Because of my current research interests, most of my meetings at MWC 2010 in Barcelona were about mobile broadband and in particular, the crunch that network operators experience as usage soars.

At his press conference, Ericsson’s CEO seemed to breeze by the issue in a “Brave New World” speech (why do these always remind me of films from the 1939 New York World’s Fair?). But it came up in meetings with the rest of his company and with every other vendor I met with from Tier 1 network vendors (Alcatel-Lucent, NSN, Huawei), to OSS vendors (Amdocs, Comverse, Convergys, Telcordia), to mobile backhaul vendors (RAD, Cambridge) and of course with Femtocell vendors (Airvana) and specialists like Allot. It was the “elephant in the living room” in a Telecom TV panel discussion I did on WiFi and it even came up in a discussion with over-the-air TV chip maker Telegent who proposes their solution as a way to off-load streaming TV traffic from the mobile network.

In every meeting the following question either arose naturally out of the discussion or I forced the issue and asked it directly:

Are dongles (mobile broadband modems) or smartphones to blame for the problem?

Hardly surprising that the answers were almost equally balanced between the one and the other i.e. both are to blame. But depending on the country, the principal blame will lie ether with smartphones or with dongles.

In developed markets like North America and Western Europe, the blame lies with smartphones. Sometimes it is bad protocols or bad settings and so sometimes just a software refresh by the device manufacturer gets things under control. But most of the damage is done by apps that constantly poll the network for new information. As the king of the app ecosystem, the Apple gets singled out but the issue isn’t the iPhone per se but the types of applications advanced smartphones like the iPhone encourage users to install.

In emerging markets like Latin America or Eastern Europe or developing Asia Pacific, the issue is dongles. Lack of adequate fixed broadband and heavy marketing by mobile operators mean that 3G wireless connections are increasingly the primary means of accessing the internet in these countries. As I have written elsewhere, that means the devices are stationary instead of in motion, connected for long periods of time instead of just for brief dips into an app or for a quick search and they are often used for heavy video or even peer-to-peer traffic. To state the obvious, this is not the kind of use-case the 3GPP standards bodies had in mind.

The solutions are many but they basically boil down to variations of the following

1. Optimization of device protocols
2. Traffic shaping and prioritization
3. Pricing schemes beyond flat-rate that encourage economic use of mobile broadband
4. Off-loading fixed-use case traffic to fixed networks
5. Waiting for LTE

Of these only “Waiting for LTE” is anything more than a stop-gap, a way to slow down traffic growth and hope that LTE arrives before the seemingly inevitable crash of 3G networks.

Much has been made of Apple’s pervasive industry influence, accomplished without actually participating at the in-person events that make up the annual tech sector calendar. But here at Mobile World Congress in Barcelona this week, Google has been the largest presence without a presence.

“What will Google do next (to us)?” has been the prevailing question in virtually every executive conversation I’ve had. It’s safe to say the industry fears Google’s brand, cash, capabilities, and perhaps most of all, sheer audacity. I suspect if Google announced plans to put a new data center on the moon, the network community would nod sagely and say, “Sure; it was only a matter of time.”

Google CEO Eric Schmidt keynoting the 2010 Mobile World Congress (c) Monty Metzger

Tuesday night, Google CEO Eric Schmidt entered a packed auditorium, nominally to give a conference keynote. What he really did was subject himself to the Spanish Inquisition. He did offer some formal remarks, but following that, with poise a politician would envy, he fielded questions from attendees for close to 45 minutes.

Diplomacy was the order of the hour; he took pains to talk about how honored he was to attend, how Barcelona is now “the place to be” for the computing industry, and how the enormous success of the mobile sector to date is due to the community gathered here this week.

Some highlights:

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I got a rude awakening early this morning: the ice and snowstorm that blew through Massachusetts last night knocked out our power. That meant we had no lights, no heat, and no running water (darn those electric well pumps!).

But, like in Emerging Anywhere countries, even though we didn’t have power, we did have Internet access via our mobile phones. And that strange disparity—the ability to call people and access information from the rest of the world when we didn’t have basic infrastructure services—provided personal emphasis to stories I’d recently read in the news over the weekend.

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That’s French for “After now, the deluge”. And that’s about how I feel about today’s CES opening in just 2.5 hours. It’s going to be a very busy day.

But before the networks melt (or at least glow bright red with heat) from 120,000 people blogging away, I thought I’d recap a few highlights of the last 18 hours deserve some note. Instead of running down the facts of each announcement, I’ll let links to New York Times articles do that for me; I’ll just add my reasons why the events are significant. Specifically:

• Vendors are pushing 3D as the next high-definition. Every flat panel vendor here is hoping that 3D televisions will be the next must-have upgrade. I must admit that I’ve been impressed by the demos here; I saw Sony’s 3D technology with Taylor Swift performing last night, and it was one of the best broadcasts I’ve seen with passive glasses. All that said, with the inconvenience of 3D glass and most flat panels only one to three years old in the U.S., I don’t think most consumers will even consider replacing them for another 3 to 10 years, dooming the trend until the latter half of our new decade. I’ll be touring Panasonic’s booth this morning (it’s the size of a football field), and may have to say about this tonight.
• TVs are adding connected apps in a big way. Both Panasonic and Sony are boasting Skype conferencing on their connected TVs, and that’s far from the last app they’ll be adding. Whether built-in or add-on connected TV apps are the wave of the future, there’s no question in my mind that connected TVs will be a bigger trend than 3D in the short term, and it may be true later in the decade as well. Vince Vittore’s report published just yesterday is a timely analysis of this trend.
• Consumers may be pushing companies to become more vertically integrated. Apple’s been able to win over consumers over the last decade because it can orchestrate hardware, software, and media to create a single unique consumer experience. Microsoft’s one success story in the last decade has been XBox, which is similarly vertically integrated. Sony’s recent successes have been with Playstation Network melded to its PS3 and PSP gaming systems. Despite the appeal of open partner, these vertically integrating offerings are winning consumers and creating profits. The very fact that Google had to create its own Android phone to drive adoption suggests that we may be seeing the open pendulum swing back toward soup-to-nuts offerings.
• Cars are moving to glass cockpits. Despite the dangers of distracted driving, car companies are madly rushing to put Internet connected screens in car dashboards. I don’t actually believe that Anywhere connectivity is the juice that makes this trend take off, but rather the replacement of traditional car instruments with electronic icons, maps, and controls. By the end of this decade, analog guages in cars like we do in airplanes today: amusing antiques.
• Tablets just aren’t here yet. Despite the excitement over Apple’s rumored iTablet and Steve Balmer’s announcement of an HP tablet last night, the reality is that these connected devices are still a dream rather than reality. The litmus test? Try to buy one. It will take more than CES to get this trend moving, but it will probably take Steve Jobs bringing tablets down from his mountain later this month to make it reality instead of vapor, and even then, no one’s going to be using those tablets in any volume until at least Q2.

The economic crisis proved a major obstacle for consumers, enterprises and network builders, and each has had to evolve to survive. The changes from 2009 will create new opportunities in the Anywhere ecosystem, especially in the areas of cord-cutting, devices, cloud computing and network innovation.

Earlier today, I was joined by my colleagues Jon Paisner, Camille Mendler and Josh Holbrook to unveil Yankee Group’s top predictions for the 2010 communications industry. We discussed six of our eleven published predictions and took questions live from the audience. Check out the webinar replay below. You can also register as a Guest on the Yankee Group Web site to get the full report for free.

The webinar runs about an hour: audio (mp3) and slides (pdf).

I mentioned last month that I thought that Google might launch a net neutral mobile phone to spur the wireless market toward its vision. Well, according to Techcrunch and Google itself, Google apparently gave its employees unlocked Google phones for the holidays to “eat its own dogfood”. If Google sells these phones directly to the public, this promises to be nearly as disruptive a trend to the wireless operators as the iPhone was.

Fortunte notes at least nine ways of looking at this development. The bottom line though is that when others have been giving lip service to creating a more competitive consumer market, Google is actually doing something about it. Stay tuned: this is going to be a big change.

Not satisfied with Verizon’s recent launch of its Android-powered Droid phones, Techcrunch.com is now agog with rumors of Google launching its own phone. What’s unanswered in the post, though, is an important question: Why?

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Vodafone announced its half-year results today. Wait, don’t go, they were interesting.

I’ll spare you the financial details. Ok I can’t resist. Overall there were no big surprises. Organic revenues were down 3% yoy and group EBITDA declined by almost 8%. Full-year guidance was reiterated.

The headlines were uninspiring, but this morning’s results presentation, hosted by Chief Executive Vittorio Colao, threw up a few interesting snippets regarding the company’s operational performance. They provide a useful snapshot of what’s going on at Vodafone, but they also have implications for other players. Hope you like numbers:

• Average price per minute down 10%. Ouch! Definitely some price plan optimization going on there – that’s operator speak for consumers using every last voice minute and text message in their price plan bundles.
• Roaming revenue down 14% – that’s businesses cutting costs during the recession – by happy coincidence Vodafone’s own travel expenses are also down 14%.
• Enterprise revenues down 5% – more cost-cutting. See the trend?
• Fixed broadband up 9% – that’s Vodafone playing catch up with other more established converged service providers like Orange.
• PC connectivity revenues up 21% and consumer mobile Internet revenues up 30% (with a whopping 73% increase in the UK – just wait ‘til Vodafone’s UK customers get the iPhone).
• 30% of Vodafone’s active customers use data services (at least monthly), but only 10% subscribe to a data plan (see the opportunity?)
• 20% of Vodafone’s new handset sales in Europe are Smartphones. It expects this to increase to 30-40% next year (it’s already approximately 40% in the U.S.). Wow – the U.S. leading Europe on a key mobile market metric – stop the presses.
• Here’s one for the engineers among you – only 5% of Vodafone’s cell sites are operating at more than 90% of capacity during busy hours. The company believes HSPA+ will meet its needs for the next 2-3 years. It will also achieve better capital efficiency through cost savings – 55% of new sites in Europe are already shared. So, no rush to LTE then?
• Let’s finish with a big number. Vodafone also announced today that it’s targeting £1bn in additional cost savings by March 2012.

So, what do all these numbers mean? Here’s one interpretation. There’s no voice revenue growth in mature markets (I guess we knew that). Data is where it’s at (knew that too?). The pipes must get fatter and more efficient (Mr Colao’s term – not mine) to cope with future smart-phone-driven data demand. Operators (well, Vodafone anyway) are still operating well under capacity. No data crunch coming? Operators can sell lots more data plans to consumers, which means it will be several years before the data business goes ex-growth – by which time Vittorio will be sipping on something pleasant on a Mediterranean beach. Before then, he’ll take great pleasure in cutting Vodafone’s costs to the bone. That’s what I think the numbers say. What do you think?

Google’s acquisition of mobile Internet advertising network Admob for $750 million just signals that it intends to reprise its desktop Internet strategy on the mobile Internet. Google already had an aggressive strategy to develop and deploy mobile Internet services such as search, news, and mobile Web reformatting. After all, Google is already the dominant mobile Web search destination among consumers and its news service tied Yahoo in our 2009 Best of the Anywhere Web evaluation of news sites. What Admob adds is the ability to monetize that development with what is probably the largest mobile Internet advertising network today.

I liken this development to that of building a new city. Google is providing free roads and power for a new mobile Internet metropolis. How does Google make money from that? Google/AdMob just happens to own most of the billboard space in that city.

All I can say to this acquisition is that Google still seems to be a couple steps ahead of everyone else in its Internet strategy. Google just acquired some of the best advertising real estate on the mobile Internet. Everyone else is now looking for something in the neighborhood—but not nearly as good.

Who was it who said, “Everything old is new again”?  Reading David Pogue’s NYT column yesterday on the Droid phone, I was struck by an odd sense of deja vu at his introduction. In view of the expanded functionality of mobile phones, he said, “smartphone” no longer works as the name of the category, so we need a new term for the device that better describes their roles in our lives. Crowd-sourcing the problem to his Twitter followers, he reported that his favorite proposal among those responses was “app phone.”

My deja vu cloud cleared when I realized I had written a stunningly similar column for the Yankee Group website… in April 2006.  What that says, I guess, is that it has taken three years for what our industry knew to be true to become true to someone as connected, but focused on mass market issues, as Pogue.

Here is my original column from three and a half years ago:

A friend’s daughter was recently studying her lines for a production of Romeo & Juliet. Together we looked at the monolog by Juliet ruing her beau’s unfortunate surname, including the line, “A rose by any other name would smell as sweet.”

Can’t agree, actually: Romeo might have been as handsome if he weren’t a Montague, but what we call things can have an ineffable and long-lasting impact on how we see them. Case in point: our new digital best friend, the mobile phone. Some in the US call it my cell, the Italians say la mia portabile and the Japanese use the term keitai denwa  But is it really just a phone? Less so than it used to be.

With a camera, memory slots, video playback, and enough messaging options to overwhelm anyone born before the onset of IM, it hardly seems right to constrain the thing with a name that now covers just a fraction of the functionality. Even more so as the torrid pace of new model introductions continues. Few in the industry would debate the new reality: Just as the PC displaced the minicomputer as the focus of computing innovation, the mobile handset has begun to displace the PC.

Indeed, Nokia is actively pushing alternative nomenclature into the  keitai denwa domain with its new line of N-Series “multimedia computers”. But on a web page describing an impressive array of products it expects to release (including the N93), there’s that pesky word again—phone. The king is dead—long live the king.

With this on my mind, I wandered a wireless industry tradeshow in April and asked two dozen booth denizens this question: Five years from now, when you discover you’ve left your house without it, how will you complete this request to your friend: “Wait a minute—I have to run back inside for my __________” ? Answers fell neatly into a couple of categories:

•  Handheld. The first and most useful half of “handheld device,” matching previous colloquial naming dropping the second word of formations such as laptop (computer), transistor (radio) and television (set).
• A two-or- three-letter acronym (TLA). Analogies offered up included PC, CD, DVD, and of course TV. The most laughable suggestion in this category, from an immediately embarrassed Microsoftie who made me swear never to reveal his name, which I won’t do as long as his checks don’t bounce, was WMD (for wireless multimedia device, not a weapon of mobile destruction) If we have to go this route, let’s hope it’s something as pronounceable as scuba (originally, self-contained underwater breathing apparatus)
• The brand that cracks the code. Along the lines of Xerox used (illegally) to describe all copiers, and increasingly, iPod for portable music players, some predicted the adoption of whatever name borne by an as-yet-unavailable device that unlocks a new wave of functionality. Having already adopted TiVo as a verb myself, and knowing how a breakout brand’s dramatic step away from the pack can unleash mass adoption, I like this idea. Just wish I knew who was going to do it. Most of my interviewees were betting on Apple.

 Honorary mention goes to the answer I got from Ed Zander, CEO of Motorola: “I’m going to call it the thing I can’t leave my house without. Which it already is.” In his case, however, it’s a $1,000 limited-edition bronze Dolce & Gabbana RAZR, which matched his sport coat very well. (Belatedly, with an apologetic glance at his PR exec, he amended his answer to, “My RAZR.”)

Moment of truth: A substantial group of neocons insisted on phone, pointing out that the one-syllable word is clear enough and easy to say, and thus generally not linguistically broken.

Me? I’ll bet on handheld.

 ————

OK, we’re back in late 2009 now. Amusingly, the only thing that really feels dated to me now about that column is the fact that Ed Zander isn’t the Motorola CEO anymore.

“App phone” ? I say UGH, big-time. What do you think?