STL Partners

Telco 2.0 Growth & Innovation

HTML5: market impact and telco strategies

Summary: HTML5 will have a profound impact on consumers’ and businesses’ interaction with the web in coming years. In particular, HTML5-compliant smartphones may lead to a reduction in the power of closed app platforms such as Apple iOS and Google Android. While this seems broadly positive for telcos, there may also be negative side-effects of the increasing capability of standardised (and often free) Internet capabilities. (May 2012, Executive Briefing Service)

HTML5 Standards Scope and Status

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Below is an extract from this 31 page Telco 2.0 Report that can be downloaded in full in PDF format by members of the Telco 2.0 Executive Briefing service here. Non-members can subscribe here, buy a Single User license for this report online here for £695 (+VAT for UK buyers), or for multi-user licenses or other enquiries, please email contact@telco2.net / call +44 (0) 207 247 5003. We'll also be discussing our findings at the London (12-13 June) New Digital Economics Brainstorm.

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Introduction

For the last two or three years, telecom operators – especially in mobile – have been chasing after the “app economy” as a potential source of revenue, as well as the core of perceived threats from the Apple and Google ecosystems. In general, despite a lot of effort and noise, telcos have not really been in a position to benefit from the app explosion, except insofar as it has helped them upgrade customers to smartphones and data-plans. Telco-run appstores have made little headway against the vendors’ centralised storefronts. There have also been downsides, in terms of a shift in market influence to the device vendors, and spiralling traffic and signalling loads from easy-to-use interactive apps on smartphones.

Now, another shift is starting to appear, and the impact on the operator community is still unknown. We see growing traction for a new version of the web’s underlying technology, HTML (HyperText Markup Language). The new standard, HTML5, is already being supported (albeit patchily) in various devices, and allows a web browser or similar software to act in much the same way as a standalone “native” app. It is increasingly possible for a website, or innovative service, to be based on HTML5 – and work across many types of phone or other device - rather than needing to rely on the underlying capabilities of the OS.

Some in the telecoms industry believe that HTML5 gives operators a unique opportunity to reclaim a measure of control over the smartphone’s destiny. It also promises the benefits of true multi-screen applications and services, with browser-based apps working seamlessly across TVs, PCs and other devices as well as phones. But on the other hand, it could also present risks, strengthening other players such as Amazon or Facebook, while presenting telcos with yet another set of challenges for which they are organisationally ill-prepared.

This document gives an outline of why HTML5 is important for the telecoms industry – and how telcos can attempt to skew he impact towards exploitable opportunities, rather than accelerating threats.

What is HTML5 and how does it differ from earlier versions of the web?

HTML5 is the latest version of the standards used for displaying content and running applications from the web. The key standards body behind it is the Worldwide Web Consortium, also known as W3C. It is a huge upgrade to the previous variant HTML4, which has been used (albeit with ongoing enhancements) since 1997 – pretty much the whole history of the popular, mass-market Internet. 

In particular, HTML5 incorporates many of the extra functions that have been layered on top of the web in recent years. These are add-ons which have made it more interactive and akin to a computer programming language, rather than just the content-display (“markup”) capabilities it had previously. If you think back maybe five years, much of what we now take for granted online didn’t really happen. We didn’t get self-updating and scrolling pages (think of the Twitter Timeline), forms that reconfigure the page or download background content while you’re typing (e.g. Google’s auto-complete). All those are driven by tools such as JavaScript, which lets code “execute on the page”. The term “Web 2.0” was coined to describe the more-interactive services that are common today.

HTML5 takes that concept much further, allowing the web to be used as the basis of “full applications”, which can:

  • Work offline (when the device is not connected to the Internet).
  • Access underlying device functions such as the camera or phone-book. (This is also being worked on by WAC – see later in the document for how this fits with W3C’s efforts)
  • Replace the use of some proprietary plug-in functions, such as Adobe Flash for vector graphics and video playback.
  • Work across different smartphone and browser platforms (at least in theory), meaning that developers do not have to re-code their apps (“port”) between different phones’ operating systems.
  • Break the dependency on locked appstores (especially Apple) and permit much wider distribution and discovery via the Web instead
  • Allow web apps to be standalone “widgets” or be integrated into other applications, rather than merely running “in the browser”.
  • Be developed (in theory) by a much broader community of web developers than those who specialise in particular device platforms.

Technically speaking, HTML5 is separate from ongoing evolution of both JavaScript as the programming/API language, and the presentation standard CSS3 (Cascading Style Sheets), but as they generally get used together, we will stick with simply referring to HTML5 here. 

Overall, HTML5 represents a general philosophy as much as anything else – the idea that the Internet is the future platform for all services and applications, finally breaking the link with underlying hardware, device type or operating system. 

Yet while this goal of a totally democratic and ubiquitous “execution layer” for software is a recurring one, the reality is that platform providers are always incentivised to differentiate, and create dedicated features that make their device or ecosystem optimised in some way. In Telco 2.0’s view, HTML5 will ultimately raise the “lowest common denominator” bar very high – but there will always be a need for proprietary “best of breed” software running on dedicated platforms.

Web pages, widgets and web-apps

It is worth quickly distinguishing between HTML5 mobile web pages, a “web app” and a widget a little more deeply. Firstly, an increasing proportion of “normal” web pages will be written in HTML5 and will be able to support a measure of interactivity. This is however outside the scope of this report, which focuses more on what happens on the device – specifically when the user downloads an “app” of some description. What this means is that HTML5 apps won’t feel to the user like a web page – there won’t be the usual browser UI elements like tabs, URL and search bars, bookmarks, back/forward buttons and so on. 

This is important for various reasons – including the psychology behind the browser vs. app difference. Many users instinctively believe that the browser-driven web is always “free” (and certainly, the constant presence of a search box and bookmarks makes it easy to escape to somewhere that is free). Conversely, standalone widgets feel like “pieces of software” and therefore fit better with the perception of payment.

There is also a bit of a complication in definition here – some of today’s “web apps” are actually just extensions of a web server’s code which runs in the browser (the HTML5 website, as described above). Conversely, true widgets are completely standalone, and can work fully offline without a connection to a server. In addition, while various device and browser platforms have offered widgets or “gadgets” before (e.g. Android phones and some Nokia’s devices have active web-connected elements on the home-screen), these have typically been based on proprietary platforms with significant differences in behaviour and coding. The fragmentation has hindered broader use – something that HTML5 (and perhaps related standardised widget environments like WAC) should solve.

HTML5 history and status

It is important to note that HTML5 is not yet “finished”, but remains a work-in-progress. Over time, it has evolved from an independent project started outside of W3C, to becoming a broader standard pursued by W3C, absorbing other features and functions over time. It is expected to be finally completed in 2014. 

Its origins started in an informal group called the Web Hypertext Application Technology Working Group (WHATWG) in 2004, set up when the “official” web industry body W3C tried to replace HTML with XML, voting down an alternative approach to applications. But proponents Mozilla, Apple and Opera decided to carry on developing it privately anyway, and in 2007 it was brought back into the fold officially. 

A full discussion of W3C’s processes and rather arcane distinctions between “drafts”, “recommendations” and so forth is outside the scope of this note, but the bottom line is that HTML5:

  • Has enough stable elements to be implemented usefully today.
  • Will continue to evolve for several more years.
  • Is however likely to suffer from a measure of fragmentation and non-interoperability for some time to come.

Although it might be thought that this level of “flux” might be off-putting to telcos, it is worth noting that it is not that different to 3GPP or other bodies’ standards development. Many telecom standards are implemented in piecemeal fashion, and interoperability is often less than might be hoped. It’s not optimal – but neither is it a showstopper for telcos to become involved with HTML5.

Figure 1 - HTML5 standards scope & status

HTML5 standards scope & status

 

To read the note in full, including the following additional analysis...

  • The web vs. the app: a shifting battlefield
  • The run-anywhere utopia
  • Hybrid web+native apps
  • HTML5 appstores
  • HTML5, consumer electronics & PCs
  • HTML5 & mobile phones
  • Not all HTML5 devices are created equal
  • The Internet (not-telco) actors in HTML5
  • W3C
  • Mozilla
  • Google
  • Telco initiatives around HTML5
  • WAC (Wholesale Application Community)
  • Former OMTP BONDI
  • Boot to Gecko
  • Risks and threats
  • HTTPS and SPDY: secure but opaque
  • Why WebRTC is transformative
  • A new generation of competitors in apps?
  • Innovative threat example – HTML5 tethering
  • Impact of HTML5 on mobile networks
  • Conclusion & recommendations
  • Recommendations
  • The Telco 2.0™ Initiative

...and the following figures...

  • Figure 1 - HTML5 standards scope & status
  • Figure 2 - HTML5 vs. native apps vs. hybrids
  • Figure 3 - HTML5 pro’s and con’s
  • Figure 4 - HTML5 remains fragmented in implementation
  • Figure 5 - Browsers remain imperfect for HTLM5 but are improving fast
  • Figure 6 - Google Chrome is a major catalyst for HTML5
  • Figure 7 - Operator involvement in HTML5 is centred on WAC

...Members of the Telco 2.0 Executive Briefing Subscription Service can download the full 31 page report in PDF format hereNon-Members, please subscribe here, buy a Single User license for this report online here for £695 (+VAT for UK buyers), or for multi-user licenses or other enquiries, please email contact@telco2.net / call +44 (0) 207 247 5003.

Technologies and industry terms referenced: Apps, Appstores, Smartphones, STBs, Social TV, WAC, W3C, Facebook, Google, Apple, Browser, Widget, Mozilla, Webkit, HTML5, WebRTC