Posts Tagged ‘Deutsche Telekom’

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Wi-Fi offload won’t reduce the need for more mobile spectrum

February 5, 2014

During the Wi-Fi Offload Summit in Frankfurt on Jan. 23, a number of interesting developments in the Wi-Fi space were presented. A key question for mobile operators is whether Wi-Fi offload reduces the growth in mobile broadband (HSPA and LTE) traffic and thus the need for more mobile spectrum.

Research presented by Deutsche Telecom from tests in Hamburg and Rotterdam showed that when Wi-Fi is advertised and available free of charge in a particular area, this immediately generates substantial Wi-Fi traffic but does not reduce the volume of mobile data traffic. Towerstream Inc. presented conflicting evidence from its outdoor Wi-Fi offload network in New York.

From other findings presented, it is clear that both Wi-Fi and LTE traffic are increasing dramatically. Perhaps what is at work here is the Jevons paradox, which proposes that as technology progresses, the increase in efficiency with which a resource is used tends to increase (rather than decrease) the rate of consumption of that resource. The increasing availability of free Wi-Fi coupled with a rapid uptake of smartphones and cheap tablets would underpin this theory as one feeds off the other.

The growth in Wi-Fi is also driven by the desire of shops and malls to engage with shoppers on their in-store Wi-Fi networks. There is marketing value for retailers to have shoppers on their Wi-Fi network as soon as the shopper walks into the store. EE in the U.K. is turning this into a small business line, equipping supermarkets such as ASDA with a Wi-Fi infrastructure. Rather than identifying shoppers at the checkout when they swipe their loyalty card, ASDA hopes to be able to identify and engage with shoppers from the minute they are within the store’s Wi-Fi coverage. For example, coupons could be sent to a handset at the beginning of the shopping trip and can be used right away rather than languishing at the bottom of a shopping bag. This is just one of the many marketing benefits of free in-store Wi-Fi.

The simultaneous growth in Wi-Fi and LTE traffic may also be explained by the fact that Wi-Fi has other uses compared to cellular. The proliferation of TV Anywhere apps turns tablets and laptops into TV outlets, and in Canada, Bell has launched the first wireless TV proposition. TV over Wi-Fi creates a surge of Wi-Fi traffic in residential areas. Other devices in offices, public indoor spaces and outdoors rely increasingly on Wi-Fi connectivity because it is cheaper and more flexible than cable connections. This all takes Wi-Fi capacity in cities and raises the Wi-Fi noise floor.

In regard to the rapid adoption of tablets, all are Wi-Fi-enabled, but few are 3G (HSPA) or LTE-enabled. As people take these tablets out of their homes they will look for Wi-Fi access, thus increasing Wi-Fi hotspot usage. However, smartphones have a personal hotspot feature and where tablets are not in Wi-Fi coverage, we are seeing “cellular on-loading” from Wi-Fi devices.

Having paid for a shiny new LTE device, some customers would prefer to pay another €10-20 a month rather than having to faff about with logging onto Wi-Fi. Asking smartphone users to choose between LTE and Wi-Fi is the antithesis of a ubiquitous mobile broadband experience. However, Wi-Fi 2.0 with SIM-based authentication increases the ease of Wi-Fi access and may even be transparent to the user.

Another factor which determines the amount of LTE vs. Wi-Fi traffic are the policies for applications set in smartphones. For example, which bearer is allowed or preferred for which application. Some apps do not work via LTE; for example. FaceTime on the iPhone. In the U.S., the first version of the iPhone 5 with iOS 6 did allow FaceTime over LTE. This came as a bit of a shock to cellular operators as AT&T blocked FaceTime over cellular on most plans, but subsequently changed the policy. What cellular operators really want is to be able to set policies dynamically based on the app, the location, time of day and perhaps even the type of customer.

Nevertheless, most mobile operators have some Wi-Fi offload strategy. The focus is not so much on relieving congestion in busy areas but to deliver an “always best connected” value proposition. In short, LTE and Wi-Fi complement each other. The growth in Wi-Fi does not reduce the need for more cellular spectrum to serve the growth in mobile broadband traffic.

Written by Stefan Zehle, CEO Coleago Consulting

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How much is in a Gigabyte? – or the not so broad-band experience

May 31, 2013

The ordinary broadband user does not grasp the concept of “Gigabyte per month”, despite many years of educational efforts by operators around the world. A typical operator illustration looks like this: for one Gigabyte you can get x (low single digits number) hours of video, or y (double-digit number) hours of music, or z-thousands of (not too high-resolution) photo messages. The often advertised promise of high-definition video on the go and the actual reality of limited data packages are usually far apart.

A friend, who recently moved to a farm house in the country side complained to me: I cannot get any fixed-line service here and while my 3G mobile connection works fine, my data is used up within 3 days – so for the rest of the month, I’m left with chatting on whatsapp.

An illustration of what happens here: In most European countries the average person consumes around 4 hours of TV per day. Bringing this experience to an IP world translates into an astonishing data volume of 1 Terabyte (or 1000 Gigabyte) per month (assuming high-definition video). This is far from any current mobile data package and even far from the newly data-limited DSL packages of Deutsche Telekom, which offer a maximum data allowance of 75GB at entry level and 400GB at the highest package. So, even this highest package would cut you off in less than half a month, if you were to bring all your average TV consumption to the Internet.

There is still a long way to go until an all-IP world can become reality.

Written by Matt Halfmann, Partner, Coleago Consulting

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The end of unlimited internet

May 28, 2013

At last week’s shareholder assembly of Deutsche Telekom, the outgoing CEO Rene Obermann defended the decision to stop selling DSL packages with unlimited data volumes, by arguing that only a few percent of customers will be affected: when reaching their monthly data limit, and that they would need to pay extra to keep enjoying broadband speeds, which he considers a fairer option compared to increasing prices for all users.

Price discrimination is a valid company strategy, found in many products and industries (in mobile telecoms it is already common to charge different subscription prices, e.g. for different access speeds and monthly data allowances). However, the move of Deutsche Telekom to pioneer download limits on fixed line Internet access packages, gives raise to two serious concerns:

First, Deutsche Telekom’s own IP video services will be exempt from the data limit – this already received many comments on violating the principle of net neutrality: as soon as the monthly data limit has been reached, access speed with be throttled to such a low level, that most broadband services such as YouTube won’t work anymore, while access to Deutsche Telekom’s own video service will be unaffected.

The second and more important point – and in most discussions somewhat neglected – is the effect that such a decision could have on the Internet services market. As a vertically integrated operator, Deutsche Telekom is controlling essential access network infrastructure (the local loop), which it needs to provide at regulated terms to other service providers. At the same time, Deutsche Telekom competes with these service providers in the retail market. This recent change in DSL packages has to be seen in context with another Telekom announcement: The use of VDSL2-vectoring to upgrade DSL lines to speeds of up to 200Mbps. This increase in speed (though not necessarily available to all households) could seriously discourage potential investments in fiber-to-the-home installations by alternative providers. Vectoring increases the access speed of a local copper loop only if the whole cable bundle is controlled from one single DSLAM (to manage cross-talk between copper pairs). This means, that to provide this technology, alternative access providers may be forced off the local loop, potentially limiting competition. Deutsche Telekom will still have to provide bitstream access to competitors, but this will come at an additional cost. In this case, the recent reduction in monthly wholesale access charges for the local (sub-)loop by the German regulator may not translate into reduced prices for end-users.

Although it is already part of all newly signed contracts the data limit will only be enforced by 2016. This gives Deutsche Telekom lots of time to observe the market reaction: it may be in their intention to have other competitors follow this example.

This case shows a clever example of a successful incumbent strategy exploiting legacy infrastructure assets and keeping competition at bay. While other countries move ahead with bringing fiber access to buildings and homes (with Russia currently being the fastest growing market in Europe approaching 15% FTTH/FTTB penetration) Germans will need to keep enjoying their copper wires for a while (FTTH penetration is still far below 1%). There is a lot of work ahead for regulators and ministers to assure, that Germany won’t miss the connection in a digital society.

Written by Matt Halfmann, Partner, Coleago Consulting

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Turkcell launches German MVNO

October 19, 2010

News that the number one Turkish mobile operator Turkcell (home market share 56%) is launching an MVNO on Deutsche Telekom’s mobile network in Germany is not entirely a surprise given its desire to expand outside Turkey and the success that Dutch operator KPN had with its wholly owned Turkish proposition Ay Yildiz in both the German and Belgian markets over the past five years. No figures are available but it is rumoured that the A Yildiz subsidiary of KPN’s German operation E-Plus numbers circa seven hundred thousand mobile customers (>20% market share) in the 3.5m strong Turkish community in Germany. E-Plus’s real market share amongst the German Turks is therefore a lot higher as this does not include other brands that it markets (E-Plus, BASE, SIMYO, Ortel etc.). Turkcell may also have felt compelled to act given the competition it is seeing from Vodafone which entered the Turkish market via the acquisition of Telsim in 2005 (and now has a 25% market share) and which has started offering roaming deals between Germany and Turkey. The question is whether they can successfully market and distribute the right product for the Turkish German community given the headstart that E-Plus/Ay Yildiz enjoys in the crowded segment.