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The phone company’s beautiful children

Last week we proposed a rather gloomy assessment of the long-term trends that ultimately erase the value of the traditional phone company as a business. Voice interactivity is becomes a feature of applications and services users acquire from an increasingly diverse set of sources. The play closes with the body of the phone company slumped in the stage corner, the spotlight fading to black. There is no villain, no violence; the victim died of loneliness and old age.

However, this theatrical production need not be a tragedy, let along a farce. Instead it can be a complex mystery, with an intrigue of possibilities of mistaken and revealed identity. There are things network operators can do to transform themselves so that when time is called on telephony they have moved on already. The phone company is dead, but a smart telco will have ring-fenced that business a long time ago and grown a replacement identity. We think it is possible: telesalvation follows telepocalypse. And we’re not alone.

At the Telco 2.0 event last month the Head of Strategy at Belgacom, Matteo Gatta, gave a presentation with some intriguing possibilities. He raised the ambition of Belgacom being a supplier of contextual voice services. This should sound familiar: social, contextual and collaborative are our buzzwords. The trick he needs to pull off is to find those contexts which Internet players find hard to reach.

It isn’t hard to think of examples. Home and industrial security systems and alarms, kiosks, TV shopping, in-car, e-government initiatives, social care services, logistics management — the list goes on. Voice may be an enabler in each case, and a technically difficult thing to do well, thus demanding high network management and technology skills. The real key is that each involves a partner, sales and distribution ecosystem that doesn’t significantly overlap with the Internet players. A great deal of potential exists for all kinds of real-time communications solution sales to domestic users as well as enterprise customers.

There are probably hundreds of possible contexts for embedding voice away from the PC and Web. No telco can have deep knowledge of all these. Thus the business model evolves to being a business and technology platform enabler. These contextual services aren’t the only possibilities. For example, startup Tello has been struggling to federate presence between enterprises to speed up certain business processes. A nationwide, federated enterprise employee directory with privacy and access control is probably a business there to be snatched by someone with some entrepreneurial spirit. The phone company dies, but the Telco 2.0 offspring lives in considerable health. This is before we even begin to address bigger opportunities, such as helping those contextual social services go mobile with carrier-enhanced advertising.

All this could even give a lease of life to IMS equipment, although we at STL remain concerned about the cost and complexity of this technology. Indeed, technology is the easy bit. The hard part is building new solution delivery organisations and re-tasking sales and marketing groups to sell that. They need to get close to a non-traditional customer base, and possibly only have an indirect relationship with the end user (or at least shared customer ownership).

Overall it paints a very different picture to trying to eke out a few cents of ARPU from users by selling them relatively trivial software functions inside a big switch. There are only so many ways to bundle and price a triple or quad play product, none of which creates lasting differentiation. Yet a platform enabler would barely notice the passing of the telephony business — no worse than phasing out an inflexible old piece of software you have to interface with.

Looking more broadly, the purpose of voice is to connect people. If you see yourself in the “connecting people” business, then you draw your net wider than tip-and-ring telephony. For example, one of the attendees at the October Telco 2.0 event in London, Lee Dryburgh, is a telecom consultant doing his PhD at University College, London. He’s looking at tackling some of the hardest identity and privacy problems of connecting people in real-time. For example, when you walk into a hotel, shouldn’t the reception desk temporarily appear at the top of your buddy list? Now imagine you’re a telco helping to broker this relationship in the post-metered minute world. Today it’s a research project, tomorrow it’ll be a billion-dollar business. If you want to learn more, go to ConnectionCommons.org and contribute to the effort!

The centenarian phone business has been a wonderful story, but its coming to an end. Rather than mourn, we should celebrate its lively sequels.

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"There are only so many ways to bundle and price a triple or quad play product, none of which creates lasting differentiation."

And yet, ironically, this is the primary strategic focal point for most incumbent telcos. So, given the theatrical theme of your post, perhaps we should call this The Multiplay Masquerade?

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