Lowenstein’s View: Will wireless compete with broadband?

lowenstein 3 0 Lowensteins View: Will wireless compete with broadband? Lowensteins View: Will wireless compete with broadband?

Susan Crawford paints a bleak picture of the state of U.S. broadband services in her book, "Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age." In it she argues that Internet access is slow and expensive. She is right, to a point. Up until now, the cost of deploying broadband, particularly given U.S. demographics, density, and reliance on private market forces, might have led to a natural monopoly or duopoly. On the landline side it is cable and FiOS winning the battle, and in wireless, Verizon and AT&T have some 75 percent of 4G subscribers.

Crawford does not believe this will change, maintaining that the "communications inequality" gap is widening. I believe that she ignores potentially powerful developments in technology, especially with regard to wireless infrastructure, that could alter the economics of broadband. She also dismisses the U.S. leadership position in the deployment of 4G, adoption of smartphones, and use of mobile data services.

Yes, with regard to fixed broadband, the United States is in the middle of the developed-country pack. In most of the country, broadband is often a monopoly, or a duopoly at best. Pricing over-indexes that of other OECD countries, especially on an un-bundled basis. Of the nearly 70 percent of households that have broadband, only about 20 percent have download speeds of greater than 10 Mbps, according to a 2012 report by Akamai. Verizon's state-of-the art FiOS network, which is the only true fiber-to-the-home (FTTH) service, will not expand beyond more than about 20 million households passed (there are about 5 million FiOS Internet customers today). Other FTTH initiatives, such as Google's Kansas City network and important work being done by people like Blair Levin and the Gig.U initiative, are admirable but these networks, whether in cities or at colleges, are being deployed a scattershot basis. We have a long way to go if we're going to realize the FCC's National Broadband Plan objective of 100 Mbps service to 100 million households by 2020.

Amidst a mixed broadband picture, wireless is the comparative bright spot. The U.S. leads the world with respect to 4G deployment, with more coming. It is true that today's wireless broadband services, which are priced at some $ 10-20 per GB, do not offer a viable alternative to fixed broadband. However, if we play our cards right, there is reason to believe that wireless is going to play an important role in our broadband future. There are five key catalysts.

1. Greater Competition

By the end of 2014, we will have four national, facilities-based LTE networks available to U.S. consumers, assuming current industry plans and structure with respect to Sprint and T-Mobile's plans. This will usher in a more competitive period in wireless pricing than we have had in some time. I also expect that the perambulations around Sprint/SoftBank/Dish/Clearwire will result in a robust wholesale LTE/LTE-A network open for MVNO business. This will invite important companies such as Google, Amazon, and others to offer cheaper wireless broadband services, with innovative, and disruptive business models.

2. LTE-Advanced

LTE-Advanced is progressing rapidly, promising significant increases in network speed and spectral efficiency. There are two game-changing elements here: channel aggregation, which allows an operator to "pool" its holdings across various parts of the spectrum band to offer up to 100 MHz of capacity to consumers (assuming they have that much spectrum), which is up to 5x today's 20 MHz maximum; and up to 8×8 MIMO, which would allow at least 2x the downlink speeds compared to LTE. A home gateway/router could be among the first types of products to be able to accommodate that type of antenna configuration.

3. Spectrum/Capacity

An active deal market and a more open FCC has resulted in a significant improvement of the spectrum position of major operators, as evidenced by AT&T WCS, Verizon-SpectrumCo, and Dish S-band. AT&T, Verizon, and Sprint are now each in a position to have at least 100 MHz of spectrum available in nearly all markets.

Things also appear to be on course for the FCC to make significant swaths of new spectrum available over the next few years:

  • The incentive auction, likely in 2014, which will make available up to 120 MHz in the 600 MHz band.
  • Possible expansion of the 3.5 GHz band for Wi-Fi, which will figure prominently in a HetNet world.
  • Continued progress on the use of unlicensed TV white-spaces spectrum. Approved database providers such as Telcordia and SpectrumBridge, can now provide national service to unlicensed TV band devices. Google was approved earlier this week for a 45-day trial of its TVWS database.

Importantly for broadband, the 802.22 standard published by the IEEE will allow for the installation and deployment of wireless regional area networks (WRANs) using TVWS. This opens the possibility for WRANS to deliver 22 Mbps to 29 Mbps of data speed over a radius of 10-30 kilometers, without interfering with reception of existing TV broadcast stations, which will help facilitate the use of fixed wireless for broadband in un- and underserved rural areas.

4. Small Cells/Wi-Fi

In 2013, we will start seeing aggressive deployment of small cells (microcells and picocells), as part of a concerted effort by the wireless operators to densify wireless networks in order to improve coverage and increase spectrum efficiency. These HetNets, which are now economically viable for the operators to deploy, also result in a greater percentage of subscribers experiencing the higher end of promised LTE throughput.

Also, with planned incorporation of Wi-Fi into small cell deployments and progress being made on "Hot Spot 2.0," Wi-Fi will increasingly be seen as an extension of mobile networks, with improved roaming, hand-off, and authentication. We're also seeing an accelerated deployment of carrier-grade Wi-Fi networks, and deployment of public hotspots by operators and cable companies.

5. Government money

There are several large pools of federal dollars being made available to facilitate and accelerate broadband deployment: the wireless-centric $ 6.5 billion Connect America Fund; the Broadband Acceleration Initiative; the NTIA's Broadband Technology Opportunities Program; and the $ 7 billion First Responder Network being funded out of the upcoming incentive auction; and billions of dollars in grants and loans to states for rural broadband programs, where wireless/fixed wireless will play a prominent role.

The delta between fixed and mobile networks, in terms of capable throughput, capacity, and cost to deliver a GB of data, has narrowed substantially over the past five years. Significant improvements in wireless technology and economics, as described above, will narrow that gap still further, meaning that wireless networks could well figure in the development of more pervasive, competitive, and lower-cost broadband services over time. With small cells, carrier-grade Wi-Fi, and devices that can accommodate more antennas, the traditional distinction between fixed and wireless networks will continue to blur.

As wireless plays a larger part in the objective of providing ubiquitous high-speed broadband, I believe there will be instances where wireless will compete directly with established broadband providers. Just as some households have chosen to give up fixed landline in favor of wireless, we could see "broadband displacement" by wireless, too. A sweet spot here might be the price-sensitive household that consumes 20-30 GB per month and doesn't need the absolute upper tier of broadband speeds.

A combination of technology advancements, private market transactions and investment, and more aggressive public policy are all leading to what will be "a lot more network" in the aggregate, becoming available over the next few years. There will be much greater choice of service providers, more innovative business models, and significant price competition across the fixed and mobile broadband landscape. We don't have the population density or the industrial policy infrastructure to bring fiber to everyone a la South Korea and Japan. But with our lead in 4G wireless, climate of innovation, significant capex commitments among the major operators, and the likes of SoftBank, Google, Apple, Samsung, Amazon, Dish, and so on helping to accelerate the disruption in the near-to-medium term, the U.S. might become one of the most vigorously competitive broadband markets in the world. Wireless looks to figure prominently.

Mark Lowenstein, a leading industry analyst, consultant, and commentator, is Managing Director of Mobile Ecosystem. Click here to subscribe to his free Lens on Wireless monthly newsletter, or follow him on Twitter at @marklowenstein.


Free Public Wi-Fi to Get Faster to Meet Mobile Demands

In response to the soaring use of smartphones, tablets and other data-hungry wireless devices in public mobile broadband hotspots such as airports and convention centers, government regulators have voted in favor of a proposal to increase the capacity of free public Wi-Fi.

Operators see Wi-Fi as a critical differentiator, but split on business models


Hawifi small Operators see Wi Fi as a critical differentiator, but split on business modelsving long been regarded as the ugly-duckling of wireless technology, Wi-Fi is fast evolving into a necessary strategic tool for mobile operators.

The simple story of Wi-Fi as a way to carry low-priority cellular data traffic is being rewritten as operators look to use the technology to drive and enhance service differentiation.

A recent study conducted by Analysys Mason, on behalf of Amdocs, placed service differentiation ahead of data offloading as the leading reason why operators are adopting Wi-Fi.

However, while cellular data offload is relatively easy to understand and quantify, using Wi-Fi to differentiate a mobile service is less simple.

O2 UK pushes its own model with retailers

Gavin Franks, managing director of O2 UK Wi-Fi, stressed that the accepted model used to build Wi-Fi networks is undergoing radical change. "The approach taken by The Cloud and BT in the UK with their Wi-Fi networks needs updating," he said. "These business models have been focused on simply providing laptop customers seated in a coffee shop with access to the Internet."

Franks said O2 UK saw how smartphones were triggering a mobile revolution and took the decision to make Wi-Fi a relevant technology by bringing it to the forefront of the customer experience. This effort involves working closely with the owners of department stores, hotels, entertainment venues and others to provide them with a Wi-Fi service they could then use to engage with their customers and add value.

"What retailers are recognising, driven by increasing pressure on their sales figures from online activities, is a drive to differentiate the experience for their in-store customers," Franks said.

franks Operators see Wi Fi as a critical differentiator, but split on business models

Gavin Franks

"We're not giving away free Wi-Fi, it's very much a B2B2C proposition," he added. "The venue owner is paying us to provide the service which they then offer free to their customers. What we're undertaking in exchange is building value by providing them with insight into the activities of their customers."

This ability for venue owners to better understand the behaviour of their customers is partly provided through Wi-Fi networks' ability to track their location to as close as 50 metres, said Analysys Mason analyst Chris Nicoll.

"This will enable the owners to analyse the flow of traffic through the venue and provides much improved insight to what is happening within the shopping mall, train station, exhibition hall, etc.," he said.

"Promotions are also much more relevant if the consumer is close to the retailer making the offer," Nicoll said. "These opportunities are not necessarily simple, and it will require the mobile operator to think differently."

Wi-Fi land-grab

This focus on providing venue owners with Wi-Fi services is pushing operators to become the exclusive provider within the more valuable locations.

BT Wi-Fi CEO Andy Baker said that new entrants are realising which venues are in key locations and a land-grab is already underway. "As a venue owner I can't see why I would need more than one Wi-Fi provider in my location," he said." The owner wants one landing page regardless of whether they are a coffee shop or giant department store, so I believe there will only be one Wi-Fi solution per venue."

Operators that want to capture some of the Wi-Fi market are scrambling to catch up, claims Baker. "But they're hampered by starting from scratch. Our nearest competitors–The Cloud and O2–have around 15,000 Wi-Fi hotspots each to our 4.5 million (this includes Fon access points). We've significantly accelerated the expansion of our UK Wi-Fi network over the past two to three years."

Operators started to accelerate their efforts to acquire key venues around 12 months ago, according to Steven Glapa, senior director of marketing at Wi-Fi equipment vendor. Ruckus Wireless. "Obvious high-value land-grab sites for Wi-Fi are train stations," he said. "The first operator to provide a service can gain a dominant position and extend the value of its network." 

Glapa dismisses the use of LTE within venues, claiming that Wi-Fi has a spectrum advantage in terms of achieving very high density and capacity.

"We see LTE small cells having a use outdoors, but when you shift from coverage to capacity as an objective LTE becomes expensive relative to Wi-Fi," he said. "A train station may need something like 100 femtocells to achieve the required capacity which could be expensive using licensed spectrum."

Integrating Wi-Fi with mobile

This viewpoint sits uncomfortably with France Telecom's technical director of strategy, Yves Bellego. "We don't consider public Wi-Fi as a stand-alone activity with a dedicated business model."

Bellego said that voice services are best provided by the macro networks with small cells for in-building coverage. "But Wi-Fi is becoming a good complement to the cellular network with the rise of indoor data usage, and has become a valid technological solution to provide capacity and performance in a cost-effective way."

However, Bellego is adamant that the customer experience is not about 2G, 3G, LTE or a Wi-Fi experience. "The role of the operator is to deliver a good experience by using the right set of technologies and deployments," he said. "This is why we believe that methods for seamless mobility between cellular and Wi-Fi are needed, and that standardisation is the way to have these mechanisms."

There are already plans underway to bring Wi-Fi closer, if not almost totally, into the cellular ecosystem. Curenntly the Wireless Broadband Alliance, Wi-Fi Alliance, 3GPP and other industry bodies are pushing to have Wi-Fi working with cellular infrastructure in a near-seamless manner.

"Operators are particularly looking to take video traffic off their cellular networks in high density city areas," Analysys Mason's Nicoll said. "With new Wi-Fi up in the 5 GHz range, where channels don't overlap and you get much better performance, Wi-Fi presents a good opportunity to retain data traffic within the operator's network and remove it from the expensive and limited cellular spectrum."

The heavyweight operators involved with this initiative, which, according to Nicoll, includes AT&T, China Mobile, Deutsche Telekom, France Telecom, EE, Telecom Italia and NTT DoCoMo, are looking at how they can resolve real-world cellular issues such as spectrum exhaustion, in-building coverage and capacity.

Wi-Fi provides answers to solving some of these critical problems on the licensed spectrum side, such as taking traffic and splitting it appropriately to one or the other –whilst providing a secure and seamless experience for their users, Nicoll said.

However, the burgeoning involvement of these international operators could, and likely will, dictate the speed and direction that Wi-Fi will take in near- and mid-term.


Nokia Siemens targets carriers' Wi-Fi, small-cell rollout challenges

The suppliers of mobile carrier networks are still thinking small when it comes to making speeds fast and signals strong, and this year's Mobile World Congress next week will again host introductions of Wi-Fi access points and small cellular base stations.

Samsung launches Rex handset line for emerging markets, challenging Nokia

Samsung Electronics is launching a new handset line called Rex that is aimed at emerging markets. The move could be the beginning of a battle between Samsung and Nokia's (NYSE:NOK) touchscreen Asha line, which is focused on young people in emerging markets and bridges the gap between feature phones and smartphones.

samsung rex 60 Samsung launches Rex handset line for emerging markets, challenging Nokia

Samsung's Rex 60 is one of a line of new phones from Samsung. Click here for the rest.

Samsung calls Rex "a new series of smart feature phones" and the company is rolling out four devices: the Rex 90, 80, 70 and 60. The first three sport capacitive touchscreens while the 60 supports a resistive touchscreen display. All of the phones are dual-SIM phones, an important feature for emerging markets such as India. The phones run on a Java-based OS and feature Samsung's TouchWiz user interface.

"We are committed to developing the best possible mobile solutions to suit all lifestyles and budgets, which is why we are so excited to launch the Rex series across a number of the world's fastest growing markets," said JK Shin, president of the IT & Mobile Communications Division at Samsung.

According to the Wall Street Journal, which cited an unnamed source familiar with the matter, Samsung's Rex phones will likely be sold for between $ 50 and $ 100 each.

The most direct competitor to the Rex line will be Nokia's Asha phones; Nokia is relying on Asha sales to stem the decline of its Symbian line while it generates traction with its Lumia phones running Microsoft's (NASDAQ:MSFT) Windows Phone software. In the fourth quarter Nokia sold 9.3 million Asha phones, more than twice the 4.4 million Lumias it sold. During the second half of 2012 Nokia shipped 15.8 million Asha phones, compared with 7.3 million Lumias.

Earlier this week Nokia introduced the Asha 310, a new, dual-SIM phone with Wi-Fi support. Nokia said the device will be available in Asia, India, the Middle East, Africa and Brazil starting this quarter for a suggested price of $ 102 before taxes and subsidies.

The battle for the low end of the smartphone market and the high end of the feature phone market is certainly going to be fierce during the next several years as more customers migrate from feature phones to smartphones and as smartphone prices drop. According to a recent Nielsen report, China is the only country among the so-called BRIC countries (Brazil, Russia, India and China) where smartphones are predominant, leaving plenty of room for growth in the region. Further, according to a recent study from Informa Telecoms & Media, smartphones costing less than $ 150 will make up 52 percent of all smartphones sales in 2017.

For more:
- see this release
- see this The Verge article
- see this WSJ article (sub. req.)
- see ZDNet article

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Report: Most smartphones to cost under $ 150 in 2017


Report: Skype makes up one-third of all international phone traffic

Microsoft's (NASDAQ:MSFT) Skype unit grew its international traffic by 44 percent in 2012, more than twice the volume growth achieved by all the phone companies in the world combined, according to a report from TeleGeography. The report found that global Skype usage is now equivalent to over one-third of all international phone traffic, Skype's highest level ever.

The report, which looks at trends in the international long distance market, highlights the growth of Skype and other over-the-top communication service providers. TeleGeography found that that "international telephone traffic grew 5 percent in 2012, to 490 billion minutes," while at the same time "cross-border Skype-to-Skype voice and video traffic grew 44 percent in 2012, to 167 billion minutes. This increase of nearly 51 billion minutes is more than twice that achieved by all international carriers in the world, combined." That means Skype traffic represented 34 percent of all international phone traffic last year, the firm said.

skype big Report: Skype makes up one third of all international phone traffic
The above shows international call volumes and growth rates, 1992-2012, according to TeleGeography. The firm said data for 2012 are projections based on preliminary data. VoIP traffic reflects international traffic transported as VoIP by carriers, and excludes PC-to-PC traffic.

"The pressure on carriers will continue to mount in the coming years," TeleGeography analyst Stephan Beckert said in a statement. "While Skype is the best-known voice application, it's far from the only challenger to the PSTN. Google (Talk and Voice), WeChat (Weixin), Viber, Nimbuzz, Line, and KakaoTalk have also become popular. And, perhaps most ominously for telcos, Facebook recently added a free voice calling feature to its Messenger application."

However, TeleGeography noted that not all of Skype's traffic represents a loss for traditional carriers, since over 40 percent of Skype's traffic is now video, "and it's likely that a meaningful share of this is 'new' traffic, rather than a direct replacement for a telephone call. However, given their enormous traffic volume, it's difficult not to conclude that at least some of Skype's growth is coming at the expense of traditional carriers."

TeleGeography found that if all of Skype's on-net traffic had been routed via traditional telcos, global international telephone traffic would have increased 14 percent in 2011 and 13 percent in 2012, rather than the 5 percent the market experienced in 2012.

In other Skype news, the company has started testing video messaging for iOS, Android, and Mac devices. The new video feature lets Skype users send up to three minutes of video to each other.

A Skype spokesperson said that the company's video messaging "is in early release for testing in several markets for Android, iOS, and Mac with functionality to send and receive video messages. Users in these markets across all Windows desktop and mobile platforms can receive messages, too. We will have send capability in Windows by end of April. In the meantime, we continue to test this new feature in its early release."

For more:
- see this TeleGeography report (PDF)
- see this Ars Technica article
- see this CNET article
- see this AllThingsD article
- see this The Verge article

Related Articles:
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Microsoft acquires Skype for $ 8.5B in cash

Article updated Feb. 15 with a comment from a Skype spokesperson on Skype's video messaging.


Analysts question Cisco’s mobile data traffic revisions

Cisco Systems' mobile data traffic numbers from its Visual Networking Index are widely reported and touted by the industry, but a growing number of analysts and research firms are questioning the numbers and Cisco's methodology after the company made multiple backward revisions to its data in its latest report. TMF Associates analyst Tim Farrar raised questions about the data earlier this month, and noted, for instance, that Cisco had made "dramatic changes in assumptions about offloading, without much explanation or any retrospective view of whether the prior estimates were remotely accurate."

Now, research firm Analysys Mason is taking issue with Cisco's report too, arguing that the data shows "a substantial downward revision of traffic volumes for 2012 for Western Europe, and lesser, but significant downward revisions for most other regions. Moreover, projected growth rates to 2017 have been revised downwards. Despite these downward revisions, the volumes for 2012 in Western Europe and North America still look much too high to us, and imply growth rates of around 100 percent for 2012 over what we already know about 2011. This contradicts all the evidence we have seen for actual rates of growth last year in these regions."

Analysys Mason acknowledged that "forecasting data traffic is riddled with uncertainties, and, when the explicit or implicit warnings in forecasts are taken seriously, involves feedback loops that will contradict the trend forecasted." Still, Analysys Mason said that while there is nothing wrong with backward revisions, "trying to get it right by assessing the available evidence is important." 

In response, Cisco spokesman Jim Brady said that Cisco's methodology "includes a combination of direct data collection from more than 1.3 million users and nearly two dozen service providers around the globe, in-house estimates and forecasts, and third-party analyst projections from organizations such as Informa Telecoms and Media, Strategy Analytics, Infonetics, Ovum, Gartner, IDC, Dell'Oro, Synergy, ACG Research, Nielsen, comScore, Arbitron Mobile, Maravedis and the International Telecommunications Union (ITU)."

Brady said that "Cisco has consistently revised VNI predictions publicly to reflect new data and trends. For example, in February 2010 we did not have a tablet breakout. By 2011, after the iPad was introduced the previous spring, we updated the forecast to include this new device which would dramatically change the mobile landscape. As reported in the published in the Mobile VNI Whitepaper, the recent mobile traffic growth forecast was adjusted for several reasons, including the fact that mobile laptop traffic growth is slowing, particularly in Western Europe. As people replace mobile laptops, which consume more bandwidth than most other devices, we will see variances in growth."  

"In addition, Service Provider Wi-Fi has increased far faster over the past year than our forecast in 2011. It is a 'top of mind' issue for mobile service providers worldwide, many of which are actively deploying Wi-Fi solutions or looking to do so soon," Brady said. "While complementary to the macro-radio based Mobile Internet, we account for Wi-Fi in our fixed traffic forecast, which will be released in June. If we were to include offloaded traffic with mobile traffic, the difference between last year's forecast and this year's is much narrower. Also, people are using Wi-Fi small cells more often, shifting more data from mobile networks."

"We have consistently used what we believe to be the most accurate currently available data to support our methodology in updating the forecast each year, rather than artificially imposing consistency with previous estimates," Brady concluded.

For more:
- see this release

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Hotspot 2.0 guru talks Wi-Fi roaming, new job at Ruckus

Dave Stephenson is at the center of one of the most important efforts in mobile networking, the move to shepherd smartphones and other devices among Wi-Fi hotspots safely and automatically.

T-Mobile aims to grow B2B share with customized plans, more options

T-Mobile USA may be a small player in the wireless B2B market, but the company wants to grow its market share significantly this year by focusing on plans that do not gouge enterprise customers on pricing, according to Frank Sickinger, the carrier's senior vice president of B2B. The carrier also plans to offer enterprise customers new products and services.

To that end, T-Mobile just announced that it is adding new hosted and on-premise MobileIron mobile device management (MDM) services to its portfolio. T-Mobile also said that for business customers that want around-the-clock managed service and mobile helpdesk support, they can turn to its new partner, Mission Critical Wireless, a wholly-owned subsidiary of Digital Management.

The addition of MobileIron as a new MDM service producer is indicative of T-Mobile's efforts to give enterprise customers more options, Sickinger said in a recent interview with FierceWireless. T-Mobile works with around a half-dozen MDM companies, he noted, including Good Technology, AirWatch and Soti.

Sickinger estimated that T-Mobile currently has 5 or 6 percent of the wireless B2B market and that the company expects to grow that figure this year thanks to the investments it has made in B2B, including increased staffing and new products. However, he said that while the growth will be "meaningful" this year, the carrier is unlikely to crack 10 percent market share by the end of 2013.

Sickinger said the company spent a good portion of the second half of 2012 upgrading its business platform capabilities, including adding support for pooled data plans. "If a company wants to sign up for 500 GB of data across 500 users, each of those users can be signed up on 1 GB plan but we would not charge any overage until the common pool is used up," he said. Sickinger said the goal is to reduce bill shock for CIOs and add more predictability to billing.

Sickinger said larger U.S. carriers "are trying to capitalize on the growth in data usage in order to take a lot more revenue in the form of overages." He said T-Mobile is working with enterprise customers to make sure that they are offered the best plans to suit their needs so they do not get "gouged."

T-Mobile is also running a promotion in the first quarter that offers enterprise subscribers up to $ 200 in credits per line to switch their service over to T-Mobile. Sickinger said the amount of the credit will be determined by how many business services customers buy through T-Mobile; the more services, the higher the credit.

Sickinger said the carrier's impending launch of LTE will be a boon for its B2B business. "On the LTE side, I think we have an LTE story that is pretty much unrivaled," he said. T-Mobile plans to deploy LTE to 100 million POPs by mid-year and 200 million by year-end. In many markets, the company expects that it will be able to launch LTE on 2×20 MHz channels.

Not only will T-Mobile continue to run its HSPA+ network, which now covers 220 million people, but the carrier now has HSPA+ on its refarmed 1900 MHz spectrum covering 126 million POPs, he noted.

Additionally, Sickinger said that T-Mobile's coming launch of Apple's (NASDAQ:AAPL) iPhone will be a "significant contributor" to growth in the B2B business since there is so much pent-up demand for it on T-Mobile's network.

For more:
- see this release

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T-Mobile offers businesses up to $ 200 in credit to switch over
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T-Mobile announces new B2B push, LTE investment


Rebtel CEO says mobile VoIP firm could IPO in 2-3 years

Rebtel, a leading mobile VoIP service provider and Skype competitor, has indicated it may launch an initial public offering in the next two to three years if it achieves its growth targets, its CEO told Reuters.

The company, which is the second largest VoIP provider after Skype, but is accessed by a mobile phone app, has around 20 million users compared with Skype's 145 million.

Rebtel CEO Andreas Bernstrom told Reuters that revenues could rise to more than $ 100 million (€75 million) this year from $ 80 million in 2012, and to between $ 150 million and $ 200 million (€112 million to €150 million) in three years. He also said believes that by this time its customer base should will grow to 50 million.

"Listing is certainly an option," Bernstrom said. "My view is that in a couple of years, if the market allows it, that might be an interesting option." He said Rebtel will follow three major strategies to boost growth.

The first is the launch of a calling feature for apps allowing online poker players to chat for free during games and Internet daters to share more than emails and pictures. Money transfers is the second strategy, where the company intends to compete with heavyweight rivals Western Union and Moneygram in what Bernstrom said was a $ 480 billion-a-year market.

Thirdly, Rebtel intends to expand and develop its products into stand-alone apps, including one that will enable travellers to avoid roaming charges, he said.

"If the business is earning $ 150 to $ 200 million  with a 15 per cent EBITDA margin, then the business is worth a lot of money," Bernstrom said.

For more:
- see this Reuters article
- see this Trutower article

Related Articles:
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Report: Mobile VoIP users to reach 1 billion by 2017:
TeliaSonera does U-turn on mobile VoIP charges
Mobile VoIP gaining headway, despite operator reluctance
Report: Swedish operators may block mobile VoIP calls
Skype increases pressure on UK operators that block VoIP calls
Telefónica's O2 hits back with free Wi-Fi calls


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