Smart Grid and Telecom Carriers…Friends or Foes?

I’m attending the OpenSG conference in Ft Lauderdale this week hosted by Florida Power and Light. The event is chock full of smart people, smart discussion and debate (as industry consortia go, there appears to be sparce rhetoric among the participants…although this is my first OpenSG event). I’ve had several sidebar conversations with utilities, consultants, vendors, and standards bodies or industry forum coordinators thus far. The conversations have ranged from smart grid security to OpenADR conformity and verification to more general smart grid topics and trends. It’s relatively impressive the pace at which the various working groups and committees are developing their specifications and recommendations that may ultimately become standards through more formal standards development organizations (SDOs) like IETF, IEEE, and so forth.

One category of participants which I’m not surprised is not in attendance though have high hopes this will change soon are the telecom operators or network operators in general. At least I’ve not noticed them in attendance. So the likes of AT&T, Sprint (and I know they have a Smart Grid initiative) or Verizon are persona non grata. I’m not surprised because I believe the evolution of the smart grid is such that it’s pretty early in the business model critical mass curves of the telecom operators. Simply put, I don’t believe they know how to make money on the smart grid at this point. This is fine but will need to be reconciled soon. There are many many parallels between the smart grid and telecom as far as how each will or has evolved to the Internet model, as well as their opportunities to collaborate. I had this exact discussion with a colleague from EnerNex. And not surprisingly both he and I had significant telecom backgrounds both from service provider and vendor perspectives (he was at Verizon and I was at Cisco and Motorola). That also appears to be a big gap in terms of smart grid/utility industry engaging the telecom players…if you don’t know who and how, it’s a harrowing experience just showing up on the lobby and saying “who do I talk to about your smart grid business?” An example I derived from the Smart Grid Security bootcamp I attended on Monday proved this point or at least just provided a useful datapoint. When the speaker took an adhoc poll of the years in the power industry among all the audience participants, the average was roughly 10-15 years! This ranged from 2 years (myself and another participant) to as high as 25 years.

Some of the parallels among smart grid and telecom that the EnerNex gentleman and I briefly discussed were:

  • both had to overcome major legacy from business models to operations to adoption of new radically different technologies (e.g., IP)
  • both suffered from extremely vertically integrated businesses and operations infrastructures
  • both see themselves as service providers with unique offerings
  • both are beholden to the whims of regulators and regulatory pressures
  • both are actually VERY good at customer service from the perspective of customer care and billing relationships are core to their businesses
  • both look at industry and standards for making decisions on adoption of new technologies and practices
  • IMPORTANT: both certainly can benefit from the guidance of people who’ve “done it before” for softening their respective migration to the New World

This last point is a key one. For example (and a gratuitous infomercial of my company) at People Power we have a significant presence of engineering, sales and executives that came from the computing and mobile industries. In other words we have experience dealing in complex value chains and ecosystems, embedded technologies, lengthy certification cycles, painful standards processes, and migration from legacy to new connected technologies. Hmm, looks like the same script being played out with a new stage and cast! What do you think? Should smart grid and telecom become BFFs or hate each other?

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Wal-Mart and New Age MVNOs

Wal-Mart recently its new MVNO wireless brand called Wal-Mart Family Mobile. This is a great move for what is undeniably the largest retailer in the world and has unfettered access to a tremendous customer base. While the plan is not quite optimized yet (new lines are $25/line and a bit too expensive, phones are locked to the Wal-Mart service, among others) I’m sure they’ll learn a lot after launch, marketing and selling the service. In fact, they’ll find out that as they rollout into international markets, i.e., outside of the US, the requirements and behaviors from those local markets will be different. Details of the plan are outlined below:

“The service, called Wal-Mart Family Mobile, will run on T-Mobile USA’s network and will cost $45 per month for unlimited voice and texting; additional lines can be added for $25 per month. Interestingly, there is also a prepaid component to the plan: Users who want mobile data can pay into a prepaid account that can be pooled for an entire family, and the data does not expire. The first 100 MB of data are free, and come pre-loaded on all of the phones using the service. Customers can buy more data for an extra charge: $10 for 200 MB, $25 for 500 MB or $40 for 1 GB.

Importantly, Wal-Mart’s plan does not have a contract for customers to sign or come with early-termination fees. However, phones for the offering will be locked to Wal-Mart’s service, and will not be able to work on other networks or even under a T-Mobile plan.”

What are the most disruptive of this are: big brands launching new mobile services, and who owns the customer. Best Buy Mobile is marketing and selling many devices across many carriers. When will they actually launch their own service under their own brand? They are one of the largest CE and appliance retailers, not quite on the same plane of existence as Wal-Mart but in a different one (Ed.: Stephen Hawking may chime in here). Or LVMH in France? Or Boots or Tesco in the UK? It’s just a matter of time as costs of smartphones (or tablets or other interesting devices) come down and infrastructure-based carriers, especially tier 1.5 or 2, are willing to open up their networks to other big brands. Of course Amazon has been doing this since the launch of the Kindle and is very successful though hard to tell if Sprint or Qualcomm are making money on leasing their infrastructure to Amazon/WhisperNet.

The longer term and most disruptive impact will be ownership of the customer relationship and ultimately wallet. Prime example is the iPhone. Does Apple or ATT own the customer relationship? Some may disagree but I think it’s Apple, hands down! They own the AppStore, all extensibility of the device, upgrades, and most of the profitability of the value add elements of the device. ATT charges for the 3G service voice and data pipes. I don’t trivialize this but it’s a matter of who you think of when you think of iPhone. Case in point. Yesterday as I was trekking down University Avenue in Palo Alto, CA, I noticed an ATT store right across the street from the Apple Store. ATT store was desolate…Apple Store was booming! As always.

What do you think of the future of the convergence of MVNOs and big brands with big customer bases? I think it only has one direction: up and to the right.

Nations First Mobile Emergency Messaging

The state of California recently announced in cooperation with Sprint their Emergency Management Agency (CalEMA) will be rolling out a mobile emergency messaging service to its residents, http://www.govtech.com/gt/articles/768874. This is certainly a great idea that has been around form quite some time especially so around heightened emergency incidents such as Columbine, Fort Hood or any such events that require a localized emergency notification to inform people what to do or where to go.

The cellphone is THE most pervasive messaging device available at the finger tips of pretty much every citizen, resident or visitor to the United States. Short Message Service, or SMS, the the least common denominator for every one of those same cellphones whereby all the cellular operators support this ubiquitous protocol. I commend CalEMA for standing up to do something about it. But speaking of cellular operators, where are the #1 and #2 in Verizon and AT&T in supporting this emergency notification service along with Sprint and CalEMA? Irrespective of the prepaid, postpaid or MVNO subscribers on the Sprint network, they pale in comparison to Verizon and AT&T.

I guess we have to wait for phase 2 on the roadmap? Not much of a consolation for those California residents on Verizon and AT&T that didn’t get the text during the next wild fires, floods or God forbid school shooting.

The Cloud Completes the Connected Experience

Owners of iPhones are probably tired of hearing all the AT&T “network issues”, dropped calls, or other user experience degrading issues. I’m certain AT&T is also tired of hearing the complaints. I know the customer service agent who took my call last week had a fair bit of experience with iPhone customers calling in to complain. But this post is not yet-another bitchfest about AT&T’s network or how I love the iPhone…except for the phone! In experiencing the stellar experience with the iPhone platform and its extreme dependence on the network, I’m reminded of just how important the carrier experience is for the overall positive user experience.

Google’s CEO, Eric Schmidt, agrees with this. He delivered an engaging keynote appearance at Mobile World Congress stating the importance of the cloud, i.e. operator network, in the device and application experience.

“We feel very strongly that we depend on the successful business of operators globally,” he said. “We need advanced, sophisticated networks.”

Eric was reacting to an audience member’s statement that Google would basically make the operator network a “dumb pipe” and all the value would be over-the-top. But I disagree with this mindset. The connected experience that we are increasingly engaging with our smartphones, app stores, data, and social media would incur a tremendous amount of friction and dissatisfaction without the right networks in place and operating properly. Good session and roaming management will yield great experiences to end users, and that results in sticky, ARPU-rich subscriptions to all kinds of services and applications.

“Applications are sharing-intensive, and the cloud is all about sharing and replication,” Schmidt explained. “An application that does not leverage the power of the cloud is not going to wow anybody.”

It’s hard to find a successful application on an iPhone or Android device that does not have some sort of persistent or recurring network connection. Whether it’s location, gaming, messaging or productivity, the application experience is enriched with a great network. It seems that I’m stating the obvious however the notion of Over-The-Top has been on the minds and desired of users and application developers ever since the first walled garden went in place. Yes, many mobile computing platforms will have a variety of applications on them and accessing services in the cloud that are relatively transparent to the billing platform of the wireless operator (maybe the application specifics, but not the bits). The ultimate Always Connected User Experience will happen only with the integration and cooperation of the end-to-end value chain elements. This includes the pipes!

Pay Me Now or Pay Me Later

Prepaid mobile services have been around for quite some time in many countries worldwide. This financial model offers cellphone services for those that either cannot or choose to not opt for postpaid plans. Pay-as-you-go of sorts. This was the first plan my kids got on cellphones and as their financial ability, but at least as important, their usage increased, they then migrated to postpaid plans with the appropriate size buckets of voice minutes and SMS texts (for my daughter, UNLIMITED!).

As long as the plan had the right balance of bucket size and payment size (a perceivably good price-performance on what you get), then prepaid remains an attractive option for many of us. Usually the biggest advantages are the lack of contracts or commitment periods associated with postpaid, although some wireless operators (usually MVNOs like Virgin Mobile and Cricket Wireless) offer postpaid plans without contracts or commitments.

The first basic question that prepaid users ask is, “do I use the service enough to justify a postpaid plan?”

  • Will they talk or receive calls on the cellphones to go for a higher minute plan?
  • Will they need some more advanced features that only postpaid plans offer, such as 3G data?
  • Or do they need to have just enough connectivity with a mobile device without taxing their monthly budget?

There is another large group of devices that have been coming online that are asking the same question. The mobile compute platforms such as laptops and netbooks (or the cleverly named smartbooks such as HP and Qualcomm’s recent announcement) are increasingly being connected to mobile networks in addition to WiFi.
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There is a recent flurry of noise from the mobile operators on prepaid mobile broadband plans with megabyte and gigabyte buckets available for as little as $10 for 100 MB, in the case of Virgin Mobile USA. But the larger operators such as AT&T Wireless and Verizon Wireless will offer prepaid mobile broadband to complement their postpaid options. I think prepaid as an economic model is ABSOLUTELY made for:

  1. connected platforms now such as laptops (to avoid the “everything they can eat, and they will” problem operators encounter with data hogs)
  2. emerging connected devices later such as cars, gaming platforms, eBook readers (bundled today in the Kindle but I predict this will change)
  3. many other multimedia and entertainment devices…can you say iSlate?

Recently Tariff Consultancy published a report stating that:

“Pre Pay Mobile Broadband will become the norm for the majority of users to access the Internet worldwide, with a third of a Billion users by the end of 2013″

The notion of “becoming the norm” is the operative phrase here. Similar to how cellphones have become the norm for communications and ultimately having resulted in cannibalizing fixed line services, is it feasible to think that mobile broadband will cannibalize fixed line Internet access? At a minimum, it will be complementary in that high use devices such as media servers, Hulu, Playstation Online, torrent servers, or groups of PCs and Macs will demand more than what the mobile network (or even local femtocells) would be capable of providing. But in either developing countries or smaller connected households, the advent of $10 or $20 (or even less in some countries) to last a month or two for web and email connectivity is more than sufficient to serve their needs.

Floating Among the #Cloud…#Services

The importance of device characterization, content adaption, and cloud services is absolutely critical to a positive Always Connected User Experience (ACUE). Today I bounced back and forth between my iPhone and Kindle 2 reading snippets of The Lost Symbol by Dan Brown (GREAT book so far, as usual from the author of The DaVinci Code).

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Without getting verbose, these were the essentials of my positive Always Connected User Experience while waiting for my car’s oil change.

  1. The page sync is automatic between the 2 devices so I never have to worry about remembering where I was. It wasn’t always this seamless…back in the stone ages of Kindle 1 I had manually sync many if not all the time.
  2. The adaptation of the content is performed to the device’s capabilities (screen size, display technology, I/O, dynamic features such as accelerometer). Obviously Apple (obvious, I think) would not have approved the Kindle for iPhone app if it had not met the specs for what they typically consider as a stellar user experience. In a nutshell, it just works!
  3. Yes, the content does in fact reside locally on both devices, so it’s not what I’d call a classical “connected cloud service”, but the content originates and remains available in the cloud no matter what I do locally on the devices. If I wipe my iPhone, I just reload the app and book, and I’m right back to the same page I left off on.

One key element of the overall ACUE equation is the transport media, but since the content is cached locally on the device (probably always will be) this is not as important other than the time to download. Where this becomes important is when less of the content resides locally and what the device side gets is rendering of the content. So if Amazon were actually rendering the book content and pushing me each page as I flip to the next page, I will be begin to care very much whether I’m connected over HSPA, WiFi, or EDGE. I’ll also care about the quality of the connection if I’m moving. Imagine the sorts of outages or failed calls on the iPhone in some of the dreaded “coverage holes” in the San Francisco bay area when I’m immersed in a really good publication or book.

There are many other items such as security, authentication, e-commerce, and so forth that I’m leaving out and of course must be built into the equation. But from the non-technical users perspective, once they signed up for their account on Amazon and purchased their Kindle, they just want it to work without needing any knowledge of an unreliable cellular network, fading, channel congestion, or roaming.

Are we there yet? Ehh, kinda sorta. We’re definitely getting there as users push the capabilities of the applications, services and devices. Apps, services and devices push the capabilities of the network. And the networks push the capabilities of the carriers to react innovatively and expeditiously. Do you agree or disagree?

GSM Hacking Trial

This week on Dark Reading there was more talk of the cracking of the GSM A5/1 over the air encryption. There is certainly a lot of attention swarming to this topic, rightly so given the pervasiveness of mobile. In addition the hacker community is making statements of the A5/3 encryption who is built into some of the 3G standards.

I think that the biggest concern does lay solely with the cracking of A5/1, but that there is a HUGE community of software programmers interested in “seeing” how vulnerable these encryption protocols actually are and if they can break them. In general this is a good thing to overcome the Kool-Aid Syndrome (where carriers and mobile technologists because too enamored with legacy and the status quo) and get telecom vendors, standards bodies, and carriers to think innovatively and out of the box. However it’s only a good thing if malicious behavior does not reign supreme.

Imagine if the confidential mobile communications of a government official or corporate CEO were intercepted and held for ransom. Imagine if terrorists were somehow to exploit this vulverability to their advantage. As with any socially and globally impactful technology, there are two sides to the coin: the good side and the dark side!

How do we solve this both near term and long term? Do we ban cellphones in certain instances or environments? Is this even feasible given the human appendages that cellphones and smartphones have become?