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February 25, 2009

MWC 2009 Roundup - Fear and Optimism

The giant mobile-telco bazaar has come and gone for another year. The pre-event fear about footfall seemed overplayed - everywhere was still crowded, if slightly less crowded than last year. The merchants were also out in force with their stands as huge and shiny as ever - perhaps there was slightly more unfilled space, but nothing that would indicate the mobile economy is in a massive downturn. As much as we hunted for the Four Horsemen of the Apocalypse - they were nowhere to be found.

The Nokia stand, day one Figure 1: the Nokia stand on day one

Unlike any traditional bazaar, MWC is not about the exchange of cash, but more about creating partnerships and product awareness which will lead to revenues throughout the rest of the year. Deals are a bonus, especially if they lead to the deployment of next generation technology - especially one’s coming with a multi-year revenue flow.

Here is the Telco 2.0 analysis of the key events from the event:

LTE and 4G technology was everywhere, the focus of network equipment vendors’ show, whether radio access or equipment to deal with the continued explosion in data traffic in backhaul and core.. Before the event even started, Vodafone, France Telecom & Deutsche Telekom placed a speed bump on the 4G highway, by saying that there was unlikely to be mass deployment in Western Europe before 2012. By Wednesday, Verizon Wireless, the largest US carrier, rode to the rescue and announced Alcatel-Lucent and Ericsson as their chosen radio access suppliers - contracts which will probably be worth billions over the technology lifecycle. More importantly, Verizon Wireless is pressing ahead for limited 4G launch in 2010.

mwc09.png Figure 2: Verizon’s 4G plans

The US will definitely lead the EU on deployment of 4G technology, but it is hardly surprising given that the FCC has already auctioned the spectrum. Europe and most of the rest of the world is lagging in this regard, and there were several sessions urging the freeing up of the “digital dividend” of spectrum about to become available from the analogue TV switch-off for mobile.
The new GSMA chairman, Alexander Izosimov of Vimpelcom, said that mobile was the “new lifeblood of the global economy, and additional spectrum is not a luxury, but an absolute necessity for future growth”.

Certainly in the UK, there is a lot of horse trading going-on with the government and Telco 2.0 wouldn’t be at all surprised if the traditional highest-bidder wins auction route was circumvented this time around for a beauty contest with revenue share with commitments for rural coverage. The last thing anyone wants in a recession is a repeat of the runaway 3G auction.

The big news in the handset world was the Qualcomm-Nokia deal, whereby Qualcomm will develop drivers for its MSM (Mobile Station Modem) chips for the Symbian Operating System. The two will work together to develop phones initially targeted at the North American market where Nokia’s market share is well below other regions of the world. It is encouraging that two industry giants have decided to invest in product development rather than lawyers.

The corollary of the deal is the uncertain future for Texas Instruments’ mobile chip division - Qualcomm will certainly be looking for more than selling a few extra modems in North America. TI had a big stand showing off the fancy features of their OMAP application processor family, but it was completely overshadowed by Qualcomm Snapdragon platform. Two icons of the American mobile industry, indeed, the American electronics industry more broadly - Motorola and Texas Instruments - now look under severe strain.

LTE@Qualcomm

Figure 3: LTE on the Qualcomm stand

Snapdragon is a quantum leap forward for mobile processors and I suspect that 2009/2010 will witness a battle royale between Intel and Qualcomm in the low-end portable computing device market, whether we call them MIDs, Netbooks or whatever. If Gobi was Qualcomm’s 2008 beachhead on the valuable silicon-space in notebooks building relationships with all the major notebook players, then Snapdragon 2009 is the full-frontal assault.

The brightest news of the Congress was the launch of Acer into the Smartphone market - with four new models. It follows on from their purchase of E-ten last year, but highlights that the lines of Smartphones and traditional portable computing are blurring. We expect to see a flurry of announcements of other new entrants in 2009.

Of course, the fruit on everyone’s lips was the missing Apple and the fear of the iPhone - nowhere was this more in evidence than around the discussion of Application Stores. Most of the one’s we heard mentioned seemed to be very me-too effects, whether Nokia’s, Android’s or Research-in-Motion.

Historically, Apple is hugely successful at leading companies into blind alleys. Application stores have all the appearance of a blind alley from our 20,000ft view of the world. Initial enthusiasm by developers will soon be curtailed if they don’t make any money and the press moves onto the next great thing. We still occasionally bump into ex-Palm, BREW and Symbian developers who never quite made it to the end-user-paying-for-apps nirvana. Applications development is going to be seriously important - don’t get us wrong. But app stores are not enough unless they get beyond being just this week’s fad and copying Apple.

We believe that the most promising announcement around services was the Mobile Entertainment Forum announcement of their Smart-Pipes Enabler initiative. This brings together three key players (at least from an UK-centric view) - the BBC, mBlox and Vodafone. To quote the MEF:

“Enabler services offered by network operators will deliver many capabilities to content providers, including age-verification, location, identity authentication, reliable phone applications, specific tariffs to consumers and delivery with specific quality of service.”

Very Telco 2.0, and far more important to a content provider than yet another Application Store. Note that all the elements of the Smart Pipe match the ones we identified in the 7 questions, and quite a few other Telco 2.0 documents beyond that - they are examples of key capabilities that telcos could provide to help optimise other people’s business processes.

Overall, another good congress with lots of food for thought on industry changes for 2009 and beyond. Despite the hellish macroeconomic news, it’s very clear that the fear and pain won’t be evenly distributed. A large chunk of the North American market seems set for catastrophic change, with the possible exits of TI, Motorola and Nortel, at least in their current form. On the other hand, Qualcomm has successfully ridden the waves of uncertainty.

As far as operators go, it’s clear that Telco 2.0 ideas have taken root at the most forward-looking carriers - will they be the ones to seize the opportunities the crisis presents? Further, we had very successful meetings with a number of major vendors - IBM, HP, Ericsson, NSN - and with operators around the forthcoming Telco 2.0 Club, which is intended to provide a forum to help the industry enable the two-sided business model. This is complementary to all the predominantly technical activity that the industry is engaged in.

Not everyone uses the same terminology - but more people than you think are working on the same lines.

Who would have imagined, not so long ago, that none other than AT&T, the biggest ugliest telcoest telco in the world, would be talking about the importance of ”standards-based APIs that ensure consistency, security and ease-of-use for developers”? But here’s mobility chief Ralph de la Vega talking about just that at the end of his keynote.

dlv.jpg

Figure 3: AT&T Keynote

Not that APIs are sufficient in themselves. But with the parallel development of the GSMA OneAPI project and O2’s Litmus developer platform, it’s impossible to deny that the fear is with Telco 1.0 and the optimism is with Telco 2.0.

[Ed. - We’ll be exploring the ‘two-sided telecoms business model’ in more detail at the next Telco 2.0 executive brainstorm on 6-7 May, run in partnership with the GSMA. It’s invitation-only for senior strategy execs. To apply go here]

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Platform Lessons from BSkyB

BSkyB’s platform shows a multi-sided business model in action, bringing value to both upstream and downstream customers and earning decent returns for shareholders.

BSkyB is probably the most misunderstood publicly quoted company in the UK. Most analysts view them as a media company; our theory is that BSkyB is a platform company and comparisons to Apple, Microsoft or Google are more appropriate than UK media players such as the BBC, ITV or even potential new entrants such as BT.

bskyb1.png Figure 1: Sky Delivery Platform

Here are five rules to being successful in the platform game:

Rule #1 - You have to keep loading extra features onto your platform…

Microsoft historically were tops at this - Windows for some grew fatter and fatter release by release, but in reality every release contained new features that appealed to some. BSkyB have done the same - they moved from analogue to digital, introduced interactive TV, took PVRs to the mass-market, and now are doing the same with HD-TV. As soon as that is complete ,they will move onto the next thing - 3D TV or even true on-demand VOD.

BSkyB seem to be one step ahead of the competition all the time. The only exception to this is Virgin Media networked VOD service, which is far superior to the BSkyB limited caching of programmes to the Sky+ device - currently a big hole in the portfolio. Notice that BSkyB is totally agnostic whether the features are driven by hardware, software or network - their platform contains all three elements.

Click here to read more and join the Telco 2.0 Executive Briefing service

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February 24, 2009

eComm2009 - Next Week, San Francisco

If you can get to San Francisco next week we’d strongly recommend eComm, the Emerging Communications Conference on 3-5 March.

It’s the leading-edge telecom, internet communications and mobile innovation event, and attracts the world’s leading futurists, and smartest, most forward thinking exec’s who are exploring the future of communications. The speakers are a who’s who of cutting-edge thinkers. See http://eCommConf.com for the full agenda and speaker line up. Telco 2.0 is proud to be a partner of this important event.

NB: As a Telco 2.0 reader you can get 20% off the price of a ticket. Just use promotional code ‘Telco20’ on the registration page or directly at this link.

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LiMo - The Tortoise picks up Momentum

Handset Operating Systems are crucial to the Telco 2.0 world - they are at the front line for the presentation of Operator services. Today, the proliferation of handset operating systems is making application development unnecessarily complex. Over time the number of Operating Systems will reduce, and the LiMo Foundation is in the prime position to move from its current position at the back of the pack to lead the field.

Mobile Linux foundation LiMo’s presence at the Mobile World Congress was impressive. DoCoMo demonstrated a series of handsets built on the OS; and LG & Samsung showed a series of reference implementations. But more impressive than the actual and reference handsets were the toolkits launched by Access and Azingo.

limo-1.png

We believe that LiMo has an important role to play in the Mobile Ecosystem and the platform is so compelling that over time more and more handsets based upon the OS will find their way into consumers hands. So why is LiMo different and important?

Sign up for the Telco 2.0 Executive Briefing service to find out, here.

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Cisco: The Future of the Mobile Internet

Here’s an interesting view from Cisco about the consequences of 4G wireless access - just as important as higher bandwidth will be that the 4G networks are all-IP, and that the great driver of traffic will be video, as Cisco’s Simon Aspinall pointed out at the last Telco 2.0 event.

We will, of course, be discussing the problems of online video distribution at our next event, in Nice on the 6th-7th of May,

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February 23, 2009

Rich Communications Suite: Really Considered Significantly Obsolete

It was a curious Mobile World Congress last week; half Telco 2.0 triumph, with things like the OneAPI project, O2 Litmus, and a truly impressive focus on developer communities, and half a harking back to the days when IMS was the solution, whatever the problem might be.

Take the GSMA’s ‘Rich Communications Suite’ (RCS). We’ve discussed the imperatives for voice telephony recently here. So, we’re at a loss as to the relevance of RCS to the market, as one of our analysts vociferously describes below.

But we’d value an open discussion with readers who support the initiative. Do read the analysis in the rest of this article, and tell us what you think via the ‘comments’ function on this blog…

Rich Communications Suite - sounds impressive, doesn’t it? You might be surprised to find that in fact, the feature set and the look-and-feel are identical to essentially any IM client you may have used since 1998 or thereabouts. This is because so far, that’s it - RCS mostly consists of adding presence-and-availability to your mobile address book. Which is nice, but as the French say, it won’t invent gunpowder.

The vendors involved - and it’s practically all vendors, usually a bad sign - are very proud of the efforts they’ve made to make sure it’s fully interoperable. Dozens of testfests have been carried out. Trials with small groups of users. All that remains is to deploy the thing and put it on the market. Does this remind you of any other recent mobile technology? Ah, you’re ahead of me. IMS. And indeed, all the RCS applications they showed off were connecting to their SIP applications servers through an IMS core network. Just to prove that it really is IMS, one of the reference applications is the inevitable video-sharing.

This raises a couple of issues. To start with, SIP is not very new. It’s also a proper, tried, IETF-standardised technology. Interoperability should be about as much an issue as it is with the Internet itself. You follow the relevant RFCs and things work. So, this is a sign that one of the big interoperability issues with IMS may still be out there - the fact that 3GPP chose to fork SIP and use its own non-standard standard. Similarly, XMPP is, well, a standard. And neither technology cares very much what kind of device is involved - XMPP even provides for multiple clients logged into the same server with the same user ID at the same time, routing messages based on user-defined priority. And its notion of “transports” allows you to hook up all your other services and see all your contacts in one place, which happens to be the RCS unique selling point.

But perhaps the point is to spread the service beyond the power users? Well, some of the people involved described the target audience as “early adopters, young pioneers, young materialists”, which when you parse the marketspeak means exactly the people who already use IM. So it’s not a good sign that neither Apple nor RIM was present. Social graph applications stand or fall on user adoption, and iPhone and BlackBerry users are strongly represented among the user elite who tend to have huge contacts networks. Neither were the Joint Innovation Lab carriers - Vodafone, China Mobile, and Softbank - around. Although the client in the demonstration was on a Nokia device, and NSN people were in evidence, we didn’t notice anyone from the Symbian/software side of the Nokiasphere either.

However, others seemed to think the point of RCS was to bring presence-and-availability and IM to the bulk market, and that IM was incredibly complicated and daunting. But it can’t be targeted both at the power users and at the mass market - you have to choose.

Also, we’re concerned about the business model, or lack of one. Insofar as the tawdry question of commerce was discussed at all, it was suggested that it would lead to “more total communication”, which apparently must be good. Ask a UK DSL operator how more total iPlayer worked out. More traffic is certain to lead to one thing - more cost. Whether it leads to more revenue, and whether this exceeds the additional cost, is up to your own creativity, product leadership, and customer intimacy. In an environment of falling prices, just pushing volume is not enough.

It’s unlikely that IM traffic would ever be enough to harm operator business models, but the RCS team are awfully keen on video - live, streaming, full motion video on shared-medium wireless networks. Unless the operators can invent a meaningful business model for this, the impact of successful RCS would be indistinguishable from the impact of a hit OTT video app, which is what IMS was meant to save them from. Watch out! Also, what happens when a prepaid RCS customer runs out of cash? Do they just vanish off everyone else’s radar screen, or is there to be a Smile-like model where presence, status updates, and other pre-call activity is free, but voice or video is chargeable?

Further, essentially all RCS’s current and even suggested future features are already well served by competitors, many of whom have the inconvenient property of being free. Are we really expected to be impressed by “sharing photos” in 2009? When every Nokia cameraphone ships with a client designed to upload photos to Flickr (or anything else you may like)? Yes, RCS might integrate them in one place - but it’s worth remembering that “one application to rule them all” has been surprisingly unsuccessful on the Web. Specialisation, according to Robert Heinlein, is for insects. But there are a hell of a lot of insects in the world. Bees are a traditional image of bourgeois trading wealth, civic pride, and work ethic for a reason. And come to think of it, bees are nothing if not devoted to specialisation.

Another problem is that RCS is reliant on someone not solving the same problems in the client. It’s widely assumed that any download or installation is a massive turn-off; but the industry is frantically, and rightly, launching app stores and building developer platforms as fast as it can.

Nokia, for example, already has a unified XMPP-based address book and messaging/sociability app with Nokia Maps integration in beta, has signed up to deploy native Skype clients on the N-series, and also has both a native SIP client and a Gizmo implementation for S60. (Gizmo, like the XMPP/Jabber boys, has the ability to bridge other IM and VoIP networks and act as a single contacts book.) So RCS is relying on the failure of operators’ efforts to encourage users to download and use new applications. It is a fundamental rule of success in all information technologies that you shouldn’t bet against applications development - the evolutionary cycle is much faster than it is for all the other elements of the system.

And, as they say, if you prepare to fail you’ll get what you prepared for. There is also the big IMS question, which is as always simply “why?” You have an endpoint with an IP address. You have an application server with an IP address to which it connects using SIP. Why do we need an IMS between the two? The force of these objections is well shown by the absence of IMS in general at this MWC - nobody is advertising it, talking about it, or indeed doing anything with it. We suspect its sudden rebranding as RCS reflects a push by certain vendors whose heavy investment in IMS begins to look like a waste.

It’s also worth noting that essentially all the operator support for RCS comes from France and, to a lesser extent, Italy. This may reflect a lower penetration of Web-based social network apps there, which could provide a glimmer of a chance - but it may also imply that RCS will be at best a technology that succeeds in one market but doesn’t travel, like i-mode rather than GSM.

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Ring! Ring! Hot News , 23rd February 2009

In Today’s Special Mobile World Congress Issue: Nokia cooperating with Qualcomm - dogs, cats sleeping together; dire forecasts for Motorola’s future; VZW taps ALU for LTE RAN RFP; here an app, there an app, everywhere an app store; the Telco API cometh; everything is a Web page; the peaceful rise of LiMo; 3’s triumph with INQ; Roshan pays anti-Taliban fighters’ wages by SMS; Afghans get EDGE; comfort in the DRC for Alvarion; wind-powered base stations; ZTE threatens WiMAX boom; ZTE launches revolutionary software-defined radio tech; in “and finally” slot, Samsung’s BeatDJ handset delivers Chris Morris’s vision of the future

Not only are the standards wars over, but the Nokia vs Qualcomm row is over as well; after all the suing, the two industry titans buried the hatchet at MWC to the extent of cooperating to develop a new line of Nokias for the US market, using Qualcomm’s Mobile Station Modem chips. It’s good news for Nokia, which is looking avidly at Motorola’s share of the US market; it’s good news for Qualcomm, which needs reliable major customers.

It’s probably pretty bad news for their competitors, especially Motorola - we’ve seen forecasts of handset shipments falling by 15% this year, with the smartphone sector holding its own. If smartphones hold steady and the total market falls by 15%, that means non-smartphone sales must fall even more. And Nokia, Apple, LG, RIM, HTC and Samsung are all strongest at the top of the market - so there’s a dark year in store for Moto and Sony Ericsson. The crisis at Motorola’s handset division is not news, but then, MWC had some pretty awful news for the Networks business as well.

Verizon Wireless announced contracts for base stations for its LTE network, and the great bulk of the work is going to Alcatel-Lucent, with some participation from Ericsson. This essentially means that Motorola Networks just lost one of its staple customers. And the political situation doesn’t look good for Moto’s defence/government business either.

Rather surprisingly, none of the VZW contracts went to China. Huawei and ZTE were present in even more force than usual, but there was no business for them from Verizon. However, it will be interesting to see who gets the VZW core network job - and how they decide to implement it. IMS? Non-IMS but all-IP? China Mobile-style all IP with SS7 voice running over the IP infrastructure? (Huawei was prominently advertising their “Software SDP”.)

Beyond this, MWC was all about “developers, developers, developers”, as Steve Ballmer once said lay at the root of Microsoft’s success. (He was there too, but he didn’t say anything like that interesting.) Nokia announced an app store and many new applications and services integrated in its Ovi web portal. Telefonica/O2 showed off their impressive Litmus developer platform, which integrates a whole lot of things including crowd-sourced testing (paying subscribers for bug reports), mates’ rates for hosting, free access to network APIs , and an internal VC squad, to say nothing of Apple-busting revenue share terms.

Speaking of APIs, the GSMA and Telco 2.0 allies Aepona had a pleasant surprise - “OneAPI”, a standardised RESTful Web service for GSM network resources like messaging and location. According to Aepona engineers, they eventually plan to open up most or all capabilities provided by OSA Parlay-X, although things like charging and access to CDR information will obviously take some time to sort out the privacy, security and operational issues. But the service is live now with a gaggle of European operators.

We mentioned the smartphone market; but perhaps the question should be “what is a smartphone”? The CEO of LiMo specialists Access described two versions of his firm’s embedded Linux OS, one for the smarties and one for the cheapies; but even the cheap version has a full Web browser, and the Web is where the action is. Palm’s Pre, shown off at MWC, has a whole user interface based on html/css/js widgetry. The Joint Innovation Lab carriers (Vodafone, China Mobile, Softbank) demonstrated their own standard developer interface - and it’s all Web-based widgetry too. Just like the iPhone, the various Mozilla projects in the mobile Linux world, and Web Runtime in the Nokiasphere.

Speaking of mobile Linux, even if the klieg lights are still very much trained on Android, which got another handset this MWC, the industry’s dark horse LiMo was beginning to pull around the outside. Notably, the JIL operators agree on three OSs as standard - Symbian, Windows Mobile, and unspecified mobile Linux. But they recently signed up Azingo, the Indian software firm that developed the first reference implementation of LiMo; so clearly they’re banking expertise. And LiMo has the support of a lot of smaller vendors, plus some majors like NEC.

From an operator perspective, LiMo has the advantage that it’s not aligned with one big vendor. Symbian, however open, will always be dominated by Nokia; Android by Google. The less said about MS Windows Mobile or BlackBerry OS here, the better. But with LiMo, operators have a good chance of getting their way, and the degree of openness is the highest outside the super-purist OpenMoko. If you were considering something like 3’s INQ gadget - which won an award at MWC, even if the free drinks in their INQ Bar every evening probably helped - LiMo has to be near the top of your list, even if the INQ itself is a Qualcomm-based device.

Meanwhile, the coolest application title has to go to Karim Khoja of Roshan, who’s using Safaricom’s M-PESA to pay the Afghan Army. In a country with essentially no financial infrastructure, this is a problem - soldiers either have to go home to give money to their families, which in Iraq led to a string of very bloody bus ambushes, or lots of money has to be shipped around some very dangerous roads, which isn’t ideal either. With M-PESA, the wages are paid by phone and then transferred the same way, and cash is paid out by Roshan’s airtime agents - so it shouldn’t even be obvious who’s receiving money from a soldier, which is handy.

But perhaps he shouldn’t have turned his back - rivals AWCC turned up EDGE service in Jalalabad this week. It’s that sort of place where a lot of activity was going on - Alvarion could feel some relief after the affair of the missing $2.4m shipment of WiMAX base stations by landing a contract to build a turnkey network for the DRC, Ericsson was proudly showing off the tower-top wind turbine built by a partner company for their base stations. And that’s probably why, despite all the LTE activity, ZTE was predicting a “boom year” for WiMAX.

ZTE also had one of the geekiest announcements of the whole show - they’re building a new integrated 2G/3G all-IP network for CSL in Hong Kong, which relies on Software-Defined Radio technology. That is, the base stations have a common radio whose parameters are programmed in software rather than being defined by the hardware design. So the same infrastructure can do almost all radio air interfaces; ZTE have already demonstrated 21Mbits/s HSPA+ in software. Interestingly, Sol Trujillo of Telstra was lurking at the announcement.

Finally, Samsung’s BeatDJ gadget got favourable reviews, but a crucial factor appears to have been overlooked. The gadget has two high quality Bang & Olufsen speakers, which double as touch-pad interfaces - so the user can mix and scratch MP3 files. This was of course a feature of the short-lived Wasp T12 SpeechTool, and as such is a rare example of Chris Morris-Driven Development, as opposed to Test-Driven Development. There is no word on whether the BeatDJ also has an extra large number 5 on the keypad, but we’re looking forward to Samsung’s implementations of Cake and Heavy Electricity with awe.

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February 18, 2009

O2 Litmus: Better than the Apple App Store

A major buzz source at this MWC has been developer communities and telco APIs - as you can probably imagine, Telco 2.0 is more than pleased about this (especially the number of companies involved that are current or former customers of ours). For a start, there’s the GSMA-backed OneAPI effort, where our friends at Aepona have been standardising a developer API based on Parlay-X Telecom Web Services. James Aitken, who will be familiar to some Telco 2.0 event participants, demonstrated its location capabilities live on Tuesday.

Although the GSMA was keen to describe OneAPI as an easy way into mobile for Web developers, it tends to be a truth about development that the fastest feedback wins. Powerful scripting languages won relative to strongly typed ones. Web interfaces increasingly win out over GUIs. RESTful Web services APIs have become a de facto standard instead of SOAP and XML-RPC, largely because it’s just a URL - you can experiment with them directly in a browser or from a command line and see instant results. IntelePeer, which is a handy model for this because it has a private VoIP switching infrastructure with extensive developer APIs, sees about 95% of function calls coming in on the REST interface as opposed to their PHP library.

So we expect much activity with OneAPI coming soon. It’s great news that a standard exists, and the GSMA deserves credit for taking a lead on the issue. But, as we’ve said so often, it’s not just the APIs - it’s the terms of business, toolchain, support, community, distribution and everything else around it. Standard APIs are necessary but not sufficient.

Step forward, O2 Litmus. This is O2’s effort at a developer ecosystem; it’s truly impressive. The offering includes access to network APIs, technical support, sponsored hosting, forums, and a motivated user community. How motivated? Litmus members will be paid for checking out beta projects and filing suggestions and bug reports. The idea comes from Mob4Hire, a Canadian firm that’s been doing this for PC applications. O2 will also offer help marketing and distributing applications, and pay out 70% revenue share from their app store, with a guarantee of payment within five weeks. (Take that, reverse billing SMS! - and for that matter, the Apple App Store…)

The real payoff for O2 is that it gets to see which applications and services succeed; rather than trying to guess, they can simply observe, and push the hits to their mass subscriber base with the full marketing resources of the company. If that wasn’t enough of an opportunity, here’s another feature of Litmus - a resident team from Telefonica’s internal VC unit.

Which reminds us - we’re in the depths of a vicious recession, everything is cheap, the banks have no money. But telcos still have strong cashflow. It’s a great time to pursue opportunities, and this is one of them. There is already a VC drought on, but we can expect funding to dry up for a lot of innovators - are you ready to step in and invest in the future, and particularly in making sure you’ve got a future?

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February 12, 2009

Coming Soon: Serving the Digital Generation

There’s a new Telco 2.0 strategy report rolling down the tracks.

It’s a natural inclination to imagine that the difference between young people and their elders is simply that they’re young. But at times of rapid technological or social change, quite often, nothing could be more wrong. Instead, patterns of behaviour and culture that you might assume are the caprices of youth will last a lifetime and will become the conservative norm that the youth of the future will rebel against.

Serving the Digital Generation: Innovation for a new breed of customers is Telco 2.0’s attempt to characterise future customers and explore what operators should be doing to better serve them. Statistically speaking, the customer of the future is already with us, in the form of South Korean, Chinese and Japanese youngsters, and is a user of at least one of many social networks, games, and virtual world applications that have sprung up in the last few years. In the report, we analyse a whole range of such services in order to understand the business models and product features that have succeeded. We’ll also be running a major session on this topic at the Telco 2.0 world event in May - www.telco2.net/event/may2009.

We identified a number of major factors and new opportunities that constrain and liberate the customer of the future. On one hand, parental paranoia, rapid urbanisation, and proliferating surveillance systems have led to a public space that is ever more restrictive for the young; on the other hand, the digital world has created huge opportunities to escape this and to pursue what we describe as the ‘Participation Imperative’. We have developed a framework to help service providers clarify these user needs and how to serve them.

An Introduction to the Participation Imperative Framework

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What is the participation imperative? People care fundamentally about certain things, based on their psychological needs, either to build their identity or to participate vicariously in that of others. We analysed market participants based on the degree to which they help the customer of the future:
  1. To interact with a peer group
  2. To personalise and exert control over their environment
  3. To express creativity
  4. To maintain privacy/anonymity or seek notoriety
These, in turn, require certain enabling factors:
  1. Portability - working across multiple PCs, mobiles
  2. Payments - virtual currencies
  3. Feedback - comments, discussion, personalisation, hackable APIs
  4. A directory - find other people

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To read more about the Participation Imperative Framework, read a case study on QQ (huge social networking service in China) and other relevant analysis, subscribe to our new Executive Briefing service, a searchable online database of cutting edge Telco 2.0 research. Details here: www.telco2research.com.

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February 9, 2009

IntelePeer: Reverse Engineering Telco 2.0

IntelePeer is a Californian startup that should worry telcos quite a lot. It’s constitutive of Telco 2.0 that we want to identify the key telco capabilities and assets that are hard for competing over-the-top players to replicate, make them available in a useful form, and then monetise. But one of the risks here is that other players - OTT’ers, software developers, big clouds, big IT services firms, device makers - start to replicate these faster than telcos start to develop them.

What is IntelePeer and what’s important about it?

They describe themselves as a “communications as a service” company, which is another way of saying that they are actually quite telco-like. After all, telephony was the original software-as-a-service product - all the intelligence is at Telco HQ, and you just dial in, and you mostly pay for what you use. IntelePeer’s products include essentially all the elements of a voice network - they have extensive peering relationships for VoIP and also TDM transport, they have a hosted switching infrastructure with an API for Web-voice integration (the AppWorx platform - note that they call it a platform!), and they have a so-called SuperRegistry, which is essentially a private ENUM deployment.

This gives them the ability to serve even complicated platform/VAS and Voice 2.0 applications; the registry is especially interesting, because one of the main barriers to better voice and to the wider re-use of telco data assets for identification, authentication, and sociability is the difficulty of mapping telephone numbers to other services and vice versa. The official answer is ENUM, a project, led by the IETF, which aim to replace the existing telco system with one based on the Domain Name System.

Essentially, you’d be able to query the DNS for a telephone number and be given the IP address of the end-point with that number, or instead be referred to another domain name, for example a SIP ID; in the other direction, it would be possible to register a meaningful name for a service or resource identified by a traditional e164 phone number. And you could have different kinds of records attached to a name or number - so others would be able to know where to look for other things you might be using beyond steam voice or IP. To cap the lot, it would also provide for federation (just because your phone number is assigned by Vodafone, this doesn’t mean that your ENUM record couldn’t point your answerphone at Me2Me) and for user ownership of their identity.

Now, we’re going to have to do this anyway with the move towards all-IP networks; IMS depends on ENUM, but flat-architecture IETF SIP networks will need it as well if they want to use telephone numbers at all, and even XMPP uses the DNS to make its interconnection work. But it’s especially critical for applications that use customer data, or that need to interact with other services. However, the progress has been very slow indeed, and it’s no surprise that we’re beginning to see efforts to build private deployments.

So there’s an effort to replicate telcos’ “Who are you?” and “How are you?” capabilities. Of course, the real source of differentiation for the telcos isn’t the technology or the infrastructure, but the accumulated data pile - but as soon as people start using a rival system, this advantage will start to diminish.

Then there’s the network infrastructure; BT’s Matt Bross said at the last Telco 2.0 event that he wanted the company to use the infrastructure built for global voice interconnection to develop new applications. Telcos have always been big on interconnection, even if some resisted peering at IXen for years; equally, they enjoy claiming that only they can provide “carrier grade” performance. (We remember watching an IMS video-sharing demonstration one 3GSM that was almost totally nonfunctional due to very high latency, while the demonstrator explained that only IMS-enabled telco networks could guarantee a good user experience.) IntelePeer is buying dark fibre and building an IP MPLS backbone network, whilst also aggressively seeking new peering relationships - they aim to eventually become transit-free. Creating their own MPLS core and peering relationships gives them more telco-like control of costs and quality - part of the answer to “how can we reach you?”

And they’re also working hard on making these things available as APIs so their customers can spawn their own developer communities.

According to IntelePeer, about 95% of applications that use their services are interacting with them through their REST Web service (the rest are using a PHP library); these are mostly business-intelligence, CRM, and related applications. They recently signed a partnership with Microsoft to integrate their platform with MS Live applications - and more broadly, to get access to MS’s huge base of both customers and developers.

When we spoke to IntelePeer management, they were keen to depict telcos as partners and software developers like Ribbit and IT service companies like IBM or BT Global Services as competitors. But the main resource they need from telcos is raw bandwidth. Being a trusted partner is all very well, but if you are their “bit pipe partner” it may sound a little hollow! At the moment, they may be a big customer; but structurally, their strengths directly challenge many of the key assets telcos bring with them to Telco 2.0.

And, as usual, a significant chunk of their infrastructure uses the Asterisk open-source telephony platform; as we keep saying, every Voice 2.0 player we see runs Asterisk, even if IntelePeer also uses a lot of big-iron Sonus Networks IP voice switches.

[Ed - we’ll be debating the issues raised in this article at the next Telco 2.0 event on 6-7 May in Nice.]

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Ring! Ring! Hot News, 9th February 2009

In Today’s Issue: Vodafone-Hutch merger in Australia; Vodafone profits from plummeting pound; Sprint-Nextel in forced iDEN sale; horrible ALU results, quits WiMAX; IMS sales “more than TDM” but this may not be much; Alvarion left holding bag after Nortel bankruptcy, manages to ship units anyway; horrible results at Motorola; Moto goes upmarket, launches cheap “unattractive” phone; $10 lappy that isn’t; Makerere teaches African GSM hackers; shadow CDR analysis app; fridge; Google launches its take on stalkerware; Reading “not that boring after all”; MS’s My Phone contactabase; shiny gadgets; Netflix for mobile; heads roll at Salesforce and RIM; OFCOM tackles Dutch astronomers over Channel 38; strike at AT&T; nine-year old iPhone dev wanted to impress sisters

Meet Vutchison - Vodafone and Hutch are merging their Australian operations into a 50:50 joint venture. The main motivation is to keep up with Telstra, whose heavy investment in its Next-G 850MHz UMTS network has left it with 42 per cent of the market, and SingTel, which has a respectable enough 32 per cent. The new firm will hold 26 per cent and will presumably be trying hard to push into second place, at least if you agree with Jack Welch’s contention that it’s only ever worth being first or second.

Vodafone gets a A$500 million cash contribution as part of the deal, but retains control of the company, which will call itself “Vodafone” and be headed by Vodafone Asia-Pacific boss Nick Reed. Sounds like a deal, but then, a lot of participants in joint ventures with Hutchison thought that…

Vodafone, for its part, announced reasonable results; the good news was that revenues were up 14 per cent at £10.47bn, with operating profits for the year forecast to be a similar amount, and data service revenue was up 25 per cent. The bad news was that European voice is stagnant and much of the good news was simply because Vodafone is essentially an exporter of services, so the fall in sterling automatically helps its figures.

Meanwhile, the Telco USSR’s regional conflicts have flared up again. You thought the rows with Sprint PCS affiliates were over? You were wrong. RCR Wireless reports that a court in Cook County, Illinois has ordered Sprint to sell its iDen network in the area in order to fulfil a noncompete agreement with its local PCS affiliate. This is a strategic problem for Sprint; they are rightly keen to develop the Nextel assets’ enterprise voice and messaging capabilities, but at the same time, they are constantly subverted by the need to greenmail the old affiliates. According to RCR, this is even a problem for the XOHM WiMAX deployment.

Speaking of WiMAX, it looks like Alcatel-Lucent is the next of the megavendors to quit the field; the company swung from a €2.56bn profit in the last quarter of 2007 to a €3.87bn loss in the same period of 2008, adding up to a loss of €5bn for the full year. As a result, they’re trimming their immense range of products (ALU covers pretty much every technology you can think of), and dropping Mobile WiMAX - which is a shock, as ALU was very successful in landing contracts for WiMAX networks. The background is that the wireless access division had an especially shocking 2008, with their revenues plunging 22 per cent (compared to 5.4 per cent for the whole company). Now they want to concentrate on LTE and “enhanced wireless DSL”, which probably means fixed WiMAX (rather like Ericsson). In a call, Alcatel claimed that IMS revenues now exceed TDM switching revenues, but then, who is buying TDM switches today?

Increasingly, then, WiMAX kit will be coming from China (Huawei and ZTE don’t appear to be cutting their WiMAX products), Motorola, or specialists like Alvarion. They, meanwhile, are picking up the pieces from the Nortel bankruptcy - they’ve had to take a $3.4m restructuring charge related to the end of their partnership, and also accept that they can’t recognise $2.4m worth of sales to Nortel - we think that means “we shipped Nortel $2.4m worth of kit and they went broke before the cheque cleared.”

Despite that, Alvarion managed to post revenues up 19 per cent, and WiMAX sales up 37 per cent, so perhaps it’s best to leave these things to the experts.

Motorola is still very much a WiMAX-friendly operation, but of course the news flow from there is all about the continuing disaster at the handsets division, which lost $2.2bn in 2008. However, the whole company was looking pretty sick in the fourth quarter - a net loss of $3.6bn, of which “only” $595m was attributable to the gadgets mess. The CFO, Paul Liska, became the latest of many Motorola execs to call a cab.

Apparently the firm is hoping to revive the handsets operation by going upmarket. So, obviously, they just launched a barebones low-cost phone. The USP is that it’s the “greenest phone yet”, being made of recycled plastic bottles and subject to full offsetting of all the CO2 released by its manufacture. Unfortunately, they don’t appear to have got the memo about Viridian Design and the doctrine that green products ought to be better than the ones they are meant to replace…
The handset isn’t entirely barebones either - it features a music player, SMS and MMS, games, a MicroSD slot, hands-free headset and will be compatible with T-Mobile’s popular MyFave service. With a (true-to-its-cause) dark green, water bottle shell, it’s not the most attractive handset on the market..
Restricted feature set and ugly industrial design; a sure-fire winner in the iPhone era. You could say something similar about this bizarre tale; Indian media thought they were going to see a “$10 laptop”, but it was actually more like a $10 USB drive.

Nathan Eagle@Forum Nokia points us to a rather impressive curriculum on mobile technology at Makerere University in Uganda; there’s also an application that analyses your call log to look at. This is an important point; if you don’t find creative things to do with the CDR pile, people will find ways of collecting the same information and using it. Less usefully, there’s also a socially networked fridge.

Google, meanwhile, leaps into the LBS arena with Google Latitude, a service which lets users announce their current location to others - so a bit like Yahoo Fireeagle then, or that Nokia Contacts on Ovi/Jabber app we mentioned last week. There are obvious stalkerware concerns, but the main obstacle to using Contacts we’ve found was just getting our contacts into the thing.

Reading city council, to our surprise, has launched a mobile information service with live public transport running information, maps, and CCTV streams from all their traffic cameras. This reminds us of going to a mobile apps fest some years ago; having ploughed through the miles of Sexy Football Babes, Tentacles for your RAZR, and whatnot, we were refreshing ourselves at the bar when we met the only man at the show who had a useful product - an app that showed live feeds from traffic cameras covering most of the UK. And he couldn’t get any financing to deploy it.

Synchronisation, migration, deployment; boring but essential problems that are especially tough on mobile because of those tiny keyboards. Microsoft is the latest company to provide an on-line backend to keep track of your contacts and similar data - My Phone will be launched in beta at MWC. (Nokia is adopting the time-honoured MWC option of launching a shiny, as is Samsung.)

More excitingly, here’s an example of integrated video delivery on mobile; Netflix for Windows Mobile is a frontend for Netflix services, on Windows Mobile gadgets, which lets you search, see previews, order, and manage the queue. And then, of course, the actual heavy video is delivered off-line. More fun and possibly more use than yet another IMS plugfest.

Anyway, does anyone remember when everybody loved Salesforce? The Web-based enterprise development platform was the geekosphere’s darling, but suddenly you never hear about them. This week, there appears to have been some corporate turbulence there; the president/chief of strategy has quit, as has the EVP of sales (ironically enough), and another unnamed executive. You’d still be well advised to look at integrating your Voice 2.0 products with Force.com, but watch out…In other boardroom stabbings this week, half the CEO of RIM has resigned in connection with a shares scandal, but they’ll be all right as that still leaves them with one CEO.

Back in the UK, OFCOM was trying to tackle some of the problems of opening the 800MHz band; it’s going to involve moving part of the digital TV allocation (doh!) and paying compensation to theatres and film makers who use lots of wireless mics, oh, and tiptoeing around some Dutch radio astronomers.

There is a strike coming up at AT&T Mobility; and finally, aaah! The nine-year old iPhone hacker, it seems, wasn’t motivated by a desire to subvert AT&T’s switching infrastructure, but rather to make something that would interest his younger sisters. Kids these days, eh. They’ve all gone soft.

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February 3, 2009

Telco 2.0 Launches ‘Executive Briefing’ Service

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From now on, some of the detailed analysis that has been published in this blog will only be available via the Briefing Service. Don’t worry - we’ll continue to keep you up to date with key headlines, news and trends via this blog/newsletter - but do consider upgrading to the Subscription Service for the detailed analysis, particularly if you are in a strategy role.

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February 2, 2009

Ring! Ring! Hot News, 3rd February 2009

In Today’s Issue: Facebook builds giant base in extinct volcano, denies planning for “world domination”; is hidden or overt surveillance more worrying? epic fail at Google; scheme to detect non-neutrality; RIAA tickles Eircom’s tummy, offers biscuit; all the Carter report that’s fit to print; Vodafone buys a map; 11 innovative applications, no money; Fring+last.fm=bandwidth hog; Kenyan voice-web integration; voice-command line memories of the Blair administration; perhaps time for a more intelligent intelligent network; WiMAX base stations run Linux; Nortel bails from mobile WiMAX; $9bn for US broadband; Renesys on the BGP routing costs of freedom

It’s coming: Facebook promises to make some money. This year. Real soon now. And, inevitably, it’s going to do this by selling its huge social-graph data pile to advertisers. It’s not clear whether this is going to be a Google Ads-style exercise - matching adverts to topics or groups of people - but Mark Zuckerberg’s remarks up in Davos suggest that they may be more interested in market research/business intelligence rather than advertising.

It’s a major theme of the times that the distinction between these fields is disappearing; an interesting question will be whether Facebook users are more or less tolerant of this because they can’t see it. After all, if the data is being used for market research purposes, Facebook might be able to extract significant revenue from it without actually having to annoy its users with ads; but then, it’s possible that the idea of being spied upon would actually be more offensive if the spying was invisible…

Anyway, they’re taking action on the CDR. Are you? You’ll need to be careful though; look what happened on Saturday afternoon. Google managed to mark literally all search results as “likely to harm your computer” for some 55 minutes after someone typed an extra / into a configuration file, thus accidentally creating a new address space containing literally everything, and then the intended blacklist. Doh!

Which is a pity, really; it happened the week Google joined an effort by various academic researchers and general-purpose do-gooders to detect discriminatory DPI deviationism deep down in the world’s ISPs and drop them directly in the doo-doo. The concisely named Measurement Lab will establish well-connected test machines all over the world in order to take lots of very accurate latency measurements, and then see if any sources of content are being systematically favoured or disfavoured.

Eircom can probably expect to be scrutinised early on: they agreed to implement “three strikes” against their users if the record industry asks them to, just after the UK government ruled it out. We predict sudden growth in VPN traffic across the border, but the UK is still blowing hot and cold about this; Lord Carter’s Digital Britain report promised to set up a “Rights Agency” to “inform and educate” users about copyright. Whatever that means. He’s also promising to make ISPs spy on BitTorrent users and “notify” them, but not apparently to do anything.

TelecomTV isn’t happy at the lack of any discussion of neutrality in his report; in fact, what with the general floppiness of the report, with its exciting target of 2Mbits broadband (woo!), you’d be pressed to find anyone who’s happy with it; a rundown of problems is here. The record industry and the surveillance lobby in general won’t find it punitive enough, telcos other than BT are facing the possibility of an inconvenient public service obligation, Carter’s view of users, businesses, and developers is summed up by the fact he wants “households” to “receive broadband” as if it was analogue TV and this was 1970, BT is neither getting rid of obligations nor getting funding for fibre….

All in all, it’s a classic example of the quote attributed to Sir Jeremy Greenstock: “What are we going to do? Ah, the D-word…” So far, although they are doing nothing, at least they aren’t doing anything actively evil. They have, however, decided to make the mobile networks very happy; it’s possible that 3G licences will not expire but instead be perpetual, and 900MHz refarming is right back on the agenda. All very good news for the Original Two GSM networks, not so good for 3UK; he also wants to encourage infrastructure sharing, but then, 3 and T-Mobile UK already did that.

Meanwhile, Vodafone buys a sat-nav software firm; as the report says, it’s hard to make money from maps when Google Maps Mobile is free, so it better be good. But then, a significant and growing chunk of the target market will have Nokia Maps 2 and GPS - and a lot of that is free as well. Our tip - get Wayfinder to hack up an interface for user-generated map overlays, like Google did for Maps and Earth, and then everyone else copied. At the moment, Google Maps Mobile doesn’t support any of the wonderful UGC capabilities of the non-mobile version, let alone its powerful KML and GeoRSS features; Nokia Maps, cracking product that it is, doesn’t do user-created overlays or underlays either.

After all, the whole buzzfest about mapping the Internet onto the fabric of the city is all about user-generated content; no-one seriously imagines that the Ordnance Survey, perhaps the world’s most clue-deficient mapping agency, or Rand McNally, or some other wholesale content deal will be able to tell you where you can dance with a transvestite robot to baile funk/Sigur Ros mashups. Isn’t that what we all want from location-based services? Personally, I think of it as dogware - it’s essentially simulating the experience of being a dog sniffing a lamppost.

The other thing about UGC is that, dammit, it’s cheap; something which Nokia’s 11 innovative apps could well do with. As The Register so rightly says, none of them have anything approaching a business model.

Meanwhile, Fring hooks up with annoyingly hip music site last.fm so you can bother your friends on the well-known mobile SIP network with broadcasts of whatever you’re listening to right now. Surely, if the music actually comes from last.fm (or hopefully, their CDN), it would be more sensible just to send your friends a SIP message with a link rather than restreaming the actual music? Stop the bandwidth insanity! Mind you, we know Fring and they have a clue, so there’s a reasonable chance that’s what they’re doing under the bonnet.

Getting away from the media-hipster twaddle, the voice-web integration stakes crank up again; Nairobi University is working on some interesting projects with text-to-speech, speech-to-text, the Web and SMS. We blogged about Me2Me, and we’ve noted IBM’s Indian research lab’s work on voice Web browsing before; this project is all about the visually impaired, but like IBM’s, it could also help the illiterate.

Either way, though, voice-web integration is an emerging hot spot. Interestingly, there is some limited experience with this stuff to go on - several carriers, notably Sprint and Orange UK, launched voice-command products back in the .com boom. Although none of them hit it big, they both succeeded at (as they say) creating passionate users - so, naturally enough, the telcos involved both shuttered the service as soon as times got tough.

As Alan Quayle points out, everyone’s IN systems installed back then are coming to their end-of-life together, so it’s a great time to look at exactly this kind of service. (Alan also has a good point about iPhone apps and open application/service development more broadly - they let you get at everyone else’s customers.)

Of course, the temptation to forget about that and just do it with Asterisk is strong…even if your project is a WiMAX base station. As Nortel bails out of Mobile WiMAX, their rivals are building their base stations on Linux.

After all, there’s no chance of a big order for - say - a rural hybrid fibre-wireless deployment coming along, is there? Whoops. Here comes the stimulus bill, with as much as $9bn for broadband, defined as 15Mbps up/45 down. The FCC is asked to rule on what constitutes open access within 45 days; talk about the devil in the detail.

Finally, when Renesys blogs it’s usually worth reading; here, there’s an interesting discussion of their presentation at NANOG-45. A small number of emerging market ISPs account for the bulk of instability in the Internet Routing Table; but is this a problem, or simply the cost of freedom? After all, even if they annoy Tier-1 network administrators, they are getting the Internet to places where the Tier-1s will never go. And further, the whole point of BGP is to make it possible for the Internet to (sigh) “route around damage” - isn’t this a sign that they just have a harder job?

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