Seybold's GSM Surgery
SPOTLIGHT
17-JAN-2003
Andrew Seybold pulls few punches when commenting on the wireless industry. The Informer asked him about the prospects for 2003.
Seybold's GSM Surgery
Self-styled "wireless guru" Andrew Seybold is, in his own words "about as far out of the GSM-fold as you can get." Never one to shy away from a good standards scrap when he sees one, Seybold's forthright views are well known and have been a constant irritant to GSM/UMTS cheerleaders for many a year. But as any physician will tell you, a pain in the neck often points to deeper problems elsewhere. So who better to indulge in some punditry on the year ahead for GSM? Particularly as GSM-heads are now engaging in a somewhat egregious round of back-slapping on the promise of a billion subscribers worldwide by the end of 2003. Haven't we moved on from the fixation with shinybright big numbers? What about the bottom line in 2003? What kind of year will it really be for GSM? Mr Seybold?
A.S: The GSM community has to get GPRS right in 2003. If they don't it will impact the future of their UMTS systems dramatically. If they don't get a good uptake on data...it is going to be really hard to convince the investment community that there really is a world where voice and data are both in demand in the wireless arena.
Informer: What's wrong with GPRS at the moment?
A.S: : They did not support roaming originally which is beyond belief to me. GSM is the most roamable technology in the world and yet somebody forgot to put it into GPRS. And the other thing is devices were late to market. And there is no real compelling content out there.
Informer: GPRS without roaming, and now MMS without interoperability.
A.S: Exactly. What you have is equipment vendors and network operators still looking for an advantage over their competitors. At the same time you have customers who want to be able to do this stuff across lots of different networks. There is a disconnect here. The customers are demanding standards and the network operators and the handset vendors would like nothing better than something that is proprietary to them.
Informer: How can operators get GPRS data right?
A.S: A couple of things. Nobody has a clue what a megabyte is so pricing by megabyte makes no sense at all. Second, there is a discrepancy between what the carriers believe is the value of data and what the customer believes is the value of data and we are going to have to get much more creative and make the data plans simpler.
In fairness, wireless data is not yet a huge success no matter what the technology. The weak part of the link is still content. Ringtones, news and weather, and sports doesn't really hack it. The GPRS community failed to understand the importance of push technology. It wasn't until RIM came to Europe with Blackberry that people came to understand how important push was. The way GPRS was originally devised the user themselves had to initiate the session to go get the data. Having to stop what you are doing and go ask if there is an email for me is not a good user experience.
Informer: Do you think financial pressures on GSM operators will be as acute in 2003?
A.S: : I absolutely do. The GSM community has set itself up as the world standard, 70% of the world's market, 70% of the world's networks in most countries of the world. And their move forward to UMTS is the assumption that they will take that same world standard and the same installed base and just move it into the next generation. I think that is a very dangerous set of assumptions.
Informer: Which implies that some operators will be changing horses.
A.S: : I would not be at all surprised in 2003 to see somebody in Europe break ranks... Until UMTS networks are really in any great number and working, somebody could still change horses. Remember that Ericsson makes both technologies... I'm not a believer that that is really going to happen but I know there are some secret trials going on in Europe with GSM1x overlay. I think it is safe to say there is one going on in England and at least one in France and one in Germany.
Informer: What about roaming and interoperability in this scenario?
A.S: : Qualcomm has a chipset coming out shortly that supports cdma1x and GSM/GPRS. And they are not the only ones. So my assumption is that would not be an issue. You are going to see by Q3 2003 the ability to deliver large quantities of handsets that work across multiple networks.
Informer: Operators have to reduce churn. Now it is less a case of grabbing market share, more a case of nurturing the market you have. What structural changes do they have to make?
A.S: : The old network operating philosophies are going to go away very quickly but there has to be a balance. What we have a bunch of wireless operators who came out of a telecom environment where the back-end and operational costs are staggering. And they are going to have to change that, because if they don't change that they can't afford to be competitive.
The wireless industry has done a terrible job, an absolute horrendous job, on public relations. A few years ago the cable TV operators had such a bad name the industry got together and came out with a list of 10 things they believed their customers had the right to expect. It was a Bill of Rights for cable TV customers. They then set about a marketing campaign and in a few short years they changed people's perception about their industry. That kind of thing needs to happen in the wireless community.
Informer: What's more operators get a lot of revenues from roaming rates and call termination rates, which are both coming under regulatory scrutiny. How are they going to cope if these rates are slashed?
A.S: : If they don't do it themselves someone will do it for them. If you see a train coming down the track you figure out how to get out of its way. One of the things you do as an industry is you say: "If we do something proactive ourselves then the regulators don't need to step in." I'm a big believer in that.
Informer: In conclusion, will the situation improve this year and what can GSM operators realistically achieve?
A.S: : I think it can improve and I think they can, if they pay attention, find out what the customers want in the way of data services they are willing to pay for. There is no market research other than getting stuff out there, seeing if it works, and trying it again.
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