But that’s exactly how things have turned out after an extraordinary drop in public support for the government saw the August 21 federal election result in a hung parliament, with the Labor and Coalition parties tied with 73 seats each and needing to win support from four independents MPs – three of whom are from rural constituencies – to secure a working majority.

There are numerous reasons for the collapse in public support for the Labor government over the past six months, but two of the biggest criticisms leveled at it have been that it lacked the political courage to make major decisions and that it had no core convictions around which it formulated policies. These were most obviously illustrated by the dumping of its planned emissions-trading program in April, a move that caused fury among environmentally focused voters and triggered the collapse in support for former Prime Minister Kevin Rudd that ultimately saw him replaced by Julia Gillard in June.

How ironic, then, that the government’s only piece of genuinely visionary and bold politics – the creation of a A$43bn ($38m) NBN, offering FTTH connections to 93 per cent of the country’s homes – might prove to be the policy that enables it to fight a second term, albeit as a minority government.

The cliffhanger changes it all
So, how did the NBN suddenly become the central issue in a country where telecommunications policy has never before appeared even remotely on the main agenda of either major party at election time?

First, the “rush to the middle” of the Labor Party and the opposition Coalition parties left few substantial policy differences between the two parties on the key issues, such as the economy, immigration and education. As a result, the rollout of the NBN was one of the few policy areas where clear blue water existed between the parties, and it therefore attracted far more media interest than any telecoms issue had ever received in a federal election campaign.

Then, of course, there was the result of the election itself, which means that both major parties need to somehow persuade the three independent MPs from regional areas – Tony Windsor from New England, New South Wales; Rob Oakeshott from Lyne, New South Wales; and Bob Katter from Kennedy, Queensland – to help them form a majority.

All three independent MPs have long been huge critics of the existing telecommunications infrastructure in their electorates and rural Australia in general, claiming that the quality of rural telecommunications has plummeted since Telstra’s privatization forced it to focus on profits rather than quality of service.

As a result, all three independent MPs have been enthusiastic backers of the NBN project, with the maverick Katter – although socially conservative – viscerally opposed to allowing the “privatization” of rural telecoms services to continue.

Abbott left in a nasty wedge
All of which leaves Coalition leader Tony Abbott in a parlous position, given that he ran much of his campaign pledging to “end Labor’s waste and debt” and scoffed at the creation of the NBN.

During the campaign, Abbott not only doubted the government’s ability to successfully roll out the network but also described the NBN as a “white elephant” project that would be superseded by superior wireless technologies.

In its place, Abbott proposed a A$6bn broadband plan that would provide a government-built fiber-optic trunk network to serve metropolitan areas, enabling private operators to build their own last-mile FTTH/B connections, and would use wireless broadband to serve regional and rural areas.

The Coalition plan was immediately denounced as a complete turkey by many local industry analysts, who pointed out that it did not address the crucial problem of last-mile fixed-line access because it left Telstra in place as a monopoly network operator. The plan also did not provide details about what spectrum would be used for the planned mobile broadband services, what technology would be used to provide the services and how many transmission towers would need to be built – and by whom – to facilitate the rural mobile broadband service.

Abbott himself hardly helped matters by putting on a cringe-worthy performance on the influential 7.30 Report in prime time on ABC TV, where he struggled to explain the technical details of the Coalition plan. At one stage, interviewer Kerry O’Brien even had to explain the concept of peak download speeds, with Abbott eventually pleading: “I am no Bill Gates. And I don’t claim to be any kind of techhead.”

However, now that there are three rural independents to be wooed, Abbott has had to suddenly readdress the issue and concede that he would be willing to negotiate with the independents on the issue of rural broadband.

It’s either the whole pie or none at all
The problem is that having so vigorously attacked the NBN as a huge waste of taxpayers’ money and even – mind-bogglingly – claiming that FTTH would soon be an “outdated technology,” Abbott will find it difficult to reach a compromise deal with the three independent MPs.

The key attraction of the NBN – and one that helped Labor retain several regional seats, such as the traditional bellwether Eden-Monaro, New South Wales – is that it is the first piece of genuine national infrastructure that does not short-change regional areas. The NBN will offer the same 100Mbps connectivity to the city slicker in Bondi Beach, Sydney, or Toorak, Melbourne, that it does to the small farming towns in New South Wales and Queensland that are represented by the three independent MPs.

As a result, it is hard to envision how the Coalition can offer anything short of the full NBN that will keep these independents happy, not least because the NBN – no matter its flaws – represents a concrete plan and commitment to providing rural areas with high-speed broadband.

By comparison, the Coalition plan is really no more than a vague list of policy preferences that leaves much of the heavy lifting to private players, which have little commercial interest in providing rural telecoms services. And it is hard to see how the Coalition can put together a serious plan in the weeks before the new government will be formed.

Moreover, although Oakeshott and Windsor have made public comments about potentially working on a new NBN plan that incorporated a greater wireless segment in order to lower the overall cost of rollout to rural areas, both MPs will be aware that diluting the NBN in such a way would be hugely dangerous from a political perspective. The NBN would provide equal access to households, and rural and regional voters will simply not accept funding a network that provides high-quality FTTH connections to urban areas – already served by HFC/DSL – but provides them with wireless broadband services offering variable quality.

As a result, the three independents – although serving notionally conservative electorates – will find it difficult to return home with a deal that dilutes the NBN with a significantly increased portion of wireless connectivity, because rural voters have already been promised FTTH connectivity and will not be happy if it is replaced by a wireless offering that remains more theoretic than actual.

The first Apple TV was a failure for a number of reasons. It was too expensive, and few were keen to pay £200 for a set-top box. It also offered a limited range of content, with the only internet content coming from the iTunes store.

The new version has fixed the first issue: the device will retail at an extremely wallet friendly US$99, and at one-quarter of the size, it is certainly less obtrusive and easier on the eye than your average set-top box. These reductions in size and price come as a result of the device shipping without a hard drive, mirroring an industry-wide move away from users downloading content and storing it locally to streaming it directly from the cloud.

Including TV episode rentals is a step forward, but we believe this will be a small market in the short term at least, as equivalent physical products are priced more aggressively. The inclusion of Netflix is of minor interest given that it is available on so many other devices. It is also unlikely that Apple TV will include any Netflix-equivalent service outside the US, as no other provider has acquired as many streaming rights as Netflix has. Consumers in these markets will therefore be paying $US100 for a box that does little but allow them to rent video content from Apple; a hard sell to anyone that is not a die-hard Apple fan.

Apple is entering a crowded market in bringing internet content to the TV, and at the moment its content offering stacks up very poorly compared to the likes of Sony’s PlayStation 3 and the connected TV manufacturers. In the long-run, the platform that dominates the connected home will be the one that builds critical mass most quickly. The US$100 price point will help Apple with this, but it will be competing against devices like TVs and games consoles that consumers see as a primary component of their connected homes, rather than a secondary optional extra.

Perhaps the most surprising thing about the device-and something I never thought I would say about an Apple product-is that it seems rushed. The timing of Apple’s (re)entrance into the living room comes at a time when the sector is receiving unprecedented levels of interest and plays from Apple rivals like Sony, Microsoft, Yahoo! and, of course, Google. Yet it almost seems like, in the rush to ride the internet TV zeitgeist, Apple has sacrificed the inclusion of what would have been some killer features.

The lack of inclusion of a subscription service is likely not entirely Apple’s fault: content providers have been extremely reticent to license. Content providers will be wary of licensing any service that looks too much like a cable or pay-TV service. They will also want to avoid over-reliance on Apple for digital distribution, something that has brought short-term benefits for the music industry but that is starting to become a hindrance.

And of course, there is no application store, and very limited third party content, meaning that Apple TV is not the “iPhone for the TV” that some billed it as. It is clear that Apple could have the same galvanizing effect on TV applications as it has with mobile applications, and it may still do one day.

This appears to be a step further than the company wishes to take, and for now, it appears content to cement its (already strong) position as the digital movie and TV retailer. But this is a small business today, and will only be a small part of the future TV ecosystem.

As a result, what Apple is offering is not actually that new, or innovative. Arguably, it is even less innovative than the first Apple TV, which came at a time when its rivals were not considering this space anything like as seriously as they are now. This is not necessarily a bad thing: remember, of course, that many MP3 players were released before the iPod was. Apple TV has weapons in its arsenal: the elegant design, users interface and sheer simplicity of the device are ever-present and correct here.

But no amount of sheen can take away from the fact that Apple TV, or indeed any similar device, will live or die based on the quality, volume and cost of its content. It also cannot disguise the fact that Apple TV today is a mere shadow of what an Apple set-top box and ecosystem could achieve in the future.

On a related topic, our Connected Home research by my colleague Andrew Ladbrook will soon be available. For more details please visit www.informatm.com/connectedhome.

The stage was the Commonwealth Telecommunications Organization’s 5th Connecting Rural Communities Africa forum in Accra, Ghana. Credit must go to the organizers for preparing an excellent agenda packed with interesting speakers, and yet the discussion points remained much the same. And most depressing of all was that, on the whole, administrators of universal-service funds could not point to KPIs showing the successful delivery of their universal-service targets, and although strides have been made in connecting rural and remote communities, little progress has been made on converting those connections into healthy adoption rates. Be it mobile telephony or broadband, the customer’s experience is still often poor, and the relevance and value of local content does not encourage mass usage.

And then from the wilderness came a presentation that enlivened the conference and for me changed the occasion. We were listening to something genuinely exciting: the story of the Esoko concept and how it has been able to help local farmers transform their businesses. The conference had finally come alive.

Funded partly by private entrepreneurs and partly by public money, the Esoko model is simple: It provides market-commodity information by SMS to users in Ghana, Nigeria, Mozambique, Burkina Faso, Mali, Ivory Coast, Madagascar and Sudan. The product empowers individuals to make better decisions on when and where to sell their goods. This empowerment means that a yam-tuber farmer in Salaga, northern Ghana, was able to use Esoko to compare prices offered in Accra with that of a local buyer. Using Esoko, the farmer discovered that, even after transportation costs, he could make a greater profit from his goods by selling them in the capital city, rather than the local town. This is a service that offers real value to remote communities.

There were other exciting stories to hear. Phase3 Telecom plans to use its fiber-optic backbone infrastructure to benefit the backhaul requirements of Nigerians and others in West Africa. The links between a higher bandwidth per capita and GDP improvement is clear, with recent studies from the World Bank suggesting that a 10-percentage-point increase in broadband penetration can equate to a 1.3% rise in economic growth. Phase3 plans to link its fiber-optic network in Nigeria to Benin, Togo, Ghana, Ivory Coast and Senegal, cutting down the cost of connectivity and making capacity available at more affordable pricing.

The innovation does not have to come from Africa to affect Africa. Another of the more enlightening solutions to meeting the challenges of connecting rural communities came from Sweden’s Flexenclosure and its E-site platform, which is already available in Kenya. A real barrier for operators in reaching out to rural areas is the scarcity of power, and E-site is a turnkey platform that is power efficient and designed to generate energy from renewable sources, such as wind and solar radiation. In addition to helping carriers make savings in opex, the platform also provides the opportunity for carriers to diversify revenues by actually distributing power to local communities.

Examples such as these demonstrate that progress is being made in the drive to reach out to the more remote communities in Africa. And even though governments have set universal-service targets, the targets haven’t played much of a role in the progress that has been made. It is innovation and investment (albeit sometimes with the help of public funding) that will ensure a greater customer experience, which will, in turn, lead to the more rapid adoption of telecommunications services in rural areas.

But although digital-locker services usually wash their hands of any responsibility for the legality of the tracks being uploaded, saying they can’t be held accountable for pirated music owned by their subscribers (much to the chagrin of music labels and rights owners), Music Anywhere aims to pay royalties for all music stored and streamed over the service. And the platform provider behind the service, Catch Media, has already gone a long way toward achieving that, having secured licensing deals with all four major labels and several indie-music aggregators before launch – no mean feat, considering how ridiculously complex the music industry makes it for service providers to license content and how suspicious labels are of locker services.

Rather than have users physically upload tracks to Music Anywhere, the service scans users’ PC hard drives for music tracks and tries to match them with the tracks in its 6 million-strong catalog of licensed music. If a match is found, the corresponding track in the catalog is added to the user’s account. If a match is not found, the track on the hard disk is uploaded to a digital locker. In both cases, the user is free to stream the tracks to Web browsers, PCs and one predefined handset (initially just iPhone, Android and BlackBerry devices). Catch Media says it will keep a tally of unlicensed tracks and note how often each one is streamed, so that if licensing deals can be secured for them in future, rights holders will get their fair dues.

Users pay a flat fee of £29.99 a year for the service – when not bundled into the price of handsets sold by Carphone Warehouse – and a portion of subscription revenues is divided among the rights holders on a pro rata basis, depending on how much each track has been played.

Backup services so far
Until now, mobile players have mostly dabbled in the personal-information-management (PIM) and user-generated-content side of cloud services – an area commonly referred to as “data backup and storage.” In fact, Carphone Warehouse has launched Music Anywhere as an extension of its My Hub backup service, where handset users can store contacts, pictures and messages. Numerous operators have launched My Hub-type services, such as T-Mobile, which has put great focus on its My Phonebook Backup service, and O2, which failed to get much traction for its heavily marketed Bluebook service.

Offering services that back up subscribers’ contacts and other PIM data along with snapshots and videos taken on the user’s camera phone is a natural play for operators. It’s a useful service for subscribers, who don’t want to lose that data if they lose their phone and want an easy way of porting that data when changing phone. And it’s useful for operators, as a way of encouraging users to stick with their network. It also avoids legal complications, since none of the content being backed up is copyrighted.

Digital-locker services are considered by many in the music industry to encourage piracy because they make the ownership of ill-gotten tracks more attractive by providing anytime, anywhere accessibility through the “cloud.” MP3-music-service pioneer Michael Robertson, for example, is being sued in person by major music label EMI for running music-locker service MP3tunes.com.

Legitimizing locker services
Music Anywhere’s model tries to legitimize locker services in the eyes of the music industry. Although a lot of the music “uploaded” to Music Anywhere will no doubt be pirated, the service provides a rare opportunity to the music industry to claw back some revenue from pirated content – even though Music Anywhere’s small print says that subscribers whose music collections are mostly made up of pirated tracks might have their subscription terminated.

Informa understands that numerous operators are planning to follow Carphone Warehouse’s lead and extend their data-backup and storage services to digital lockers. There are reportedly a few 20-30-petabyte digital-locker deployments by major operators in the pipeline, costing US$100-200 million – and some of these might rival any such deployments by the online players.

The biggest deployments appear to be in North America, where operators have identified this kind of service as a key part of their value-added-services strategies. In Europe, deployments are reportedly less ambitious – more about testing the waters than a full-fledged commitment to such services. But now that Vodafone seems to have hit a dead end with its Vodafone 360 service, it is reportedly refocusing its attentions on cloud services.

In some ways, digital-locker services are not a natural play for mobile players, since the vast majority of digital-media content is downloaded to and stored in PCs. Most multimedia content on phones tends to be user-generated photos and video clips.

Role for operators
But many mobile operators belong to parent firms with fixed-line arms, making a service that converges mobile and the Internet more of a natural fit. And many mobile operators are becoming distributors of netbooks and other PC products as part of their mobile broadband offerings, making the dividing line between the mobile and PC worlds faint. And the “anywhere, anytime” idea is intrinsic to mobile.

In addition, the idea behind locker services is that users should store all of their digital content in a single place, rather than have numerous separate backup/locker services for specific types of content and devices.

There are powerful online players, such as Google, that are angling to take on the role of central repositories of people’s digital content. But operators have a powerful factor in their favor: user trust. It is arguable that if users are given a choice, they are more likely to trust operators than online players with their data. There are numerous examples of online services that have shut down with little notice, leaving users in the lurch. By contrast, operator services offer a greater sense of permanence and accountability.

By the same token, though, users might think twice about storing all of their content with their operator for fear that it might stop them from churning to another operator when convenient. Stickiness is precisely one of the factors prompting operators to deploy such services, but it’s not necessarily what users want.

More launches inevitable
There is little doubt that digital-media cloud services such as Music Anywhere will be deployed by mobile operators, either through the same platform provider, Catch Media, or others, such as NewBay Software. And if they don’t sign up to licensing deals with rights holders, they will at least try to show more accountability for the content uploaded by users than the likes of MP3tunes.com, through some kind of digital-rights management. For example, some of the platforms targeted at operators are designed to carry out copyright checks of all content uploaded and apply restrictions on downloading, streaming and sharing depending on the copyright owners’ rules and the operators’ business rules.

It will be interesting to see which firms users will trust most with their precious content.

If you think about it, the telecoms industry of today bears little resemblance to the state of the sector at the start of the last decade. If we cast our minds back to the year 2000, the industry was still over 18 months away from the launch of the world’s first ever 3G network. Even good old GPRS had only just been unleashed on the world. Back in those days, your average mobile user made a few phone calls, sent a handful of text messages and, in rare cases, occasionally checked his phone for the latest sports scores.

In fact, it would take another half-decade or more, until 2006 and the arrival of HSPA, for the transformation to really get under way. But the pace of change that’s swept through the sector since then has been remarkable. The explosion of data services with the rise of smartphones, dongles and other connected devices means the mobile world of today is virtually unrecognizable from that of 2000.

When we’re all agreed that the mobile sector has changed almost beyond recognition, why have none of the operators changed the way they report the changing nature of their businesses? A quick scan of your typical quarterly report reveals that the metrics of a decade ago are still being used to measure the relative operating success or failure of an operator’s business today. We all know what those standard measures are: subscriptions, ARPU, minutes of use and churn. But these metrics are being rendered more irrelevant by the day as multiple-SIM ownership grows, as voice usage is substituted for data and as operators target new segments of the market with an array of new device types, such as laptops, notebooks, tablets, e-readers, not to mention the whole connected world of the Internet of Things.

So just why aren’t operators quantifying the operational performance of the growing parts of their business? Sure, some operators will split out a few financial indicators that are a tad more relevant. Generally speaking, we probably do get some break down of revenues derived from voice and data; maybe even voice, messaging and nonmessaging data, if we’re lucky. But why not some more meaningful operational metrics? If I were a financial analyst, I’d be seriously questioning how I can credibly measure the performance of an operator’s data business with the bare bones of what’s reported today.

If operators are unsure of what’s insightful to report, let me kick off with a few ideas. For starters (and this list could be endless), how about:
1. Connections with data plans per operating company.
2. Connections with smartphones/dongles/M2M per operating company.
3. Average revenue per device type (i.e. smartphone, dongle, M2M).
4. Churn rate of different device categories (e.g. mobile broadband).
5. Number of converged customers (i.e. taking mobile and fixed services).
6. Customer lifetime value (based on all revenue attributable to a single user).
7. Average data-traffic usage (in megabytes) per month per connection.

I’m sure the operators will trot out the standard response that these numbers are competitively sensitive. But are they really? Are they really that sensitive that they’ll affect the competitive dynamics of their operating companies? I’d argue not. Why, for example, if operators are happy to report minutes of use for voice services, are they loath to publish average data usage per customer?

Perhaps a greater issue is that operators simply cannot provide the transparency on new data points because they don’t know them. It’s fair to say the capturing and reporting of internal data has never been the operators’ greatest strength. My discussions with operators have revealed that they struggle to get to grips with how to allocate revenue fairly when end-user spending is bundled together as a single flat-rate plan for voice, SMS and data.

To be completely fair, some operators are beginning to be more transparent about their businesses, and it is here that I’ll give a shout-out to Vodafone and Swisscom, which are starting to publish some interesting data points, albeit on an ad hoc basis. But ad hoc is simply not enough: These metrics need to be published regularly and consistently to enable the industry to analyze ongoing performance in a more enlightened way. The operators themselves will benefit as they learn to benchmark their performance against other operating groups across more meaningful metrics than total subscription numbers or ARPU.

I’m sure my sentiments would be echoed by industry-analyst colleagues the world over, but the reality is that pressure to open up can only really be applied effectively by the financial-analyst community. The cynic in me says it is only to serve financial analysts that operators will truly bend over backward to be transparent as they seek to secure as many positive “buy” notes as possible.

So here’s my call to arms for all the equity analysts out there: Demand greater transparency from the operators. Ask them to publish more-relevant operational data and ask them to do it more consistently. It’s only under pressure from shareholders that the operators will be forced to open up about the reality of their performance to the outside world and the industry will start to shift to understanding its success on the basis of a more meaningful set of metrics.

The proposed ban on BlackBerry services in the UAE could prove to be disruptive and costly for the many users of the devices in the country, as well as for local telecom operators and BlackBerry manufacturer Research in Motion (RIM). BlackBerry devices and services are strikingly popular among both business and consumer users in the UAE, and Informa Telecoms & Media estimates that there are about 750,000 BlackBerrys in use in the country at present.

Mobile data including mobile broadband and smartphone services – notably BlackBerry services – represents one of the most important growth areas for Etisalat and Du, the two operators in the UAE.A ban would also end RIM’s business in the UAE, where it has been enjoying strong growth. The imposition of a ban would most likely cause inconvenience, costs or losses to affected parties. However, it could represent an opportunity for rival smartphone manufacturers and messaging providers that can offer alternative services.

The date of October 11 that is proposed for the implementation of the ban leaves some time for the principle parties in this matter – RIM and the UAE authorities – to reach an agreement that allows them to avert a ban. The local telecom operators, RIM and the UAE’s telecom regulator are likely to be keen to avoid the implementation of a ban on the BlackBerry service, and there is still an opportunity to find a solution.

Note:The Telecommunications Authority of the UAE announced on August 1 that BlackBerry Messenger, BlackBerry E-mail and Blackberry web-browsing services in the UAE will be suspended as of October 11. The TRA said that BlackBerry services are configured so that “BlackBerry data is immediately exported off-shore, where it is managed by a foreign, commercial organization”. As a result, the TRA said, BlackBerry services operate beyond the enforcement of telecommunication regulations introduced by the UAE in 2007.

Rapid growth in mobile search
Mobile search is growing rapidly with Google seeing 500% growth in mobile search queries from 2008 to 2010. Further, it is estimated that 1/3rd of mobile search requests are for local content, which clearly shows that consumers are looking for local information on their mobile phones and highlights the opportunity this presents for delivering relevant mobile ads based on a user’s location.

As Internet traffic on mobile grows, brands and ad agencies are realizing that they need to advertise on mobile. In developed markets such as the US, smartphone shipments are expected to surpass feature-phone shipments in 2011. The growing penetration of smartphones and subsequently the increasing adoption of data plans are contributing to the growth of a large addressable market for mobile search and Internet advertising.

Mobile Apps offer new opportunities
Apple has taken a major step into the mobile advertising space with the announcement of its iAd mobile advertising platform. Apple will sell and serve the ads, and developers will receive 60% of iAd revenue. It is believed that Apple now already has $600 million worth of mobile advertising commitment from brands and agencies for the iAd platform in 2H 2010.

Mobile advertising in apps presents a huge opportunity but its early days. Most brands run campaign to reach the mass market and therefore companies will use mobile apps more as a branding, CRM and marketing exercise rather than for running mobile advertising campaigns.

Mobile advertising as part of multi-screen consumer engagement strategy
From listening and speaking to many industry professionals it seems that the best way to drive the mobile advertising market, at least now and for the next couple of years, is to consider and use mobile advertising as part of integrated (print, TV, online and mobile) advertising campaigns and for driving multi-screen consumer engagement.

Brands and advertisers now increasingly want to reach to their target audience through multiple devices. A mobile phone is the only device that a consumer carries all the time and therefore it can play a key role in increasing the effectiveness of advertising campaigns by extending the consumer engagement period. For example, according to John Zehr, Senior VP and General Manager for ESPN Mobile, a large number of users access their mobile app and mobile site on weekends to access sports updates, news, and other information on their mobile phones while they are outside on a beach, at a restaurant, or shopping.

The reality today:  mobile advertising is not yet a high-volume high-revenue business
Despite all the positive developments, for the ad agencies, the revenues from designing a mobile banner/display ad is very little compared to working for TV, magazines and online advertising campaigns. As a result, ad agencies at present don’t find the mobile platform attractive enough and operators should consider offering them a higher revenue share.

Average spend on mobile advertising campaigns is creeping up but not at a very strong pace. In terms of who the big companies are that are currently spending on mobile advertising, it’s the same big budget companies that spend the most on all forms of advertising. Almost 70% of the top 20 brands in the UK have run a mobile advertising/marketing campaign, spending in the range of US$5,000 to US$1 million.

Also, the limited knowledge of the mobile industry amongst brands and advertising agencies is restricting the market growth. Brands and advertising agencies are showing more interest in mobile but the high industry fragmentation and fast innovation is confusing to them. These players have limited knowledge of the various mobile network technologies, handset considerations and OS platforms. As a result, currently the ad spending on mobile in most cases is still limited to a few thousand dollars on trial campaigns.

What needs to be done
Educating brands and advertising agencies about the mobile medium and making it easy for them to advertise on mobile will be the key to drive the mobile advertising market growth over the coming years. To achieve this, mobile operators and ad networks need to partner and work with a wide assortment of technology vendors and content publishers to address both the demand side, and the supply side market fragmentation.

The first is to deploy ubiquitous high-speed broadband factories. In essence, operators are focused on extending the reach of broadband to as many people in as many locations as possible using a mixture of fixed and mobile technologies to do so. On this front, the tactics in achieving the goal vary both in terms of the speed of deployment and the technologies chosen, but the operators are united in realising that high-speed broadband will be their key asset in the future. But it’s not just about coverage, quality is also uppermost in their thoughts and operators are deploying a variety of network management tools to try to lay a foundation that is leading in terms of coverage, capacity, quality, speed and experience for their users.

Whilst all the talk may be of future revenue streams, operators cannot afford to forget about the cash cows that drive profitability in their business. That means protecting the core revenue streams of voice and SMS that even in 5 year’s time will continue to account for more than two-thirds of mobile operator revenues. On this front we again see a variety of approaches – some more short-sighted operators are still focused on VoIP blocking, others are keen to partner with third-party VoIP providers, while the most forward-looking operators such as Telekom Austria and Telefonica have begun launching their own VoIP propositions. SMS, meanwhile, is threatened not only by price declines, the threat of regulation as well as cannibalisation from other internet-based communications options such as Facebook messaging,

The third priority is a commitment to service quality. In a mature industry where the retention of customers is so fundamental to profitability, operators must have a razor-sharp focus on ensuring exceptional service quality levels across every part of their business, from the call centre, to the retail footprint right through into the network.

At the same time, however, new revenue streams must be found to fill the holes left by declining traditional revenue streams. That means investing in new areas to seed and nurture the arrival of alternative sources of cash. It’s no coincidence that every major European telco has set up dedicated arms to tackle the M2M business. Ironically, many of the European telcos have been engaged in M2M for nearly 10 years, but only now have the resources and focus been put behind those initiatives in earnest. The growing operator investment levels into M2M also reflect the fact that other industry verticals have suddenly awoken to the opportunity to bring enhanced products and services to market by bundling in a connectivity play. The arrival of the iPhone and the service-strategies of others like Nokia, Samsung and RIM has caused many in the industry to debate the smartphone’s role in disintermediating the operator from the provision of services to end-users – to breaking the relationship with the customer. There’s also strong questioning from some about the upfront hit to profitability that operators take when they target heavy subsidies on these expensive devices. But when we’ve looked at the positive impact that smartphones are having on operators businesses, it’s not hard to see just why operators have been so aggressively marketing the push for smartphones. Telenor Norway recently reported they are seeing close to 60% ARPU uplift when a user migrates to a smartphone from a non-smartphone and although this is perhaps a more aggressive example, in other markets operators have regularly reported uplift in the order of 25-40% per month. Not only is there incremental revenue uplift, but operators also report that smartphone customers are more loyal meaning that more revenue per month, plus a longer eventual lifecycle gives huge gains in overall customer lifetime value. Put simply, getting the right device in users’ hands has become the single biggest incremental revenue driver for today’s mobile operators.

Clients can access this research through the Mobile Europe channel of our Intelligence Centre – www.intelligencecentre.net/europe. Plus, we will soon be publishing some research on mobile operator business models (more: www.informatm.com/fmobm).

The chair and vice chair of WAC are Vodafone’s chief executive for Europe, Michel Combes, and France Telecoms’ deputy CEO, Jean-Philippe Vanot, respectively. The board of directors also includes executives from AT&T, China Mobile, Deutsche Telekom, KT Corporation, NTT DoCoMo, SK Telecom, Smart Communications, Softbank Mobile, Telecom Italia, Telefonica, Telekom Austria Group, Telenor and Verizon. Twenty carriers have so far signed up to the initiative as fee-paying members.

WAC aims to commercially launch its SDK by February of next year, allowing developers to create widgets that will run on a wide range of devices and be sold on the application stores of a wide range of operators – and it is confident it can keep to that deadline.

It all sounds impressive. So could operators prove sceptics wrong and successfully pull off a multilateral initiative of this scale where so many others have failed before? Could operators have found the answer to fighting back against the huge lead taken by mobile-industry outsiders Apple and Google on the mobile applications front?

I, for one, remain sceptical.

JIL numbers
WAC is largely modelled on its predecessor JIL, which also set out with the aim of creating a single SDK to develop mobile widgets for the combined customer base of nearly one billion subscribers of its member operators. JIL was launched more than two years ago, yet so far 9,000 developers have signed up and 8,000 widgets have been published on the platform. Contrast that with the 43,000 developers and 236,000 active applications currently on Apple’s App Store and the 5 billion downloads the store has clocked up since its launch on the iPhone in July 2008. No numbers are available for the number of JIL downloads.

What’s more, the only avenue available to JIL developers to sell their widgets is Vodafone’s V360 Shop, which is only available on a limited number of devices through eight of Vodafone’s subsidiaries in Europe – covering only part of the carrier-group’s footprint. And the Vodafone 360 service, of which the V360 Shop is a part, has had disappointing take up, accumulating fewer than 500,000 users by the end of May. The latest news from Vodafone is that it is discontinuing development of the Samsung H1 and M1 handsets, the only two devices which natively integrate the Vodafone 360 service.

Meanwhile, none of the other JIL operators have started distributing the platform’s widgets yet.

What is true of JIL will not necessarily be true of WAC. But, when combined with the poor track-record that operators have in both mobile content services and multilateral initiatives, the little progress made so far with JIL doesn’t bode well for WAC.

Clash of cultures
Operators need to distract developers’ attention away from iPhone, Android, BlackBerry and other smartphones to have any chance of generating enough traction for WAC. But many developers – and content providers – were left jaded by their first experiences of trying to deal with operators in the bad old days of the haughty operator portals. And most other developers don’t even have the operators on their radar. They belong to the online and computer worlds in which the likes of Google and Apple are iconic brands for whom they feel inspired to create stuff. Telcos are an alien species as far as they are concerned.

The kind of apps that WAC is aimed at – widgets – is also likely to put off many developers. Widgets and other applications created in web-runtime environments have the potential of reaching a broader audience than the native apps developed for specific smartphone operating systems. But their richness and functionality is severely limited by having to cater to lowest-common-denominator handset specs to reach as broad a range of devices as possible. The result is that the user experience is much poorer and the services that can be delivered much more basic, making it much harder to charge a premium. In fact, the vast majority of widgets are offered free of charge.

WAC intends to make it easy for developers to sell their widgets on operator application stores and portals. But that won’t be of much use if users expect to download them for free.

To its credit, WAC is also planning to enable in-app payments and in-app advertising. But it doesn’t expect the latter to come on stream for another two to three years at least, when hopefully the WAC community will have built up enough critical mass to attract enough ad revenue. Meanwhile, Apple’s in-app advertising service, iAd, has generated around US$75 million in the first two months since it started taking bookings, which according to some sources is more than has ever been spent on mobile advertising in the US by the big brands.

Good idea, but…
Don’t get me wrong. I think the idea behind WAC is a good. It is trying to overcome one of the operators’ biggest deficiencies in relation to smartphone players like Apple and Google: global reach. And it is trying to go one better by reaching out to devices of all types – not just the smartphones owned by an elite of mobile users – and by enabling widget payments via carrier billing – a far-more ubiquitous form of payment than the credit/debit-card dependent payment methods pushed by Apple and Google.

But WAC is three years too late. The market momentum now is with the outsiders from the online and computer worlds. The mobile players are playing catch-up, and the operators are at the back of the pack.