4G. The UK lags behind

Update: The UK operator EE (Everything Everywhere), a partnership between Orange and T-Mobile have announced they will be offering 4g to customers in 16 cities by the end of the year. The UK operator Ofcom allowed the roll-out on their existing 1800 MHZ band ahead of their competitors, particularly O2, who would have to bid for the channel when the government announces their auction. More here: http://www.mobilebusinessbriefing.com/articles/everything-everywhere-reveals-uk-lte-launch-plans/25232?elq=fbaeda07d3784a24868b558af464bced#.UE8lQL3vvxo.twitter

In the UK we’re still waiting for our 4G. If the network operator data caps are anything to go by, 3G is creaking under the strain. However, in spite of early promises for the Olympics, it looks like the UK roll-out for 4G will take a while. Ofcom, the regulator won’t decide on how the spectrum will be sold until summer 2012. Then there’s the auctions. Then there’s the roll-out itself. When will we actually see 4G in the UK? 2014 would be my guess. In the meantime, the best solution seems to be O2’s one, which is to install WiFi hotspots for their smartphone users.

Other countries are way ahead. The US has tended  to lag behind other developed countries when it comes to mobile, but they’ve had it for over a year. So have Canada, and the obvious advanced mobile countries including S. Korea, Japan and most of Scandinavia. That’s all well and good, but a number of countries who would be considered less advanced in the mobile space are also starting to implement 4G. The include Bangladesh, Cameroon, Peru, Fiji, South Africa, Ghana, Jamaica and Nigeria. As has been predicted, it looks as if some up and coming countries will leap-frog their more mobile-mature counterparts with new, super-fast mobile connections. And when everyone can get high speed internet everything changes.

Spam SMS and the Operators: what can they do about it?

All the evidence points to a rise in spam SMS. 42% of people in the UK have had an accident claim spam. Add in the other unsolicited marketing messages and it’s fair to assume that more than half of the population have experience SMS spam. And most people blame their operator for it. So why does it appear that they are doing very little to tackle the problem? Why can’t they just filter out these messages?

Some conspiracy theorists have suggested that the operators have an interest in keeping spam going because:

  1.  They earn money from the messages
  2.  They sell the data in the first place

Unfortunately for these theorists neither of these things are true. The messages are typically sent using PAYG SIMS with an unlimited SMS plan. It is therefore better that messages are not sent – they earn money from the top up, and not the message sending itself. When it comes to their data, it is not in their interests to sell it. This would be a pretty fundamental breach of the Data Protection Act – both the fines and damage to their reputation would be far in excess of any revenue from selling numbers. In fact, when some T-Mobile employees sold customer data out the back door, the company informed the police and two people were prosecuted. The biggest reason though is that dealing with spam costs the operators a lot of money. They need a considerable customer service resource to do this.

So, given that it is far better for the operators to be spam free, why can’t they stop it?

First of all, the spammers don’t make it easy to stop. They use multiple PAYG SIMS in a SIM bank. This allows up to 300 cards to send messages via one server. The spammers even spoof IMEI numbers and handset types to make it look like individual phones are sending the messages. However underlying all of this is the fact that operators cannot view the message content by law. Whilst some nameless organisations were happily hacking into mobile phone voice mails, the operators can neither listen in to calls nor look at a text message.

In spam terms this means they have one hand tied behind their back. Still, they have methods of detecting spam – looking at things like message length, originating and IMEI number ranges all helps identify the spammers, but as these constantly change, it is also not easy. In one case in the US the spammers put their SIM bank in a van and drove around to different areas, ensuring that the base station sending the messages constantly changed.

So is there an operator solution?

There are two ways the spammers can be stopped. The first one is by using software, much the same as email spam software. Whilst a human cannot look at message content, a computer can. A good algorithm can identify spam not just through key works, but a whole series of patterns from the sender ID, to the base station, frequency or IMEI number. The second part of the solution is the one that works the best – get customers to report spam. They are the best at identifying it, and if the process is made easy, they will willingly do it.

If it’s so simple, why don’t the operators filter spam already?

Some do, but not all of them. In the UK the amount of spam you get will very much depend on your operator (I won’t name names). However, as one of them put it to me; ‘we didn’t think spam would be a problem’. Naïve? Certainly. But welcome to the world of mobile operators. They are focussed on running big engineering operations for calls, SMS and data and on provider customer service. They can also work at a glacial pace. It’s hard to implement things quickly within these vast organisations. Whilst the spam software can be implemented in a few weeks, it will take an operator years to put it in place.

The other side of this is consumer reporting: if customers tell them when they get an unsolicited SMS it is possible to close the spamming numbers quickly. The timescale to stop the SIM banks is within an hour as around 85% of people respond within that time. Unfortunately at the moment there are two problems with this: firstly consumers don’t know how to report spam. There is a shortcode number for all the operators, but it’s hard to find it. Secondly, the current systems in the operators means that it takes a minimum of three days to close down a number (and typically one week).

In Korea there was a similar problem with spam. They solved it by getting the handset manufacturers to add a ‘this is spam’ link to all of the phone messaging menus. Simple and effective.

Why aren’t they working together?

The biggest issue preventing an operator solution in the UK is that the operators don’t want to publicly admit there is a problem. The primary reason is competition. If one operator puts spam high on their priorities, they are worried that others will simply say they don’t have a problem with it. In many ways, that doesn’t make sense. Most customers are aware of receiving spam, but it would seem that this competitive fear is stopping them from tackling the problem in the best possible way – with the help of their customers. In the end though, they are on a hiding to nothing. At some point, the government will want to legislate. They may happen sooner rather than later if someone in the government gets one of the infamous messages. And when governments legislate around technology, the outcomes are far worse and more draconian that industry legislation. In Canada there is now a fine of $1 million PER MESSAGE for unsolicited SMS. Whilst there are initiatives from the GSMA to monitor and stop spam, it is optional for operators (and they need to pay for the service).

Hopefully that problem will end soon. Representatives from all the UK operators have both discussed the spam problem around accident claims messages, and agreed to give their customers the same advice. I say hopefully because in spite of giving that information to the operators, as yet none of them have updated their site, or publicly admitted to unsolicited messages being a problem. Things move slowly in the world of mobile networks. Very slowly.

Former T-Mobile Employees Fined for Stealing Customer Data

Fines totally £73,000 against two former T-mobile employees raises some interested issues about data protection prosecutions. The two were fined for theft of customer data. This took the form stealing customer data, including contract renewal dates, which was then passed to a company set up by the former T-Mobile marketing manager. There was an attempt to launder the data, with the addition of other non-T-Mobile customers, which was then sold on to marketing companies. Over half a million of such records were sold. Many T-Mobile customers will have experienced calls, usually from abroad, claiming to be from the company and asking about their contract renewal.

The ICO (Information Commissioner’s Office) took the lead in the prosecution. An interesting aspect of this was that the fines were made under the Proceeds of Crime Act for confiscation costs, rather than a fine under the DPA (Data Protection Act). The culprits received sentences up to 18 months, which were suspended on the condition of the fines being paid. It would seem that the ICO and the courts are now taking the issue of data protection seriously. Prior to the end of May this year, the maximum fine for a breach of PECR was £5000, and it would seem a similar amount under the DPA. Since 25th May 2011, fines under PECR and DPA are now £500,000.

There is no connection between this case and the epidemic of accident claims texts; the stolen data was specific to T-Mobile whereas the claims texts appear to be across all of the UK operators. Although the T-Mobile case involved theft of information (DPA) and the accident claims messages are a breach of permissions (PECR) it is good to see that the courts are taking these kinds of breaches more seriously.

Mobile Broadband: it’s broadband, but not as we know it

With the increase in mobile broadband usage, Ofcom has carried out a series of test to find out how fast it really is. Whereas fixed-line broadband offers average speeds of 6.5 mbits (0.5 seconds for the average web page), mobile has just 1.5 mbits (8.5 seconds for an average web page), although some networks achieved speeds of over 2 mbits. It’s fast enough to be called broadband, but slow when compared to fixed line broadband. O2 came out the best in the studies, and Orange performed the worst (no comment from them). Mobile broadband is on the rise, with 17% of households now using it, and 7% using it exclusively for internet access. Two years ago it was just 3%.

Ofcom concluded that mobile broadband speeds would remain significantly lower than fixed lines until at least 2013, after which new channels will be rolled out.

More on the Ofcom report here.

Operators need to ebrace apps for new revenue streams

A new report from PwC called Embrace New Revenue Sources: Living in an Apps-driven World, suggests that in the future just 50% of operator revenues will come from text and calls. The remainder of their revenues need to come from other sources such as apps. So how’s that going to work?

The problem for the operators is this:

They have little chance to increase their call/sms/data revenues. Most people are on the package they want, including their data, and don’t feel they should pay any more for it. They also expect a free (or cheap) new phone every 18 months. Yet, the operators are having to provide more and more service for that package. At the same time, their little extras have been eroded: inter-network calls, roaming charges and data charges have all been limited by legislation.

To some extent they have no choice but to get into other revenue streams such as content and apps. The problem for the operators is that they’ve already tried apps and it didn’t work. Contrary to some perceptions, Apple did not invgent the AppStore. The operators were at it a few years before Steve Jobs launched apps on iTunes. Stores such as Vodafone’s Betavine and O2’s revolutions put apps in front of their customers. The problem with them, however, was two-fold:
Firstly from the content provider perspective it was expensive. As one developer put it, ‘it would cost £1000 to get in there, and you had about one weeks’ visibility. Unless you had a major hit on your hands, you would lose money’. Apple changed all that with their appstore, going from a B2B to a direct to consumer model, where the developer received a revenue percentage rather than paying to be there.

Secondly, there is the problem of the consumer relationship. People don’t see their mobile operator as a place for content, but more as a utility company to provide calls, texts and access to that content. The operator portal was a classic of this: users tolerated it as it was the first port of call, but they only used it as a jumping-off point to the things they really wanted. When it came to promotion on these portals, if you weren’t on the first page (the Top Deck) you were basically nowhere.

The biggest problem that the operators now have to face is that the consumer relationship for apps and content is now with the operating system: Apple’s iTunes, Android Market, BlackBerry World and Nokia’s OviStore. Changing people’s perception of operators as a utility will be hard, if not impossible to achieve. In the long-term the only solution for content revenue is to create tie-in’s and joint ventures with the OS app stores.

Operators are NOT the place for mobile marketing

An Orange Shots campaign for Snickers

Who are the media owners/media channels in mobile these days? Is it the operators or is it the app stores and social media owners such as Facebook, Twitter and Foursquare. Most agencies and brands would regard the latter as the place to buy their media. However the operators would like us to think different. Some mobile networks have made valiant attempts to create their own direct marketing channels, namely Orange Shots and O2 More. Both have a reasonable number of opt-in customers who receive marketing messages on behalf of companies. Whilst there are problems with the media planning and buying in these channels, they have a certain amount of brand appeal. Operator revenues are increasingly squeezed so these channels offer a potentially valuable source of income.

However, according to a YouGov report this week, it would seem that consumers are less than impressed with the idea. In short, over 80% of those surveyed said it was unacceptable for operators to include third party offers in their mobile marketing. Consumers will accept a limited amount of brand marketing on their mobiles: 38 per cent said they would want no more than one per month and 31 per cent saidless than that. 14 per cent were prepared to receive offers up to twice a month, but there was a significant difference between the ABC1 (8 per cent) and C2DE (20 per cent) demographics. The study found that whilst consumers are happy to accept a certain number of offers from their mobile phone companies, such as offers on new tarrifs or handsets, when it comes to third party marketing, they are risking alienating them and pushing them to other networks.

More on the YouGov report here.

The problem with mobile video

I have never been convinced by mobile tv, or even mobile video, for that matter. Whilst there are some people who may use it, it’s pretty small and niche. This is primarily because the true TV experience is so much better, well established and easy to use. It is also a shared experience.

The other problem with mobile TV and video is bandwidth. Even if the demand was there, the networks simply could not cope. To deal with this, Derek McManus, CTO of O2 UK recently explained in a press release that the company was investing to cope with the growing demand for mobile data services, such as those demanded by the iphone.

He said:

“In the past 12 months the mobile industry has seen an unprecedented change in demand. The introduction of world-class devices, in combination with a wide variety of data applications, has brought about a dramatic change in customer behaviour and created an exponential demand on mobile data networks. To put this in context, watching a YouTube video on a smartphone can use the same capacity on the network as sending 500,000 text messages simultaneously.”

I’ll repeat the last line in bold:
To put this in context, watching a YouTube video on a smartphone can use the same capacity on the network as sending 500,000 text messages simultaneously

Brands, may be looking to deliver content-rich video and applications, but this could present a problem for networks. If it is to go anywhere then there needs to be the bandwidth.