Research Notes

Mobile World Congress 2012 – a Preview by Strand Consult

The Mobile World Congress 2012 will be the year where the industry hopefully starts taking a more realistic view of the future…
Next week we will once again be heading towards Barcelona. More than  60.000 people from around 1.500 companies will once again spend almost a week together, exchanging thoughts, experiences and visions. Once again Strand Consult and many of our employees will participate in this tradeshow about a unique industry that is using its own money to invest in modern society’s most vital communication infrastructure. When we join over 60,000 colleagues from our industry it is amazing to think about how little of the taxpayers money is actually being invested in the mobile industry – despite the importance of our industry in a world where one country after another is finding itself in financial difficulties.

Spain is one of the countries that unfortunately knows all about having financial difficulties – and with a pending bus and train strike during the MWC 2012, many of us visiting Barcelona might experience these financial difficulties at first hand. This year’s MWC reminds me of a large Broadway Theatre production, where they say that a bad general rehearsal will result in a successful opening night. A bad MWC general rehearsal is what thousands of MWC participants became part of just a few weeks before the start of the Mobile World Congress, when Spanair filed for bankruptcy and those that had purchased Spanair flights realised that their tickets were now worthless and had to buy tickets with an alternate airline.

Employees of Barcelona’s public transport system have chosen to strike for more pay during the MWC. Perhaps they should try working in the telco industry and learn a little about real competition and how that competition influences companies that are doing business on a liberalised market? I am sure that there are currently many Spaniards that would be happy to take over their jobs at the wages they are currently receiving – or perhaps even for a lower wage.

The GSMA has put together a good program for this year’s MWC. For the first time in many years there is more focus on the part of the mobile industry that is expanding and less focus on markets that are experiencing price reductions and consolidations as a result of the extremely tough Telco competition on mature markets. It is surprisingly refreshing to see so much focus on the innovation coming from emerging markets and the increased focus on mobile operators that are experiencing growth in customers and revenue.

Once again the Mobile World Congress is very focused on the end-users, which will probably result in the MWC attracting a great deal of international media attention. Personally I would have liked to see a little more focus on the technical challenges the mobile networks are currently facing and how the signalling traffic from technically inferior smartphones like some of the iPhone models is influencing the mobile customers’ overall network experience.

There is a great deal of focus on the services that customers are using and even more focus on new services that the industry is hoping to find and which they hope will create the next hockey stick that can create growth in their business. We have no doubt that this is a beautiful dream, but unfortunately we also believe that the hockey stick is not going to appear before the Spanish economy is back on track and the Greek government has paid back their financial debts…

The Telco industry is facing a paradigm shift that is becoming increasingly reminiscent of the experiences from the airline industry. Companies in the Telco industry that understand this will do well and will be very successful. Those that do not understand this will most probably end up like Spanair and either close or become part of the consolidation we are currently seeing on many different markets – and which we will see on even more markets over the coming years. France is most probably the next market where we will see the results of the competition that Free Mobile has recently created by thinking and acting like Ryanair and a number of Danish MVNOs.

This year’s Congress will focus on a number of the areas that we felt were missing from last year’s Congress and which we wrote about here: We can only say we are delighted that the GSMA is aware of what is happening around the world. The only thing we would like more focus on this year is the enormous importance of what the Telco industry is currently doing for our global society. Many countries are heavily taxing the Telco industry and in many countries the Telco industry is operating under extremely difficult conditions regarding acquiring permission to erect mobile masts. In our latest report about this subject we have described some of the mobile mast challenges that the industry is currently facing in many countries How to ensure satisfactory mobile coverage in the future

The Mobile World Congress 2012 is an El Dorado of knowledge, people and entertainment at a very high level. Once again there is a great deal of focus on the areas that have been hyped by the media. But the impressive list of speakers will probably guarantee participants that some of that hype will either be brought down to earth, or alternatively reach new heights…

Keynotes – The usual suspects will be speaking, but we will also be seeing a number of new exciting faces.

There are some exciting name was among the list of keynote speakers at this year’s Congress. Below we have selected some of the speakers that we are most looking forward to see in Barcelona.
This will be the fourth time Google’s now former CEO Eric Schmidt speaks at the MWC. Each year his message has been that Google is the operators’ best friend. Some say that if you repeat a lie enough times people will start believing it. It is no secret that a lot of people do like Google, but more people should take a serious look at what Google is actually trying to do. Strand Consult has always been critical regarding Google’s claims and each year CEO John Strand has asked Eric Schmidt questions that Eric Schmidt has had difficulty in answering. Eric Schmidt would like people to believe that Google is a company that is contributing a great deal to the Telco industry, but the fact is that Google is a parasite that is benefiting at the expense of others. Google is an expert at minimising their contribution to the national economies and is currently placing a cultural centre in Paris to try to prove that they are European – Eric Schmidt does not seem to realise that if you put a redneck in a dinner jacket, he will still be a redneck.
This year will be the second and perhaps last time we see Nokia’s CEO Steven Elop speaking. Last year he premiered in front of an audience of MWC participants and all the journalists reporting from Barcelona. Looking back at last year’s presentation, there is no doubt that he can only do better this year. Last year Steven Elop stood up and told the whole Telco industry and all his customers that the mobile phones that Nokia would launch in 2011 would be based on a sinking platform that he personally did not believe in. A lot has happened since then and this year Steven Elop needs to prove that he can deliver an alternative product, or else he will end up being the last man on that sinking platform that he spoke so much about last year. Strand Consult feels a little sorry for Steven Elop. He was in a difficult position to start with and managed to put himself in an even more difficult position in an industry where many journalists believe that the American mobile market represents the global mobile market and that everybody has an iPhone.

We are also looking forward to hear Anne Bouverot speak. Anne Bouverot is the new Director  General (note the French title) of the GSMA. It will be exciting to hear what she has to say and whether she will focus as much on France as Rob Conway focused on the USA. In our opinion, the GSMA is a global organisation and it is important to remember that the organisation is handling both global, regional and not least national interests for mobile operators around the world. We believe the GSMA has not done enough to emphasise that our private Telco industry is posting huge investments in vital national infrastructure and how these investments are helping the development of modern society. We believe the GSMA should spend much more time explaining how operators are helping society and start lobbying to ensure that the political system starts looking at how society can in return help our industry.

Another speaker we are looking forward to hear is Bret Taylor from Facebook, who undoubtedly will talk about Facebook’s success on mobile platforms. The 800 million users and traffic that Facebook is creating on the mobile operators’ networks is proof that Facebook is a success. But one of the things that Bret Taylor will not be speaking about is how Facebook is influencing SMS traffic in countries like Denmark, Norway, Finland and Holland, where SMS traffic is decreasing by around 20% a year. Strand Consult published a research note about Facebook’s influence on SMS traffic a few months ago: In an industry where around 14% of the mobile operators’ revenue derives from SMS traffic, Facebook is single-handedly in the process of butchering one of the operators’ largest cash cows. Perhaps Facebook should consider calling their presentation: “Your worst nightmare – come and hear Bret Taylor from Facebook”.
An interesting speaker will be Bill Ford Jr from the Ford Motor Company. He will be speaking about innovation and how his company is using innovation to improve their customers’ experience when they purchase and use their cars. It could be quite interesting if he explained how Henry Ford created a paradigm shift in the car industry with his Ford T model. Then he could draw a parallel to how the competition on the Telco market, combined with what companies like Facebook, Google, Microsoft and Apple are currently doing, will create a very similar paradigm shift in the mobile industry.

Another exciting person that is returning to the MWC is Ericsson’s Hans Vestberg. Hans Vestberg has a passion for handball and is the boss of an impressive company that is pushing consolidation on the infrastructure market. Market players like NSN, Alcatel Lucent and many others have focused on tightening their belts and the Chinese with ZTE and Huawei have started focusing on making money. In that world Ericsson has positioned itself as the market player that can offer their customers one-stop shopping and their strategy is to purchase products and customers locally, regionally and especially globally. The big question is not whether there will be room for Ericsson on the future market, but rather whether they can increase their future earnings to reward their shareholders?

One session we are very much looking forward to see is with Sunil Mittal from Bharti Airtel, Santiagoo Fernandez Valbuena from Telefonica and Jo Lunders from VimpelCom, who will be speaking about Mobile Operator Strategies on developing markets. Strand Consult often works with operators from these markets and we are constantly surprised and impressed with how operators and companies on these markets are pushing forward and creating a great deal of innovation. When we visit these regions of the world, it is not difficult to understand why we are seeing so much growth in the BRIC countries compared to our spoilt Western world.

This year’s list of keynote speakers is as usual impressive. We pray that the moderators and audience will prepare more critical questions than we have seen in past years. That would make the MWC 2012 an extremely exciting experience that will reward us with a great deal of information and plenty of entertainment.

A week with lots of other exciting presentations…

Looking over the many other presentations we will be seeing during week nine, there is no doubt that there is a great deal of focus on many of the subjects that have been hyped by the media. One could say that the keynote speakers will be delivering the entertainment, while the many speakers at a lot of the smaller sessions will be delivering some of the knowledge you will be needing if you want to safely navigate this complex industry that is facing many large challenges.

One thing that is currently being hyped is the mobile cloud. We have no doubt that the mobile operators’ share of the cloud market will most probably be marginal, in fact mobile operators will probably end up with the dubious honour of being the mobile cloud dumb pipes. It is difficult to see which operators are currently clever enough to transform into becoming a smart pipes and combine future cloud traffic with services that they can profit from. One thing is certain and that is that the mobile cloud is not the hockey stick that will push forward new growth for the mobile industry any time in the near future.

It will be interesting to see whether anybody speaks about the distortion in competition we are seeing on this market, where global market players like Amazon, Google and Microsoft are placing their clouds in TaxFree heavens, whereas national mobile operators have no choice but to place theirs locally and thereby be subjected to local taxes and fees. The whole issue regarding Telco globalisation is an area that there is simply too little focus on at this MWC. We can only hope that there will be more focus on this increasingly important area next year.

We are looking forward to the sessions about mobile value added services. It would be nice if there was more focus this year on how to make money in this area. It will be exciting to hear about all the people that have not been able to make money on apps so far and what role operators will have in this area in the future. Will operators be delivering premium billing and APIs that can make apps more intelligent, or will operators be reduced to dumb pipes?

Many of the sessions are about subjects that were already discussed at last year’s conference. Things like mobile payment, mobile marketing, embedded connectivity etc. Are areas that were covered by last year’s conference. Probably the biggest difference is that this year there will be more real cases than there were last year as the industry is starting to get real experience in these areas. Strand Consult is more interested in the underlying business models of these areas and our current position is that investing in this type of new technology will not guarantee any growth in turnover or earnings.

This year there is not much focus on MVNOs and the MVNO market – a market that Strand Consult has been working with for many years – This is a pity. I would have really enjoyed having Free Mobile’s CEO Maxime Lombardini talk about their experience on launching on the French market. Right now we are seeing the same development that has already been created by a number of MVNOs on the Danish, Norwegian, Dutch and German markets being created by this French MNO. Reading how Free Mobile’s French competitors are trying to handle the new development on the French mobile market is very entertaining – and in many ways very predictable. We are sure that what is now currently happening in France will also happen on many more markets over the coming years.

We are really looking forward to….

There is no doubt that the Mobile World Congress 2012 will be exciting, especially for those that are interested in what is happening in the parts of the world with the largest mobile development and growth right now. We sincerely hope that participants from the Western world and especially the USA will go home with new knowledge about mobile markets that are far more exciting than the American mobile market, where just a few mobile operators are sharing 330 million CHECK DET TAL customers and where the mobile operators are primarily competing on their ability to sell a mobile phone at under cost price – which is both bad for their business and their shareholders. We know that AT&T, Verizon and T-Mobile could spend a great deal of time talking about their experiences in doing exactly that, but it looks like we will be spared this year.

This year’s Congress will have a wider focus than we have seen previously and we think that everybody who travels to Barcelona to participate in this year’s Mobile World Congress will get some real value for their money. During the Congress we will receive a great deal of news, learn what a number of the markets largest players will be focusing on in the coming 12 months and see who become the new media darling’s. Strand Consult is very much looking forward to participating and meeting our customers and partners, who like us are congregating in Barcelona to be inspired, meet equal minded people and not least be entertained by a number of exciting lectures.

The biggest challenge of this year’s MWC is most probably that the Spanish society appears to be over-populated by people who do not understand what it takes to survive in a global society and that believe that they can spend more money than they earn. Perhaps the GSM should give out some free passes to some of those people so they can learn how to survive on a market with extremely high competition. On the other hand, it is possible that some of the striking transport workers or their trade unions believe that Spain should travel the same path as Greece and that is why they want to send a strong signal to the global technology industry that Spain is a country with an unstable workforce that you should avoid investing in…

What happened at previous MWCs?

Every year Strand Consult publishes a pre-conference newsletter up to the Mobile World Congress about what we believe we will be seeing and hearing at the conference and a post-conference summary after it is finished. You can read our newsletters from the past eight years here:




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