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March 31, 2008

Ring! Ring! Hot News, 31st March 2008

In Today’s Issue: Motorola gossip: the demerger cometh; cablecos’ Comcast-Clearwire concert party; HOWTO deploy fibre in NZ?; here’s an answer from San Francisco; Symbian OS platform security is hacked; free WLAN in BA lounges; 3UK is profitable, pigs fly; another MVNO casualty; Virgin Mobile India “not an MVNO”; Miss Bimbo; $20 a month on ringtones; Cuba Movil!; Chinese 3G; really fast stuff; 3G iPhones; another startup-without-money.

Inside gossip at Motorola; someone claims to have been the Richard Kinder figure of their crisis and accuses Ed Zander of working their past CMO to death, and also playing too much golf. Which of these sins is more serious is left as an exercise for the reader. It was also this week that saw Moto finally take our repeated advice. They got rid of the handsets operation, thus leaving it “floating downwards to find its own level”, in the immortal words of Sir Norman Fowler describing the collapse of Sterling.

Telephony Online (ever tried offline telephony? me neither) reports that a squad of US cablecos are testing the water for a possible bid for the WiMAX operation, with a view to rolling Clearwire up in it as well. (More here.)

In New Zealand, however, they’re going the other way. It only remains to work out some details, like who pays and what form a national fibre rollout would take. So nothing to worry about there. Communications Breakdown has the background; it looks like the biggest problem is how to structure an investment vehicle to build open-access fibre. We’re thinking a big lorry with a spool of cable on the back… chasing another lorry throwing out public money in front.

The good people from the Internet Archive are fibre-ing up San Francisco’s public housing with 100Mbits/s Ethernet; what lifts this out of the “whoo! those crazy Californians” bracket is that it’s a classic example of the joy of incremental muni-fibre. San Francisco, or rather the city government, has already laid point-to-point fibre for its own use, linking up its buildings. For whatever reason — probably a mixture of future-proofing and the advantages of using its own right-of-way — this often passes beneath public housing projects. So the problem is reduced to some Cat5E cables along the corridors, a switch on every floor, a router in every building and a VLAN for the public access traffic. Cracking.

Cracking is just what they’ve done to the Symbian OS Platform Security functions; we reported on the great row going on among the mobile developers about whether it was any use, or just a layer of bureaucratic hassle. One Telco 2.0 employee went so far as to experience it himself. Now somebody’s hacked it, and although the hack is far from stable, it does at least send a signal regarding this sort of thing. Stop trying to control what users do with devices they own.

Heathrow Airport’s new terminal and its dodgy baggage-handling system were in the news this week. (Anyone who wonders how this might have happened should check out the Project Failure Blog and especially that terrifying architecture diagram. It makes IMS look elegant.) Fortunately, British Airways chose the same week to put free Wi-Fi in its lounges. So you could whinge at up to 54Mbits/s while you waited. Could this be the start of a larger trend of bundling telco products into travel products — anyone for a cheap roaming SIM card with their next business class ticket?

In other surprises, 3UK this week staggered into positive EBITDA after years of essentially buying customers with Li Ka-shing’s money. They’d followed a curious string of strategies, ranging from high-end, super-walled garden telco-as-media, through bargain basement minutes giveaway, to putting Skype on 3G handsets and pushing HSDPA modems hard. Maybe just a good offer, well presented, and competently executed is the secret sauce.

Far less surprisingly, there’s another entry for the dead MVNO file; student-focused Dot Mobile has gone bust after apparently convincing itself that students had money.

Virgin Mobile’s operation in India, it turns out, is officially not an MVNO. But what is it — an Unidentified Financial Object? In fact, according to the Indian Department of Trade, it’s not any kind of operator or even a reseller, but just a brand licensing deal with Tata’s mobile outfit.

Here’s another youth-oriented play: Miss Bimbo, where you can buy virtual breast implants for your avatar. Not really mobile, except for the fact they’re using premium SMS to handle payments. Here’s a Telco 2.0 teachable moment: this is an example of a telco facilitating large numbers of small transactions, by trading with both parties to them. Unfortunately, it’s also an example of somebody’s slightly dubious business wandering into the highly regulated telecoms world — there is clearly going to be trouble.

AT&T, meanwhile, is offering the chance to make your own ringtones with music from their portfolio. Unfortunately it’ll cost you a bargain $20 a month, sigh.

Cuban leader Raul Castro has announced that the ban on ordinary citizens owning mobile phones is over. That’s good news for the Italian company, Italcom, that operates Cuba’s only GSM network. China, meanwhile, announced that trials had begun of its TDSCDMA network; which is curious, as trial networks have been deployed since at least late 2005. The news is actually that the public are being invited to take part; a difference from China Mobile, which was forced to take part…

It’s Monday, so there must be an absurdly optimistic theoretical maximum speed story. This time it’s NEC, LTE, and 250Mbits/s; but you could swap the company, acronym, and large number with any other such story without doing much harm. And how, precisely, do they plan to backhaul that, let alone hold the handset?

Perhaps with a giant chain of iPhones? Or something. But anyway, Apple is apparently contracting for 10 million 3G iPhones.

Here’s yet another voice & messaging 2.0 startup: Mind Caller, which offers a free voice-broadcast service. As Vinny at VoipGuides points, looks like any another VoIP 2.0 startup with no practical business model.

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March 30, 2008

Music 2.0 the Telco 2.0 way

The week that the real Music 2.0 book launches, we were having a backchannel conversation on future business models for the content industry. We think there’s a strong parallel between music and telecoms — high fixed cost businesses trying to recover that value through products with zero marginal cost of production, and therefore a tendency towards zero as the marginal price.

The thought process therefore needs to be similar: What’s the fundamental value in music… or telephony?

I’m listening to Pink Floyd’s Meddle right now (for the 712th time). Why? Well, a Wikipedia article on Radiohead’s lead guitarist cited it as an influence. And I was reading that after watching the stunning (ahem, pirate) Radiohead performances on YouTube from Later with Jools Holland back in February, which as I told my brother at the weekend…

OK, let’s stop there. Among other things it’s about (i) fandom — discovery, belonging, experience and emotion; and (ii) shared experience — recommendation, weekend house party soundtracks, concert-going, toked and smoked out festivals, etc. These overlap.

So how could you build a business model around that? Well, we’re all potential microsponsors and millipatrons of the arts. And just as billionaire sponsors of the arts like to have their name on the concert hall, us thousandaire plebs won’t want to look like cheapskates in public. If people want to share music, let’s turn that from a bug in the business model into a feature.

What if every album or track sale was also effectively a lottery ticket to the concert; or at least buying the recording would make you eligible for the concert, but that those receipts could only be redeemed for concert ticket applications in date order. You get rewarded for buying, and being in early. Imagine Radiohead’s 1993 Pablo Honey receipts on sale at eBay for $1000… but thanks for discovering us. Oh, and your odds are proportional to the dollars spent, so a mega thanks for getting the deluxe box set.

And then what if you get a digital receipt for every download, and you can show your support on your MySpace page. “Genuine verified supporter of Radiohead”. Roll over to see Verisign announce which albums you really paid for. Freeloaders need not apply.

And then what if the purchase was also a bundle, which included the ability to gift the content. Potentially to an unlimited number of recipients. Just the recipients don’t get sponsor and supporter status, or a place in the concert ticket queue.

And then what if you could be upsold to the “mobile plus” version, where all the distribution costs of gifting were included. “John, I’m sending you this amazing album. You’ve got to listen to it now. All the mobile data charges are included. Ciao, M.”

Or why not be able to listen to whatever Thom Yorke has on his iPod right now… for a fee?

There’s a pattern here. You make money because of the music, not from it. Concert tickets and t-shirts, not albums. There’s still money in the base product, but that is priced and packaged in ways that accellerate the other lines of business.

Could telecoms go the same way? Perhaps the most important economic thing in a phone call in 2018 won’t be the access or minute charges. It’ll be getting a receipt for each call. You can then feed it into LinkedIn (or whatever’s popular in 2018), saying: I gave you my most valuable thing — my time — for 12 minutes 47 seconds on 30 March 2018. Because without that, my call won’t be routed though to you or your friends in future. The value will be in protecting the time and attention of users, not metering out network access by the dime. I’ll be in the “straight to voicemail” or “access denied” categories unless I’m verifiably a buddy of yours, or we’ve made an agreement to talk.

For a practical look at the closer future of the voice and messaging business, we’ll be publishing our Consumer Voice & Messaging 2.0 Report at our next Telco 2.0 event.

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March 25, 2008

Ring! Ring! Hot News, 25th March 2008

In Today’s Issue: 37% of Ultra-Mobile PCs to get WiMAX; Virtual PBXs could eat your business customers; low-cost telepresence like low-cost spaceflight, i.e. not very; MSFT buys callcentreco; Don Price on managed services; topology aware P2P; variable speed limits for the Net; price war rages; i-mode fails in Europe; huge telcos win huge telco auction; epic Aussie brawl over WiMAX; Sprint’s new core network - platform perfection or IMS infection?; Vodafone & MTN; French FTTH; Deutsche Telekom disaster; sickening “human skin” phones.

37% of ultra-mobile devices to fit WiMAX. So says Intel — but then again, how big will the market for ultra-mobile PCs really be? Time will tell…

Virtual PBX providers are building the platform; developing Web-based click-to-call APIs and virtual call centre capability. This is a crucial area of interest for Voice & Messaging 2.0; they’re explicitly targeting businesses that are too small to afford one of the Big Vendors’ enterprise VoIP systems, but who need functions that are more sophisticated than the ones the telcos offer (which is to say, not necessarily that sophisticated at all). There’s another of those undemarcated frontiers here, between Virtual PBX/IP CENTREX, hardware vendors, VoIP software developers, and mobile operators’ business products.

Similarly, Hewlett-Packard just launched a new, low-cost telepresence suite targeted at smaller enterprises. Telepresence - it’s a staple of everyone’s vision of the future. Basically, it’s souped-up teleconferencing, verging on virtual reality; a typical suite involves a wall of very high quality video screens, surround sound speakers, and cameras, wired into a device that uses SIP to control a videoconferencing session. But low-cost is a very relative term here; the list price is $120,000, which is a sizeable dollop of CAPEX for any smallish business, or of course any smallish division of a bigger organisation. With a few well-known exceptions, we’re sceptical of telepresence in general, and we suspect Cisco and HP probably have it sewn up; rather, the opportunity is in making the context of telephony visible. Microsoft thinks so: they just bought a call-centre software firm which gives them the assets to integrate the consumer and enterprise environments better.

The increasing co-opetition between hardware, telecoms, and services also applies to network operators themselves; Informa Telecoms.com has a fascinating interview with Don Price, CTO of Bharti Airtel on developing a major emerging market network with managed services (in their case from Nokia Siemens Networks), and how to manage the critical relationship with the services provider, who after all owns the heart of the business. Counterintuitively, he reckons it’s better to buy the kit from the services provider’s parent company than go for diversity; that way, in the event of any conflict with services, you can threaten to chuck the X billion in hardware to Ericsson…

There’s more here on Verizon’s effort to make nice with the P2P world. The Register makes the interesting point that there’s a divergence of interests between the telcos - defined as the RBOCs and friends - and the cable operators here. Cable operators have TV genetics, and their revenue cash cow is TV, or increasingly, video content delivered like TV. Their key business relationships are with the studios and TV networks; no wonder they really hate P2P. Telcos don’t have this vested interest (yet); perhaps topology awareness will make P2P a competitive differentiator for telecoms? See also this story on the Guardian Online blog about a proposal from BT Research on this. Since 1987, the Internet’s Transmission Control Protocol, TCP, has an inherent mechanism to deal with congestion; really simply, the TCP stack in a user device tries to send as fast as possible, until it either reaches maximum speed or starts to see lost packets. When packets go missing, it backs off, slowing down until the loss stops. The effect is that all the TCP users on a given link slow down until utilisation gets back under 100 per cent, sharing bandwidth equally between all the TCP connections involved. Fair’s fair.

But this is dependent on the assumption that all users have roughly similar numbers of open connections; if one user opens a lot of them, their total bandwidth is their share multiplied by the number of connections they open, so they can grab more than their fair share. This tends to happen with peer-to-peer applications, which by definition need at least one connection per peer. Bob Briscoe of BT Research suggests that, instead of sharing bandwidth between connections, it should be shared between users. (We blogged about this back in August.)

Failing that, there’s always the price war. Virgin Mobile USA announces a new tariff with no standing charge, so somewhere between PAYG and contract service. But how far are you going to go? Motorola just fired half the staff at its UK devices R&D operation (and Carl Ichan is suing); Vodafone gets rid of 10% of head office head count, but claims it’s simultaneously hiring customer facing staff. BT and 3UK, meanwhile, take OFCOM to court over termination fees. Perhaps we need…a new business model?

But it’s probably not i-mode: E-Plus just canned its i-mode service, with the result that the only i-mode network in Europe is now in Romania. The users have been flipped over to a flatrate data tariff instead. The Mobile Web is dead. Long live the Web on mobiles!

To no-one’s great surprise, AT&T and Verizon won the Block C 700MHz spectrum auction; it will be interesting to see how the Open Access provisions play out. Google, however, has shifted target to the so-called white space frequencies in the analogue TV bands; we reckon it’s all about keeping the option of a Google wireless access loop open as a bargaining chip.

That’s if the technology even makes it possible; there’s a brawl going on in Australia (should that be a donnybrook?) regarding WISP Buzz Broadband, WiMAX, and British WiMAX vendor Airspan Networks. Briefly, Buzz’s CEO recently announced they were abandoning a WiMAX deployment because the technology didn’t work. As the same guy had been one of the most aggressive proponents of it last year, this raised eyebrows. Now, Airspan claims it was Buzz’s engineering at fault; they claim that rather than using their recommended equipment for wide-area deployments, they attempted to get away with cheaper micro-cells (presumably by cranking up the TX power). Anyway, the problem may really have been in the core network rather than the radio air interface; Airspan claims Buzz didn’t provision enough backhaul capacity.

It’s also worth noting that Buzz was using the earlier 802.16d-2004 (so-called “fixed WiMAX”) standard in less-than-ideal 3.5GHz spectrum bands. Most WiMAX operators chose to hold the roll-out until 802.16e (“Mobile WiMAX”, though it’s not mobile-specific) was available, or else updated their equipment with 802.16e firmware.

Meanwhile, in the Telco USSR, Sprint-Nextel looks at building a single core infrastructure for all its networks; can anyone spell “platform”? After all, if the WiMAX network is meant to be an open development environment covered in APIs, this does sound interesting. But only as long as they resist the temptation to build an IMS monster, and the project doesn’t get dragged down in the general chaos. This isn’t encouraging though.

Vodafone , meanwhile, was knocked back from buying the rest of Vodacom by the South African government; now they’re being rumoured as possible buyers of MTN Investcom. It has a kind of grandiose logic to it, but Vodafone acquisitions are still a little radioactive in the City… More concretely, Vodafone is apparently planning to float 20% of Vodafone Qatar this year, thus getting value out of one of its many, many emerging market buys.

France Telecom is reported to be looking at 800,000 FTTH hookups; meanwhile, the horrible figures at Deutsche Telekom’s fixed-line operation just keep coming. Revenues fell 8% in 2007, and EBITDA 14%; this year they reckon with 4-6% and 5-8% drops respectively. No wonder the stock market treated this as a profits warning.

Perhaps they could try appealing to the fetish market? LG this week announced a phone designed to “feel as if you were texting on someone’s skin”. It’s got HSDPA. And who knows, maybe even acne? Now, we finally realise why Google called their mobile development platform Android.

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March 20, 2008

New Telecoms Business Model: some ‘A-Ha’ moments

We’ve been presenting the concept of the ‘two-sided telecoms business model’ to numerous parties over the last few weeks - boards and corporate strategy teams at large telcos in Europe and N.America, internet leaders in Silicon Valley, CEOs of mobile operators in emerging markets, CTO gatherings, equity researchers in investment banks, public policy lobby groups, and officers of large trade assocations. We’ve found that there are certain parts of the presentation that we might call ‘A-Ha’ moments. An ‘A-Ha’ moment has nothing to do with the 1980s Danish pop group, but refers to some key slides which grab the attention.

We’ve captured these below, then picked out some highlights of our the Telco 2.0 event in April to show how we’re looking to expand on these concepts to help answer the number one question we get asked at the moment: “How do we move forward from here…?” Here’s the first ‘A-Ha’ slide which wakes up those getting too excited about mobile broadband:

There’s a real live example of this with the BBC iPlayer, which is hurting fixed ISPs in the UK since it launched two and half months ago. This slide helps to explain it:
iPLayer.png Of course it’s early days so far: on mobile, we’re only just starting to sell 3G data as a mass market phenomenon, and those corporate laptops aren’t all hammering on video and P2P yet; the BBC example is new, online video is still mostly low-res and therefore lowish bandwidth; and internet video is still generally lacking a path to the TV set, which is when the problem really gets bad.

Nevertheless we suggest a ‘new business model’ is needed to address the fundamental issue - technical fixes alone won’t work. But what does that mean? Let’s look at the current business model. It tends to reach its limits in competitive, saturated and/or price-sensitive markets:

So, why not expand our horizons and look at more sophisticated distribution services for digital goods: connecting end-users with 3rd party digital services…and getting paid by the 3rd party for doing so:

As described earlier this week, telcos have many valuable assets (that companies like Google envy), the most important being the data and information that flows through their networks. There are challenges to take advantage of this (described here), but if we classify them appropriately it will help us decide which would benefit from new industry wide standards to expose and exploit them and which can be done by individual operators locally:

So, we can now start to see more revenue sources, which tie in with telcos core capabilities:

And here’s a (very high level) example of how it might work:
Slide7.PNG (Here’s a more detailed example).

Crunching a lot of numbers and projecting forward, this could result in a very attractive growth opportunity:

But the first steps on the way to achieving this growth is to quantify the opportunities and benefits for the upstream partners, the 3rd parties, who increasingly rely on digital channels but who also experience significant friction in exploiting them. How can the telco insert itself effectively between 3rd parties and end users and add value in so doing?

That, essentially, is the in-depth research we’ve been running recently. We’ll be presenting summaries of the key numbers at our event in April to stimulate the debate (event participants get a choice of one of these reports for free as part of their entry fee).

Also stimulating the debate will be senior execs representing large Wholesale operations (critical enabler of the 2-sided business model, and where lots of the growth will come from), Mobile Internet programmes, Quad play cable operators, social networking sites, large internet platforms, the advertising industry, the banking industry, handset manufacturers, developers specialising in ‘mash-ups’, the traditional vendor community, public policy and investor groups. (More here).

Finally we’ll describe a framework for how these new business models work in practice, and how to answer the question ‘What next…?’:

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March 19, 2008

Mash-Up Demos at Telco 2.0

We’re delighted to be partnering with mashup* demo. They will being bringing their usual high energy buzz to Telco 2.0 event on the 17th April. The closing date for mash-up developers to submit demo proposals is 20th March, please send an email to demo@mashupevent.com with a 100 word description should you want to be considered.

There are 2 types we’re interested in:
1.) Those that support generic business processes surrounding the purchase, provisioning and payment of any good or service; 2.) Those that support delivery of a specific telecoms-related product or service to the user.

For #1, the processes to cover include: Identifying and authenticating customers; Advertising, Marketing Services & Business Intelligence; E-Commerce Sales; Telco-enabled Order Fulfilment (on-line, voice) - e.g. software or music downloads, Telco-enabled Order Fulfilment (offline) - e.g. parcel delivery, Telco enabled/managed Billing & Collections; Electronic/on-line Content Delivery - principally content delivery caches, rights management; Customer service and support.

There are also additional business activities such as warehouse management, vehicle tracking, etc. - things which the end customer doesn’t touch, but which forms part of the supply chain. Overall, this is what we call “communications enabled business processes”.

For #2, it’s what happens to put together the actual user service. For example: Personal communications services (“better telephony”, integration with collaboration tools, etc.), or horizontal activities like: Integration with Web tools; Vertical industry solutions (healthcare, property, utilities, etc.).

More information on mashup* demo activities here:

The mashup* Event serves the digital industry community through regular events, allowing everyone to be kept up-to-date and to meet for discussions with like-minded professionals. Run by and advised by members of the digital community these events, hosted in London, include: mashup* Event, mashup* Demo, mashup* Innovate, Being-Digital. Their events typically provide for informal networking, top quality speakers and debates, demos, followed by drinks and snacks.

Upcoming event:

mashup* Event Mobile - 10th April
The focus of the next mashup* Event will be “Is there an opportunity to for mashups enter into the mobile value chain?” Along with speakers and debates, we offer the opportunity for a few theme-related demos to be shown at mashup* Events.
For more details please visit here.

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Mobile Advertising and Marketing Awards: Roundup

Guest post from Mobile Enterprise CEO Tony Riley:

The first Mobile Advertising and Marketing Awards Conference was held in London on 12th/13th March 2008. The event continued many of the themes from the GSMA’s CMO Forum and the Telco 2.0 program. It added its own unique sound bites enhancing previous debate and also a few new insights into “what the industry is really facing.” Here are a few thoughts from the conference:

At the GSMA’s CMO Forum, organised by Telco 2.0, Brian Featherstonehaugh, CEO of OgilvyOne suggested the ad business needed to say “Good bye to the 4 P’s and hello to the 4 E’s”. Those are:
Product to Experience Place to Everyplace
Price to Exchange
Promotion to Evangelisation

How can this be applied to telecoms? The historical paradigms for additional revenue in telecoms have been 1.) voice mail for call completions and 2.) SMS. Is mobile as a medium the third financial paradigm of telecoms? Are the necessary structures being formed to reduce fragmentation, increase transparency, create media propositions, provide measurement through metrics and audit through independent adjudicators? How are life’s three drivers supporting the development: sex, avarice, and ‘free’?

Here’s what the network operators present had to say:

Kennet Radne, TeliaSonera:
Where is the money? SMS continues to grow!
“Portal first until we have got it right, then independent channels”
Can the Two sided business model wait?

Telco 2.0 Comment: Portal first? We’re not so sure. The point of the two-sided business model is to get away from the problem that telcos - big, conservative organisations - have to do the innovating.

Jonathan Mac Donald: Blyk
Voice text and alarm clock, consistency “Blyk is an open network to the market and to our customers, the audience”
“We partner brands and embrace the market”
A valuable communication service, we are a media owner……

Telco 2.0 Comment: Don’t get hooked on being a media owner - being a distributor is good. And it’s distribution that you (telcos) actually own.

Steve Ricketts: Orange
“Mobile: The second platform, but becoming the first” AND…. “50% of customers WANT to see more advertising”
” Let’s employ the idle screen as customers like to see it work”

Telco 2.0 Comment: The idle screen is an interesting territory. By definition, it’s not interrupting or intruding on the subscriber while they try to do something else. This is important, as you can see from the next speaker…

Stacey Fassberg: Celltick
Mobile media is causing people to have a love affair with their mobiles. “Love may be blind, but very rich”
“Mobile may generate love, but not too much please…”
Love possesses not nor would it be possessed; Kahlil Gibran

Telco 2.0 Comment: And only fools interfere in a love affair. You better believe the subscribers will be angry if you get between them and their love..the value of mobile advertising property appears to scale directly with its potential for user rage.

Robert Victor: Double Click
“Concerns over brand erosion on-portal” No metrics or standards for metrics
Lack of knowledge about available inventory
There is more than just demographics

Telco 2.0 Comment: Don’t worry about on-portal brands; were they making any money anyway? After all, that’s the big metric; will anyone pay for it? What you really need better metrics for is the “it” - which of your data assets are valuable, in what format, to whom. There surely is more than just demographics - hold back on this and Google will have it.

Jimmy Roukolainen: Xtract
“A case for using demographic and behavioural data, scientifically with psychology and mathematics. Operators can expect 82% less revenue if advertising is not profiled!

Telco 2.0 Comment: You’re damn right. The more valuable a mobile ad, the greater its potential to offend. Mobile advertising is targeting; look what the guy from Google said.

Jim Levey: Amdocs
“The future is a hybrid on and off-portal approach.” Let the future start today! “Increasing use of SMART phones by those who can afford to pay”
“Don’t forget the long tail whilst chasing the prime market”

Telco 2.0 Comment: He’s right - it really doesn’t matter whether you’re “on” or “off” portal. What matters is excellent content, even better targeting, and the right commercial terms. The only way to learn is to experiment. But you may need an ethics committee…

Paul Whiteing: PhonePayPlus
“We have to earn TRUST from our customers” “We have no desire to fine companies, but will if they breach that trust”
“Communicate with us if you are in doubt”

Telco 2.0 Comment: Yes, Virginia, the regulator will make you suffer if you get this wrong. Remember the huge potential for offence mobile ads have.

Summary of Findings by the Chair

Will mobile medium be the third financial paradigm of telecommunications? There is significant fragmentation in:
The audience: Phones; networks, services, channels… The Market: Sectors, disciplines, Interests…
The channel: On and off portal and channel association conflict
Mobile customers: the audience is very positive about mobile advertising.
Very positive market: Eager to embrace mobile when they understand it …and for some, before they understand it. So, increasingly a positive channel with:
Huge investment in mobile
Significant knowledge
Enormous breadth and depth
Oozing with specialist market knowledge
Actively bringing the market forward and awakening media owners and buyers

The whole value chain needs to help in reducing fragmentation, providing consistent propositions, increasing transparency, offering consistent measurement, and independent audit. The recently announced GSMA Cross Network trial in the UK is a key step in the right direction. Engender trust up and down the value chain. Everyone has a role to play, let us respect it!

Finally, it is very clear that the two sided business model CANNOT wait if we are to make mobile the first screen. The breadth and depth of the supply industry is so great and diverse, the industry needs to embrace it and enable it to enliven the Mobile Medium and to deliver value.

The long tail, although highlighted for the internet, is even more appropriate to mobile. To make the long tail work, we need to open the doors and let the channel and market participate! As Rory Sutherland said at the CMO Forum this year:
“Get on with it and then figure out how to charge for it and what to share later, when there is something to talk about. We all have clever people to do that and we will find a way”
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Mobile Networks - Fear Factor

Together with our friends over at TelecomTV, we are in the process of surveying Telecom Executives about their expectations around the brave new world of communications.

Over 400 people have currently completed the survey and it is still open for a short period. Please take a few minutes to complete the survey — it won’t take long. In return not only will we share the findings with you for FREE, but we will also donate $1 to, UNHCR’s charity, Ninemillion.org. Many thanks to the survey sponsor, Qualcomm.


For us, currently the biggest surprise is that telco executives see the biggest threat coming from new entrants and device makers shaking up the market — rather than the current competition, regulators, technology or users changing behaviour.

For our next executive brainstorm in April, rather than focussing on threats we are going to be looking at new opportunities, namely the 2-sided business model opportunity.

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Interview: TM Forum’s Chairman, Keith Willetts

As described in an article in November the work of the TM Forum is becoming more and more important to the development of new telecoms business models.

It’s been trying to simplify the interactions between telcos for years by standardising their OSS-BSS interfaces; if the Telco 2.0 vision comes to pass, what with all those third-party innovators, payments going upstream and downstream, and user data flowing through dozens of APIs, we’re really going to need answers to a whole world of questions around OSS-BSS, roaming, interconnection, and settlement. After all, arbitrarily large numbers of small services (either on their own or as part of bigger organisations) will be busy interacting with telco networks, and the complex of telco, third party developer and customers will be interacting with other telcos, other systems, and other businesses; we’d better have these things nailed down.


As a prelude to their important Management World event on 18-22 May in Nice, we spoke to Keith Willetts, their Chairman (and one of the nicest men in telecoms), about convergence, trends in OSS/BSS and data mining - critical issues, as was re-iterated at the CMO Forum at the Mobile World Congress:

Telco 2.0: Convergence is a popular buzzword, but is it more likely that the industry will diverge - become a much more diverse variety of products using a common IP network?

Keith Willetts: Convergence doesn’t mean “everyone doing the same thing”; it means a new value chain. Most operators do two things - transport, and an end-to-end service. The future won’t be the same; instead, the end-to-end service will be supplied by entirely different players or created from several different products.

Instead of a world in which the operator controls everything it needs, it’ll be about gluing together many different things.

Telco 2.0: So we’re looking at a standard for exchanging commercial information - a really big XML struct?

KW: We’ve got to define a standard trading and management interface between companies. Otherwise, it won’t work for thousands of participants if you have to get on the phone and talk.

Telco 2.0: Rather like GSM roaming, then.

KW: But for many other services. The challenge is integrating it with the SDP. Once, you knew what the service was, telephony, it came out of the network, and you applied OSS-BSS to administer it and bill it. Now, it comes out of a server, and there will be many more services.

As a result, you’ll no longer be able to see the join; some functions are OSS, some are BSS, some belong to other parts of the SOA, some are charging. You won’t be able to walk up and plant a sticker on the BSS. Convergence at the software level means the join between these elements is invisible. I expect there will be fewer small ISVs.

Telco 2.0: How can we price complex information based on multiple telco data sources, the sort of thing we’ll need for advanced mobile advertising? Will we have to move to a more Amazon-like pricing structure; a flat fee per event?

KW: Provided you can measure it you can bill it; the real problem is responsibility. There will be many parties to every transaction - how do you settle responsibility instead of profit? We need to understand this in advance; what happens if someone downloads a movie and the file is corrupted? Does the telco give them a refund - and if so, does the content provider bill them for another copy? Imagine some sort of tied-in marketing that goes wrong.

The trading relationships dwarf the complexity of actually counting the packets. For things like mobile advertising, the basic stuff is all there in the OSS - calling circles, location, etc - but it’s in a gazillion different formats Monetising it upstream is dwarfed by the difficulty of getting it out; in the short term it’ll have to be flat-rate. A service provider like O2, for example, has several thousand OSS-BSS instances with information in different formats.

Telco 2.0: How can we make progress towards solving this?

KW: Iron filings on a sheet of paper; you’ve got to provide a commercial magnet to make the operators go back in there and revalue their data. I was recently in Russia with MegaFon, who are quite good; they’ve configured things to autopopulate the databases. But others are far worse in terms of fragmentation.”

We need some sort of agreement on what data you can supply, and a “service indication” protocol. We also need a OneWorld Alliance of operators to work on a much bigger scale; a lot of operators can offer you 20% of the market, but Google can offer you the world, so we need to start working on a cross-continental scale. None of this will occur until there’s real money on the table. I give it 3-5 years to the first green shoots of new thinking.

Telco 2.0: Will the solutions be more of a Web services model, with external applications pulling data from the telco systems and processing it themselves, or a software-agent model where external developers specify logic to be executed within the telco systems that returns an answer? The first is much simpler to implement and secure, but the second may be needed to solve the privacy issues…

KW: It’s a huge issue; who owns this information? It won’t be long before there’s a major lawsuit; I signed up to let this service use my data, and they shared it with my wife! We certainly need a detailed opt-in process. There are other questions as well - if you ask yourself what the top five pieces of information advertisers would want about a user, you realise that you can’t get age from the network. The big unanswered question is - what do the advertisers want?

If you put users, operators, developers, vendors and advertisers in a room, you’d probably end up with some very divergent sets of answers. I guess that’s what the Telco 2.0 events are all about?!.

[Ed - Telco 2.0 will be presenting at and facilitating the Leadership Summit at Management World on 19 May. Details here.]

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Plutonium data: prize or problem?

When the British government inconsiderately lost in the post details of all our children, the event was rather aptly described as a “privacy Chernobyl”. Once out in the open environment, there’s no undoing the contamination that the release of such data can cause.

By coincidence, we’ve been privately using a metaphor of “plutonium data” for some time to describe the most sensitive data that telcos, by their very nature, must gather and store. The paradox is that this data could hold a key to evading the “dumb pipe” fear of so many operators. It also provides a differentiator and advantage to telco building a B2B services platform, at least compared to IT platforms such as Google’s. What if the telco brand could be redefined as a trust mark to mean “privacy protected”?

Separating the ordinary data from the extraordinary data

When running any business, you have to deal in what we call “potato data”. That’s the everyday staple diet stuff — name, address, products bought, support calls made. You have to store it somewhere sensible, but it doesn’t need three rows of barbed wire and armed guards. Standard IT tools and procedures will suffice. No special storage or processing facilities are needed. Furthermore, you can pass “potato data” around between enterprises fairly easily, subject to standard privacy and disclosure rules.

In contrast, “plutonium data” is the most sensitive data, such as location, call history, or credit worthiness. It requires special facilities to house it, and can cause havoc if allowed outside. The problem is that this data is potentially very useful in powering interactions between users and various third parties. Sometimes the third party needs to have a shard of radioactive material released. The taxi company needs to know where you are to dispatch the taxi to the right place. We establish special procedures to ensure that this location dip is done according to the rules.

It’s not about network APIs

Yet the operator would like to have more “value added” than just a bulk messaging or location API. That means packaging up APIs and customer data to solve a business problem for a partner. Consider my personal example of signing up for a new electricity supplier. A month or so later, on the day the new service is activated, I receive an SMS welcoming me to Scottish Hydro, and asking me to send my initial meter reading by return SMS. Sadly, I’m over a thousand miles away from home at the time, so it’s a waste of my time and Scottish Hydro’s money.

The job of the telco platform is to optimise business processes such as these. Rather than forwarding the SMS to roaming users, it should be stored until I’m back in the country. Indeed, it should only be forwarded to me at a time that I’m likely to respond. In this case, there’s no point in sending the message when I’m not physically at home. If I get home at 1am after a long business trip (or, for those so inclined, a long pub trip), it’s probably not the ideal time to ask your customer to hunt in the dark recesses of the under stair cupboard for a meter reading. Indeed, why not take the level of personalisation one step further. Don’t send the message when the user is in a call. Only send the message at a time of day when the user is normally active. You’re a shift worker who sleeps in the mornings and doesn’t make or take calls? We’ll hold the message back until you’re awake.

Get paid for outcomes, not inputs

The telco is then rewarded not for sending SMS messages, but for optimising the number of responses. You can see the same example playing out across other similar scenarios, such as marketing campaigns. In the case of meter readings, there’s margin to be made between the few cents of a bulk SMS API, and the many dollars of a personal visit by a meter reader (or the capex of replacing my meter with a connected smart one).

The catch is that I don’t want Scottish Hydro location dipping me 24 hours a day. And at standard pricing for such location capabilities, they’d go broke quickly too. The telco has to offer an interface that’s easy for the power company (or their systems integrator) to consume, and is fairly standard across all operators. We see the same issue with mobile advertising today, where media buyers find the telco an almost impossible channel to buy from due to fragmentation, lack of metrics, and low volume.

Mix and match APIs to increase value

This means that to work, the telco needs some kind of combinatorial API that only forwards the message when I get home. This is a mix of location, presence, messaging and personal data and preferences. A key idea here is we’re keeping all the “plutonium data” inside the telco. The telco knows your location anyway, and we’re not passing that to any third party. All they want are meter readings.

We can easily imagine this personalisation process happening in other ways. For instance, the taxi company I use starts off it’s IVR with an automated message “if you want a taxi dispatched to right away, press one”. Not much point in sending a taxi there if I’m not at home, and equally annoying to ask me if the taxi company can location dip me. In a future scenario, you can image their application passing some VoiceXML to the telco platform to drive a telco IVR. If I’m at home, the telco asks if I want that taxi sent there; otherwise, I go straight to the operator. Again, we’re keeping the “plutonium data” within the telco’s special processing facilities.

The next problem is that every vertical will have its own needs. You can’t keep on spawning APIs for every use case. The next guy will want the “forward this message when the user gets home, but only to adults” API. So just as Web 2.0 needed a new programming paradigm, so might Telco 2.0.

A new kind of computing

The Web 2.0 world has two technical innovations. One is web services, so that it’s easy to fetch data and invoke code remotely. The second is AJAX, which is how we download bits of code (i.e. Javascript) from the server to the browser to be run locally, since those user interface interactions are most sensibly done in that context of the user’s own PC. Web services enable the AJAX code to talk back to the server code.

The Telco 2.0 equivalent is a move towards a software agent model. That means the application sending a bunch of logic or code to the telco to be executed. The telco keeps all the super-private data, and aggregates the behavioural information (“does this person respond to marketing messages?”) across the different application providers. They don’t need to run the whole of their application inside the telco, just the bits that need to interact with “plutonium data”. For example, they might want to route calls based on your previous history of interactions with the callee, and the telco has the CDR history to enable this.

This provides a radically different vision of the future of the telco network than the one being pushed today by vendors or IT giants. The “intelligence at the edge” model of the Internet implies user data dispersed all over, and ignores that some of that data has a natural affinity with the network itself. Potentially, we’ve a “get out of jail free” card here against over-the-top threats. So we’re looking forward to sharing this concept more with everyone at the next Telco 2.0 event, but equally look forward to your feedback and opinions right here.

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March 18, 2008

Broadband: but not quite as broad as advertised

The most popular forms of broadband whether ADSL, Cable and HSPA Wireless all suffer the same technological limitation — it is almost impossible to predict the actual speed that the consumer will enjoy. And therefore, the marketeers take over and sell the maximum theoretical speed and in some small print actually describe that only in exceptional circumstances will the maximum speed be realised.

The following graph based upon a sample of 175k Plusnet customers illustrate the scale of the challenge.


The graph illustrates that only around 12% of the base get the full 8Mbps at synchronisation whereas just over 6% of the base are languishing below 1Mbps. Very little fault can be ascribed to Plusnet — it is just a feature of ADSL technology that speed is proportional to line quality and length. In fact, Plusnet work hard to ensure that their customers are satisfied. The recent polls of customer satisfaction showing Plusnet topping the list can not all be wrong.

In fact, we seriously doubt whether the majority of UK population actually currently know what speed they are receiving — to most people the biggest test is whether the BBC iPlayer streams acceptably or whether Skype calls do not break up. Most people we speak to these days just accept that the really big bandwidth hogging applications such as P2P or Usenet downloading are just something you do in the background and it is not important when they arrive. Life is probably much more difficult for the IPTV service providers such as BT and Tiscali, who require more bandwidth.

However, we feel that all is about to change with the next generation of monitoring and comparison tools which are about to be unleashed onto the unsuspecting ISP networks. There is now the technology available to monitor broadband connections and determine where the bottlenecks are within an ISP network — if the sample is big enough it will produce results down to the individual exchange / central level.

This will be a frightening thought to most ISPs — a new churn generator entering the market. Churn is quite possibly the most destructive force ever invented for telco business models.

This will also be applicable to cable networks. Although they don’t suffer the same degree of problems as ADSL technology, nonetheless DOCSIS is a shared pipe technology. Indeed… it is rumoured that on some segments in some areas of the planet some pipes are overloaded.

The situation for wireless companies is even worse: for not only is it a shared technology, but the signal degrades with distance from the cell site and when passing through walls. Vodafone recently revealed that 50% of its data traffic is transmitted from 10% of its cell sites. This illustrates the scale of the network engineering challenge facing the wireless operators.

In short, no technology is perfect and currently only a limited amount of customers will be aware or even care whether they are on the best local performing network. This is all about to change and the ISPs, whether fixed, cable or mobile, need to get ready and focus on delivering the best possible connection with the customer support to match to keep hold onto the base.

Your customers are about to become a lot more informed. What’s your plan?

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March 17, 2008

Google vs Telcos: The Tale of the Tape

We are close to finishing our latest research report, The Two-Sided Telecoms Market Opportunity, which outlines in detail how operators can achieve growth by adopting a two-sided business model. We’ve invested a huge amount of time and effort in sizing the opportunity for operators a.) by capability (Identity, Authentication, Security + Advertisng, Marketing, Business Services + E-Commerce + Off-line Order Fulfilment + On-line Order Fulfilment (content delivery) + Billing & Payments + Customer Care) and b.) by vertical industry. This helps us not only show how and why operators should tackle this opportunity (the usual strategic focus of our research), but also demonstrate the potential size of the pot.


We discuss the different functions of 2-sided platforms in the report and then look at Google, Amazon, Monster, iTunes, Betfair and AP Moller-Maersk in detail, pulling out appropriate lessons for telco operators. In this article we explore Google and, in boxing parlance, who measures up better in the ‘tale of the tape’…

Google is interesting because many people feel that it is ‘game-over’ for the operators and Google will merrily extend its dominance of web search into other areas, including voice and messaging and mobile advertising. In the report, we take a fresh look at Google:

  • What it has achieved and why
  • Its skills and assets
  • Its current strategy

Operators and Google both make noises about being cosy partners. But we all recognise that they will also compete in a big way going forward.

Those interested in boxing may notice that the pictures above are of Mike Tyson (Google) and the unfancied British heavyweight Danny Williams (Telco operators). They are taken from a world heavyweight contest in 2004 in Louisville. The assumption of most people at the time was that even a Tyson in decline would brush Williams aside. Instead, Tyson was knocked out in the 4th round. Now, we are not suggesting that the same will happen in the battle between Google and and the operators but we do feel that the operators have plenty of weaponry IF they can use it. And Google thinks this too. This is from the IPO prospectus in 2004 and still holds true today:

We face competition from other Internet companies, including web search providers, Internet advertising companies and destination web sites that may also bundle their services with Internet access.
In addition to Microsoft and Yahoo, we face competition from other web search providers, including companies that are not yet known to us. We compete with Internet advertising companies, particularly in the areas of pay-for-performance and keyword-targeted Internet advertising. Also, we may compete with companies that sell products and services online because these companies, like us, are trying to attract users to their web sites to search for information about products and services.

We also compete with destination web sites that seek to increase their search-related traffic. These destination web sites may include those operated by Internet access providers, such as cable and DSL service providers. Because our users need to access our services through Internet access providers, they have direct relationships with these providers. If an access provider or a computer or computing device manufacturer offers online services that compete with ours, the user may find it more convenient to use the services of the access provider or manufacturer. In addition, the access provider or manufacturer may make it hard to access our services by not listing them in the access provider’s or manufacturer’s own menu of offerings. Also, because the access provider gathers information from the user in connection with the establishment of a billing relationship, the access provider may be more effective than we are in tailoring services and advertisements to the specific tastes of the user. (Our bolding). See the full prospectus here.

Rather than walk you through the case study on Google, I have uploaded in slide format:

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Ring! Ring! Hot News, 17th March 2008

In Today’s Issue: Big Trouble over Phorm; no immunity for US telcos; mystery letters from Apple; iPhone hacked, cracked, and rehacked; 500 million Flash devices; unified comms drives datacentre demand; Deutsche Telekom looks at OTE; Sprint merger dread; Virgin Media USA suffers; Verizon does topological P2P; Safaricom IPO back on; BSNL looks for prepaid packet-pushing partners; Bharti Airtel looks for wholesale customers; broader broadband beats basic broadband

BT get caught over using personal data in Phorm trials: real customer data was used to test the system. The Phorm Ultimatum highlights two key considerations for any successful platform: privacy and rewards. The Pope of the Web himself, Tim Berners-Lee puts its succinctly:

It’s mine - you can’t have it. If you want to use it for something then you have to negotiate with me, I have to agree; I have to understand what I’m getting in return.

At the same time, the US telcos are back on the hook for illegal wiretapping after a new version of FISA, without immunity, passed the House of Representatives. It makes you wonder who you’d prefer to spy on you.

Perhaps Apple. The computer company everyone loves followed up the announcement of its iPhone SDK with a mystery letter to hundreds of developers - no-one’s quite sure whether it’s a threat or not. There’s much to be said for taking your competitors by surprise; but astonishing them isn’t quite the same thing. Over at eComm 2008, meanwhile, Google bashes the iPhone. Incredibly enough, they reckon Android is superior. Meanwhile, the iPhone hackers have knocked the firmware wide open; including the bit that lets Apple brickify ones they don’t like. Linux iPhones can’t be far off now; not that there would be any point, but when does that stop hackers’ unbridled neophilia? Meanwhile, the port of Lotus Notes for the iPhone is confirmed. And Adobe reckons there are 500 million mobiles around with Flash Lite installed - but not one iPhone.

Building the platform requires laying the foundations. Telehouse is spending £80 million on doubling the size of its carrier hotel in Docklands, as a world surge in data centre spending keeps up. They’re also adding 15,000 square feet of floorspace in Paris and setting up shop in Singapore. You can’t fake infrastructure, so don’t try. If you want to know who wants all that rackspace, this could give you an idea.

We’ve repeatedly said that Deutsche Telekom is a company with an overpriced foreign acquisition in its future: now here it is. DTAG plans to buy Greek incumbent OTE; stand by for more details, but you have to worry. At least the rumour about them buying Sprint-Nextel hasn’t come true yet; Telephony Online reports that Merrill Lynch is behind it, and discusses the appalling complexity of such a deal. It would create a company with CDMA2K, UMTS, GSM, iDEN, WiMAX, FLASH OFDM, and UMTS TDD networks, and that’s just in the mobile division. To say nothing of arguing with both US and EU regulators, and maybe buying a piece of a giant illegal-wiretapping lawsuit (remember, T-Mobile USA was one of the two honourable exceptions next to Qwest). Don’t do it, man - think of your wife and children.

Telephony Online speculates that T-Mobile might want it as part of a grand scheme to build an LTE-based pan-global mobile empire. One network to rule them all. But if T-Mobile wanted to do that - they’ve already got 2+ GHz spectrum across the US for their UMTS build. In the EU, they’re already acquiring masses of cell-sites for the same reason. So why would they want the Telco USSR’s problems? Still, it really would be a huge, overpriced foreign acquisition. Alternatively, maybe Sprint will just demerge Nextel; leaving what?

Just to help matters, Sprint’s major wholesale customer, Virgin Media USA, is suffering after a sharp drop in subscriber additions. The excuse is that they didn’t see value in competing at the low end of market. The alternative, more plausible reason, is that the recession and competition is starting to bite.

Verizon looks a better bet; they’re looking seriously at the problems of developing a topology-aware P2P distribution system. This is something the industry badly needs to tackle the broadband incentive problem and further develop its digital logistics capability. But if you can’t wait for that, the short-term upside is still in emerging markets. Proof is that the Safaricom IPO is back on after being held up due to a screaming mob problem.

India’s state incumbent BSNL is looking for franchisees for pre-paid WiMAX; Bharti Airtel is working on its wholesale business. Finally over in the Netherlands, cable and fibre pull ahead of DSL for broadband access.

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Voice Revolution Watch

The vision of our Voice & Messaging 2.0 project is coming ever closer in reality. Two pieces of news this week underline this; first, Sony extends in-game VoIP to more PlayStation Portables. (You’ll remember, of course, that earlier this week Sony filed patents on a PSPhone.). Second, IBM pours $1bn into unified comms. In this article we explore where the telco can fit in…

Sony’s move is an example of one major world trend; the extension of voice (and video) into applications and devices that have never had it in the past. The PSP is a games device; ever since the first MUD (Multi-User Dungeon)s, the ability to chat or rather, to mock, taunt, gloat at, or conspire with fellow players has been common in gaming. (Arguably, it’s been so ever since Dungeons and Dragons.) Equally, sound is critical to the realism of the gaming experience. But so far, most sound in games originates from a file of predetermined effects triggered by…the trigger, more often than not. Communication is usually restricted to text equivalents to IRC (Internet Relay Chat - Chat Rooms being the most prominent example), and gestures in virtual space; no voice.

Putting voice functions into the console means that - to start with - voice and messaging can happen alongside games. It also means - much more importantly - that games developers who want voice or messaging can use the device API and its hardware capabilities rather than building their own, which in turn means that many more games will have in-game voice.

And where are the telcos in this? Nowhere. (But imagine the possibilities of presence/availability, mobility, location, and payments.) Here’s what the respondents to our Future Broadband Business Models survey think will happen to mobile voice over the next 10 years in Europe.

The decline of telco voice; the boom of embedded voice

The upshot is that voice minutes of use - in so far as this measurement is at all meaningful - will keep rising, indeed, may rise faster than ever before. But the share that telcos handle and bill will fall. Up to a point, it’s a good thing that telcos aren’t part of some of this voice activity; for example, there is very little point building a telco instant-messaging platform, because there is very little revenue or customer retention to be had. (Imagine telcos trying to design a games console; and weep.) It’s essentially junk voice; there’s no money in competing for free or near-free VoIP traffic.

Telcos could, however, make their contextual features useful to the emerging embedded voice applications - remember the “Seven Questions”, and this scenario for value-based pricing of voice into social networking sites.

Probably the most commercially interesting IM users in the world are the 17 million people who use Lotus Notes’ instant messaging client, Sametime, inside enterprises.
Their traffic is highly valuable to them, and to their companies; the archived chatter is valuable, both for reference and for regulatory compliance. Security, reliability, and identity authentication are critically important. They can’t just churn off to MSN, Yahoo, Skype or IRC - hence they are a genuine asset to Lotus’s owners, IBM. This brings us to the second piece of news: IBM pours $1bn into unified comms.

IBM is targeting its biggest enterprise customers with the latest version of Sametime, which now includes VoIP and video conferencing next to IM, e-mail, group scheduling and other collaboration/teamwork applications as an integrated suite. As far as voice goes, the first new feature is intelligent call-routing telephony; watch this grow as an application.

This is their response to Microsoft’s Unified Comms server software, and Cisco’s Unified Comms hardware. Computerworld perceptively points out the synergy with IBM Global Services; their network and hosting/managed services infrastructure is, in a sense, IBM’s answer to all those Cisco voice switches. It’s also a lot like the “pipes” and “platters” in the Telco 2.0 model; with the software as the “product” and possibly the platform, and probably IBM itself as the “partner”.

It’s worth noting that much of the new functionality originated with third-party developers contributing to IBM’s Eclipse ecosystem for Java coders; IBM put the source code out on Eclipse two years ago and is now reaping the rewards.

The upshot? Voice is growing at both ends of the spectrum - but telcos are in the middle of it. At one end, we see many, many ad-hoc micro-networks providing basic chat inside all kinds of other applications - chat that will be free in itself. Telcos can participate here by making nonvoice functionality available for cheap through their APIs. At the other end, we see increasingly sophisticated total-communications managers developing value from the context of every communication event; large enterprises and companies like IBM will develop their own solutions, mostly needing bulk bandwidth and mass-scale infrastructure from the telcos.

But who will bring these functions to the vast numbers of power users and SMBs who don’t have the scale for an IBMicroHP TotalComms Enterprise Environment? The answer could be - you. Remember that telcos already have the ability to interconnect pretty much anything in terms of voice and messaging, and to bill for anything that raises a signalling event, wherever in the world it happens. They also know who and where their customers are; all of these capabilities are difficult and expensive to implement as an over-the-top application using the Internet, which means that only really big companies can afford to do so for their own needs.

Telcos, however, have these capabilities as part of their evolutionary inheritance, and already operate at huge scale. A scale that Google et al cannot match today…

[Ed. - find out about the praticalities of exploiting these capabilities at the Telco 2.0 event on 16-17 April in London].

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March 10, 2008

Ring! Ring! Hot News, 10th March 2008

In Today’s Issue: BT starts Verwaayen succession plan, ideal candidate said to be “probably male”; Brough Turner takes the separation gospel to ETech; iPlayer hits mobile; Alltel goes flatrate, hoists white flag; Yahoo! lines up to whack telcos; Sun outwits Apple over iPhone; Sony lines up to whack telcos; hackers assail Chinese mobile-IM users in first mobile ransomware; Symbian Platform Security considered harmful?; more on the Death Of Mobile Apps; HSPA+MobileTV=coffee+grit?; heads roll at Motorola

BT looking to the post-Verwaayen era. Telecoms’ best-known International Relations grad may be looking to name a successor; if he gets this right, after being right about structural separation, he will go down in BT’s history as close to the perfect CEO. Ian Livingstone of BT Retail is being mentioned as a possible candidate. It’s very unlikely, however, that Verwaayen’s successor would be a woman: Brough Turner wants to know why.

Our best guess is that it’s something to do with telcos having alienated three generations or so of young techies; in the 1980s everyone wanted to work for Microsoft, Sun Microsystems, Lotus and friends. In the 1990s they wanted to work for Yahoo!, Netscape, Cisco, or Electronic Arts. And today, it’s Amazon, Apple, Google, your favourite open-source project, or else some random Web 2.0 lashup.

Brough also likes branded ringback tones. Hmmm, the next step is to make a really unpleasant noise so the subscribers pay for personalised ringback to get rid of it….right? Sounds like a plan.

In our continuing Brough-fest, he also has an interesting post advocating structural separation and a de-commercialised, either regulated, shared, or publicly owned, dark-fibre operator. Call it the Super-Openreach option. You’ll need it, too; Alltel is the latest US operator to go flat-rate, and the BBC iPlayer is coming to the mobile networks. Watch out!

The pressure, in general, is well and truly on the telco business model; Yahoo! has announced a content-manager application that works across PCs and mobile devices, organising all your stuff. Most of the stuff will be locally cached as you use it, so there’ll be no data charging bonanza for the telcos either. Chuck in their unified-messaging/stalkerware app, OneConnect, and search, and they have an impressive emerging portfolio of over-the-top mobile applications. Maybe that’s what Microsoft actually wants.

Speaking of Microsoft, the launch of the iPhone SDK this week faced a double spork attempt on both flanks; Microsoft’s Silverlight in-browser development languagecame to Nokia devices, whilst Sun Microsystems declared that it was working on a Java Virtual Machine implementation for iPhones, which would neatly run around Apple’s planned Apple-branded development ecosystem. And it’s going to be available through the Apple Appstore, priced free. Curse you, Red Baron.

Meanwhile, Sony Ericsson patents a phone based on the PSP, suggesting a highly advanced user interface (no keys, haptic feedback under the touch screen, accelerometers…); the question is, however, will Sony cut a side-deal for connectivity like that on the Amazon Kindle (or Truphone vs The Cloud), or perhaps stuff them with pre-loaded content? Remember that the next versions of the PS3’s software includes some voice and messaging functionality. Consumer electronics is pushing into the undemarcated zone of new voice and messaging; are you ready?

New gadgets, and new forms of voice and messaging, mean new security threats; Chinese hit mobile IM platform QQ gets hit by hackers, who released a Trojan called Kiazha-A. It appears to be the first case of mobile ransomware; the victims receive threatening SMS messages demanding that they send a ransom in QQ’s internal currency in exchange for the Trojan’s deactivation. At the same time, it copies all their messaging traffic to (presumably) the attacker, who is believed to want it in order to phish for passwords. If you don’t have a QQ account, the ‘bot will set one up; considerate! Nokia S60 devices are affected by the virus, which is spread using old favourite Commwarrior’s MMS and Bluetooth functionality.

Only good software gets cracked, as Gabor Torok says at Forum Nokia, demonstrating another workaround of Symbian’s security platform. It’s an interesting question whether Symbian codesigning is actually more useful than not; clearly, people are getting hacked anyway, and the codesigning process is a significant barrier to innovators as well as a general bloody nuisance. In fact, come to think of it, even installing Python for S60 is needlessly annoying, before you get to the stage of doing any development.

The risk for Nokia is that, especially with the release of their Web Runtime and MS Silverlight, developers will migrate to working in the browser, which cuts them out of the value chain (Nokia’s own efforts to create a business model for widgetry could backfire on them here). The risk for the rest of us is more mobile malware, but then, not only is this the cost of freedom, but if everyone turns to working in AJAX, Flash, JavaFX, or Silverlight, we’ll get rigged mobile web pages instead of dubious apps, which is a considerably more efficient distribution vector and one against which Symbian codesigning doesn’t provide any protection.

Well, at least QQ can be pleased that they have built something useful; if the enemy are using your product there can’t be that much wrong with it. We shall see if that’s the case with Huawei’s new HSPA+mobile TV dongle. Sounds more use than a tri-band CDMA-only gadget.

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March 7, 2008

TomTom shows Google the way

For all of Google’s intellectual brilliance, they currently do not have a business model for their maps — they have a superb tool, a lot of customers using it, no doubt a lot of costs … and unfortunately no outward sign of revenue. Even the attention-grabbing tiddly text ads don’t make an appearance.

On the other hand TomTom, the mapping specialists, have just declared record profits of €317m for 2007 on revenues of €1.7bn, expanding market share, and expanding into new areas by signing MVNO deals with Vodafone.

Step one: build a better mousetrap

TomTom differs from Google in that navigation and mapping is its core business and they sell dedicated devices. In fact, its nearest competitor is Garmin, who is stronger in the USA. TomTom finished Q4 2007 with a 49% market share in Europe and a 27% market share in USA.

The TomTom success factors are that its devices are:

  • easier to use,
  • more accurate than the competition and
  • a lot of people need help in navigating the roads.

In 2007, they launched two products that will keep them ahead of the pack. The first was MapShare, which actually employs the TomTom user base in correcting its maps and sharing the results with the rest of the community. A wonderful way to both lower costs and generate a sense of ownership for the product. Over a million of these map updates were delivered in 2007.

The second is TomTom HD which uses the Vodafone GPRS network to improve estimation of journey lengths and suggest alternative routes avoiding traffic jams. This is currently live in Holland and is coming soon to France (via SFR), Germany and the UK.

In fact, TomTom has signed a MVNO deal and with a 2-way always-on channel now to the devices, the options for innovation are pretty limitless. This is in stark contrast to Garmin who has recently entered the cutthroat handset business.

Some challenges remain

As far as we can see the only potential dark clouds on the horizon for TomTom are: the approval and integration of the TeleAtlas acquisition for €2.9bn; the complexity of migrating to 3D maps to show buildings as well as streets; and Google and Nokia wanting to muscle in on TomTom’s turf.

Any acquisition brings risk, but it helps that TomTom was already using TeleAtlas data, so that is minimised. The alternative of TeleAtlas falling into a competitor’s hands is probably much worse than the challenges TomTom currently face.

3D maps will entail new data collection challenges, require software upgrades and also certainly hardware upgrades. However, once the next generation products are launched, they will bring a new level of usability and also the potential for plenty of new services.

TomTom works to integrate technology and partners

The greatest ally to TomTom is fighting off both Nokia and Google will be to partner and share the revenue with key mobile networks. Obviously, they have an European partner with Vodafone and we expect a similar partnership to be announced soon in the other key market of the USA.

TomTom has a big advantage over Google in that GPS technology is already integrated into the product with the device knowing exactly where you are. This data can also be shared with others — an example being the TomTom Work application which morphs into a fleet management tool.

There is also the major point that both Nokia and Google have no track record in the subscription business, whereas TomTom has some limited experience and claims a current base of twelve million. But ultimately, the winner will be the company that provides the most compelling products.

From a one-sided to two-sided model

TomTom has a great opportunity to expand its business model into a 2-sided one. For instance, it is only a slight stretch from where they are today to offer customers a “guide me to my parking space” in city centres and automatically take payments via the mobile operator.

And with a GPRS modem already included in device, SMS-like functionality can easily be integrated to offer not only general chit chat, but also emergency and Yellow Pages services.

We believe TomTom has a bright future and it will see off all its challenges and challengers. It is also a perfect example of a multi-modal device which would benefit from a sprinkle of the 2-sided business model magic fairy dust.

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Next Generation Mobile Networks Alliance - CeBIT

NGMN.org ran a half-day conference at CeBIT on mobile broadband. The presentations - from Vodafone, LG, Nokia Siemens, and Texas Instruments - can be downloaded here…but Hamid Akhavan’s, CEO at T-Mobile International, seems to have been withdrawn from the site now. We managed to grab it before it was. The key image is below. It shows the economic unsustainability of mobile broadband, especially on flat-rate tariffs. If you understand that low quality YouTube videos now account for 10% of all global web traffic, then imagine what will happen when the quality improves. In fact you don’t need to imagine: see the real stats of the impact of the BBC’s iPlayer (high quality streaming video) on UK ISP’s in the last 8 weeks since launch (a doubling of streaming traffic and a trebling of costs - analysis here). Then you have to ask: “Don’t we need a new business model here, in parallel with the 4G technical developments?” The answer is of course, yes, and we explained why to NGMN.org in detail over a year ago on this blog (here). But, of course, we’ve had a deafening silence from the tecchies about this (“Not our problem!”). Hence the 4th Telco 2.0 Executive Brainstorm in April to bring 200+ tecchies and commercial people together to look at this in a structured way.

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March 6, 2008

GSM in a Suitcase = Double Disruption

It is not very often when a proposition comes along that promises to affect the core business of both the Network Equipment Providers and Mobile Network Operators but a small(ish) engineering company based in Thirsk, Yorkshire, called Private Mobile Networks (PMN), is trying to disrupt both business models.

As with most innovative communications companies, PMN has a background with the military. A common challenge for any military is to quickly establish communications on a rapidly changing front line. The first iterations of mobile technology were in fact developed by Motorola for use in the Second World War. The PMN solution is far easier to deploy and comes in a ruggedised suitcase with all the required components (batteries, gateway, MSC, HLR, Picocell) contained within, and is compatible with any off the shelf GSM handset.


All the required components (batteries, gateway, MSC, HLR, Picocell) are contained within a suitcase and provide four hours of battery powered communications to everyone within 600m range of the picocell. Add a power supply and you have infinite use. Add more picocells with standard power over ethernet cable connectivity for more coverage. Add a satellite dish for interconnect with the rest of the world. Even in the most remote regions of the world, within a couple of hours of establishing basecamp and soldiers can ring home to tell their families about the weather and the local scenery.

Call in the Tanks

In the Western World licensing of spectrum for GSM use is an issue, but for the military whoever has the biggest tanks control the airwaves. In 2006 the UK regulator, OFCOM licensed the GSM guard band and for £1m PMN controlled a slice of airwaves and could offer its solution to businesses throughout the UK. Given that approximately 40% of all mobile business calls are taken within buildings this is quite a large market to target.

The system basically works as an extension of the PBX providing in-building or out-of building coverage. For a basic cost of £12k, a business gets the opportunity of reducing its intra-building mobile costs to zero. And probably, they will get improved in-building coverage thrown in. Connectivity to outside the world, whether fixed or mobile, is delivered via the normal PBX.


Lego Approach

The system is scalable and currently uses ip.access picocells with each picocell giving approximately 300m indoor and 600m outdoor coverage. The system can be engineered to give broad coverage whether in a single building or on a campus. The system can also placed on multiple servers, so that for instance, a service provider, can host the MSC and HLR functionality and resell to multiple businesses. The server hardware is standard off the shelf linux x86 kit and all the intelligence and value is in the software. Given the low price and standard components, this is quite a threat to existing Network Equipment Provider models.

The above solution is perfect for students who are based on a campus and don’t mind fiddling with mobile phone settings to select another network to get free calls., However, for the time-challenged executive another solution is required and for this PMN have developed a client, which works with Symbian and Windows Mobile, which automatically detects a PMN networks and allows simple selection.

Connecting to the Big Boys

The utopian solution would be for PMN to sign a roaming deal with a national operator and switching between networks to happen automatically. As with most things in life it is all a question a price and PMN feel they will be in better position to negotiate a reasonable deal with the operators once they have the volume of minutes. The first “paid for” deployment was last August and PMN claim to be winning plenty of new business as the word spreads.

Serving the Builders, Fast

One of the most poorly served industries for communications is the construction business and PMN have developed a “GSM & Data network in a portakabin” approach for them. This can be delivered onsite and installed with satellite backhaul within two hours - a much better solution than waiting for BT to connect up the site with copper or fibre.


I wonder if the organisers at this years Glastonbury Music Festival will allow me to bring a private GSM network along with my wellies this year?

Swedish Pacman defense

In all seriousness, PMN highlight the threat to Network Equipment Providers as hardware is becoming standardised and other people start to develop flavours of their “secret sauce” software. The threat to mobile operators and their premium charging for minutes, texts and bytes is even more serious. The Swedish solution when a similar company called Spring Mobil deployed a similar solution, but using big-iron equipment provider was for Tele2 to sign a nationwide roaming agreement and take an equity stake in them.

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March 5, 2008

Trends in Mobile: New Global Survey

Please take part in a new survey from our good friends at Telecom TV on Trends in Mobile: here. It covers:
- Revenue & Cost Predictions for your home market
- Business Models & Investments
- Services & Applications
- Disruptions
- Industry Leaders

It’s deliberately short (10 mins). Telco 2.0 has designed some of the questions, so that it ties in with our broader Telco 2.0 research programme and we’ll be helping with the analysis. All participants get a free copy of the results, highlights of which will also be presented and discussed at the Telco 2.0 event on 16-17 April in London.

The survey is sponsored by Qualcomm CDMA Technologies. Note also, for each survey completed, TelecomTV will donate $1.00 to UNHCR’s Ninemillion.org (background here). The survey link is here.

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March 4, 2008

The Telecoms Transaction Platform: Seven Key Questions

Telco 2.0 is all about new business models telcos need in order to survive the crashing price of their staple product, voice. We reckon that addressing entirely different markets and needs — in particular the two-sided business model — is the answer. But sometimes it’s hard to explain this; so we came up with a new framework for it. So we’re going to try to work out what, precisely, goes into one of these “platforms” we keep talking about, how much of it there is, and eventually, how much it will cost.

To start, remember there are two things that go to make up this model: 1.) the ability for partners to re-package distribution assets (broadband networks, voice networks, etc.) independent of the telco’s own retail efforts, via rich new wholesale products; and 2.) B2B value-added services you build on top that use telco network and customer data assets to support largely non-telco business processes. In this article we’re just talking about the great big transaction platform that support the latter of these.

We assume the underlying infrastructure gets “Openreached” (for the access loops) or “Level(3)’d” (for the backbone). In other words, physical access ultimately becomes part of a multi-utility company, based off a model more like that for estate management, with 30+ year investment horizons and stable annunity rents. The core belongs to specialist wholesalers who thrive on volume. Also let’s assume telcos remain weak at feature-based product development (which seems fair). So, what is left? Quite a lot. But surely it’s now useless shorn of being an end-user services innovator? Absolutely not.

The remaining telco assets are capable of answering seven very important questions:

  1. Who are you? We’re talking authentication and identity here, based on the verified billing records in the BSS and OSS, plus security assets such as the SIM.
  2. Where are you? Mobile operators especially have a huge resource of information about location.
  3. How are you? We already see some rich presence-and-availability services, though driven by a desperate bid to compete with Web 2.0 apps. Some instant messaging addicts (think of it as “digital chocolate”) spend a surprising amount of time updating avatars and mood messages to reflect their emotional state, not just doing one-to-one messaging. Capture these behaviours and you will create major opportunities in anything that involves changes of status. Presence is to time as cell-site location and GPS are to space — we just need to figure out the business model still.
  4. Do you have credit? All the data by-products of billing; telcos can make your application aware of money. The Internet can route packets, but not payments.
  5. How can we reach you? Operators not only can reach you via their own communications services, but often can associate together multiple addresses or identifiers.
  6. Who do you know? No-one has more social graph data than a telco. Users have invested their most previous assets — time and money — in creating this data. It’s very valuable.
  7. Any questions? However good the processes, there are always problems that have to be dealt with by a human being. Telcos have massive call-centre capability, and are used to providing support to both enterprises and consumers.

Does anyone really doubt that there’s money in those capabilities if they can be packaged and promoted appropriately?

The likely technical interfaces of the platform

Further, each one of these questions maps to a core-network entity and a network protocol, which permits us to sketch the design of the platform’s technical implementation. We talk a lot about open APIs, but now we can say very roughly that we need an interface for each one of those seven questions. This in turn means that the platform applications server will need to interact with each question’s underlying asset in the core.


The wholesale pricing of the platform

How might these transactions with the telco platform be priced on average? At the upper end we can say, very roughly, that pricing will be somewhere below the cost of Turkcell and Telefonica’s Mobile Signatures product — equivalent to one SMS per transaction, i.e. somewhere between €0.075 and €0.32 depending on location and price plan. At the lower end we have Amazon Web Services’ 10,000 queue messages for $0.10, which feels cheap given the uniqueness of the data assets going into the service. Turkcell’s pricing feels steep — the Amazon page for any given product is assembled from about thirty different Web service calls, for context, and this is only one of millions of sites using dozens of AJAX (i.e. API) functions. So it will have to be somewhere between the two poles; for a wild guess, say €0.01 per transaction with any service as a starting point. 100 function calls = €1.

Scale is everything

We can always adjust the pricing, but the obvious conclusion is that we’re talking about making our money out of a huge volume of transactions. Indeed, we even have an idea of how many transactions a telco would need to capture to make it worthwhile, and the scope-and-scale of the SDP required to do it; this begins to sound like a plan. €1 per 100 lookups doesn’t sound like much, but let’s compare some other platform businesses. We think the opportunity for transactional value-added services may be as much as $100bn a year by 2017, or €65bn in real money; that would suggest a fearsome number of transactions, 6.5 trillion a year.

Comparing the telco platform to its transactional competitors

But there are in fact several incredibly huge platforms that are, in the aggregate, approaching this even now. VisaNet, the information system behind Visa, processed 6,803 transactions a second on the peak day in 2006; which means they have to scale their systems for over 210 billion transactions a year. Their smaller rival, MasterCard, is about a third as big; so in total, taking into account another year’s growth and minor players, we’re looking at about 300 billion credit-card authorisations a year. NASDAQ’s systems are designed for 3 kilotransactions/second; HSBC’s internal IT system for 1.16. EUREX receives between 60 to 80 kilotransactions/second from the OPRA pricing feed alone.

One billable event to a partner can be many transactions

We know, however, that there are about four billion telecoms access lines on Earth. The interactions in a telco platform will be much more like OSS-BSS or cell site hand-off events than telephone calls; there’s already a significant multiplier between calls and non-call events in our existing networks. It’s the nature of the platform that its various APIs are meant to be combined to create some kind of business process; a payment is made either before commencing the process or afterwards, but the service that is being paid for might include dozens to hundreds of network events.

For example, today’s chip and PIN terminals are fundamentally insecure. A future point-of-sale platform might use your mobile as a more secure terminal (since you trust your own equipment more than some tampered-with in-store hardware). A single payment could involve a dozen transactions between the merchant, bank and a telco that enables various supporting identity and credit functions.

The technology already exists to do it

In fact, we’re the only industry that could possibly process these numbers of transactions. If there are a hundred billable events a year per line on average, we’re already at 400 billion events; two VisaNets. But quite a lot of activity inside a telco core network isn’t billable, especially in mobile networks; the signalling channel is always busy with OSS, HLR, network management, logging, device management and many other kinds of traffic.

Consider the capabilities of typical telco equipment; this Sun Microsystems study (pdf), for example, which demonstrates 5,500 transactions a second on an HLR running on a single Netra UltraSPARC bladeserver. Two telco HLRs are the equivalent in transactions per second to more than twice VisaNet’s throughput. The OpenSS7 Project, being open-source, is much more open that most telco vendors about actual numbers; their HLR application is scaled for 4,000 transactions a second and 15 million subscribers on a 3GHz, 2GB RAM PC-based Linux box.

A platform tied to enabling all forms of economic activity

Further, the price these figures is based on is a very rough concept; the call-centre element (“any questions?”), for example, is likely to be worth much more and the presence-and-availability (“how?”) perhaps less. We’ve often thought at Telco 2.0 that platform-like services from telcos — such as location — tend to be overpriced by a factor of 3 (or more); basing this on the Mobile Signature pricing would give a figure of 2 eurocents per request, which brings us down to 3.25 trillion transactions, or 9 credit-card networks’ worth of activity. That would be one transaction for every 20 US dollars of global economic activity, 103 kilotransactions/second.

Convergence — a supply-side phenomenon

The term “convergence” has been thrown about for years to describe a frequently fictitious vision of one universal device that attaches to a universal network. What’s really happening is that the telecoms, media, banking and IT industries are fighting over a complete transactional value chain from advertising to order processing to delivery to support. Being a “dumb pipe” could be a very comfortable position if as a result you can carve out a defensible position in the broader digital economy.

It will be a long time before we get to these kinds of transaction numbers, though. What will the margins on all this activity be like? Based on these numbers, we can start to find out — watch this space.

[Ed - More in-depth analysis of the ‘Telecoms Platform’ opportunity in our new report out at the end of March. Details here, or an opportunity to get a free copy for participants at our event in April].

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March 3, 2008

Ring! Ring! Hot News, 3rd March 2008

In Today’s Issue: Mobile apps RIP? And are mobile RIAs the killer? Control your private plane with a Nokia N810; or develop for IMS. It’s your choice. NEC pushes “It’s not IMS”. Sprint = Telco USSR? British ISPs; how not to do it. Comcast: much the same. iPhones; hacked again. Hackers deploy platform strategy. Salesforce.com menace rises. Big changes ahead at Telecom Italia. Nokia GPS-tags photos. Virgin Mobile in India. EU “worse than communism”. And cancerogenic BTS doesn’t exist after all.

Have downloadable mobile applications died the death, to be replaced by a Web-based future? Former Palm and Apple exec Michael Mace thinks so; Carlo Longino agrees. The argument is that the diversity of possible platforms, the difficulty telcos (especially) and vendors have relating to the developer world, and the restrictive terms of business they apply, have rendered it just too difficult for a real developer ecosystem to emerge. Meanwhile, the surge in things like Microsoft Silverlight, Adobe AIR, and JavaFX means that the richness of applications that run in a browser is beginning to challenge what you can achieve reasonably quickly in a native application. This is a significant change in the balance of power between the Web 2.0 players and telcos, since you don’t need a special (telco-issued) digital certificate or pre-installation for web applications.

Nokia Forum blogger and developer Robin Jewsbury agrees; his firm has shortened its product cycle to 3 weeks by moving from a mobile app to a Web app for mobiles. On the other hand, it’s going to be tough to implement this kind of machine-vision/location application in a browser, and probably a bad idea to try (do you really want to send live camera output and location info to website X?). Similarly, you just try firmware hacking in the browser. So it’s a big shift, but shouldn’t be exaggerated.

And as one of the major fields for application development is machine-to-machine and other things that involve mobile devices interacting with objects and macro-scale machinery, this is a problem. Whilst all this ruckus was going on in developerland, some people are still interested in IMS applications development.

However, NEC just launched what it calls “light IMS, also known as “not IMS at all”; it’s a blade containing an IETF SIP media server, OSS-BSS database, and an SDP application server. NEC spokesmen said that it differs from IMS in that it uses IETF SIP rather than the special 3GPP kind, stashes data in a more distributed fashion rather than one big HSS, and puts more emphasis on the SDP; and they say that like it’s a bad thing. Keen and agile minds will note that the product is actually a SIP IP-SDP in a box; who needs IMS at all with one of those?

Sprint-Nextel, meanwhile, announced a $29.5bn loss, mostly in writedowns related to buying Nextel. Apparently there’s something called a “sub-prime credit customer” involved in there somewhere. But there was worse; revenues are down 6% and 1.3 million subscribers are leaving a quarter. The real question, of course, is who will play which role as Sprint becomes the Telco USSR: as the economy spins its wheels in a stagnant pond of bureaucracy, and rebel fanatics stockpile guns, the rocket scientists keep working away on their WiMAX space station. Embarq looks like one of the Baltic states, or maybe Slovenia; the ones who got out in time. SprintLink is looking at being Kazakhstan; not special, but bringing in a good income from its pipelines. The cellular division; well, the Nextel side looks like it might have a chance (perhaps it’s Russia itself — rich in customer loyalty resources). But Sprint’s CDMA network? Looks more like Yugoslavia or somewhere in the Caucasus; a bloody mess, if you’ll excuse our English.

The General Secretary, meanwhile, promised that the workers would soon see CDMA/WiMAX dual-mode devices in the shops. Anybody who asked why disappeared. Unsought advice from an exiled Sprint dissident is here.

In other Soviet things, or at least Orwellian things, Britain’s top three ISPs have, it seems, struck a deal with a company owned by veteran spyware distributors to intercept all their users’ URL requests and tweak the responses in the interests of advertisers. Nice — how could anyone possibly object? Perhaps the most interesting news about this is that they’re doing it for a less-than-huge £85m in ad revenue. As we keep saying, advertising; just not worth it without a bigger platform plan.

BT, CPW, and Virgin’s move is just about as un-Telco 2.0 as you can get; until you see Comcast charging $1.99 for the privilege of not getting a paper bill. That’s right, they are trying to make users pay for choosing an option that costs Comcast much less. Here’s a Telco 2.0 teachable moment; selling user data is only acceptable, and is also most productive, when the users get something they want from it as well — and “more targeted ads” is a benefit to the advertiser, not the user. Similarly, if you want the public to behave in a way that suits you — like not leaving BitTorrent clients running at line rate in working hours — you’ve got to share the benefits with them. Two-sided markets, yes. Two-faced ones, no thanks.

In related news, yet another version of a tool for getting around Apple’s control of iPhones is released. No doubt the 400,000 Chinese users of black market iPhones are downloading it as we speak. And as for this: well, well, well. We know there must be something right with the platform strategy when the hackers start adopting it.

If you doubt that, read this: the CEO of Salesforce.com says he wants the firm to become a “platform as a service” company, before Google gets there. The comparison is made with the early days of Windows; they had to convince the applications vendors that Windows was stable, adaptable, and widely deployed enough to be worth developing for. This is just what telcos should be doing.

Rumours of big changes at Telecom Italia; an announcement is coming on Friday, and it looks like both separation and network sharing are on the agenda.

Nokia has been putting GPS into everything in sight lately. Unsurprisingly, now they’re letting you tag your photos with GPS coordinates. We bet they start indexing them in a whacking great GIS database, too, probably to appear in a mapping application soon enough — surely it must be something like that, something interesting for the Ovi service platform to dazzle us with? Because we had an HP gadget that GPS-tagged its photos two years ago.

Virgin Mobile is making a fairly cautious entry to India; Virgin phones are coming, but really they’re just hiring out the brand to Tata. More detail is at Pluggd.in; they wisely note that offering to pay subscribers for inbound calls might be a canny way of attracting marketers.

Back in Europe, Telekom Austria boss Boris Nemsic accused the EU of being “worse than Belarus” and as bad as communism. We’ll keep tactfully quiet…and finally, another outspoken Austrian, in this case a mobiles-give-you-cancer obsessive, is in some trouble after it turned out the base station they claimed was making people ill didn’t exist. Rather like the perfect home coverage they promised you in the store just before you signed the 2-year contract…

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Telco 2.0 Strategy Report Out Now: Telco Strategy in the Cloud

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