Category Archives: General

Dot BigBang

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Dot BigBang

If you haven’t already heard about new generic Top-Level Domains (or gTLD) then you might be excused for thinking it’s of no interest to you.

Current top-level domain names (TLD) are restricted to the known extensions such as .com, .net and .org. Some additional extensions like .biz and .info were later introduced, but these have not gained widespread adoption for reasons I’ll go into a little later.

For the uninitiated, ICANN (Internet Corporation for Assigned Names and Numbers) is the authority responsible for managing global Internet domain names. They have been under pressure to expand (or in my view deregulate) the domain name registry market and as a result are accepting applications for what they call ‘new’ generic Top-Level Domains (gTLD).

A new gTLD can be pretty much anything. For example, you might want to start up your own Internet registry for farmers, offering domain names with the .farm extension. To achieve this you pay a hefty $185,000 evaluation fee to ICANN, submit your application and eventually you might end up as the official owner of the .farm registry. ICANN estimates that they may issue up to 1,000 of these new gTLD extensions in a year.

The general concept is that since the amount of meaningful names in the popular .com namespace is finite, introducing new gTLDs will expand the pool of available names. The theory being that someone like Apple Farm Co then has a chance of registering a name like apple.farm for their business.

In practice however all that happens is that the owner of the existing .com variant uses their trademark ownership rights to secure ‘their’ name via a sunrise registration period and so most of the names are taken before the registry even opens its doors for public registrations.

The introduction of .biz and .info is a perfect example of this. The .com owner doesn’t want or need a new gTLD variant of their name, but they are compelled to purchase it as a defensive registration. The end result is more spend for no commercial benefit and no appreciable increase in the available name space.

So how will these new gTLDs improve the situation? I’m stumped. Ever since ICANN announced the new gTLD program, I have been trying to think of a compelling use case for them.

Faced with the myriad of confusing and unfamiliar new gTLDs and concerned at the risks of online fraud, end-users will seek refuge in the provenance of .com. All this will do is reinforce the value of the traditional domain name extensions.

.com remains the undisputed domain heavyweight and I don’t see that situation changing any time soon. The only obvious winners in the gTLD game will be ICANN, registrars and consultants out to persuade you to register even more domain names you don’t need.

Embrace the bit-pipe!

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Every mobile network operator I’ve ever worked with has been preoccupied with the corporate paranoia that they might one day become “just a bit-pipe”. It’s spoken about in hushed tones like it will be the end of the world if data is the main service they end up delivering to their customers.

To counter the bit-pipe fear, some operators have desperately attempted to expand beyond their core business. They seek to exploit their brands and diversify into other service industries.

O2 has been the greatest exponent of this strategy, as described in this Marketing Week article from March 2012:

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O2 is to implement a new business approach designed to champion innovation and which includes a brand campaign that will convey its “Fresh thinking, new possibilities” mindset to consumers.

The new mantra, created by O2’s marketing department, will be underpinned by a refreshed brand strategy, which will move the focus of O2’s marketing away from handsets and tariffs to other areas of its business, such as money, ticketing and charity initiatives.

Sally Cowdry, O2’s marketing and consumer director, says the new way of thinking has been endorsed by the board, so every division must now ensure every business process has “Fresh thinking, new possibilities” at its core.

Presumably this new way of thinking hasn’t gone down all that well since Sally Cowdry has subsequently announced her departure from the O2 business.

With the current obsession for cloud-based services, social networking and on-demand entertainment, being a ‘bit-pipe’ has actually become very important indeed.

When Google invented the Chromebook, they recognised that most people need a laptop computer for web browsing – and that requires Internet connectivity. The same is also true of most smart phones. If you don’t have good network coverage, be it cellular data or WiFi, then there’s not much fun to be had with your shiny device.

So what has become the fuel for all our connected devices? Mobile data connectivity.

Consumers want a reliable mobile network, with bandwidth on tap and good coverage. Provide all of these for a reasonable price and consumers will stay with you. Yes voice and text revenues are on the decline, but those conventional cash-cow revenue streams are simply being substituted by data consumption.

While some mobile operators diverted investment away from their core network and bet the family silver on non-telecomms service strategies, 3 Mobile bravely took the opposite approach and heavily promoted their ‘big-boned’ Internet credentials. Not long after Orange & T-Mobile got together and re-invented themselves as the superfast connectivity provider EE.

This unashamed focus on data connectivity is unsurprisingly a hit with data hungry consumers, with recent commercial success going to those who embrace the bit-pipe philosophy!

Time will tell which strategy has proven most sustainable, but with the unpopular O2 Wallet service already due to be obsoleted by the Payments Council’s mobile payments, I know where my money is.

iPhone 5

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An industry insider told me that sales of Samsung’s Galaxy S III sky-rocketed the day after Apple’s big reveal of the iPhone 5. Evidently potential customers were holding off their upgrades until they had seen the new product, but what they saw disappointed.

I probably shouldn’t be admitting this, but I have already used the iPhone 5 and I was underwhelmed too. iPhone has become the safe (even boring?) option, something you would confidently give to your Mum and Dad. Apple’s runaway success has become the de facto smartphone, but the commercial imperative not to alienate their mainstream customer base has stifled innovation.

The original popularity of iOS (then iPhone OS) was due to its perfect blend of technology, form and function. Often it wasn’t possible to customise something to your liking, but that was by design and the intention was to keep things deliberately simple.

I look at iOS 6 and wonder where Steve Jobs’ painstaking obsession with simplicity has gone. I never expected CEO Tim Cook to share the same ethos, but since Jobs had apparently described Sir Jonathan Ive as being his “spiritual partner” there was a hope that he would carry forward Jobs’ legacy. It’s likely however that Ive’s control only extends as far as the hardware design, not the operating system, which is the responsibility of Scott Forstall.

Watching the official iPhone 5 promo video, it’s hard not to be impressed by Apple’s manufacturing techniques and the obvious attention that has gone into the hardware design (like crystalline diamond-cut chamfers!), but it doesn’t detract from the hard truth that to the average customer the new iPhone just doesn’t seem all that different.

With each new iPhone Apple usually succeeds in generating enough excitement and desire to persuade existing customers to follow the natural upgrade path, but they also lose some customers to Android - and they rarely return. I don’t know anyone (including myself) who has switched to Android and then gone back to an iPhone. Once you’ve broken away from the closed iPhone ecosystem it feels quite liberating to have the freedom of open services and a wide range of devices.

Conversely with each evolution of the Android platform the gap has been closing and arguably the Android 4.1 ‘Jellybean’ release has leapfrogged iOS by delivering a simple intuitive user interface and powerful features – much like the original iOS.

Samsung are seizing the opportunity to capitalise on the apathy surrounding iPhone 5 with a marketing campaign directly comparing their two flagship products:

Apple fanbois have responded with their own parody advert, but when the best they have to brag about is ’fits all pockets’ and ‘elastic bounce back’ (the subject of Apple’s recent patent dispute with Samsung), it doesn’t bode well.

It’s certainly not all doom and gloom for Apple. They will of course sell iPhone 5 by the millions, but the shine is starting to fade.

I do have an answer to their predicament. Apple needs another product with which to dazzle and showcase their technical excellence and suppressed innovation.

Dear Tim, how about you add a new model to the iPhone range? Call it the ‘iPhone X’, pack it with enough fancy gizmos and new technology to satisfy the Android crowd and demonstrate what the biggest company in the world can really do.

LTE, 4GEE and sleeping giants

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For many years Vodafone and O2 have been regarded as the heavyweights of the UK’s mobile operators, but the status quo is changing.

First to set the scene with a bit of telecomms history.

In the beginning there were two UK cellular radio operators – Vodafone and Cellnet. They operated TACS analogue radio in the 900MHz band, but this radio technology didn’t make the most efficient use of radio resources and it was open to eavesdropping. Five years later a new standard for digital cellular communications (GSM) was introduced.

Vodafone and Cellnet launched GSM networks in the 900MHz band and gradually migrated existing customers onto the new service. In 1990 the GSM standard was updated to support the 1800MHz band (then known as DCS 1800) and in 1993 two new entrants – one2one and Orange – launched GSM digital services.

The new operators were at a technical disadvantage because the higher frequency of their 1800MHz radio signals didn’t penetrate as far as 900MHz. This particularly affects in-building coverage and it meant they had to build out considerably more network infrastructure than the competition. Despite this one2one and Orange started a mobile revolution and through innovative tariffs and services they can be credited with making mobile phones accessible to the mass market.

In 2000 the UK Government raised £22.5 billion in a spectrum auction for the new 3G mobile standard operating in the 2100MHz band. Licences were won by all four existing mobile operators and Hutchison 3G became the fifth entrant to the UK mobile operator club.

Some rebranding went on at the operators, with Hutchison 3G becoming “3″, BT Cellnet becoming “O2″ and one2one becoming “T-Mobile”. There was one constant however and that was the size and dominance of the original two operators, with Vodafone and O2 still sharing over 50% of the total UK market between them.

In 2010 T-Mobile and Orange merged their UK businesses to become ‘Everything Everywhere’. It was initially dismissed by some as a forced marriage of desperation, but by combining their networks under a common umbrella, with double the network capacity and vastly superior mobile coverage, a sleeping giant was born.

This brings us right up to date with the arrival of LTE. This is the latest evolution of digital mobile communications which delivers wireless speeds of up to 40Mbps, but it requires new radio spectrum in which to operate. In the UK Ofcom have reserved the 800MHz and 2600MHz bands for LTE, with another spectrum auction due to take place in 2013.

While the big two operators waited patiently for the forthcoming LTE spectrum auction, Everything Everywhere were busy plotting. They were in possession of more 1800MHz spectrum than they needed to satisfy current demand and so they made a tactical strike. They asked Ofcom to vary the terms of their licence to allow them to re-farm the 1800MHz band for use with LTE.

After a brief consultation period and despite protests from Vodafone and Telefonica (the Spanish owners of the O2 brand), Ofcom agreed to the request:

1.2 On 23 November 2011 we received an application from EE for variation of its 1800 MHz licences to enable it to provide services using LTE technology in those frequencies. The application encompasses all frequencies currently licensed to EE in the 1800MHz band, i.e. the 2×15 MHz that it undertook to divest as a result of its merger in 2010 and the 2×45 MHz it will retain.

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1.8 Although we consider it likely that EE will enjoy a competitive advantage during the period before other operators are able to launch their own LTE services, we consider on the evidence available that any such advantage is unlikely to result in an enduring advantage which distorts competition to the detriment of consumers. Our assessment takes account of the impending release of additional spectrum in the 800 MHz and 2.6 GHz bands which will enable other operators to launch competing LTE services during the course of 2013. We have also taken into account EE’s obligation to divest itself of some its 1800 MHz spectrum.

1.9 In light of this assessment, and for the reasons explained in more detail in this decision, we consider that it is in the interests of consumers for us to vary EE’s licences now, in accordance with EE’s request. We have therefore today issued EE with varied 1800 MHz licences with the provisions authorising LTE and WiMAX coming into force on 11 September 2012.

It’s interesting to note that Ofcom made it explicitly clear that the ruling covered the 1800MHz spectrum which Everything Everywhere are required to relinquish.

Shortly afterwards Everything Everywhere announced their immediate plans to launch a LTE service starting in 16 major UK cities, and a week later they agreed to ’dispose’ of a sizeable chunk of 1800MHz spectrum to 3:

As part of the commitments given when the European Commission approved the merger of Orange and T-Mobile in the UK in March 2010, Everything Everywhere was required to divest 2X15MHz of its 1800 MHz spectrum.

In accordance with these commitments, Everything Everywhere has today announced an agreement with Three to transfer this 2×15 MHz of its 1800MHz spectrum to Three. Ofcom and the European Commission will review whether the divestment satisfies the merger commitments, and a response is expected within the next three months.

This means that 3 might not be far behind in their own commercial launch of LTE in the 1800MHz band, since it does not require a separate application to Ofcom.

Vodafone and O2 were clearly on the ropes, but without a decent range of desirable handsets Everything Everywhere’s LTE rollout would only be in demand from data hungry road-warriors using mobile broadband dongles.

On September 11th Everywhere Everywhere announced their re-branding as ‘EE‘ with their 4G LTE service branded as ’4GEE’. The following day the final piece of the jigsaw slotted into place with Apple’s public announcement of the iPhone 5.

As expected the new iPhone does indeed support LTE, but only on some frequency bands. The surprise was Apple’s choice of LTE bands for the European hardware variant, omitting support for the 800MHz and 2600MHz bands which are due to be auctioned next year. It does however support the 1800MHz band which EE are using for their 4GEE service. This has effectively handed EE a virtual exclusive on the iPhone 5.

Was this just a fortuitous coincidence for EE? The exquisite timing of EE’s new brand launch and Apple’s iPhone 5 LTE announcement was a marketeer’s dream. I have no doubt that EE and Apple have been working out this arrangement to marginalise Vodafone and O2 for quite some time. The sleeping giant has awoken!

The old guard are guilty of standing still and the tables have been turned while they were napping. There is an argument that Ofcom has not been fair in handing EE a considerable head start and commercial advantage in starting LTE without any competition, but the damage has been done and there is little to be gained from late legal challenges.

Vodafone and O2 will have to accept defeat on iPhone 5, concentrate their efforts into playing catch-up on LTE, then try and win back customers when their EE contracts expire. Whatever happens, the long established landscape of the UK’s mobile network operators has changed and once again Apple have had a hand in shaping it.