Children in their connected classroom in the village of Suruacá

Just over ten years ago I went backpacking in Brazil for a month with some friends. We arrived in Rio de Janeiro, one of the world’s great party towns, at nightfall and found, to our dismay, that we couldn’t get a caipirinha for love nor money. It turned out that we’d landed on the day of the presidential elections and there was a blanket ban on sales of alcohol because the authorities were concerned that violence might erupt if politics mixed with booze.

Eventually we managed to persuade a man running one of the street food outlets on the Copacabana beach to sell us a beer. He told us that the winner of the election would be a man known as Lula. Lula, leader of PT, the worker’s party, went on to become perhaps the most popular president in the history of Brazil, introducing sweeping social reforms designed to lift millions of Brazilians out of poverty.

Ten years on, 40 million of the country’s people have been brought above the poverty line into a new middle class thanks to the creation of a welfare programme, the taxable population has been increased, and there is rising demand for a wide range of consumer products and services.

Brazil will host the FIFA World Cup and the Olympic Games in the next four years and many of the people you speak to in the cities today project a sense of great optimism about the country’s upward trajectory. Of course the corporate extravagance of Sao Paulo, now surely one of the most expensive and traffic-congested cities in the world, and the carefree glitz of the Copacabana are only part of the story.

Socio-economic diversity in Brazil is on the scale of the country itself and it is in the poorer communities that you can perhaps see the changes most visibly. Communications services are central to these changes and, from the Favelas of Rio to the remote communities of the Amazon River, access to the internet, and to one another, is changing people’s lives. It is a reminder that the Connected World is about more than machine-to-machine communications.

The view from the Connect to Learn installation in Vila Cruzeiro

The current president of Brazil, Dilma Roussef, is alive to the importance of these services, something that Communications Minister Paulo Bernardo said she stressed to him when he was appointed in 2010. Bernardo was speaking at Ericsson’s Business Innovation Forum, which took place in Sao Paulo in November.

“One of the missions of the [communications] ministry was that we had to make an effort to give widespread access to ICT,” Bernardo said. “The new middle class had buying power now and was willing to buy services and devices like tablets and smartphones. We are working with these goals,” he said.

A 2010 census revealed household internet penetration of 27 per cent, Bernardo said. That figure rose to 38 per cent as 6.3 million homes came online in 2011 and the government is aiming to have broken the 50 per cent barrier by the end of 2012. The number of 3G devices—smartphones, tablets and wireless modems—grew by 99 per cent in 2012 and the expectation is that growth will be in the region of 70 per cent this year, he said.

Meanwhile there are ambitious plans in place for the digitisation of domestic power meters which will be internet connected and enabled as access points for the homes at which they are sited. The energy ministry is currently working to install 70 million such meters.

Bernardo said that the government has pledged to connect more than 80,000 schools that are currently without internet access by 2015, alongside a programme that will supply tablet computers to teachers. “The internet is a means,” he said. “Access to these technologies will improve our performance in education and health, and it will connect rural areas where there are large agricultural businesses, small fishing communities and Indian tribes.”

The private sector, inevitably, has an important role to play, as Bernardo was at pains to stress. But the government is keen to ensure that at least some of the benefits that private sector companies derive from investing in the country remain in Brazil.

Bernardo explained that the government will continue to require that a significant portion of telecoms network equipment is manufactured locally as it seeks to harness the sector’s growth to create jobs and local wealth.

He said that, in Brazil, the state is responsible for over 50 per cent of investment in innovation and was committed to creating the right environment for continued private sector participation. In return, he said, the government expects technology developed locally to be available at a low enough cost to make connectivity across some of the most challenging geography in the world truly viable.

“The treasury has been removing taxes from equipment and civil construction works because two reach our objectives, and our national broadband plan next year, we need infrastructure available at fair prices,” he said. “We have policies that will demand products made in Brazil because it helps create jobs and trade. In my opinion this is a policy that is here to stay; it is reasonable for companies to invest to develop here in Brazil.”

Read about how Brazil is delivering care to the riverside communities

He added that Brazil is “betting on LTE from the beginning”, as the performance of WCDMA networks reaches its limits. Sergio Quiroga da Cunha, Ericsson’s head of Latin America, said that the Brazilian government had originally suggested that all LTE technology deployed in the country be locally produced. But while the vendor does manufacture equipment and conduct R&D locally, and is the only large network vendor to do so in its own factories, he said, many components have to be imported. Instead the firm gets tax breaks for guaranteeing that its products contain up to ten per cent of locally produced hardware.

But investment alone cannot guarantee that Brazil’s targets will be hit. Quiroga da Cunha said that a fund for the universalisation of telecoms in Brazil, created by collecting 0.4 per cent of operator revenues since 1998 currently sits at almost $5bn but is not being tapped because “nobody is sure how to use it”.

One thing is clear, he said: greater density of mobile networks is essential in Brazil. Currently there are only 60,000 cell sites in the country and, while much of Brazil is sparsely populated or uninhabited, this number needs to have more or less doubled before the kind of coverage and capacity that the market requires is available.

The mast at Suruacá

One problem is that the aims of the communications ministry are not always in tune with other government departments, he said. “Site acquisition is a nightmare. 99 per cent of the time you can be guaranteed a refusal for planning applications for a new cell site.” It was a point echoed by Minister Bernardo, who said he was constantly battling with regional and municipal governments whose planning legislation made it impossible to expand and densify the network. “We have many cities where they say we cannot have antennas near schools. But how can I connect a school if not with an antenna nearby? We need to change this, the law has to help us.”

Up in the Amazon this is much less of a problem. Here the challenge lies in convincing Brazil’s mobile operators that there is value in connecting the remote region’s inhabitants to the mobile network. Such was the operators’ resistance to the idea that it was Ericsson that undertook the region’s first deployment. In 2009 the Swedish vendor installed a base station site in the small town of Belterra, bringing 3G connectivity to the Amazon for the first time.

The site was attached to the Vivo network, owned by Spain’s Telefónica, but Vivo did not contribute to the cost, which was in the region of $300,000. It began to generate traffic immediately, according to Carla Belitardo, head of sustainability in Latin America for Ericsson, at a rate that led the firm to forecast that RoI, had it been paid for, would have been delivered inside six months. A significant number of Belterra residents already had mobile devices, which they would use when travelling to Santarém, a far larger city 50km to the north. When connectivity reached their town, they were ready to take advantage immediately. “We demonstrated that there was hidden demand,” said Belitardo. “One year after the site was deployed, 43 per cent of students in the town were using it to access the internet. This was about finding ways for [companies in] the private sector to invest in areas that they would never think about.”

Card operated phone booths in the village never functioned

Sufficiently convinced of the opportunity, Vivo and Ericsson deployed a second Amazonian site, across the river in the remote community of Suruacá. This installation was complicated by the fact that riverside villages such as Suruacá are off-grid. The river is 18km wide at this point, preventing any connection to the grid at Belterra on the opposite bank, meaning that Ericsson and Vivo had to install large numbers of solar panels to power the base station.

The same power source also enabled charging points for laptops and mobile devices, although regulations prevent Vivo from charging for this energy. In other markets, however, telecoms operators can also provide energy services and off-grid base stations can present more than just a communications opportunity to the companies investing in the installations, Belitardo said.

Technology and innovation can solve problems like remote installation, although Belitardo conceded that there have been a number of instances of downtime when there has been insufficient sunlight to power the base station. The impact of the internet on such an isolated community—with all the positive and negative experiences it can bring—is a far more subtle and complex issue to address.

Eugenio Scannavino, who heads up a Brazilian NGO, Projet Sáudi e Alegria, that partners with Vivo and Ericsson on a number of projects in Brazil, said that some time after the Suruacá site went live and the village got its first glimpse of the internet, he found the village’s female elders huddled in a group. When he asked them what they were doing they told him they were holding a discussion about the problems of the world—the wars, famines and social issues that they had discovered online—and what might be done to solve them. For those of us who have grown up with ready access to information from around the world it is impossible to imagine what it must be like to go from almost complete information isolation to a window on the world with the switch of a button. For this reason, said Scannavino, it was very important that internet access arrived in Suruacá before television.

Television would have offered the community visibility of the outside world with no opportunity to participate. It is very important, Scannavino said, that the people of these communities are empowered to share their own views as well as absorbing those of the outside world.

“Connectivity gives [the villagers] visibility,” he said. “They can understand what’s happening outside but they also have a voice to be able to let other people know that they exist. They can become citizens and get respect from the rest of the world. Our biggest aim is to empower them to become citizens. “

Eugenio Scannavino

He continued: “With the internet they discover that they have just as much culture to offer other people as other people have to offer them. They can connect with people globally but they don’t lose their identity. Now they are proud of themselves and their culture and they can communicate that to other people.”

An impulse to travel outside of the community is bound to result from a sudden awareness of the wider world, but Scannavino said this is not something that the NGO necessarily wants to encourage. Wherever there are communities living in the rainforest, he said, the ecosystem is more likely to remain healthy. “They are the guardians of the forest,” he said. Instead one of the aims is to foster a manageable level of eco-tourism that will generate further economic benefits to the locals. It is unsurprising that a group of international journalists visiting the community of Suruacá should, en masse, produce smartphones and begin filming the welcome ceremony laid on by the locals. But the fact that the villagers were filming us arriving on their own handsets was truly unexpected. That footage is now on their blogs and social network profiles; the visitors to their community a part of their story as well as the other way around.

The lives of the children who live in the favela of Vila Cruzeiro, which is in Rio de Janeiro’s Zona Norte (north zone), could not offer a starker contrast to that of their counterparts in the Amazon village of Suruacá. They have language and poverty in common but not much else.

Vila Cruzeiro was previously renowned as one of the most violent of the Rio favelas; just two years ago, according to the Rio Times, it accounted for one third of the city’s murders. Stray bullets from the frequent exchanges of gunfire between gangs were one of the most common causes of death. Today, in the wake of the ‘pacification programme’ that saw the army sent in to confront gangs and suppress the drug trade, it has improved somewhat.

The Connect to Learn project, founded by the Earth Institute at Colum¬bia University, the Millennium Promise and Ericsson, is working in Brazil to create communication channels between the children of Vila Cruzeiro and those of Suruacá, providing education services to both communities using cloud technology, thin client laptops and a reliable wireless broadband connection.

In the past, according to the directors at Projeto Atitude Social, a commu¬nity centre that offers educational, arts and sporting facilities to more than 8,000 children in Vila Cruzeiro, there were only two cultures; football and gangs. By connecting children in the favela to schools in other parts of Brazil, it is hoped that wider cultural exchanges can be created that will enable them to see beyond the own immediate confines.

There are obvious potential downsides to giving internet access to chil¬dren who have never had it before. But the Connect to Learn project allows for their online behaviour to be monitored. And the video connections that are available to both sets of children enables remote education in internet usage to be delivered. There is no attempt to restrict the access that the children have, according to Carla Belitardo. Rather the emphasis is on teaching them about the benefits that are available to them beyond the doubtless appeal¬ing worlds of social media and online gaming.

Despite the dense population of the favela, social workers in the area talk in terms of the children being just as isolated as their opposite numbers in remote villages. Indeed, prior to the Connect to Learn initiative arriving in the favela there was no more awareness among the children of what life was like in the Amazon than there was in the Amazon of life in the city slum. They may be 3,500km apart but now they are connected.

Carla Belitard

Carla Belitardo is head of sustainability for Latin America at Ericsson. She oversees projects across the region that focus on connecting people isolated by poverty, geography or both. Well-meaning as these projects may be, Belitardo is insistent that they are not driven by charity or philanthropy.

“Most people think sustainability and corporate social responsibility is something to do with green activities or charity. But our view is that it must be aligned to the business. Everything we do has to demonstrate a positive impact on what we call the ‘triple bottom line’; People, Profit and Planet,” she says. “In our view we’re creating a positive business impact with technology, and the more balanced that impact is across the three elements of the bottom line, the better.”

Ericsson’s position in the value chain means that it is dependent on its customers to provide the link to end users. “We can’t do anything on our own because we do not have a relationship with consumers,” she says. “So the only way I can have a positive impact on the triple bottom line is by partnering with operators. So I work with our sales organisations, our account managers, who have the relationships with operators. Operators have foundations for social activities.”

Vendors like Ericsson can provide human resources, though, and Belitardo has created a ‘Virtual Volunteer’ programme that sees employees delivering educational classes over video links to teachers in remote or impoverished areas. The programme covers traditional academic subjects like maths and science, as well as best practice for internet usage.

“We are starting a revolution, helping to teach the teachers. Sometimes the call quality isn’t that good but everybody is eager to make it work. What we really want to do next is connect our volunteers to the children in the village so that, whenever they have a question to ask, we have someone trained to answer it.”
Not every project is successful, she says. Two years ago Ericsson tried to deploy a remote health solution that used connected health devices to chart metrics such as weight, blood pressure and insulin levels in diabetics. The solution had met with success in Croatia but did not travel well. “It was a bit too much, too soon,” says Belitardo. “We learned a lot but healthcare is an area where you’re required to involve a lot of stakeholders and they didn’t really need that solution at that time.”

Poland is a country with a population of around 40 million and around 40 per cent of those live in rural areas

Once upon a time, when most of the industry still knew GSM as Groupe Spécial Mobile and Nordic Mobile Telephony was the big success story, another digital cellular operation was finding its feet. The CDG (CDMA Development Group) was formed to push the adoption of a technology that would become CDMA2000 in what many perceived as bitter rivalry against the 3GPP’s UMTS standard.

Fast forward two decades and with so many CDMA flag bearers migrating to LTE, the CDG has changed its focus to stay relevant. NMT finally disappeared from the landscape earlier this year and it’s actually these low frequency bands, such as 450MHz, once popular in many parts of Northern and Eastern Europe for analogue telecoms services, where the organisation is now heavily pushing its technology for spectrum– and capacity-poor mobile carriers.

It is well documented that one of the biggest problems facing an operator today is spectrum availability. So when the world’s last NMT network was switched off, in Poland, in June of this year, local licensee Orange found itself with a swathe of unused spectrum and a golden opportunity to offer something its rivals couldn’t.

The operator swapped out NMT equipment for CDMA450 and, exploiting the frequency’s natural efficiencies, was able to get a 12x increase in coverage versus 1800MHz or 2100MHz. Poland is a country with a population of around 40 million and around 40 per cent of those live in rural areas. As the only operator with a 450MHz licence, Orange has the monopoly, and while EDGE covers 99 per cent of the territory, WCDMA deployments are only focused on major urban areas. Less cells meant that the carrier was able to deliver ‘wireless broadband’ to 90 per cent of the Polish geography, with CDMA450 users now delivering an ARPU of around $18 per month. It is the relatively low ARPU of the rural regions as well as the challenging territory for network buildouts that make the 450MHz spectrum so well suited to this application. As Piotr Stepniewicz, manager of strategic projects for Orange Poland puts it, there is simply no incentive for any of the local carriers to invest in LTE or even 3G outside of dense urban areas, even if they were to collaborate.

“10MHz of LTE spectrum delivers the same experience to a user as 5MHz of CDMA spectrum, so it doesn’t make sense to invest,” he says. As a result, Orange is serving the rural Polish market alone. Orange Poland shares certain similarities with Triatel’s operation in Latvia. The 100 per cent privately-owned carrier achieved 98 per cent geographic coverage of the 64,000 square kilometre territory, playing home to two million people, with just 160 CDMA450 basestations.

According to Viktors Topors, technical director at the Latvian operator, the average CDMA450 base station on the Triatel network offers a coverage radius of 46km, extending up to 100km off the coast. By his calculations it would be “impossible” for HSPA+ to provide the same level of coverage even with “a few thousand” basestations.

Cranking the theoretical 3GPP deployment up to LTE would improve the coverage map by an order of magnitude but still not put it in the same ball park. Again Topors estimates that an LTE900 deployment would require more than 600 basestations to provide a similar level of coverage—a rollout plan that would no doubt struggle to find investment.

One of the key factors pointed out by Joseph Lawrence, VP of marketing at the CDG, is that an LTE carrier needs a site deployment that is guaranteed to cater to around 500 people per basestation, in order to justify the buildout. “This is why there are no cellular installations in places like upstate New York or Vermont. It just doesn’t make economic sense to cover these areas as there are not enough people there. And if a carrier won’t put HSPA+ or CDMA2000 in these places then why would they put LTE there?” he said.

Triatel can get away with between 50 to 100 customers per base station, depending on location, but Topors acknowledges that some rural regions are slim pickings. “There are some areas where there is only one police station or a single post office in the coverage area of a basestation, especially in the Russian border areas,” he says. To this end, Triatel is actually considering shrinking its coverage area when the mandate on its 450MHz spectrum licence requirements expires in June of next year. The company could relocate some of the basestations it has in areas where deployment doesn’t make economic sense, and then perhaps coverage in some of the borderlands would be provided by Russian operators.

“It’s commercially viable that we could shrink coverage by five to seven per cent or about six base stations,” Topors said, “without making any difference to our subscriber numbers or revenues.” The economics make CDMA450 a niche, but attractive play for those that have the opportunity.

“African operators I have spoken to, say they have to do business on ARPU of less than $5 per month, and 450 means operators can still be profitable on that kind of ARPU,” says Lawrence. “Economically, 450MHz is maybe three times more effective at coverage than 900MHz and around twelve times more efficient that 1800MHz or 2100MHz cells. But it also helps breach the digital divide.

“450MHz spectrum is the best solution for the connected world. In fact it doesn’t even matter what technology is used really, just that if you can make use of the 450MHz band you will be able to economically connect schools, businesses, communities and emergency services. And when you can do that with one basestation instead of 12 then the economics are dramatic. All the same services on 3G and 4G are enabled on the 450MHz band,” he said. Statistics from the CDG show that there are 116 450MHz networks in operation today across 61 countries, with new deployments still popping up. All of these installations use CDMA, and 12 new CDMA450 networks were launched in 2011, with two more upcoming deployments in Georgia and Serbia.

A quick look down the list of countries supporting 450MHz cellular deployments underlines the historical association with NMT in Northern and Eastern Europe, with the rest being soaked up by Central Asia, the Middle East, Africa and Latin America—emerging markets almost every one.

In other parts of the world the 450MHz band is used for trunking systems such as emergency services radio installations, military deployments, or even sits unused. Brazil, for example, took almost ten years to clear the 450MHz spectrum for use as it was being used by the federal police, so it’s not always easy to make the spectrum available for reuse. In the US it is used for trunking services and in the UK for wireless microphones and broadcast equipment. But in much of Western Europe, the 450MHz band is an untapped resource that has not even been auctioned yet.

The point, according to the CDG, is that lots of regulators don’t realise they are sitting on this potential gold mine, which could potentially even be used for LTE deployments. The remit of the CDG (which has renamed itself as the acronym and dropped all reference to CDMA) now, is to educate the industry on the importance of 450MHz networks for people and machines (M2M), given the understanding that LTE will not deliver broadband coverage for whole regions, leaving 3G and other technologies to pick up the slack as demand for wireless service grows.

To further explore Joseph Lawrence’s point about technology agnosticism in the 450MHz band, we spoke to Igor Virker, director of business development at the CDG, who revealed that the group is working with LTE stakeholders to specify LTE for 450MHz using non-contiguous spectrum. Virker warned this will likely be an arduous process, as standards bodies like the ITU and 3GPP need to be involved, but nonetheless, there is strong interest from operators in Brazil, as well as the local regulator, Anatel, and Sky Link, the Russian CDMA450 player.

“We could be there in about five years with input from Brazil,” he says, “but the challenge for new licensees is always coverage obligations, so maybe the operators don’t want to wait for LTE450 to mature.”

The vendors face a similar dilemma. While CDMA450 makes up a good chunk of Alcatel- Lucent’s portfolio at present, Brahm Parasher, network strategy manager at the vendor says that vendors are understandably reluctant to develop a solution without a standard in place, as they don’t want customers to be left with a proprietary offering.

In the meantime, CDMA is really the only solution for the 450MHz band, and with only 34 EV-DO Rev. A commercial networks and four EV-DO Rev. B commercial networks in play, there is plenty of headroom in the technology roadmap.

“Because it’s at the bottom of frequency pile, 450MHz offers the greatest range and covers the most distance. It means less cell sites and less backhaul and it also has good building penetration, making it a great choice for talking to smart meters in homes,” says Joseph Lawrence.

“It was licensing conditions that forced CDMA 450 into being the defacto standard globally for fixed wireless because of tough competition from GSM. The country of Georgia, which has three CDMA450 operators, has 50 per cent of its broadband subscribers on fixed wireless, and achieved that in just a few years. Then with Orange in Poland, once you leave the metro areas you are into CDMA coverage because as soon as you go out of urban areas the economic model becomes weaker,” says Lawrence. “You will never see a single technology used all over the world comprehensively.”

As both Orange Poland and Triatel Latvia attest, fixed wireless offers a great opportunity mainly due to a sheer lack of competition. Orange’s Stepniewicz says that many suburban new builds in the country have no fixed line access, so the operator offers a variety of consumer end point devices from nomadic routers to multi-mode dongles supporting WCDMA, GSM and CDMA in one unit.

In Latvia, there is a government sponsored project to close the Digital Divide by taking fibre out to 169 points of presence in the country and then letting local entrepreneurs extend those connections out to villages and other remote areas. Of course Triatel is there already with a wireless offering that delivers pretty good in building coverage, something that drives down the attractiveness of the state’s ‘middle mile’ project.

The other thing about rural and developing regions is that user expectations tend to be quite low. The majority of ex-NMT customers were either fishermen or farmers using the devices for work purposes, and the newer CDMA450 deployments are catering to much the same demographics from Poland to Indonsia. Operators like Orange say their user base is happy with the experience, with Alexsander Jakubczak, wireless access division director, Orange Poland, claiming that users can’t see any difference with most apps, “except maybe with video streaming.”

In Poland, Orange only guarantees downlink speeds of 1Mbps, but while testing in a rural, woodland area, MCI got an average throughput of 3.6Mbps and streamed high definition video with little buffering. Orange’s CDMA450 network has so far been upgraded to Revision B Phase One only, which was a software upgrade to the network. A second phase hardware upgrade is planned over the next year, where the network cards are swapped out in the base stations, pumping the network downlink peaks up to 14.7Mbps.

Jakubczak said that Revision B Phase 2 would increase throughput and improve network QoS, with the carrier offering packages supporting 45Mbps peaks for HSPA+ in urban areas and 1-2Mbps for EV-DO Rev. A in rural areas. With Rev. B Phase 2 this will jump to about 9.6Mbps in the rural regions. “But considering the alternatives, our users don’t have very high expectations,” he says. “So there is still scope for much of the countryside.”

All Orange Poland’s SIMs are multi standard by default, allowing access to all networks, regardless of device or terminal. Users have to switch network manually, but the only real issue is finding a supply of attractive devices that actually support both CDMA450 and HSPA+.

In Latvia, Triatel is competing against market incumbent LMT which has a licence for 2100MHz as well as DSL operators offering up to 10Mbps links. But Topors believes his company is competitive with average downlink speeds of 5-7Mbps with Rev. B Phase 2 and peaks of 14.7Mbps, while upload speeds average at 2-3Mbps and peak at 5.4Mbps. The company is also targeting a mid-price point compared with fixed line, selling its fixed wireless service for Lat19 or around €25 per month. From next year the company will also start an education programme to push capped offers based on usage bundles as Topors believes most people don’t need unlimited data.

The defining factor among these markets is that there are clearly some areas that don’t have fixed broadband because it’s not economical to deploy—some don’t even have narrowband, because the demand simply isn’t there. But what the CDG argues is that regulators don’t realise the potential of the spectrum they are sitting on. It comes down to an education issue, Joseph Lawrence believes. And while the potential of that spectrum is somewhat limited by technology at present, this may not always be the case.

“CDMA is the only technology working in the 450MHz band today but we are working with stakeholders to develop specs for LTE. Spectrum aggregation can allow you to expand bandwith with non contiguous spectrum,” he says. And bear in mind that CDMA 2000 operators are actually responsible for much of LTE’s initial growth, especially those based in the US.

Everything will be connected

Connected cars represent an exciting evolution for consumers, car manufacturers and mobile operators alike. There are already over one billion cars on the world’s roads today, according to research firm Ward’s Auto, and that number is expected to continue growing as more consumers in emerging markets get onto the roads. Automotive manufacturers have already put plans into action to ensure, that in the coming years, the majority of new cars will be equipped with broadband connectivity.

But despite the optimism being voiced throughout the connected car ecosystem, demand for vehicles with internet connectivity has been relatively sluggish to date. This is largely due to the economic downturn. With cars representing a substantial purchase for consumers, demand for new vehicles in Western Europe has been low in these difficult times. September 2012 marked the 12th consecutive month in which new car sales dropped in the EU; traditionally one of the strongest markets for new vehicles, according to the European Automobile Manufacturers’ Association.

“[Car] original equipment manufacturers (OEMs) are really suffering at the moment,” explains Sheridan Nye, senior analyst in the enterprise verticals practice of Informa Telecoms & Media.

“The European market has come to a halt; they are looking for growth in areas such as China, India and Brazil, and those are mid-range/low-end vehicle markets, so that’s going to be the sweet spot in terms of volume sales for the next few years.”

Despite the challenges facing connected cars, there are reasons for operators to be optimistic. All new cars in Europe will have to facilitate network connectivity, under plans revealed by the EU earlier this year. MEPs have mandated that new cars must be equipped with a network-connected tracking device that will automatically alert the emergency services in the event of an accident. The eCall system, which uses sensors to call the nearest emergency centre when a car crashes, will be made mandatory from 2015. The EU claims the technology could save up to 2,500 lives a year. These trends are further influenced by similar legislation being introduced in Russia and in Brazil, which will require the introduction of similar telematics hardware.

Insurers are also pushing connectivity in cars. Usagebased insurance is an area gathering momentum as insurers are interested in collecting data to have a better understanding of what is happening with driver behaviour. Today, the usage based insurance model requires the customer to take a small plug-in device that is inserted into a port in the connected car. This unit feeds data from the car back to the insurer which will reward drivers with lower rates on the provision of evidence that they do not drive their vehicles very often.

Automotive OEMs are also keen to see connected cars take off. Despite the focus on the lower-end sectors for volume shipments, at consumer car shows, manufacturers usually showcase their latest premium offerings, and the majority of these come with internet connectivity. OEMs are hoping that by tempting consumers with luxury offerings, and with economic recovery on the horizon, they can get volume sales back into the higher end of the industry. Research conducted by agency SBD on behalf of the GSMA reveals that, today, the global total revenue for the automotive embedded telematics market stands at around €1.5bn. But the association’s research forecasts that it will grow at CAGR of 24.6 per cent over the next 15 years to reach €20bn by 2025, by which point all cars on the road are expected to have broadband connectivity. The bulk of this revenue is expected to be from the sales of vehicle-related services and content. However, SBD also forecasts that connectivity revenues alone will increase to almost €4bn by 2025.

The types of apps on offer beyond usage based insurance and emergency calls are rich and vast. According to Francesca Forestieri, director of the GSMA’s mAutomotive division: “The range of connected car services is constantly expanding and only our imaginations today limit the possibilities.”

The trade association divides connected car services into three categories: Infotainment: services such as on demand real-time radio and video, cloud based in-vehicle services and news; Navigation: for parking, fuel, journey times, travel and traffic assistance; and Telematics: services such as remote diagnostics, breakdown help, stolen vehicle tracking and toll payment.

According to Toyota’s general manager for telematics and special projects, Derek Williams, the use of entertainment apps will open up the floodgates for consumers to use more sophisticated apps.

“SatNav and entertainment will drive the take-up of connected car services,” he says. “Then, I think that consumers will become used to using apps within the cars and begin using other services, such as remote locking and remote diagnostics.”

Scarlet Motors is a start-up electric and connected sports car manufacturer which is looking to pioneer connected services in its vehicles. As Julien Fourgeaud, who holds the role of CEO and chief catalyst at the firm explains, the task of deciding which apps the firm uses and even devising them is one that it has opted to open up to an online community that it has created.

“This gives a chance for people to participate in the car development process. Some of the services will be designed by the community; they will tell us what they want,” he says. “This is a key differentiator for us, there is no car company that is manufacturing a full commercial model that has opened up their product development process to complete strangers.”

In terms of the business models behind connected car services, from the outset, it appears that the largest opportunity for mobile operators is to work with car OEMs on embedded connectivity in cars. For an operator, by teaming up with a car manufacturer it stands to benefit from providing connectivity to a new stream of devices; internet-embedded vehicles.

While smartphone integration and tethering will lead to greater data consumption in the car, according to the GSMA’s research, it will effectively restrict the value of telecom operators to selling more data. The association argues that embedded telematics, however, provides telecom operators with a much broader opportunity to provide more advanced M2M support to vehicle manufacturers. Fourgeaud says his firm has chosen to adopt the built-in approach. “We’ve seen the adoption rate of smartphones and more and more people are using smartphones every month,” he admits. “But out of the smartphone users, how many of them understand the full functionality of the phone and how to use Bluetooth? As much as you want to make things simple in the car, using the brought-in approach you must rely on other devices and you need to educate people on how to use their own phone; that’s not an experience we’re interested in. We’d rather go up front and find a good partner in the telco world.”

Peugeot is another car manufacturer taking the embedded approach. In France, it has teamed up with national operator Bouygues Telecom and is providing connectivity through a 3G USB ignition key that powers its Peugeot Connect Apps system. When the 3G key is plugged into the vehicle, it enables touch-screen access to the Peugeot Connect Apps service. “It is not necessary to buy connectivity as a factory option inside the car, instead we decided to make the connection through the 3G key, which is provided to the customer when they decide to subscribe to Peugeot Connect Apps,” says Pierre Yves Etienney, technical and product press attaché at the car manufacturer.

“Once they have the touchscreen inside the car, which is standard on 90 per cent of Peugeot 208s, the car is compliant with the service and it is possible for us to connect it.” However, vehicles roam by their nature and OEMs ship cars all over the world, so the ability to provide global coverage, without incurring roaming fees, is an important attribute that OEMs are looking for in an operator. Scarlet Motors says that for this reason, it is leaning toward teaming with an operator with global reach.

“There are two options: Teaming with an operator that has all the networks in place —such as Telefónica or Orange—which understand the project and what it can bring to them on a global scale. We’ve had some good conversations with this type of operator,” explains Fourgeaud. “Or the alternative is to partner with a small one that is really hungry and wants to make a difference.”

Vehicles roam and OEM's ship cars all over the world, so global coverage is necessary

Sheridan Nye says that she does not really see a lot of opportunity for national operators in embedded connectivity, beyond being roaming partners. She believes that the global operators will “sew up the market” because car OEMs do not want their customers to be at risk of bill shock.

Ford is one car manufacturer that has taken a different approach to its competitors, and opted for the ‘bring-your-own’ approach. Rather than embedding a modem device for communication, the US car maker chose to allow users to use their own smartphone, iPad or MP3 player for its Sync service.

The service uses voice recognition technology from software provider Nuance to allow users to use their smartphones hands-free while driving. The smartphone interacts with Ford’s on-board computers using Bluetooth connectivity. Ford has developed its own set of APIs called App Link as part of the Sync offering and made it available to developers. “The advantage of brought-in devices is that there is no separate voice plan or data plan, you’re relying on the same plan you use with your phone on a daily basis,” explains Jim Buczkowski, a Henry Ford Technical Fellow and director in Ford’s research and innovation centre.

“We refer to it as the democratisation of technology. We say: ‘This is a great feature, something that the average person would appreciate having, so how do we make it affordable for everyone to take advantage of it?’”

He adds that the affordability of the service is not the only benefit of taking a brought in approach, it also alleviates risks associated with the evolution of technology. Customers can benefit from 2G services until they upgrade to 3G and then to LTE, at their own pace. “We insulated ourselves from those technology changes of networks by relying on the phone. We knew we could rely on people upgrading their phones and we would not have to upgrade the modem and hardware in the car,” Buczkowski adds.

Ford prices its Sync service at a $295 one-off up-front cost with the car, having seen a price drop from $395, when the service was first launched in 2007. Additional charges are paid straight to the operator in accordance with the price plan that the customer is on. However, for embedded connectivity in cars devising a pricing model is a more complex task. “Whenever you talk about consumers, you have to take into account that they’ve only got so much disposable income—and not only is that not changing in Europe, it’s coming under increasing pressure—so the revenue has got to come from somewhere else,” says Nye.

“It looks unlikely that consumers are going to want to pay more for services that they already get on their smartphones that they use in their everyday lives and then pay more because they happen to be in the vehicle. It’s going to have to be more imaginative pricing than that.” The situation becomes more complex for OEMs because charging for communication is a completely new area for them. And a challenge lies in the fact that being new entrants to the telecoms market, ascertaining value for money is no easy task.

According to Toyota’s Williams: “We can only pick operators to work with based on the tenders that they bring to the table. We select operators based on the offers they submit, so at this stage, we don’t really know whether we’re getting value for money.”

A further hurdle facing the future connected cars is the fact that some of the major areas that cars travel are lacking cellular coverage. Motorways, country roads and dual-carriageways are areas that often lack coverage, but are arguably some ofthe areas where connected car services will be used most prevalently. Therefore, operators need to work to extend coverage in these areas for connected car services to evolve, despite the return on investment not making it viable at this stage.

“I think you will see gaps in major roads being filled in for sure,” explains Informa’s Nye. “Cars do go into rural areas, so there will a matter of managing customer expectations around that, because at this stage we’re not talking about the kind of revenues that will make it worthwhile to deliver blanket coverage in rural areas.”

Ford’s Buczkowski agrees and admits that the car manufacturer’s brought in approach does not allow it to have much influence over how operators build their network. However, some operators have spotted the potential opportunity in connected cars.

“We’re investing in expanding our coverage,” says KPN’s strategic partnership manager Alan Beveridge. “Covering the population is one thing, but cars go to places where people don’t live and we need to ensure that we can provide coverage in these areas.” How well these services make use of an operator’s network without causing signalling problems is another concern. Considering the number of cars on the road and the amount of voice and data traffic operators are already carrying during peak times, it becomes hugely important that networks can cope with the strain without it impacting the quality of service.

While connected car services are making their way onto the market, discussions are already being held about the potential of self-driving cars. The Institute of Electrical and Electronics Engineers (IEEE) anticipates that by the year 2040, driverless cars —operated using M2M technology—will account for up to 75 per cent of cars on the road worldwide.

Driverless cars operate through use of communicating sensors to ensure safe and efficient travel. Through vehicle-to-vehicle (V2V) and vehicle-to-infrastructure (V2I) communication there may be no need for traffic lights and stop signs when all of the cars on the road are driverless. Web giant Google became the first company in the world to obtain a licence for driverless cars, after the US state of Nevada passed a law in June 2011 to allow the operation of driverless cars in the state.

However, it will take a long time for driverless cars to make an appearance on our roads. Firstly, all car manufacturers have to be on board in order to have awareness of each other for the concept to work. Linking these vehicles up with traffic systems is also going to take a very long time.

According to Sheridan Nye, there are clear benefits of driverless cars in terms of safety and convenience, but it takes a strong business model to make it worthwhile to invest in the vision.

“This is more likely to happen with ‘road trains’, or freight deliveries. You may have a fleet of trucks that carry cargo which people do not drive, you just have a driver at the front, and the others follow.”

Discussions are also being held about the potential of self driving cars

However, Ford is one company working towards this vision for the consumer segment. The firm already incorporates tools in its vehicles such as active cruise control; using radar technology to lock in on the vehicle in front and maintain speed and the distance from it; lane keeping assistance; and traffic jam assistance, which is similar to cruise control but at low speeds.

“Gradually we are moving in a direction that provides more driver assistance to our customers,” says Buczkowski. “We refer to it as automated driving and we are keen on the vehicle to vehicle (V2V) and vehicle to infrastructure (V2I) vision; there’s an opportunity to reduce accidents,” he adds.

Scarlet’s Fourgeaud opposes the idea of driverless cars, and as perhaps would be expected from a sports car manufacturer, believes that such technology would take the fun out of driving. He says that people would not trust a completely pilotless plane, so why trust a driverless car? Those people who are not interested in driving their own car should “just take the bus”, he argues.

Informa’s Nye agrees and says that for consumers, there are all kinds of “psychological warm fuzzy feelings” that people have about their cars.

“The luxury brands and sports cars advertise about how a car is about your personal freedom, but the idea of driverless cars causes one to question, what exactly are cars? Do they need a steering wheel? Will we begin to travel around in our own personal pod? It would mark a drastic change from what the car actually is today, which is a personal, status thing. It’s all a little bit futuristic at this stage.”

Being recognised as a genius in your field is one thing, but creativity and innovation will only get you so far. To stay at the top you need the support of your team. Lose that, and your days are numbered no matter who you are.

This was the hard lesson learned by Scott Forstall, one of the original architects of the Mac OS X operating system and head of the team responsible for the software platform at the heart of the iconic iPhone device last month.

Out of the blue, Californian vendor Apple announced an executive reshuffle, which will see the departure of Forstall early next year and his status trimmed back to that of an advisor to CEO Tim Cook in the interim. The company did not expand on his reasons for leaving, but rumours suggest personality clashes at the top, as well as the fallout from the Maps debacle and ongoing issues with Siri.

But it wasn’t only Forstall that was for the chop. John Browett is also leaving after only five months as head of retail. A search for a replacement is underway, but in the interim the retail team will report directly to Cook. Again, the rumour-mongers suggest that Browett made some serious mistakes in his short tenure which didn’t do him any favours.

In other movements, famed designer, Jony Ive, who was responsible for everything from the iMac to the iPhone and iPad design is now going to “provide leadership and direction for Human Interface (HI) across the company in addition to his role as the leader of Industrial Design.” Meanwhile, Eddy Cue, senior vice president of Internet Software and Services, will take on the additional responsibility of Siri and Maps, placing all online services in one group along with iTunes, the App Store, the iBookstore and iCloud.

And Craig Federighi, senior vice president of Software Engineering, will lead both iOS and OS X development. Bob Mansfield, senior vice president of Technologies, will lead a new group, which combines all of Apple’s wireless teams across the company in one organisation and will also include the semiconductor team.

This all smacks of some serious tension at the top of the company’s management tree and leaves Apple without a dedicated veteran software lead or a retail chief in the run up to the holiday season. But it’s not the only company in this situation.

US software giant Microsoft recently announced the immediate departure of Steven Sinofsky, head of its flagship Windows and Windows Live operations. The move came just a few weeks after the launch of the company’s next generation software platform, Windows 8, which spans both desktop and mobile devices.

Microsoft did not give any reason for Sinofsky’s departure, which again is being attributed to personal differences in the management layer. But the move does raise questions over the future direction of Microsoft’s platform strategy and Sinofsky’s departure couldn’t have come at a worse time. After all, Windows 8 was billed as more than a simple product upgrade when it was launched, with Microsoft positioning it as a multi-device strategy that would embrace modern diversity in devices used to access services and content.

With Sinosfky gone, Julie Larson-Green will be promoted to lead all Windows software and hardware engineering while Tami Reller, who retains her roles as chief financial officer and chief marketing officer, will also assume responsibility for the business of Windows. Both executives will report directly to Microsoft CEO Steve Ballmer.

Since 1993, Larson-Green has worked on and led some of the most well known products for Microsoft, including the user experiences for early versions of Internet Explorer, and helped drive the thinking behind the latest iteration Microsoft Office. For Windows 7 and Windows 8 she was responsible for program management, user interface design and research, as well as development of all international releases.

Reller began her career in technology at Great Plains Software in 1984 and was the company’s chief financial officer at the time it was acquired by Microsoft in 2001.

So with two of the bigger players in the handset ecosystem tied up with internal issues, is there opportunity for the grass roots Linux movement to break through? A couple of players think so.

Former Nokia executives in Finland, disgruntled at the abandonment of MeeGo, set up their own mobile OS start up, Jolla Mobile, in the summer. A couple of weeks ago the firm offered the world a first look at Sailfish OS.

Moreover, in a show of support for domestic innovation, Finland’s third largest operator DNA said that it will distribute handsets using the OS upon its commercial launch.

In a similar vein, Spanish operator group Telefónica is one firm that has been vocal about its attempts to break free from the dominance exerted by proprietary players by putting its support behind open source software developer Mozilla’s Firefox operating system. Following Telefónica’s lead, operators Deutsche Telekom, Etisalat, Smart, Sprint, Telecom Italia and Telenor have now signed up to back the open Firefox OS as an option for delivering cheaper smartphones.

Mozilla recently released a prototype version of its lightweight mobile operating system Firefox OS. The OS is available as a prototype module, which developers can run on Windows, Mac and Linux computers.

It’s been a year for serious cloud investments and networking specialist Cisco has closed out 2012 with a $1.2bn outlay on privately held cloud management company Meraki.

Having missed the 3G boat, Cisco is attempting to make an impression in the telco space by using its IP expertise to cash in on the migration to endto- end IP architecture brought in with LTE. At the same time, however, specialist telecom equipment providers are developing their own ‘Cisco killer’ switching infrastructure.

The acquisition of Meraki complements Cisco’s offerings with software that enables enterprises to centrally manage their network infrastructure from the cloud. Meraki’s technology offers wifi, switching, security and mobile device management that can be centrally directed, supporting BYOD, guest networking, application control, WAN optimisation, application firewall and advanced networking services.

The enterprise market represents a sizeable opportunity for many players in the ecosystem, with Orange recently agreeing to use CDN service provider Akamai’s Aura Network Solutions to address the growing needs of the enterprise sector for improved content delivery.

Orange Business Services, the operator’s enterprise division, will market its offerings initially in France and will address the exponential increase in web-based traffic, in particular HD video and e-commerce services.

Over in the UK meanwhile, citing its previous infrastructure as being expensive to run and time consuming to maintain, Orange Digital has moved its operations to Amazon’s cloud, where it is better able to support spikes in traffic and capacity and reduce costs by £2m over a three-year period.

Through mergers and acquisitions, Orange Digital, which manages the online portals for Everything Everywhere, inherited a legacy physical infrastructure that was no longer adequate to meet the needs of the company and its clients. Moreover, the firm’s traffic profile is variable in nature, which resulted in an oversized infrastructure 90 per cent of the time. “Our infrastructure was expensive to run and time consuming to maintain,” said Neil Jennings, lead enterprise architect, at Orange Digital.

“In addition, we had many EE micro sites and applications that needed rapid and temporary hosting. We were also in a period of expansion, and with traffic on our Orange and mobile home pages climbing to four billion requests monthly, we became limited by our fixed infrastructure.” To scale up a physical infrastructure would present a massive upfront cost and a long time to market for deployment, he added, so the firm sought alternative solutions.

The software architecture team at the firm therefore looked at alternatives to their existing infrastructure, including evaluating cloud service providers like Amazon Web Services. Rival operation, Telefónica Digital, a long time proponent of cloud services for internal and external usage, is also bolstering its global public cloud service with a toolkit that offers users greater control and provisioning of virtual servers.

These ‘Instant Servers’ allow customers to configure the size of their virtual server in terms of RAM memory, CPU and hard drive as well as choose the Operating System (SmartOS, Ubuntu, CentOS, Windows Server, Fedora and Debian) the virtual server runs on, from a single interface. All the hardware resides in Telefónica’s enterprise-grade data centres and is connected to the carrier’s fibre optic network, coupled with an SLA of 99.996 per cent per year and a turbo-charge boost of computing power by up to 400 per cent in real time to handle spikes in demand.

The company is hoping to target thousands of businesses that require a cloud services platform that is easily scalable, with low latency and totally trustworthy—common promises in the cloud services space.

In fact, Informa Telecoms & Media recently warned that the biggest problem with cloud offerings at present is a lack of differentiation.

Camille Mendler, principal analyst and head of enterprise verticals at Informa Telecoms & Media, called for new segmentation methods among operators customer bases in order to give them the tools to capitalise on contextual opportunities. Mendler believes there is a significant opportunity for players to sell cloud services in the ‘long tail’, the blue collar market and micro-businesses.

“Small is beautiful. Looking at the small enterprise opportunity is where much value will be found,” she said. But to date, Mendler claims carriers have focused on a very linear model, based on how many connections they can sell into a single group or customer on a ‘one size fits all’ basis.

“So far it’s a counting game,” said Mendler. “But the marketplace is more crowded in a digital world and everybody is changing business model. So a plain vanilla offering for enterprises of all sizes is not good enough.” In both emerging and developed economies, micro and small businesses are the biggest denominator. These users may not be in an office, because their office is their mobile device, and so they need to be targeted with specific services for those on the move.

Most cloud-based as-a-service offerings are targeted at white collar workers in an office environment, but tailored solutions for smaller businesses can generate good revenues, even if they form part of the “informal” economy. “The informal economy has such a huge impact, especially in emerging markets. They might not be paying taxes to the government but they may still buy services from you,” Mendler said.

Confirmation of Apple’s approach to LTE came in the end from Swisscom, shortly after the operator launched its LTE network on November 28th. In its launch release Swisscom said that the iPhone 5 would be available on its LTE service “in due course,” after a software release from Apple. When asked by Telecoms.com for more detail, a Swisscom spokesperson said: “Apple only enables 4G access after testing their device on an operator’s live network.”

When Apple is at the hear t of a stor y you can be guaranteed a certain level of emotion from the responses. The firm’s fan base is notoriously devoted—but there are just as many people who resent Apple and the shift in the balance of power that it has brought about in the industry.

In line with this, and broadly speaking, there have been two perspectives on the news. First is the belief that this is a Good Thin g, and a natural step for Apple; a company that wants to control the user experience from end to end. Operators dominated the market for long enough, holders of this view suggest, and the fact that they were unable to exploit their power to bring to market the kind of experience that Apple has created is nobody’s fault but theirs.

Second is the suggestion that Apple has accrued too much power for one company and that its network vetting is a Bad Thing for operators that have invested heavily in bringing LTE to market. Apple is secretive, closed and dictatorial, this view holds, and its dominance threatens an industry built on open standards and collaboration.

Both views confirm two things that we already knew: The mobile communications ecosystem is no longer fundamentally operator-centric—and only Apple has the power to boss the networks in this way. But the situation is not nearly so simple as the Good and Bad readings that the news generated.

Marcus Weldon, CTO at Alcatel Lucent, suggests that Apple’s policy is a positive development for operators because it underscores the importance of the network at a time when its importance desperately needs underscoring. As operators have ceded power to device, OS and OTT players, says Weldon, the perceived value of the network among end users has dropped below that of the device and the application. “The network needs cheerleaders,” Weldon says. “And Apple is essentially saying that the network is important. That’s a good thing.”

While this could be construed as positive for The Network as an abstract element of the service, it does not follow that it is good news for all operators. Life for tier two and three operators, and those that lack the scale of large groups, is becoming increasingly difficult—and Apple’s selectivity is likely to hit them hardest, says Informa analyst Dimitris Mavrakis.

“Apple would not do this to the tier one pla yers, to AT&T , Verizon or China Mobile,” Mavrakis says. “But for smaller operators, or European players with a limited subscriber base, Apple has the a udacity to do this and I’m not sure all operators will even make it to the testing phase.”

The experience of Jafar Asimov, head of the automation department at Tajikistani operator Babilon- Mobile, seems to support Mavrakis’ observation. Asimov says that he has been tr ying to get in touch with Apple in a bid to get his LTE network approved by the handset vendor, but to no avail.

Babilon, which leads the Tajikistani market with three million subscribers at the end of September, activated its LTE network in October after re-farming 2G spectrum in the 900MHz and 1800MHz bands f or 4G. But the operator only realised there was a problem with Apple’s latest smarpthone when iPhone 5 o wners began complaining that LTE connectivity was not working on their devices.

Mobile operators in Tajikistan do not subsidise handsets, Asimov says, so users often bring their own devices to the network. It was only when he got hold of iPhone 5 handsets for testing, he says, that he discovered there was no way of activating LTE connectivity without Apple’s intervention. “There is no information available about activating LTE,” he says. “We got no help and no response from Apple on this.”

So how is Apple managing this process? With the vendor unwilling to comment the answer is not entirely clear. “According to our research, the iPhone 5 talks to a server at Apple, which keeps a list of approved PLMN (public land mobile network) codes,” Asimov says.

Every operating network has a PLMN administered by the country’s regulator; a unique code identifying the operator. If the code is present in Apple’s database when the device comes online, then an LTE switch magically appears in the iPhone settings panel, Asimov says. Operators invested in LTE on the understanding that they would be able to support compatible devices, and users buy devices on the understanding that they will be able to use compatible services. If operators in situations like Babilon’s feel they are at the mercy of Apple’s strategic planning, it is understandable.

“Apple has acknowledged its dominant position and is using it as leverage over the one part of the user experience it doesn’t control—the network,” Dillon says. “The key take-away for operators is the importance of maintaining healthy competition in the handset market, as this is a clear illustration of what happens when you have a dominant player.”

But could this dominance have wider ramifications for the operator community than the distribution of competitive advantage? Bengt Nordström, founder of industry consultancy Northstream, certainly thinks so. Nordström, who admits to being “shocked” by the discovery that Apple is vetting LTE networks, suggests that the increasing power of the device vendors, Apple and Samsung in particular, could begin to affect the entire direction of the industry, threatening the operator’s role in a truly fundamental way.

Over the last eight years, Nordström says, the handset sector has more than doubled its share of global telecom industry operating profits to 11 per cent. Almost all of that has gone to Apple and Samsung in 2012, he says. One consequence of this is that these two firms have significant resource to put into innovation, R&D and standardisation at a time when the historical drivers of that work are more financially challenged.

“With this comes a considerable risk of less open standards,” Nordström says. “Operator- and infrastructure driven R&D/standardisation promoted a wider industry evolution, while device manufacturers instead push for and prioritise standards that help them to close gaps in their particular highly vertically integrated value chain and to benefit just their own devices. This has the obvious risks of bringing interoperability issues to bear and encouraging a lack of harmonised solutions.”

Two trends should concern operators, he suggests: the enthusiasm of device vendors for wifi offload (evidenced by Apple’s decision to support only a subset of global LTE bands and Samsung’s SIM-based wifi authentication solution) and what he describes as the “on-going battle over the future of the SIM card.”

Operators are in danger of being recast as “disposable, wear and swap access providers,” he suggests, warning that they and their network suppliers should “take charge of the wider industr y open interface R&D and standardisation efforts.”

Apple’s approach to operator relations has never been in doubt. The nature of its distribution agreements is tightly guarded, although the revenue share deals struck with operators for early iPhone models are an open industry secret. There is no denying the extent to which it has changed the game, or to which it has managed to succeed where operators did not.

And yet it is still to early to hail the end of the operator era. History tells us that leadership in the de vice market is a lot easier to lose than it is to win and ther e are no guarantees that Apple’s dominance is sustainable indefinitely. Recent problems with Siri and Maps ha ve revealed frailties that are at odds with the firm ’s self-styled infallibility. The question is whether operators will be able to cla w back a greater degree of control, or whether it will simply pass to the next ascendant device or OTT player.

Infrastructure vendor Nokia Siemens Networks (NSN) is set to exit 2012 having shed almost every operation it does not consider a core asset, in line with the restructuring plan it outlined in November 2011.

The year culminated in parent company Nokia selling and leasing back its head office building in Espoo, Finland, because “owning real estate is not part of Nokia’s core business”. The firm received €170m for its headquarters from Exilion Capital, a company owned by four Finnish institutions specialising in the management of real estate private equity funds.

Nokia recently posted an operating profit of €182m for the third quarter of 2012, coming up from a loss of €227m in the previous quarter and a loss of €114m in the third quarter of 2011.

In a quest to complete its transformation into a “mobile broadband specialist,” NSN has now divested seven of its “non-core” business assets since November 2011. “During 2012 Nokia Siemens Networks has made tremendous progress in the transformation of our company to being the world’s mobile broadband specialist. Our strategic focus on our core markets has enabled us to concentrate our energy and investment in areas such as LTE where we have strengthened our global leadership position,” said Rajeev Suri, chief executive officer at NSN.

The most recent operational disposal was NSN’s business support systems (BSS) unit, which went to billing and charging software provider Redknee. Under the terms of the deal, approximately 1,200 NSN employees will transfer to Redknee. Earlier this year the vendor outsourced a portion of its OSS and Subscriber Data Management activities to Finnish managed services player Tieto.

In the same week, the company announced plans to offload its optical networks business to investment firm, Marlin Equity Partners, and have the business spun off as a separate company that intends to run as “an industry leader in the fragmented optical networking sector.”

As a result of the transaction, up to 1,900 employees— mainly in Germany, Portugal and China—are expected to transfer to the new company in line with applicable local legal requirements. The transaction is expected to close in the first quarter of 2013 and will be headquartered in Munich, Germany.

Earlier in the year, the fixed-wireless broadband business, which NSN acquired as part of the Expedience portfolio it bought from Motorola Solutions networks, went to privately held Spanish firm, CN Tetragen. Meanwhile the broadband access unit was sold to US firm Adtran, the WiMAX business went to infrastructure player NewNet Communication Technologies and the microwave business to DragonWave.

These deals involved around 1,000 staff transfers in addition to the 17,000 staff reduction announced in November, taking the total number of staff reductions announced so far past 18,000. As it seeks to refocus, the company is looking to third parties to bolster its offerings. In the summer the vendor signed a global reseller agreement with wifi specialist Ruckus Wireless to help operators integrate wifi coverage as part of its small cells portfolio designed for mobile broadband services, a strategy which fits with its mobile broadband strategy.

There are three further units that NSN has identified as being non-core: Perfect Voice, the firm’s fixed line VoIP offering; Narrowband and Carrier Ethernet.

“We’ve not made any announcements about these businesses—they are in maintenance mode,” an NSN spokesman said. “We think the industry is evolving towards vendors that are focused and not ones that try to be end-toend. We see that as something our customers are supporting and actually now our competitors are trying to copy it.”

Conversely, Ericsson is focused on leveraging assets that it has acquired in recent years. Building on the acquisition of Telcordia in 2011, B/OSS has become a key strategic area for Ericsson to focus on as it is so closely tied to SDN (software defined network) evolution, according to CTO Ulf Uwaldsson.

In line with NSN’s deal with Ruckus, Ericsson has also recognised the challenge in integration of wifi technologies with those developed by the 3GPP. Building on another acquisition— BelAir networks in April of 2012—Ericsson is now tackling the issue with a wifi controller interface that talks to the 3GPP core, allowing operators to apply the same policy control and charging mechanisms. The company unveiled the first product to make use of this technology in October, with the launch of a stadium optimised wifi access point and controller.

And with Redback, which gave it strong assets in IP routing technology, the firm acquired the “glue” to hold broadcast, IT and telecoms services together in the broadcast services division of Technicolor.

Nonetheless, Ericsson has not avoided some dieting of its own. In August, US access solutions provider Calix acquired the company’s fibre access assets and more recently the company began to cut 1,550 jobs in its native Sweden, following third quarter earnings in which it saw a 42 per cent year on year reduction in net income.

But still, Ericsson has an extensive portfolio of businesses and was even in the frame to pick up NSN’s BSS unit. It will be interesting to see how the two strategies play out, with Ericsson looking to function as a one-stop shop, while a streamlined NSN is keeping its focus very much on mobile broadband, with radio access and core at the heart of the strategy, but supported by customer experience management, network intelligence and services.

Mobile and NFC payment technologies have been on the rise in recent years. But with many merchants and retail outlets still reluctant to invest in the new technologies, and with the rise of fraud in existing solutions, industry participants are divided over how and whether the technology will ever gain widespread acceptance in developed markets.

In theory, mobile and contactless payment services are all about convenience and ease of use. Customers lacking a bank account can use their mobiles to send and receive money – a model that has seen great success in emerging markets such as Kenya, where mobile payment service provider M-Pesa has 15 million users. Similarly, NFC payment technologies such as Google Wallet allow customers to pay for goods and services simply by tapping their mobile device, rather than dealing with cash. That should reduce the need for checkouts, tills and queuing.

Obstacles ahead

However, not everyone is convinced. Earlier this month, Davide Steffanini, head of Visa Europe’s Italian operation, said that mobile technology such as the mobile wallet was no longer being held back by technology, but rather by retailer and merchant adoption. In other words, if customers cannot use payment innovations at the retail outlets of their choice, the technology will be limited in its usefulness and may struggle to gain traction. That is a view shared by Mark Westbrook, head of payment services at ATM maker Wincor Nixdorf, who argues that the whole of society is moving towards greater speed and convenience.

“Cash is gradually being used less,” he said. “But if you go to a retail outlet and your mobile wallet is not accepted 50 per cent of the time, you’re still probably not going to bother using it. Conversely, from the retailer’s side adding support for a new kind of payment is expensive – a supermarket chain for example, would have to spend a huge amount of money to redesign  its IT system to support NFC. Why would it bother? Unless there are major benefits, it’s going to keep using cash.”

Adding to the difficulty is the relatively small customer base that currently has access to technology sophisticated enough to make use of NFC payment facilities, even if they did exist everywhere. Google Wallet’s website lists just six phones that are compatible with NFC. The new Apple iPhone 5 is not one of them, despite being released in September. Even when all smartphones are counted, whether NFC compatible or not, they still account for less than half (46 per cent) of devices used by consumers in the US, according to a study conducted by the Pew Research Center’s Internet & American Life Project in Q1 this year.

“We need to make merchants understand the value of the mobile payment, and industry participants should collaborate to ensure that the technology achieves circularity, so that customers can go to almost any store or any website and use their mobile device to make a payment,” said Alessandro Perego, co-director of the ICT and management observatories, school of management, Politecnico di Milano. “Mobile payments should also be connected with other services and discounts, to attract new users.”

Dangerous waters

Even where payments innovations have been implemented, customers still face potential pitfalls. Last month, NatWest suspended part of its mobile banking app following a spate of incidents in which criminals were able to withdraw money from unsuspecting customers, apparently accounts.

The bank says that the Get Cash feature of its mobile banking app that allowed users to withdraw cash without a debit card was suspended for maintenance. Using the feature, customers could simply use their existing online account to generate a passcode. After downloading the app to a mobile device, the code enabled the user to withdraw the cash.

NatWest withdrew the facility after customer complaints were reported by BBC Radio 4’s MoneyBox programme. However, it is unclear whether the app itself was to blame. Ben Knieff, head of fraud at financial crime and technology specialist NICE Actimize, believes that the hackers probably used phishing emails to obtain users’ security codes, then used a phone to get to

“There are different places for criminals to attack,” said Knieff. “In this case, it was the customers’ home computer that was targeted. The app was just the means they used to exploit their fraudulent gains. The mobile app itself may not be weak – it may use PIN codes, impose limits on cash movements, etc. – but there may be weaknesses in the surrounding processes that can be exploited by malware.”

Some 51,447 unique samples of Android malware were detected in Q3 2012, according to research by online security firm F-Secure. Although Google introduced a new security system, Bouncer, on its Android Play Store, F-Secure has reported that the incidence of malware continues to increase. That rise has been partially attributed to the increase in Android smartphone adoption, with Android phones capturing 81 per cent of the Chinese market, for example. The rise of third-party apps, which may be less secure, has also been blamed.

Of particular concern to users of mobile banking technology is the new version of Zitmo, a malware that targets Blackberry devices. It is designed to steal the mobile transaction authentication number sent by banks to their customers. Criminals can then use the number to make transactions remotely.

“Criminals have infinite creativity and time to try things out,” said Knieff. “Financial institutions have finite resources of both. But the ability of the banks to be agile and react quickly is vital. Customers won’t use an innovation if they think it’s not safe.”

A safer way forward?

For John Petersen, head of business development at fraud prevention company ValidSoft, the fraudsters are simply an unfortunate but inevitable side-effect of new channels of payment. Cyber threats capable of stealing money and private data should be countered by stronger, more integrated security.

“The industry, namely mobile network operators, merchants, smart phone manufacturers, banks and card issuers, all need to work together to find a best practice solution to combat cybercrime,” he said. “As the new transaction model is largely centred around the mobile phone, so too must be the security model. The solution is to use a layered approach to security, incorporating various telecommunications based technologies that use both visible and invisible layers that work in real-time.”

Fortunately for the consumer, mobile devices often contain technologies such as GPS that track the user’s location, front-facing cameras that can be used for face-recognition, and other biometric tools such as voice recognition technology and in some cases fingerprint technology. Drawing on these technologies, Knieff suggests that mobile banking could eventually become safer than online banking.

“While consumers didn’t like biometrics 10 or even five years ago, rising usage of the technology on sites like Facebook has made it more acceptable,” he said. “Consumer sentiment is changing, and I believe there could actually be an opportunity to use some of these technologies to make mobile banking even safer than internet banking is today.”

The concept of a new kind of payments technology infrastructure is also being supported by defence and security technology provider Thales e-Security. In a recent paper, the firm suggested that established payment firms such as PayPal, Google, Apple and start-up firms such as Square will not necessarily use the phone itself as a security layer – instead they will opt for cloud security.

According to Thales e-Security, the advantages of a cloud-oriented approach are that the user credentials are stored remotely, so less likely to be lost; fees will be more tailored to the consumer; and clearing will be carried out using fast non-card clearing services such as the Automated Clearing House in the US.

“As an industry we have been talking about the arrival of mobile payments for almost a decade now,” said Ian Hermon, mobile payment security specialist at Thales e-Security.  “Even though we have seen big players, such as Starbucks in the retail market, invest in mobile payment platforms, we are still a long way off from having one universally accepted model. Whether the industry moves to place its trust in the handset or in the cloud, one thing is for certain: TSMs need to be trusted by all ecosystem participants to guarantee the success of the overall mobile NFC infrastructure.”

By Alan Hadden, chairman, GSA.

The Global Mobile Suppliers Association (GSA) has been tracking the commercialisation of LTE and market developments, confi rming progress with the latest facts, trends and developments in its Evolution to LTE report.

The trends that we have identifi ed in 2012 are accelerating LTE network deployments and service launches across the world, in both FDD and TDD variants.

The September 11, 2012 issue of the report confi rmed that 347 operators were investing in LTE in 104 countries, including 96 commercial networks launched in 46 countries. At that time there were 292 fi rm LTE network deployments in progress or planned in 93 countries, with a further 55 operators in 11 additional countries engaged in pre-commercial LTE technology pilot trials, tests or studies. Taken together, it means that 347 operators in 104 countries are investing in LTE.

By the end of 2012 GSA forecasts that there will be 152 commercial LTE networks delivering advanced high speed mobile broadband services.

GSA has acknowledged LTE as being the fastest developing mobile communications system technology ever. The number of operator commitments to deploy LTE networks which were announced in the 12 months following the fi rst commercial LTE network launch was higher than for any other mobile communications technology in the same stage of development.

The pace of development and market introduction of LTE user devices is impressive. An update to the ‘Status of the LTE Ecosystem’ report published by the GSA on July 3rd, 2012 confi rmed that 67 manufacturers have announced 417 LTE-enabled user devices, with the number tripling year on year.

Compared to HSPA+, which is already a mainstream technology and the “workhorse” delivery system for mobile broadband, the pace of introduction of LTE user devices is faster. The total number of models of LTE terminals today is around 15 per cent higher than exists for HSPA+ despite the fi rst commercial LTE network going live ten months after launch of the fi rst commercial HSPA+ services.

It is encouraging to see how the LTE devices ecosystem already supports all market segments and form factors. However the main growth trend in 2012 is the launch of LTE-capable smartphones and tablets. The number of smartphones has increased by 73 per cent this year.

Most LTE user devices additionally support other widely available mobile communications technologies to ensure service when outside of LTE coverage. Typically this means support for WCDMA-HSPA or HSPA+ and GSM/EDGE, and/or CDMA EV-DO, and for TDD markets support for TD-SCDMA is becoming more common. Referring again to the July 3rd “Status of the LTE Ecosystem” report, 267 LTE devices also operate on either HSPA, HSPA+ or 42 Mbps DC-HSPA+ networks (as well as GSM/EDGE). Within this fi gure, 109 LTE devices support 42 Mbps HSPA+ technology. A total of 126 LTE devices support EV-DO networks.

Support for “fallback” technologies is necessary in most markets for an acceptable customer mobile broadband experience. In North America, for example, devices used on the Verizon Wireless LTE network are also required to operate on the fi rm’s EV-DO network. According to GSA’s research (July 18th, 2012), every WCDMA operator today has invested in HSPA in their networks and almost 50 per cent of them have launched commercial HSPA+ networks. There are 472 commercial HSPA networks launched in 183 countries; this fi gure includes HSPA+ investments and 234 commercial HSPA+ networks are now in service in 112 countries.

In parallel to the signifi cant investments now being made in LTE roll outs, 90 operators have commercially launched 42 Mbps DC-HSPA+ technology on their networks, and GSA forecasts that at least 115 DC-HSPA+ networks will be in commercial service by end 2012. Can some conclusions be drawn? It is true that LTE is arriving into a globally successful and rapidly developing mobile broadband market. It is also true that past investments, for example in HSPA and HSPA+ systems, won’t be discarded.

Many operators are investing in both HSPA+ and LTE technologies together. CDMA operators, especially in North America, are investing heavily in LTE as the mobile broadband technology of choice and currently claim the majority of the world total of LTE subscriptions. The balance will change as the pace of network deployments outside North America quickens— primarily in Europe and Asia—as substantial amounts of new spectrum for LTE come into use.

Key factors in the more limited progress of LTE in Europe have been the widespread coverage and availability of very efficient HSPA and HSPA+ systems, the economics and vast choice of HSPA user devices (almost 4,000 products) and the piecemeal way in which new spectrum has been allocated in the region. This is in stark contrast with the USA for example, where the early transition of broadcast TV services from analogue to digital transmission technology and the subsequent auctioning of new spectrum as the digital dividend, in a desirable part of the spectrum (700MHz), secured their headstart with LTE rollouts.

In Europe, the switchover to digital TV service is almost complete. The UK will be the last of Europe’s major economies to auction and allocate new spectrum for LTE, which is expected to be completed by end 2012. New spectrum in 2.6 GHz (3GPP band 7) which is ideal for high-capacity requirements in dense urban environments, and 800MHz (band 20 Digital Dividend) with its excellent long-range and building penetration capabilities, has now been auctioned and allocated in several European countries which will drive forward LTE deployments and investments in the region.

Many operators are seizing the opportunity to use 1800MHz spectrum (band 3) for LTE deployments (LTE1800). In all regions except North America, this band was originally allocated for GSM. It is often contiguous and partially under-utilized, meaning that operators typically have sufficient bandwidth to secure the full benefits of LTE. Providing initial widespread coverage with LTE in the 1800MHz band can be as much as 60 per cent cheaper than covering the same area using higher frequency bands. Its use can mean a faster time to market.

Operators will typically want to deploy LTE across a range of bands in order to maximise coverage and capacity, and to optimise cost structures. GSA joined in industry efforts with the GSMA, Telstra and others over a year ago to explain the benefits of using 1800MHz for mobile broadband—and LTE in particular. The campaign is aimed at device manufacturers, encouraging them to include LTE1800 in their roadmaps, and to regulators to allow re-farming for LTE deployments. New white papers from many manufacturers helped to explain the benefits and availability of solutions.

GSA published a report last November “Embracing the 1800MHz opportunity: Driving mobile forward with LTE in the 1800MHz band” which incorporated the insights of GSA member companies Ericsson, Nokia Siemens Networks and Qualcomm and pioneer LTE1800 network operators CSL Limited, Deutsche Telekom, Elisa, Qualcomm, StarHub, Teliasonera and Telstra. The situation today is positive: 32 LTE1800 networks are in commercial service, with many more deployments and trials in progress. 98 LTE1800 user devices are announced, giving ample choice and LTE operators in Europe are increasingly demanding support for LTE terminals in 800/1800/2600 MHz as well as HSPA/HSPA+ and GSM/EDGE.

With LTE heading towards the mainstream and infrastructure widely deployed by year-end, the focus will shift to return on investment, increasing efficiencies, developing new business models and generating revenue and profit growth.

The reaction of central IT functions and CIOs to BYOD has been, and remains, mixed

Enterprises are facing a challenge from employees who want to use personal devices to access corporate data. Perceived benefits around cost and productivity are balanced by concerns around device management and security. Mobile operators are positioning themselves to address these concerns and facilitate the trend.

The starting point with an investigation of a new tech trend these days is often a quick look at its position on Gartner’s famed Hype Cycle for Emerging Technologies. Which stage it is judged to have reached on the Tolkien-style quest through the Trough of Disillusionment, up the Slope of Enlightenment and on to the hallowed Plateau of Productivity is always an interesting indicator.

Bring Your Own Device, the movement that sees enterprise employees wanting to use their personal devices to access corporate functions and data, sits at the very Peak of Inflated Expectations, according to the version of the Cycle that the research house published in July of this year. For Gartner, at least, it has some way to go.

It is indeed early days, with BYOD having generated a fair amount of push back from corporate IT administrators and CIOs when it first gathered enough momentum to have been defined as a trend. This is because BYOD has emerged from the field, not from the careful planning of corporate IT strategies—and not from the minds of service providers looking for diversification in the business. In fact, like so much else in recent years, its growth can be traced back, in part, to the popularity and uptake of the iPhone, and the class of smart devices that has emerged in its wake.

In an interview with MCI, Vivek Badrinath, head of Orange Business Services, points out that while mobile telephony may have had its roots in the enterprise, it really blossomed in the consumer market. It was as consumers that we moved to the next level of attachment to our mobile phones, drawn by the mixture of utility and entertainment afforded by the application-based content model.

Alive to the benefits of their new devices, corporate employees have started to either favour them over the more basic handsets allocated to them by their IT departments or seek to use them in the absence of an officially provisioned device. As Nigel Pindar, who led a BYOD implementation programme for MCI’s parent company Informa, points out: “The technology people are buying for themselves is better than the technology with which their employers are supplying them.”

The high profile challenges faced by Research in Motion, which still enjoys a near monopoly in the enterprise mobility sector, bear this out. RIM’s Blackberry devices didn’t suddenly stop doing what they were supposed to. Instead the firm found itself (aside from a niche, teen enthusiasm for its instant messaging product) failing to compete in the consumer market. This really ought not to reflect badly on the firm, given that consumer devices were never a problem that RIM set out to solve.

Whether or not RIM’s difficulties have driven the BYOD phenomenon, whether it’s the other way around, or whether the relationship between the two developments is simply one of coincidental timing is a matter for debate. But as Mobeen Khan, CMO for advanced mobility solutions at US operator AT&T, observes: “Demand has grown and choices have improved. As a result of that, a single vendor solution is just not going to cut it any more.”

But the drivers aren’t limited to device snobbery. In the modern corporate world there are many temporary employees; contractors or consultants on secondment, who cannot function without access to key client data. It can be easier to facilitate that access through their own devices than provide them with a centrally sourced, temporary fix.

Remote working is also increasingly popular, placing greater demands on the central IT function at an enterprise to look for more efficient ways to connect employees off-premises. In smaller organisations, meanwhile, device procurement is a headache that the leadership may well be happy to do without.

Looking forward, Jeremy Spencer, head of propositions and campaigns at UK operator Everything Everywhere, suggests that LTE will accelerate the remote working trend. Spencer is certainly on message; Everything Everywhere recently announced that it is to become the first UK operator to launch the next generation network technology, lighting 16 cities before the end of 2012.

“The changes that 4G will bring to the device and the usage patterns are amazing. It really does make mobile working feasible in terms of access to business systems, and doing business on the fly,” he says. “It’s going to drive more businesses to want to make more use of mobile data and flexible working.”

Just because something is happening doesn’t necessarily make it popular, though. The reaction of central IT functions and CIOs to BYOD has been, and remains, mixed. The departments and people responsible for these functions like control and they like security; two factors at which RIM’s Blackberry Exchange Server has excelled, hence its dominance. Controlling and guaranteeing the security of a wide range of employee-owned devices is far more difficult.

In a recent survey of 73 CIOs from developed market multinational corporations (MNCs), analyst Ovum found that BYOD ranked bottom of a list of 12 mobility priorities, with half of respondents deeming it of either low or zero importance. Ovum identified security as the greatest concern for those MNCs.

“From speaking to our enterprise customers as well as going by AT&T’s own experience, control and security are areas that IT admins hold very dear to their hearts,” says Mobeen Khan. “Any time you modify rules around security and management of data it’s a difficult decision for these folks.”

But resistance to the trend appears to be on the wane, even among its most staunch opponents. “About a year ago, the CIO of a very large, Northern European corporation said to me: ‘If [my employees] want a phone from me it’s going to be a Blackberry and if they don’t like it they can go and buy their phone in a shop. But if they want to connect to my IT they go through the Blackberry or nothing’,” recounts Vivek Badrinath. “Even that person is starting to come round to the idea now.”

Part of the reason is that the tech-savvy workers pushing the BYOD trend from the field are often more than capable of implementing their own workarounds to gain access, of which there will be no visibility for the IT admins.

In a study published recently by Cisco which focused on enterprise attitudes in the US, Canada, UK, France, Germany and Spain towards the rise in popularity of tablet devices, 48 per cent of respondents said their company would never authorise employees to use their own devices for corporate access. But 57 per cent of those surveyed said that employees were using personal devices without consent, a trend that was highest in the US, where 64 per cent of respondents conceded that it was happening.

Absolute control over all devices accessing the corporate network may be CIO nirvana, but it is better to have less control over all devices than none over some. BYOD should be about “moving from control to management,” says AT&T’s Khan.

Another reason for the softening of attitudes to the trend is that it is not just field workers that are asking to bring their own devices to the enterprise. Often the senior executives are the first to acquire the latest in personal devices and it will be these people that demand BYOD access be granted before the rank and file. When the CEO comes knocking with a request like that, nobody in IT support is going to tell them it can’t be done.

There are also perceived benefits to BYOD, chief among them cost and employee satisfaction. If employees are buying their own devices to the tune of hundreds of dollars, the thinking runs, the enterprise can reap significant savings on device procurement.

“We keep telling CIOs that this is a blessing in disguise because otherwise they’re in the middle of this arms race towards bigger screens, bigger memory, better devices, better materials,” says Vivek Badrinath. “I think most of them are valuing that. They’re fed up of being the person who employees look at in the corridor and think: ‘that’s the guy who won’t let me have an iPhone’.”

Cost savings around procurement may well turn out to be an upside but there is an important counterpoint. As bulk buyers, enterprises have access to levels of discount on both devices and usage that individuals do not. They might well incur substantial costs in having to reimburse airtime charges and in processing a much higher volume of expense claims.

Employee satisfaction seems more straightforward. In a second study by Cisco, which surveyed 600 US IT and business leaders (the US is the most advanced BYOD market) the ability to carry out work-related tasks out of working hours, ranked second behind device choice in the list of employee motivators for BYOD. Productivity gains are another attraction.

For CIOs, though, becoming comfortable with BYOD as a concept is really only the beginning. A number of stiff challenges await any organisation that looks to embrace the trend, beyond the headline concerns of security.

How do they approach payment for the services being consumed? How do they manage a much wider range of devices, and indeed decide which to support and which to exclude? How does the burden of support get split between an operator and an IT department if that device has two distinct usage profiles » and sets of requirements? What happens when employees want to keep using their existing service provider—to bring their own network as well as their own device?

These are serious challenges for CIOs and sit at the heart of the opportunity in the BYOD space for mobile operators’ enterprise services departments. “The feedback I’m getting from our enterprise community,” says Everything Everywhere’s Jeremy Spencer, “is that they are really struggling with all these issues. They want the operators to think it through for them and come back with ideas and suggestions for guidance.”

AT&T’s Mobeen Khan picks up the thread: “Let’s say you allow some active sync of email with some simple encryption and you start allowing employees to bring in their own devices. The next level is that the employee now needs CRM access. Traditional IT departments are not used to managing those kind of things on a wide variety of devices, they’re much more used to a controlled environment like a laptop, or desktop PC. BYOD is about more than just managing the data and devices and being able to wipe them clean, it’s about managing your entire work environment.”

The US operator is at the vanguard of BYOD, and its Toggle solution for device segmentation is often referenced by other operators. Toggle—based on technology provided by OpenPeak—takes a literal approach to the issue of dual usage profiles on a device by creating a secure container that sits on the device and houses all corporate data and functions. It has a component that allows the IT admin to set policies and rules around when and how data can be accessed, what kind of apps need to be deployed and any reporting that is generated from the container.

When the container is first installed on the device it scans the entire device for security threats and alerts the user to any that it discovers. The solution allows remote shutdown of the container, without affecting the rest of the device—a functionality that is common to many MDM platforms targeting BYOD, given the different types of content that sit on the devices.

Policies include geo-fencing and time-stamps, designed to restrict access to data to certain locations—corporate campuses, say—or to certain hours of the day. This latter functionality allows US enterprises to ensure that unionised employees are not involved in work-related activities outside of the hours that they are contracted to work.

“The IT admin desk can monitor every single communication, data, voice or messaging, that goes on inside that container,” says Khan. “They can implement policies that compensate the user for the number of calls they make or messages they send, or they can generate two bills; one that goes to the home of the end user, and one to the IT admin.”

True BYOD has to include the ability of the user to maintain their existing service plan. This is particularly complex for operators looking to provide BYOD services and it’s an issue that is being dealt with in various ways. Everything Everywhere’s Jeremy Spencer says that his firm offers substantial discounts to employees of its enterprise customers, which is partly motivated by the desire to simplify the provision of BYOD services. This is good news for EE when it works, but it doesn’t really address the problem.

Uri Gurevitz, marketing manager at B/OSS solutions provider Amdocs says his firm has seen “no real solution” to the BYON (where the ‘N’ stands for network) so far. “Most of the enterprise customers who do allow employees to BYOD will limit them to MNOs that they can work with, so it’s not completely open,” he says.

Support for dual lines, including lines from separate mobile service providers, is a functionality that AT&T is planning to introduce in the near future, according to Mobeen Khan. He declines to explain exactly how this solution will work when the Toggle container is installed on a non-AT&T device but offers a hint, saying: “think about call-forwarding as a mechanism. It will handle it something like that.”

For AT&T devices a more sophisticated dual line solution is available, but Khan says that operators have to accept the reality of a world in which competing operators will need to provide service to a single device based on consumer and enterprise divisions. “We’re starting to raise this issue at an industry level. We need to decide how we’re going to get this accomplished in a more elegant way.”

Discussions are underway at US trade association the CTIA, he says, although industry operator group the GSMA declined to comment, saying that BYOD is currently viewed internally as an enterprise issue.

It could simply be viewed as a form of roaming, if there was enough collaborative weight behind a drive to get it right, Khan says, although he concedes that, historically, interoperability has taken a long time to establish on more than one occasion. “Carriers are already exchanging this kind of information on a roaming level. That connectivity exists,” he says. “We just need to agree on what the right mechanisms are as well as the frequencies and the level of detail that needs to be exchanged.” AT&T will issue a vision statement for such a collaboration in the near future, he says.

A co-operative approach is particularly important given that, despite attempts by large enterprises to centralise their mobility services, many procurement deals are struck at a regional, national or even departmental level, with a single MNC often likely to have a number of different operator partners.

Over 60 per cent of MNC CIOs interviewed by Ovum said that that while mobile strategy is set at a global or regional level, services are likely to be sourced locally. “Mobile service providers looking to win managed mobility contracts should recognise these conflicting trends,” Ovum advises. “They need to help multinationals that are ready to take a holistic view of mobility and want to drive their mobility strategy through their organisation. This will include support for more flexible usage policies that might vary considerably by country or employee role.”

No matter how sophisticated operator- and vendor-driven BYOD solutions become (and most operators with significant enterprises’ business will resell MDM solutions from a number of vendors), not all enterprise customers will embrace it.

Everything Everywhere’s Jeremy Spencer relates an experience with one “large professional services organisation” that looked to implement a hybrid model that allowed its employees to choose their own devices from a range that included the most popular, while the employer subsidised both the cost of the handset and the cost of the airtime. But the client withdrew the service “because they found the overhead of trying to manage an incentivised choose-your-own-device programme just wasn’t worth it.” This organisation simply reverted to supplying its employees with a device of its own selection.

But the consumerisation of IT, as it has become known, is not going away and there are considerable opportunities available to operators that are able to pull together a solution that implements the key elements of security, device management, flexibility and billing, and offer it as a managed service, taking the difficulty and responsibility away from CIOs with plenty of other pressing issues to consider.

Operators should take heart from another statistic from Cisco’s global IT study mentioned above. Some 44 per cent of respondents said that dealing with BYOD diverted attention away from other important IT functions that needed their attention.

Certainly operators seem uniquely fitted to this market, as AT&T’s Mobeen Khan suggests: “If you look at who is capable of providing this scale of solution to enterprises, there are only a handful of companies that come to mind. You can’t rely on the device vendor because it needs to be cross platform. You can’t rely on a software vendor because it needs to be a marriage of software, connectivity and device. I think carriers are very well positioned,” he says.

What really stands out, though, is the need for collaboration. And it’s tempting to suggest that the extent to which this happens will really be the measure of how seriously operators want to address BYOD.