Section 4

Challenges of the Mobile Internet

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We have seen the growth of the mobile Internet and increased use worldwide, based on the benefits that it brings to users as more services and applications become available. Here, we examine five challenges presented by the introduction of mobility and advanced features of the smart device, in terms of the resulting evolution of the Internet and the impact on development:

EVOLUTION

Smart devices enable services such as location awareness and include features such as cameras; the flip side of the coin is increased privacy issues

Usage of the mobile Internet depends on a number of wireless interfaces and access to apps; these lead to heightened security issues

Apps provide convenient access to the advanced features of the phone such as the GPS or camera; but app stores create costs for developers and customers and may limit competition

DEVELOPMENT

More users are doing more with the mobile Internet; is there enough spectrum available?

Mobile Internet is the way the next billion are going to get online; will this close the digital divide?

EVOLUTION

Privacy

The mobile Internet brings significant benefits to users, as seen in Section 3. However, the downside is that there are increased privacy concerns based on the additional information generated by these new uses.

Of course, privacy has always been an issue surrounding the Internet, growing in prominence in step with our increased usage and reliance on the Internet as part of our daily lives and growing awareness of security risks. However, these concerns are magnified here because of the intrinsic nature of the mobile Internet – as a result of full mobility we can interact with the Internet for more of the day from virtually anywhere, and the unique features of the smart devices allow for more advanced services.

As a result, we can use the mobile Internet for mHealth, mobile money, interaction with government, and social networking, generating a significant amount of personal and sensitive data. In particular, much of this data is new, because many of these services would not be feasible without the mobile Internet.

To highlight some of the new privacy concerns generated by the mobile Internet, we will focus on the example of location-based services (LBS), such as navigation apps that are based on knowing where the device is located. Such services sit at the heart of the mobile Internet; they rely on full mobility, and they are enabled by the location awareness of smart devices. Data on where we have been, where we are, and possibly even where we are going is the definition of personal data and, for many, and in many situations, it is also sensitive data. While such services provide significant benefits, as detailed in the previous section, such benefits must be weighed against privacy concerns.

Who knows where you are?

A wide range of companies have access to location data. In some cases, they can identify the individual at the location, in others they only receive anonymised or aggregated data on users’ locations.

OS APP

The following types of companies may be involved in providing location-based services. We note that some companies play multiple roles, such as providing the platform, handset, location, and apps, so here we present the various roles that one or more companies can play in providing the services.

PLATFORM PROVIDER

Provides the operating system and the app store (although there are third party app stores as well). Depending on the company, and settings, the location data may be stored on the device only, or available on the cloud.

LOCATION PROVIDER

Determines the location based on information from the GPS, towers, or Wi-Fi signals, and makes the location available to apps and/or the platform.

HANDSET VENDOR

May be separate from the platform provider, such as Samsung using Android, and is able to track the device, at the least in case it is lost or stolen.

APP DEVELOPER

Provides the location-based app – must receive location in order to provide the service, such as navigation.

AD NETWORK

May provide location-based ads, within an app – again must receive location in order to provide the appropriate ad, and may know characteristics of the user in order to target the ad.

ANALYTICS

May provide aggregated marketing data to retailers or others based on subscriber information and the locations visited.

GPS

Provides the satellite signal to locate the subscriber – there is no direct reverse transmission path to receive any information about users or their locations.

MOBILE NETWORK OPERATOR

As discussed below, the mobile operator must know the location to provide voice or data services, but typically operates under strict privacy restrictions.

WI-FI

A number of companies provide Wi-Fi location data, as third parties or the platform providers themselves. Hotspot operators will receive information about devices that are in range of their Wi-Fi.

The mobile network operator (MNO) has always had the ability to locate subscribers, even before the introduction of Internet services, in order to originate or terminate a call. On the other hand, the MNO is also typically subject to strict privacy regulations as a historical matter, covering not just location but also call information, and these regulations extend to mobile Internet services. Such regulations do not automatically extend to other companies in the location value chain, however, over whom regulation is typically lower or non existent, and who may or may not receive only anonymised data about location.

A recent study showed that under certain conditions, anonymous data on location could be linked back to individual users. The researchers had 15 months worth of location data from 1.5 million users in a small European country. Based on this data, they showed that with just four random location points, they could identify 95% of the users. With 11 location points, they could identify all of the users. This shows that our location patterns are very unique, and even a small amount of data can reveal a significant amount of information about the identity, not to mention the habits, of a user. Find out more

Users are in a difficult position with respect to location-based services. First, many may not be aware about the collection of data, including on location, or even if aware, may not know the extent of data or number of companies collecting such data. The issue is not restricted to location of course, as all the various sensors in phones may be on, and not just collecting information, but also combining it to learn more about us.

Users who are aware and concerned may limit what data is collected, and by whom, but this is not necessarily straightforward either. Each app has its own privacy policy discussing how it uses data, and access to location data must be controlled separately for each app, unless the use of location data is turned off globally, which limits the benefits of the mobile Internet. Further, across platforms the granularity of privacy settings varies, in terms of what the user can control.

Finally, the parameters may change with new versions of the operating system, surprising users who are not fully vigilant with their privacy settings.

phonescreen


Some phones track and compile frequent locations – a feature which is relatively new and has been called ‘a divorce lawyer’s dream’. Find out more

The snapshot at left, centered on ISOC’s Geneva offices, was taken from the surprised author’s phone.

On an iPhone this feature can be found at Settings -> Privacy -> Location Services -> System Services -> Frequent Locations, where the history can be seen and a map is generated when any of the entries are pressed, the feature can be turned off, and the history can be cleared. On an Android device, the feature can be turned off at Settings -> Location -> Google Location Reporting. The maps can be viewed on Google Maps from any browser when logged into Google, at https://maps.google.com/locationhistory/

Security

Mobile Internet devices and usage patterns may introduce new security issues. These issues relate both to reading of personal and sensitive data off of the devices as well as placing unwanted data or programs on the devices. The threat of these security issues is heightened by the increased amount of private information available to smart devices.

First, there are a number of communication channels – mobile, Wi-Fi, Bluetooth, and NFC – that can be intercepted or monitored. Furthermore, mobility brings victims in proximity with hackers, instead of the hackers having to seek out victims. For instance, Wi-Fi does not just relate to mobile devices, but it is easier to get access to Wi-Fi traffic near a public hotspot than it is to get access to the traffic near a private hotspot in a home or business.

Likewise, Bluetooth was vulnerable in the early days to ‘bluesnarfing’, in which information could be downloaded from a user’s phone over Bluetooth without their knowledge within the 10 meter range of Bluetooth, a flaw that has been corrected, while ‘bluejacking’, the ability to send contact information to another phone without consent, may still be possible on some phones.

Many of us store personal and valuable data including contacts and photos on our smart devices, associated storage (such as SIM cards or SD cards) or in the cloud, namely using apps that sync to a cloud service. As small portable devices they are particularly vulnerable to loss or theft, and users may have weak or no password protection allowing for easy access to the data.

The screen size also introduces its own challenges, as apps or the browser typically do not indicate whether data is stored or transmitted, what level of security is offered or what security measures are used. For instance, the secure sockets layer (SSL) padlock indicator common in PC browsers is not usually displayed in apps.

Finally, installing apps allows for introducing malware to the device, which has always been a risk when installing software on a computing device. App stores may provide varying levels of protection, either screening apps before making them available, or disabling apps after any problems have been found. Find out more Users may be able to install apps outside of the default app store – either by design or by removing built-in restrictions (also known as jailbreaking) – either way, the user then loses any protection otherwise afforded by the store.

App challenges

App challenges

a. App search and linking
Users cannot easily search or link across apps

b. Openness
App stores control the openness of their platform to developers

c. Development costs
Developers face costs in making their apps available on each platform

d. Switching costs
Users face costs in switching between platforms

App Search and Linking

While the number of websites available to users continues to grow, searching and linking across websites has become increasingly straightforward, thanks to tools such as the web browser and search engines. While these tools are available on mobile browsers, the majority of mobile data is viewed via apps.

However, such apps are standalone tools, with no web addresses and, apart from a few recent innovations, no deep links. This means that information found via an app, be that discount hotel offers or train times, cannot always be easily shared and that users cannot move directly between apps.

A number of developers have begun to search for methods to enable deep linking between apps, for example by assigning each app a uniform resource identifier (URI) that will allow it to be opened directly in place of the standard web interface. Such linking has first been adopted across individual developers’ apps, for example the Facebook app linking easily to Facebook messenger. The greatest benefit of such mobile deep linking will be the ability for users to be brought directly to a specific location within an app with a dedicated link. Just as deep links made the web more user friendly and navigable, mobile deep links are likely to do the same for mobile apps.

Illustration of how linking between apps can streamline user experience

However, while much progress has been made there are still stumbling blocks in the full adoption of deep linking, with such connections often negotiated one-to-one between apps or through a company’s individual approach.

In particular, issues arise due to a lack of interoperability, with different mobile platforms often adopting different formats. This causes a confusing user experience because different sets of links are required to access the same app on a different mobile operating system.

An open access, cross-platform approach to deep linking will increase the benefits of the app environment for all users.

Openness

The owners of App stores exert control over what is available to varying degrees. While this may help prevent downloading or use of apps with malware, improving security along with helping maintain the privacy of customers (see the first two challenges in this section), this can also limit expression and consumer choice.

A number of app stores, including those of the Apple and Windows platforms, require developers to submit their apps for review and approval before the platform operator will publish them. The guidelines for which apps will be accepted and which will be rejected can be imprecise, and can add uncertainty to app investments.

Such generalisations in guidelines for approval allow app stores to act as a gatekeeper, having complete control over the content published, potentially restricting permissionless innovation and freedom of expression.

Once accepted, apps are still subject to decisions made by app stores. There are currently upwards of 1.3 million apps available to download, leading potential customers to often rely on app rankings and content promoted by the store via “featured lists” to decide on which to download. This can mean that unless an app already has a large audience or is selected for endorsement it is unlikely to be discovered, making it hard for developers of new apps to get noticed.

The result is that the vast majority of traffic is on apps owned by large developers, for example 71% of unique visitors to the top 25 US mobile apps in June 2014 were to apps owned by just four developers. This differs from the desktop browser situation, where the dominance of the top four digital media properties is roughly half of that on apps, making up just 36% of aggregate unique visitors in August 2014. Find out more

App stores are attempting to offer developers methods through which to generate app discovery, for example the use of sponsored search results on Google Play, thereby driving awareness. Find out more However, there are issues with this solution in that it may be the wealthier, more established developers that are able to afford this service and the divide may increase, with truly innovative new apps never achieving visibility.

Aggregate unique visitors to US top 25 apps by ownership
Aggregate unique visitors (millions)

Proportion of individuals in a region using the Internet in the previous 12 month period. Data is based on surveys carried out by individual national statistical offices or extrapolated from information on Internet subscriptions.

Source: ComScore, 2014. Find out more

Development costs

Mobile platforms exist as stand-alone closed ecosystems, with apps needing to be developed specifically for each platform in order to be used on non-standardised devices. This requires developers to create multiple variations of their apps in order to reach the maximum audience in terms of device owners. For most small to mid-sized businesses, the budget for app development is a serious consideration, with the median cost for app development between USD37 913 and USD171 450. Find out more

As a result, the development of mobile apps ‘personalised’ for multiple operating systems can be expensive and resource-intensive. These costs increase with the need to update the apps as the underlying mobile OS is updated. Furthermore, as more and more of our devices become ‘smart’, including our TVs, our e-book readers, and even our watches, this can require further development to adapt apps to these new platforms.

One can see the results in the numbers of apps available on each platform, where after Apple and Android there is a steep decline in the number available for the other platforms. We note that even governments may not develop official apps for all platforms, adding to the challenge of new platforms and restricting the options for users of those platforms.

The US government provides an example of selective app development, for example apps related to America’s Bureau and Centers for Medicare and Medicaid Services are only available on Android and iOS. Overall, many apps are available on iOS only, many of the rest are only available on Apple and Android, and only a handful are available for BlackBerry or Windows. Find out more This availability does not reflect the platform market share in the US, where Android has a market share of 58%.

The European Union is also quite selective in which platforms it supports. Find out more Of the 27 EU apps, all are available on Apple, under half are available on Android, three are available for Windows, and only one, regarding the Galileo and EGNOS Satellites, is available for BlackBerry. The predominance of Apple availability is at odds with the market share of Apple – in the five largest EU countries it ranges from 7 to 38%, while Android is not below 50% in any.

Availability of EU apps for each platform

Proportion of individuals in a region using the Internet in the previous 12 month period. Data is based on surveys carried out by individual national statistical offices or extrapolated from information on Internet subscriptions.

Source: Find out more

Switching costs

The lack of standardisation between apps and app stores also acts as a barrier for consumers wanting to move between platforms as there are significant costs associated with switching. In particular these costs are associated with the loss of non-transferable apps which will likely need to be re-purchased for the new handset, increasing the relative cost of switching to a new platform. Even for free apps, there is a time cost to switching. Such costs can ultimately impact the decision of whether to switch, and if so, on which platform to switch.

Conclusion

The introduction of app stores, typically tied to the platform consisting of the smart device and operating system, has proven popular with users, by making the advanced features of a smart device available through a convenient icon. At the same time, it has created a first-mover advantage that limits platform competition. Users will only invest the cost to switch to a new platform if there are enough apps available, but app developers will only spend the money to adapt their apps to a new platform if there are enough users. The result is less dynamic than the easier switching between PCs accessing the Internet via browsers.

The outcome can be seen in the operating system market shares across countries. While the global market share for Android is 84%, in the graph below one can see a wide range across the countries shown. In no case, however, does Android have less than 50% market share and in several it approaches 90%, while Apple never exceeds 38%, Windows has no more than 14%, BlackBerry no more than 3%, and Other platforms only exceed 1% in one country.

Market Share Q1 2015

Proportion of individuals in a region using the Internet in the previous 12 month period. Data is based on surveys carried out by individual national statistical offices or extrapolated from information on Internet subscriptions.

Source: Kantar Worldpanel, 2015

DEVELOPMENT

Spectrum issues

Recent years have seen a surge in mobile data traffic, based on the increase in the number of users, and the increase in the amount of traffic generated by users taking advantage of all the possibilities of the mobile Internet. Traffic will continue to grow at a fast pace as mobile network deployments expand to cover entire countries, and as networks upgrade to 3G and 4G technologies and beyond.

The availability and growth of mobile Internet services is critically dependent on access to a finite resource – radio frequencies, or spectrum. Find out more All devices offering mobile Internet operate in a similar way, generating and transmitting a signal at a specific radio frequency. Once transmitted from a device, it is captured by the nearest base station and then transferred to the Internet. Return traffic is transmitted from the base station to the receiving device, which then decodes the signal into the required data.

Spectrum is at the heart of many commercial services, including radio and television, government services including safety networks and military communications, and personal services such as ham radio. In many, but not all, cases a band of frequency must be made available on an exclusive basis for one particular service, and often to individual providers of the service, in order to prevent interference and provide an incentive to invest in the service.

As spectrum is a scarce resource, and given that the spectrum most attractive for mobile cellular and Internet services has often been assigned for other existing services, spectrum management is a critical policy and regulatory issue. The needs for mobile services must be balanced against the needs of other services within a country, and against the international need to coordinate spectrum use and create standards for equipment.

Characteristics of spectrum frequencies

Only a relatively small subset of radio frequency spectrum, between 450MHz and 5GHz, is currently in use for the provision of mobile services, while further spectrum including that upward of 6GHz is being researched for mobile feasibility.

Spectrum is selected for different services according to the characteristics associated with each frequency. Lower frequency spectrum is ideal in many circumstances, as it can penetrate buildings in cities, and propagate far in suburban and urban areas. For this reason, however, it is already heavily used, notably for broadcast television.

Attempts are being made to make this popular spectrum more accessible to mobile, notably the digital switchover to free up spectrum, and white space usage to make existing use more efficient. Given the existing popularity of these bands, lower frequencies are not likely to be able to keep pace with increasing demands, and thus higher frequencies, where more spectrum tends to be available, are typically used to provide more capacity.

Access to radio frequencies is regulated via detailed spectrum management processes, to promote efficient use. Typically day-to-day spectrum management is undertaken by national regulators, however the International Telecommunication Union (ITU) is responsible for identifying harmonised spectrum bands to be released to different services at a regional or global level where possible. This allows for economies of scale in creating equipment and services that can be used widely across regions or globally, and helps to avoid potential interference issues, both between neighbouring countries and neighbouring frequency bands. The ITU coordinates spectrum across three regions:

The ITU hosts a World Radiocommunication Conferences every 3 to 4 years, at which it reviews frequency allocation. The next conference, WRC-15 is to be held in November 2015. In the conference preparatory meeting a number of spectrum bands were highlighted as candidate bands for use by mobile services in order to meet future mobile data demands.

Candidate bands (shown in blue) for mobile services to be discussed at WRC-15

At the national level, there are three tools commonly used for managing spectrum access, with spectrum able to be authorised as:

Dedicated, licensed spectrum

License-exempt spectrum

License-shared access spectrum

Dedicated, licensed spectrum

Dedicated, licensed spectrum is used for the provision of mobile cellular services around the world and, while the bands are co-ordinated by the ITU, national regulators assign this spectrum to individual operators through processes such as competitive auctions and beauty contests. Mobile operators must make significant investment in network infrastructure in order to provide services, and in order to make this investment worthwhile require dedicated spectrum assignments, allowing for no interference from other uses, and licensed for a sufficient period to recoup the investment.

Spectrum bands are allocated to mobile operators in different ways across the three ITU regions, however some of the more recently released bands, such as the 2.6GHz band are assigned more uniformly. Additionally within these regions there is significant variation in the amount of spectrum assigned by regulators for mobile use.

SPECTRUM ASSIGNED FOR MOBILE

The amount of spectrum assigned for mobile can vary significantly by country. For example, in Europe, Albania has assigned a total of 360MHz of spectrum to mobile while Austria has assigned 805MHz. Similar phenomena can be seen in the Asia Pacific, where Australia has assigned 658MHz and Vietnam only 340MHz.

By contrast, the ITU has predicted that by 2020 average spectrum requirements for the provision of mobile services will be between 1340-1960MHz, while GSMA has predicted that between 1600-1800MHz will be needed. This highlights the spectrum challenges facing the international community at the upcoming WRC and the challenges facing policymakers at the national level.

Summary of spectrum band allocation to mobile

Note that not every country within each region will have assigned all of the allocated spectrum to the mobile operators in that country.
Source: ECO; ITU; Regulator websites
* Likely allocation and band plan, to be confirmed following WRC-15
** So far this band is only used in an FDD configuration in Japan, but may soon be used for LTE (SDL and TDD) in multiple regions
*** Band plan not yet finalised so this could also end up being used for LTE with an FDD band plan.

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License-exempt spectrum

Certain bands of spectrum allow wireless services to operate without requiring individual licenses, based on certain technical conditions being met, for example keeping transmission power low and avoiding interference. Services that make use of such spectrum include Bluetooth and a number of Near Field Communication (NFC) technologies, however Wi-Fi is the single largest category of license-exempt spectrum use.

Mobile data on network-connected devices can be offloaded onto these services at the discretion of the operator, to preserve spectrum use where possible, or the consumer who can link their devices to their Wi-Fi hotspot, often to save on data charges. However mobile data traffic from devices without mobile subscriptions, such as some tablets, can also use this spectrum and add to the amount of traffic.

License-shared spectrum

Spectrum sharing predominantly takes two forms, spectrum competitively assigned for shared use and spectrum where the sharing is actively managed by national regulators. Its purpose is to allow spectrum to be used by another party when not in use or needed by the primary user, thereby making spectrum use more efficient.

Given the nature of spectrum as a finite resource, such innovative regulatory strategies, allowing different types of technology to operate in the same frequency band, are particularly important in meeting demand. This is notably true in the case of white spaces, which allow valuable broadcast spectrum to be shared by mobile Internet services.

Mobile Internet use will continue to grow as both subscriber numbers and average data consumptions per subscriber grow, increasing global mobile traffic.

There are four realistic means to address increasing demand, each with its own potential issues.

1. Build more mobile cell sites in order to increase overall capacity and hence reduce the demand on each site. However, this is expensive, and interference between sites limits the density of the sites as they get closer together.

2. Offload mobile traffic to platforms such as Wi-Fi and potentially white spaces. However, as shown on the right this would mean a significant increase in Wi-Fi traffic, which may lead to congestion over time.

3. Limit demand using data pricing and/or throttle demand for heavy users. This would have the counterproductive result of limiting the benefits of the mobile Internet that we have explored in Section 3.

4. Make additional spectrum available for the mobile Internet, including all types of spectrum – licensed for mobile operators, unlicensed for Wi-Fi, and shared for white spaces.

While country by country needs are likely to vary, particularly between developing and developed countries, the ITU and GSMA predict that on average spectrum requirement for the provision of mobile services in 2020 will be significantly more than what is assigned today. This will be a significant challenge at the country level, as the needs of other private and public radio services must be balanced against mobile Internet needs, and at the WRC15 as allocations are made that will impact the future availability across all regions.

Forecast mobile Internet traffic on both cellular and Wi-Fi offload networks
Mobile data traffic (PB thousand)

Proportion of individuals in a region using the Internet in the previous 12 month period. Data is based on surveys carried out by individual national statistical offices or extrapolated from information on Internet subscriptions.

Source: Analysys Mason Research, 2015

The Digital Divide

The optimistic view of Internet development focuses on the speed at which we have now surpassed 3 billion users, with the mobile Internet playing a significant role in that achievement. However, that still leaves more than half the world’s population offline. Given the role that the mobile Internet will play in bringing the next billions online, we focus here on the challenges faced in bringing those users online and allowing them the same opportunity for social and economic inclusion.

As shown on the next chart, there are three challenges to the mobile Internet closing the digital divide.

Availability
Users can only access the Internet if it is available to them; building on existing cellular network availability, availability of mobile Internet services outpaces adoption today.

Affordability
One reason that availability outpaces adoption today is clearly the cost of service, which for too many is too large an expense.

Relevance
Finally, even for those who can afford the Internet, they must have a compelling reason to go online, based on content that is in their language and locally relevant.

Availability

The first challenge is availability. The basis for mobile Internet availability is cellular network coverage, and many countries have at or close to 100% of their population covered by cellular networks, the global average is 94%, and no region has less than 80% coverage. While the data does not exist that indicate whether these networks are at least 2.5G, and thus able to offer mobile Internet services, the cost to upgrade from 2G is relatively low, and thus could relatively easily be upgraded in the face of increased demand.

While the good news is that almost every country tracked has at least a 3G network deployed, offering fast Internet connections, the coverage is not yet universal, with some regions having just over 10% coverage, and the worldwide average at 48% of population covered. This restricts much of the population to older mobile technology, if any, and restricts the mobility of those with 3G service to those parts of the country with coverage.

The Digital Divide

This chart shows that while 94% of global population is covered by a cellular network, only 48% have 3G coverage, leaving room to increase availability. Further, only 28% have subscribed to a mobile Internet service, leaving room to increase adoption by focusing on affordability and relevance.

Affordability

The second challenge is affordability. In most, if not all, countries, the availability of mobile Internet service far outpaces adoption rates, meaning that a significant number of people have access to service, but do not subscribe. One reason for this is affordability, as the cost clearly puts a ceiling on the number who can adopt service, and there is still a large number of countries where the cost is more than 5, or even 10% of average per capita income.

On the other hand, according to a recent study by internet.org, a data package of 250MB would be affordable to 55% of the world’s population, for whom this would represent 5% or less of average per capita income. At an entry level, this would allow approximately 12,500 text-based emails, or 1,250 text-based web pages to be browsed. Including multimedia would decrease the amount of usage significantly of course, and thus work still needs to be done to lower the costs to make all services available to everyone.

Nonetheless, these numbers suggest that more people could afford mobile Internet services than the 28% of the population who are currently taking them, suggesting a segment of the population for whom the Internet is available and affordable, but not yet of perceived interest to adopt, based on a variety of factors we consider next.