
these features. Device manufacturers are the closest to an ‘ideal’
app store as per the criteria above. Thus, we believe that the
device manufacturers and the Web players will be the biggest
beneficiaries of the app store strategy.
How can the operator innovate?
As a final section in discussing Open Mobile from a telecoms
perspective, we address the concept of operator innovation. Most
people accept that operators are slow to innovate. For starters,
they don’t need to innovate since the operator’s business (for the
most part) is currently stable. However, if the operators see the
impact on newspapers and other industries which have been
caught in a downward spiral, they realise that innovation is
needed. Hence, we have to ask ourselves: where can operators
innovate and how?
There are many within the operator community who are taking
steps to foster innovation. For instance, we have initiatives
including the GSMA awards140, the Mobile Innovation Exchange141
140
http://www.mobileinnovation.org/awards
141
http://www.mobileinnovation.org/
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and GSMA network APIs142 , to name a few – but more will be
needed going forward.
Let's break down the concept of innovation a bit further and
explore it from an operator perspective:
When people talk of innovation, they imply that:
1 the innovator invests commercially in the innovation;
and
2 The innovation benefits the innovator commercially.
However, in contrast to upfront investment in the innovation, the
Web‐based innovation which we have seen over the past few
years is primarily driven by a model of zero cost (or very low cost).
So, with relatively low investments, the monetization model is
based on acquiring scale (i.e. a large volume of content, large
volume of users or some other parameter). Once this is achieved,
the model then depends on getting small amounts of money from
this user base – either through direct payments for enhanced
services or through advertisements.
Of course, this model does not apply directly to telecoms since the
network investment is significant, global interconnect is complex
and costly, and scale is hard to achieve.
To make matters worse, investments in networks (i.e. innovations)
may not directly translate to greater revenues (as innovations
142
http://gsma.securespsite.com/access/default.aspx
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should by definition). To add to these woes, the capabilities of the
network are increasingly being decoupled from the network itself,
as we have explained in earlier sections. By that we mean, value is
abstracted at higher levels of the stack. The same function (e.g.
location) can be implemented at higher levels of the stack (e.g. via
cell ID databases) on a 'best case' basis, as we demonstrated
earlier.
Thus, network capabilities alone do not play out as innovation
(i.e. innovation which benefits the network commercially). For
example, location capability at the network could be seen as an
innovation. But increasingly with GPS, cell ID databases and other
technologies, monetization of location is not easy for an operator.
The important thing to note is: ALL innovation is ULTIMATELY
driven by the customer. In some cases, the customer may not
initially recognise the need for the innovation. In other cases,
venture capital may sustain the innovation until such time that it
starts making money (e.g. Twitter). But, in any case, a group of
customers need to be found who will pay for the service, and
innovation must then happen in the context of that customer
segment.
The dotcom era taught us that the model of simply acquiring a
user base with no additional innovation does not work. In
contrast, the winners of the dotcom era (e.g. Amazon and Google)
have significant technological innovation coupled by a clear value
proposition to the customer.
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So, the customer drives innovation in ALL models.
If we still doubt this idea, then let’s consider how the requirement
for a new 747 (Jumbo jet) arose. The original requirement comes
from the airline industry – that even when such a big endeavour is
undertaken, it is driven by the customer, in this case the airlines
(747: Creating the World's First Jumbo Jet and Other Adventures
from a Life in Aviation (Hardcover)143. For instance, the airlines
forecast an increase in demand (passenger numbers), the airports
decide that the runways can handle bigger planes and only then
the planes themselves are built
Like or not, customers drive innovation – whether it is data
traffic or air traffic .
So, the next questions are:
What are customers willing to pay for?
And
What do they understand?
For mobile/telecoms there are two possibilities: data or services.
Data when sold as ‘access’ is easy to understand and monetise. It
is a big success story for operators (HSDPA). Data when sold as
data itself (differential IP traffic/quality of service, etc) is a much
harder sell – for the simple reason that it is not easy to guarantee
a service. For example, a mobile user could pay more for
143
http://www.amazon.com/747‐Creating‐Worlds‐Adventures‐Aviation/dp/0060882417
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That leaves us with services.
Users understand services. They are used to paying for services on
the Web on a model of ‘basic service is free but extra features are
paid for’.
When it comes to services, there are five possibilities from an
operator standpoint:
1 deep integration of web‐based services
2 third party pays access
3 providing capabilities to others (Long Tail model)
5 support for non‐phone devices
Notes:
● We discuss deep integration of web services later in
this book.
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● Third party pays for access is similar to the 'free WiFi
at conferences/hotels' model. This works quite well
as an access level. Note that it is not the same as
differential charging for IP traffic since it is not based
on discriminating against some users to benefit other
users.
144
http://web.onetel.net.uk/~hibou/Beer%20and%20Nappies.html
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Options 4 and 5 are a distinct possibility in a post‐LTE world. We
have covered them before in other books but will not cover them
in detail here since they are outside the scope of this book. Please
contact futuretext (ajit.jaokar@futuretext.com) for more
information on these books.
We explore services in a subsequent section.
Open Mobile: the social networking
perspective
In this section, we consider the fourth perspective of Open Mobile
– social networks.
We identify four top level mobile social networking strategies, as
reported in the figure below where the mobile, Web and the
content worlds interplay with the social world. In all cases, the
social layer is the topmost layer since it is increasingly the first
point of contact with the customer.
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The emphasis on data portability
As discussed previously, we see social networks as the highest
layer of a unified mobile stack which spans both the Web and the
mobile domains. Hence, they lead to an Open Mobile ecosystem.
Note that since we view the Web and mobile ecosystems in a
holistic manner, all the factors that impact open social
networks also impact mobility.
Open vs. closed has different meanings when it comes to social
networks. Specifically, it does not matter what technology we use.
It matters who owns the data created by the users and how much
of their social graph is contactable on a given social network.
The rise of social networks has taken the world by surprise with
companies like Facebook and MySpace becoming household
names. However, as social networks mature, users have realised
that they can also be closed. Further, privacy advocates have
realised the implications of personal information being available
on social networks. In response to these developments, a
document called the ‘Bill of Rights for the Social Web’ 145 was
released by Joseph Smarr, Marc Canter, Robert Scoble, and
Michael Arrington.
145
http://opensocialweb.org/2007/09/05/bill‐of‐rights/
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The Bill of Rights for the Social Web says:
We publicly assert that all users of the social web are entitled to
certain fundamental rights, specifically:
Ownership of their own personal information, including:
● their own profile data
● the list of people they are connected to
● the activity stream of content they create
Sites supporting these rights shall:
● allow their users to syndicate their own profile data,
their friends list, and the data that’s shared with
them via the service, using a persistent URL or API
token and open data formats
● allow their users to link from their profile pages to
external identifiers in a public way and
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● allow their users to discover who else they know is
also on their site, using the same external identifiers
made available for lookup within the service.
The overall goals are concise and clear. In practice, this means as a
user you have freedoms such as:
1 If you are on MySpace and your friend is on
Facebook, you should be able to contact them, share
links, and find out their friends.
In practice, of course, this is not easy to implement. A number of
initiatives have been created to address this problem because
user data is not portable across social networks. The Data
Portability Project146 works towards the creation of open
standards for the ability of data to be reused across interoperable
applications. According to their website, the vision of the project
is: Data portability enables a borderless experience, where people
can move easily between network services, reusing data they
provide while controlling their privacy and respecting the privacy
of others.
146
http://www.dataportability.org/
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The idea of data portability is based on a number of open
technologies such as OpenId:147, Microformats:148, RDF (resource
description framework)149 , XMPP150 (Extensible Messaging and
Presence Protocol), FOAF151, SparQL152, OAuth153, RSS154, OPML155.
Besides these, there are initiatives like Google Friend Connect =156,
Facebook connect from Facebook157 and MySpace data availability
from MySpace158 all of which are getting traction. A detailed
discussion of these technologies is beyond the scope of this book.
Impact on advertising
Web and mobile social networks have a unique and disruptive
impact on advertising. Mobile‐only social networks such as
Itsmy159, Mig 33160 and Flirtomatic161, along with specialised social
networks on the Web such as Glam media162 and FM Publishing163,
147
http://openid.net/
148
www.microformats.org
149
http://en.wikipedia.org/wiki/Resource_Description_Framework
150
http://www.xmpp.org/
151
http://www.foaf‐project.org/
152
http://en.wikipedia.org/wiki/SPARQL
153
http://oauth.net/
154
http://en.wikipedia.org/wiki/RSS
155
http://en.wikipedia.org/wiki/OPML
156
http://www.google.com/friendconnect
157
http://developers.facebook.com/connect.php
158
http://developer.myspace.com/community/myspace/dataAvailability.aspx
159
www.itsmy.com
160
http://www.mig33.com/
161
http://www.flirtomatic.com/
162
http://www.glammedia.com/
163
http://www.federatedmedia.net/
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are capable of performing many of the functions of a traditional
advertising agency.
In the advertising world, there are three constituencies:
1 the advertisers
3 the media (e.g. TV).
This relationship worked well when TV ads were sold based on
simple TV metrics (mostly consumption‐based scenarios where
users passively consume content). The agencies managed the total
advertising budget on behalf of the client which could span to a
number of media (TV, billboards, etc). The spend was measurable
and accountable for the advertiser. This worked nicely and, more
importantly, had a clear role for the agency (a one‐stop shop that
can manage to deliver a quantifiable response to the campaign).
In the Web 2.0 world and Mobile Web 2.0 world, things change
because the advertiser need not go to the agency.
Many Web‐based social networks, including the ones listed above,
have advertising platforms and a sales force. Telecoms networks
will also develop these capabilities over time. More importantly,
these social networks control the data, interact with the users
directly and can provide quantifiable results to advertisers. In the
new world, the traditional agency neither controls the data nor
does it have a direct relationship with the users. For instance,
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networks such as FM Publishing164 are taking on the role of the
agency by interacting directly with advertisers, providing results‐
based advertising through their blog networks.
The traditional agency has no such advantage since they have no
network – and by extension no access to data and metrics.
Clients have a choice. They can just as easily go to companies like
FM Publishing or GLAM as they can go to a traditional agency for
their social media advertising. On the other side of the fence, the
media platforms (especially TV) are being impacted by the
interactivity and content creation. TV can manage some
interactivity (e.g. by SMS voting), but in a digital media landscape
the synergies between TV and Web could be much deeper (e.g.
the ability to have a ‘Wikipedia button’ on the remote control).
In a nutshell, the area of social media marketing is complex and
evolving. It is covered in greater detail in the book Social Media
Marketing165.
Open Mobile: the privacy perspective
The significance of privacy
We have discussed social media marketing from the perspectives
of Web, telecoms, media and social networks. Two key business
models have emerged: advertising and converged services need
164
http://www.federatedmedia.net/
165
http://socialmediamarketing.futuretext.com/
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data. The underlying data is the glue that binds different platforms
together. However, in the ultimate analysis, that data is owned by
the customer. Thus, data and privacy/trust are two sides of the
same coin. Advertisers need data to make their advertising more
personalised (and by extension, to claim more money from the
companies who use their advertising). But the acquisition of the
data requires the customer to often give up their privacy rights in
the interests of the advertiser. Similarly, relinquishing control of
the user’s data to service providers may allow them to create
better services.
Understandably, both the users and the regulators are concerned.
Most marketers make an effort to cater to the privacy concerns of
their customers and, with a few exceptions, most adhere to
statutory regulations. However, with the dominance of social
media and mobility, the industry as a whole is beginning to
encounter new issues and we believe that higher standards are
needed beyond the statutory minimum. Consequently, we
approach the topic of privacy below with this mindset of ‘beyond
the statutory minimum’.
166
http://en.wikipedia.org/wiki/Data_Protection_Act
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Although the Act does not mention privacy, in practice it provides
a way in which individuals can enforce the control of information
about themselves. Organisations in the UK are legally obliged to
comply with this Act, subject to some exemptions.
But both social networks and mobile bring new challenges as we
demonstrate below. For instance, mobile is a personal device.
Unlike a PC or a Web connection, it is not shared. Hence, we need
regulation to protect individuals, especially the more vulnerable
(e.g. children). Mobile providers and operators already adhere to
many existing rules and safeguards. For instance, they have
procedures to request customers' to volunteer personal data or
permit the delivery of advertising/services such as opt‐in and
double opt‐in (where a secondary confirmation is needed such as
an email).
So, we have to ask ourselves:
1 Do we need guidelines/higher standards beyond the
statutory measures?
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The need for higher standards beyond a statutory
minimum
We show below why privacy issues are a genuine concern and
why a higher standard is needed going forward. We believe that
engendering trust can also be genuinely beneficial to the
providers.
Brands drive technology advances – but not always to
the benefit of the customer
We have seen a lot of advances in mobile and Web technology in
recent years. However, most of the latest technology is driven by
brands. The interests of the brands are not necessarily aligned
with the interests of the customer. Hence, the notion that 'we
need brands and brands need us' has to be tempered with the
basic reality that the primary purpose of brands is to sell. As media
becomes rich and complex, brands seek to engage with us and to
measure that engagement for maximising their revenue. Hence, a
customer advocacy is needed to look after the interests of the
people. This relates especially to the privacy domain.
As we indicated before, data and privacy/trust are two sides of the
same coin.
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powerful and personalised. This benefits the advertiser, especially
in a converged media scenario where the same provider owns the
channels (TV, landline, mobile subscriptions, etc), but this could
lead to some questionable behaviour which is currently legal but
may soon be regulated. It could also lead to consumer backlash.
Consider the following scenario:
The question is: which data elements can be used to tailor this
advertising?
Consider the ‘rock group’ data element, which can be obtained
from an RSS feed from the blog. Now, it is easy to combine three
sets of data: the home address and the person’s name which the
cable company has, along with the RSS feed from their blog (which
ties to the person’s name), and the phone book/voter registration
(as a confirmation of the address).
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We could call this 'micropersuasion' and indeed it raises some
questions about the ethics of advertisements and engagement
(although none of this behaviour would be seen to be illegal).
It also raises a genuine spectre of consumer backlash (i.e. if a
person were to see a number of rock group adverts, they would
know that their TV is watching them and they might take action
and change channel providers).
Governments: often part of the problem
While advertisers will push the envelope when it comes to
deploying advertisements at the expense of privacy, in some
cases, governments have also followed suit. Governments are
supposed to be a part of the solution – but, sadly, in some cases
they are a part of the problem.
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Governments need to be involved in two ways. First, in the
creation of regulation that benefits consumers in addition to the
advertisers, especially in relation to new areas where regulation is
sparse and consumers can be potentially exploited. Second,
ensuring that the privacy rights of individuals are protected in the
light of ever‐increasing encroachments from brands and
advertisers.
At one level, we have laws such as the UK’s Data Protection Act.
However, at another level, governments can be a part of the
problem. An example is the proposed law on data sharing in the
UK.
Arguing that mass exchange of data can offer some benefits, the
UK government is proposing legislation167 that could achieve the
opposite outcome. As the Daily Telegraph newspaper reports: "
data held by the police, the NHS, schools, the Inland Revenue, local
councils and the DVLA could all end up in private hands, according
to Privacy International. At the same time, information gathered
by companies, including hotel registrations, bank details and
telecommunications data could be transferred to the Government
as part of the provisions of the Coroner's and Justice Bill, it is
claimed. The campaign group admits the "mass exchange of
personal information has the potential to deliver some benefit ..."
167
http://www.telegraph.co.uk/news/newstopics/politics/4339771/Threat‐to‐privacy‐
under‐data‐law‐campaigners‐warn.html
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The net impact of a lack of trust in the government is: customers
will trust no one! All this leads to a stalemate and a loss of trust.
Targeting minorities and ethnic groups
Yet another grey area is targeting minorities and ethnic groups.
Legally, there is no law that prevents the targeting of specific
ethnic groups by advertisers. In fact, it can be profitable to do so
as per the benefits from the ad network JumpTap, which
predicted that Hispanic‐centric campaigns168 would quadruple this
year, with revenue increasing at least 20% in the segment.
Again, this is not too difficult to do using current technology and
increasing convergence and data availability.
Where do we draw the line?
For many of us who travel to the US, we see drug companies
advertising medication on television. This is illegal in many
168
http://adage.com/digital/article?article_id=134036
169
http://news.bbc.co.uk/1/hi/health/7760413.stm
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Pushing the boundaries: consumer kids
Yet another area is protection of minors, especially in an era
dominated by mobile and social networking.
170
http://www.guardian.co.uk/media/2009/jan/26/marketing‐online‐children‐kids‐
underage‐regulation
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pictures of her sales missions and posting them back to Dubit,
where she is rewarded.
Impulse purchasing
As more and more mobile devices are able to purchase goods and
services, extending the above discussion, we enter into the realm
of the ethics of impulse purchasing. Impulse purchasing is not un‐
ethical in itself. Supermarkets for instance regularly encourage
impulse purchases though product placements.
However, with a mobile device, new problems could arise.
Consider the example of the phone 'reminding' you to buy a
related product. This would be based on 'opt‐in' so it's not spam.
So far, so good. At worst a minor irritation – at best, a useful
recommendation.
Now extend this further. Knowing the person, object they are
looking at (based on location, e.g. they are standing in front of a
car show room) and their credit history (available on the Web),
can we offer a one‐click loan to engage with the person and
encourage them to buy the car?
Legally and technologically it is not banned. However, morally and
ethically it is dubious (depending on whether the person is already
in debt – another data point that can be co‐related). Note that this
precise engagement and personalisation can be enabled by co‐
relating different datasets.
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Can advertising dictate content?
To what extent does advertising dictate content? It is an intriguing
question and most media channels will deny that their content is
influenced by advertising. However, there are indicators that this
may be the case based on the limited and advertising‐led range of
content. For instance, advertisers would favour entertainment‐led
content since it places the viewer in a more receptive mood to
buy, in contrast to the more serious documentary‐based content
(which does not).
Profiles: individual vs. anonymised
The question of profiles is also interesting and raises some
questions.
For instance, consider the abstract of the following patent filed by
Google (source: search engine journal)171:
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user, and can be derived from a variety of sources, including prior
search queries, prior search results, expressed interests,
demographic, geographic, psychographic, and activity
information.’
Such a profile would appear to be recording all our activities in
cyberspace and tying them individually to specific individuals (to
be used for the purposes of advertising). This practice does raise
privacy concerns. However, if the users were in control of all this
information collected about themselves, then the user would be
empowered and likely to enter into a trusted relationship. Google
recently implemented this feature by allowing behavioural
targeting of advertisements, but at the same time, allowing the
users to control the profile on which the advertisements were
based172.
On the other side are anonymised profiles which seek to
anonymise personal data and then create 'templates' of user
behaviour, which may be used to predict future behaviour based
on past behaviour. For instance, it may be used to identify in
advance who will churn from a social network. In this case, rather
than getting an individual profile, we get audience segments.
Audience segments are not tied to individuals (of course in a very
small segment, e.g. a segment of one, they could be).
172
http://www.nytimes.com/2009/03/11/technology/internet/11google.html?_r=1
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Consequently, the definition, meaning and usage of profiles is not
clear and more awareness, transparency and user education is
needed.
Our view is: behavioural profiling of advertisements is not wrong
in itself provided it is accompanied by transparency and user
empowerment.
Special considerations for mobile
Mobile operators generally have a good reputation for managing
data and preventing misuse from advertisers. Misleading
promotions, such as the Crazy Frog ringtone173, in the UK were not
created by telecom operators, but rather by mobile marketing
companies. In the case of the Crazy Frog ringtone, children had
been duped into signing up for expensive subscription services.
Over time, operators and the industry will face new challenges
and they will work with new forms of advertising as we have
indicated in the discussion above. Whatever the direction we
choose, we believe that mobile, due to its unique, personalised
nature, will have to go beyond opt‐in and may need higher
173
http://www.out‐law.com/page‐5862
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standards beyond statutory regulation based on moral and ethical
integrity with a view to protecting consumer interests.
Mobile as a tool for psychosocial development and
identity formation
The injecting of brand messages to personalised platforms like
mobile devices (and also social networks) is significant because
mobile impacts the psychosocial development of youth174. By
psychosocial development, we mean that the mobile device is
more than a communicative medium but is also a means of
shaping Identity for the youth as discussed in the MIT Press/Mc
Arthur foundation paper Mobile Identity: Youth, Identity, and
Mobile Communication Media by Gitte Stald175.
The value of the mobile depends on contextual uses and
experiences and this makes the mobile device a key social artefact
in the minds of the youth176. In contrast, the industry has
approached the idea of Mobile Youth in terms of brands,
marketing, engagement, etc, and not really in terms of the impact
of the phone on the creation of identity and the social
development of the youth.
174
http://en.wikipedia.org/wiki/Psychosocial_development
175
http://www.mitpressjournals.org/toc/dmal/‐/6?cookieSet=1
176
http://cenriqueortiz.com/pubs/themobilecontext/TheMobileContext‐CEnriqueOrtiz.pdf
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The above paper concludes:
‘In the context of this article, however, I have focused primarily on
the social meanings of the mobile. As we have seen, the mobile
supports and enhances the maintenance of social groups and the
feeling of belonging to a group. Young people live in a period of
time‐‐historically as well as in terms of age‐‐which is characterized
by a collectively and personally perceived sense of fragmentation
and uncertainty. Many social theorists have argued that
traditional resources for identity formation are no longer so easily
available, and that the realization of personal expectations for
"the good life" may seem increasingly difficult. Young people also
have to deal with the sometimes conflicting expectations of
parents, school, and friends. Social networks‐‐the strong ties as
well as the weak, ephemeral relations‐‐offer possibilities for
testing oneself in the light of shared values, norms and codes, for
negotiating collective and personal identity, and for establishing a
sense of belonging. The mobile is the glue that holds together
various nodes in these social networks: it serves as the
predominant personal tool for the coordination of everyday life,
for updating oneself on social relations, and for the collective
sharing of experiences. It is therefore the mediator of meanings
and emotions that may be extremely important in the ongoing
formation of young people's identities.
The need to learn how to manage and to develop personal identity
and the importance of social networks in this process are strongly
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facilitated by mobiles; and this makes it possible to talk about
"mobile identity". The constant negotiation of values and
representations and the need to identify with others result in a
fluidity of identity which goes beyond the ongoing process of
identity formation, to encompass the constant negotiation of
norms and values and the processes of reflection that are
characteristic of contemporary social life.
The constant availability and presence associated with the mobile
demonstrate how important it has become in all these arenas,
even to those who use it only moderately. The mobile enforces an
increasingly intense pace of communication and of intellectual and
emotional experience. It, therefore, becomes both the cause and
the potential solution to the frustrations of young people
regarding the potential management of everyday life. The mobile
is an important tool that allows one to be in control‐‐which is an
essential ability for adolescents in general‐‐but simultaneously it is
becoming more and more important to be able to control the
mobile.’
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Methods to empower the user: the future of
privacy
As we demonstrate in the above examples, many new factors will
come into play and industry, customers and the regulators will
face new challenges. We believe that ultimately, the solution lies
in empowering the user. In this section, we discuss the methods
by which we could do so. As we have discussed before,
enlightened and empowered users will ultimately trust the
providers and will be loyal customers (hence, good for business).
Full disclosure
As we have discussed before, disclosure and transparency will add
to customer loyalty. Transparency is a complex issue, especially as
technology gets more complex. However, certainly an attempt
needs to be made to educate the user to manage their data and
the implications of revealing their data to providers.
Vendor relationship management
There are emerging initiatives that empower the customer. One
such initiative is vendor relationship management (VRM) at
Harvard Law School177. According to the website:
177
http://cyber.law.harvard.edu/projectvrm/Main_Page
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customers with tools for engaging with vendors in ways that work
for both parties.
CRM systems for the duration have borne the full burden of
relating with customers. VRM will provide customers with the
means to bear some of that weight, and to help make markets
work for both vendors and customers — in ways that don't require
the former to "lock in" the latter.
For VRM to work, vendors must have reason to value it, and
customers must have reasons to invest the necessary time, effort
and attention to making it work. Providing those reasons to both
sides is the primary challenge for VRM.
VRM Principles include:
● Relationships are voluntary.
● Customers are born free and independent of vendors.
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● Customers can assert their own terms of engagement
and service.
We expect that there will be other initiatives that will arise similar
to VRM with the goal of empowering the end user.
Anonymity
Increasing we will see many mechanisms that anonymise data at
the source with the user’s permission. User‐managed anonymity
could provide safety and a business model based on trust.
Web 2.0 has taught us the concept of harnessing collective
intelligence. Companies such as Google (with Page Rank), Amazon
(with Amazon reviews) and others have benefited from the idea of
harnessing collective intelligence. So, the business model for the
provider in harnessing collective intelligence is proven. Creators of
data own the copyright to the individual data elements (e.g.
reviews of books), but the providers own the value gained from
harnessing that granular data. Providers of services would
postulate that the granular data elements don't hold commercial
value – it is only the aggregated elements (harnessing collective
intelligence) that have value.
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Or does it?
In other words, is there any value in the granular data as opposed
to the aggregated data?
Let us put this into perspective.
The question arises: is there a model which would enable the
providers and customers to both benefit if data is owned and
managed by the customers themselves?
To explain this issue, we have to understand k‐anonymity, a model
for protecting privacy explained in this section. The problem and
solution of k‐anonymity relates to re‐identifying individuals from
multiple datasets even if the data is (supposedly) anonymised. As
we become creators of data with Web 2.0 and especially Mobile
Web 2.0, the problem becomes significant because data is
collected by providers at a phenomenal rate. It is then possible to
potentially re‐identify people from datasets.
This discussion explores the possibility of making the problem of
anonymisation into a business opportunity. Essentially, if data is
anonymised at the source and is under the control of the
customer, the customer will trust the provider who anonymises
their data. In return for that trust, the customer could volunteer
to reveal attributes about themselves which would enable the
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provider to create personalised advertising campaigns and also to
be used in segmentation. This benefits both the providers
(protection from legal action, personalised advertising,
segmentation) and also the customers (anonymised data,
personalised services, etc).
To elaborate this idea further, we consider the example of k‐
anonymity. The concept of k‐anonymity is summarised in a paper
by Latanya Sweeney at the School of Computer Science, Carnegie
Mellon University in Pittsburgh, Pennsylvania. 178
‘Consider a data holder, such as a hospital or a bank, that has a
privately held collection of person‐specific, field structured data.
Suppose the data holder wants to share a version of the data with
researchers. How can a data holder release a version of its private
data with scientific guarantees that the individuals who are the
subjects of the data cannot be re‐identified while the data remain
practically useful? The solution provided in this paper includes a
formal protection model named k‐anonymity and a set of
accompanying policies for deployment. A release provides k‐
anonymity protection if the information for each person contained
in the release cannot be distinguished from at least k‐1 individuals
whose information also appears in the release. This paper also
examines re‐identification attacks that can be realized on releases
that adhere to k‐anonymity unless accompanying policies are
respected. The k‐anonymity protection model is important because
178
Full paper : http://privacy.cs.cmu.edu/people/sweeney/kanonymity.pdf
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it forms the basis on which the real‐world systems known as
Datafly, μ‐Argus and k‐Similar provide guarantees of privacy
protection.
The basic problem applies to all data. As we become creators of
data with Web 2.0 and especially Mobile Web 2.0, the
anonymising of data becomes a problem. Historically, data has
been anonymised by removing explicit identifiers such as name,
address, telephone number, etc. Such data looks anonymised but
it may not be when co‐related with another dataset which may
help to uniquely identify people.
The paper from Latanya Sweeney uses the example of the
Massachusetts Group Insurance Commission (GIC), which is
responsible for purchasing health insurance for state employees.
Because the data was believed to be anonymous, GIC gave a copy
of the data to researchers and sold a copy to industry. It was then
possible to co‐relate it with normal voter registration. This
information can be linked using ZIP code, birth date and gender to
the medical information, thereby linking diagnosis, procedures,
and medications to particularly named individuals. William Weld
was governor of Massachusetts at that time and his medical
records were in the GIC data. Governor Weld lived in Cambridge,
Massachusetts. According to the Cambridge Voter list, six people
had his particular birth date; only three of them were men; and,
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he was the only one in his 5‐digit ZIP code. Thus, a supposedly
anonymised dataset was used to identify a single individual!
1 be controlled by the user (i.e. the user sets the
policies)
2 manage all data – not just the location.
The approach potentially provides a compelling argument for both
the provider and the customer. It is different from current
advertising and segmentation approaches that are implemented
on a best case basis (i.e. without knowing the exact data from the
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Revocation
Conventional privacy models lean towards a closed, digital
fortress. These can take many forms – LinkedIn introductions,
signed applications, third‐party trust endorsers, etc. In turn,
conventional revocation models are provider‐driven (e.g.
certificate removal of malicious applications). The current
methods don’t fit the current open Web ecosystem and, more
importantly, a future Web‐based ecosystem where there is a
tendency among youth to volunteer personal information.
It could be possible to consider a user‐driven revocation model.
Social networks are increasingly going to be the primary way many
of us interface with the Web. Unlike the open Web, the social
network has some form of structure (profiles, messages, etc). In
this scenario (i.e. within the social Web), privacy and revocation
could go side‐by‐side, leading to a new privacy model. In other
words, the user will be open to contact but, in return, she will
choose to exercise the right to terminate that contact if she needs
to. This model is based on ‘innocent until proven guilty’ as
opposed to the existing digital fortress ecosystem (guilty until
proven innocent).
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Admittedly, the revocation engine may not work in the context of
the whole Web but it may well work in the context of a social
network. Currently, the spam features of Gmail work in a similar
way (except Google does the revocation implicitly on our behalf).
The model is a switch on existing privacy models. (i.e. strengthen
the revocation – not the moat bridge; let people cross freely at the
moat but always have the revocation engine as a defence
mechanism).
Conclusions: data and privacy
Data and privacy go together. For marketers, the temptation to
treat social media as a 'channel' is strong along with the desire to
retrofit the new world of communication to the familiar world of
brands, traffic, audiences, growth, etc. However, this is not always
in the consumer's interest.
We believe that social networks and mobile, due to their unique,
personalised nature will have to go beyond opt‐in and may need
higher standards beyond statutory regulation based on moral and
ethical integrity with a view to protect consumer interests.
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Data and privacy form the bedrock of this multi‐way conversation
between the marketer and the participants. Ultimately, we see
the participants and the marketer entering into a trusted
relationship based on transparency where the participants share
personal data – trusting the marketer with their data ‐‐ in return
for better and personalised services.
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PART THREE
The disruptive impact of Open Mobile
Converged services spanning the Web, the
mobile device and the network
An introduction to convergence
What is digital convergence?
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3 Fixed to Mobile convergence;
4 Devices being able to speak to each other and share
intelligence leading to a new service also referred to
as home networks.
Besides these definitions, there is also the point that “If all you
have is a hammer, everything looks like a nail.” – as Mike Langberg
so aptly put it in his article soon after CES180. By that we mean:
your tools (focus) determine your viewpoint of the world. The
‘nail’ in this case, is ‘digital convergence’. The ‘hammer’ is ‘the
viewpoint’ (strengths) from which each player is approaching
digital convergence.
Let us apply Langberg's logic to some industry players.
180
http://www.mercurynews.com/mld/mercurynews/news/13567880.htm
181
http://www.intel.com/products/viiv/index.htm
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Yahoo and Google see convergence as an online services problem.
The solution centers on the Web browser, a common element in
all devices.
No wonder there is confusion!
It’s important to note that the only things common to all these
definitions are:
1 digitisation and
2 communication.
In other words, information must be digitised and it must flow
freely. This leads to new services, which are greater than the sum
of their parts, i.e. greater than what the devices could provide on
their own.
Digital convergence: the definitions
Let’s first discuss the definitions above in a little more detail.
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effortlessly. They start to get mixed up and can be used and re‐
used separately or together. The mixing of audio, video, and data
is called multimedia. It sounds complicated, but it's nothing more
than co‐mingled bits.”
Another way to put it is that, to a computer, there is no difference
between a symphony, a voice call, a book, a song, a TV
programme and a shopping list ‐ as long as they are all digitised.
The factors driving digital convergence/co‐mingled bits include the
rapid digitisation of content, greater bandwidth, increased
processing power and the Internet. Digital convergence brings
four (previously) distinct industry sectors into
collaboration/competition with each other. Thus, we have
media/entertainment, PC/computing, consumer electronics, and
telecommunications industries all interacting more closely with
each other than before. This version of digital convergence is
happening all around us.
Triple play and quadruple play are a part of this scenario. Triple
play involves voice, broadband and mobile services. Quadruple
play adds digital TV to that mix. These are different from the
origins of the cable industry dual play (one build to income
streams). It now refers to one infrastructure with many services.
Whatever name you call it, here are co‐mingled bits in action! If
everything has become digital, then the boundaries between the
providers fade away.
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Device convergence: This addresses the age‐old question: Will we
carry one general purpose device or will we carry many specialised
devices? Boundaries between devices are fading fast and devices
are now capable of performing more than one function. It is
unclear if customers would really want a single device. Most
people have a view on this, and so do the device manufacturers.
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Services
The significance of mobile services
There is a fundamental change in the mobile data industry at the
moment. Even in a recession, the market for smartphones is
expanding182 in contrast to sales of feature phones, which
continue to fall.
Until recently, devices were very simple and capable of voice and
SMS. In this scenario: supply chain efficiencies, lowest common
denominator/mass market devices prevailed. Differentiation was
achieved through price plans, device aesthetics etc. With the
increasing proliferation of smartphones, devices are becoming
more complex and sophisticated. Ironically, at one level, they are
being commoditised, i.e. the megapixels are no longer a
differentiator since most devices are roughly similar. Nor is the
network itself a differentiator since we expect good coverage at all
places (within reason). Also, with the uptake of open source and
182
http://www.mobilemarketingmagazine.co.uk/2009/03/mobile‐sales‐fall‐while‐
smartphone‐sales‐rise‐says‐informa.html
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In addition, you cannot charge for IP traffic although many
operators (secretly) wish that they could. This does not work well
because it is not possible to guarantee the coverage the user has
paid for. Consider the scenario where a customer pays more for
the ‘high value IP session’. She then walks under a bridge, loses
connection and sues the operator. If we are worried about 'impact
on helpdesk', then consider the avalanche of complaints that
might result if you try to get away with differential IP charging on
mobile devices.
Thus, the result is:
When it comes to upgrades, today’s customers no longer want to
upgrade for network connectivity or more megapixels etc. They
want a step change. They want differentiation that they can
understand and are already familiar with. This means new
services. Value created at the service layer (with deep integration
to the network and the device) is valued by the customer.
There are of course other ways to create value within the supply
chain – but the winners and losers will be decided at the customer
facing end.
We define services as a mechanism from which the user expects
an ongoing application, perhaps on a subscription basis. The
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business model for services is well known – for instance the
‘fremium’ model183 where you provide a service for free but
charge a premium for extra features. To use a common example –
a dating site would charge no money to set up a profile but you
would have to pay to see who viewed your profile.
With mobile services, we have a more complex equation.
The traditional way to classify mobile services is a classic Telco‐
only view. The strategy: look at the capabilities of a network, add
a service on top of it and pray that the services created from
network capabilities(sold as services) them will be useful to the
customers. (It's a risky business if we recall person‐to‐person
video calling, which never took off!)
So, how do we classify mobile services? And which services would
be useful to the customer?
Classification of mobile services
Some initial thoughts:
183
http://en.wikipedia.org/wiki/Freemium_business_model
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Against this backdrop, we can say that there are four top‐level
classifications:
1 The Web dominates mobile (Web took off first).
Leaving aside the penguins and focusing on humanity…
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Here is a further breakdown:
Web dominates Mobile (e.g. US and Europe). In this scenario, we
have:
● Long Tail applications (app stores)
● access network services (e.g. HSDPA)
No widespread Web yet across the market but mobile is
emerging In these emerging markets examples include: babajob184
(India) and m‐commerce in Africa. In the future, a significant
amount of innovation will be driven by emerging markets to
184
http://www.babajob.com
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So, let us now focus on the markets where the Web dominates
mobile (e.g. European and North American markets and many
Asian markets which also depend on broadband penetration).
Not all services are created equal
If we now focus on the markets where the Web dominates, then
there are two possibilities: The service can originate from the Web
or the service can originate from the mobile ecosystem.
At the Nokia booth for the Mobile World Congress 2009, there
was a new service called the Green Explorer185. The service was
pitched at travellers concerned with environmental issues such as
managing their carbon footprint. It was expected that the traveller
would switch to the service. The idea is good but the practical
realities are different. Someone who spends a lot of time in
airport lounges and airlines normally uses sites like Expedia or
Ebookers. The switching cost from such a service (credit cards,
frequent flyer details etc) is simply too high to adopt a new service
SIMPLY because it is mobile.
At the same show, Nokia announced a device (Nokia N97) with
deep integration to Skype186.
185
http://greenexplorer.nokia.com/
186
http://about.skype.com/2009/02/skype_and_nokia_partner_to_int.html
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There is a very strong initiative for people to sign up to Skype on
mobile devices because they are already using it on the Web. All
their contacts are already there. The switching costs are a lot
lower. This tells us that many services that originate from the Web
and are made significantly better on mobile devices have an
advantage (in comparison to services that originate only on the
mobile device but offer no significant change to the user).
Which service would be valuable coming from the device
standpoint?
Let us now consider the converse situation, i.e. which service
would be valuable coming from the device standpoint?
To do this, you have to create a truly unique mobile experience.
Here, the best example of such a service is again Ovi from
Nokia187. Unlike the Green Explorer it comes from a more
conceptual perspective. Nokia is positioning the Ovi platform as
the first truly mobile 'channel' which just happens to have an app
store188. For instance, Nokia is working with Tim Kring the
producer of the TV show Heroes and creating unique, immersive
narrative content oriented for mobile, which will be distributed via
the Ovi store189. This will be powered by technologies like Point &
Find190 which allows users to point their phone at physical objects,
187
http://www.ovi.com/services/
188
http://www.telecomseurope.net/article.php?id_article=8315
189
http://www.marketingmagazine.co.uk/news/895395/Nokia‐teams‐Heroes‐Tim‐Kring‐
Ovi‐store/
190
http://reviews.cnet.com/8301‐12261_7‐10210256‐51.html
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Again, this is a service layer innovation and could see users
adopting this channel. If there is one thing the iPhone has taught
us, it is that customers value a great experience and will pay a
premium for it. This is happening in other areas (not just mobile).
An example is the revival of 3D movies191.
The future of search
Apart from converged services which will benefit from the Open
Mobile ecosystem, mobile search will also benefit from Open
Mobile. We discuss the future of search in detail since it brings
together many of the ideas we have discussed throughout this
book and the principles of Open Mobile impact search in many
different ways.
Search
It may seems odd to talk of search as the ‘future’ of mobile –
particularly since search already exists on mobile devices. We
include search in this section because search on mobile devices is
still nascent and its full impact will be evident in the near future as
devices and the mobile ecosystem continue to open up.
191
http://news.bbc.co.uk/1/hi/entertainment/7976385.stm
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As users, we are all familiar with search. It is often the starting
point for our interaction on the Web. In general, the goal of any
search engine is to organise the vast array of information that is
available. This information is largely unstructured and
unreferenced, and fetching the correct information in response to
the query is the end goal of the search engine. In its simplest form,
we enter a search term and a search engine returns a response to
our query. Behind this simplicity lies a lot of complex processing.
For instance, Google is driven by the PageRank algorithm192. The
PageRank algorithm depends on the links to a page (inbound
links). Thus, the algorithm is a measure of the reputation of the
content (the more people link to a page, the more they value it
and hence the more it could be relevant for future searches). A
page with a high page rank appears at the top of the search
results. However, the dominance of PageRank and other
algorithms does not imply that they will be applicable in all
scenarios. For instance, within an enterprise, if we were to grade
content, then the mere existence of inbound links may not be
enough since there may not be too many people inside the
company cross linking to their own documents. Thus, PageRank –
however powerful – may not apply ‘as is’ within an enterprise.
Similarly, different considerations may apply to multimedia
content and also to mobile search.
192
http://en.wikipedia.org/wiki/PageRank
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Is mobile search the same as ‘Search on Mobile’ (i.e. accessing a
Web search engine from a mobile device)? At a minimum, it can
be – and for some people, that’s all it will be – which is fine of
course. However, mobile search has the potential to play a much
greater role, reflecting the unique nature of the mobile device. For
starters, the results returned by a Web search may not be in the
optimal format for the customer on a mobile device. In addition,
mobile search could consider the user’s context. Thus, mobile
search cannot be isolated from the Web. We take the view that
market dynamics on the Web (such as semantic search and
recommendation engines) are also applicable to mobile devices.
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An overview of search technology
Search has three main elements/components:
● Crawl: Traverse all the Web pages and corresponding
textual (and increasingly audio and video) content on
the Web and attempt to structure the information
using some indexing parameters like keywords, file‐
types etc.
Search engines differ in their approach to the above functions;
especially in how they perform indexing and in their use of
automated rules for run‐time query processing. For instance,
Google uses page ranks, where the importance of the source is
determined by the number of URL references to it. Yahoo achieves
the same result through tags and prompts additional user input
for context. In almost all cases, search improves with previous
knowledge of what the user has searched for.
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However, search is still in its infancy because it lacks the ability to
accurately determine the context of intent. This causes two
fundamental issues today:
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content. For instance, for a sunset on a beach in Goa,
you could tag ‘sunset’, ‘beach’, ‘holiday’ or ‘Goa’.
User searches typically use one to three keywords where the user
intent is either non‐specific in nature or consists of commonly
used terms, popular goods, brands or items of information. Often,
search is used for discovery where the users don’t know exactly
what they are looking for. In that case, the user is not seeking an
accurate response but rather a recommendation from the search
engine. Some search providers like Google use rankings by Web
links (the more links that point to the website the higher the
importance or relevance attached) or by ‘inferred intent’ from
retail consumer purchase habits (history).
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Currently the majority (~90%) of users do not click past the first
page of presented results.
Hence, search in the context of Mobile Web 2.0 will need to
evolve further. Users ‘on the move’ will want to type the fewest
possible keywords and will want the search results to be
individualised and localised to their geographic frame of
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reference. Search indexes will need to incorporate the time, event
and, in particular, location context, as well as to reference rich
media content input (which will be audio and visual in nature).
Market drivers for search
● There will be too much digital information. Content
is being created, stored and consumed at a
phenomenal pace. Every three years the data we
produce doubles. To gain insights from this
information, we need better search including better
mobile search.
● More information is being indexed but information
is also protected. On one hand, more information is
being indexed. On the other hand, some information
is being hidden to meet privacy and security
concerns.
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● A drive for semantics: Independent of the uptake of
the semantic Web, there is a greater emphasis from
all providers to add some form of semantics to data.
This makes the data discoverable. The mobile device
is unique in that it could automatically add semantic
data to content captured on the phone.
Business drivers for search and mobile search
In addition to the above market indicators, the following business
indicators are also driving search:
193
http://opengardensblog.futuretext.com/archives/2009/01/ftc_complaint_a.html
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● Privacy backlash affecting personalisation: Although
personalisation can create better services, there is
increasing concern as more data becomes available
in the public domain. A privacy backlash could affect
services.
● Advertising leaning away from mass media: Overall,
advertising is shifting away from mass advertising to
a more targeted, engaged format. This benefits
search – both Web and mobile – at the expense of
traditional media (TV, newspapers etc).
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● Openness: In general, openness drives better search
since more content is accessible and that content has
better links (i.e. is referenced better).
● Deeper integration between devices, networks and
services: This is a trend we have discussed elsewhere
in this book.
● The rise of app stores and Long Tail content: An
aspect discussed in greater detail below.
● Real‐time search: Search for content which is not yet
indexed, i.e. searching in real time.
194
www.shazam.com
195
www.tineye.com
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Technology drivers for search and mobile search
The following key indicators are driving changes.
● Technology that ties the transactional intent to the
Long Tail along with the context: Ideally, search
within the context of mobile will need to cater to the
mobile user on a one‐to‐one basis, be personalised
and be tuned to the user’s lifestyle. Each search will
be ‘unique’ in the context of time, event and location
within the Long Tail of the search curve. The
transactional and monetisation value of each query
in the Long Tail will be highly valuable because the
‘intent’ can be converted into call to action driven by
time, event and location. For instance, if you search
within the immediate vicinity of a restaurant, your
search results could be presented to you filtered by
your location. You could even ‘impulse purchase’ an
item you needed by redeeming a mobile coupon.
Mobile has the capability of adding location, time
and attention without the user having to input any
data. Location information from the device location,
time from the time stamp and attention from the
amount of time a user has spent in a location (e.g.
within a good restaurant); all serve to enhance the
integrity and usefulness of the search.
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Social factors that affect search and mobile search
A number of social factors are affecting Mobile search.
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● The ability to compute trust and reputation through
online mechanisms: Search is tied to reputation and
trust (since it returns content with the highest
reputation). As information becomes increasingly
available online, it is possible to attach trust and
reputation to content. (PageRank is a measure of
trust, for example).
196
www.twitter.com
197
http://en.wikipedia.org/wiki/Crowdsourcing
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Search business models
In this section we discuss the factors affecting existing business
models and the emergence of new business models.
Overall, search business models are based on two key principles:
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valuations are based on the concept of exploiting the
user intent on an individual basis by presenting paid
for marketing banners/adverts/links which are
strategically placed on the returned searches.
Advertising
The advertising business model remains central to search. All the
factors listed in this book directly affect advertising and its
evolution. So, we will not repeat them in this section. However, to
emphasise some points:
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3 We are likely to see new players take up mobile
advertising especially in more richer platforms like
the iPhone;
5 We are seeing the first instance of pay‐ for‐search by
Yahoo Boss200.
Advertising is the main source of revenue. The majority of revenue
comes from portal and search, but the majority of time is spent on
communication and entertainment applications, as we can see
from the figure below.
199
www.admob.com
200
http://startupmeme.com/yahoo‐implements‐pay‐as‐you‐use‐model‐for‐search‐boss/
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Recommendation engines
201
http://en.wikipedia.org/wiki/Recommendation_system
202
http://hyveup.blogspot.com/2008/10/3‐different‐approaches‐to‐automated.html
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203
http://www.pandora.com/corporate/
204
http://corp.strands.com/
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Another way to look at recommendation engines is Alex Iskold’s
outline of the four main approaches to recommendations206:
3 Item recommendation – recommend things based on
the item itself.
4 A combination of the above three approaches.
Both Amazon and Google are extensive users of recommendation
engines. For instance PageRank is based on social
recommendations, i.e. who links to a Web page. Recommender
systems are especially relevant to mobile devices since they
deliver exactly what the user wants based on preferences (either
their own or those which their provider has identified). In the
205
http://www.readwriteweb.com/archives/recommender_systems.php
206
http://www.readwriteweb.com/archives/recommendation_engines.php
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Discovery
The discovery model tends to ‘searchless’ search and reverts the
concept of search to an ‘agent’ which fetches information based
on a set of parameters. In addition to notification, discovery could
have the following features: additional delivery mechanisms (e.g.
Twitter alerts), filter on content source (e.g. selecting content
sources, personalisation and prioritisation of results,
summarisation of results), negotiation and trade (e.g. eBay),
follow‐up action on behalf of the creator based on rules, voice
activation and dynamic rules engine (powered by
recommendations including past interactions and social
recommendations etc).
Context and its relation to mobile search
We have seen before that context is vital to search in general
since in an ideal world the context can be tied to the user input
and correlated to the semantic data to give accurate results.
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The big picture of the elements of context can be depicted as
below.
The mobile handset can be viewed as a social artefact. An artefact
(in archaeological terms) is “any object made or modified by a
human culture, and later recovered by an archaeological
208
http://weblog.cenriqueortiz.com/mobile‐context/
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endeavour”. 209 By this we mean mobile is an object that is not
moulded by human beings in the past – but rather is evolving in
the present time through an interplay between humans and
technology. The evolution of the handset has always been
governed by social factors, and companies like Nokia have always
understood this well by appealing to fashion, anthropological and
social trends.
Hence, social software has an important role to play in the
evolution of the mobile handset. The term ‘social software’, when
applied to the mobile handset, enables us to find, communicate,
connect, share, learn about nearby places and consume
information – all while ‘on the go’. The social role of a mobile
device implies the need to deliver a great user experience. The
mobile user experience is a trade‐off between complexity and
simplicity. On one hand, the device becomes more complex in
functionality. On the other hand, users require simplicity. Mobile
user experience leverages the mobile context. The user’s mobile
context can be defined as the set of and the intersection between
facts, events, circumstances, and information that surrounds the
(mobile) user at a given point in time.
209
http://en.wikipedia.org/wiki/Artifact
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The elements of the mobile context include:
● point in time
● personal context (user preferences, calm behaviour)
● processing
● social context
This is represented by sets and their intersections (relationships).
The social context consists of the person’s social circle or context,
and related attributes and actions. The elements of the social
context include:
● friends and family — the augmented or live address
book
● relationship distance or degrees of separation
● social information such as events (calendar, location,
other)
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● inbound/outbound social media channels
This is represented by a social graph.
Leveraging the mobile context has a positive effect on the mobile
user experience.
The benefits of the mobile context in the user experience include:
● informative services
● timely services
● accurate information (accuracy)
● useful information (relevant)
● connection (to friends and family, and other)
● dynamic interaction (always changing)
● adaptive interaction (to current circumstances)
Emerging developments in Web and mobile search
In this section, we combine various developments that are
impacting Web and mobile search.
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Mobile input and output strategies
Vertical search
Vertical search engines work by accessing content within a specific
domain. This could include search engines like Google Scholar210
and related search engines which are specialised for specific
content types.
Portal search
Portals need some form of walled garden strategy to succeed. We
expect that on‐portal search will decline. Search off‐portal will
ALSO decline since it makes sense only in the context of on‐portal.
We expect that entirely new options like app stores will proliferate
instead of portals.
Local search
Localised search is the search equivalent of the Yellow Pages
directory and newspaper classifieds. Here the intent mapped onto
relevance of local results is highly valuable in conversion rates of
consumption. Yellow pages providers, Google Local, and local
210
www.scholar.google.com
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newspaper owners provide localised results using postcodes filters
and other filters to attain localised and proximity‐based relevance.
Social search
Semantic search
We have previously indicated the importance of semantic search.
As more data becomes rich in semantics and more queries have
context tied to them (especially queries from mobile devices),
then the results will become richer. Yahoo already has plans to
search for semantic data through microformats such as hReview,
FOAF and geoRSS211. Google also appears to have similar plans.
Once data has a semantic element we could return results for
queries such as ‘Who is Bill Clinton’s wife?’, a query that needs
semantic data to be fulfilled.
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Build your own search engine
Many search engines are now being API enabled – e.g. Google
custom search engine. This means developers can build their own
search engines and can also mashup their search engines with
other feeds (e.g. Twitter).
Reverse search
Reverse search algorithms ‘reverse search’ based on content. For
example Shazam finds the title based on the music and TinEye212
reverse searches the Web for images.
Multimedia search engines
On‐device search
On‐device search is a new class of search engines. As the name
suggests, they search for content on a device. For instance, Nokia
212
http://tineye.com/
213
http://www.blinkx.com/
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has included Mobile Search On Device214 which gives users the
capability to search for data on the device itself (e.g. emails, text
messages, content etc). We expect to see other examples of this
trend as more devices develop more storage capability and
capture more content.
P2P search
Cloud search
217
Cloud computing is a paradigm in which information is
permanently stored in servers on the Internet and cached
temporarily on clients that include desktops, entertainment
centres, table computers, notebooks, wall computers, handhelds,
214
http://www.accuracast.com/search‐daily‐news/mobile‐7471/nokia‐includes‐mobile‐
search‐on‐device/
215
http://mymobilesite.net/
216
http://www.research.att.com/~rjana/Takeshi_Kato.pdf
217
IEEE Computer Society
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etc. Searching for content in the cloud is an important element of
future search evolution (e.g. memopal cloud search218).
Perspective‐based search
Human‐powered search
Swarm intelligence search
Swarm search engines mimic the self‐organising biological search,
such as that found in ant colony optimisation, particle swarm
optimisation etc. Swarm‐based algorithms use agents to interact
with their local environment with the goal of finding a wider
logical pattern220.
Visual search: Nokia Point & Find
Nokia Point & Find is a new service from Nokia221. The user points
the camera of a Mobile phone at a physical object and is then
218
www.memopal.com
219
http://www.mahalo.com/Mahalo_FAQ
220
http://www.cs.fit.edu/~sstewart/research/Swarm/Implementing%20a%20Swarm‐
based%20Search%20Engine.doc
221
http://www.msearchgroove.com/2008/12/01/nokia‐gears‐up‐to‐launch‐mobile‐search‐
service‐point‐what‐we‐see‐is‐what‐we‐get/
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The mobile address book
For mobile search, the mobile address book could be a starting
point for not only people search (names in the address book), but
also for services search (pizza, taxi etc which could be among the
address book entries). Vodafone 360 is an example of a mobile
address book managed by the operator.
Context‐aware enablers (RFID, sensors, location‐based systems)
and platforms
222
http://en.wikipedia.org/wiki/Augmented_reality
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Mobile Augmented Reality (or ‘Mobile AR’) is a combination of AR
and mobile computing technology on mobile phones. Mobile
phone applications can use both fiduciary marker and markerless
video tracking for image registration and insertion of 3D or 2D
virtual objects into a camera frame. Phone online connection in
concert with a GPS unit, accelerometer and/or compass could also
be used in combination with the camera for image registration.
These ideas come together in the Internet of Things discussion
below.
Real‐time search
The increase in the usage of microblogging social sites such as
Twitter is giving rise to the real‐time Web223. Search engines like
Google are good at indexing the historical Web. They are not
geared to linking real‐time events like Twitter feeds. However, an
opportunity exists to search or ‘mine’ this repository of real‐time
information. Currently, ‘alerts’ perform this function (similar to
Google alerts we can have Twitter alerts for a given keyword).
Twitter is also ideally placed to be mashed up with other feeds
including news feeds and location feeds. For instance: Swedish
search engine Twingly has a federated microblogging search and
aggregation tool covering Twitter, Jaiku, Identi.ca, Bleeper.de,
Bloggy.se and Pownce. TweetNews takes stories showing up on
223
http://www.readwriteweb.com/archives/sorry_google_you_missed_the_real_time_
web.php
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Yahoo News and ranks them based on how much Twitter activity
they are receiving224.
Social search and real‐time search could have interesting synergies
with conventional search.
Consider these three starting points for search:
1 Google (historical content)
2 Twitter (real‐time)
3 Facebook (social).
Conclusions: search, mobile search and context
We have covered search and mobile search extensively. In keeping
our holistic perspective, we believe that the search developments
on the Web will affect mobile. In turn, mobile devices will provide
deeper context to search itself. The capture and leverage of
context through mobile devices creates a virtuous cycle which
benefits search and new services.
224
http://searchengineland.com/google‐yahoo‐twitter‐search‐16193
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Cloud computing
A brief overview of cloud computing
According to the IEEE Computer Society,225 cloud computing is "a
paradigm in which information is permanently stored in servers on
the Internet and cached temporarily on clients that include
desktops, entertainment centers, table computers, notebooks,
wall computers, handhelds, etc."
Note that both software and hardware are provided as a service.
Cloud computing is deemed to be technology agnostic and with
the data, hardware capability and software services all being
stored ‘in the cloud’, the key emphasis turns to the ‘service‐level
agreement’ that the provider can offer to the customer.
Customers can avoid capital expenditure by renting usage from
the third‐party provider.
There are three facets to the Web:
2 as an Internet of content and
3 as an Internet of services.
So far, the Web has largely been about 1 and 2. Now we are
talking about an Internet of services 3.
225
http://en.wikipedia.org/wiki/IEEE_Computer_Society
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In doing so:
● The Internet of services spans multiple devices.
● The Internet of services changes the emphasis to the
service and the service level.
● The Internet of services will mean that process‐level
interoperability will not be achieved, e.g. Amazon's
cloud services being able to invoke Google's cloud
services. So, the emphasis of open will shift to data
portability.
The impact of cloud computing
Cloud computing is disruptive and significant for a number of
reasons:
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3 It could unify the Web and the Mobile Web: cloud
computing (along with social networks) has the
potential to unify the Web and the Mobile Web.
4 It raises legal issues about holding data in the cloud,
which are still being discussed and formalised.
http://en.wikipedia.org/wiki/Chromium_(software)
227
http://en.wikipedia.org/wiki/Software_plus_services
228
http://opengardensblog.futuretext.com/archives/2008/10/scws_sim_as_the.html
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Internet of Things
An overview of the Internet of Things
Web 2.0 taught us about new possibilities when people became
creators of data. If we extend that idea to devices, we get the
foundations of the Internet of Things, a concept the European
Union calls ‘Web 3.0’. Essentially, we will be able to create new
services when devices become creators of content. The
management or harnessing that intelligence derived from devices
could lead to many new services and possibilities. RFID (Radio
Frequency Identification) is one of the main technologies driving
the Internet of Things.
The idea itself is not new. In the dotcom era, Sun Microsystems
tried the same idea with concepts like Jini229 (a network
architecture for the construction of distributed systems in the
form of modular co‐operating services). Intelligent devices are
significant if we consider the idea of Web 2.0. Web 2.0 applies
Metcalfe's Law to connections between people. The Internet of
Things takes Metcalfe's Law to connections between devices. By
way of background, this law230 states that the value of a
telecommunications network is proportional to the square of the
number of connected users of the system (n2). In both these
cases, the entities being connected are creators of data.
229
http://en.wikipedia.org/wiki/Jini
230
http://en.wikipedia.org/wiki/Metcalfe%27s_law
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There are other factors that are driving the uptake of the Internet
of Things/intelligent devices: security, greater bandwidth,
increased international travel and trade, the need for greater
security and cloud computing.
For simplicity, let us treat the Internet of Things like any RFID‐
enabled object. There are four possibilities for drivers for the
Internet of Things:
1 vertical industries (e.g. supply chain)
2 public transportation (e.g. London Underground)
3 mobile phones
4 mass‐scale efforts from a government or a body (like
the EU) to actively promote RFID and similar
technologies
231
http://en.wikipedia.org/wiki/Electronic_Product_Code
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At the moment, these techniques are not compatible. So, for the
moment, RFID (passive tags) and hence Internet of Things
initiatives are being driven by specific industry verticals. At the
moment, there are pockets of RFID implementations in supply
chain management and in transportation. So, we can say that the
ubiquitous vision of the Internet of Things does not yet exist.
However, the recession presents an opportunity for forward‐
232
http://en.wikipedia.org/wiki/RFID
233
http://en.wikipedia.org/wiki/Near_Field_Communication
234
http://en.wikipedia.org/wiki/Subscriber_Identity_Module
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thinking governing bodies to invest in infrastructure that can truly
create a viable and vibrant ecosystem that benefits both citizens
and businesses.
The Internet of Things as a platform
As you would have guessed by now, we believe that, like many
elements, the Internet of Things can work best when viewed as a
platform.
For the Internet of Things to take off, we are trying to get network
layer connectivity. In practice it means RFID, NFC, EPC etc should
all talk to each other for the Internet of Things to be really
ubiquitous. This is not currently the case and history has shown
that network layer connectivity is hard to achieve.
However, using cloud computing it is possible to achieve a 'best
case scenario', i.e. good enough interconnectivity between the
various 'intelligent objects' at the cloud level (and not at the
network level).
In practice, this could mean (as a starting point):
1 Using voice to do Google Web search
2 Using an accelerometer to trigger applications
And much, much more!!
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We can use the analogy of the phone as a magic wand to illustrate
the idea that interconnectivity for the Internet of Things could be
achieved via the cloud by using sensor‐based mobile devices,
waving the phone like a magic wand to trigger sensors via the
cloud to trigger new services.
Business models
Throughout this book, we have discussed various business models.
From the perspective of the Open Mobile discussion we envisage
two models: app store (for the Long Tail scenario) and fremium
(for services). The impact of both is only now being felt and both
will continue to be vibrant for the foreseeable future.
The business models for converged media are converged services
based on attention and metadata.
Attention and especially the co‐relation of metadata from various
media formats (old and new) is the main business driver for
'open'. Different media formats (like TV) will adopt this to a
greater or lesser degree. It is possible to understand and leverage
as much metadata as possible without 'controlling or restricting'
the user. This metadata can be used to create better services (by
that we mean more personalised, interactive services).
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Conclusion
A summary of factors driving the future evolution of
Open Mobile
As we come to the conclusion of this book, let us list the key
factors which are driving the future of Open Mobile and affecting
the value chain.
The factors which are causing a shift in the value chain and
stakeholder relationships are given below. There are a range of
factors which we have discussed at other points in the book – but
we re‐state them here for emphasis.
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● Creation of content (as opposed to consumption of
content): Traditional players like ringtone
companies, which dominated the first phase of
mobile content, are now affected by the rise of user‐
generated content (content customers value more).
We will see this trend continue in the future driven
by social media content, which will play a greater
role in the future of mobility.
● The goals of networks and devices are not aligned:
Outside Japan and Korea, the goals of networks and
devices are not aligned. We see an increasing trend
of devices becoming brands (iPhone, Nokia Ovi), a
trend that also seems to be broadly favoured by
customers. We envisage that this trend will continue
going forward especially with the proliferation of app
stores.
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● Network operator application portals are declining:
Most of the walled garden network operator portals
are in decline. We believe that this trend will
continue towards an open model driven by
customers.
235
http://en.wikipedia.org/wiki/IP_Multimedia_Subsystem
236
www.modumobile.com/
237
http://bondi.omtp.org/default.aspx
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238
http://www.mobilemarketingmagazine.co.uk/2009/03/voda‐offers‐drmfree‐music‐
.html
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● New interfaces (touch screens, 3D etc)
● Declining role of traditional media (newspapers etc)
● An evolution of standardisation especially with the
emergence of cloud computing
● Innovation and evolution on the device: A range of
factors is leading to innovation and evolution of the
mobile ecosystem. These include Google
Gears/offline browsing, open source ecosystems,
widgets, JavaScript enhancements (Chrome, JS
libraries), location including cell ID databases,
SIM/Smartcard Web server, APIs (GSMA, OpenAjax,
Bondi, Gears, RCS), browser plug‐ins (MS Silverlight,
Mozilla,W3C), social network APIs, local Web, NFC
etc.
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● Net neutrality agreements
● Sensor‐based interaction
● Asynchronous activation, background processing of
mobile applications
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Dinosaurs and Jurassic Park
“Life will find a way,” is a famous phrase from the movie Jurassic
Park.
And indeed it does. There is a lot we can learn from that insight
when it comes to Open Mobile.
In the movie Jurassic Park239, the park creators made an attempt
to contain the breeding of dinosaurs by creating only female
dinosaurs. However, the scientists had used frog DNA to
compensate for the gaps in the dinosaur DNA. The dinosaurs were
then able to change sex (in the same way as the frogs from which
the DNA was obtained) and so reproduce.
Hence, life will find a way – there is a lot we can learn from this.
It is impossible to ‘block’ the tidal wave of open systems and once
we accept that, then the solution lies in leveraging the open
ecosystem to become a platform.
Ultimately, no company or network can drive change or indeed
block change. The customers are the only true drivers of change.
And– in a world of content creation, social networking and the
Internet – the customers want open systems.
Let us remind ourselves with a vision of the promised land which
we referred to previously
239
http://en.wikipedia.org/wiki/Biological_issues_in_Jurassic_Park
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For the true vision of Open Mobile to be fulfilled:
3 non‐malicious mobile apps should be able to run on
any device they were built for
When we have all three, we know that the promised land of ‘Open
Mobile’ has indeed been reached.
We conclude with the words of Alvin Toffler:
“The illiterate of the 21st century will not be those who cannot read
and write, but those who cannot learn, unlearn and relearn.”
Rethinking the Future 240
We are all facing a future predicted by Alvin Toffler and the impact
of open systems and Open Mobile indicates that we will have to
think, learn, relearn and re‐invent many businesses, concepts and
business models as we venture into a world of customer‐driven
openness and transparency.
240
http://en.wikipedia.org/wiki/Alvin_Toffler
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Appendix
The seven principles of Web 2.0
What is Web 2.0? The long answer is: a service that follows all (or
as many as possible) of the seven principles of Web 2.0.. These
seven principles are outlined in Tim O'Reilly’s original
document241. We discuss them below:
Principle one: the Web as a platform
Web 2.0 services make the fullest possible use of the Web. The
principle of ‘the Web as a platform’ encompasses the following
concepts:
241
http://www.oreillynet.com/pub/a/oreilly/tim/news/2005/09/30/what‐is‐web‐20.html
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Netscape was an early example of using the Web as a platform.
However, Netscape used the Web in the context of the existing
ecosystem, thus becoming the ‘Web top’ instead of the prevailing
‘desktop’.
Hence, the usage of the Netscape browser mirrors the famous
‘horseless carriage’ analogy, wherein an automobile could be
described as a ‘horseless carriage’. Whereas Netscape is still
‘software’, in contrast, Google has been ‘software plus a database’
right from the start. (In this context, we use the term ‘database’
generically to mean that ‘Google is managing some data’).
Individually, the software and the database are of limited value,
but together they create a new type of service. In this context, the
value of the software lies in being able to manage (vast amounts
of) data. The better it can do this, the more valuable the software
becomes.
Harnessing the Long Tail: The term Long Tail refers to the vast
number of small sites that make up the Web not just a few
‘important’ sites. This is illustrated by the ‘DoubleClick vs.
AdSense/Overture’ example. The DoubleClick242 business model
was not based on harnessing the vast number of small sites.
Instead, it relied on serving the needs of a few large sites
(generally dictated by the media/advertising industry). In fact,
their business model actively discouraged small sites through
mechanisms like formal sales contracts. In contrast, anyone can
242
http://www.doubleclick.com/us/
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easily set up an AdSense/Overture account. This makes it easier
for the vast number of sites (Long Tail) to use the
AdSense/Overture service.
In general, Web 2.0 services are geared to harnessing the power
of a ‘large number of casual users who often contribute data
implicitly’ as opposed to ‘a small number of users who contribute
explicitly’. Tags are an example of implicit contribution. Thus, the
Web 2.0 service must be geared to capturing ‘many
implicit/metadata contributions from a large number of users’ and
not a small number of contributions from a few ‘expert’ users.
Principle two: harnessing collective intelligence
In this context, collective intelligence can mean many things:
● Yahoo as an aggregation of links
● Google PageRank
● Blogging
● eBay buyers and sellers
● Amazon reviews
● Wikipedia
243
http://www.flickr.com
244
http://del.icio.us/
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And so on...
All of the above are examples of metadata/content created by
users that collectively adds value to the service (which, as we have
seen before, is a combination of the software and the data). In
addition, harnessing collective intelligence involves understanding
some other aspects like peer production, the wisdom of crowds
and the network effect.
A concise definition from Wikipedia is:
A new model of economic production, different from both markets
and firms, in which the creative energy of large numbers of people
is coordinated (usually with the aid of the Internet) into large,
meaningful projects, largely without traditional hierarchical
organization or financial compensation.
245
http://www.benkler.org
246
http://www.benkler.org/CoasesPenguin.html
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The wisdom of crowds is fully discussed in the book Wisdom of
Crowds by James Surowiecki247. The central idea of the wisdom of
crowds is that large groups of people are smarter than an elite
few, no matter how brilliant the elite few may be. The wisdom of
crowds is better at solving problems, fostering innovation, coming
to wise decisions, and even predicting the future. We discuss the
principle of the wisdom of crowds in greater detail in the section
on the unified definition of Web 2.0.
And finally, the network effects from user contributions. In other
words, the ability for users to add value (knowledge) easily and
then the ability for their contributions to flow seamlessly across
the whole community, thereby enriching the whole body of
knowledge. You might think of this as a collective
brain/intelligence of the ‘Web’ made possible by mechanisms
such as RSS248.
Principle three: data is the next Intel Inside
Data is the key differentiator between a Web 2.0 service and a
non‐Web 2.0 service. A Web 2.0 service always combines function
(software) and data (which is managed by the software). Thus,
Web 2.0 services inevitably have a body of data (Amazon reviews,
eBay products and sellers, Google links etc). This is very different
247
http://www.randomhouse.com/features/wisdomofcrowds
248
http://en.wikipedia.org/wiki/Rss
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to a word processor, for example, which is made up of software
(and no data).
While data is valuable, the company need not necessarily own the
data. In case of Google Maps 249, Google does not own the data.
Mapping data is often owned by companies such as NavTech250
and satellite imagery data is owned by companies like Digital
Globe251. Google Maps simply combines data from these two
sources. Such a combination of data from two or more sources is
called a mashup. A mashup is a website or Web application that
seamlessly combines content from more than one source into an
integrated experience252. A mashup could be seen as a ‘Web API’
(Application Programming Interface).
Taking the ‘chain of data’ further, sites like Housing Maps253 are a
mashup between Google Maps and Craigslist254. The more difficult
it is to create the data, the more valuable the data (e.g. satellite
images are obviously valuable). At the time of writing, there are
still grey areas in the ownership and creation of mashups. For
instance, if a company makes its data available for ‘mashing up’,
does it control the functionality of the ultimate mashup itself?
Conflicts could arise if the mashup creator does not use the
service in a way approved by the body releasing the API.
249
http://www.maps.google.com
250
http://www.navteq.com/
251
http://www.digitalglobe.com/
252
wikipedia
253
http://www.housingmaps.com/
254
http://www.craigslist.com/
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Principle four: end of the software release cycle
Web 2.0 services do not have a software release cycle. While
Google re‐indexes its link indices every day, Microsoft releases a
major software release every few years. That’s because there is no
‘data’ in Windows 95, Windows XP etc. It’s pure software. Not so
with Google. Google is data plus software. It has to re‐index its
data every day, else it loses its value. Thus, operations are critical
to a Web 2.0 company and there is no ‘software release’ as such.
The flip side of this coin is that there are widespread beta releases
and users are treated as co‐developers.
Principle five: lightweight programming models
Web 2.0 services could be seen as a lighter form of SOA (Service
Oriented Architecture). Functionally, a Web 2.0 service acts as a
distributed application. Distributed applications have always been
complex to design. However, distributed applications are central
to the Web. Web services (SOA) were deemed to be the ideal
mechanism to create distributed applications easily. But Web
services, in their full incarnation using the SOAP255 stack, are
relatively complex. RSS is a simpler (and quicker) way to achieve
much of the functionality of Web services.
255
http://en.wikipedia.org/wiki/SOAP
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Principle six: software above the level of a single device
In essence, Mobile Web 2.0 is about the sixth principle. Hence, we
do not discuss it in detail here.
Principle seven: a rich user experience
For the Web to be truly useful, we need a mechanism to improve
the user experience on the Web. In comparison to platforms such
as Windows, the Web offered a relatively limited user experience.
Technologies like ActiveX and Java applets attempted to improve
the user experience, but these were proprietary. The main
technological driver for an enhanced user experience on the Web
is Ajax. Ajax uses Web technologies (i.e. non‐proprietary
technologies). Ajax was outlined by Jesse James Garrett in an
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article published on the Web256. Ajax is being used in services like
Gmail, Google Maps and Flickr and it already provides the
technology to create a seamless user experience combing many
discrete services.
256
http://www.adaptivepath.com/publications/essays/archives/000385.php
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About the Authors
Ajit Jaokar
Ajit Jaokar is the founder of the London based publishing and
research company futuretext (www.futuretext.com) focussed on
emerging Web and Mobile.
His thinking is widely followed in the industry and his blog, the
OpenGardensBlog (www.opengardensblog.futuretext.com), which
was recently rated a top 20 wireless blog worldwide.
In 2009‐2010, Ajit was nominated as part of the Global Agenda
Council on the Future of the Internet by the world economic
forum. He hopes to use this opportunity to further extend the
pragmatic viewpoint of the evolution of Telecoms networks in an
open ecosystem.
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(Note: The Network of Global Agenda Councils plays a significant
role in shaping the global agenda by monitoring global issues and
elaborating recommendations to address them. Each Council,
comprised of 15‐20 Members, serves as an advisory board to the
Forum and other interested parties, such as governments and
international organizations. The Global Agenda Councils also act
as the intellectual drivers of the World Economic Forum’s Global
Redesign Initiative, an unprecedented international, multi
stakeholder and multimedia dialogue that aims to develop a 21st‐
century vision of global cooperation. Members of the G20, the UN
and other International Organizations have pledged their support
for this initiative.)
His consulting activities include working with companies to define
value propositions across the device, network, Web and Social
networking stack spanning both technology and strategy. He has
worked with a range of commercial and government organizations
globally including The European Union, Telecoms Operators,
Device manufacturers, social networking companies and security
companies in various strategic and visionary roles.
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Ajit chairs Oxford University's Next generation mobile applications
panel and conducts a course on Web 2.0, Social networking,
Mobile Web 2.0 and LTE services at Oxford University.
Ajit lives in London, UK, but has three nationalities (British, Indian
and New Zealander) and is proud of all three. He is currently doing
a PhD on Privacy and Reputation systems at UCL in London.
Email: ajit.jaokar@futuretext.com
Twitter @AjitJaokar
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Anna Gatti
Anna Gatti is the Head of International Online Sales and
Operations for YouTube. She is independent board member of the
leading mobile media company Buongiorno (Italy, MTA STAR:
BNG). Before joining Google, Anna was partner of the venture
capital fund myQube, and advisor to major telecommunication
companies. Anna has completed a PhD in Criminology, a PhD in
Business Administration and Management, and a post‐doctoral
program in organizational theories at Stanford University. When
she is not traveling, Anna lives in Palo Alto, California.
Email: anna.gatti@gmail.com
Twitter @gattinger
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About the Editor
Peggy Anne Salz is the founder and publisher of MSearchGroove
(MSG), an online source of analysis and commentary on mobile
search, mobile advertising, social media and all things digital at
the intersection of content and context. Her report, Mobile Search
& Content Discovery—the first of its kind—establishes Peggy as an
authority on mobile search and content discovery technologies
enabling media companies and mobile operators to monetize
content and services.
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Peggy’s drive to spark debate about issues impacting the mobile
industry at all levels has won her international recognition as a
brave new voice in the mobile content market. Her speaking
calendar includes engagements at mobile search and mobile
advertising conferences worldwide. Graduating with honors from
the University of Pittsburgh, Peggy earned a B.A. in Philosophy of
Science, Political Science, and Economics. She is a Fulbright fellow
and a member of the International Who’s Who of Professionals.
Email: peggy@msearchgroove.com
Open Mobile © Copyright Futuretext Limited
Ajit Jaokar is the founder of the London based publishing and research
Ajit Jaokar, Anna Gatti
Open Mobile
company futuretext focussed on emerging Web and Mobile. His thinking
is widely followed in the industry and his blog, the OpenGardensBlog,
which was recently rated a top 20 wireless blog worldwide.
Open
The European Union, Telecoms Operators, Device manufacturers, social Twitter @AjitJaokar
networking companies and security companies in various strategic and
Mobile
Ajit lives in London, UK, but has three nationalities (British, Indian and
New Zealander) and is proud of all three. He is currently doing a PhD on
Privacy and Reputation systems at UCL in London.
Anna Gatti is the Head of International Online Sales and Operations for
YouTube. She is independent board member of the leading mobile media
company Buongiorno (Italy, MTA STAR: BNG). Before joining Google, Anna
was partner of the venture capital fund myQube, and advisor to major
telecommunication companies.