Research Notes

Mobile World Congress 2015 – a Preview by John Strand, Strand Consult

Each year Strand Consult publishes a preview of the Mobile World Congress. MWC 2015 has all the ingredients to become one of the most fascinating in the event’s 19 year history.

Last year I wrote that the GSMA has to reinvent itself or die. I would like to repeat this message because I fear that GSMA has lost its influence in policy and regulatory circles and that key GSMA members will go their own way on political discussions, leaving the GSMA to focus on technical standards, albeit work they are good at.

The mobile telecom industry has never faced as many challenges as it does now, attacked by OTT players on the one side and political and regulatory systems on the other.

Here are the topics of this research note

• GSMA must show leadership to effectively address the industry’s challenges
• Anticipated keynotes – All the stars will be present, whether speaking or in the audience
• Tom Wheeler and Mark Zuckerberg – who and what they represent
• 10 things that which will get attention or should get attention
• What can happen at MWC 2015

The mobile telecom industry is not only under pressure from traditional competition with many providers in the market, but competition from OTT players and different technologies. As markets become more competitive, regulation generally declines, but today in the mobile industry, it is the opposite. Political and regulatory requirements are increasing. GSMA needs to act quickly as investors will start to move their investments to other countries and industries.

These competitive pressures are driving a wave of consolidation. In looking at the remedies imposed mergers, it is obvious that regulatory authorities do not understand what creates competition in the mobile market nor the impact of OTT players. See this research note.

In my 2015 predictions for the mobile industry, I wrote this research note which has a number of relevant points for MWC. Unfortunately there is not always a correlation between who gets attention and who deserves attention at MWC, so following are the things and people I think are important and why

MWC 2015 has a fantastic lineup of speakers who can provide stimulating discussion and debate. Clever journalists who can ask the right questions will be able to create articles which get international attention. A key question should be should be: Is the speaker a realist or an optimist when he looks at the mobile telecom industry’s future?

MWC is like the mobile industry’s Academy Awards. All of the stars are either in the audience or on the stage. The list of speaker is long: Ralph de la Vega, Xi Guohua, Timothy Höttges, Hans Vestberg, Hans Wijayasuriya, Ken Hu, Dr. Hwang Chang-Gyu, Stéphane Richard, Jon Fredrik Baksaas, César Alierta, Vittorio Colao, Anne Bouverot and many others. MWC is the place to meet those who make a difference and those who dream of making a difference.

Among the many speakers is the head of the Federal Communications Commission Tom Wheeler, whom I call my friend. I have known Tom for 14 years and regard him as an intelligent, likeable man with integrity. He is a man who possesses a number of qualities that make him a good person.

Real friends can speak their mind to each other. To put it simply, I find it difficult to understand many of the things that Tom says in his role as Chairman, and a number of the actions taken by the FCC under his leadership depart from the values he has demonstrated through his life. For example I cannot understand why on February 26 the FCC will vote to impose Title II utility regulation on broadband without the public having seen the 332 pages of proposed rules. Among many others, FCC Commissioner Ajit Pai has called for their release to the public.

I also find it hard to understand why Tom and the FCC are not cooperating with a Congressional investigation of the process under which Title II regulations have been made, including allegations that the Obama White House has undue influence in the net neutrality rule making process. If it is the case that Congress is wrong, then Tom needs to be more clear in explaining why the FCC need not cooperate.

In fact, I understand the desire of politicians who want to get control of the Internet. It is not necessarily because they want to spy on citizens, but because they want to limit terrorists’ and psychopaths’ use of the network. There is no doubt that Edward Snowden’s revelations embarrassed the NSA. Going forward the American government will likely be smarter about their communication on this issue. Moreover they will likely use regulation to legitimize surveillance. That is to say, regulation on net neutrality is an effective subterfuge; it enshrines the government’s control of the Internet under the appearance of keeping it “open and free”.

The question for Tom Wheeler is whether he believes that the telecom industry is the greater threat to the Internet than many governments around the world which ignore international rules and conventions, or even governments that spy on their NATO partners.

Facebook’s Mark Zuckerberg is another keynote. Last year journalists avoided asking him the controversial questions. Let’s be clear: Mark Zuckerberg is the president of the world’s largest nation and the world’s fastest growing country. In the offline world, citizens with complaints can have a number of ways for redress, but in Facebook, Zuckerberg and his staff are the legislative, executive, and judicial powers all in one.

Zuckerberg is the president of a nation where the citizens are the product he sells. He collects more detailed information more systematically on these citizens than the NSA and other intelligence services. It is true that people join this nation willingly, but they do so because their friends are there. To not be part of it is to isolate oneself.

GSMA should facilitate the debate about what Facebook, NSA, and others are doing. They they could announce that the mobile industry should assume the role of consumer watchdog. Read the research note.

When I hear Tom Wheeler talk about a free and open Internet at this recent event where he tries to sell the story of the US government guaranteeing a free Internet, I want to ask him whether he thinks that operators have a serious desire to limit people’s freedom on the Internet.

When I hear Mark Zuckerberg talk about free and cheap Internet for people in all countries as he did at MWC 2014, I want to ask him whether it is his way to lure more people into his country called Facebook.

Journalists have the opportunity to ask critical questions if they dare.

10 things that will get much focus or should get focus

1. There will be so much talk about 5G that many will come home from MWC thinking that 5G standards are already in place and that 5G has been launched commercially. The 5G debate is exciting and important, but the question is how many of the technical solutions that will be included in 5G cannot be launched commercially because net neutrality rules will prohibit them.

2. There will be focus on specialized/managed services and intelligent traffic management because they give users a better user experience and access to capacity. MWC will demonstrate that these technologies individually and collectively constitute the kind of solutions and technologies that create the future telecommunications network. The problem is that many of these solutions are not compatible with the network neutrality rules in dozens of countries and that five politically-appointed commissioners of the FCC will vote on 26 February in the USA. In spite of having rules in place, regulators in these countries cannot answer how these rules should be interpreted. Not only can the Dutch and Slovenian regulators not explain the difference between VoLTE and VoIP, they will punish operators for their failing to provide as regulatory guidance on how the rules should be interpreted in a world where technology moves fast.

3. We learned of LTE in unlicensed spectrum (U-LTE) at last year’s MWC. This year there will be focus on these solutions. Companies such as Qualcomm will demonstrate end to end solutions that allow cable TV providers with an MVNO agreement to play a serious role in the mobile market. Cable TV provider Telenet has already launched this solution in Belgium. Broadband networks combined with U-LTE can create a paradigm shift in the mobile telecom world.

4. Cybersecurity will be high on the agenda, just few days after Snowden revealed how the NSA and Britian’s GCHQ has hacked into Gemalto and stole its encryption keys. I hope that this story is not as bad as it looks. If Gemalto feels wronged, I understand them.

5. Phones and MWC belong together, and there will be focus on Microsoft’s new platform Windows 10. There will probably be some exciting news, but the question is whether they are capable to bring it to the market in high volume. Microsoft lost its keynote and no longer has the cool factor. But Apple has no keynote either, in spite of its unique position in this market. It has been a boring few years for phones, as there have been no surprises in design. Maybe this year form factors and keyboard phones will get a renaissance.

6. The Internet of Things and wearables will get attention, seasoned with hype. GSMA will provide data about how technologies are not just dreams of the future but a reflection of what is happening right now. The future could bring even more opportunities and solutions—that is if net neutrality doesn’t bomb zero rating, the fuel necessary for the Internet of Things. It’s easy to gloss over the regulatory challenges in the midst of the hype. Read our research note.

7. Connected Cars. A number of visions sketched by Bill Ford Jr of the Ford Motor Company at MWC in 2012 are real today. The Connected car is about more than the car telling the garage that it’s time for service. The use of software in cars is a defining innovation the coming years.

8. The hype about mobile payment has come and gone. Operators recognize that their role in the payment value chain will likely be limited. Just a few days ago Google acquired Soft Card, the mobile payment joint venture backed by Verizon Wireless, AT&T Mobility, and T-Mobile US. One operator after another who has withdrawn from the payment market, just as Strand Consult predicted 4-5 years ago. Read that research note.

9. The conference theme “The Edge of Innovation” speaks volumes. Not only does Edge suggest the so-called “edge providers” Google, Facebook, WhatsApp, Netflix, and so on “edging” out operators, but the “edge of innovation” also suggests the idea of sitting on the sideline, not driving the innovation. Operators face their own existential moment as to whether they will allow regulators to turn them into dumb pipes or whether they can respond to market forces to create smart networks. See our research note.

10. All the rest – Many want MWC 2015 to reflect some idealized world where people sing “Everything in awesome” like in the Lego movie. The reality may be more like “Fifty Shades of Grey”. While the movie could be seen as a story about a man dominating a woman, it can also be interpreted in light of the Snowden biography “Citizen Four” where the government dominates its citizens.

MWC 2015 will likely be an amazing gathering for 85,000 people where the number of mobile industry stars will eclipse the number of Oscar winners a few days ago. The conference can go in two directions: either it will be a party for the technology geeks oblivious to political and regulatory realities or the GSMA and operators can send a clear message to the political and regulatory leadership that they understand the dilemma created by Internet but that this is an opportunity to have real discussion about how to build a healthy democracy. The mobile industry can be the tool of the government under its regulatory thumb—or it can be the tool of the consumer driving political transparency.

The infrastructure the mobile telecom industry builds and operates is a gold mine for political authorities in many countries. It is a mine which can be used for good or ill. We should demand the guarantees from Tom Wheeler and Mark Zuckerberg that Title II and Facebook are not NSA 2.0.

The MWC shold be the moment of truth for the political and regulatory system. It’s time for the GSMA to step up and for its members to demand results.

Strand Consult provides both pre and post review of the Mobile World Congress. Read our reviews from the past ten years herunder.

If you would like to meet with Strand Consult during the MWC, please contact us.
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