Technology and retail: how wireless is key to bricks-and-mortar shopping

3174937547_838753c182_oThe media love a good “the high street is dying — online shopping is the future” story. Compelling headlines that talk about the death of one industry in favour of another make for an entertaining read, and who wants the truth to stand in the way of a good headline?

The reality is that bricks-and-mortar shops are not disappearing. On the contrary, retailers and property owners are taking actions to encourage people to use the “real” experience of shopping to complement the online experience. However, the retail stores of today are significantly different to those in the past in how they attract and retain customers. Although each shop will have its own unique strategy for attraction and retention, the key trend of 2015 points to improving the customer experience and we at Real Wireless see technology playing a crucial role in achieving this.

For stores with big budgets, the technology can often be headline grabbing and quirky, and can potentially offer consumers experiences they don’t typically see every day. Harrods, for example, installed augmented reality window displays for its Tissot watch range.

But, of course, most stores are unlikely to want to invest in technology like that, certainly not at the early stage of any technology initiative. However, the premise of using tech to improve the customer experience remains important to every store. So, most retailers are focusing on how to capitalise on a piece of technology that almost every consumer has in their pocket nowadays — the smartphone — in a way that enhances the experience and ultimately improves business performance.

As consumers become more accustomed to using smartphone technology, they increasingly expect retailers to replace loyalty cards with a digital app, provide personalised discounts based on the consumer’s own preferences, interact with consumers through social media, accept contactless payment, let consumers themselves scan items to speed up the checkout process, and roll out countless other enhancements. At the same time the customer may want to do online comparisons and get an opinion from their friends through social media before making the purchase, so the customers need to be able to get online.

The key to capitalising on smartphones lies in wireless connectivity — not just Wi-Fi, but 3G and 4G too. If a retailer fails to meet today’s consumer’s connectivity needs, they risk losing out on sales. But by addressing those needs, retailers can enhance the customer experience, driving brand loyalty and, ultimately, improving sales.

To help retailers get the most out of good connectivity, Real Wireless has published a report detailing the importance of wireless for the retail industry, the business case for generating a return on technology investment, and how to overcome the challenges that any rollout will face.

The report, entitled Wireless and the omni-channel time bomb, is available free of charge from today.

2G and 3G are dead, long live LTE

Earlier this month, Verizon CFO Fran Shammo finally confirmed that the long delayed launch of VoLTE on their networks will happen in Q4 of this year.

This signals a turning point in the technology; it’s been a long and slow road to get here, but we’re finally at the point where it is starting to infiltrate the mainstream conscious.

Both AT&T and Verizon have committed themselves to offering phones that can take advantage of the new VoLTE technology by Q4 – and I’d hazard a guess that means it is certain to be a standard feature in both Apple and Samsung’s latest generation phones. This in turn will undoubtedly mean their competitors are not far behind with their own offerings.

So far no real surprises. The more interesting question, though, is when will we see the first LTE only devices? After all, many operators and handset manufacturers have made no secret of their desire to turn off 2G or 3G networks.

For the operators, supporting these now legacy technologies not only occupies valuable spectrum, but adds additional infrastructure rollout and maintenance costs.

For handset manufacturers, the need to make use of 2G and 3G networks adds additional modem requirements and costs. These in turn negatively impact battery life and phone size. We’ve recently seen several new companies emerge offering “LTE Only”, thin modems at very aggressive prices, which no doubt has piqued the interest of manufacturers.

Obviously switching over entirely to LTE has only been made possible with the introduction of VoLTE. The lack of voice support has meant that a circuit switch fall back has been a requirement up until now, therefore 2G and 3G networks were a necessity.

Another key barrier up to now has been LTE coverage. Obviously, until this catches up, we’re unlikely to see any operator in a hurry to offer handsets that only support LTE, as this would severely impact their customers’ experiences.  But, as we saw in our recent work for the Scottish Government, the speed with which LTE has rolled out means it won’t be long until it catches up – our estimates put indoor 4G coverage in Scotland at 95% by the end of 2015.

Verizon originally forecast the introduction of LTE-only phones to their network by the end of 2014, a prediction that raised more than a few eyebrows. Their updated forecast now pushes this out to early 2016.

I think this is not only likely, but perhaps a necessity; should they wait any longer, the ecosystem will be in place for a competitor to take advantage of their delay.

Norwegian 2.1 GHz Spectrum Auction Over in Minutes

The Norwegian second auction of 2.1 GHz spectrum concluded in a single round yesterday, with all nine blocks selling at the reserve price of 5 million Norwegian kroner, resulting in all three winners having the same spectrum in this band – approximately 2 x 20 MHz. The winners were:

  • TeliaSonera
  • Telenor
  • Mobile Norway
There were actually five registered bidders in the auction, but two of them withdrew before the start of the auction, one just 24 minutes beforehand.
Full details are available on the NPT website.

NTT DoCoMo announces first LTE and 3G femtocell

While outdoor small cell products supporting both technologies have previously been announced, this is the first intended for small locations such as offices, shops and homes. It delivers up to 112.5 Mbps (DL) / 37.5 Mbps (UL) in LTE mode alongside a 14 Mbps W-CDMA mode. It will be launched commercially from December.

Small cells in the big wide world

 

We have been supporting Virgin Media Business’s trials of a hosted managed small cell service. The trials have involved two small cell vendors: Alcatel-Lucent and Airspan, who worked with the Virgin team to trial LTE small cells mounted on lampposts in Newcastle and Bristol. The measurements included both indoor and outdoor locations.

Our role has been to provide independent analysis of the trial data and determine how it informs some of the key questions regarding small cells, including:

  • How well do small cells work? 
  • Where should they be placed?
  • How many are needed?

The results so far are very promising as indicated in Virgin Media’s press release. And the potential was brought to life in a compelling
 demonstration yesterday, including representatives from mobile operators and the city councils. The shoebox – sized small cell was mounted outdoors but provided impressive service to a host of devices indoors, providing seven (yes, 7) high-quality video streams, 4-way video conferencing and web browsing – simultaneously!

But there are plenty of open questions and challenges ahead, including the practical challenges of gaining access to the right street furniture and of providing suitable backhaul. A hosted, managed service (for which we have coined the term SCaaS – Small Cells as a Service) looks like a promising option to help with both of these.

 

Yesterday’s event was also well-attended by the press – here’s a selection of the resulting articles:

 

3G as an alternative to home broadband?

 

In a desire to develop competition in broadband provision to the home, many have hoped that wireless might one day evolve sufficiently to become a viable alternative. But the technologists were generally sceptical. Wireless, they noted, did not have the capacity and tended to lag behind the speed of fixed connections. Previous attempts to deliver wireless broadband, from Ionica to the more recent UK Broadband, have all either failed, or remained small-scale activities. Yet suddenly, almost out of nowhere, 3G data card sales are rocketing and for many wireless does appear to be becoming a viable alternative to fixed line broadband. What is going on here?

 

The answer is that 3G is a viable alternative for some – in particular those with relatively low total data volumes and who do not want a fixed line to their home. On the data side most 3G cards have a limit to the data per month unlike home broadband which is typically unlimited (albeit with some “fair usage” clause). So, 3 are currently offering 5GBytes/month for £15 on contract with 10p/MByte additional charge if this limit is exceeded. That equates to around 160Mbytes/day. For downloading emails and web surfing that is probably plenty for most, but audio and video streaming could quickly eat through that (audio streaming at 100kbits/s equates to around 45Mbytes/hour, video streaming at 500kbits/s would use up the daily entitlement in 40 minutes). As the BBC iPlayer becomes ever more popular, many predict a rapid increase in the average data consumption to the home. (In passing, it is worth noting that 160Mbytes equates to around 1,800 voice call minutes per month. Current offers are £20 for 500 voice call minutes so data is being offered at around a quarter of the voice call price making VoIP attractive.)

 

The other question is whether the household wants to have a fixed phone line. If they decide they do, and pay the line rental, then the additional cost of broadband on this line is typically well below £15 and provides higher data rates, unlimited volumes and often mostly free calls (except to premium rate and overseas numbers). For such a household, mobile broadband is not particularly attractive (except as a way of accessing the network when on the move). However, many people do not want a phone line. Those who are renting, students and those who spend little time at home often do not want to feel tied to a fixed line. Such individuals already make use of mobile as their only means of voice communications and extending this to mobile data clearly looks sensible.

 

Finally, there is the question of network capacity. Cellular networks have enhanced their capacity with HSDPA which broadly enables higher data rates for those with good coverage while excluding those with very poor coverage. This makes it very difficult to analytically derive cell capacity. Instead, Qualcomm and others have modelled and measured typical scenarios and concluded that data rates in the region of 1.2 – 1.5Mbits/s per cell can be supported. So if all the data users tried to access their 160Mbytes between, say, 8pm and 10pm, the cell could, at best support around 8 subscribers per carrier. If voice traffic is also to be carried then this would be lower. Assuming around 10,000 cells covering the UK, each with 3 sectors, then the total subscriber numbers per operator per carrier would be in the region of 240,000. Of course, if users actually averaged less than their allotted allocation per day then more could be supported – as is likely the case. So perhaps up to a million users per operator might be feasible, especially if additional spectrum is acquired allowing more carriers to be deployed, giving perhaps as many as five million across all operators.

 

So we can conclude that cellular is not a viable replacement for broadband for all – it does not have the capacity for more than around 25% of UK households. It is also only attractive to a certain class of user who would typically not have a fixed line to the home and it may become less attractive if video streaming becomes the norm. But for a substantial subset of the market it looks ideal.

The iPhone 3G is radical – but the business model is conventional

The new iPhone 3G, announced yesterday, looks like a very cool device.

But one of the more striking features from a business standpoint is that Apple appear to have reverted to a much more conventional business model than for previous versions.

 

iPhone 3G

When the original iPhone was launched, Apple managed to convince operators to enter into a revenue-sharing model, where they would take a proportion of the call revenues flowing to the operator. This required a very close relationship with the operator. The balancing factor in the deals was operator exclusivity for supplying the iPhone in a given territory. All of this ran counter to the prevailng industry trends, where the movement has been away from such approaches, with handset subsidies and operator locking gradually diminishing, and  revenue sharing almost unheard of, certainly in the case of handset manufacturers.

But with the release of the new device, reports suggest that Apple have reverted to a conventional hardware sale, leaving the operator to collect the revenues in the normal way. They also seem to be moving away from operator exclusivity. The technology may be revolutionary, but it seems that simple business deals work best for all concerned.

 Update: Interestingly, some reports have suggested that the net result is not necessarily favourable to operators, as the reduced retail price of the iPhone 3G requires operators to provide larger subsidies. I suspect operators ae smarter than that, and expect the device to drive take-up of data services and increased loyalty which which will provide a net positive effect.