29c3-5167-en-setting_mobile_phones_free_en.srt

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[Applaus]

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Ok, thank you!

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I don't like crowded slides, so this is the most crowded slice I have.

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What I'm gonna talk about is the telephony industry.

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And what we know about the telephony industry is,

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that it has been a long time been a closed sector.

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And for fixed lines, and now we have the internet, there's voice-over-IP,

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things are going better.

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But this is not the case for mobile.

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And one of the things, that is really changing the landscape,

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is voice-over-IP, the Session Initiation Protocol and things like that.

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And there are some kinds of extraordinary open source projects going on;

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like OpenMoko.

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What they are doing is, they want to create open source software

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to run on your cell phone to get rid of all the closed-source things that are in there.

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And on the network side people are working on projects like OpenBTC and OpenBDSC to create,

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actually, the infrastucture you can use to build a network, based on open-source software.

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Ahm..., at this conference we have one of those networks running, actually.

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But there's still something missing.

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Who of you is using a cell phone right now?

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[Murmurs in the Audience]

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Ok, so who of you have completly open-sourced the network and the, the hardware?

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I see nobody

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There isone particular reason: There is one thing we are missing,

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and that's national coverage.

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And there's the ease of use: That you can be anywhere in this country,

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or in another country, you can pick up your cell phone and you can call.

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You can reach anybody, you can be connected anywhere you are.

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And that's what we where missing. And that's why we started the project Limesco.

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Our aim is to be a network operator, or a phone operator.

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Not completely open-source yet, that's the long term goal,

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but that's not where we are right now.

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But we want to go there.

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We're three founders.

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I'm just one of them.

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The other two are sitting in the front row;

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they deserve an applause anyway.

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[Applause]

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I'm only doing the scary part here.

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But it started about two years ago

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and we were just chatting in IRC about, well,

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there are some things we don't like.

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There are roaming charges.

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And sometimes they're ridiculous.

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And once we started the project, we actually learned there were charges far higher, than we even knew.

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There are providers, when you roam in -for example- Australia, you pay 80€ per megabyte for data.

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But there was a lot of lack of transparancy.

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Or actually there is a lot of lack of transparency.

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One of the things whe noticed in the Netherlands is, that if you have SIM-only packages,

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and you have package deals, were you get SIM-cards and a phone with it.

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But these are incomparable.

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For Example: When you want to get a package deal, you can choose for a package

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with 400, 600, 800 or 1000 minutes.

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But if you want a SIM-only, you can choose for 250, 450, 670 and...

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So, what I want to do is, I want to calculate my total cost of ownwership over two, or maybe three years,

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given in to account my calling, my texting, my data uses and the device I have.

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This isn't easy.

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There a lot of other things, that I'm not going to dive into that in this presentation.

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But one of the things that keeps getting back is supscription bundles.

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They rock and they suck!

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But they are a perfect marketing tool.

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Because this is what you can say:

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"You can call using our plan from 3.4 ct/min"

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which is actually true, you can do the maths.

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But this is only true if you call for exactly 550 minutes.

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If you pay half of it one month, you pay actually 7 ct/min.

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So, OK.

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But... [pause], what if you pay more?

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Out of bundle charges?

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Well, then we just charge 30 ct/min.

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And we can do that, because it is written in small letters, in small print

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and nobody ever reads it.

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Ahm, but there is another trick.

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And that is unitization.

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And in the Netherlands it's getting a hot topic.

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In the telephony industry it is very used to pay per second and a start-fee for a single connection.

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So for example, and this is something from our price sheet, there is a cost per call of 4ct,

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which means you pay the 4ct, no matter what the length of your... ahm, the duration of your call is.

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And you pay 10 ct. per minute.

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Your cost per minute.

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Now, if you're doing this and you're going to call for two minutes and ten seconds,

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you can do the maths.

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It's 26 ct.

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OK, cool!

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Now, ahm, there is something of a start fee, and we could do marketing again:

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"We don't have a start-fee! Cool!"

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What we don't say is, we also, ah, we let you pay per minute, and not per second.

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So the same conversation is again now to minutes and ten seconds.

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And we do it three times ten cents, and it's more!

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It's just the simple things, and if you don't compute the details, then you are going to pay more.

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Now, then there is another trick:

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Because, hey, because we don't want to round by minute, but, we do the first.

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I'm not going to do the maths, it's actually better than to round everything.

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But with data sessions there is another trick in the sleeves.

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Let's say we do 20 ct/MB when you're roaming within the EU, OK?

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It's. it's fair.

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Ahm, we unitize by blocks of a 100kB, ok that's fair, I've seen worse.

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Ten megabytes for example. Per session!

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Which means if you are in a train, and the session is dropped for a moment and a in a couple of seconds

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you get a new session, we start counting towards the 100kB.

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And for youTube, which you should not do when you're aborad and you are roaming,

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this might not be a problem, but when you're doing SSH and you are just doing little data.

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But if you spread it over sessions it will get a lot of blocks.

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Now, my Android-phone can measure my usage, but you're operator may measure data usage differently.

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For example: Per session.

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Now when we're talking about what is in the industry in the Netherlands, ahm,

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what companies are involved, there are actually three types of companies we're ´going to look at.

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And fist there are the MNO's, which are the MObile Network Operators.

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And in the Netherlands, we have three of them at the moment.

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The largest is KPN, it is a former state-controlled company.

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They have about 50% market-share in mobile.

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The second is Vodafone.

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They have about 25% of market-share, and they are from britain.

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The german T-Mobile, which has the remainder 25%.

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And we just had an auction for frequencies and Tele2 is going to join them soon.

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2013

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So things might change soon.

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And another thing, that might be interesting for people in Germany too:

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E-Plus actually is KPN.

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Now those are the three MNO's, and they have a network.

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They have antennas.

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And they have an infrastructure to connect antennas to the remainder of the telephone industry.

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But those are not the only companies, where you can buy your plan, your subscription, from.

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And that's what we call "Vitual Mobile Network Operators".

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They are virtual, because they don't need to have their own infrastructure.

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And in the Netherlands we have around 50.

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Ahm..., some of them are actually brands of the larger companies.

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Some of them are small, targeted towards a niche.

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For example, there is an operator specifically targeting people from Surinam.

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But they are the brands you can see in a store, that you can buy.

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One of them is "SpeakUp". It's a little less known, ahm, one.

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This is the one I'm going to talk about in a moment again.

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SpeakUp is the one we're working together with.

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Limesco officially is not an MVNO,

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because if we say we are we're getting in a fight, and we don't like that.

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So, officially we are a reseller of SpeakUp, and Speak-Up is an MVNO.

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And SpeakUp is using the network of T-Mobile, the antennas of T-Mobile.

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But there is a company inbetween.

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And this is called a MVNE.

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A Mobile Virtual Network Enabler.

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And we have four of them in the Netherlands.

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There were five, but one of them went broke last year.

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Aspider Solutions which offer services using the KPN Network.

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There's Teleena, which have a nice network all IP-based.

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They're offering services using Vodafone network.

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And on the T-Mobile network we have two:

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ElephantTalk and NarrowMinds

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[laugher from the audience]

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So, when you're a subscriber of Limesco actually this is the chain of companies involved.

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T-Mobile is the one that owns and operates the antennas,

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ElephantTalk has quite a bit of infrastructure in the middle

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and SpeakUp and Limesco, we together, take care that you as the customer get your bill.

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So, the most important thing MNO's are doing is taking care of antennas.

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And the most important thing an MVNO is doing is subscribers and marketing,

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and everything inbetween you can shift around.

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So, going a little more into technical details, a HLR, a Home Location Register,

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which in GSM is a compontent which is actually a database,

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where all customers are listed with their SIM-card number and their key...,

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encryption keys to communicate and perform authentication.

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In our case this is shared between T-Mobile and Elephant Talk.

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VLR is the Visitor Location Register.

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When you're roaming to another country or to another operator,

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you're subscribed into VLR.

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So the network knows what to do.

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Ahem, this is actually not important to us, because we don't actually have our own network.

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But T-Mobile has a VLR, so iwhen you, as a Limesco Subscriber or from an other customer goal

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are travelling to Germany and log on to the T-Mobile network,

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you'll be subscribed in the VLR.

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The SMS-Center also is managed by Elephant-Talk,

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and the GPRS-Gateway-Support-Node, which is actually the gateway to the internet,

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is also managed by Elephant-Talk in our situation.

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But this can move, so for other MVNOs it may mean, that they're handling the SMS-Center themselves or something.

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What we have as ambition, is that we want to do more ourselves.

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For example the GGSN.

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Because if we have control to the gatway of the internet, we can give more control to the end user.

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Another thing which you can shift around is number blocks.

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Ahm, alot of brands that are operated by KPN have one huge number block,

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which is by KPN and is just shared among them.

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While at the other side, in our case we make use of a number block whisch is registered to SpeakUp.

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And [inaudible] routing.

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This is one... This is very interesting in our case.

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You can leave things higher up in the network,

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you can let T-Mobile do the interconnection and you can make routing decisions and you can say to T-Mobile:

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"Just route it to there!"

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But in our case, what we're doing is: "Just route every call to us!"

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And then we can make the dicisions in the end.

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Which I'm going to do in ahh, tell a little more in a [incomprehensable] at the end of the presentation.

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But one of the interesting things we've been investigating in the last to years is pricing.

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Pricing is different for MNOs, MVNEs and MVNOs.

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So let's star with MNOs.

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What is the situtation for an MNO?

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You have a couple of costs.

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So first of all you have a lot of antennas, and you have infrastructure.

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And these two tend to be expensive.

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Because they are closed source under a lot of support contracts, and everything involved.

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But this is equity.

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You own them as  a network operator, or you lease them.

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And when you lease them, you don't need to have a large upfront payment to buy all the antenna's to create national coverage.

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But they are owned by a network supplier or by the manufacturer.

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And you lease them and pay by month.

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Which is cool as an operator, because know you know you have a certain amount of costs every months,

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and you must make sure you have income to cover those costs.

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Now if you choose as an operator to own them, to own the hardware,

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you have a lot of upfront costs and you use armotization to, ahem,

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in accounting to spread the cost over a longer period.

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Ahem, this is somthing that happens in accounting for every company,

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the cost for the network operators is just a little higher than for a small company.

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You have now, in your books, a certain amount of money you have to pay every month,

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so you have to get income.

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The easiest thing you can do is just: Charge your MVNE per month.

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And that's nice, because you can say: Whatever happens, you need to pay me 1 million Euro's every month anyway.

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If people are calling it or not, I don't care, you need to pay.

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That's happening.

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The next at, ahem, next is there are some administrative tasks.

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And depending on how things are arranged, there are more or less of them,

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but porting a number, transferring it from one provider to another provider,

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and [incomprehensible] task,

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ahem, ah, calling people in bad.. when you have bad tempts,

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calling people to get those, ahem, to get your money.

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It's all administrative actions which you want to do.

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And they raise a charge for usage.

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By the way, you can make up any way, as an MNO, you can make up any way of

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charging your MVNE.

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The thing is: It must be reasonable, because if it is not, they will not accept it.

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But you're free to do.

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What you're actually do is spreading the cost of your hardware over a large customer base.

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Now, if you're going to do that, you can set up a cost per call, and a cost per minute.

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We have already seen those.

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But the interesting thing is, what you're selling is airtime, acces to the frequencies.

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So you can do it in both directions, both for outgoing and incoming calls.

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And we call that by the way, mobile originated, when your mobile starts it.

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And we're used to pay as a customer, when we start a call,

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but also network initiated, so going from the network to the mobile.

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The MNO just charges an MVNE when that happens.

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just using minutes or seconds, how you see it.

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So looking at an MVNE, they have a different structure.

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They have monthly cost, we have seen them,

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and they have usuage related costs, we have seen them,

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and besides that we have some administrative costs,

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and we can have some infrastructure.

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And we can, as an MVNE, choose how much we want.

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So getting income now again, is the same like an MNO.