Cellular 25 – a Celebration

Last night the UK cellular industry gathered in London’s Science Museum to mark twenty-five years of mobile networks in the UK.  It was an event that drew together many of the people who have been responsible for the extraordinary explosion of the mobile industry, talking about the history of how it happened, and looking into their crystal balls to try and predict the direction of the next twenty-five years.

It has been an extraordinary journey.  I missed the first five years, but have been involved for the last twenty, predominantly trying to encourage data applications and moving services past the phone to internet connected devices.  That’s not been the most successful area of the industry, although I believe its time is about to come.  What last night proved was how radically the growth of the mobile industry has changed our lives.

Given our familiarity and love for our phones, it’s easy to forget just how great that change has been.  Although the evening was peppered with statistics (there are now 1.29 phone subscriptions for every person in the U.K.), the most telling example of the change came from a relative outsider – Stephen Timms – the Minister for Digital Britain.  His constituency is one of the most deprived ones in the East End of London.  He recounted that twenty years ago, when people came to visit him at his surgeries, very few could provide him with contact details allowing him to get back to them.  Today everyone who comes to him for help has a mobile number.  That’s a small personal confirmation of a finding that the Joseph Rowntree Foundation ascertained last year.  For almost all of the population of the U.K., a mobile phone is now an essential item, whereas a car is a luxury.

In the early days of mobile, the U.K. industry thought they were being over-optimistic in designing infrastructure that would support 2 million users.  Today that seems quaintly naïve.  The mobile operators have come to realise that projections and users will grow without limit.  As a number of speakers pointed out, that poses a problem, as technology can only go so far.  LTE and LTE advanced will give us ever increasing bandwidth (and some rather misguided promises of Gbits/sec were thrown around as the evening progressed), but the event horizon of dear old Dr Shannon, plus some basic physics, will prevent cellular seeing a Moore’s law increase in bandwidth.  What the industry needs is more spectrum.  Speaker after speaker pleaded for the Government and regulators to deliver the digital dividend, but the Minister had neatly foreseen that eventuality and made a speedy exit before the tomatoes were thrown.

The big question is, where next?  Today there are over 4 billion mobile subscribers in the world.  By the end of 2010 that is expected to reach 5 billion.  A phone for everyone within the world is now a possibility.  2G handsets can be made and sold for around $10, 3G ones for less than $20.  The hardware cost is no longer a barrier.  More phones are sold than TVs, cars, or computers.  The sheer scale of the industry is phenomenal.

Once every person has a phone, the logical next step is to connect machines – an issue close to my heart.  All of the cellular crystal ball gazers believe that M2M is the next great market.  Some years ago, Deloitte predicted that by 2020 there would be 60 billion machines in the world.  Last night Ericsson predicted that 50 billion of those would have a cellular connection.  That seemed a little extreme.  Although the cellular industry may be owning all of our souls by then, come the next decade, I expect my toaster and dishwasher may still be keeping themselves to themselves, rather than discussing where to hang out with their friends on MachineBook.  On which point, did you know that Britney Spears has more friends that there are people in Belgium? 

That gem came from Jeni Mundy of Vodafone, who distinguished herself by being the only operator to talk about customers.  And talked very intelligently about them.  She made the very valid point that up until now, networks have largely worked on the principle of “if you build the network, the customer will come”.  That’s changing; we’re now at the point where “if you don’t look after the customer, they’ll leave”.  One aspect of customer behaviour that remains unchanged is the willingness to churn.

Other aspects of customer behaviour is changing behaviour.  For years, the network treated SMS as data.  The advent of the iPhone has changed that and data usage has grown exponentially as the iPhone population has turned its attention to applications like iFart.  Ed Candy put up the graph that stated the major problem that networks face – data usage is going up, but revenue is not.  The whole business model is beginning to look as shaky as Gordon Brown’s handling of the economy.  When we consider that the iPhone still only accounts for around 0.5% of mobile phones in use, there could be a major problem around the corner.  Certainly if we want to add another 50 billion machines, we need to make sure that they concentrate on low bandwidth, high value transactions, rather than adding to the demands on bandwidth and spectrum.

It isn’t just usage that’s changing, so are the underlying dynamics of mobile development.  Europe and the U.S. are no longer the centre of development – that is firmly moving to China and India.  Nokia used to be considered unassailable in terms of handset shipments, but if you take Korea Inc. as a whole, they’ve probably already been pushed into number two position.  If they’ve not, it will happen this year.

If Europe is going to continue to be at the forefront of cellular, we all need to continue to innovate.  Every network speaker talked about convergence between cellular and the computing industry.  Yet we heard that by the end of 2011, which is only next year, sales of smartphone will have passed that of computing devices.  Maybe we need to change our mindset and forget convergence.  As smartphones become the device of choice, our mindset should be is that cellular is supplanting traditional computing.  If we don’t make that change, I expect other developers to the East of us will.

The next 25 years will be challenging.  One of the final questions to the panel was who would be sitting on the stage at Cellular 50?  The panellists did a good job of avoiding the question, but it will almost certainly be a different roster.  Will they have all been bought by the Chinese? Or by French utility companies, once they become dumb pipes?  Will there still be a computing industry?  And will a Britney Spears in her mid fifties have more friends than my vacuum cleaner?

The answers to these, and other questions may, or may not be found in last night’s presentations.  But you’ll need to provide your own alcohol to make as much sense of them as we lucky few did.