Google's MVNO - Project Fi is disappointing

A first look at Google's MVNO to launch in the US on the Sprint and T-Mobile networks reveals itself a little disappointing (or a relief if you are a network operator). I had chronicled the announcement of the launch from Mobile World Congress and expected much more disruption in services and pricing than what is announced here.

The MVNO, dubbed project Fi, is supposed to launch shortly and you have to request an invitation to get access to it (so mysterious and exciting...).

At first glance, there is little innovation in the service. The Google virtual network will span two LTE networks from different providers (but so is Virgin's in France for instance) and will also connect "seamlessly" to the "best" wifi hotspot. It will be interesting to read the first feedback on how the device selects effectively the best signal from these three options and how dynamically that selection occurs. Handover mid call or mid data sessions are going to be an interesting use case, Google assures you that the transition will be "seamless".

On the plus side, Google has really taken a page from Iliad's free disruptive service launched in France and one-time rumored to acquire T-Mobile US. See here the impact their pricing strategy  has had on the French telecommunications market.

1. Fi Basic service comes with unlimited US talk and text, unlimited international text and wifi tethering for $20 per month.
2. The subscriber is supposed to set a monthly data budget, whereas he selects a monthly amount and prepays 10$ per GB. At the end of the month, the amount of unused data is credited back for 1c / MB towards the following month. The user can change their budget on a monthly basis. Only cellular data is counted towards usage, not wifi. That's simple, easy to understand and after a little experimentation, will feel very natural.
3. No contract, no commitment (except that you have to buy a 600+$ Nexus phone).
4. You can send and receive all cellular texts and calls using Google hangouts on any device.
5. Data roaming is same price as domestic but... see drawbacks

Here are, in my mind, the biggest drawbacks with the service as it is described.

1. The first big disappointment is that the service will run initially only on Google's Nexus 6. I have spoken at length on the dangers and opportunities of a fully vertical delivery chain in wireless networks and Google at first seems to pile up the drawbacks (lack of device choice) with little supposed benefits (where is the streamlined user experience?).
2. "Project Fi connects you automatically to free, open wifi networks that do not require any action to get connected". I don't know you, but I don't think I have ever come across one of these mysterious hotspots in the US. Even Starbucks or MC Donald free hot spots require to accept terms and conditions and the speed is usually lower than LTE. 
3. Roaming data speed limited to 256 kbps! really? come on, we are in 2015. Even if you are not on LTE, you can get multi Mbps on 3G / HSPA. Capping at that speed means that you will not be streaming video, tethering or using data hungry apps (Facebook, Netflix, Periscope, Vine, Instagram...). What's the point, at this stage, better say roaming only on wifi  (!?).

In conclusion, it is an interesting "project", that will be sure to make some noise and have an impact on the already active price war between operators in the US, but on the face of it, there is too little innovation and too much hassle to become a mass market proposition. Operators still have time to figure out new monetization strategies for their services, but more than ever, they must choose between becoming wholesaler or value added providers.

Hyperscalers enter telco battlefront

We have, over the last few weeks, seen a flurry a announcements from hyperscalers investing in telco infrastructure and networks. Between Facebook's $5.7B investment in India's Jio Reliance, to Microsoft's acquisition of Affirmed Networks for $1.35B or even AWS' launch of Outpost and Google's Anthos ramp up.

Why are hyperscalers investing in telecom gear and why now?

Facebook had signalled its intent as far as 2016 when Mark Zuckerberg presented at mobile world congress his vision for the future of the company.

Beyond the obvious transition from picture and video sharing to virtual / augmented reality, tucked-in in the top right, are two innocuous words “telco infra”.

What Facebook realized is that basically anyone who has regular access to broadband will likely use a Facebook service. One way to increase the company’s growth is to invent / buy / promote more services, which is costly and uncertain. Another way is simply to connect more people.

With over 2,5 billion Facebook products users, the company still has some space to grow in this area, but the key limiting factor seems to be connectivity itself. The last billions of broadband unconnected are harder to attain because traditional telecom networks do not reach there. The last unconnected are mostly in rural area. Geographically disperse, with a lower income than their urban counterparts.

Looking at this problem from their perspective, Facebook reached a similar conclusion to the network operators operating in these markets. Traditional telco networks are too expensive to deploy and maintain to reach this population sustainably. The same tactics employed by operators to disaggregate and stimulate the infrastructure market can be refocused and better stimulated by Facebook.

This was the start of Facebook Connectivity, a specific line of business in the social media’s giant empire to change the cost structure of telco networks. Facebook connectivity has evolved to encompass a variety of efforts, ranging from the creation of TIP (an open forum to disaggregate and open telco networks), the co investment with Telefonica in a Joint Venture dedicated to connect the unconnected in latin america and this week, the announcement of its acquisition of 9.9% of Jio Reliance in India.

How about Microsoft, Google and others?

Google had, before the recent open source cloud platform Anthos dug their toes in telco water with project Fi and its fiber businesses.

Microsoft has been trying for he last 5 years to exploit the transition in telco networks from proprietary to IT. Even IBM's Redhat acquisition had a telco interest, as the giants also try to become a more prevalent vendor in the telco ecosystem.

So... why now?

Another powerful pivot point in Telecom is the emergence of 5G. As the latest telephony technology generation rolls out, telco networks are undeniably being re-architected and redesigned to look more like cloud networks. This creates an interesting set of risks and opportunities for incumbents and new entrants alike.
For operators, the main interest is to drastically reduce the cost of rolling out and maintaining complex telco networks by using powerful virtualization, SDN and automation techniques that have allowed hyperscalers to dominate cloud computing. These technologies, if applied correctly can transform the cost structure of network operators, particularly important at the outset of multi billion dollars investment in 5G infrastructure. The radical cost structure disruption comes from disaggregation of the network between hardware and software, the introduction of new vendors in the value chain who drive price pressure on incumbents and the widespread automation and cloud economics.

These opportunities bring also new risks. While they open up the supply chain with the introduction of new vendors, they also allow new actors to enter the value chain, either to substitute and dominate legacy vendors or create new control points (see the orchestrator wars I have been mentioning in previous posts). The additional risk is that the cost of entry into telco becomes lower for cloud hyperscalers as the technology to run telco networks transitions from proprietary closed ecosystem to open source, cloud environment.

The last pivot point is another telco technology that is very specifically aimed at creating a cloud environment in telco networks: Edge computing. It creates a cloud layer that can allow the provision, reservation and consumption of telco connectivity, together with cloud computing. As a greenfield environment, it is a natural entry point for cloud operators and new vendors alike to enter the telco ecosystem.

Facebook, Google, AWS, Microsoft and others seem to think that 5G and edge computing in particular will be more cloud than telco. Network operators try to resist this claim by building a 5G network that will be a fully integrated connectivity and computing experience, complementary to public clouds, but different enough to command a premium, a different value chain and operator control.

In which direction will the market move? This and more in my report and workshop Edge computing and Hybrid Clouds 2020.

2015 review and 2016 predictions

As is now customary, I try to grade what I was predicting for 2015 and see what panned out and what didn't. I'll share as well what I see for 2016.

Content providers, creators, aggregators:

"They will need to simultaneously maximize monetization options by segmenting their user base into new price plans and find a way to unlock value in the mobile market.While many OTT, particularly social networks and radio/ audio streaming have collaborated and signed deals with mobile network operators, we are seeing also a tendency to increasingly encrypt and obfuscate online services to avoid network operators meddling in content delivery." 

On that front, I think that both predictions held true. I was envisioning encryption to jump from 10 to 30% of overall data traffic and I got that wrong, at least in many mature markets, where Netflix is big in mobile, we see upwards of 50% of traffic being encrypted. I still claim some prediction here, with one of my first post indicating the encryption trend 2 years before it started in earnest.

The prediction about segmentation from pricing as OTT services mature has been also largely fulfilled, with YouTube's 4th attempt, by my count, to launch a paid service. Additionally, the trend about content aggregators investing in original content rights acquisition is accelerating with Amazon gearing up for movie theaters and Netflix outspending traditional providers such as BBC with a combined investment by both company estimated in the 9$Bn range. Soon, we are talking real money.

In 2016, we will see an acceleration of traditional digital services that were originally launched for fixed line internet transitioning to predominantly mobile or mobile only plays. Right now, 47% of Facebook users are exclusively through  mobile and account for 78% of the company's revenue. More than 50% of YouTube views are on mobile devices and the corresponding revenue growth is over 100% year on year. 49% of Netflix' 18 to 34 years old demographics watches the service on mobile devices. We have seen signs with Twitter's vine,  and Periscope as well as Spotify , MTV and Facebook that the battlefield will be on video services.

Network operators: Wholesaler or value providers?
The operators in 2016 are still as confused, as a community as in 2015. They perceive threats from each other, which causes many acquisitions, from OTTs, which causes in equal measure many partnership and ill-advised service launches and from regulatory bodies, which causes lawyers to fatten up at the net neutrality / privacy buffet.

"we will see both more cooperation and more competition, with integrated offering (OTT could go full MVNO soon) and encrypted, obfuscated traffic on the rise". 

We spoke about encryption, the OTT going full MVNO was somewhat fulfilled by Google's disappointing project Fi launch. On the cooperation front, we have seen a flurry of announcements, mostly centered around sponsored data or zero rated subscription services from Verizon, AT&T.

"We will probably also see the first lawsuits from OTT to carriers with respect to traffic mediation, optimization and management. " 

I got that half right. No lawsuit from content providers but heavy fines from regulators on operators who throttle, cap or prioritize content (Sprint, AT&T, ...).

As for digital service providers, network operators are gearing themselves to compete on video services with services such as mobile TV /LTE broadcast (AT&T, EE, Telekom Slovenje, Vodafone), events streaming (China Telecom, ), sponsored data / zero rated subscription services (Verizon, T-mobile Binge On, Sprint, AT&T, Telefonica, ...).

"Some operators will seek to actively manage and mediate the traffic transiting through their networks and will implement HTTPS / SPDY proxy to decrypt and optimize encrypted traffic, wherever legislation is more supple."

I got that dead wrong. Despite interest and trials, operators are not ready to go into open battle with OTT just yet. Decrypting encrypted traffic is certainly illegal in many countries
or at the very least hostile and seems to be only expected from government agencies...

Mobile Networks Technology

"CAPEX will be on the rise overall with heterogeneous networks and LTE roll-out taking the lion share of investments. LTE networks will show signs of weakness in term of peak traffic handling mainly due to video and audio streaming and some networks will accelerate LTE-A investments or aggressively curb traffic through data caps, throttles and onerous pricing strategies."

Check and check.

"SDN will continue its progress as a back-office and lab technology in mobile networks but its incapacity to provide reliable, secure, scalable and manageable network capability will prevent it to make a strong commercial debut in wireless networks. 2018 is the likeliest time frame."

I maintain the view that SDN is still too immature for mass deployment in mobile networks, although we have seen encouraging trials moving from lab to commercial, we are still a long way from a business case and technology maturity standpoint before we see a mobile network core or RAN running exclusively or mostly on SDN.

"NFV will show strong progress and first commercial deployments in wireless networks, but in vertical, proprietary fashion, with legacy functions (DPI, EPC, IMS...) translated in a virtualized environment in a mono vendor approach. "

We have seen many examples of that this year with various levels of industry and standard support from Connectem, Affirmed Networks, Ericsson, Cisco and Huawei.

"Orchestration and integration with SDN will be the key investments in the standardization community. The timeframe for mass market interoperable multi vendor commercial deployment is likely 2020."

Orchestration, MANO has certainly driven many initiatives (Telefonica OpenMANO) and acquisitions (Ciena acquired Cyan, for example) and remains the key challenge in 2016 and beyond. SDN NFV will not take off unless there is a programmatic framework to link customer facing services to internal services, to functions, to virtual resources to hardware resources in a multi-vendor fashion. I still maintain 2020 as the probable target for this.

In 2016, the new bit of technology I will investigate is Mobile Edge Computing, the capacity to deploy COTS in the radio network, unlocking virtualized services to be positioned at the network's edge, enabling IoT, automotive, Augmented Reality or Virtual Reality services that require minimal latency to access content even faster.

In conclusion, 2016 shows more than ever signs that the house of cards is about to collapse. Data traffic is increasing fast, video is now dominating every networks and it is just starting. With 4K and then 8k around the corner, without talking about virtual or augmented reality, many of the players in the value chain understand that video is going the next few years' battlefield in mobile, OTT and cloud services. This is why we are seeing so much concentration and pivot strategies in the field. 
What is new is the fact that if mobile was an ongoing concern or barely on the radar for many so-called OTT, it has now emerged as the predominant if not exclusive market segment in revenue. 
This means that more pressure will rain on network operators to offer bandwidth and speed. My reports and workshops show that mobile advertising is not growing fast enough in comparison to the subscribers eyeball moving to mobile screens. This is mostly due to the fact that video services in mobile networks are a pretty low quality service, which will get worse as more subscribers transition to LTE. The key to unlock the value chain will be collaboration between operators and OTT and that will only happen if/when a profitable business model and apportioning of costs is worked out.

At last, my prediction about selfie kills seem to unfortunately have been fulfilled with selfies now killing more people than shark attacks. Inevitably, we have to conclude that in 2016, commercial drones and hoverboards will kill more people than selfies...

That's all folks, see you at MWC next month.

All you need to know about T-Mobile Binge On

Have you been wondering what is T-Mobile US doing with your video on Binge On?
Here is a small guide and analysis of the service, its technology, features and limitation.

T-Mobile announced at its Uncarrier X event on November 11 the launch of its new service Binge On. The company's CEO remarked that video is the fastest growing data service with +145% compared to 2 years ago and that consumers are increasingly watching video on mobile devices, in wireless networks and cutting the cord from their cable and satellite TV providers. Binge on was created to meet these two market trends.

I have been previewing many of the features launched with Binge on in my video monetization report and my blog posts (here and here on encryption and collaboration) over the last 4 years.


Binge On allows any new or existing subscribers with a 3GB data plan or higher to stream for free videos from a number of apps and OTT properties. Let's examine what the offer entails:

1. Subscribers with 3GB data plans and higher are automatically opted in. They can opt out at any moment and opt back in when they want. This is a simple mechanism that allows service transparency, but more importantly underpins the claim of Net Neutral service. I have pointed out for a long time that services can be managed (prioritized, throttled, barred...) as long as subscribers opt in for these. Video optimization falls squarely in that category and T-Mobile certainly heeded my advice in that area. More on this later.
2. Services streaming free in Binge on are: Crackle, DirecTV, Encore, ESPN, Fox Sports, Fox Sports GO, Go90, HBO GO, HBO NOW, Hulu, Major League Baseball, Movieplex, NBC Sports, Netflix, Showtime, Sling Box, Sling TV, Starz, T-Mobile TV, Univision Deportes, Ustream, Vessel, Vevo, VUDU.
3. You still have to register / subscribe to the individual services to be able to stream free on T-Mo network.
4. Interestingly, no Google properties (YouTube) or Facebook included yet. Discussions are apparently ongoing.
5. These OTT video services maintain their encryption, so the content and consumer interactions are safe. 
6. There were mentions of a mysterious "T-Mobile proprietary streaming technology and video optimization" that requires video service providers to integrate with T-Mobile. This is not transcoding and relies on adaptive bit rate optimization, ranging from throttling data to transrating, to manifest manipulation (ask video providers to enable un-encrypted manifest so that it can be edited and limited to 480p definition).
7. Yep, video is limited at 480p definition, which T-Mobile defines as DVD quality. It's going to look good on a smartphone, ok on a tablet and bad on anything bigger / tethered.
8. I have issue with the representation "We've optimized streaming so that you can watch 3x more video" because mostly it's: 



File size per hour of streamed video per definition

1. Inaccurate (if this is unlimited, how can unlimited be 3x what you are currently watching?); 
2. Inexact (if they are referring to the fact that a 480p file could in average be 1/3 of the size of a 1080p file, which is close enough), they are assuming wrongly that you are only watching HD 1080p video, while most of these providers rely on adaptive bit rate, therefore varying the video definition based on the networks' conditions.
3. Wrong since most people assume watching 3X more video means spending 3X the amount of time watching video, rather than 3X the file size.
4. Of bad faith, since T-Mobile limited video definition so that users wouldn't kill its network. Some product manager / marketing drone decided to turn this limitation into a feature...
9. Now in the fine prints, on the rest of the video you watch that are not part of the package, expect that "Once high-speed data allotment is reached, all usage slowed to up to 2G speeds until end of bill cycle." 2G speed? for streaming video?  like watching animated GIF? That's understandable, though, there has to be an carrot (and a stick) for providers who have not joined yet, as well as some fair usage rules for subscriber breaching their data plans - but 2G speed? come on, might as well stop the stream rather than pretend that you can stream anything on 128 kbps.
10. More difficult to justify is the mention "service might be slowed, suspended, terminated, or restricted for misuse, abnormal use, interference with our network or ability to provide quality service to other users". So basically, there is no service level agreement for minimum quality of service. Ideally, if a video service is limited to 480p (when you are paying Netflix, etc. for 1080p or even 4K, let's remember), one should expect either guaranteed level or a minimum quality floor?
11. Another vague and spurious rule is "Customers who use an extremely high amount of data in a bill cycle will have their data usage de-prioritized compared to other customers for that bill cycle at locations and times when competing network demands occur, resulting in relatively slower speeds. " This is not only vague and subjective, it will vary over time depending on location (with a 145% growth in 2 years, an abnormal video user today will be average tomorrow). More importantly, it goes against some of the net neutrality rules. 

T-Mobile innovates again with a truly new approach to video services. Unlike Google's project Fi, it is a bold strategy, relying on video optimization to provide a quality ceiling, integration with OTT content providers to enable the limitation but more importantly an endorsement of the service. It is likely that the service will be popular in terms of adoption and usage, it will be interesting to see, as its user base grows how user experience will evolve over time. At least, there is now a fixed ceiling for video, which will allow for network capacity planning, removing variability. What is the most remarkable in the launch, from my perspective is the desire to innovate and to take risks by launching a new service, even if there are some limitations (video definition, providers...) and risks (net neutrality).

Want to know more about how to launch a service like Binge on? What technology, vendors, price models...? You can find more in my video monetization reports and workshop.

OTT as MVNO… or MNOs

This is an excerpt from my latest report "Video monetization 2015" .

OTT providers on their side might have some slightly different plans and views from mobile network operators. Most of them have built a business predominantly digital, based on internet-based delivery and had had to navigate the intricacies of creating an ecosystem (content creation, aggregation, distribution,…) and a business model (free, freemium, ad sponsored, hybrid, subscription, sponsored…) for the internet. 

This effort has resulted in partnerships and value chains, where content delivery is a little part of the value and when third parties like CDN can’t provide suitable or economical service levels, they are replaced by homegrown solutions, as illustrated by Netflix and Google’s caching strategy.

As a result, I believe that Google’s SVP products Sundar Pichai’s announcement at mobile world congress 2015 is likely to be a sea change. The company has decided to put rumors of becoming an MVNO to bed by integrating vertically the value chain one step further. The company will launch a MVNO service in the US, probably on Sprint and/or T-Mobile networks, blending cellular and wi-fi coverage. It starts to look increasingly like the dystopian future described here.

It is very likely that Google being who they are, will be looking at extending their services to mobile in a very different fashion than a mobile network operator. One can muse that in all likeliness, a Google subscriber (!?) with an Android device on YouTube or G+ is unlikely to pay for minutes of voice or Megabytes of data. It is likely that this first attempt to translate the very basics of mobile network economics into an ad sponsored model will have a very disruptive and durable effect on the whole value chain.

If you remember, this is not the only initiative that Google has with mobile networks. Since 2013, the company has been exploring the possibility to build and operate wireless networks in Southeast Asia and sub-Saharan Africa. If you put this with the recent announcement that Telstra in Australia, Vodafone in New Zealand and Telefonica in South America have all agreed to participate in live trials of the Loon project, it is likely that Google will look at being increasingly involve in cellular networks. The project now supports LTE and balloons can stay up for about 6 months. 

Driving the nail farther in operator’s coffins, Mark Zuckergerg at the same show was advocating for Facebook’s initiative internet.org that is promoting free mobile internet access in emerging countries. The rationale here is that free internet promotes usage, which promotes engagement, which promotes new revenues. Current experiments in Millicom Paraguay or Tanzania, saw increases of data users by the tune of 30% and 10x increase in smartphone sales.

All in all, OTT providers have fundamentally different view of services and value different things than mobile network operators. The reconciliation of these views and the emergence of a new coherent business model will be painful but necessary.

More on the subject, as well as strategies from OTT and mobile network operators to monetize video in "Video monetization 2015". 

Why Telcos need Open Core Surgery

 (This article was initially published in Light Reading)

At Mobile World Congress, TIP (the Telecom Infra Project, an industry forum created by Facebook and a number of leading telco operators and IT vendors), announced the creation of a new project group called Open Core Network. Details have starting to emerge last week, with a webinar.

The ambitious target of the group is to define and develop an open and disaggregated 4G Evolved Packet Core and 5G Core for wireless, wired, Wi-Fi on a variety of use cases.

We have seen in the recent past that various attempts to open up the telco cloud ecosystem and value chain have had contrasted results.

• Telco clouds, based on VNFs and Openstack-like virtualization layer have mostly failed to reach critical mass in deployment and usability.
•  ETSI-defined orchestration efforts based on open source projects such as OSM (Open Source Mano) and ONAP (Open Network Automation Platform) have been a work in progress and have equally, to date, failed to become automated telco networks app stores.
• TIP has been successful with the definition, launch and deployment of Open RAN. We have recently seen announcements from Altiostar, Nokia and Cisco in Rakuten's network, as well as from Mavenir in Idea and DISH networks.

As we know, these efforts are aimed at disrupting the current telecom infrastructure provider cost structure by disaggregating traditional networks.

First by separating hardware from software, so that the solutions can be deployed in white boxes - Commercial Off The Shelf (COTS) hardware - rather than costly proprietary ones.

Second by breaking telecom functions into software elements that can be deployed, managed and sourced independently from each other. This is key in the sense that it allows new vendors to enter the ecosystem, who can specialize in specific elements rather than end-to-end solutions. This increases competition and allow a more flexible sourcing strategy, with either best-of-breed vendors for each elements or selection of vendors for fit-for-purpose use cases deployments. The key to enable this scenario is an architecture that is accepted by all, with well-defined software elements functions and more importantly, open, standard, rigid interfaces that guarantee that one vendor can be substituted by another without undue integration effort.

5G is supposed to be the first telco cloud network that is natively virtualized, software-defined, elastic and automated at scale. This can be achieved today by deploying a single vendor solution from one of the dominant telco vendors. Things start to complicate vastly if one wants to deploy a multi-vendor network. Since the standards are not quite finalized on some of the elements and behaviour of a 5G network and operators are announcing and launching 5G networks nonetheless, vendors have to fill the gaps with proprietary implementations, and extensions to the standards to make their end-to-end solution automated, software defined and elastic.

One last bastion of telco proprietary implementation is the Core network. The Core network is basically the brain of the telco network. All the consumer data is stored there, all the charging systems reside there, all the elements to decide where traffic should go and how it should be treated live in the Core. This brain is very complex and composed of a number of elements that have, until now, usually been sold and deployed from single vendors. This has long been a trojan horse for dominant telco vendors to control a network. It is also a self-perpetuating decision, as the evolution from one standard version to another or from one generation to another is much more cost effective as an upgrade of the current vendor's solution as opposed to a rip and replace by a new vendor. 

With 5G, the traditional vendors had a few different architectural options for Core deployment and they mostly elected a non-standalone (NSA) version, which can only be deployed as an upgrade to the 4G EPC. It essentially guarantees that a current 4G Core deployment will evolve to 5G with the same vendor, perpetuating the control over the network. This does not only affect the Core network, it also affects the Radio Access Network (RAN), as its implementation, in the early stage of 5G is dependent on an harmonious interworking with the Core. As a result, many traditional Core vendors who are also RAN vendors have created a situation where the only practical and economical way for an operator to launch 5G fast is to deploy Core and RAN from that same vendor. This situation perpetuates the oligopoly in telco supply chain, which reduces innovation and increase costs.

TIP's Open Core is an attempt to create a Core network for 4G and 5G that will be open, composed of software elements that will be provided by independent vendors, all using the same open interfaces to allow low-touch integration and increase the rate of innovation. If the group follows the same path as Open RAN, it could become a major disruption in telco networks, enabling for the first time in decades the possible deployment of a full telco network from a rich ecosystem of vendors and an innovation pace in sync with what we have seen from the hyperscaler world.

This and more in my upcoming report on telco edge and hybrid cloud networks.