Mobile Experience Innovation Centre

Innovation and Insight: Mapping Ontario’s Mobile Industry

Mobile Experience Innovation Centre, April 2009

Innovation and Insight:Mapping Ontario’s Mobile Industry

Mobile Experience Innovation CentreApril 2009

Innovation and Insight: Mapping Ontario’s Mobile IndustryApril 2009All content developed and coordinated by the Mobile Experience Innovation Centre via the MEIC Steering Committee, Working Groups and Additional Partners. Phase One of the Mobile Experience Innovation Centre was led by the Ontario College of Art & Design, and managed by Michele Perras, MEIC Project Manager.

The MEIC is grateful for the funding provided by the Ontario Media Development Corporation through the Entertainment and Creative Clusters Partnership Fund.

Phase One was also supported by the following Secondary & Additional Partners:

33 Magnetic Ltd Aesthetec Achilles Media LtdBitcasters CFC Media Lab Canoe.ca/QuebecorDecode Entertainment Inc The Delvinia Group Design ExchangeEcentricarts, Inc George Brown College Gesturetek, IncIBM Interactive Ontario marblemediaMEF Canada Microsoft Canada MobileMondayMotorola Mypetbrainstorm RBC CanadaRyerson University Silverback Wireless Sweet Caesar Telus Mobility Triptych Media TVOUOIT WirelessNorth.ca Yahoo! Canada

The content of this report is licensed under Creative Commons Attribution-No Derivatives License. For more information on this license, please see http://creativecommons.org/licenses/by-nd/3.0/

For more information on the MEIC, please go to http://meic.ocad.caFor more information on the Entertainment and Creative Clusters Partnerships Fund, please go to http://www.omdc.on.ca/Page3231.aspx

The Mobile Experience Innovation Centre is a public-private consortium engaging leaders in mobile research, design and innovation. Funded by the Ontario Media Development Corporation and the Entertainment and Creative Clusters Partnership Fund, the MEIC includes 5 academic institutions and over 30 organizations from across the mobile industry, and is led by the Ontario College of Art & Design (OCAD).

The MEIC has launched Phase 2, as of March 2009, to facilitate research and prototyping between industry and academic partners. Through 3-month initiatives in mobile design, user experience, foresight, and business model development, etc, the MEIC develops partnerships to link students, faculty, non-profits, small and medium sized enterprise, and corporations.

To learn how to become involved, please contact Michele Perras, Project Manager, at [email protected].

Innovation and Insight: Mapping Ontario’s Mobile Industry 2

Table of Contents 5 Innovation and Insight: Mapping Ontario’s Mobile Industry – Recommendations

13 An Analysis of Global Trends, Impacts and Opportunities in the Mobile Industry, applied to the Province of Ontario – Ray Newal, with the Mobile Experience Innovation Centre Working Groups

37 Portrait of the Ontario Landscape: A Survey – Led by Michele Perras, MEIC Project Manager, with the MEIC Steering Committee, Working Groups and Additional Partners


Innovation and Insight: Mapping Ontario’s Mobile Industry –

Recommendations


OverviewIn many ways, the current state of mobile and wireless industries resembles that of the early years of any new, disruptive media. Just as the internet of 1990, although difficult to see at the time, subsequently transformed human behavior, communications and business in a ubiquitous manner, mobile and wireless technologies are leading the next revolution. We are rapidly moving towards an era where everyone will be a mobile entity moving through a robust, interconnected landscape. Our window of opportunity is to decide what we would like that landscape to be.

Mobile capacity is a key factor for growth across industries, being the technological, organizational and human thread that will link all activities in coming years. The current Canadian context is lacking in terms of preparedness to embrace the next generation of networked enterprise, educational and cultural activity – data rates, though becoming more accessible, are still quite high compared to global standards, mobile penetration is lagging, and access to capital, distribution[1] and markets are the largest inhibitors to local entrepreneurial growth in this sector.

However, solutions are within reach. Specifically, Ontario has the potential to become a global mobile and wireless leader, and has a long tradition – and continued willingness – to collaborate on initiatives aimed at leveraging current capabilities and future potential. We believe that future potential must be realized by developing convergence strategies for Ontario’s entrepreneurial and educational activities. Around the world, Convergence Centres of high cultural-economic activity, innovation and commercialization of products and services operate according to the mantra of Build Local, Aim Global. Building capacity to the convergence advantage in areas such as the Southern Ontario Triangle (including Waterloo, the Golden Horseshoe and Ottawa) will leverage our existing strengths and facilitate opportunities for future growth. The MEIC has identified the following factors and recommendations to do this:

Led by the MEIC and drawing upon its pool of industry and academic resources, a strategy has been developed to leverage and enhance Ontario’s Virtual, Physical and Human Infrastructures, targeted at the mobile and wireless industries, through networks, consortia, partnerships and investment into the entrepreneurial community.

This strategy will continue to leverage Ontario’s strong tradition and continued willingness for cross-sector, cross-platform collaboration, and facilitate continued support of Ontario’s Convergence Advantage. This aims to strengthen local business and consumer markets and attract venture investment while creating a branded platform and increased channels to global marketplaces.

As advocates and partners, the MEIC will work towards developing government procurement strategies in capital investment, increased tax credit initiatives targeted at mobile content, services and application developers.

The development and implementation of agile and lightweight architectures must be framed and collaboratively built for the 3 largest inhibitors of local growth: Lack of Access to Capital, Markets and Distribution.

The MEIC will continue its support and facilitation of Agile & Rapid Prototyping, Strategic Foresight, Adaptive Innovation and Applied Research initiatives in mobile and wireless technologies, via an industry-academic centre or virtual consortium.

[1] While application marketplaces provided by Apple, Nokia and Blackberry are providing some opportunities for developers of content, they are currently not

the drivers of economic and innovative growth.


Key Phrases

Virtual, Physical and Human Infrastructure; Tax Incentives for Mobile; Government Procurement and Capital Investment Strategies; Innovation and Convergence

The following research report and survey conducted by the Mobile Experience Innovation Centre in 2008-2009 has resulted in a series of strategic recommendations for both the MEIC in its future iterations as well as towards industry, government, academic and other leaders in Ontario. By focusing on four main areas, the MEIC long-term strategy has developed a flexible, wholistic perspective that encourages collaborative innovation, educational engagement in the digital sector and economic growth at all stages of the mobile value chain.

The four areas for the long term MEIC strategy are outlined and further developed below:



An Analysis of Global Trends, Impacts and Opportunities in the Mobile Industry, applied to the Province of Ontario

Ray Newal, with the Mobile Experience

Innovation Centre Working Groups

March 2009


Methodology

The following document was developed collaboratively through the Mobile Experience Innovation Centre Working Groups, Independent Research Consultant Ray Newal and Michele Perras, MEIC Project Manager. Over the course of 6 months, two Working Groups, focusing on Mobile Behaviour and Emerging Business Models, led by Gabe Sawhney of 33 Magnetic, Ltd and Avi Pollock of RBC Applied Innovation, respectively, worked with the larger MEIC group as well as Ray Newal in developing this report’s content. Continual discussions and revisions ensured the document was truly a collaborative venture.


Introduction

Through recent innovations in mobile and web technology, the world finds itself at the fulcrum of a major shift in the way people consume information. These innovations will result in the elimination of borders be they political, geographic, economic, social, language-based, or otherwise. Information will be readily accessible everywhere, by anyone, and will be presented in ways that are socially, culturally, and locally familiar. Already, mobile devices are being used to remotely monitor patients’ health. And closer to home, cell phone tower activity is being used to determine traffic patterns along busy highways.

Within the shift that is taking place, lays significant opportunity for innovation and ultimately, wealth creation. A few companies, namely RIM, Microsoft, Google, and Apple among others, will supply the platforms for which this shift will occur, but they will not be the only entities to prosper. Carriers, old and new, are investing millions of dollars into next generation networks that will enable rich multimedia content to flow at broadband speeds regardless of location. Throughout the world, media companies, health care services, utility companies, transit services, game publishers and a vast array of others, are already beginning to rely on a fertile green-field of talent to develop a long-tail of applications through which this shift will occur. While some applications will receive more usage than others, ultimately it is the breadth, quality, and usability of available applications that will allow the winning platform to prevail. The platforms which emerge will see unprecedented levels of usage. These emerging industry dynamics have created a gold rush of sorts, as each new mobile platform competes for compelling content and for talented content creators.

Today, due to the relative newness of the shift that is taking place, a scarcity of talent exists to create applications for these new and emerging platforms and devices. Therein lays an opportunity for the creation of geographic centres of innovation. The

country, city, state, or province that invests heavily in creating a work-force with the right combination of skills and creativity, will become a proverbial battle-field for emerging mobile platforms. These battle-fields will attract large amounts of investment from multi-nationals and other players from within the funding eco-system, and will thrive on the spending power of a highly-skilled and sought-after work-force.

The purpose of this report is to analyze the shift that is occurring within the mobile industry on a global scale, making light of impacts as they relate to consumers and businesses within Ontario. Our analysis draws from a landscape of recent research, industry blogs, news articles, and working group documentation that has been prepared by members of the MEIC initiative. The report will look at the changing mobile landscape with specific focus on the areas of consumer behaviour, business dynamics, funding activity, and education. Through this analysis of the changing landscape, and through our perspective of the way in which business eco-systems are evolving to accommodate the shift, it is our hope that this report will help to inform the way in which the Ontario government engages with all inhabitants of the broader mobile eco-system. In the interest of disclosure, the author of this report is an Ontario-based entrepreneur who is currently in the midst of establishing a business centred on mobile content distribution and monetization. His background includes close to fourteen years of business development, marketing, and sales experience within technology and new media companies that include Microsoft, Yahoo!, and DoubleClick among others.



Mobile Usage

Mobile usage is in the midst of a sea change transformation. For years, mobile offerings in North America have lagged those of other developed and, in some cases, developing countries as well. North Americans were late to implement 3G networks, slower to adopt SMS, slower to introduce smartphones and other advanced features. Historically, particularly within North America, incumbent mobile network operators (MNOs) were able to establish a powerfully dominant role within the mobile value chain. The accessibility of mobile services and pace of mobile innovation was entirely gated by the service, price levels, and offerings made available by the MNOs. For many years, North American mobile subscribers in particular, looked on as Europeans used cell phones to purchase goods and services; citizens of Asian countries experienced new ways of connecting and sharing content with one another; and in the third world, consumers who couldn’t afford land-lines and automobiles were all of a sudden gaining access to cheap mobile voice and data services.

In recent years, the forces of technological change have suddenly begun to disrupt the historical patterns of the mobile industry. Canada and North America are catching up to the rest of the world. We are beginning to see the market power of incumbent MNOs erode slightly, as players at almost all stages of the value chain are finding new ways to assert themselves. Thanks to “killer devices”, vendors like RIM and Apple are gaining more clout with consumers. Thanks to new distribution channels and device capabilities, publishers and mobile content creators are finding ways to deliver content directly to mobile users without necessarily negotiating deals with network operators for access to “decks” or walled gardens. Consumers too, are becoming savvier and more aware of “what they are missing”. In June of 2008 10’s of thousands of Canadians signed a petition eventually influencing Rogers to change their pricing plans for the iPhone to be competitive with global rates . Ever-improving mobile technology has made it increasingly commonplace for independent

developers, entrepreneurs, artists, educators and ordinary Canadians to create, share and distribute their own content using mobile devices or across mobile networks.

As a result of all these forces, the pace of innovation in the industry, particularly in Canada, is accelerating rapidly. With a broad base of creative talent, educational and industry resources, one could argue that Ontario is already transforming itself from laggard to leader in almost every segment of the mobile industry value chain.

The transformation which is under way in the mobile industry will expand the ubiquity of smart, networked devices to the market. Indeed, most of the first world has been deeply penetrated with ubiquitous access to mobile for a while now. By the first quarter of 2006, over thirty countries had already exceeded 100% per capita cell phone usage (meaning in those countries, some users had more than one phone) . Canada, which among developed countries sees one of the lowest mobile penetration rates, at 61.6%, will see growth happen at a quicker pace thanks to the entrance of new competitors in the carrier arena. Developing countries such as India and China still have a ways to go before they see similar per capita penetration, but it is these countries among other developing nations that will see the highest number of new aggregate subscribers added every month. As a testament to this, according to the Telecom Regulatory Authority of India, in January of 2009 India saw a record of 15 million new mobile activations.

The transformation we are currently experiencing will also have a dramatic impact on the way residents of urban, rural, and even war-torn areas use and rely on their mobile devices thanks to cheaper and more accessible data services, feature laden devices, and more informative, compelling, and accessible mobile content and applications. Features such as location awareness will create dependency on the mobile phone for orientation in unfamiliar places, be they across town, or on the other


side of the planet. Mobile technology is also transforming journalism. The front page photos of the 2005 London bombings were taken with mobile phones. In January 2009, when a US airliner crash landed in the Hudson River, the first photos and media reports were delivered by Twitter, an SMS-based mobile social networking platform. In San Francisco, a group called Mobile Millennium (a partnership between Nokia, Navteq, and UC Berkley) have found a way to fuse GSM data from cell phones with data from existing traffic sensors to build a functional traffic monitoring system. Residents of the Bay Area can participate by downloading an application free of charge. Contrast this application of real-time, location specific data with those originating in areas such as Uganda, or East Timor, or even London, UK, where SMS is used to alert residents of hostility breakouts and locations, along with instructions to those who happen to be in the vicinity of attacks that are taking place.

As data speeds increase to broadband levels and device processing and interface capabilities allow devices to display rich data in graphical and tactile ways, mobile users will begin to store all of their ‘life’ content within external network repositories, or in current lexicon: ‘the cloud’. Ubiquitous access to personal data and content stored in ‘the cloud’ will mean subscribers, both consumer and corporate, are never away from their desk, filing cabinet, television, or music collection. Medical, financial, and educational records will never get lost.

And above all, thanks to the changing dichotomy of influential players within the mobile industry, and the axis of control moving from incumbent carriers to wireless platform, media publisher to social network, proprietary operating-systems to open-source operating-systems, and proprietary software publishers to developer communities; the price of usage will come down. Ubiquitous access to ‘life’ information and content will no longer be restricted.

Canada will not be insulated from this transformation.


Mobile industry Value Chain

With established presence in Ontario

Global Examples

Mobile users / Subscribers >7B mobile phone users >1B mobile phone users

Mobile content 100s of Freelance Developers, Small Content Studios with 1-5 employees, Cross-Platform Interactive Agencies, Digital Games, National Media Outlets (Canwest Media, CBC, Canoe.ca etc.) Financial Services (all of Canada’s largest banks and card associations), Health Care, Advertising and Marketing.

Independent developers, Music, Film and Gaming industries, consumer and enterprise software industries, Public sector: Government, Education, healthcare and 911 services. Financial services. Media: News media, social media, user-generated media.

Distribution and Content Creation Tools

RIM AppStore, Viigo, Glassbox, Mythumb, etc.

Apple AppStore & iTunes store, Microsoft Skymart, Yahoo Gears, Google Android Market, Nokia Marketplace

Mobile Platforms & Operating Systems

RIM Blackberry platform, Windows Mobile

Windows Mobile, Nokia S60, Apple iPhone, PalmOS, Google Android

Mobile Device Manufacturers

RIM, Motorola Nokia, Apple, Palm, Samsung, LG, Ericsson, Motorola, NTTDocomo, HTC, Asus

Mobile Network Operators (MNOs)

Rogers, Bell, Telus, Globalive, MTS

Equipment suppliers Nortel, RIM, AMD Nokia, Ericsson, Motorola, Qualcomm

Academic Institutions

(Active in Mobile Research and/or skills training)

OCAD, George Brown College, University of Ontario Institute of Technology, Ryerson University, CFC Media Lab, University of Toronto, University of Waterloo, Carleton University, Conestoga College, etc.

Source: WirelessNorth.ca, 2009



Mobile Data Evolution

Until very recently, Canadian consumers ranked among the lowest in the world in terms of data usage. Consumers for the most part ignored the mobile web. Younger or more technologically adept demographics had in recent years begun to embrace SMS as a substitute communications tool, but for the most part Canadian consumers were restricted to Voice services. Employees of businesses that could justify the purchase of expensive data plans became the primary, and for all intents and purposes, the only users of data services in this country.

As recently as April 2007, the cheapest Canadian mobile data plan was more than 6 times more expensive than T-Mobile’s service plan in the US, 5 times more expensive than data plans offered by Terracom in Rwanda, and 9 times more expensive than the data plan offered by Vodafone in New Zealand.

Carriers have, until very recently, tightly controlled the Canadian mobile industry. Consumers in Canada have been trained to make mobile subscription decisions based on plans and services, particularly those bundled with land-line and broadband services, not mobile hardware. According to a recent (May, 2007) document submitted by the British Columbia Public Interest Advocacy Centre to the Director General of Telecommunications at Industry Canada, the average cost of residential land-line service offered by a monopoly provider in BC is $23 to $29 a month, compared to the average monthly cost of mobile service which is $79. Canada sees a particularly high penetration of land-line usage, with over 92% of the population having access to land-line services offered by regulated monopoly providers. Indeed, perhaps due to a combination of price, accessibility, and perhaps even influences such as the aging population, a very high percentage of the population end up relying on their land-line phone as their ‘primary’ telephone.

Add to these factors the cost of data transfer, and it becomes quite apparent why consumer demand for data-rich devices has paled in

comparison to that of businesses. Despite the high cost of data, businesses seem to still be able to justify the expense. In a 2006 survey of 300 SME’s (Small and Medium-Sized Enterprises), IDC Canada (on behalf of International Technology Association of Canada) found that 79% of respondents reported that improving productivity and efficiency within the organization is a leading business priority. Perhaps it is thanks to these increases in productivity through mobile devices, and the overall accessibility of employees beyond the traditional 9 to 5 work day that businesses are able to justify the high cost of data transfer. Or it could be because business owners have the ability to write-off mobile fees as business expenses. Regardless, while mobile services may drive real value to business owners, higher Canadian mobile fees have been driving a higher cost of doing business in Canada across all segments of the economy that rely on BlackBerries and other mobile services. Thanks to a lack of competition, until the recent shift of control within the mobile eco-system, Canadian carriers have felt limited pressure to reduce rates.

Part of this expected shift is due to the approach the government employed to release AWS (Advanced Wireless Services) spectrum. This approach has made it possible for new entrants to compete with the incumbent carriers, by reserving space in the spectrum as well as guaranteed roaming access to incumbent cell towers for a period of 5 to 10 years (the life of the license). The auction, held in mid-2008, is expected to be the last major Canadian spectrum auction for a number of years. Specifically, this auction dealt with the licensing of chunks of frequency between the ranges of 1670 MHz and 2155 MHz, the largest block of spectrum ever released in Canadian history. This part of the spectrum range provides an attractive balance of coverage and bandwidth capabilities. In general, the lower the frequency within the radio spectrum, the better the coverage of the signal ranges, but the lower the bandwidth capabilities.



Though Canada conducted its auction of AWS Though Canada conducted its auction of AWS spectrum a full two years after the US, it should be noted that the average Price/MHz for each potential customer came in at $1.41 after 331 rounds of bidding. This compares to an average price of $0.54 in the US. Canada had been expected by analysts to generate a mere $0.40/MHz per potential customer.

The new entrants which emerged through the spectrum auction include Globalive Wireless (which paid CA$442m for a national licence), Data & Audio-Visual Enterprises (which won licences for Ontario, Vancouver, Edmonton, Calgary and Victoria at a cost of CA$243m), and Shaw Communications (which paid CA$190m for access to spectrum in British Colombia, Alberta, Winnipeg, Saskatchewan and northern Ontario) among others.

Though most of these ‘new’ players already offer services of some kind to consumers, they are expected to deploy a plethora of new ‘bundled’ services which will help to boost Canada’s mobile penetration rate. It is widely expected that as Canada’s mobile penetration rate surpasses the 80% mark, a scarcity of new subscribers will force increased levels of competition among all carriers, which will almost certainly put downward pressure on mobile voice and data plans.

Source: Wired Magazine, 16-10-2008


Innovation and Insight: Mapping Ontario’s Mobile Industry Innovation and Insight: Mapping Ontario’s Mobile Industry 21


Canadian AWS Spectrum Auction Winners - 2008

Bidder and Legal Bidding Name

Total of Winning Bids Population Coverage

Spectrum Acquired/Region

Rogers - Rogers Communications $ 999.4 M 30M National - 20 MHz

Telus - Telus Mobility $ 879.9 M 30M National - 10 to 20MHz

Bell / BCE - Bell Mobility Inc. $ 740.9 M 29M National - 10 to 20MHz except no licenses Manitoba, Saskatchewan.

Quebecor/Videotron - 9193-2962 Québec Inc

$ 554.5 M 29M Regional - Quebec 40Mhz, 10Mhz Toronto and southern, Eastern Ontario

Globalive Wireless - YAK Com-munications

$ 442.1 M 25M National – 10 MHz each province/ter-ritory except Quebec

DAVE (Data & Audio-Visual) $ 242.1 M 17.5M National/Urban – 10 MHz in Southern/Eastern Ontario, Calgary, Victoria, Vancouver, Edmonton

Shaw 1380057 Alberta Ltd. $ 189.5 M 12M Regional – Western Provinces 20MHz from BC to Manitoba except 10MHz in Saskatchewan

SaskTel $ 65.7 M 3M Regional – 30 MHz Saskatchewan

Manitoba Telecom - 6934242 Canada Ltd.

$ 40.8 M 3.5M Regional – 20Mhz Manitoba

Bragg a.k.a. Eastlink Bragg Com-munications

$ 25.6 M TBA Regional – Atlantic Provinces 30MHz across NFL, NB, NS, PEI and 10 to 20MHz some areas of northern Alberta and Ontario

Celluworld $ 0.5 M TBA 10 MHz Chatham, ON

Rich Telecom $ 0.4 M TBA 10 MHz Huntsville, ON and Dawson Creek, YT

BMV Holdings $ 52.4 M 18M 10 MHz Urban Southern Ontario, Quebec

Source: WirelessNorth.ca 2008

The leading business metric for MNOs is the Average Revenue per User (ARPU). ARPU is a closely monitored benchmark which indicates how much revenue an operator is making from every user, every month. In Canada, ARPU fluctuations between our three major carriers can mean significant changes in revenue. ARPU is sometimes segmented by analysts into Voice and Data related ARPU. In 2006, while in most developed countries, data-related ARPU was on the decline, Canada led the rest of the world in net data-related ARPU increases. And it wasn’t because our typical mobile subscribers were consuming more data than

other countries in the world. In fact, when data related revenues get spread out over all mobile subscribers, Canadian carriers rank as one of the lowest earners of data related ARPU of all developed countries. Perhaps this is due to the historically narrow market for data services among business subscribers. Today, thanks to the proliferation of devices and applications that make data services compelling to consumers, the carriers see an opportunity to expand their data services portfolio to a much wider audience. Data transfer prices have dropped significantly, as carriers opt for consumer-targeted multi-year data plans as a method to boost data-related ARPU.


Innovation and Insight: Mapping Ontario’s Mobile Industry Innovation and Insight: Mapping Ontario’s Mobile Industry 23

Impacts of the iPhone on Data Usage

Aside from the cost of data being an inhibitor to mobile data usage among Canadian consumers, there was also a lack of any apparent or practical consumer need for data services until the iPhone and high speed 3G data transfer came along. Historically, consumer’s found mobile devices to be unintuitive when it came to doing anything other than checking email, sending text SMS messages, or in some cases chatting via mobile messenger/SMS applications. Browsing the mobile web meant navigating through multiple screens and menus; entering or searching for web pages that usually didn’t exist in MOBI or WAP form; and then waiting for text laden, graphically poor, pseudo-web pages to download at a snails pace. Once the page was loaded, these devices lacked an intuitive way to interact with the content. Restricted to low-speed GPRS or 2.5G networks, even devices that could browse conventional web pages, or multi-media content were never practical.

For the most part, consumers restricted their mobile web usage to applications or sites that were situated ‘on-deck’. On-deck meant the page or content was situated within one or two sub-menus, making it much easier to access. Unfortunately it didn’t make the content easier to interact with. It also didn’t ensure a better experience for the consumer. In most cases, on-deck deals were driven by fees paid by portals, or applications developers to the carriers or device manufacturers. As consumers became increasingly accustomed to the limitless world of multimedia content, and applications which were available via broadband connections on the PC Web, they couldn’t help but feel restricted on the mobile web. Between the lack of content, services, and applications available to consumers via the mobile web, the impracticality of viewing and interacting with content on mobile devices, and the slow bandwidth speeds available via 2 and 2.5G wireless platforms, consumers understandably saw relatively little need to demand better data packages and services from providers.

With the advent of the iPhone in 2007, Apple introduced a device that would for the first time make rich data services compelling for consumers. Through being the first device to incorporate features such as location awareness, a large touch screen, a powerful processor, an easy to access third party application platform, and a browser that allows full web pages to be accessed and browsed in a quick and intuitive manner, the iPhone has set the standard by which all smartphone devices are being compared. This will likely continue for the foreseeable future. The result of all this has been a significant impact on the mobile eco-system in almost all markets that the iPhone is offered.

Though Canadians weren’t able to purchase the first generation of iPhones through legitimate channels, thousands of unlocked phones made there way into the market anyway, priced at well over $500. To the chagrin of most Canadians, the iPhone is only designed to work on the GSM mobile platform. This meant that unless users of the first generation of unlocked iPhones were willing to pay the hefty data rates charged by Rogers in 2007, they would have been relegated to using their devices via Wi-Fi, or to using them as glorified iPods. When Apple announced in spring of 2008 that the 3G iPhone was coming to Canada through Rogers, most consumers expected Apple to have asserted its newfound and growing influence over carriers, to Rogers. The 3G iPhone is the second generation of the iPhone which supports the third generation of GSM platforms and claims speeds that are at least twice as fast as the EDGE capable first generation iPhones. If form factor was the cause of the first generation iPhone’s success, then functionality and speed are the drivers of the second generation’s success. In many countries, Apple had become notorious for holding out on deals with carriers unless packages were offered that would let consumers take advantage of the full potential of the device without worrying about data charges. In a few of these, Apple had managed to do the impossible. They pushed carriers to offer unlimited data plans at a reasonable monthly price. This wasn’t the case in Canada. A couple of weeks before the July 11th launch of the 3G iPhone in Canada, Rogers announced it’s pricing, resulting in an uproar of disenchanted consumers.

Innovation and Insight: Mapping Ontario’s Mobile Industry 23a

Perhaps due to the onslaught of publicity via sites like ‘ruinediphone.com’, where 50,000 consumers protested the pricing of the original iPhone data plans, shortly before launch, Rogers introduced a 6 GB data option for $30 a month. As consumers for the first time started to show an interest in purchasing monthly data plans for a reasonable price, Bell and Telus decided at about the same time to begin charging consumers without a plan, $0.15 per received text message. Having awoken to the necessity of a cost effective mobile data plan, Canadians now demanded better data rates. And carriers have woken up to this opportunity, responding receptively with a range of moderately priced multi-year data plans that have become the focus of intense competition.

Though consumers have been somewhat successful at putting pressure on the carriers to reduce data rates, there is still a disparity in the way consumers use mobile data, due largely to the device selection available on each platform. The 3G iPhone is still one of the only devices on the Rogers Network to make the usage of rich data and applications practical to consumers. The BlackBerry Storm, Samsung Instinct, and HTC Touch are new entrants to the 3G smart devices category and share many of the iPhone’s features and form factor. These handsets, offered by Bell and Telus, and have been the center of an intense marketing battle between Canada’s top three carriers.

Devices such as BlackBerry’s Storm, and others developed to run on Google’s Android operating system will provide functionality that is similar to the iPhone to consumers and business people alike. Consumers have voted with their usage, that they are willing to embrace mobile features such as location awareness, full-page web browsing, and third party application stores, if the device makes usage: easy, intuitive, and therefore practical. Within 6 months of the launch of the first generation iPhone, its proprietary browser accounted for 0.09% of total browser market share, compared to Window’s CE which had only 0.06% market share despite having been on every Windows Mobile device shipped. In February of 2008, Google announced that the iPhone was accounting for 50 times more searches than any other mobile device. Within 30 days of Apple launching the App Store, over 60 million applications had been downloaded.

And yet the devices themselves are only a part of the shift that is taking place.

Innovation and Insight: Mapping Ontario’s Mobile Industry 23b

3G and the Future of Wireless Data

If it weren’t for 3G network capabilities, smart devices would see their most compelling features restricted to WiFi enabled hotspots. The migration path from 2G (offered in Canada since the mid 1990’s) to 3G has not been a smooth one, perhaps owing in part to a plurality of network systems (CDMA and GSM). While the Rogers GSM network needed to employ W-CDMA technology to upgrade its 2G systems to 3G; Bell and Telus, seeking to avoid the cost of migrating to a GSM system, opted to deploy CDMA2000-EVDO in order to offer competitive high speed data services. With current 3G deployments, all three carriers should be able to support data transfer speeds of up to 2 Mbps, but in most cases speeds of 160 Kbps to 380 Kbps have become the norm. Contrasted with the speed of previous 2.5G offerings (CDMA20001x, and Edge) which offered download speeds in the range of 80 to 160 Kbps, this is still a substantial increase.

Despite the availability of 3G services in many metropolitan areas throughout Canada, it is widely expected that the impact to mobile data usage will pale in comparison to the changes which come about through the next evolution of Canada’s mobile network infrastructure. Already, all three carriers are getting ready to deploy the next generation of network improvements, enabling what some are referring to as 3.5G. HSPA is a protocol that improves data transmission speeds for W-CDMA (GSM) networks and can support download speeds of between 4-14 Mbps. While HSPA would be a pretty costly upgrade for Telus and Bell who currently employ CDMA networks, CDMA carriers are experiencing growing pressure to convert to GSM platforms given the lower cost and higher selection of GSM handsets.

In the not too distant future lies 4G deployment. 4G is widely seen as a game changer for the wireless industry because it promises speeds of 50 Mbps while mobile, and up to 1 Gbps while standing still. The two key technology standards that will compete

at this level are LTE (Long Term Evolution), which will begin to see commercial roll outs by carriers in 2011 if not sooner, and WiMAX, an open, worldwide standard that covers both fixed and mobile deployments. Carriers see WiMAX as a threat because it can be offered today by network providers that focus specifically on data. WiMAX providers offer both high-bandwidth and broad coverage, which mobile carriers can’t provide cost effectively, until they’ve deployed 4G technology. Leveraging this competitive advantage, providers are already making inroads by offering fixed WiMAX services to many rural regions of Canada that do not have access to broadband telecom, or cable wire-line services. The long term threat of WiMAX to mobile carriers is enhanced by mobile WiMAX.

Source: Techware Labs, LLC , 2002-2008

A mobile WiMAX standard was ratified in 2005 which allowed providers to build networks which allow for signal transfer between base stations, effectively allowing subscribers to ‘roam’. Even though WiMAX is data focused, mobile broadband services could easily layer a VOIP (Voice Over Internet Protocol) application for marginal network cost, thereby giving them the ability to push Voice and Data services below the breakeven point of mobile carriers.

Looking forward into the next decade, Canada will also see another important radio spectrum auction take place. The UHF spectrum, a range of 60MHz which is currently dedicated to the broadcast of analog television is particularly valuable because of its superior ability to circumvent obstacles such as walls, buildings, or mountains. The US held its auction of the


UHF spectrum in 2008, generating record proceeds of close to $20 billion. Industry Canada is expected to follow the same path as the US, allowing UHF licenses to be used for mobile, wireless, and broadcast services. Out of the US auction, two of the major license winners (Qualcomm, and Aloha Partners) are already pursuing the development of systems based on WiMAX technology.

So what does all this mean? For businesses seeking to address the mobile market, the rules have changed. Opportunities exist that didn’t a year ago, and the pace of this transformation will quicken. The next section of this report will examine the role local stakeholders should play in order to establish Ontario as a world-leading center of excellence for mobile innovation.

Mobile Business Landscape

The Mobile business landscape had been established around an eco-system and balance of power which until very recently, has made it difficult for start-ups without deep pockets to penetrate.

At the top of the food chain, lay the carriers and handset manufacturers. In the past, such power and control existed between these two players that a veritable force-field made it extremely difficult for other members within the eco-system to exist without paying penance. Over time, as the market for smartphones developed, so did a new category of carnivore at the top of the food chain: the operating system. For many years, Microsoft, Research in Motion, Palm, Symbian and others have been accumulating greater control as developers of operating systems, and in some cases handsets. As Microsoft’s plans to roll out a mobile phone operating system began to take shape in 1999, many carriers and handset manufacturers looked to the history of the Personal Computer market and Microsoft’s ensuing dominance, and foresaw a similar destiny if precautions

weren’t taken. Nokia responded to the MS threat by investing heavily in the Symbian OS. Motorola diversified its use of proprietary third party operating systems, Symbian and Microsoft included. And conversely, some OS manufacturers became device manufacturers in their own right.

With a battle for control raging between the carriers, handset manufacturers, and operating systems, ultimately it was the user experience that suffered. The sheer number of device/OS/platform/carrier combinations that developers needed to accommodate for any specific application could only be described as massively fragmented. Aside from SMS and related server side technologies, no silver bullet solutions existed for developers to use in order to address large scale markets.

Until recently, this food chain of carrier, handset manufacturer, and operating system sat in a paralyzing dead-lock. Ultimately, thanks to this fragmented landscape, applications providers were having a hard time finding sustainable business models, at least in North America. As this fragmentation increased, so did the cost of building and launching viable applications to a mass audience. Only applications providers with deep pockets could afford to develop the near thousands of iterations of an application needed. And even if an applications provider could fund this level of development effort, the devices for which these applications were developed were not simple to use for the consumer.

And then the question of getting on the handset arose. Applications or content could either be installed by the factory, before the handset was shipped – which became known as ‘on-deck’ – or accessed by the user via the mobile web – conversely known as ‘off-deck’. The sheer difficulty of accessing content from the mobile web through cumbersome device interfaces made off-deck applications and content a non-starter for providers hoping to generate revenues through advertising, or other models that depended on critical mass. The volume of usage would never scale enough to support a viable model via the off-deck approach. The alternative meant paying significant fees per handset or subscriber to the manufacturers or carriers for on-deck integration, and even that approach didn’t guarantee usage.


In recent months, with the advent of the iPhone and its open marketplace for developers of third party applications; Google’s roll-out of Android, it’s open source smartphone operating system which is supported by Motorola, Samsung, LG, and HTC; and the recent trend among smartphone OS providers such as Research in Motion, and Symbian to establish their own applications store-fronts for third party developers, similar to Apple’s; the eco-system has changed. With the advent of open-source operating system API’s (Application Programming Interfaces), and third party App Stores, it is no longer as difficult for applications providers to get their software on-deck. It is also apparently less difficult for developers to make money. These are two critical needs that have always been lacking within the mobile eco-system.

Mobile business models are beginning to emerge within three distinct categories: Premium Content, Advertising, and Paid Applications. In the Premium Content category, publishers now have a way of accessing consumers directly via app stores if they choose. Open Door Communications is a company that has taken on the task of adapting book formats of travel guides for the iPhone, and charges consumers $1.99 per download. But premium content is now becoming a more promising business model even on phones that don’t have access to App Stores. As a testament

to this fact, Bell Mobility recently launched a service that makes premium NHL content available to subscribers of an NHL Mobile Content package. Beginning at $8 a month, subscribers to the service will have access to NHL video highlights; audio broadcasts of every game; and a feature called NHL Centre Ice, which streams video of a full game to mobile handsets. Though available on a wide selection of Bell phones, subscribers with large screen 3G handsets such as the Samsung Instinct, BlackBerry Storm, and HTC Touch Diamond will inevitably enjoy the best experience.

Advertising-based business models have also begun to take shape in a more impactful way due to better interfaces, 3G data speeds, and compelling device features. In some cases advertisers have taken to creating applications as a method to engage consumers with their brand. An example is an application recently developed by Audi,

which was one of the first brands to create an iPhone specific game. The A4 Driving Challenge Application was designed to assist with the launch of Audi’s new A4 model by leveraging the accelerometer features of the iPhone to highlight superior handling abilities of the new car. Networks such as AdMob have begun to establish models that aggregate advertising space among multiple applications and mobile platforms in order to establish critical mass. Local businesses are also beginning to take advantage of opportunities which allow them to promote themselves via location-aware applications that relate information based on proximity.

While Advertising and Premium Content are themselves significant business models, an interesting new phenomenon is the opportunity presented to developers seeking to charge for their mobile applications. Obscure applications such as ‘Pull My Finger’ which simulate sounds of flatulence, and Smule’s Ocarina, which allows consumers to transform their iPhone into a musical wind-instrument are generating significant revenues from curious consumers. Now that RIM has unveiled the BlackBerry App Store we can expect a similar phenomenon with a host of new and exciting business applications that take advantage of the features of devices such as the Storm.

Factoring the sheer usability of devices such as the iPhone, Blackberry Storm and other devices; and the onslaught of


compelling new device features such as location awareness, cloud connectivity, and accelerometer telemetry which third party developers can easily incorporate in their applications via OS-specific APIs, and the opportunities for exploration are infinite.

While the eco-system of the new mobile world still includes some of the same players, the balance of power has changed dramatically. Within North America, opportunities have opened for new businesses and business models to emerge.

If the Ontario Mobile Industry is to capitalize on these recent changes in the mobile landscape, the time to act is now. The question is, where do we start? If we’re situated in the midst of a proverbial Gold Rush, do we focus on mining; do we focus on building mining tools; or do we invest in creating a world-class training system for miners? It is our opinion that we cannot do any of these things in isolation, and do them well. In order to set the stage for Ontario as a center of excellence in the training of the new mobile industry workforce, we need to also establish best of breed businesses here, and we can only do that by establishing a funding infrastructure that supports, nurtures, and promotes ideas and innovation. To date, our funding infrastructure be it government run, or private, has always embraced ideas and business models that apply to the Canadian market exclusively. This approach restricts our ability to amortize innovation based on the size of the Canadian market.

This same phenomenon is endemic to adjacent industries such as film and television production. Canadian broadcasters are the triggers for funding that gets placed via government channels into Canadian content. Due to our consumers’ propensity to consume US content, the mandate of most Canadian broadcasters is to focus their restricted content acquisition budgets on the purchase of US content. Whatever is left over (and mandated by the CRTC), is used to make conservative investments in Canadian content. The fact is, we do not have the market ability to amortize the volume of content, or the quality of content that American broadcasters do. The value of Canadian content on a world stage suffers as a result. Without a global demand for Canadian content, our local film production industry is forced to rely on serving the

needs of finicky US and international film studios. As observed in the first half of 2008, this type of reliance can have an inherently negative impact resulting from influences such as fluctuations in the Canadian dollar versus other world currencies.

If we are to establish a world-wide center of excellence in the mobile industry, our investments and training infrastructure need to foster innovation and concepts that are relevant at a global level. This means public and private funders need to be prepared to take greater risk on concepts that apply outside of the Canadian stratosphere. For example, while the Canadian market might not have the ability to sustain applications developed to address the entertainment needs of Bollywood fans, we should still be willing to fund initiatives like these. Perhaps a specific platform or device capability is uniquely available in markets such as Japan. Does this mean Canadian developers and businesses would be better-served by ignoring markets such as these? Perhaps global market potential and the ability to gain insights that are ahead of our market development curve need to be factors that are taken into consideration as investments are made.

This means our educators need to include in their curriculums a focus on platforms that exist in Asia and abroad, not just Canadian platforms. And it means that we should seek input and involvement from leading mobile industry players outside of Canada to foster trade relationships that make it easy for those companies to tap into local markets as a source of innovation. Bridges need to be forged now. This is not to say that local businesses shouldn’t invest in or benefit from our approach. Indeed, by having a workforce that is intimately familiar with foreign platforms, business models, and user behaviours as they apply to the mobile industry; our local businesses will be in a position to compete much more profitably, and on a much larger playing field. If we were to choose a theme to rally under, it would be: ‘Think Global, Invest Local’.


The Funding Eco-System

From an entrepreneur’s perspective, the Canadian funding eco-system is comprised of banks; government; venture capital funds; private equity funds; institutions; and high network individuals (angels) among others. For the purposes of this report, we will briefly examine several of these funding groups from the perspective of the entrepreneur, with the purpose of extracting insights to inform the methods used by the government to foster innovation and growth. Deliberately, tax programs such as SR&EDs (Scientific Research and Experimental Development program) will be excluded from this list of funding vehicles. In our view, SR&EDs are not funding sources, but are essentially incentives for entrepreneurs or established businesses who have received funding, to conduct or extend research and development activities within Canada. While important for that aforementioned purpose, SR&EDs and similar programs will not expand the base of entrepreneurial activity in a region. If our purpose is to engage new generations of entrepreneurs, who are less versed in navigating the national tax system, and more skilled in their understanding of new mobile platforms, technologies, and applications, then emphasis needs to be shifted to the accessibility of start-up focused funding initiatives.

Following family and friends, banks often provide the first level of funding to any entrepreneur seeking to boot-strap their way to a proof of concept. Often, a line of credit, or similar lending vehicle will provide the quickest and most efficient dilution-proof approach to raising money. Banks for the most part do not take risk on seeding early stage businesses that lack operating history, especially those that lack tangible capital assets. The risk falls entirely on the entrepreneur. One solution might be for banks to co-operate with government funding initiatives, providing distribution of low/no-interest lines of credit to entrepreneurs. Banks provide a known, and easy to access front-line to entrepreneurs,

and are perceived to be much more accessible than government funders. This might follow a similar template to the way the government works with banks to administer student loans.

A distribution partnership via Ontario banks might solve the problem of accessibility, but that in isolation will not drive innovation within the mobile industry. Government funding initiatives need to broaden their mandate to reflect a global perspective, as opposed to the national or provincial mandates that these funds often operate by. Government funding initiatives need to also simplify the scope through which they apply themselves. In a recent request, made in the process of conducting research for this report, a call to the Canadian-Ontario Business Centre resulted in an email which included links to just under 20 sources of related information and applications. For an entrepreneur to make sense of the funding approach, they need to stop developing, and focus their efforts on navigating through the red tape. Simply put, no young, eager entrepreneur wants to spend their time this way. Nor do these young, eager entrepreneurs have the resources through which they can hire government agents to navigate through the red tape on their behalf. Furthermore, should we really be placing investments in people based on their ability to navigate bureaucracy?

The Ontario Centres of Excellence and the MaRS Discovery District, based in Toronto, created the Investment Accelerator Fund (IAF) which is directed at emerging early stage technology companies. Over 600 companies in the last year applied for funding from the IAF, of which about 14 were successful in attaining access to funds. The most remarkable aspect of the IAF is that it relies on a board which consists of VC’s, angel investors, and members of industry to make funding decisions. In that way, the IAF embodies an effective partnership between government and other members of the funding eco-system.

In regards to the Venture Capital community, VC’s make themselves much easier to find than governmental institutions, and they make the steps to funding much easier to comprehend. Indeed some VC’s are flexible


in their approach to funding relationships if they believe in a concept or technology. The mandate of VC’s causes them to be much more aggressive when it comes to casting their nets. However, as many entrepreneurs can relate, the cost of raising funds from a VC can be significant. Cost in this context entails equity which VC’s ‘purchase’ by way of the investments they make. Despite the chance that the cost of raising money through a VC will possibly outweigh the desire of the entrepreneur to establish a business they ‘own’, the chances of landing VC funding are tantamount to winning a lottery. As this report is being written, VC investment activity in Ontario has fallen to record low levels, perhaps due to a hampered ability to exit investments given current market conditions. In 2008, Canadian VC’s saw a total of one IPO take place. The VC model, which is designed to operate based on the velocity of deals that get entered and exited, is suffering.

If the act of filtering the number of businesses that receive VC investment results in funding the best start-ups, the local market would logically benefit. The size of the investment is predicated by the size of the funds from which they come. Funds in Canada are proportionate to our market size, as are the size of the investments they make. This means that at the onset, investments in Canadian businesses hoping to compete with other similar start-ups funded in the US or elsewhere, is often fractional at best. How can start-ups build to be globally competitive when the investments they receive are often barely sufficient to make a dent in the local market? Or perhaps the answer is not in raising the size of the investments, but rather broadening the size of the funnel, i.e. expanding the number of businesses that receive early stage funding.

Many Canadian entrepreneurs meet with Canadian VCs as part of the search for investment. Therein lays an opportunity for the VC community to play a role in taking the level of innovation within the Ontario mobile industry to a higher level. Rather than focusing on investing significant capital, and taking significant equity stakes in just a few businesses; perhaps an opportunity exists for VC’s to cast a wider net, by leveraging the resources committed by government funding institutions. Perhaps VC’s should be enabled to act as a more active and easier to engage front-line, distributing pre-seed stage

financing which is provided by a mixture of banks, government, institutions, and themselves. A good example of this kind of partnership is the JumpStart program which is offered by the BlackBerry Partners Fund and matches investment made by government organizations such as the OCE. This could allow VC’s to place the focus on engaging a larger group of investments, thereby increasing the funnel size through which their deal flow occurs. The greater the capacity at the top of the VC’s funnels means more local successes will come out at the bottom. Perhaps assembled this way, a co-operative between banks, government, institutions and VC’s might be better able to compete with funding power-houses that exist in Silicon Valley, Boston, New York and abroad.

Institutions can also provide a valuable contribution to the funding process as demonstrated by the $150 million BlackBerry Partners Fund, which was recently established through a partnership with Royal Bank of Canada, and JL Albright & Associates. The mandate of the BlackBerry Partners Fund is to place investments in early stage businesses that are creating applications and services for the BlackBerry and other mobile platforms. While the BlackBerry Partners Fund isn’t the first to invest in companies that are creating mobile applications and services, it is the first to maintain a neutral stance regarding the platforms for which the fund supports. In contrast, the $100 million iFund, launched by Kleiner Perkins in March 2008 in partnership with Apple, is focused entirely on applications and services developed for the iPhone platform. Similarly, the Google Android Challenge was initiated as a contest by Google in November 2007 to seed interest among the developer community in creating applications for the Android platform. While these funds were established to add incentives to the developer community in creating applications that traverse the landscape of smartphone operating systems, similar and related activity is happening in the web-based social networking world where Facebook, MySpace and others have


have established themselves as ‘social network OS platforms’. They too are establishing funds to win over the hearts, minds and wallets of the developer community.

In order to have greater impact, government funding initiatives should explore closer partnerships with the banks, VC’s, multi-nationals and others that make up the funding dichotomy. While the government may play a role today in encouraging investment from established businesses into the mobile industry, government funding initiatives have massive amounts of unrealized potential. Our suggestion is that government ministries and associations aggregate their investment budgets and apply them with the help of established players such as the banks or VC community. By focusing on the pillars of reach, engagement, and scope, government funding initiatives have an opportunity to significantly impact the pace of innovation within the mobile industry in Ontario. Rather than setting up the tools and infrastructure needed to properly deploy its grants and other forms of financial stimulus, the government should focus on developing win-win partnerships with established channels.

What is also becoming clear from the funding activity illustrated above is that the developer community (consisting of designers, programmers, user experience architects, etc) is clearly becoming a force to be reckoned with in the platform wars. Also notable is the fact that the platform wars are no longer limited to mobile operating systems. Platforms will traverse social spaces, content, business models, and devices. Perhaps this is what puts Google, Apple, Microsoft and others in a position of strength, over the mobile platform titans of the past. A nod to this possibility may lie within a recent landmark announcement by Motorola, which stated that they’ve decided to adopt Google’s Android operating system on all of there flagship handsets, thereby discontinuing the support of operating systems such as Symbian.


The Role of Educators within the Eco-System

Platforms, developers, handset manufacturers, funders, and in some cases even the carriers are in a race to win over the support of the developer community. Today’s consumers expect smart devices to do more than handle email, text, and voice communications. Analogous to the way the web changed the way we use personal computers, the mobile web as defined by Apple, Google and RIM have opened consumers’ minds up to the potential that lies within a smart device. In doing so, it has also created new found expectations of what a mobile device will achieve. Consumers expect a wide assortment of applications that in effect, allow them to personalize the way they use and interact with the device.

If we look to the personal computer industry, wars also ensued between platforms, most notable of which was the war between Apple and Microsoft. Until recently, there has been a lot of debate over whether developer support, or the decision to partner with hardware manufacturers made Microsoft the winner. However, it appears that consumers have come to recognize the relative seamlessness of an operating system that runs on the device for which it was built. As recently as October of 2008, Apple announced a 17.5% share of new units sold within the personal computer sector.

The seamlessness by which applications work on a device is now a base expectation by consumers. But equally important to consumers, is the selection of applications from which they can choose. Therein lays the battle that is being waged between Google, Apple, RIM, and others. The battlefield lacks a particular location at this point. Thanks in part to investment vehicles such as the BlackBerry Partners Fund; an opportunity exists for Ontario to engage in continued and critical growth. Ontario post secondary educational institutions and government

funding agencies need to be aligned with the direction of funders and multi-nationals if we are going to properly equip the province to capitalize on this opportunity.

One of the issues uncovered in conducting research for this report is the void that exists with respect to programs or courses which focus on mobile and/or wireless technology. While there is a high probability that facets of mobile and wireless technology get addressed within the context of broader computer science and engineering courses, the fact that we do not treat mobile and wireless technology as an area of specialty underlies the way corporate recruiters see our workforce. Consortiums, collaborations and other public or non-profit organizations are an important first step towards addressing the gaps, especially in increasing the dialogue between the public and private sector, and developing strategies for growth and cultivating opportunities for entrepreneurs and emerging graduates. How should these relationships evolve, with the aims of establishing Ontario as a center of excellence and innovation in the mobile industry. To help shape our perspective on this topic, we can look to markets such as San Francisco, where the relationships between education and industry sees heavy investment in preparing their workforces for the future of mobile.

Starting in the fall semester of 2008, Stanford University began offering a course focused on developing iPhone applications. Entitled iPhone Application Programming, the course enables students to develop and test applications that have been created for students. By late September, Stanford was already testing 5 of its own applications which enable students to register for courses, pay bills, view the campus map, look up sports schedules and scores, and search the university’s online directory. Perhaps reinforcing the opportunity this provides for businesses, the Stanford course was offered at the same time as Apple rolled out the iPhone Development University Program which offers a toolset to university teams of up to 200 students, to develop iPhone applications. While Apple was apparently one of the first major platforms to offer this type of a program to students, offerings from Google and other OS providers are likely in the works, if they have not already been rolled-out. In Ontario, the University of Ontario Institute of Technology is currently the only


institute to offer iPhone-focused courses.

The application-centric eco-system that is evolving will require more than just development skills to build market leading applications, it will require a workforce which has specialized knowledge in the areas of interface and experience design, content production, marketing, business development, and entertainment law among others. As such, the chances of one school or program being the silver bullet for Ontario’s mobile workforce by offering a crash course in new mobile applications is slim. In order to succeed, Ontario requires a well-coordinated and orchestrated mobile workforce development strategy which spans relevant post-secondary institutions, and capitalizes on each of their specialized areas. In instances where students require some degree of training which is outside the scope of their home school, easy access should be provided to supplementary courses within other schools. Institutions such as OCAD which specialize in advanced forms of visualization and application interface design have already started to lead the charge in this area by providing students with the opportunity to engage in partnerships with faculties at Ryerson University, University of Toronto, University of Waterloo and the University of Ontario Institute of Technology.

By assembling a dream team of facilities, focused on training students with core skills, but broadening the depth of knowledge and access to disciplines taught in other schools, Ontario may be better equipped to develop a mobile technology work force that is armed with a breadth of knowledge that sets it apart from other sources of talent.

The big opportunity lies in establishing educational environments that foster idea germination. An example of this is an experiment called VeloCity. The University of Waterloo has invested more than $800,000 to transform a small residence into what it hopes will become a hot-bed for innovation in mobile and web technologies. By attracting upper-year students who come from a plethora of disciplines and have aspirations of starting a business or pursuing an idea and giving them access to the latest technology, industry mentors, and potential investors, the University of Waterloo is fostering an environment that is becoming a template for other Ontario post-

secondary institutions. As a testament, VeloCity has already been successful at attracting several business sponsors.

Moving beyond post-secondary training, graduates should be encouraged to continue the development of projects/applications started pre-graduation. Perhaps upon graduating, students should be provided with access to government grants or investments if they’d like to continue with the development of an application or business concept. By pushing students to large companies via co-op programs prior to or directly following graduation, we will in fact limit the potential of fresh, eager, and well-trained students by constraining their thinking to the local market needs of most Canadian businesses. This would in fact result in a direct reversal of our intended outcome. We must think global. If the government were to provide an incentive for recent graduates to think and act on ideas that are relevant on a global stage, our local market will become much more fertile for ideas and businesses that play on a world stage, allowing them to amortize innovation at a much higher level.


Conclusions

As the balance of power shifts within the mobile-ecosystem, a significant opportunity has emerged for communities that possess the skills, knowledge, and global insights to develop best of breed applications for the new breed of smartphone devices and platforms. To fully capitalize on this opportunity, local businesses need to have access to funds and a work-force that apply at a world-scale, not just a Canadian one. As a market, it is no longer sufficient for our work-force to be versed on Canadian or North American usage trends and behavioural insights alone.

Canadian funders need to work together to broaden the reach of our new-business funding initiatives while simplifying the process through which entrepreneurs can achieve early-stage funding. At the same time, funders need to broaden their scope to include local ventures that may apply in foreign markets. Post-secondary educators need to embrace partnerships with local and multi-national mobile players, funders, and each other to prepare a workforce that leads the world in its ability to apply its skills through informed perspectives.

None of these efforts can happen in isolation. Essentially, Canada needs to further establish its own eco-system to feed and capitalize on opportunities that exist within the larger world mobile eco-system. Trade relationships need to be further developed with foreign multi-nationals, and governments to ensure our access to the global eco-system. The opportunity to secure these relationships will occur by demonstrating to the world a model that sees businesses, educators and funders collaborate.

This is not to say that the Canadian consumer should be ignored. As demonstrated through the recent availability of the iPhone; when provided with the opportunity to purchase mobile data plans at reasonable rates, the Canadian consumer has a definite appetite for smartphones and third party applications.

By establishing a local eco-system that is capable of global innovation, Canadian consumers will benefit by gaining access to world-class applications and services.

These will stimulate usage, and result in the creation of more effective business models which could spur flow-through economic benefit to other local industries. The Canadian consumer is indeed, an important player within the eco-system.

The time to act is now. Though the emergence of organizations such as the MEIC, and mandates such as those driven by the OMDC are important first steps, we need to continue to establish the framework for our local eco-system. The opportunity, as lucrative as it may be, is not Ontario’s for the taking and requires transformation of the approach as well as organizational relationships. With certainty, as we set out to establish Ontario as a centre of excellence and innovation for the mobile industry, many other cities, states, provinces and countries are trying to achieve similar states of readiness to capitalize on recent shifts in the mobile landscape. The potential and the caability are poised to inform and speed the development of our local mobile eco-system.


Section One Endnotes http://wirelessnorth.ca/2008/06/30/tens-of-thousands-sign-rogered-iphone-petition/, Tens of Thousands Sign Rogers

iPhone Petition (June 30, 2008)

http://www.smrb.com/uploads/mobile_whitepaper_04.21.08.pdf, Experian Consumer Research: U.S. Closing Mobile

Usage Gap, Ellen Romer (2008)

http://www.cellular-news.com/story/33535.php, Canada’s Mobile Penetration Rate Rises to 61.6% (2008)

http://traffic.berkeley.edu/, The Mobile Millennium Project: Using cell phones as a mobile traffic sensor, The Mobile

Millennium Project (2008)

http://news.bbc.co.uk/2/hi/2757017.stm, Text service warns of attacks, BBC (February 13, 2003)

http://www.thomaspurves.com/, Where is the ‘app store’ for the greater internet?, Thomas Purves (October 23, 2008)

http://www.ic.gc.ca/epic/site/smt-gst.nsf/vwapj/dgtp-002-07-The-British-Columbia-Public-Interest-Advocacy-

Centre.pdf/$FILE/dgtp-002-07-The-British-Columbia-Public-Interest-Advocacy-Centre.pdf, Re: Canada Gazette Part 1

Vol. 141, No. 7 published February 17, 2007 Notice No. DGTP-002-07 - Consultation on a Framework to Auction Spectrum

in the 2 GHz Range including Advanced Wireless Services, BC Public Interest Advocacy Centre (May 25, 2007)

http://www.itac.ca/uploads/research/06idc.pdf, Special Study: Does ICT Matter to SMBs Canada?, Michael Hyjek and

Jamie Sharp (2006)

http://www.cellular-news.com/story/33535.php, Canada’s Mobile Penetration Rate Rises to 61.6% (2008)

http://www.chetansharma.com/biz_ARPU.indd.pdf, Perspectives: Wireless Data APRU, Chetan Sharma (Jan Feb 2007)

http://blogs.computerworld.com/iphone_browsing_marketshare_closes_in_on_1, iPhone browsing marketshare closes

in on .1%, Seth Weintraub (December 3, 2007)

http://us.ft.com/ftgateway/superpage.ft?news_id=fto021320081404398122, Google homes in on revenues from phones,

Majia Palmer and Paul Taylor (February 13, 2008)

http://apple20.blogs.fortune.cnn.com/2008/08/11/steve-jobs-60-million-iphone-apps-downloaded/, Steve Jobs: 60

million iPhone apps downloaded, Apple 2.0 Mac news from outside the reality distortion field by Philip Elmer-DeWitt

(August 11, 2008)

National Bank Financial, Canadian Telecom Services: The Economics of Wireless Broadband, Canada, January 24, 2008.

http://mobileopportunity.blogspot.com/, App stores and APIs: It’s the ecosystem, stupid, Michael Mace (September 10,

2008)

http://online.wsj.com/article/SB122523624204277979.html, Motorola Speed Dials Cell Overhaul, Sarah Silver (October 29,

2008)

http://havemacwillblog.com/2008/10/28/apple-market-share-the-sound-of-breaking-windows/, Apple Market Share:

The Sound of Breaking Windows, Robin Bloor (October 28, 2008)

http://blog.wired.com/gadgets/2008/09/stanford-offeri.html, Stanford Offers iPhone 101: App Developing Workshop,

Brian X. Chen (September 24, 2008)

http://www.globecampus.ca/in-the-news/globecampusreport/but-will-they-still-eat-kraft-dinner/, But will they still

eat Kraft Dinner?


Mobile Experience Innovation Centre Industry Survey Results

Conducted by the MEIC, September-November 2008.


Mobile Experience Innovation Centre – Industry Survey ResultsConducted by the MEIC, September-November 2008.

Methodology:

This survey content was collaboratively developed and iterated through ongoing discussions of the MEIC Steering Committee and Working Groups, and aggregated through the MEIC Coordinator. It was released publicly in mid-September, 2008, and distributed via the MEIC industry partners, including personal mailing lists, associations such as interactive Ontario, MobileMonday and Achilles Media, for a period of 2 months. The following summary and insight is based on survey respondents from this period, raw data is available upon request. Overall Statistics• NumberofParticipants366• CompletionRate:31.76%


Mobile Experience Innovation Centre – Industry Survey ResultsConducted by the MEIC, September-November 2008.

Methodology:

This survey content was collaboratively developed and iterated through ongoing discussions of the MEIC Steering Committee and Working Groups, and aggregated through the MEIC Coordinator. It was released publicly in mid-September, 2008, and distributed via the MEIC industry partners, including personal mailing lists, associations such as interactive Ontario, MobileMonday and Achilles Media, for a period of 2 months. The following summary and insight is based on survey respondents from this period, raw data is available upon request. Overall Statistics• NumberofParticipants366• CompletionRate:31.76%


Section One: Professional and Business Information

Other locations include: Australia, Denmark, India, UK, USA.


Section One: Professional & Business Information


Other locations include: Australia, Denmark, India, UK, USA.


Please describe those partners:

• SubsidiariesintheUS;CommercialBankingCentresinEurope,Asia.• Telstra,Vodafone,AT&T,ZTECorporation,UK-basedWirelessSoftwareSuppliers• ApplicationProviders,DeviceManufacturers,ConsultingFirms(TelecomIndustry)• WirelessResellers/Carriers/Operators,alsoResearchers/Marketers/TechnologyCos• GlobalCarriers,ManufacturingPartners,etc• ResearchinMotion• PartnersinAsia,Europe,AfricaandAustralia.• EcosystemofComplementaryPartners,suchasIBM,HP,etc.


Our activities also include:

• Understandinghowthisshifttoalways-connecteddevicesischangingbehaviours, beliefs and the social structure which guides our sense of self.• Creatingmarketingforwirelessservicesandbuildingend-userapplicationsfor wireless devices.• Commentingonwirelesstrendsinthemedia;Hosting/Speakingatindustryevents.• ProducingCustomer-facingorEmployee-facingproductivitysolutions.• Hostingandmaintainingwirelessproviderfranchisewebsites• Developingrevenuemanagementsoftware;OSS/BSSsoftware;CRMsoftware;etc.


Please describe your experience in funding your wireless projects – what’s worked, what hasn’t worked?

• InCanadathereisagenerallackofawarenessandopportunity.Themarket is controlled by a tiny few operators who have secured bizarre deals with the ISPs and TelCos, meaning there is limited opportunity for innovation or new services like we are seeing elsewhere in the world.• TheavailabilityoffinancinginCanadaispoor.Weareconstantlytoldtorelocate abroad.• Payingformainstreamcontentisdifficultasmostofthedistributorsareseeing up-front fees - this is not a good business model to adopt by a Telco since there’s a strong chance of losing investment and not recouping. The media industry puts high value on the content yet has a hard time creating a business model that is profitable.


Section Two: The Mobile Ecosystem


Additional Comments:

• Acceptability of this type of technology comes from the consumer level, in respect to exposure and comfort. Consumers have only started to get exposure to mobile internet (other than home wi-fi) in the last 12 - 14 months.• Canadaboastsoneoftheleastadvancedwirelessindustriesofdevelopingand developed nations – a slow and conservative approach prevents the wireless application market from growing and thriving, although this• Canadaisbehindwhenitcomestotheglobalmarketandpeopleadaptingmobile as a platform for entertainment delivery.• Carriersdon’tprovideadequatesubscriptionoptionsforproviders;fragmented and multiple integrations required; content platform providers are inefficient, slow and have no sense of accountability.• StrongR&Dbutweakleadershipto‘globalize’innovations.


What are the major constraints that could affect the growth of your business?

• Difficultybootstrapping;Lackofaccesstocapitalforgrowth;Financing;Capital constraints• Infrastructurechallenges;Rural/NorthernOntarioresidentshavepooraccessto mobile networks.• Consolidationamongwirelessoperatorsanddelaysinthedeploymentofnew entrants’ cellular networks• Closedsystemofdevelopment+needtointegratecustomersinthevaluechain• Theindustryisriskaverseandscaredtomakebigchangesorchangetrajectories• Lackofintegratedeffortsandresearchdeploymentintodevelopmentprocess.• CompetitionwithOEN’swherecontentdealsareinvolvedspecifictoourarea. Canada would benefit from an open ecosystem which includes reasonable data tariffs. When this happens, better handsets will come. Forget about trying to build hardware, focus on creative content, web based mobile products and growing talent in professional services. Also hugely important is to start training students and design professionals now--primarily on mobile web but also mobile interaction design and the cultural aspects of mobile technology use which affect all products in the marketplace.• Challengesinnetworkneutrality• Restrictionsandadditionalfeesimposedonconsumersbyincumbentcellular carriers (and subsequent further consumer distrust for mobile technologies)• FreecontentsubsidizedbyadvertisingmodelsfrommajorslikeGoogle.• Lackoftechnicaltalentandleadershiptalent• Globaleconomicrecessionandresultingslowdown

What are the major constraints that could affect the growth of Ontario’s wireless industry?

• Mobilecarrierslockingin1stparty/partnerservice/app• Non-competitivecarriermarket• HighcostofdataCapitalconstraintsNetworkneutrality• CostofinvestmentregardingcarriersmovingtoLTECostofconsumeradoption(i.e. too expensive) Slow adoption of m-payments / m-commerce• IndustryregulationLackofaccesstotalentGlobaleconomicrecessionand subsequent downturns


Section Three: User Experience


Section Four: Skills & Training


What mobile-related skill sets or strengths do you find are in surplus in Ontario?

• BlackBerry hacks.• Inmyareaofcontent-wedonothaveenoughunderstandingofmobileasa delivery platform for content.• Toronto’sverystronghistoryofdigitalcontentandmediawillbeoneofthe strengths going forward. So in some way, that is the strength especially compared to other provinces like BC. • Carrierexperience;Physicalinstallers/technicians.

What mobile-related skill sets do you think are missing in Ontario?

• Javadevelopersareimpossibletofind.Emergingplatformexpertisenear impossible to find. Challenges if you want more than engineering talent.• CocoadevelopersforiPhone.• UserExperienceforDisabledPersonsandInclusiveDesign• Peoplefamiliarwithmobiledevelopment,rightnowthereisnodemand,noris there any real opportunity to develop those skills, with the exception of Blackberry. • Contentgenerationandnewserviceofferings.• Combinationoftechnicalandinterpersonalskills• Trulycreativesoftwaredesigners;Conceptanddesigndevelopers• UserExperienceandUserInterfacetraining,designanddevelopment;Cross discipline skills: for technologists and designers to understand how to work together; Core communication skills among professionals• ComplementaryWeb&Mobileabilities


Please describe the skills that colleges and universities should be teaching to better prepare students for future work in your industry?

• Emergingopenplatforms,UXdesignskills,Java;Lessemphasisonlargescale software and IT development, more on agile and lean programming.• Basicsofthefinancialservicesindustry;Basicpresentationskills,abilitytocreate/ develop business cases.• DevelopmentandimplementationinwirelessGSM,Symbian,J2ME,Android.• Encouragemobilelearningsolutionsathighschools,collegesanduniversities.• Whatareneededaregraduateswithproblemsolvingskillsandexposuretoavariety of technology; Understanding of technology and terminology and the relationships between the various media platforms that are in a struggle to converge.• Treatingmobileasanindustryratherthananafterthought.• ComputerSciencefundamentals,low-leveloptimization,userinterface.• Betteraccessandlessexpensivetuitionfortechtraining&applicationdevelopment.• Mobilewebdesign(XHTMLMP,webstandardsingeneral).• Mobiledesign(differencesbetweenwebdesignandmobileie:takingcontext, indirect manipulation, colour gamuts, contrast, glancing, interruptions etc. into consideration) Understanding global cultural differences in mobile usage and behaviour• Entrepreneurshipfortechnologists&designers;technologyfordesigners,designfortechnologists.• Betterblendingofacademicandhands-onexperience.• Innovationcentrestofacilitateideasandbusinessmodels,aimedatyoungtalent.• Abilitiestodistilkeysuccessfactors,criticalbusinessmodelelementsandan understanding to identify risks and opportunities

What is a success? Why or why not?

• Yes,wehireregularlyoutofsuchprogramsandrelyoninternstoprovide knowledge to our teams. The quality of the staff was superb.• Hitormiss.Dependsonthestudent.• Yes,ithasbeenaverypositiveexperience.Studentshaveamuchhigherdesireto achieve the kinds of results we’re looking for and are willing to do the extra work required in order to achieve those results.


Section Five: Research & Knowledge Sharing


Comments:

• GartnerandForresterareusedfrequentlyinourorganization.• Someverygooddiamondsbutinaseaofgenerallymediocrecontentthattendsto be very expensive.• Wedoalotofourowntrendingandresearchin-house.


Was it useful and valuable? Why or why not?

• Ifoundscenarioplanningtobeanexceptionalmethodforalongerviewofthe future and a tool for managing unknown risks and opportunities years before they surface.• Yes,butourbusinessapproachisconservative,sowecan’tlooktoofarout.• Yes,wecontinuetouseforesighttoolstochangeourbusinessaroundandtowork with our partners in a strategic plan.• Oursuccessestodatehavebeenlargelybasedonfuture-focusedtrendsandinsight.• Itisalwaysuseful,planningiscriticalforongoingsuccess.• Sometimes–thechallengeiskeepitrelevantgiventherapidlychanginglandscape


Mobile Experience Innovation Centre

Technology

Transcript of Mobile Experience Innovation Centre