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May 29, 2009

Mobile Standards Processes: Inhibiting business model innovation?

(This is a modified version of an article first published by Dean Bubley, an Associate of the Telco 2.0 Initiative, on his Disruptive Wireless blog)

An important area for Telco 2.0 strategists to consider is the way that technical standards are created in the communications industry, and the direct and indirect impact this has on future business models.

Either by deliberate intent by “traditionalists”, or accidental inertia, standards often tend to entrench Telco 1.0 thinking and processes. Going forward, it will be important to influence the way standards (and requirements) are developed, in order to ensure that business model innovation is not “frozen” out of future technlogical deployments.

Attendance at the recent LTE Summit in Amsterdam stimulated this article, as various presentations and offline discussions highlighted the way that standards bodies operate (notably 3GPP). Various examples showed risks that could delay ecosystem development, entrenching legacy business models for operators and others.

This is not necessarily intentional, as many standards groups are staffed by engineering-type people, who often try to avoid the whole issue of commercial models. This is either because they have limited understanding of that side of the industry, or limited time - or perhaps are worried about regulatory and anti-trust implications. Having said that, there is also a huge amount of politics involved as well, ultimately driven by commercial concerns.

Often, this is exacerbated by vendor-centric vested interests, looking to promote in-house specialisms and protect future revenue streams, rather than operator-based concerns. Where they are operator-based, they tend to reflect “old-school” views from legacy silo business units, rather than the newer “2.0” thinking which is evolving in corporate strategy departments.

The problems arise because certain aspects of technical architecture can act as limiting factors in a market context. Physical SIM cards, for example, need to be distributed physically. Which means that a customer has to go in person to a store, or receive them via the post. So what seems like a basic technology-led decision can actually mitigate against particular business models - for instance, ad-hoc usage of mobile networks - by adding the “latency” of hours or days to the process of sign-up for the customer. In this example, there is also an implicit requirement for the distribution of the SIMs, as well as associated production and management costs.

Alternatively, dependencies between otherwise separate sub-systems can cause huge brittleness overall. LTE is being optimised for use with IMS-based core networks and applications. But not all operators want to deploy IMS, even if (in theory) they want LTE - again, restricting business model choices or forcing them towards what is now a non-optimised radio technology. It seems as though 3GPP is trying to use a popular technology (LTE) as a means to crowbar an unpopular one (IMS) into broader adoption.

A specific knock-on impact of this has been the very slow definition of a voice and SMS service for LTE mobile networks - the IMS-based standard called MMtel has been criticised for three years and has achieved almost zero market traction. This now threatens to delay overall deployment of LTE networks - which ironically may mean that vendor politicking and intransigence in the standards processes will ultimately prove counter-productive. It has already drawn pragmatists to work on a non-standard voice-over-LTE technology called VoLGA.

A parallel set of issues can be seen in the insistence of many mobile operators to view only each other as peers, working within the GSMA club and through various of its standards initiatives like IPX. This reinforces the notion that alternative communications service providers like Skype or Facebook are not peers, but instead deadly enemies, pilloried as “over the top players”. For some operators that competitive stance may be valid, but for others they might be critical partners or even (whisper it) in a dominant role, for which the MNO is a junior part of the ecosystem.

Freezing old-fashioned assumptions into standards and architectures, often without even identifying that those assumptions exist is a recipe for disaster. Numerous other standards processes we’ve reviewed recently also seem to perpetuate 1.0 models - essentially next-gen walled gardens.

This isn’t to say that standards are bad - but just that there is often no mechanism by which seemingly-sensible technology decisions are double-checked against potential future business models. Having a cycle in which people ask questions such as “Will this work with prepay?” or “What’s the wholesale model?” or “What happens if three people want to share one ‘account’” and so forth, would avoid many of these mistakes. You can never account for all eventualities, but you can certainly test for flexbility against quite a range.

The Telco 2.0 Initiative would be delighted to offer a free ‘future-proofing audit’ of any standards activity, to help prove our point.

Back to the recent LTE summit, it was notable that there was not a single mention of the word “MVNO” during the whole event. Nobody has thought what an LTE-based MVNO might look like - or whether there might be cool features which could enable such a provider to offer more valuable services - and generate more revenue for the host MNO. One panel of luminaries returned blank stares when asked about implementing open APIs on the radio network, to make it “programmable” for developers or partners. It seems likely that there won’t be latency-optimised virtual mobile networks for gaming, any time soon.

Many speakers appeared to view the only mobile broadband business models as traditional contract and prepay mechanisms - there was no talk of sponsored or third-party paid access. No consideration of the importance of Telco 2.0 strategies. No discussion about where in the 4G architecture a content delivery network might interface, and so on.

One option for fixing this problem is via the other industry bodies that don’t set standards themselves, but which can consider use cases and business models a bit more deeply - NGMN, OMTP, Femto Forum and so forth. Many of these groups are pragmatic and much broader in vision than the purely technical standards groups.

Perhaps this is the level to bring in these commercial considerations, so that they can then “suggest” specifications for the standards bodies to work to. They could ask questions like “does this architecture make MVNOs easier or more difficult to create and run?” or “what could be done to the standard to enable richer wholesale propositions?”

So maybe documents which say things like “Future mobile networks MUST be able to support a variety of MVNOs of example types A, B and C” could force the standards groups to refocus their efforts.

In any case, the Telco 2.0 Initiative believes that the future success of business model innovation could be gated by well-meaning but inflexible standards. Strategists and C-level executives must ensure that their organisation’s participants in standards bodies are aligned in thinking with an holistic, 2.0 view - and not just trying to protect historic silos against the forces of change.

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May 28, 2009

Enterprise Services 2.0 - Output from Telco 2.0 exec brainstorm, May 09

Below is a summary analysis of the Enterprise Services 2.0 session at the May 2009 Telco 2.0 Executive Brainstorm. It builds on some of the issues we described before the event here.

The premise we explored was this:

Enterprises are rapidly extending their use of the internet and mobile to promote, sell, deliver and support their products and services and manage their customer and supplier relationships. However, companies involved in the ‘digital economy’ still face substantial challenges in doing business effectively and efficiently. Telcos have a unique mix of assets (user data, voice and messaging, data and connectivity capabilities) that can be re-configured into platform-based services to help reduce the friction in everyday enterprise business processes: Identity, Authentication and Security , Marketing and Advertising , Digital Content Distributio , Offline Logistics, Transactions (billing and payments), Customer Care.

Research from the Telco 2.0™ team has identified significant potential market demand for these services which could generate new profitable growth opportunities and increase the value of the telecoms industry to investors and government.


As part of the interactive process, participants were asked which of the following statements best described their view on ‘communications-enabled business processes’ for the enterprise?
  1. Individual operators should focus their efforts very carefully on specific capabilities (e.g. billing and payments or customer care) and verticals (e.g. government, healthcare) and compete with point providers (such as Paypal) in these markets.
  2. Individual operators should focus their efforts on building a broad set of horizontal capabilities (covering identity, authentication, security, marketing and advertising, content distribution, off-line logistics support, billing and payments and customer care) to a broad range of vertical markets as this will enable a unique value proposition and develop scale.
  3. Telcos should avoid Telco enabled business processes - the market is a red herring.

Enterprise 2.0 – lessons learnt & next steps

In theory, the enterprise segment ought to be at the heart of operators’ Telco 2.0 strategies. Irrespective of single-sided corporate retail propositions, in a two-sided world “upstream” providers are generally businesses or governments. But many of the comments during the session identified just how difficult it is to extract the value in a Telco’s inherent assets and capabilities, and apply this to corporate IT and business problems.

The Telco 2.0 Initiative believes that one of the major issues around exploiting the enterprise opportunity is that Telcos need to learn how to develop, sell and support services which are customised, as well as mass-market “basic” applications and APIs. Ideally, the technical platform will be made of underlying components (e.g. the API interface “machinery” and the associated back-office support systems) designed to cope with both “off the shelf” and “bespoke” go-to-market models for new services.

Especially in the two-sided model, there are very few opportunities to gain millions – or even tens of thousands – of B2B customers buying the same basic “product”. Google has managed it for advertising, while Amazon has large numbers of hosting and “cloud computing” customers – but these are the exceptions. Even in the software industry, only a few players have really huge scale for basic APIs (Microsoft, Oracle, Sun, etc.) across millions of developers.

Werner Vogels, CTO, Amazon.com: ”Amazon cloud services took off with the creative people and start-ups, but the enterprises came aboard because they could get agility here they couldn’t get anywhere else.”

Operators may indeed have some easily-replicable “upstream” services that could be sold through an online platform in bulk (perhaps authentication or billing, or basic APIs like location), but these often also face competition in terms of alternative technological routes to their provision. They may also need to be “federated” across multiple operators to be truly useful. Perhaps the most easy and universal horizontals will be enhancements to voice and messaging capabilities – after all, these are the ubiquitous cross-sectoral services today, so it seems likely that any enhancements will follow.

To really exploit unique assets and “take friction out of business processes”, there will also be a need to understand specific companies’ (or at least sectors’) processes in detail – and offer customised or integrated solutions. Although this does not scale up quite as
compellingly, the aggregated value involved may be even higher. Even Microsoft and Oracle have dedicated solutions for healthcare or manufacturing, as well as their baseline horizontal products.

J. P. Rangaswami, MD, BT Design: ”Our measure of success should be how easy it is for customers to use the network. Margins will be like a retail business –  a razor thin layer of value spread across a huge area of the economy.”

Another interesting example is that of the BlackBerry. Although today we think of mobile email as a generic capability used across the whole of the economy, the original roots of the company (pagers) were highly financial-oriented. The banking sector very much catalysed the subsequent growth in other knowledge industries (e.g. legal / consulting) and then the more general adoption among businesses of all types. This reflected not just the need for (and high value of) real-time messaging, but also other issues that a pure horizontal approach may have neglected. A specialist salesforce, an early focus on enterprise network security integration – and a large target audience of Microsoft Exchange users were all important. Even the “gadget envy” of a well-paid and dense concentration of users (Wall Street) may have helped the device’s early viral adoption.

As yet, this need for customisation and integration has not been fully recognised. The results of the vote at the end of the session were stark – perhaps surprisingly so. The vast majority of survey responses suggested that operators should attempt to build up exposed capabilities across a set of horizontals, rather than focus on the needs of specific markets.

This seems to reflect the hope for more Google/Amazon-style cross-sector offerings. But as discussed above, this may not be easy, nor will it be the whole story. It is also unlikely to work for every operator. Telco 2.0 thinks that the horizontal approach certainly makes sense in terms of the core abilities of the technical platform, but in terms of developing solutions and partnering with particular integrators or influencers, some measure of vertical specialism is often necessary. 

That said, the telecom industry has not often been good at “picking winners” from an enterprise stance,

In the short term, Telco 2.0 would recommend the following:
  • Look for “low hanging fruit” around next-generation contact centres and voice mashups. These are prime targets for horizontal exploitation. Where appropriate, partner with one or more start-ups if existing internal skillsets are weak. ‘Eat your own dog food’ – sort out your own call centres first and develop skills and processes that can be applied to other industries

  • Continue with plans to monetise certain other assets for enterprise utility – especially security, payments, messaging and features that can add value to logistics processes. However, work in parallel on broad commercial platforms (e.g. web-based APIs) and more customised routes to market.
  • Conduct research to identify any particularly attractive near-term addressable target verticals. This can reflect existing skills/services (e.g. within an internal integration business unit), national-specific trends (e.g. major healthcare or environmental projects), local legislation (e.g. banking rules) or wider industry collaboration (e.g. GSMA projects in areas like mobile payments)
  • Build a database of possible acquisition targets (for example, corporate web/telco specialists), especially those with funding vulnerabilities that may make them available at low prices in the recession.
  • Start thinking about the implications of network outsourcing or managed service contracts on the ease of offering exposed service capabilities to upstream enterprise customers.
Longer term, other considerations come into play:
  • Develop separate strategies for high-volume/low-value enterprise services (e.g. servicing thousands of customers via web service platforms for generic “building blocks” like authentication), and low-volume/high-value corporate projects. [Note: volume here means # of customers, not # of transactions or events: imagine a one-off deal with a government, for national health ID & patient records]. Ultimately these may use the same underlying capabilities, but the engagement model is totally different – for example, participation in a Government-led scheme to extend smart metering for utilities, or a one-off deal with a broadcaster for a new advertising and content-delivery partnership.
  • Aim to work closely with one or more top-tier enterprise IT vendors to help add value to their hardware/software solutions. IBM, Microsoft, Oracle, SAP, Cisco, HP, Sun and others have large bases of extremely loyal customers.
  • Look to exploit new device and network capabilities, such as sensors, cameras, enhanced browsers and widgets on phones, or femtocells in B2C customers’ homes. In particular, there are various government/public-sector applications that could benefit from closer integration with citizens’ technology. Examples could include authentication for local services (or even for assorted types of monitoring for environmental, healthcare or public safety reasons). Do a full analysis of applications that can be hosted in the cloud – but beware the integration and “touch points” with corporates’ in-house infrastructure.

Event Participants: can access the full presentation transcripts, delegate feedback, and long-term recommendations for action at the event download page (NB. the URL has been emailed to you directly as part of your package).

Executive Briefing Service Members: can do so in a special Executive Briefing here. Non-Members: see here to subscribe.

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Retail Services 2.0 - Output from Telco 2.0 exec brainstorm, May 09

Below is a summary analysis of the Retail Services 2.0 session at the May 2009 Telco 2.0 Executive Brainstorm. It builds on some of the issues about selling to the ‘digital generation’ that we described before the event here.

The session involved short stimulus presentations from leading figures in the industry, group brainstorming using our ‘Mindshare’ interactive technology, a panel discussion, and a vote on the best industry strategy for moving forward. Below is the vote, followed by some of our post-event analysis on key lessons and industry next steps:

Retail services vote

Participants were asked which of the following statements best described their views on the role operators should try to play in serving digital natives?

  1. Be a really good dumb pipe. Provide connectivity and voice messaging only and let the ‘over the top’ players get on with innovating services
  2. Retail supermarket. Sell Telco or third-party services via online platform.
  3. Enabler. Allow third-party innovators to do a better job by giving them access to Telco capabilities and assets (identity, billing etc).
  4. Retail - enabler. Sell own and third-party products AND ensure they are improved through access to Telco enabling capabilities.


Retail services – lessons learnt & next steps

Taken together, the presentations, feedback and final vote highlight an industry in transition – but still very uncertain of the precise direction or roadmap for retail services, especially to the ‘Digital Generation’. Early examples and case studies of new retail telecom business models are like gold dust - scrutinised and dissected to yield any generic insights. Irrespective of the aim to develop two-sided business models and open platforms, it is also clear that strategists are still focused on extracting the maximum value from today’s existing services.    

Looking at the results of this section’s vote, it is unsurprising that few people in the industry see the dumb pipe as an attractive future strategy. But more interestingly, the concept of a retail supermarket, which had been widely seen as an attractive option in the past, seems to have fallen away, reflecting a desire by Telcos to ensure that they can still differentiate and add value through their infrastructure. This shift may also reflect the awareness that this type of retail operation would put them head-to-head in competition with Apple’s AppStore and various other service portals. It also highlights the dilemma of Telcos’ desire for exclusivity, set against application providers’ hope for the widest possible distribution.

The Telco 2.0 team agrees with the outputs of the vote – the most attractive options involve turning the operator’s network (and possibly devices – see below) into a platform of “enablers” for third party services and applications. These assets and capabilities may not be easy to deliver – either organisationally or technically – but once in place, should provide a much more defensible source of value.
Marc Davis, Chief Scientist, Yahoo! Mobile: “Give the user ownership over this information! This is crucial! You could geocode all my photos or send me restaurant recommendations; but just give me value!”

There is a fairly even split between those suggesting that “enabled” services can be sold in retail by Telcos, versus those who believe that the exposed capabilities alone represent a more viable standalone basis for growth. In many ways, the reality will depend on a variety of factors – existing customer relationships, portfolio of existing inhouse services, ease of developing retail partnerships and so on. A tier-3 mobile operator with <1m subscribers and few smartphone users is going to find it hard to partner with the coolest web brands. A former fixed-line incumbent, in its home market, with enviable billing relationships to a sizeable % of the country, is in a much better position.

It is worth noting that various of these applications simply cannot be “sold” through an operator’s retail store, as they will be small but integral parts of much larger services. In the same way, Amazon is able to enable the development and sale of a huge variety of other products and services, but would be the wrong company to try and retail all of them to its customer base. (Sellers of fresh food or fuels, for example, would not fit with Amazon’s logistics business, but might still exploit its various online commerce enablers).
Richard Titus, Controller, Future Media, BBC: “In general, you need to remember that the data is the asset, not connectivity. Connectivity is a loss leader. But data is buried treasure.”

In the short term, the following needs to occur:
  1. Continued emphasis on getting C-level buy-in and commitment to new business approaches
  2. Identification by Telcos of areas for quick pilot deployments
  3. A focus on deploying marketing services like Buongiorno’s, which are “enhanced 1.0” models, with a relatively straightforward roadmap towards 2.0 options as they mature.
  4. Willingness to publish details of successes and failures – despite the competitive aspects of the marketplace, we are still at a stage where the industry as a whole needs validation.
  5. Awareness of tactical acquisition opportunities, given the contraints of the recession
  6. Pragmatism about retail services that can use “lowest common denominator” service components like SMS and the existing installed base of legacy phones or home gateways, even if they lack the “sexiness” of those that can exploit the latest smartphones or intelligent end-points.

Longer term, the emphasis clearly has to be on developing full-fledged platforms open to developers, as well as exploiting new distribution channels.

  1. Structure and incentivise the retail operations in a fashion that enables them to compete on a level playing field with future wholesale customers. This does not necessarily mean structural separation, but it will need some “chinese walls” and changing attitudes from protectionist to competitive.
  2. Go back to the drawing board and develop a full strategy for voice and messaging services. Despite the move towards cheap/free minutes, there are ways to extract value through other business models.
  3. Pragmatism about relationships with leading Internet players. Trying to compete head-on with FaceBook or Google is unlikely to succeed. There is more mileage in looking to enable peripheral service or capabilities, or partnering directly if the Telco has sufficient scale.
  4. There is no reason that Telcos should not retail each others’ services if they are particularly good. At the moment, there are extremely few instances of Operator X selling an application developed (and maybe branded) by Operator Y. Would you really rather deal with Google than your peers?
  5. Invest in behavioural research, but in ways that directly translate to new relationships rather than putative services with a multi-year development timeline. Think “R&P” (research & partner) rather than R&D.

The full presentation transcripts, delegate brainstorm output, and long-term recommendations for industry action is available to event participants and to subscribers of the Telco 2.0 Executive Briefing service here

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Mobile Advertising Is Really Another Comms-Enabled Business Process

We should all now be aware that the global digital advertising market adds up to about 2 per cent of the telecoms industry’s revenues. But advertising is a sub-set of a bigger sector -  ‘marketing services and business intelligence’ -which is far more valuable and far more pertinent for telcos to support.

As Rory Sutherland, vice-chairman of Ogilvy, said at Telco 2.0, there are probably more good ideas in mobile marketing than there is money to pay for them.

he's right, you know

Limits to advertising, and the Google threat

The ad industry traditionally argues that there is no theoretical limit to how much enterprises might choose to spend on advertising, and that therefore their business is a natural growth sector. However, it is also a highly cyclical sector; there is always scope to cut advertising budgets. It would be a robust optimist who projected a major increase in advertising spending in the near future; as well as the bleak macro-economic outlook, there are signs of a structural shift in progress in the industry (as the IBM Institute for Business Value also thinks), with traditional TV and newspaper display advertising collapsing.

The only major success story, which is also the biggest success in advertising since the arrival of commercial TV, is Google. Google has certainly profited by enlarging the addressable market for online ads - its scale, and its two-sidedness in deliberately subsidising the creation of an audience through search, and inventory through its content-creation services, have enabled it to reduce the minimum scale required to advertise effectively online. Businesses that would never have advertised to a mass audience can do through Google Ads.

This price war strategy, however, has obvious consequences for the potential margins companies entering this field might expect. And do you really want to set out to compete with Google in its core business? Unless there is a drastic change in Google’s strategy, business model, and technology, the great majority of the $100bn in annual revenues the company is aiming for will come from advertising. It is a valid question how much online advertising will be left for others; arguably, as a capital intensive business with global scope, it is likely to be dominated by a very few giant firms. Google and Yahoo! are there already.

Then, as Scott Shoaf of Juniper Networks said at the Telco 2.0 Executive Brainstorm, experience from some of the world’s biggest businesses that sell advertising - the US cable TV MSOs - shows that although ads are a major source of revenue, it isn’t obvious that the distributor is best placed to capture it. 90% of the money goes to the content owners.

The importance of “..marketing, and business intelligence”

Fortunately, that is not the only way to make progress with mobile ads. In the 2-Sided Business Model strategy report, we included advertising in a group of businesses with marketing and business intelligence. Increasingly, however, we’re seeing it as part of a broader spectrum of enterprise services; after all, one of the main aims of CRM is to understand the customer in order to sell them your products, and one of the key disciplines of marketing is to make it as easy as possible to buy. Can you really divide advertising from these functions?

One of the major selling points telcos have in advertising is much improved reporting and analysis. So where is the clear distinction between this and the company’s general management-information system? Also, one of the services we mentioned in the post about Rory Sutherland’s presentation, Fizzback, is designed to elicit real-time feedback from your customers. This is, again, a silo-breaker. Is it marketing? Is it advertising? Is it CRM - or possibly VRM? If you recall the use case - asking passengers on a coach for their impressions, and having the driver adjust the air conditioning - it’s not all that different from some of the logistics-focused CEBP applications Voicesage and friends specialise in. The main difference is that rather than monitoring the temperature of goods in a refrigerated container, it’s monitoring the perceived temperature of passengers in a heated bus.

So the first lesson about ads from this spring’s Telco 2.0 is that, as we’ve said before, it’s not really about ads.

Advertising as a communications-enabled business process

Instead, it’s part of the sprawling, chaotic undemarcated frontier between classical enterprise IT, Web 2.0, and mobility. Specifically, it’s all about the edges of those businesses - where it makes contact with suppliers or customers, where other people’s business processes overlap into yours or vice versa, and where the company overlaps the edges of its own IT system.

We’ve pointed out before that a lot of very expensive, and often very good, corporate IT stops at the loading dock; as soon as people, information, or goods leave, they go off the radar, even if they are moving about within the same organisation. The reason is twofold - mobility is difficult, unless you have the accumulated asset base and expertise of the telcos, and it’s a strange world out there, so corporate IT systems tend to hunker down behind their firewalls.

As Thomas Howe put it at Telco 2.0:
An important, but underestimated market for CEBP is within the enterprise. Many companies lock out suppliers, customers, other stakeholders and even employees in the field from their systems. CEBP breaches this - it extends the enterprise IT system outside the firewall.
After all, it’s still difficult to do damage directly with just a telephone call, even if you can make all hell break loose over the Internet, and CEBP applications make any phone part of your IT capability. It’s almost certainly the cheapest way to extend your system into the field.

A major inefficiency created by the firewall is the number of customer-service calls which only generate a request for information - query-only calls. Using people to take calls from other people, look up data in a computer system, and read it out to them, is obviously a waste of their time, and 60-70% of the cost of a contact centre is labour. According to Glenda Akers of SAP, speaking at Telco 2.0, even before you get to answering the queries, 40% of call-centre agents’ time is spent dealing with calls that have landed in the wrong place.

User experience trumps advertising. So perhaps the second conclusion to take away is that we should facilitate advertising, marketing, and business intelligence on the same basis that we facilitate - say - container-tracking.

Who owns the content in a telco?

If it’s about people, then, it’s about customer data. Scott Shoaf referred to the way in which ad revenues tended to go to content owners. What is the content in a telco, and who owns it?

We’ve always contended that the content is the accumulated social-graph data built up in the telco, and that the distribution system for it is voice - it’s good to talk. It’s increasingly clear, however, that it is not acceptable for telcos to behave as if they owned this data. Instead, as Marc Davis of Yahoo! said at the event, and as we have repeatedly argued, the data was created by the subscribers and should be considered their property. If content owners do tend to capture the ad revenue, this suggests that a big chunk of the benefit from advertising is likely to go to content owners - i.e. subscribers - and advertisers, just as the great bulk of the benefit from containerisation went to shippers - i.e. enterprises - and to consumers rather than to shipping lines.

The telcos’ role, instead, should be to facilitate trade in this information - aggregating, processing, and making it available programmatically. The equivalent roles in container shipping were the providers of intermodal logistics services and the major load-centre ports.

Blyk is the standard example in the real world; its 29% response rate suggests that its advertisers certainly are profiting, and presumably the users are too, even though it seems that they take the free minutes and SMS messages and also use enough overage to reach the bill they were expecting. The telcos? Not so much. However, Blyk isn’t a perfect example - as an MVNO, it holds the subscriber data itself, so it’s not possible to separate out the roles of distribution, aggregation, and content. Perhaps everything, in the end, is a CEBP?

It’s possible that the future of this business will, indeed, be dominated by reporting, targeting, analysis, CRM, and VRM, rather than anything that Don Draper would recognise as advertising. We mischievously invented a new TLA, IRM for integrated relationship management, to describe the intersection of customers and businesses in the era of the upstream customer, who is defined by being as much a producer as they are a consumer.


  1. Telcos’ role in advertising, as in so many other things, will be as an indispensable enabler rather than a store front.
  2. It’s not really about ads - as the value of telephony has moved to before and after the call, the value of advertising is moving to everything around the ad (the wider world of ‘marketing’)
  3. Telcos need to facilitate this in the same way they need to facilitate all kinds of other CEBPs - as another of the many services we provide for enterprises to improve their business processes
  4. It’s not a glamour sector, as a lot of people think, it’s an extension of CRM and management information systems.
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Devices 2.0 - Output from Telco 2.0 Exec Brainstorm, May 09

Below is a summary analysis of the Devices 2.0 session at the May 2009 Telco 2.0 Executive Brainstorm. It builds on the issues we described before the event here.

The session involved short stimulus presentations from leading figures in the industry, group brainstorming using our ‘Mindshare’ interactive technology, a panel discussion, and a vote on the best industry strategy for moving forward. Below is the vote, followed by some of our post-event analysis on key lessons and industry next steps:

Devices 2.0: Vote

Participants were asked which device strategy would offer Telcos the most realistic opportunity to deliver profitable new services and business models in the future?

  • Telco designed and controlled smart devices (e.g. custom smartphones, operator specific digital picture frame)
  • Separate Telco controlled gateway device (e.g. femtocell, set top box) used with open edge device.
  • Open device with Telco control of policy software (e.g. netbook with sim & operator connection software).
  • Forget about controlling devices, we can manage everything in the network.


Devices – lessons learnt & next steps

Unfortunately, Telco strategists still appear to expend more efforts on examining infrastructure and centralised application platforms, rather than the network “edge”. Although obviously some within operator organisations are focused on the users’ hands and homes, there is often no more general recognition of the shifting balance of power – in terms of both influence and computation. The rise of the iPhone and similar devices has helped redress the balance somewhat – but even there, the emphasis has shifted to the more “comfortable” centralised AppStore as something for operators to emulate.

This is understandable. By and large, few fixed or mobile operators have successfully helped create new types of devices on their own. A few broadband providers have used home gateways as new service platforms, or as ways to reduce churn, but even these have tended to just be through the addition of functions like IPTV or VoIP. Few consumers would view their broadband “box” as a central hub of a home network – despite 10+ years of discussion of interconnection with consumer electronics, utility meters and home automation. All the talk of Telcos exploiting connectivity to HiFis or “screen fridges” has been hot air.

Alberto Ciarniello, VP Service Innovation, TIM: “Apple shipped 1bn apps at a significant average revenue per user. It’s unprecedented. It’s generated a lot of traffic and a lot of stickiness.”

In the mobile space, the power of Nokia, Apple, RIM and others is always set against operators’ desire to customise applications or user experience. Although in developed markets, a high % of phones are sold through operator channels, the use of embedded operator-specific applications and on-device portals has had only limited commercial benefit. Probably the most important customisation has been the configuration of the Telco’s own portal as the default browser home page. If anything, the shift towards smartphones and PC-based mobile broadband has further weakened Telcos’ role – the majority of 3G data traffic goes straight to and from the Internet from “vanilla” devices.

Anssi Vanjöki, EVP New Markets, Nokia: “Our user studies show that 12% of user time on the N-series is telephony or messaging; the rest is Web browsing, camera, media playback, e-mail, and applications.”

The future possibly holds some more hope. The audience at the event was strongly in favour of pushing for Telco “control points” in otherwise open devices. This fits well with the heritage of SIM cards (which are expanding in capability) as well as standardisation in areas like the browser and widget frameworks (eg OMTP BONDI). Software pre-loaded with PC dongles or embedded 3G modems is another option. [Readers of this blog will know that Telco 2.0 is more sceptical of the benefits of the current approach to the Rich Communications Suite client advocated by the GSMA and certain operators]. In the converged triple/quadplay space, femtocells offer another point of control and service delivery, close to the customer – although the notion of a separate “gateway” product was viewed with less enthusiasm at the Nice event. New classes of devices such as MIDs, operator-enabled consumer electronics (Internet TVs, 3G musicplayers, in-car systems etc) also hold promise, but are seen more as low-risk experiments at this point.

In terms of next steps, the Telco 2.0 team feel that, in the short term (c12 months), operators should:

  1. Aggressively pursue “must have” devices like the iPhone – even if there is a short-term pain point around loss of control. At the moment, customers are still device-centric.
  2. Think twice about pushing end-users towards smartphones – instead, look at data plans coupled to higher-end featurephones, especially those with good browsers, touchscreens etc.
  3. Assess the business opportunities around OMTP’s BONDI model at a strategic level
  4. Revisit the realistic opportunities afforded by next-generation SIM cards for both PCs and phones.
  5. Beware of certain device categories which will need new business/charging models to succeed broadly in the marketplace – for example, embedded-3G PCs are an “elegant concept”, but fail to meet the needs of massmarket consumers (or enterprises) at present.

The full presentation transcripts, delegate brainstorm output, and long-term recommendations for industry action is available to event participants and to subscribers of the Telco 2.0 Executive Briefing service here.

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May 25, 2009

Ring! Ring! Hot News, 25th May, 2009

In Today’s Issue: Sales crunched! but smartphones hold up; 3UK+T-Mobile=Skype?; 3UK, BT want to terminate termination fees; BT not too happy with LLU pricing either; Vodafone results; US layer-zero access legislation; Oz structural separation floated; Vodafone backs national fibre in NZ; Gulf state telcos want FTTH; EU clears rural broadband aid; Safaricom results; Vimpelcom’s holiday in Cambodia; politicians intervene in Telenor/Vimpelcom, demand end to political intervention; Wolfram Alpha “not the answer”; vvvvvv.tvvitter.com fools millions; Sun’s app store ready for launch; MS Mobile Me; Verizon offers security for SMBs; MetroPCS outsources complete BSS; numbers on the Amazon Kindle; Apple recruits ARM experts, 32GB iPhone rumoured; statistics app for the iPhone; working from bed, or possibly just watching TV; Hulu UK launch timed for September; yet another Nokia service; Yahoo! voice search; location data more privacy-sensitive than we thought; Project Gutenberg app slaughtered as “too sexy”; Paris Hilton tests RIM’s remote wipe function; Venezuelan satellite gone missing

Mobile phone sales suffered in Q1. Didn’t everything? Gartner estimates shipments were down 8.6%, with the smartphone segment holding up and even growing. This is rather the pattern we predicted back at MWC; as we also predicted, Nokia has ridden out the crisis while the mid-market manufacturers felt the squeeze.

Rumour of the week: three-way deal between DTAG, 3UK and Skype, with a little help from Deutsche Bank. The idea is to sell T-Mobile UK to 3, thus getting an underperforming division off DTAG’s plate and providing a politically useful quick hit, and somehow rebranding the whole thing as a “Skype carrier”; well, you can’t fault it for ambition, can you? And certainly, 3 would like to get hold of T-Mobile’s spectrum and customer base.

Further, 3 was the first operator to offer a mobile version of Skype, and its INQ handset is specifically designed to deliver third-party Web services rather than anything 3-branded. So it’s not totally implausible, and could even be rather Telco 2.0…although we do wonder if Skype has any real interest in being part of a telco. There are plenty of solutions for that, though.Before any of this eventuates, though, there’s a good row coming up, as 3UK and BT launch a campaign against termination fees. BT is not happy about the latest set of regulated wholesale prices, either.

Meanwhile, Vodafone results are out. Revenues of £41bn, operating profits of £11bn, and data revenues over £1bn for the first time…but there was always going to be something awful, lurking. Such are the times. Inevitably, this being Vodafone, it was a huge accounting charge against profits - £5.9bn, mostly on its network in Spain. Further, service revenue actually fell slightly in the UK, although wholesale was up strongly.

In the US, a bill in Congress proposes that every road construction project that receives Federal funds should include an open-access fibre duct with sufficient surplus space to accommodate multiple service providers’ cables. Optus, meanwhile, suggests to the Australian government that Telstra might like to structurally separate itself; we think that with the recent post-Trujillo exodus, the company is possibly preparing itself to cooperate with the National Broadband Network, and separation would be an unavoidable prerequisite of that.

Vodafone New Zealand is of a similar view, suggesting that all the carriers should contribute to a joint public-private open-access dark fibre company. It’s a disturbance in the Force, as if a thousand DSLAMs cried out and were suddenly obsolete…after all, even the Gulf’s incumbent state telcos, who are arguably the most incumbent, state, and telco of incumbent state telcos, are keen to get the fibre out there.

Perhaps the EU might do something? It seems their experts on their own rules are convinced that it would be OK, really, if some public money was spent on rural broadband deployment, so there’s a chance at least. Even if the Union itself is only putting up €1bn, this could uncork much more in national and regional government funds.

In Kenya, meanwhile, Safaricom has results; revenues up 14.8%, 3.2 million net adds, but profits down sharply as the OPEX costs of expansion bit and the carrier started to tap even lower ARPU markets.

Vimpelcom is going to be the first Russian operator to launch outside the former Soviet Union, taking its Beeline brand to sunny Cambodia. Relatedly, the Russian and Norwegian prime ministers held a joint press conference to say that Telenor and Vimpelcom should just play nicely like good little boys, and not bother politicians. Does anyone think this dispute will ever be settled, or will it drag on until it has become the Schleswig-Holstein question of mobility? Gladstone said that only three men had understood the issue, but two of those were long dead and one had gone mad.

Similarly, you could have died or gone mad listening to the hype over Wolfram Alpha, but as Wired and many others point out, it proved to be nothing if not “alpha”, with among other things a number of weird gaps in its database, like geology. If you were desperately waiting to try out Wolfram Alpha, you’re probably into Twitter in a big way; this week saw a phishing attack on it which used the novel trick of registering a domain name that began with v’s - like so: vv rather than w. Cunning!

Meanwhile, another app store this way comes. This time it’s Sun Microsystems, which is launching an online market for Java applications. As there is a seriously large installed base of Java phones and devices of every kind, you can see the attraction; it’s also possible that this might mean Sun is interested in re-activating SavaJe, the Java-based mobile OS that never quite happened.

Microsoft has opened Microsoft My Phone to the public, essentially a clone of Apple’s MobileMe sync service and content stash. Well, it’s a strategy that worked for them before…even if MobileMe has hardly been a roaring triumph, and a lot of telcos also like the idea of keeping all your content with them.

Verizon, meanwhile, has a new security offering for small businesses - it’s a software-as-a-service approach to network monitoring and management, using technology from CA. There’s also an RSA hardware token system.

It’s not only small businesses, either, who are doing this sort of thing; MetroPCS has announced the transfer of its billing functions to Amdocs as a managed service. We have long expected much more hosting and managed service provision in the network; as a delegate at Telco 2.0 in Nice pointed out, though, this does raise some interesting questions about regulation, privacy, and security if all the data is held by some other BSS firm.

Amazon knows a lot about running that kind of giant IT factory; so they get to do clever front end things, like the latest version of the iPhone implementation of the Kindle. And analysts reckon they might make $1.6bn from the gadgets by 2012.

On things iPhone, it looks like Apple is looking for people qualified on the latest ARM chips, and a 32GB iPhone is rumoured, although surely that would cannibalise most of the iPod range. And at last, some properly po-faced business-focused applications for the damn thing; Mellmo has an interesting-sounding data visualisation tool, with a client for SAP business intelligence systems coming up behind it.

The upshot: a worryingly large amount of time is spent by telecommuters working from bed using a mobile device. At least, they say working. We know better; remember that the peak hour for BBC iPlayer streaming to mobile devices is midnight. Speaking of TV, Hulu is expected to launch in the UK in September. Put out all fires and get under cover; the next wave of disruption is heading for your backhaul operations.

Rumours of a Nokia Linux smartphone are floating about, which may mean that this leaked screenshot is significant. Either way, impressive eye-candy. Perhaps more usefully, the new version of Ovi Maps is out and it’s full of features, even if it still has a Microsoft Windows fixation; strange, really, in a company which makes its own pair of operating systems and its own Linux distribution. Still no word on how it’s meant to make money, however, especially as it includes quite a lot of proprietary content pulled in from several sources.

Yahoo! is keen on voice-activated search. Security researchers have discovered that knowing where somebody lives and where they go to work is enough to identify them uniquely to a surprising degree of granularity; regulators warm up on the sidelines.

This week’s banned iPhone app; Eucalyptus, an e-book application for the Project Gutenberg library, which was refused access to the App Store because users might read Sir Richard Burton’s translation of the Kama Sutra on it. Probably true; you know what Apple’s customer base is like.

Another element of the superstar test for mobile devices: does the device-management remote wipe or kill switch work? We’ll soon know - Paris Hilton’s BlackBerry has gone missing. And has the same thing happened to Venezuela’s satellite?

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May 19, 2009

Open Mobile Summit, 10-11 June, London: Recommended

The Open Mobile Summit (10-11 June, London) is shaping up very well. It’s a very strong event with the top people in mobile. Telco 2.0 will be speaking there and sharing some of the brainstorming output from our event a few weeks’ ago.

We are told the event is almost sold out, so it’s worth reserving a place ASAP if you want to participate. Some discounts still available.


Below are details of the agenda and its top quality speakers and the key benefits of the event:

3 reasons the organisers give to register:

1/ Networking with powerful industry figures
The Open Mobile Summit offers intimate networking with some of the most powerful people in mobile, Internet and media. They can propel your business to an entirely new level. Reinforce existing partnerships and build new ones, right here.

2/ Unparalleled strategic insight
Understand the ‘open’ agendas of all the major players in wireless. Learn how the competitive landscape is changing and how that will affect your business. Identify opportunities to profit from the disruption, and how to build a sustainable business model in the open mobile economy. See the full agenda here

3/ 60+ world-class speakers
Including Christopher Schläffer, Executive Officer, T-Mobile, Yves Maitre SVP Orange, Kenneth Karlberg President Mobility TeliaSonera, Ed Candy CTO 3, Mike Short, VP, O2/France Telecom, Pieter Knook, Director Internet, Vodafone, Alan Brenner, SVP, RIM, Marco Argenti VP Nokia, Glu, LG, Motorola, Disney, Google, Yahoo, BT and many more!

More here.

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May 18, 2009

Ring! Ring! Hot News, 18th May 2009

In Today’s Issue: Participants at 6th Telco 2.0 Executive Brainstorm sceptical about the industry’s transformation efforts; Vodafone opens API worldwide; slashes roaming rates; data traffic surges at Orange and elsewhere; VZW encourages bandwidth hogs with netbooks, global data plans empowered by software-defined radio; more news on VZW LTE speeds, SIMs, timings; first Indian 3G net, powered by ALU; US carriers take credit for iPhone, for regulatory purposes; iPhone as weapon; express your despair with Motorola’s new motion-sensitive device; Sony goes for better sound, but not yet for better voice; “paper” stage of Nokia open-source life cycle removed; another Nokia service acquisition bites the dust; Google outage; zombie nightmare at BT; Wipro gets into nearshoring; court go-ahead for Vodacom, Marxist rage; C&W monster-bonuses; Nortel in “not quite that awful” shock; Bill Morrow woz ‘ere; RLEC consolidation watch; satellite broadband spectrum assigned, spaceship breaks down; Facebook the platform; learning from pirates; Will Page considered right

Participants at the 6th Telco 2.0 Executive Brainstorm in Nice were sceptical about the industry’s efforts to transform itself:


Fortunately, some people are listening. Vodafone has announced the next steps in its Joint Innovation Lab project; they’re opening up a set of network APIs across the entire Vodasphere, which will be available to JIL users. That in turn suggests that the other JIL carriers, China Mobile and Softbank, will be on board as well. Notably, the capability suite includes access to the billing system, which of course opens up a wide range of possibilities in terms of monetising your fancy new application on a world-wide scale that hasn’t really been possible before.

Vodafone UK also slashed roaming rates for this summer…fortunately, the data revenue fountain is still going and the capacity crunch hasn’t happened yet. Orange reckons usage doubled in 12 months.

No surprise, really. Verizon Wireless doesn’t just want you to buy a netbook; it wants you to burn bandwidth, it seems. The data caps on its flat-rate tariff have just been increased, and the company is now offering an international data roaming plan through its relationship with the Vodafone empire. It isn’t the first time they’ve done this; the first EV-DO and UMTS data cards also saw an effort to sell transatlantic data plans, but that required two different devices. LTE will of course fix that, but in the meantime, it looks like Qualcomm’s Gobi radio chip is the key - the SDR (Software-Defined Radio) device will permit the HP netbooks in question to do both EV-DO and UMTS. I think we mentioned this before…

Speaking of VZW and LTE, they held a webcast for developers this week, which clarified the schedule of deployment. Test networks should appear by the end of the year; a commercial launch will take place next year; build-out should be complete in 2014. Speeds of 8-12Mbits are targeted (which isn’t so impressive when you think that some UMTS HSPA networks aim for that already). And the devices will indeed have proper SIM cards. They will also have certification requirements “over and above the standard”; Gearlog thinks this means you’ll be restricted in what you can hook up to the network, but it may be a reference to their Open Development Initiative.

Euro-vendor watch: MTNL launches the first 3G network in India, running on Alcatel-Lucent kit.

Everyone loves app stores; Wired reports on a truly odd invocation of the Apple App Store mythos. US telco lobbyists are using it to argue against regulatory demands for open access; which is amusing, seeing as Apple isn’t a telco. It is, however, a slightly unlikely contributor to US counter-insurgency in Iraq, now that there’s an Arabic-English dictionary app for the iPhone.

Meanwhile, the first gesture-sensitive device from Motorola is announced. It uses an accelerometer as a core element of the user interface, which is an interesting idea; apparently, if you clap both hands to your face like the figure in Edvard Munch’s Scream, it recognises the gesture and logs into Motorola’s internal phone system, on the principle you probably work there.

Sony announced an iPod chaser with digital noise-cancellation for better sound. We’ve long been advocates of better voice and messaging, and in fact Telco 2.0 was involved with a high-quality voice product as consultants. So what we’re wondering here is whether Sony might put the fancy audio tech into the rumoured PSP phone, or perhaps just add an Ericsson cellular radio to the new Walkman? Relatedly, the Zune-phone story bubbles on.

Nokia, meanwhile, has simplified the process of contributing code to Qt, the open-source GUI framework it bought with Trolltech and which is used in the KDE desktop for Linux machines. You no longer have to fax in a special copyright form; fax? Good God. After a little more than a year, Nokia has added yet another name to the list of services it’s launched and closed down; Ovi Share, ex-Twango, which went live at 3GSM in 2008, will not actually close but will no longer receive any investment. An analyst quoted by Reuters said that Nokia needs to “stop trying to replace Facebook, Flickr and start trying to collaborate with them” - we couldn’t agree more.

Google had a massive outage; according to Renesys, an as yet unexplained BGP routing issue caused most North American backbone operators’ traffic with Google to be routed into NTT (AS2914) in Japan and then back to Google, resulting in extremely high latency to essentially all the G-services. We’re interested by the fact that at the time of the crash, Google was pulling some 15Gbits of traffic, with a peak of 35; that’s not much more than half the output of the BBC’s iPlayer at the evening peak! Video: it’s what’s in the tubes.

There is anger at BT after last week’s horrorshow profits warning; it looks like the CEO is going to get a cash bonus despite the loss, the job cuts, and the slashed dividend attendant on yet another NHS IT Zombie assault on BT Global Services. Those fleeing the zombie might well end up at Wipro, which has announced that it intends to hire more European and North American staff.

In South Africa, a court challenge has failed to stop Vodafone’s acquisition of Vodacom and its subsequent floating of the carrier on the stock exchange. There was a memorable quote as a result:
Gone are the days when narrow transactions would be undertaken in the interest of the parasitic bourgeoisie!
Well, perhaps.

There has been some relatively good news at Nortel; sales in the optical networks division are falling less quickly than Alcatel’s! The real question here is what on earth Nortel management was thinking when they suggested selling off the division…

Meanwhile, Clearwire needed a gnarly network builder and so they hired Bill Morrow from Vodafone. Thuds and screams inside the palace followed; WiMAX visionary Barry West has been given an “ambassadorial role”, the COO Perry Satterlee has taken his carriage clock early, Michael Seavert of Switchbox Labs has become their new Chief Commercial Officer, whatever one of them is, West’s technical role has been passed to the existing CTO, Kevin Hart has given up being CIO of Level(3) to do the same job at Clearwire, and the head of HR from T-Mobile USA is going to do the same job at Clearwire as well. Apparently cold water will get the blood off that carpet, Bill.

Telephony Online suggests that another wave of consolidation among the RLECs is imminent; Inmarsat and Solaris win spectrum for satellite broadband in the EU, although a teensy prob with one of the spaceships spoils it. Facebook is advised to make money by revenue sharing with app developers; after all, there’s money in unauthorised innovation.

And another report bears Will Page out on the long tail.

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May 11, 2009

Ring! Ring! Hot News, 11th May 2009

We’re back from the 6th Telco 2.0 Executive Brainstorm in Nice; and as usual some interesting things came up from the voting at the event. 93% of participants think exploring new business models in these tough economic times is a higher priority than simply cutting costs and defending the legacy business.


A plurality of Telco 2.0 attendees think the industry has made a good start with its open API programmes - but feel more needs to be done to standardise approaches and to bring commercial thinking to the fore if APIs are going to generate significant value to the Telco industry in the next 3 - 5 years. A significant minority think the existing efforts are inadequate, and almost no-one believes they are sufficient:


And our participants much prefer being a wholesale enabler than trying to beat Amazon and Apple at their own game of service innovation; but combining better wholesale enablers and better retailing is the best of the lot.


[Ed. - We’ll feed back more output from the Telco 2.0 brainstorm over the next few weeks. Detailed analysis is reserved for event participants and subscribers of our Executive Briefing service.]

Latest BBC iPlayer numbers are here; that’s 60Gbps of streaming, 15 of download, and 1.5 of mobile at the evening viewing peak. Interesting that the peak is at the same time as the classic TV one, which suggests that iPlayer is substituting for traditional TV, but oddly enough the peak for iPhone viewing is midnight. As Richard Titus, the BBC’s Internet chief, said at Telco 2.0, the viewers have paid for it and they’re going to deliver it…

More content for Hulu; even if it’s British TV, however, you still can’t get it in Britain. Similarly, the BBC’s effort to standardise set-top boxes for integrated TV delivery, Project Canvas, is struggling on; now the big vendors are trying to kibosh it in order to push their own proprietary nonstandards.

In other UK market news, at last a buyer for Tiscali: Carphone Warehouse. This makes CPW the second biggest retail ISP in Britain, which may explain why CEO Charles Dunston is planning to spin off the telecoms operation. Who wants to be the second biggest British DSL operator anyway, what with all that iPlayer hammering the BT Wholesale bills?

Will US satellite TV network DirecTV merge with a telco? It would be a move that opens up all kinds of interesting possibilities for multimodal video distribution, linking Internet/telco specialities with better set-top boxes and satellite broadcast, the cheapest way to deliver video content.

The strategic crisis of telecoms, however, continues. Telephony Online reports that voice revenues are falling even as minutes of use continue to grow, and that although revenues and usage for mobile Internet service are both rising fast, capacity pressure is building.

A symptom, in part, will be the expected nightmare Thursday this week, when BT is expected to announce a wedge of bad news regarding pensions, profits, and jobs, with a huge writedown at BT Global Services expected to take centre stage. As predicted, it’s the NHS IT zombie that’s eaten the company’s brain…

Meanwhile, alternative voice specialists Fring closed another $10m in venture capital. The Register is typically sarcastic, but we’d be interested to know how their national deployment with Mobilkom Austria is coming on…

The first lot of upgrades for Android is about to be pushed to T-Mobile USA Googlephone users; a key feature will be a direct upload client for YouTube. Ideal for, say, filming vicious cops, and an example of why the iPhone is such a receive-focused device. (However cool the Flip might be, it’s trapped without a radio link to the Internet, isn’t it?) In the opposite direction, AT&T announces “Send to Mobile”, a desktop application which sends things to your mobile phone (we thought that was called a USB cable).

AT&T has further acquired a chunk of ex-Alltel spectrum and some rural networks from Verizon Wireless for a mere $2.35bn.

Details about the Palm Pre have been blogged from within Sprint-Nextel. Note that it’s going to support Google Talk IM - that is to say, Google’s XMPP server - natively. But will anyone get the voice capability of Google Talk working on it? And what will Sprint think of that?

In the future, voice will be provided by everybody and will be embedded in everything. Jamie Zawinski said every program expands until it can read mail; we say every program will expand until it can make telephone calls. Sony “might” add telephony to the PSP. And Verizon Wireless is offering a portable, cellular-backhaul WLAN hotspot.

In other device news, the new version of the Amazon Kindle is out and everyone is talking about the possibility of basing a wholesale delivery business for newspapers in it.

Big changes at Telstra after the Australian government’s bold fibre plan; both the chairman and CEO are walking the plank. This may herald a KPN-like decision to cooperate with the fibre deployers rather than clinging to the copper.

We famously love Free.fr, but one of the reasons for their success both with DSL and fibre is the French regulator, ARCEP, and its tough line with France Telecom on access to ducts. Brough Turner demonstrates another way ARCEP rocks - all their spectrum allocations are in a searchable database on the Web.

In other radio news, OFCOM has had a cunning band of techies attach devices to a fleet of salesmen’s cars, in order to map radio spectrum use around Britain. Imagine their surprise when they found a powerful 1GHz signal emanating from the Cumbrian village of Millom; sadly, neither spies nor aliens nor mad scientists emulating Nikola Tesla were behind it, but instead a shopkeeper with a grey-import CCTV system.

And finally, Wind Telecom proudly supports RCS; and although we don’t speak Italian, it looks very much as if it is in fact another name for IMS.

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May 7, 2009

Yahoo!, COLT and the Customer Data Revolution (CDR)

Alireza Mahmoodshahi, CTO of COLT, seems to have caught the Telco 2.0 Executive Brainstorm’s imagination with COLT’s plans for a carrier-grade cloud computing platform.

The fundamental principles are all about virtualisation, of literally every element in the stack, and their own patented task-scheduling software which dispatches application tasks to server instances as the load on the system rises and falls. Owning the machines, the data centre, and the fibre, they are in a position to guarantee quality of service credibly. That also applies to the planned API and SDK that provide developer access to the system’s resources.

The audience, according to the Mindshare output, immediately saw a possible application - why not use the system to do hosted telecoms billing and more radically, customer data analysis? Andrew Thomson of Infonova had already suggested a third-party aggregator model for customer data; Marc Davis, Yahoo! Connected Life chief scientist, raised the radical suggestion that the industry should create common terms of service that would recognise users’ ownership of their data and provide for relinquishing it back to them should they churn.

It’s a crucial issue of trust, but it’s not quite that new - we’ve blogged about data sovereignty before, and we’ve even blogged about it from the floor of Telco 2.0 before, not just once:
Perhaps the guiding principle should be that operators respect subscribers’ data sovereignty? That would mean subscribers would have to explicitly and effectively choose what data to release and how; it would also mean that they would have to be rewarded for uses of it that mainly benefit the operator, like ad targeting. The reward, however, doesn’t have to be money. It could be quasimonetary — lower rates — or it could be access to new and compelling applications. Carriers would have to make it easy for churners to take their data shadow with them as they go out the door. Perhaps, as someone suggested today, this is yet another reason to deploy ENUM. That sounds grim, but the flipside is that you’d need to make it easy to import data; which is all good if you consider the CDR pile to be a strategic asset.
but twice.
But at Telco 2.0 yesterday, we heard how CDRs might actually empower the users in a Telco 2.0 future. Keith Wallington of mobile SIP insurgents Truphone suggested that “in the future, this will be bigger than mobile number portability”. Wallington proposed the ability to have calls routed intelligently depending on your preferences and the patterns of use revealed by network data. And this brings us right to his point. If all your contextual services depend on the contrail of signalling data you leave behind in the operator network, the ability to take that information with you when you churn is going to be crucial. Perhaps we need a right to claim our data; however, the really important point is as always the practical implementation of such a thing, just as it was with number portability.
There must be a huge opportunity here, not least for the vendors - according to Paul Magelli of NSN, only 14% of operators have a real-time data analysis capability. Maybe this time someone will get the message? To share this article easily, please click:

The Vital Importance of Frivolity

“Rather mad, but silly things are important”. So said Rory Sutherland of Ogilvy at Telco 2.0 yesterday. And he’s right - we’ve pointed to the vital importance of frivolity before. So what if one of the biggest-selling iPhone applications makes a fart noise? It beats a ton of unsaleable PowerPoint engineering. Silly things frequently show up the things people actually find valuable, compelling, or interesting; we owe much of the broadband business and the whole of the technology of Web video, essentially, to porno Web sites, and we would know much less about scaling transactional Web applications while maintaining security if it wasn’t for gambling.

Another human reflex is to whine about things; hence Fizzback, a real-time user-experience application Rory mentioned. Essentially, it invites your customers to record their impressions by SMS and routes the messages accordingly, whilst letting you keep all sorts of useful information about them. The cycle can be quick enough that someone who complained about the bus they were travelling on becoming intolerably hot actually got a call back to tell them the driver had been told to turn on the air conditioning.

It’s a classic example of communications-enabled business processes; in this case, it’s being used to shorten the company’s OODA loop - the process of Observation, Orientation, Decision and Action through which organisations cope with their environment.

As such, it may well be a better idea than mobile advertising itself. As Rory Sutherland put it, “I can see more good mobile ad ideas than there is possible advertising to pay for. The total spend can increase, of course, but only slowly” - and it is unlikely to grow much for some time given the dreadful economic climate. The upshot? As we’ve said before, concentrate on improving the business processes of your customers, and remember that entirely silly ideas may be your best guide. Especially in a world where mobile devices are as much outside-broadcast units as they are TV sets, as Rory Sutherland points out.

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May 4, 2009

M-Banking: can Zain’s new business model for ZAP rival M-PESA?

One of the major successes of the mobile industry in recent years has been the growth of m-banking in the developing world. (Safaricom is adding 10,000 M-PESA accounts a day) although a considerable number of well-funded, vendor- and operator-backed efforts to deploy m-payments systems in Europe have failed, m-banking succeeded in Africa and Asia - largely because it catered to needs that the rest of the financial system simply didn’t supply. Now, a major emerging market operator, Zain, has entered the game with a radically different business model. Will it work?


Another driver of success was that the developers of M-PESA and other systems observed that the airtime credit transfer features built into their prepaid OSS solutions were being used by their subscribers as a crude money transfer system; rather than prescribing a solution, they built on user creativity. Telco 2.0 is interested in this not only because this form of development is profoundly Telco 2.0, but also because m-banking is the ultimate example of the opportunities that appear where there is a large and positive difference between the quantity of data transferred, and its social value.

By far the best-known systems are M-PESA, developed in-house by Safaricom in Kenya and now deployed in several other countries, and Smart Telecom in the Philippines. However, as you’d expect, the success of these has attracted imitators and competitors as well as emulators. If you’d asked most people in the industry which operator was likely to reach the market first with such a product, they would probably have said Celtel, the hugely respected emerging market GSM specialists founded by Mo Ibrahim. After all, by 2006 they’d already integrated their East African HLRs, ending roaming charges in the area and permitting cross-border credit transfer, a single currency of sorts.

Well, Celtel was sold to Kuwait’s MTC not long after that, changing its name to Zain. Mo Ibrahim took his money and began offering African presidents a bonus for retiring peacefully. Now, however, Zain has moved into the mobile money business. It is certain that this will be an important moment in its development; Zain’s sheer scale makes that certain. The initial deployment covers some 100 million subscribers. This also means that some markets now have competing mobile payments services - Tanzania, for example, has Zain’s ZAP and two competing M-PESA deployments. This is probably going to teach us a lot about this business in the next few months.

The rest of this ‘Analyst Note’ is available to subscribers of the Telco 2.0 Executive Briefing Service here. It covers the end-user value of m-banking, Zain’s new approach to rewarding its agents, and lessons from GSM deployment in Kerala.

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Making a Successful Mobile Developer Platform

As stimulus for the debates we’ll be having at the Telco 2.0 Exec Brainstorm in Nice this week, below we discuss what distinguishes successful mobile development platforms from the many, many unsuccessful efforts we’ve seen before?

[NB: If you can’t come to Nice this week, check out the new ‘distance participation’ packages which allow you to access all the brainstorming input and output without the travel, at a time that suits you.]

Everyone loves them these days, especially if they come in windows with bevelled corners and are called “app stores”. But the idea covers a lot of very different practices and products. In order to understand it a little better, in this article we track its development and examine what it needs for success.


A brief history of mobile apps

The industry has been interested since the late 1990s in the possibility that some of the creativity and user-driven innovation characteristic of the software and Internet industry could be transferred into the networks we had just so expensively built. The underlying technological drivers were network convergence, the arrival of useful data services, and the increasing general-purpose processing power available on the devices, especially after the arrival of the ARM 7 baseband chip. But in practice one of the most important catalysts was the arrival of a new sensor on the mobile device - the camera.

Simultaneously, there was also the example of an existing mobile software ecosystem - the world of small developers around the Psion PDA platform. The capabilities of GSM devices rapidly converged with those of PDAs, and eventually the mobile industry bought Psion’s operating system. But actually delivering on this prospect proved difficult; technical barriers (a lack of commonality between PC and mobile programming) and some bad decisions by the operator community (WAP and MMS, rather than just providing a TCP/IP stack and standardised device APIs) meant that the initial bloom of interest failed to survive the crash of the early 2000s. Things recovered, but only slowly, and take-off wasn’t achieved until the launch of the Apple App Store - even i-mode didn’t achieve much outside Japan.

What makes a platform?

What elements make up a developer platform? The first group consists of technical enablers - the development environment itself, with the interpreter, virtual machine, or compiler for the programming language used, any SDK associated with it, and any standard software libraries that may be provided. APIs go here as well. We’ve had these for many years now, and they’ve steadily improved as well. Nokia provides a positive embarrassment of developer resources - you can develop for Symbian in Objective-C, Python, or HTML/Javascript, there are SDKs for all of these, lots of documentation, and extensive APIs for the devices.

The second group is what you might call the social enablers - you need a community, in order to share both problems and solutions. This may sound wet, but just look at the sheer volume of forums, blogs, USENET groups, lists, wikis, IM nodes, twitter feeds etc devoted to discussing software development. Horizontal gene transfer accelerates evolution in software as much as it does for real viruses.

Another key social enabler comes later in the development cycle; you need the users to be able to discover, discuss and recommend products. After that, you need to deploy the products to the users, while balancing painlessness with security. As we’ve said so many times before, content is king but distribution is King Kong. You also need a mechanism to distribute updates and to collect bug reports.

But you still don’t have a platform.

Finally, you need commercial enablers - a business model which routes money from the end user back up the value chain. Because of the strong trading-hub nature of development platforms, the end-user value of the service rises rapidly with more applications and more developers - ask Steve Ballmer. So, there’s a need for two-sidedness; it’s vital that the activation-energy required to get developing (and to get using applications) is as low as possible, and that the path to actually making money is short. Good software is scarce; therefore, that’s the side of the two-sided model that you need to subsidise.

Three Telco 2.0 themes

Summing up, three familiar Telco 2.0 themes are represented here:
1.) the importance of being a much better wholesaler to your upstream customers, 2.) the vital importance of distribution, and 3.) the aim to improve other people’s business processes.

So, how did they do?

So, how did they do? Apple is triumphant; Nokia has had some limited success; RIM and Windows Mobile have islands of success in some enterprises. The triumph of the iPhone, in this framework, is not difficult to explain - using Unix, an Apple-typical SDK for C, but mostly the technology of the Web, they had a lot of technical commonality with the rest of the world, every device came with the ability to search for, recommend, and install new applications, and their commercial terms provided for an unusually generous revenue share that was paid out quickly. Quite simply, it was an integrated combination of business, infrastructure, software, and hardware of the sort Apple historically specialised in.

Nokia can claim to have the most developers signed up, but there is much less sign that it’s a meaningful contributor to their bottom line or anyone else’s. (This may be blurred by the fact that Symbian applications don’t have to be delivered from a central Nokia service.) It may change now that the Ovi Store is launching, and they have a number of advantages - huge scale is one, and their programming tools are powerful and increasingly available as open source software.

Despite all that, Microsoft Windows Mobile and RIM have both managed to carve out a niche serving enterprises; this is almost certainly because there is an existing, long-standing economy of IT departments and software companies that exist to serve this demand, and these vendors have simply extended onto another type of device. (Not that IBM and Salesforce.com’s mobile activities have been concentrated here.)

Conclusion: Distribution is still king

In conclusion, distribution is still the issue, even if it regularly causes headaches. Apple is constantly involved in disputes about applications it has denied access to; this is a downside of offering your users software with an implicit guarantee. But this is arguably better than Nokia’s code-signing and testing process through Symbian Signed, which costs the developers time and money upfront whatever they plan to do with it and thus works against the fundamentally ‘two-sided’ business involved.

Because of this two-sidedness, it’s very important to foster the community with cash. However, it’s too early to say whether O2’s bold Litmus project, which aims to provide a complete infrastructure for mobile developers including testing, hosting and access to VC funding as well as APIs, documentation, forums, and distribution, brings enough additional value to the game to take off. We think it’s got a chance, but we are concerned that making it a “UK project” compared to the global App Store may be a mistake. Scale is vital in two-sided businesses.

An integrated view of this two-sided business opportunity is crucial

  1. Mobile app platforms require integrated technical, social and commercial enablers
  2. Apple’s success to date is explained by this integration
  3. Scale is crucial, good software is scarce
  • Therefore a two-sided approach that leans towards the upstream developers is appropriate
  • Ed. More on this topic at the Telco 2.0 Executive Briefing service: www.telco2research.com

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    Ring! Ring! Hot News, 4th May 2009

    Vodafone Qatar IPO; Tellabs looking up; ZTE growing fast, sells CDMA gadgets, gets gig for LTE smartphone; Ericsson profits fall 30% to general relief; Qwest profits rise 37%; more litigation at Sprint; Sprint outsources its network to Ericsson; ALU renames WiMAX “Wireless DSL”; more horrible results at Motorola; Android gadgets to save them “by Christmas”; Palm Pre, considered cheap; Palm lines up another gadget behind the Pre; Vodafone free trial reveals remarkable numbers of people googling for Google; Acer gadget with two SIM cards; more Apple netbook chatter; crisis at T-Mobile UK; fibre diet improves latency; Telcommunicator on Singaporean fibre; Enck on possible UK fibre; Wikimedians on implementing the Hitchhiker’s Guide to the Galaxy; Pirate Bay in court again; Phorm’s…unusual…PR strategy; Google Books litigatin’; David S. Isenberg, much less stupid than his network

    Signs of the upturn, or at least the bottom. Vodafone Qatar floats, raising $1bn; not so sure about boss Grahame Maher’s remarks, though.
    “In any other country in the world this would not be possible. Qatar has demonstrated again that it is the leading global economy with this successful result.”
    The leading global economy? Perhaps so. 65% of the shares went to 82,000 Qatari individual buyers, or an average of about eight grand each.

    Tellabs CEO Rob Pullen was being demonstratively cautious, but they’ve pencilled in a few percentage points of growth this year too. Nothing like what’s happening at ZTE, however, where their handset shipments are growing at a 30% clip, with more than two-thirds of production going for export.

    A notable customer is US regional carrier MetroPCS, which already offers some ZTE CDMA devices, and which is also planning to get ZTE smartphones for its LTE network, which is intended to roll out in 2010.

    And Ericsson’s profits fell 30 per cent. Which counts as good news these days! Qwest, however, saw profits up by 37%.

    Telco USSR news: Sprint Nextel loses one of its many, many lawsuits with a regional affiliate, iPCS, which claims that the joint Sprint/Clearwire WiMAX net breaks their noncompete agreement. Meanwhile, Sprint is trying to save 20% of OPEX by outsourcing everything to Ericsson. Alcatel-Lucent, by the way, is talking about WiMAX as “Wireless DSL.

    Another US crisis club, Motorola, has some news; mobile devices lost $509m, the rest made something under $250m. But apparently there will be Android gadgets by Christmas; it all hinges on that.

    Palm’s survival hinges on the Pre going over well; after last week’s news that it was undergoing the challenging movie queen trials, it looks like the margin on the devices is not going to be fantastic. Possibly, as iSuppli estimates that it costs about as much as an iPhone to make, but will sell for much less, they are hoping to triumph on volume - which does make you wonder why they didn’t start off with a GSM version. Speaking of which, there’s another Palm device coming which will have a GSM/UMTS radio, but won’t have some of the Pre’s features. Right.

    If you’re suffering with the economy, this weekend may have helped a little, as Vodafone offered a free trial of mobile broadband. The most interesting information that resulted is that the eighth most common search string sent to Google is “Google”, which suggests there may be limits on the possible market for a phone with two SIM cards. However, you can be fairly certain that people will pay for whatever netbook/webpuck/thingy Apple comes up with.

    Deutsche Telekom’s main shareholders - Blackstone, and the German government - are not happy with T-Mobile UK. And it seems they are looking for a sale or a radical fix, with suggestions that 3 might go beyond their existing radio network joint venture and buy the thing. Which would, come to think of it, settle a few of the outstanding spectrum issues in the UK.

    Yet another reason for fibre; check out the graph showing the network latency experienced by one subscriber after Lafayette, Louisiana deployed a muni-fibre network. See also: Tim Poulos on the Singaporean national FTTH roll-out.

    James Enck points to an LSE study on the benefits of public investment in fibre - they reckon £15bn in investment would create 700,000 jobs.

    There’s a podcast from the Wikimedia Foundation over at Telephony Online about their mobile activities; you might also be interested in this presentation at OSCON about the local Wikipedia available for the OLPC and iPhone.

    More Pirate Bay legal troubles, this time in Italy; Phorm is trying to combat its rotten image by starting an anonymous website that attacks its critics. That’ll do it. And more and more legal issues are bubbling up around Google Book Search.

    And there’s a gripping conference address from David S. Isenberg here.

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    May 3, 2009

    Nokia’s Strange Services Strategy - Lessons from Apple iPhone and RIM

    Over the last 10 years, Nokia has sustained a keen interest in applications and services as a complement to its dominant position in hardware and operating systems. Equally clearly, it’s hard to say that they’ve made any progress in making a business of it. The profuse proliferation of poorly integrated projects suggests either - if we’re being charitable - a deliberate policy of experimenting with many different ideas, or else - if we’re not - the absence of a coherent strategy.


    Clearly Nokia is aware of the secular tendency in all information technology fields that value migrates towards software and specifically towards applications. Equally clearly, they have the money, scale, and competence to deliver major projects in this field. However, so far they have failed to make services into a meaningful line of business, and even the well developed software ecosystem hasn’t seen a major hit like the iPhone and its associated app store. Why is this?

    Nokia Services: Project Proliferator

    So far, the Services division in its various incarnations has brought forward Club Nokia, the Nokia Game, Forum Nokia, Symbian Developer Network, WidSets, Nokia Download!, MOSH, Nokia Comes With Music, Nokia Music Store, N-Gage, Ovi, Mail on Ovi, Contacts on Ovi, Ovi Store…it’s a lot of brands for one company, and that’s not even an exhaustive list. They’ve further acquired Intellisync, Sega.com, Loudeye, Twango, Enpocket, Oz Communications, Gate5, Starfish Software, Navteq and Avvenu since 2005 - that makes an average of just over two services acquisitions a year. Further, despite the decision to integrate all (or most) services into Ovi, there are still five different functional silos inside the Services division.

    The great bulk of applications or services available or proposed for mobile devices fall into two categories - social or media. Under social we’re grouping anything that is primarily about communications; under media we’re grouping video, music, games, and content in general. Obviously there is a significant overlap. This is driven by fundamentals; no-one is likely to want to do computationally intensive graphics editing, CAD, or heavy data analysis on a mobile, run a database server on one, or play high-grade full-3D games. Batteries, CPU limitations, and most of all, form factor limitations see to that. And on the other side, communication is a fundamental human need, so there is demand pull as well as constraint push. As we pointed out back in the autumn of 2007, communication, not content, is king.


    In trying to get user adoption of its applications and services, Nokia is pursuing two aims - one is to create products that will help to ship more Nokia devices, and to ship higher-value N- or E- series devices rather than featurephones, and the other is a longer-range hope to create a new business in its own right, which will probably be monetised through subscriptions, advertising,or transactions. This latter aim is much further off that the first, and is affected by the operators’ suspicion of any activity that seems to rival their treasured billing relationship. For example, although quick signup and data import are crucial to deploying a social application, Nokia probably wouldn’t get away with automatically enrolling all users in its services - the operators likely wouldn’t wear it.

    The rest of this Analyst Note is available to subscribers of the Telco 2.0 Executive Briefing service here. It covers the problems of using social applications to sell hardware, Nokia’s fraught relations with operators, and the lessons of bundled connectivity and the iPhone.

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    May 1, 2009

    TM Forum’s ‘Blueprint’ Initiative

    As most readers know, we’re working increasingly closely with the TMForum and, in an effort to get strategy and IT people talking more closely with each other, we’ve co-located next week’s Telco 2.0 exec brainstorm with their big Management World event. (Check out the new ‘distance participation packages’ if you aren’t coming but want the input/output of the brainstorm). Below is an intro to TMForum’s new ‘Blueprint’ initiative, which we believe is a major step forward in helping realise the dream of the ‘two-sided’ telecoms business model:

    TM Forum’s Solution Frameworks (NGOSS) has been a very widely adopted set of standards and best practices that have helped many businesses successfully transform their business and operations.

    But to take it to the next level required in today’s extremely competitive landscape, we’ve developed the Blueprint Initiative, which essentially takes our Solutions Framework - and its key elements the Application Framework (TAM), Business Process Framework (eTOM) and Information Framework (SID) - and brings it to the next stage of evolution by finding commonalities among the core frameworks.

    The Blueprint Initiative’s goal is to find these synergies and bring them together in an effort to help companies create a Service-Oriented Enterprise (SOE), the goal of which is to create an extremely nimble, agile and modular organization that can very quickly adapt itself to new business models, new technologies and new partnering agreements.

    During Management World 2009 we’ll be featuring a session aimed at CIOs from the major communications and media companies to look at how they can go about moving towards the concept of SOE. During the session, we’ll feature a case study from Amazon, which has already gone down this road and found in the process that the services that it needed to put in place to handle a customer order or payment could actually be made available to other people. So Amazon is in essence is running two businesses. In addition to selling goods under its own banner, it is also enabling other people to sell things using its platform (as avid readers of the Telco 2.0 blog will know well).

    We think our Blueprint Initiative will play a big role in giving companies in the communications, media and entertainment sectors the right tools to take their businesses to the next level.

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

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