Fujitsu's Arrow smartphone, launched in Japan earlier this year

Japanese electronics vendor Fujitsu has announced its intention to launch smartphones and tablets into the European market. The firm has a 20 per cent share of the Japanese mobile device market, according to Robert Pryke, director of Fujitsu’s European device business.

Pryke said that the vendor is currently in talks with European operators over potential distribution deals.

“Details of timings and devices that will be made available in European countries will be dependent on the outcome of ongoing negotiations with operators across Europe, including those with a pan-European footprint and those that provide services in just one territory. The company is looking for the right partnerships that will lead to steady and sustained growth,” Pryke said.

Fujitsu’s move comes at a time when the large operator groups are focused on reducing the numbers of device providers they work with, rather than increasing them. Last November, Matthew Key, head of Telefónica Digital announced that the operator is looking to cut its device range in half, while Vodafone’s head of device marketing Peter Becker-Pennrich recently told Telecoms.com that just eight vendors supply 98 per cent of the devices that Vodafone ranges, and that he expects this number to come down “quite a bit”.

Research by Accenture suggests that operators cannot get the best unit price from vendors until volumes rise above half a million.

“The research that we’ve carried out into the prices that manufacturers charge operators shows that, until you hit between 500,000 – 750,000 units, you don’t reach a manufacturer’s best price,” said Dan Adams, a partner at Accenture. “So operators have to set their portfolio so that a good chunk of it gets over that number per device. If they don’t, they’ll be paying more than the competition and, while they might have a better range of handsets that’s more adjusted to the local market, consumers are not going to pay more for a handset they can get cheaper elsewhere.”

Paul Bultema, executive director, UK and Ireland strategy lead for the communications, media and technology operating group of Accenture

Paul Bultema, executive director, UK and Ireland strategy lead for the communications, media and technology operating group of Accenture, talks about consolidation, differentiation and the rise of over the top services.The opportunities for differentiation in this industry are cyclical. At one time carriers competed on network coverage or price. Today, at the dawn of the 4G era, coverage and price remain important to customers—although in many cases there is nowhere for prices to go—but the deployment of new technology is adding into the mix the expectation of improved performance.

As a result, there is a significant opportunity for operators to differentiate on the customer experience, with a focus on the products and services on offer and the brands they represent. Paul Bultema, executive director, UK and Ireland and strategy lead for the communications, media and technology operating group of Accenture, believes that wireless operators are having a tougher time than the fixed line players, which is forcing a certain shift in the network operator business model.

“On the wireline side there is more of a sustainable and consistent enterprise space where you have not seen the same amount of churn,” Bultema says. “But on the mobile side you have the decline of voice and data revenues combined with the impact of growth in data over the last few years as well as the capex investment needed for those network upgrades. It puts carriers in a precarious position and they’ve historically been very vertical in everything like retail and distribution so they’ve taken a hit on many levels.”

Sticking to comparisons with the wireline industry, Bultema notes that operators have “horrific” data quality linking the physical layers of the network to the services used by customers. And while wireless operators also have this issue, they have the additional challenge of much more dynamic requirements. “It’s one thing trying to manage a POTS customer but another managing them in a 3G or 4G environment where you have to be so dynamic, while at the same time deploying your 4G network, and catering to tablets and devices that are very bursty and have never been seen before in the network,” he says.

This kind of pressure is driving operators to question themselves as to what’s really core and non-core to their business. Bultema acknowledges that operators are increasingly coming to accept that networks are not core to their business—a phenomenon which is driving the growth in outsourcing and network sharing.

“We’re going to see some major changes in the next two to three years in the mobile space, with increased M&A and consolidation impact in terms of retail and distribution and substantial consolidation on transmission,” he says. “Where regulators have historically encouraged competition they now have to change tack a bit and tolerate network consolidation. It’s more of a move towards a utility rather than each operator owning their own network.”

Bultema cites Australia as a prime example, where the National Broadband Network is being pitched as a core national utility—designed to make the country more competitive and aimed at trying to lower the cost of provision per subscriber. He also cites national investment schemes taking place in Brazil and many other countries, where it is unsustainable for every operator to have their own network.

By the same token, LTE is having a dramatic impact on operator business models—with the threat of the dumb pipe—the operator’s greatest fear—looming ever large. But according to Bultema, the dumb pipe strategy is a good thing for the industry. “Consider LightSquared in the US, which is trying to be the dumbest pipe possible. It has no product development or R&D but what it has is open APIs into their OSS and BSS and network so customers can come and plug in to their network and develop products and services on behalf of their own customers where they have greater customer intimacy. I think this model speeds innovation and moves innovation closer to the customers in niche segments,” he says.

In the wake of LightSquared’s creation, the industry has seen a proliferation of the LTE wholesale model adopted by Yota in Russia, as well as operators in Poland and Mexico. Accenture believes this will drive intense competition at the retail level and that mobile operators will be put under further pressure as a result.

“Technology is one of the drivers of this business model–Ethernet and backhaul is a pre requisite–and the upgrades around 4G are more difficult than operators expect. They may know network deployment but this is not just another network deployment,” Bultema says. “It has end-to-end ramifications across the company, starting in sales and marketing, management, infrastructure and engineering, construction, service delivery, and IT, before you even have your node ready,” he says. “Doing that in 3G with a well defined process is one thing but trying to optimise 3G much more dynamically while trying to roll out 4G—and doing that in an efficient way—is another thing entirely, and I’ve not seen one operator that has an end-to-end management workflow system to align those plans on the network. That is a significant issue and means most operators are very much behind schedule in terms of 4G upgrades.”

According to Bultema, telecoms as an industry suffers from tremendous inefficiencies. He picks out airlines as an evolutionary target. There are few players headquartered in any given country and many don’t even own their planes, preferring instead to lease them. Airlines don’t do their own maintenance or their catering, they outsource both. But what they do manage directly—and what they’re really good at, Bultema says—is pricing models, operation heuristics and supply chain management as well as supply and demand forecasting.

“This is what’s driving network consolidation and the rise of LTE wholesalers. Take Yota for example—it’s a much more capital efficient and faster way of deploying LTE,” he says.

“Telecoms has not made that type of change–most operators still own everything on an end to end basis and, outside of the US, the way operators communicate with each other in terms of third party network access is still through phone, fax and email, there’s no e-bonding infrastructure.

“So telecoms has been ripe for an upgrade for decades but nothing had emerged as a critical issue that will drive this—until now. My belief is that LTE, not as a technology, but because of the fundamental dynamics needed to support network upgrades and the innovation required to survive at the IP layer, is going to drive that kind of structural change in the industry.”

Although some operators are considering the dumb pipe model, they also need to consider content and service partnerships, and this is where the over the top (OTT) players have been much more innovative than operators. They are closer to and more intimate with their customers, allowing them to extract a significant amount of profitability from the changes of platforms and ecosystems as they develop rapidly within the industry.

Coming back to the key question of whether or not each service provider in any given market needs to have their own network, Bultema argues that this is something that is becoming increasingly unsustainable. Going forward the requirements for LTE, fibre and network upgrades will drive very deep network sharing. Operators will have to morph themselves into much leaner organisations in order to compete against OTT players and provide that responsiveness and innovation.

And analytics will play a key role in tailoring these services. The ability to dynamically link customers to their products and services and then back to the financials and network quality, so operators can proactively respond to QoS issues and improve the user experience, will be a core competitive advantage and differentiator going forward.

Customer touch points should be extended throughout the customer lifecycle—not just at the end of a customer’s lifespan and not just on the sell side but also on the customer experience side, he says. “Such as text messages when you land in a foreign country giving you information about roaming prices and a notification if you’re about to hit your data allowance–these things can be helpful or beneficial and can improve your perception of the operators,” Bultema says. Again telcos can learn from airlines with their own loyalty programs and improve their loyalty schemes in a way that attracts customers, he argues.

“The OTT players, Facebook, Google and Apple have a fairly loyal fan base and there are lessons to be learned from them by operators in terms of keeping products very simple, and the interface very clean and straightforward, creating a suite of services around what their core strengths are,” he says. “There is rapid innovation but also rapid abandonment if something does not work and all these product management elements are still slow in the operator community.”

Learn more about Accenture Communications Solutions:

www.accenture.com/communications-solutions

Without an adequate medium of delivery, there is no message

Way back in 1996, at the dawn of the digital revolution, Microsoft founder Bill Gates declared in an article that “Content is King.” Gates drew a parallel to television, saying that “The television revolution that began half a century ago spawned a number of industries, including the manufacturing of TV sets, but the long-term winners were those who used the medium to deliver information and entertainment.” This statement has proved prophetic.  However the ensuing evolution of content – or more specifically content quality –is also proving to be one of the greatest challenges to the digital future. Without an adequate medium of delivery, there is no message.

The iPhone, the iPad, the Android platform, the Kindle, the ultrabook – new mobile devices have transformed the world in which we live and work. But this transformation has come at an increasingly high financial cost. The scale of network investment required to achieve the performance that customers expect – and the increased need to support complex services and content – is threatening the business case for mobile broadband services.

Typical mobile operators spend between 20 percent and 30 percent of operating expenses and 50-70 percent of capital expenses on network cost. As data volumes increase and the deployments of 4G networks proliferate, so will network costs. Such increases, combined with uncertainties about how to monetize higher levels of data traffic, represent a continuing challenge to operators that could hinder future profitability and cash flow.

One of the solutions to this problem is to limit network costs through network sharing, a formal arrangement between two or more mobile operators to share various components of their networks.

Changing Strategy

Historically, networks have been considered areas of competitive differentiation. Superior network performance and coverage have been the slogans of providers for years. However, many network components today are simply table stakes and may not be true differentiators. Indeed, by focusing on cost-reduction measures such as network sharing, management may be able to reinvest savings into alternative differentiating strategies such as customer service, innovative offerings and being first-to-market with new devices.

A well-executed network sharing venture has the potential to deliver a 20 to 40 percent reduction against standalone cost run rates . From one-third to two-thirds of those benefits are rooted in cost avoidance, with the balance resulting from actual cost reductions. Equally important, network sharing can help an operator significantly accelerate deployment speed, plug coverage gaps and grow revenues without increases in network costs.

Negotiating, planning and managing a network sharing deal requires executive leadership to overcome multiple complexities, including organizational integration issues and regulatory challenges. The prize for overcoming these challenges is the opportunity to control costs and achieve market advantage in the years ahead.

The business case

For a typical mobile operator, the majority of network costs don’t come from the core network. They come from the access network, often called the “edge.” This includes “backhaul” – the microwave, fiber or copper connections between the core network and base stations – and the “radio access network,” the final connection to the device. A recent industry analyst report found that these elements can account for more than 80 percent of incremental network costs. Most network sharing arrangements will therefore cover one or more elements in the edge, while the backbone is rarely shared. Which elements exactly are shared or kept separate will depend on the tradeoff between cost control and differentiation that the sharing partners are willing to make.  The financial business case is one that is clearly measurable, while differentiation is much more difficult to quantify. Interestingly enough, it is the differentiation agenda that will stir up the most emotions.

Savings are usually realized by consolidating two network infrastructure footprints into one, eliminating redundant sites and connections. Cost avoidance is delivered by using another operator’s network sites or leveraging a joint deployment strategy, thereby reducing deployment  and operating costs. In addition, operators often receive a top-line boost from network sharing. By using a partner’s existing sites, operators can accelerate deployment of services and improve customer experience and retention. These have obvious positive impacts on revenues.

Mobile network sharing strategy depends on careful planning in three key areas.

Choosing the right organizational model

A formal network sharing partnership requires a dedicated organization to manage it. These arrangements are generally of three types. An operating joint venture involves both parties contributing financial and human resources to the organization. An asset-owning joint venture involves having the network sharing organization take control of the assets and liabilities related to the network share, with each party having an equity stake in the organization. The third arrangement is one where a neutral third-party operates and manages all aspects of the network sharing venture and charges back all relevant costs to the different partners.

If the sharing partners are similar in terms of spectrum position, backhaul strategy and market share, the first model is often the most appropriate. The other two models work better when there is a significant difference between the sharing operators.

Regulation

A number of important regulatory constraints, especially those focused on the impact of network sharing on competition, must be carefully considered and managed. Typically, operators cannot use network sharing to reduce competition or coordinate their market behaviors.

This restriction can hinder rollout synergies because it limits the extent to which the sharing partners can align their plans. Only the joint-venture organization is permitted to view both operators’ intentions, but it cannot share this information with either party. Both operators need to be aware of these constraints and not be tempted to compromise them in a way that would increase regulatory risk.

Integration

Successful network sharing requires meeting several integration challenges across systems, processes and people. From a technology perspective, the success of a network-sharing venture depends on the ability to align the information systems across the different organizations and to keep the information consistent for both. Network processes will also overlap, so it’s important for operators to understand each other’s existing processes, delineate the responsibilities each operator will have, and make any needed changes to either side’s approaches to support the success of the venture, as well as prevent any leakage of competitively sensitive information

Because network sharing changes the way people work, effective change management activities are important, including clear communications, team building and support for cultural change.

The common thread among these success factors is strong program management. A dedicated program management function – which drives the coordination and integration of the consolidation and rollout –can make the difference between success and failure of a network sharing venture. Some operators are looking to improve speed to value by leveraging a third party to deliver program management – an organization that can bring experience from other similar ventures and that can, by being neutral and not aligned to either side, be in a better position to make difficult decisions.

A final thought

Network sharing is a significant opportunity for network operators to keep costs under control while also improving the customer experience and retention. However, operators need to be aware of the subtleties that underpin this strategy, specifically around cost reduction versus cost avoidance. In addition, benefits will be difficult to achieve without effectively addressing a range of operational and management challenges around the organization, integration and competitive aspects. Getting this right will significantly improve an operator’s chances of driving advantage from a network sharing strategy.

Paul Bultema is Executive Director, UK and Ireland Strategy Lead, Communications, Media and Technology operating group, at Accenture. Read his comments on Customer Experience Management in a forthcoming feature due in February.

“Mobility is a key area for Accenture,” said Marty Cole, chief executive, Accenture Communications and High Tech group. “This collaboration with Nokia will enhance our ability to help clients across multiple industries leverage mobility to advance their business agendas. It is a real win-win for Accenture and Nokia”.

The deal not only sees Accenture increase its foothold in mobile services but also sees Symbian re-united with David Wood, its co-founder and now Embedded Mobile Industry Advisor at Accenture. Accenture and Nokia have been working together since 1994 and in October 2009 Accenture acquired Nokia’s professional services unit, which served as a key building block in Accenture’s Mobility Services portfolio.

For Nokia, the deal will enable the Finnish vendor to focus closely on future smartphone development, namely integrating Windows Phone with its hardware, rather than be encumbered by the outgoing Symbian platform. Nokia does, however, have an ongoing commitment to Symbian and plans to sell 150 million Symbian devices in the future, assuming it is able to maintain the platform’s viability during the transition to Windows Phone. Jo Harlow, Nokia’s executive vice president for Smart Devices, said: “As we move our primary smartphone platform to Windows Phone, this transition of skilled talent to Accenture shows our commitment to provide our Symbian employees with potential new career opportunities.”

The companies expect completion of the final agreement during summer 2011 and the transition of employees by the end of the year. The Accenture deal forms part of a wider Nokia plan to reduce operating expenses for devices and services by €1 billion (US$1.5 billion) in 2013 compared with 2010. In addition, Nokia also plans to reduce its global workforce by about 4,000 employees by the end of 2012, with the majority of reductions in Denmark, Finland and the UK.

The desire for Nokia to outsource software activities and cut costs is a clear indication of the company’s new-found focus. “At Nokia, we have new clarity around our path forward, which is focused on our leadership across smart devices, mobile phones and future disruptions,” said Stephen Elop, Nokia president and CEO. Nokia hired Elop from Microsoft in 2010 and this year he announced that Nokia is pinning its smartphone hopes on Windows Phone as its primary platform to compete more effectively against Apple iOS and Android.

Now that Nokia has outsourced Symbian and sold off the commercial licensing and services business of Qt, a cross-platform application and UI framework, it will be able to operate in a far more platform-agnostic mode in future. Ridding itself of these burdens will allow the company to be far more pragmatic in its future choice of platforms, enabling it to react faster to market demands, although at the cost of losing some element of control and internal expertise. This still leaves Nokia with the MeeGo software platform it developed with Intel in its portfolio, so is it a question of when, rather than why, will it go the same way as Symbian? If this outcome were to materialize, Nokia will have managed to outsource the majority of its software business to focus primarily on hardware, sending the Finnish company back to its roots as a very successful handset design house, which is arguably what it does best.

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At a time when just about every telecoms legal suit seems to involve Western companies suing their Chinese counterparts, or vice versa, Apple is taking its “Think Different” motto to its logical conclusion and suing everyone, regardless of nationality. With its announcement last week that it was going to sue Samsung for “blatant copying”, however, the Informer is beginning to wonder if the plot hasn’t well and truly been lost – after all, Samsung only makes the CPUs and LCDs for the iPhone.

According to Apple, that’s not the only point of commonality: “It’s no coincidence that Samsung’s latest products look a lot like the iPhone and iPad,” quoth Apple, before going on to accuse the Galaxy maker of “slavishly” following its lead, right down to the cardboard boxes it ships its products in (called “Trade Dress” in iSpeak).

If slavish following is indeed a crime, one can only conclude that the hordes of iSheep lining up outside Apple shops would be better off skipping the next iUpgrade. Next week: St. Steve of Cupertino sues everyone with Jobs…

In the meantime, Samsung is entering into the spirit of things by launching a countersuit. Rather than even try to suggest that its products don’t resemble Apple’s, Samsung has decided to change the subject a smidgeon, accusing its biggest customer of stealing its technology to optimise data transmission, reducing power usage during data transmission and a technique for tethering a mobile phone to a PC.  If Samsung decides to suspend production while the two lock horns in court, things could get very interesting indeed.

In a “Me Too” world, Apple and Samsung aren’t the only ones filing legal paperwork. This week, AT&T filed the official documentation for its merger with T-Mobile with America’s Federal Communications Commission (FCC). All 381 pages of it.

Predictably enough, the tome is heavy on things like how the proposed merger will solve the telcos’ respective spectrum crises and how the explosion in mobile data usages is threatening to bring their networks to a halt. Indeed, according to AT&T, in the first 5-7 weeks of 2015, it expects to carry all of the mobile traffic volume it carried during 2010, meaning that it faces “severe capacity constraints” and “cannot simply wait for the next major auction to resolve them.”

Somewhat bizarrely, the document consistently states that AT&T’s ability to offer quality services is deteriorating faster than the Informer can type. In the not-inconceivable event that the deal is blocked, how many customers will stick around to see if the network with the most dropped calls can turn a profit on dead air?

And speaking of profits, it’ll be very interesting to see if the document’s statement that T-Mobile customers will be allowed to keep their rate plans will survive the merger. If not, no worries – according to the document, “other providers already fill – or could easily move to fill – the competitive role T-Mobile occupies today.” And if you’re wondering who these alternatives might be, “Sprint has re-emerged with a combination of first-to-market 4G services, attractive devices and aggressive pricing,” while MetroPCS and Leap offer “inexpensive, no-contract service with nationwide coverage…and have won dramatic gains in total subscribership.” With that kind of free advertising, one can only assume the growth will continue.

One telco likely to be wishing that everything AT&T says in its document is true is rival Verizon Wireless. AT&T’s assertion that Verizon claims “unequalled network advantages in the provision of high-end LTE services” will come as empty praise following the collapse of America’s largest wireless provider’s LTE network yesterday. Users of the HTC Thunderbolt handset reported difficulties getting online as the telco admitted there was “an issue” with the service. At the time of writing, the service was still down, and no further details as to the cause or when services will resume were available.

Thunderbolt users are reporting that the issue appears to extend beyond simply being unable to access the LTE service; many are complaining that they can’t connect to 3G or any other service, while subscribers to Verizon’s LTE wireless access card and hotspot offerings have also been unable to connect. According to a statement from Verizon, LTE handset users will still be able to make calls but some “may experience a 1XRTT data connection during this time.” The company said it expected to see the network restored on a market-by-market basis.

For Verizon, the timing couldn’t be worse: the company was due to launch its second LTE-enabled handset, Samsung’s Droid Charge, today. While there’s been no official announcement on the subject, it seems unlikely that the launch will go ahead while services are down.

Verizon isn’t the only ones with network problems this week. Vodafone Hutchison Australia’s coverage troubles looked set to deepen, with a proposed class action suit against the telco for poor service gaining ground in the country. When the idea was first suggested at the beginning of this year, about 9,000 claimants expressed interest; that number has more than doubled to 22,000 in the past couple of months, according to reports in The Australian.

The report comes on the back of a weekend network outage that saw VHA customers unable to send or receive SMSs on Easter Sunday. Disgruntled subscribers vented their anger on Twitter and Facebook, with the former managing to make “Vodafail” the trending topic in Australia for the day. VHA apologised to customers on a blog post and offered 12 hours of free SMS services on May 1^st by way of compensation, but comments posted in response suggest that the gesture is unlikely to make much difference to increasingly negative perceptions of the carrier’s service.

Nokia’s Symbian operating system must be feeling similarly unloved, with the announcement on Wednesday of plans to outsource its development to consultancy firm Accenture. As part of the process, Nokia will also transition some 3,000 employees in China, Finland, India, the UK and the US to Accenture.

The move casts Nokia is the role of hardware developer. Under the collaboration agreement, Accenture will provide Symbian-based software development and support services to Nokia for future smartphones, extending beyond Symbian. Accenture will provide mobility software, business and operational services around the Windows Phone platform to Nokia and other ecosystem participants.

In October 2009, Accenture acquired Nokia’s professional services unit that provides engineering and support of the Symbian operating system to mobile device manufacturers and service providers, and which then served as a key building block in Accenture’s Mobility services portfolio. But the changes don’t stop there: As part of measures to reduce its Devices & Services operating expenses by €1bn for the full year 2013, Nokia will reduce its global workforce by about 4,000 employees by the end of 2012, with the majority of reductions in Denmark, Finland and the UK. The company’s research and product development sites will be hit hard, with the expansion of some sites and the contraction or closure of others.

Speaking of closure, it’s time for the Informer to wrap things up for the week and prepare for the impending nuptials tomorrow. Despite the current litigious environment, it seems that the Happy Couple are hell-bent on saying “iDo”, so it can only be hoped that the bride’s frock doesn’t look suspiciously like an iPad.

Take care,

The Informer.

Nokia will outsource 3,000 jobs and cut 4,000 others

In what appears to be another move to distance itself from Symbian, Nokia on Wednesday announced plans to outsource development of the floundering operating system to consultancy and outsourcing firm Accenture. As part of the process, the Finnish giant will also transition some 3,000 employees to the outsourcing firm.

The affected employees are currently based in China, Finland, India, the UK and the US and over time, with the process starting before year end, the company will seek opportunities to “retrain and redeploy transitioned employees”.

The move casts Nokia in the role of hardware developer. Under the collaboration agreement, Accenture will provide Symbian-based software development and support services to Nokia for future smartphones, extending beyond Symbian. Accenture will provide mobility software, business and operational services around the Windows Phone platform to Nokia and other ecosystem participants.

“This collaboration demonstrates our ongoing commitment to enhance our Symbian offering and serve our smartphone customers,” said Jo Harlow, executive vice president for Smart Devices, Nokia. “As we move our primary smartphone platform to Windows Phone, this transition of skilled talent to Accenture shows our commitment to provide our Symbian employees with potential new career opportunities.”

In October 2009, Accenture acquired Nokia’s professional services unit that provides engineering and support of the Symbian operating system to mobile device manufacturers and service providers, and which then served as a key building block in Accenture’s Mobility services portfolio.

But the changes don’t stop there. As part of measures to reduce its Devices & Services operating expenses by €1bn for the full year 2013, the Finnish firm will reduce its global workforce by about 4,000 employees by the end of 2012, with the majority of reductions in Denmark, Finland and the UK. The company’s research and product development sites will be hit hard, with the expansion of some sites and the contraction or closure of others.

“At Nokia, we have new clarity around our path forward, which is focused on our leadership across smart devices, mobile phones and future disruptions,” said Stephen Elop, Nokia president and CEO. “However, with this new focus, we also will face reductions in our workforce. This is a difficult reality, and we are working closely with our employees and partners to identify long-term re-employment programs for the talented people of Nokia.”

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Andy Zimmerman, Accenture

Between them, Andy Zimmerman and members of his team from Accenture’s Global Communications division had 275 meetings at February’s Mobile World Congress. With clients from all areas of the industry – mobile operators, infrastructure vendors, content and media players, service providers – Zimmerman was exposed to the full breadth of opinion on how the mobile industry will evolve. The fears and aspirations of all players are clear, he says, speaking to telecoms.com just days after the event’s conclusion.

This year the show seemed to lack the hype of previous events, with even popular topics like advertising and search monetisation tempered with a degree of realism. As the range of mobile services and business models increases, the various players within the industry are concerned with staking and protecting their claim in the value chain. This was a theme that ran through the show as it does through the industry week by week.

“There’s a healthy dose of paranoia out there,” says Zimmerman, which he attributes in part to what he calls the “iPhone experience”. The launch of Apple’s long-awaited handset last year worried the content community, he says, which had seen the impact Apple has had on the music industry. And it gave the carriers cause for concern as details of the deals the IT vendor had struck with it’s operator partners – with revenue shares of 40 per cent for all iPhone-related traffic widely believed to be flowing back to Apple – leaked out in the weeks after the handset hit stores.

The iPhone itself has achieved only minor penetration relative to other handset vendors, of course. And while Apple has shown, “a great ability to build an end to end solution that everyone wants,” says Zimmerman, “they tend to end up being a a small market share company at the end of the day”. The importance of the iPhone arrival, Zimmerman reckons, is that it has awoken the mobile industry to the way things might move.

“Everybody’s looking at this and saying: ‘Ok, if this is the future, what do I have to do to protect my role in all this?’”

And it is the device vendors that are reacting most effectively, he says. “They’re trying to imitate the Apple model, not only with the UI but also the services behind it. Right now, I feel like there is a device renaissance going on, where the device vendors are the ones that are attracting the imagination and attention of the consumers and, frankly, the carriers are not really doing that.”

Ultimately, Zimmerman believes that no one sector – be it the vendors, the internet players, the carriers – will truly be able to dominate the others. The inter-dependency is too great, he says. That said, he feels the device players have the upper hand because, “so much of the user experience around mobile tends to be hardware related.”

If the carrier community has a job ahead of it, he says, it is to learn to be comfortable with its unique attributes and to learn to effectively exploit them. Operators have assets relating to the end user – like presence, identification, authorisation and credit information – that give them a richer customer relationship than other members of the value chain, says Zimmerman. “But they haven’t been particularly proactive about bringing those to the table,” he says.

“I have a feeling that the carriers don’t appreciate what they could provide that could be enabling for a lot of different kinds of service providers. Maybe they should be thinking about getting a dollar from every ten dollar transaction, rather than getting the whole ten dollars…”

Zimmerman talks about ‘Tridgets’, a “combination of content, device and the software that is used to manage the service.” A mobile phone is a tridget, as is an iPod. So to is a wifi-enabled pacemaker, implanted next to somebody’s heart. “In 20 years there could be a trillion tridgets in the world to be managed, all of which will be network enabled, and almost all of them mobile,” he says. “If you can get a dollar a year out of each one, in terms of some information or service around the network to enable it, that’s $1tn, which is the size of the current telecommunications industry.”

Zimmerman concedes that this is a simplistic view, joking that it’s “kind of like the way people justify getting into the Chinese market,” but he is serious about the role of the network operator as enabler. Whether all carriers share his enthusiasm for such positioning is less clear, though.

“What they don’t like about this point of view is that they feel a lack of control over the evolution of the sector,” he says. “They feel like they are a participant but they worry that, particularly as they relate to the end user, that they may be giving up too much control.”

Despite this, he argues that there is a rough 50/50 split in the carrier community today, with one half ready to accept a redefined role, and the other convinced that it needs to play end-to-end to avoid being marginalised. “It depends on the individual personalities, and where their company is at the moment,” he says. “There are a fair number of executives out there who say that they’re never going to be in the [end-to-end] business, and that they should focus on the enabling business.”

These are the players that are positioning themselves effectively and pragmatically, he suggests: “Don’t you want to control the development of content distribution on the network, regardless of who is retailing it, even regardless of what screen it’s showing up on, for that matter? Don’t you want to own that before you worry about whether or not you own the end consumer?” he asks.

As carriers look to expand their repertoire, many are also involved in expanding their footprint, and Zimmerman reckons that further consolidation among the global carrier community is more than likely.

Historically, consolidation and global expansion has been led by the stronger developed market players but with players like India’s Bharti and Reliance making public commitments to overseas investment and talk of China Mobile flexing its considerable investment muscle, could the global picture be about to shift, with an emerging market player or two stepping up to challenge the likes of Vodafone and Telefonica?

“I think an emerging market player could do that,” says Zimmerman. “They have great credentials and this DNA of working in very low cost, low price markets successfully. So I can definitely seem them sharing in the penetration of the emerging markets because they have more cultural sympathy with emerging market government and regulatory environments.

“The disadvantage they have is that, when you’re in a high growth area like they are, it is a little hard to develop a diversification strategy geographically at the same time as you’re in an incredibly fast-paced race in your existing market. One little miss could really hurt you in terms of your market capitalisation.” These players also face competition from wealthy regional carriers, says Zimmerman, whose interest in low-penetration neighbours is driving prices up, he says.

There has been plenty of consolidation among the vendor community as well, but Zimmerman is not sure it has all been successful. “There have been mixed results. Some of these transactions have scared people a little bit because they didn’t realise much in terms of synergies. Whether or not there will be any more M&A activity among the mega-vendors, I don’t know, because there’s so much volatility now in terms of those companies themselves,” he says.

“This might lead to more transactions, but more out of firesale desperation than any kind of real strategy,” he says.

“My sense is there’s still some room for consolidation among around software and among second tier vendors. Cisco has done a tremendous job in terms of M&A but they have a particular focus on emerging tech and much smaller companies. It’s interesting that they have chosen not to do a big merger, even when there have been assets out there which, when you look at the relative valuation, would have been easy for them to pick up.”

At the Mobile World Congress, Vodafone CEO Arun Sarin made a plea for consolidation in the handset operating system space, arguing that there are too many options to allow for the creation of an ecosystem in which interoperability and universal application development thrive. Zimmerman is no more optimistic about the chances here:

“With smartphones, there’s so much still to be determined in terms of who’s going to dominate. So I can’t see the leading players gravitating around particular standards to help world hunger, as it were, if they think there is still a chance of picking up market share with their own products. The dynamic right now is not quite right for that sort of thing.”

Zimmerman’s assessment of the structure of the industry may not be what everyone wants to hear. But he’s not the first observer to suggest the carrier community might be heading up a blind alley. Whether any of his consulting customers heed his advice or not remains to be seen.