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MWC 2014 Daily Round-up: Day One

By Informa Telecoms & Media, February 24, 2014

MWC14 Keynote: Operators and OTT players sketch out their value-added visions

Five presenters took to the stage today at Mobile World Congress for the “Mobile, Disrupted: Challenging the State of Play” keynote session. Mobile operators Tele2, Millicom and VimpelCom were set to duke it out with mobile messaging apps WhatsApp and Kakao Talk, but, at least on stage, the atmosphere was harmonious.

WhatsApp co-founder and CEO Jan Koum had more news to add during his presentation, announcing that the company plans to add voice to its iOS and Android applications sometime in 2Q14. Koum also made the best introduction of the five speakers: “Hi, my name is Jan Koum, and last week we added a new Facebook friend. I don’t know if you heard?”

There was a good deal of talk from the operators in terms of teaming up with content and app providers. Tele2 President and CEO Mats Granyrd said the operator was gearing up to charge its mobile subscribers for data only, giving away voice minutes and SMS. To do this, however, Granyrd said that Tele2 would need to be relentless in reducing costs and equally relentless in improving the customer experience and the quality of its network.

Tele2 also sees itself as a disruptor, Granyrd said, in that it is fostering partnerships with application providers and developers to provide its customers with new services, such as subscription-based insurance and Wi-Fi-based IP telephony. “I think it is a sign of the industry maturing that we are all working together as disrupters,” he said.

Similarly, Millicom CEO Hans-Holger Albrecht told the audience that the operator had a different philosophy from other mobile operators regarding services such as Facebook and WhatsApp and is in fact partnering with Facebook in Paraguay to provide data packages that include the service. Providing access to these services for customers is a must, Albrecht added. “Let’s team up rather than try to fight the OTT players,” he said.

Then it was the turn of Sirgoo Lee, co-CEO of Kakao, whose presentation was also somewhat philosophical, describing the different approaches toward communications between Western society and Asia Pacific, and using several pieces of art to illustrate how the “we” way of thinking among those in Asia acted as the spiritual foundation for the Kakao Talk service. Lee said the question that Kakao sought to answer when developing Kakao Talk was, “How can we, as a collective group, create value?”

Kakao Talk now has about 130 million registered users, who between them are generating 5.5 billion messages a day, but who are also downloading games, sharing music and sending and receiving gifts. The ecosystem is also substantial: Kakao has partnerships with about 200 games developers, about 900 providers of digital content and 16 commercial banks. Lee says that he believes Kakao is being not only disruptive but also innovative.

Koum was next to take the stage, giving a talk that was fast-paced, passionate and punchy, if a little awkward toward the end. Koum said that WhatsApp has 465 million monthly active users and 330 million daily active users. In the wake of last week’s announcement, Koum sought to reassure users by saying that the company promises not to change its ethos of providing a simple-to-use and uncluttered communications experience and that both he and Zuckerberg were in agreement that WhatsApp would remain independent. Not long after mentioning that WhatsApp would introduce voice to its application, Koum also announced an upcoming partnership with German operator E-Plus and said that further partnerships with mobile operators would be announced in the coming months.

VimpelCom Chairman Jo Lunders was last to present, acknowledging that mobile operators are moving from being providers of voice and SMS to content and application enablers and providers of “smart connectivity.” “A customer relationship is not something we own,” Lunders said. “It is something we earn.” He added that VimpelCom has more than 40 global partnerships with Internet companies, including Facebook, and that via these partnerships the operator has been able to increase its mobile data traffic 55% in Russia. In Pakistan, the number of active daily mobile data users has grown from 700,000 to 1.4 million. In summing up, Lunders said that he views companies such as WhatsApp and Facebook as partners, rather than disruptors, which can help expand operators’ user bases and online revenues.

BlackBerry extends BBM to Windows Phone, Nokia X

BlackBerry announced at MWC2014 that it will make its BlackBerry Messenger service available to Windows Phone users and to mobile subscribers on Nokia’s new Android-based platform, Nokia X. The handset vendor will preload BBM on selected Windows Phone and Nokia X handsets in selected markets, starting this summer. David Proulx, BlackBerry’s senior director for BBM business development, told Informa Telecoms & Media that the basic thesis for extending BBM to Windows Phone and Nokia X is that expanding the BBM base is important to the health of the BBM community. “The number one determinant in the value of BBM is the number of friends I can communicate with,” Proulx said.

Proulx also told Informa that he believes, after last week’s acquisition of WhatsApp by Facebook, that mobile operators will be seeking out deeper alliances with messaging-service providers out of necessity. BlackBerry is in a good position in that respect, in that it already has partnerships with more than 600 mobile operators. “It is a core competency of our business, going back a decade, that we have found ways to constructively work with operators to build a unique, economically viable data proposition,” Proulx said.

The recent acquisitions of WhatsApp and Viber Media are a validation of the fact that mobile messaging apps are capable of generating revenues, Proulx added. BlackBerry’s approach toward monetization will be three-pronged. It will offer its BBM users virtual goods, with the first offering, stickers, already in beta. “We will be evaluating other sorts of goods and applications, or in-built services that extend the utility of chat,” Proulx said. “The underlying commerce infrastructure [of BBM] can be repurposed quickly to add those other sorts of goods.”

BBM Channels is already a source of revenues for BlackBerry, and will continue to be so, with about 350,000 channels already live, including a mixture of branded and user-generated content. Proulx said that BBM was the only messaging platform that had a formal branded presence on social media with the Sochi Winter Olympics, with the Sochi BBM Channel doubling to 80,000 subscribers for the duration of the Olympics. Enterprise will be the third source of revenues for BBM, which is already being used by companies in a number of industry verticals.

As for WhatsApp, Proulx says the pressure is on Facebook to come up with a revenue model for WhatsApp, given the application’s US$19 billion price tag. “WhatsApp has an orientation to market which is very functional and purist in terms of how they view sponsored content, advertising and monetization in general,” Proulx said. “I don’t see a simple straight line from ‘we own the asset’ to ‘we are going to be able to generate a sufficient return for what we pay for it.’”

Operators home in on in-building coverage

Today’s MWC also saw a group of announcements aimed at enhancing connectivity with small form-factor devices. Global operator Vodafone launched an 11kg mobile network in a backpack that can be deployed in 10 minutes. “Instant Network Miniis aimed at mobile aid workers operating in disaster situations. The device can provide up to five concurrent calls within a radius of 100m and enable text messages to be sent to thousands of people to provide crucial information after a disaster.

Vodafone Group, Australia’s Telstra, SoftBank in Japan, Singapore’s SingTel and MTN in Africa and the Middle East also announced that they were deploying Ericsson’s Radio Dot System, a cellular radio the size of a person’s hand, to deliver low latency and high-speed data in buildings and venues. Operators are deploying the technology to reduce the cost and complexity of indoor mobile broadband deployments and increase revenues by enabling mobile broadband access in these areas, which are typically difficult to penetrate with high-quality cellular coverage for data.

And 5G …

In terms of technology developments, the Next Generation Mobile Networks Alliance launched a global initiative to define systems for 5G. The first major outcome of the NGMN 5G initiative will be an industry white paper delivered before the end of 2014, intended to support the standardization and subsequent availability of 5G starting in 2020.