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January 29, 2010

Machine-to-Machine (M2M) 2.0: mHealth Opportuniies

Machine-to-Machine (M2M) appears to be finally coming of age. What business model challenges are bringing this about in Healthcare, and how can Telcos add value? Below are some videos and summary analysis from the Telco 2.0 AMERICA Executive Brainstorm in Orlando:

- An overview of M2M and ‘Embedded Mobile’, with a sector focus on the opportunity in health, by Ken Figueredo, Principle, Ventura

- Challenges in the US Healthcare market, by Rick Cnossen, President, Continua Healthcare Alliance

- Orange’s approach to the US healthcare market, by Niels Helkov, VP e-Health Americas, Orange Healthcare

M2M: a panacea for healthcare?

Ken Figueredo, Principle, Ventura, presented an overview of machine-to-machine (M2M) and embedded mobile, with a focus on the mHealth sector, and an examination of the key strategic choices for operators.

(NB We will also shortly publish a Telco 2.0 Executive Briefing on M2M that we are writing with Ken. This will describe examples and provide additional market data and greater detail on this emerging new sector.)

M2M: An idea that’s time has finally come?

Interest and activity in M2M has blossomed recently in projects such as the GSMA’s embedded mobile initiative (which Ken has advised), and initiatives by AT&T, Telenor, Verizon and Sprint among others.

Market growth estimates range from 50% to 500% additional device penetration, even though shipments of industrial M2M run at only 40m devices / year compared to 1bn handsets.

The concept of ‘Embedded Mobile’ expands the traditional industrial M2M opportunity definition by including service innovation as well as device innovation, and considering M2M as a new solution to:

• consumer needs (e.g.s Amazon Kindle, energy consumption and costs)

• industry value chain ‘pain points’ (e.g. high costs of service)

• the needs of broader sectors including transport, clean energy, healthcare, consumer electronics, and utilities

• government needs (e.g.s improving healthcare and reducing congestion).

These broader market opportunities create the potential for lower prices and higher ultimate market penetration.

But it is not all ‘Plain Sailing’

There are also structural barriers to growth. The value chain is fragmented, operators’ traditional industry segmentation is vastly different from the segmentation of needs in the industries, and operators do not have a long track record of offering a whole suite of M2M services.

Sector focus: mHealth Overview

As an example of how M2M addresses needs, we focused on US Healthcare.

The $2.3 trillion U.S. health sector costs $7,290 / person. This is much higher than in many other markets, and it is and will be a priority for US Administrations to reduce this cost and improve the quality of care now and in years to come.

Comparison of per capita health expenditures in the OECD (2007)

US%20market%20healthcare%20costs%20oecd%202007.png

SOURCE: OECD (2009)

A Global Challenge

With increasing longevity and decreasing mortality, many populations are ageing, and managing costs and improving quality of healthcare will be a significant national challenge in most developed economies. Providing healthcare to developing nations with growing populations presents additional challenges. Managing improvements in healthcare with simultaneously rising populations and reducing costs is therefore a global challenge.

Many ‘toes in the water’

There are a large number of operator initiatives in many disparate areas, and Ken covered some of these in his presentation. Examples include providing remote health monitoring services, and tracking people’s calorie intake to help manage obesity.

The Key Strategic Question for Operators

What is already clear is that providing connectivity alone is not enough, and that service and business model innovation will be key to monetise the opportunities in different ways. However, the key strategic question for operators is whether to adopt horizontal, platform based solutions, or a vertical focus on a detailed solutions for targeted sub-segments.

Challenges of mHealth: the birth of an Industry?

Rick Cnossen from the Intel Digital Health Group, and President of the Continua Health Alliance that develops standards for mHealth, presented on early US market experiences and challenges.

Rick picked up from Ken’s introduction, and reiterated that with costs projected to rise to 20% US GDP, healthcare provides an opportunity to create economic benefits as well as improve peoples’ lives.

Opportunities for communications service range from ‘here and now’ examples, such as creating voice and messaging applications to contact and remind patients, through to full M2M solutions.

Key Challenges from the Early Life of the Industry

Rick detailed numerous examples of applications, and described a number of key challenges to solve in the Health ecosystem:

• Interoperability standards - (Continua’s role)

• What are the Business models?

• Gaining Clinician Acceptance (workflow, data overload)

• Regulatory / Liability

• Security / Privacy (identifiers)

• Quality (coverage / bandwidth)

• International solution

Orange’s approach to Healthcare in the US

Niels Helkov, VP e-Health Americas, Orange Healthcare, laid out additional compelling statistics behind the E-health demand surge. He pointed out that a baby born today has a statistical life expectancy of 100, while on the other hand, €17.7bn is spent on asthma in the European Union every year and $92bn on diabetes in the US. 25% of Europeans are over 60 and overall, healthcare is growing as a sector at 5% annually, significantly outpacing GDP.

Healthcare and Telecoms: All About Interfaces

Telcos, he said, are naturally intermediaries between actors. The sheer diversity of organisations and interest groups in healthcare implies a wealth of interfaces across which they can intermediate and profit. He gave as examples services for assisted-living, remote monitoring (of values like blood pressure), and “compliance” - i.e. whether patients take their prescribed medications.

In France, Orange is working on a wellness Web portal, a project that is intensely focused on self-care and patient empowerment. Another project, with the Sorin Group, centres on remotely monitoring the performance of heart implants and preventing the patients from being hospitalised. And this was backed with a further element in the form of a B2B2C tech support desk for both patients and clinicians.

Healthcare 2.0: Early Days + Big Opportunity = Time to Get On With It

Health represents a huge opportunity for telcos around the world and particularly in the US. All the demand drivers are there with an aging population, adverse and costly health trends such as obesity and its associated diabetes and heart issues and limited funds. These create a cost base that cannot be sustained in the long run.

Communications-Enabled Business Processes (using initially Voice and Messaging products) offer a way to massively turn around that cost paradigm in every sector of healthcare from equipment tracking, to appointment setting, bill settlement, wellness monitoring, medication alerts and much more besides.

However, the barriers to implementation are not trivial. Perhaps the largest factors will be the inertia of established players, and the initial inefficiency of the complex evolving ecosystem as new players jostle for position.

Nonetheless, there doesn’t need to be a ‘boil the ocean’ approach here though but rather telcos can start where the barriers are lowest - with wellness monitoring, asset tracking and appointment reminders, rather than with medical advice.

What they really need to do is to enter this market soon as some of the lower hanging fruit is already being snapped up by iPhone and other apps.

(Ed. Further information and analysis from the Brainstorms will be made available to attendees and members of the Telco 2.0 Executive Briefing Subscription Service. For future Brainstorms and Virtual Events, please see here or email contact@telco2.net.)

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January 28, 2010

Voice and Messaging 2.0: Growing Enterprise Revenues

Voice and messaging are the mainstays of telco revenue today yet there are still opportunities to grow the value of these services using innovative business models. At the 7th and 8th Telco 2.0 Executive Brainstorm in London and Orlando, two thought-provoking presentations provided concrete examples of embedding voice and messaging into business process for SMEs (so called ‘Communications Enabled Business Processes’ - CEBP) and proffered ideas about how telcos can turn these into significant revenue streams.

Below are videos and analysis of presentations on:

- ‘Cooking with Voice’ by Thomas Howe of the Thomas Howe Corporation,

- Telco Applications in the Clouds by Irv Shapiro, CEO IfByPhone

Cooking With Voice

Thomas Howe develops around six voice applications a month for enterprise clients and, speaking at the 7th Telco 2.0 Executive Brainstorm in London in November, called on the telco industry to monetise their data to reinvent voice services.

(NB We will shortly be publishing a detailed Executive Briefing by Thomas, describing detailed Voice and Messaging Use Cases, both for customers of our research subscription service and sale as a standalone report.)

Voice is a Spice

He equated voice to a spice in that in the enterprise application world it isn’t a service in its own right but a feature that can be used to enhance a process. As an example he related the experience of Mercedes Benz when it added a simple click to call function to its corporate website.

As a result of having data about where the customer was calling from and which web pages he had previously been to, sales conversions doubled from 10% to 20%, call abandonment was reduced and the average selling price increased.

Monetising Hard to Replicate Data

It wasn’t about the voice call per se; it was about putting the call together with information that was relevant to the call and valuable to the corporation and that is worth paying for from the corporation’s point of view.

Monetising such hard to replicate data by combining it with voice is where telcos have a great opportunity to grow, said Howe. There are many areas where only telcos can deliver voice and have the information that will add value to the call, such as authentication, location, even availability.

Location, Location, Location

Telcos may have lost the lead with location in consumer apps but there are many examples of where location information in conjunction with voice or messaging could be monetised for businesses large and small. Examples cited included simple business process integration to automate a call to confirm a person is home to receive a delivery, to more complex notification of the need to leave for an appointment based on an individual’s location and the distance they are from the location of the appointment.

These and many more are highly valuable to businesses as they can save them huge amounts of money, primarily by cutting back on wasting time and resources.

Identity Authentication

Identity authentication could become another major growth area when combined with voice, according to Howe. The authentication of a caller is something that is highly valuable to a whole host of businesses. By adding location, phone identity and perhaps additional applications such as voice analysis, finger print readers or iris scanners on phones, a telco could verify a caller is who they say there are for banks, government departments, schools etc. This links closely with the work Telco 2.0 is engaged with on customer data and privacy which is discussed in Customer Data and Privacy 2.0 - Telco Goldmine?

Telco Applications in the Clouds

Speaking at the 8th Teleco 2.0 Executive Brainstorm in Orlando, Irv Shapiro, CEO of IfByPhone, claimed to be an outsider to the telecom industry. He then proceeded to demonstrate how his company was monetising telecom’s primary services, voice and messaging with 2.0 applications. He even suggested how telcos could do the same - not bad for an outsider.

Stop Analysing and Start Doing

Shapiro said that telcos are in real danger of suffering from ‘analysis paralysis’ in the face of declining margins from voice and data. They need to start to act to find alternative revenue streams and he used examples from his own business to demonstrate how the value of voice and messaging could be reinvented.

Telephones as New Access Devices for Apps

Rather than iPhones and app stores, these applications involve the integration of voice and messaging into business processes to improve the efficiency of SMEs. The technology for this is based in the cloud and works by automating phone calls for SMEs in three lines of business.

Do-It-Yourself App Building

The first comes from providing a web portal through which SMEs can drag and drop voice and messaging functions to configure their own apps into business processes. There is no requirement to integrate the applications for the SME as they do it themselves but the clever and monetisable part provided by IfByPhone is in hiding the complicated work required to allow the drag and drop capability.

Diabetes America is a user of the service and used the web portal to replace its outsourced call centre costing $400,000 a year, with an IVR app and six people in house, amounting to a saving of $240,000. IfByPhone now charge them $1500-$2000 dollars per month, which may sound low given the savings but equates to a 70% gross margin.

The other two revenue streams for IfByPhone come from outbound customer notifications and click to call capabilities where a click on a website triggers a phone call.

Savings, savings everywhere

Go Configure, a company that builds flat packed products for customers in their own homes, provides a typical case for the value of automated notifications. They spend $1500-$3000 a month with IfByPhone to arrange appointment times, a process previously conducted by secretarial staff and taking an average of five calls per appointment. The change has saved them $70,000 a year.

The value of Click to Call applications was previously referred to by Thomas Howe.

Telco Opportunity

Currently, telcos either benefit from this as wholesale sellers to IfByPhone or as partners if they have the relationship with the SME. However, an even bigger opportunity could exist if telcos could turn PSTN phone numbers into SIP addressable end points, said Shapiro.

PSTN Boost

If that were the case then telcos could charge for the initiation and for connecting to those end points. In some ways this is similar to receiving party pays cellphones in the US or international roaming where both the sender and receiver parties pay. However it doesn’t have to be a sender and receiver, it could be the sender who pays twice, if the application is valuable enough. He challenged the telco industry to boost the PSTN in this was and then encourage app developers to create apps that would drive traffic to those end points.

It’s Voice Jim - But Not as We Know It

Seemingly all that remains for simple voice connections is a race for the bottom of the voice market. However, voice remains a core service and a core asset to the telco and one that has significant potential to be monetised in combination with other telco assets.

Take Howe’s Spice analogy a stage further and say voice isn’t a spice but salt, something that enhances the flavour of everything it is combined with. In order to build new revenues streams from voice telcos need to combine voice with other functions in order to create a service whose value has nothing to do with call time and distance.

Would You Like Voice With That?

The examples cited by Howe and Shapiro demonstrate that for the business community that value is huge. Similarly the number of potential customers for such services is limited only by the number of businesses. However, it will be impossible for telcos to sell individually tailored services to all of these. They must pick their targets carefully, create platforms that make adding voice to a business process as simple as adding fries to a fast food order and encourage app developers to see voice as an essential part of the developer portfolio.

It will also require the development of business models based on direct, partnership and wholesale routes to market and Shapiro’s suggestions for boosting the PSTN are food for though, although need working through with real use cases.

Voice 2.0 will be a more complicated proposition than its predecessor but it has the potential to be highly lucrative, and highly valuable to its customers.

(Ed. Further information and analysis from the Brainstorms will be made available to attendees and members of the Telco 2.0 Executive Briefing Subscription Service. For future Brainstorms and Virtual Events, please see here or email contact@telco2.net.)

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How to Profit from Cloud Computing?

Following from the success of the Cloud Computing sessions at the recent Telco 2.0 Executive Brainstorms, we’d recommend the Fifth Annual Parallels Summit to those looking to deepen their knowledge. It takes place on 22-24 February at the Fountainbleu Miami Beach Resort, Miami Beach, Florida. Parallels are offering free places (worth $3000) - see below.

Making money from, and best practices in, cloud services are the focus of the Summit, which aligns well with Telco 2.0’s agenda.

Please visit the Parallels Summit 2010 web site to learn more here or register now here.

More details on agenda, features and benefits below (from Parallels):

Why join the Fifth Annual Parallels Summit?
The Parallels Summits have become the premier Cloud industry leadership forums for driving innovation, creating differentiated service offerings and building businesses that profit from the Cloud. This Summit’s key points are:

Focus on Profit - Specific emphasis will be placed on enabling networking opportunities that help grow your revenue and optimize your operations.

High-Profile Speaker Line-Up - Sessions will include Warren Adelman from GoDaddy.com, Melanie Posey from IDC, Lance Crosby from SoftLayer, John Zanni from Microsoft and Jason Waxman from Intel.

Expert Knowledge - Learn the best practices of how to launch and market new cloud services.

The Fifth Annual Parallels Summit ties everything together - industry experts, networking, knowledge and training - all in one place to provide you with the tools to grow your business and increase profit.

Better yet, Parallels is picking up the conference registration fee - a $3,000 value! Don’t miss out on this opportunity to grow your cloud services business and increase profit!

Who are Parallels?

Parallels is the leader in cloud enablement solutions. Parallels’ breadth of services allows its clients to offer a wide range of profitable services from hosted email and website hosting to VPS and SaaS. Over 5,000 cloud service providers worldwide rely on Parallels to deliver best-of-breed applications and services for their customers.”

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January 27, 2010

Customer Data and Privacy 2.0 - Telco Goldmine?

Key to many of the value-added services opportunities presented by the ‘two-sided’ telecoms business model, the presentations on customer data and privacy were some of the most inspiring and intriguing of those at the Telco 2.0 AMERICA Executive Brainstorm in Orlando in December and the EMEA Brainstorm in London in November. It is also the focus of the Privacy 2.0 Forum in February 2010. Below are videos and analysis of presentations on:

- whether Telcos could be the bankers of the information economy, by Marc Davis, Partner, Invention Arts and former Chief Scientist at Yahoo! Mobile

- the opportunity in the US and globally, and technical solutions for operators to give customers the ability to control and interact with their ‘digital self’, by Cody Bowman, Head of Business Solutions at Telco 2.0 Partners Nokia Siemens Networks (NSN)

- the four steps for operators to unlock the value of customer data, by Paul Magelli, Head of Subscriber Data Management, NSN

Telcos: the bankers of the information economy?

‘Personal data is hot’ said Marc Davis, Partner, Invention Arts, and former Chief Scientist at Yahoo! Mobile. Marc practices ‘invention by design’, identifying technological investment opportunities 5-7 years out and designing IP for them.

He drew the analogy that user data is the “broken currency of the information economy” and is not yet managed or traded like money. He said that the first companies to build the institutions for trading information currency will be ‘big winners’. Could this be a profitable role for telecoms operators?

No shortage of demand

Many commercial and government institutions want to access and use this data, and privacy is an increasing concern for customers. Telcos, along with internet companies and others such as financial services institutions, are contenders in this space. But do they have the right approach to succeed?


No shortage of power

The power of available declared, observed and inferred data is significant in the hands of expert analysts. Marc cited the example of the ‘best face recogniser in the world’ that doesn’t even look at the photos, but at the contextual data - when and where it was taken, who by, and the connections related to these pieces of information.

No Shortage of Competition - or Regulation

The use and management of customer data is consequently an area of regulatory concern, and information held or used without the user’s implicit or explicit consent is increasingly subject to regulatory scrutiny.

Internet companies such as Google and Facebook make money by matching what people enter on their websites with their consumer behaviour. These organisations capture and make sense of as much customer data as they can and increasingly must obtain explicit user consent to do this. They are therefore starting to take a different approach to managing it, granting users rights of portability and control to their own data.

Could telcos compete as ‘Information Institutions’?

Despite the richness of the data they hold (primarily for the purposes of delivering communications services, charging for them and complying with legal requirements), telcos’ legal approach is typically a combination of ‘your data is ours’ and ‘it’s too sensitive to handle’. Their technical approach is usually to hold the data in silos, and their operational approach is often to avoid using it at all costs. This will need to change if they want to compete as an ‘information institution’.

Is it a realistic opportunity for operators?

At the US brainstorm, Cody Bowman, Head of Business Solutions at Telco 2.0 Partners NSN, talked about technical solutions for operators to give customers the ability and control and interact with their ‘digital self’, and described the opportunity as realistic both in the US and globally.

Operators have some significant assets

As well as the raw data, a strength of operators is that they are trusted partners, and that customers are used to them providing secure services such as billing. A recent NSN survey covering 14 countries and 9,200 respondents showed that communication service providers (CSPs) are in a good position to protect customers’ privacy, and that customers want an active solution - they want to be able to set their own policies on how their digital data is used.

But it needs a different technical approach

To do so requires a different ecosystem and operational structure in order to aggregate the data, and give consumers the means to make informed choices on what is done with the data.

Four Steps to unlocking the data

At the EMEA brainstorm, Paul Magelli, Head of Subscriber Data Management NSN, described four normal steps for operators to unlock the value of customer data:

Step 1. Recognising the value of the data.

Step 2. Collecting and managing customer data as an asset.

Step 3. Improving and personalising the services they deliver.

Step 4. Helping the customer exchange that data in the info economy

NSN’s strategy is to provide the infrastructure to help manage the data and build information exchange.

Paul thought that ultimately there will be market level information exchanges because it will be difficult for some individual operators to provide this. He also said that there is a window closing on the potential value available to operators as many other networks - phone, location, internet social communities, and internet companies that are moving in this direction and could outflank the operators if they don’t act effectively now.

Yes, it is a Goldmine - but you have to dig to extract the value

Information is valuable and increasingly tradable. Some customers already know this. Some of them see it as an opportunity, others are fearful.

Crooks know this, which is why they steal identities. Governments know this, which is why they are huge investors in invasive technologies to defend national interests. Brands and businesses know this, which is why they spend $ billions trying to obtain, refine and use it. Internet companies, phone makers, and telecoms vendors know this, and many of them are adopting increasingly refined strategies to evolve their own positions in this new economy.

The social, government and economic needs will ultimately be served by the market. Telecoms operators have many of the assets and a central position in the digital economy. Operators also have the offer of technologies that could enable them to participate in the solution, and can benefit from other immediate benefits of making better use of their data such as improved customer loyalty.

Many operators are increasingly aware of the opportunity, but they do not have unlimited time or an uncontested field, and have not yet acted effectively to address it. Will they get there in time?

(Ed. Further information and analysis from the Brainstorms will be made available to attendees and members of the Telco 2.0 Executive Briefing Subscription Service, and we will report further from the Privacy 2.0 Forum in February 2010 on progress on the debate. For future Brainstorms and Virtual Events, please see here or email contact@telco2.net.)

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January 25, 2010

Consumer Data & Privacy - Industry Framework

The 1st Privacy 2.0 International Summit that Telco 2.0 is running in collaboration with MIT and Nokia Siemens Networks in Boston next week is looking like being highly productive. It’s a gathering of 60 experts from North America and Europe with the objective of defining a strategic framework for the potential role of the telecoms industry as custodians of consumer data (described in more detail here).

We’re delighted to have the key people from Strategy, Public Policy, IT and Marketing functions representing the following organisations participating in the brainstorm: AT&T, Amex, Bank of America, CenturyLink, Comcast, DARPA, Federal Trade Commission, IBM, Microsoft, NokiaSiemensNetworks, Orange Group, Rogers, Sprint, Telefonica, Telenor, Telus, Verizon Business, Verizon Wireless, Vodafone, WPP. They’ll be joined by some specialist innovators in this space, state Information Commissioners and the leading academics from MIT Media Lab, Harvard Berkman Center, and St.Galen and Goethe Universities.

Phil Laidler, Telco 2.0’s Director of Consulting, is currently preparing stimulus material for the event, building on output from the last Telco 2.0 Exec Brainstorms. Below he covers some of the key issues on a video panel with TelecomTV broadcast last week called ‘Customer Data - who owns the clickstream?’:

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Telco 2.0 News Review

Telco 2.0 Top Stories

Don’t assume the crisis is over; horrible sales figures from Ericsson were published this week, with fourth-quarter revenues down 13 per cent and profits positively crashing. Another 1,500 jobs are going. However, they did manage to cling on to market share. According to CEO Hans Vestberg, the trouble was concentrated in the emerging markets, where many of their customers were still unable to raise funds for their network deployments. Interestingly, Ericsson’s best performing markets were the US, China, and India - you might think that those three would be enough to support a half decent business, and it’s telling that China and India no longer come under the heading of “emerging markets”.

The Google China crisis escalated, as Hillary Clinton criticised Internet censorship in a major speech and the Chinese demanded to know why Google hadn’t just called the Chinese CERT. Bruce Schneier is arguing that the very existence of lawful-intercept features is a major security risk.

Google, for its part, attacked what its enemy values most - shiny gadgets, deciding to halt the release of two new Androids in China, including its own Nexus One. Speaking of which; IBM announced that there would be a Lotus Notes client for the Google phone, and Android devices more broadly, this year. Hackers gave the device its multi-touch capability back, which had been disabled for reasons not made clear. The Chinese will just have to make do with Lenovo’s new Android device, the LePhone (does it look just a bit like an OpenMoko?).

Meanwhile, Microsoft moved Windows Mobile out of the Entertainment & Devices division and into the Windows division, so whereas in the past Windows Mobile wasn’t in the division responsible for Windows, now their mobile device operating system isn’t in the division responsible for devices. Bureaucracy does its thing. And the new Apple product has moved into the leak phase.

Stand by for some upheaval in the Internet infrastructure; this week, the DNS rootservers are expected to implement part of the plan to deploy DNSSEC, the technology intended to cryptographically sign all DNS records and therefore obviate a wide range of attacks. It’s worth remembering that DNSSEC depends on EDNS, which means that anyone who is filtering DNS messages longer than 512 bytes will break the new implementation. If you’re doing that, you’ll also be unable to make use of ENUM and unable to interoperate with anyone who does….

It was also the week that we hit the last 10 per cent of the IPv4 address space, as the network 1.0.0.0/8 was released by IANA. It immediately turned out that a number of fancy applications, notably the AnoNet anonymous overlay network and some peer-to-peer radio systems, were squatting in it…

The production version of Netalyzer, a project to detect non-neutral behaviour by ISPs, was launched this week. At the same time, BT announced some details of its planned VDSL service; apparently, it’s going to be called “BT Infinity” and subject to a 20GB download cap, or something like one hour at 40Mbits. Ah well, at least there’s Tor…as long as you remembered to get the urgent security patch.

Alcatel-Lucent launched the world’s most powerful optical switch, the TeraTransport Switch 1870, which lets you switch optical traffic at terabit speeds based on IP and MPLS headers as well as on raw optical technologies like SONET and Layer 2 things like carrier Ethernet. Rich Karpinski has more, including the point that Verizon is in the market for such a beast. Just the ticket if you needed to slurp a whole telco’s worth of traffic into some sinister government data centre; the EFF is appealing after a judge threw out one of the warrantless wiretapping cases.

Alcatel landed one of the first major contracts for Australia’s National Broadband Network, as the supplier of DWDM kit, optical switches, and remote network management services to Nextgen Networks, which has one of the regional NBN contracts.

In the access loop, Brough Turner reckons new technologies will mean that 802.11 will be a serious option for wireless broadband access and a better idea for data traffic than femtocells. He points out that the IEEE802 world has been consistently faster in adopting new radio technology than cellular. A commenter points out that UMTS broadband has won customers from Wi-Fi because, thanks to the USIM card, it just works.

China Telecom and China Unicom are going to share their 3G base stations in Shanghai, 500 of them. You might wonder what China Mobile did wrong; not only do they have to build a TD-SCDMA network, they have to rent all their own cell sites as well…

Etisalat reports that it uses about 73% less energy to serve each one of the 5,000 properties on its FTTH network than it does for comparable properties on copper. And they need a building every 7.5 route miles compared to 2.5 for the copper network.

Vodafone initiated a major push behind its femtocell product, which has been rebranded from the original Vodafone Access Gateway or VAG for short to Vodafone Sure Signal, which is both less unintentionally funny and less boring. Further, they’ve slashed the price from £160 to £50, or £5 a month on contract for a year. Brough Turner reckons they’re only of use for voice; others suggest this is Vodafone’s way of tackling the surge of traffic expected now it has the iPhone.

In voice news, O2 UK suspended new sign-ups to its Mobile Landline service, which lets you add a landline number as an alias to your mobile number, with calls being forwarded without further connection charges. Apparently, the service was actually reselling GoHello’s virtual-PBX, and seeing as their web site has disappeared, you might not be surprised if a service disruption followed.

Telegeography estimates that Skype traffic in minutes of use on-network grew 51% in 2008 and 63% in 2009, compared to 8% annual growth in international voice overall. Skype also commissioned a survey of small businesses, which unsurprisingly showed they love it.

Truphone has begun its new life as an MVNO, with the first two countries in its “Local Anywhere” service being the UK and US. Roaming in the UK, for example, costs 12 US cents a minute, but you pay for this by not having a cheap home operator - although, of course, you can use Truphone VoIP at home. The secret sauce is a SIM with multiple phone numbers, so you’re essentially a local customer of any carrier they’ve got a deal with; hopefully, inbound calls to a Truphone number get routed to the right one.

Google, meanwhile, is testing the native video capabilities of HTML 5 on YouTube. Unfortunately, nothing open-source will play it because they’re still using proprietary codecs. There is also a new playlist feature.

Connected Planet asks an excellent question. What video content really needs to be live, other than sport? Isn’t the live broadcast model actually value destroying for most use cases? A Cox Comms vice president offers some interesting answers. TiVo, Microsoft, and AT&T are suing each other.

Omnifone’s music service will get bundled on Hewlett-Packard computers. The UK government’s data site launches; it’s content, of a sort. There’s a rumour that Apple might switch to Bing as the default search engine on the iPhone. Nokia has decided to make its Ovi Maps and Navigation services available free, and there’s going to be an API as well; Google says the future is local.

In Haiti, guess what the most valuable piece of new technology is? SMS shortcode interoperability. There’s much more detail here and here; Sahana, the open-source disaster management system, is heavily engaged. The NANOG community is helping keep the Haitian NAP on line; Bill Woodcock has sage advice over there.

Mobile operators would do anything for more spectrum, and one operator in the area is pressing for a temporary serve of unused 850MHz AT&T style GSM to cope with two major problems; first, the remaining cell sites have to overlay the ones that were destroyed, secondly, 5,000 aid workers are constantly phoning and also hammering the GPRS data network, not usually a problem in Haiti. Perhaps the least expected form of US aid is now on the scene: DISA’s Defense Spectrum Office.

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January 21, 2010

Appstores: Toys or Tools?

The value of Apps and Appstores was a hotly debated theme at both the Telco 2.0 AMERICA Executive Brainstorm in Orlando in December and the EMEA Brainstorm in London in November. Below are some videos from the events:

- The CEO of Getjar, the ‘World’s second largest Appstore’, presentation on who’s using what apps and why.

- VPs of Strategy from Amdocs Interactive present and discuss a ‘value framework’ and App strategy for telco operators, based on a comparison with the activities of Apple, Nokia and Google.

Who uses what Apps and Why?

Ilja Laures, CEO of Getjar, ‘the world’s second largest Appstore’ (60 million downloads per month), presented details of a recent global analysis into the behaviour of Getjar customers.

Some Highlights

An increasing number of Getjar’s 18-24 years old customers are switching from feature phone to smart phone, although usage and demographics differ quite widely by country.

The dominant reason that people use and shop for Apps is ‘to pass the time’. Shopping for Apps often takes more time than downloading, and ‘discovery’ is an important part of the entertainment. 40% of users download apps several times a week.

For this group of 15 million ‘early adopters’ browsing the phone for 20 minutes before going to sleep is not unusual, and 73% of Getjar app users use mobile internet much more than ‘desktop’ internet.

The App Ecosystem

At the Orlando Brainstorm Scott Adler, VP Strategy at Amdocs Interactive, presented an analytical framework for mapping App ecosystems from user through to appstore and apps, and looked at the strategies of Apple, Nokia, and Google, and for Service Providers. A video of his presentation is here .

amdocs%20Picture1%20jan%202010.png
Source: Amdocs Interactive

In a subsequent video interview (here), he describes apps as “lots of little hooks into customer loyalty” for the device manufacturers, and discussed how the future of apps is about becoming much more personalised, taking advantage of more advanced network APIs.

His view is that while apps have started as ‘entertainment’, they will ultimately become increasingly important to consumers in daily life.

What should the Telcos’ App Strategy be?

At the EMEA Executive Brainstorm in November, Gil Rosen from Amdocs Interactive, argued that the best strategy for operators is not to recreate the device appstore, but to create and own the cloud platform that adds richness to cloud services.

Apps & Appstores: toys or tools?

‘Apps’ started out as a fun thing and the primary motivation for getting them is killing time.

The segments that are now using them are the earliest adopters. Some are kids, but some are grown up kids with highly paid jobs, expensive phones, high current ARPUs, and high likelihood to need, want and try new services in the future. Apps may be the thing they value most in the end, so ultimately, can telcos afford not to serve them?

With the right strategy for Apps and Appstores, operators may have found a great loyalty tool. But will it drive any significant new revenue? As many of our delegates observed, it is still early days and a lot of the winning business models have yet to emerge.

The Telco 2.0 team will be providing more detailed analysis on this issue over the next few months on this blog and via our research programme, in the build up to the 9th Telco 2.0 Executive Brainstorm on 27-29 April in London.

[Ed: Orlando Exective Brainstorm delegates and Telco 2.0 Subscription Customers will shortly be able to access a more detailed write up of the Brainstorm, including analysis of the panel sessions and votes. To join the next Telco 2.0 event, please see here, email contact@telco2.net or call +44 (0) 207 247 5003.]

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January 19, 2010

Cloud Computing: AT&T, Juniper and Openet on the Telco Opportunity

Cloud Computing was a popular topic at both the Telco 2.0 AMERICA Executive Brainstorm in December and the EMEA event in November, although the subject came with strong ‘hype alert!’ warnings. Below are videos of some of the stimulus presentations from the events:

- AT&T Business Solutions’ VP Strategy, Joe Weinman, on the role of telcos in Cloud Computing.

- Scott Stevens, VP Worldwide Technology at Juniper Networks, on the challenges of Building the ‘Responsive Cloud Network’ beyond the data centre.

- Joe Hogan, Openet’s CTO, on the dynamic real-time charging and capacity management that operators need to deliver a good cloud experience.

AT&T - the Critical Role of Telcos in Cloud Computing

Joe Weinman, VP, Strategy & Business Development, AT&T, shared his insights on ‘Cloudonomics’ - the economic and business rationale for Cloud Services:

Joe questioned the limited usefulness of the standard definition of the ‘cloud of internet services’ available via a browser, and explored the multiplicity of end products and mediums used to access ‘the cloud’.

In his presentation, he describes 38 ‘hard-nosed reasons’ for clients to use cloud services, and explored several use cases including flexibility to deal with peaks in demand. (This is described more fully in his Telco 2.0 interview here).

WEINMAN%20Telco%202.0%20Cloud%20use%20cases%20jan%202010.png

Here he argues that the critical role of telcos in cloud services is the delivery of the service via secure and capable network. He also argues that his company, at least, has a unique set of assets to deliver these services and has made significant investments to monetise the opportunity, emphasising the importance of optical transport to guarantee quality.

Building the ‘Responsive Cloud Network’ beyond the data centre - Juniper

At the EMEA Brainstorm, Scott Stevens, VP Worldwide Technology, Juniper Networks, described the challenges of building a ‘responsive cloud’ in the network. This is needed to scale and adjust the security, VPN and experience delivery of the network to match changes in the configuration of the Cloud Computing infrastructure in the data centre.

Dynamic, Real-time Charging to Manage Cloud Capacity - Openet

At the EMEA Brainstorm, Joe Hogan, CTO of Openet, discussed the practical need for dynamic, real-time charging and policy systems to monetise and manage Cloud Network Services effectively.

From Openet’s experience with a number of operators, the real challenge for operators is balancing the money made with the traffic carried. Managing capacity, congestion and how to charge for it are the key issues

In his presentation above, Joe explores pricing strategies that allow operators to manage capacity issues, including dynamic tiered approaches, and described three levels of applications: 1.) sponsored, 2.) an evolving set of cloud applications, and 3.) non-strategic.

Cloud Services: Windy Vapour or Serious Money?

Despite a powerful and contagious attack of ‘hype’ indicators, such as rabid geek interest and outbreaks of impenetrable industry jargon (e.g. ‘the cloudburst scenario’), Cloud Services appear to have a sound basis. They solve an economic and business need, and the technologies appear to be coming of age.

The next challenge appears to rest with the sales and marketing community - how to make sense of ‘Clouds’ beyond the enterprise CTOs to the CEOs, many of whom have strong instinctive dislikes of anything hinting of gas. The complex operational challenges of delivering on the marketing promises will then follow. Then, perhaps, cloud services money will rain into Telcos’ coffers.

‘Profit from the Cloud’

For more on making money from Cloud Computing, Telco 2.0 Partners Parallels are holding their 5th Annual Cloud Computing Summit on February 22-24, 2010 at the Fontainebleau Miami Beach Resort, Florida.

[Ed: Orlando Exective Brainstorm delegates and Telco 2.0 Subscription Customers will shortly be able to access a more detailed write up of the Brainstorm, including analysis of the panel sessions and votes. To join the next Telco 2.0 event, please see here, email contact@telco2.net or call +44 (0) 207 247 5003.]

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January 18, 2010

Innovation Strategy: Sprint, Verizon ODI, and Ericsson’s 2020 vision

Telecoms innovation strategy was a big theme at the Telco 2.0 AMERICA Executive Brainstorm in Orlando in December. Below are some video interviews from the event:

- Sprint’s VP Corporate Strategy on reaching “Silicon Valley speed” innovation.
- Verizon Wireless’s Open Development Initiative (ODI), on accelerating the network’s ability to connect external devices.
- Ericsson’s vision for 2020.

Sprint - ‘Breaking Big Bell Dogma’

Russ McGuire, VP, Corporate Strategy, Sprint, says that changing innovation from ‘carrier speed’ to ‘Silicon Valley speed’ needs Telcos to break “Big Bell Dogma” by embracing open innovation processes.

Interview Summary:

A key challenge for telcos is to participate without slowing down innovation, which is as much a cultural as a technological challenge for telcos.

In terms of the big picture, Sprint sees the traditional one-sided model remaining essential in the near term (as indeed do we at Telco 2.0), but also an increasing role played by ‘two-sided’ business models to enable 3rd parties to create value for their customers via telecoms capabilities and/or the telecoms channel.

Russ describes a business model he calls ‘the carrier inside’: a wholesale provider entirely within other businesses’ propositions. He also suggests near term opportunities in voice such as supporting ‘at risk’ mothers-to-be with a push to talk phone directly connected to medical advisors.

Verizon Wireless ODI - faster, more practical innovation

Maurice Thompson, Director of Verizon Wireless Open Development initiative (ODI), explains how the programme enables new external devices, including machine to machine (M2M) devices and e-Readers, to get on to the network in less than four weeks.

Interview Summary:

The aims of ODI are to speed more new innovations to Verizon’s customers, to enable wider innovation from external sources, to give a greater choice of devices for customers, and thereby attract new customers. Maurice also gives more detail on examples of the types of new devices connected.

Ericsson 2020 - Future Innovation ‘Turned on its Head’

Pankaj Asundi, VP Media & Content at Ericsson, describes how the global telecoms innovation process is changing and provides insight into Ericsson’s view of the market in 2020 - with 50Bn connected devices.

Interview Summary:

Innovation is changing from an internally driven, PC focused process, to one driven by external mobile developers and led by customer choice. What will be the key segments, where will telcos make money, and what key developments will unlock the market? How will networks operating ‘two-sided’ business models leveraging unique assets be able to profit from the new openness?

Innovation Strategy: What’s New?

‘Innovation’, n. in-no-vay-shon, change in an established practice by the introduction of new methods, etc.

It’s clear that the Telecoms industry is waking up, starting to open up, and starting to pilot new business models. It is at least increasingly talking about doing so.

Richard Kramer, investment analyst at Arete Research, said in his opening presentation on shareholder value at the Orlando event that it is the most interesting time he can remember in the Telecoms and Tech sectors. Despite, and possibly because of the world’s economic problems, the telecoms industry looks like it is starting to reinvent itself by looking outside its own doors for inspiration.

As part of the warm up for the 9th Telco 2.0 Executive Brainstorm, on 27-29 April in London, we will publish more output from the last events on this blog, along with additional analysis, over the next few weeks.

[Ed: Orlando Exective Brainstorm delegates and Telco 2.0 Subscription Customers will shortly be able to access a more detailed write up of the Brainstorm, including analysis of the panel sessions and votes. To join the next Telco 2.0 event, please see here, email contact@telco2.net or call +44 (0) 207 247 5003.]

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Telco 2.0 News Review

Telco 2.0 Top Stories

iSuppli has finished costing out the bits of a dismantled Google Nexus One, and they conclude that the $530 device costs about $174 to make, which is a fascinating margin by anyone’s standards. It’s worth noting that the silicon in the gadget is almost entirely Qualcomm - the main processor, and most expensive single component, is a Qualcomm Snapdragon, and the radio hardware is Qualcomm as well.

However, the first week sales may have been a bit of a disappointment, as TelecomTV reports. Their data source is a company that is using information from the Android app store to see which devices are slurping up apps - on the fairly sensible basis that anyone who pays $530 up front for a Googlephone is probably an app addict, they estimate that as few as 20,000 gadgets have been sold. Google followed up the launch with a software-development kit for the device.

It was also the week of the great Google crisis. Google astonished everyone by announcing that it would no longer accept censorship of search results on Google.cn, alleging that it had detected a major effort to get access to Gmail accounts and to Google engineering information by hackers it believes are working for the Chinese government. Google was immediately accused of taking advantage of the affair to exit a lacklustre business. However, even if Google.cn only got 17% of the search traffic, it was making 33% of the total search-ad revenue in China, which suggests that it had a good grip on advertisers and high value users. Unexpectedly, within hours of the statement appearing on an official Google blog, members of the public began leaving flowers outside Google buildings.

The Electronic Frontier Foundation’s Danny O’Brien has a useful roundup on the issue. Technically speaking, the attack involved a specially crafted PDF file that exploited bugs in Adobe Reader and Microsoft Internet Explorer to install a remote-administration application on the target PC. The attacks were apparently tailored to individual Googlers as well as employees of several other tech companies, notably Adobe, Yahoo!, Juniper Networks, and Symantec, which suggests one of its aims was to keep up to date with security precautions against the attack.

An implementation of the attack against IE is in the wild; Adobe released two urgent patches for Reader, Illustrator, and Acrobat simultaneously with the Google statement. As a result, the German Government has warned the public to replace Internet Explorer as a matter of urgency. One could have said that at any time in the last 10 years…

The US Government, meanwhile, handed in an official protest to the Chinese foreign ministry. Yahoo! issued a supportive statement, which annoyed their Chinese ad partners. Computerworld, meanwhile, reported that the Chinese hackers got access to a lawful-intercept system.

Meanwhile, academic security experts at the Weizmann Institute demonstrated a possible attack on UMTS encryption. Time to move to A5/3.

In other Google news, some people wondered how Google would react to a recession. We thought they were in a position to adjust their prices to very fine tolerances; it turns out that’s what happened. When the crisis hit, Google responded by increasing the volume of ads it served (by as much as 57% in terms of ads per page) and cutting prices in order to make up for lost spending; now, as the economy recovers, they’re cutting back the volume and rebuilding margins.

More seriously, T-Mobile USA, followed by several other wireless carriers, announced it was waiving all call charges to and from Haiti after the earthquake. On the scene, the only submarine cable to land in Haiti was reportedly cut, but the Port-au-Prince NAP was operational with microwave connectivity to the Dominican Republic, and Reynold Guerrier, treasurer of the Haitian NIC, was appealing to the NANOG list for help in getting diesel to refuel the backup generators. A major donation drive by SMS is underway, although one wonders how much the operators are going to stick to, going by experience with some similar projects in the UK.

That’s probably the right moment to mention RapidSMS, an open-source project for dynamic data collection and supply-chain management using SMS and the Django Python web framework. Great stuff; a combination of low-bandwidth, low cost, high-reach GSM technology with open-source Web development to help deliver aid, public health, and education.

In Rwanda, the fibre-optic backbone that will extend the new submarine cables in east Africa inland is expected to reach Kigali in April, said Rwandatel. They’ve recently ordered another 155Mbps commit on the SEACOM cable. Relatedly, MTN Ghana and Huawei installed the first 900MHz UMTS system in Africa. Huawei may have got the test network contract for TeliaSonera, but the production build was split between Ericsson and Nokia-Siemens Networks.

In other networks news, South African UMTS-TDD operator iBurst was being sued by a group of people who claimed that “radiation” from a new cell site was making them ill. It emerged this week that the transmitter had been off for six weeks while they were supposedly experiencing various symptoms and nobody noticed the difference.

Brough Turner has a table showing that faster, cheaper broadband correlates with open access to lower layers. The second round of the US Government’s broadband stimulus plan is opening, with a major difference; it’s splitting in two. Originally, two different federal agencies, the Rural Utilities Service and the National Telecommunications-Information Administration, shared power over the scheme. Now, they’re dividing by function. NTIA is dealing with middle-mile and backhaul projects; RUS is dealing with the last-mile and remote area satellite ones.

Deutsche Telekom is worried about stagnation and hopes IPTV will help. More interestingly, they’ve made a second offer to the German regulator about prices for Layer 0 and 1 access and sub-loop unbundling (i.e. access to the street cabinet). They want to charge €354 a month for the use of dark fibre from the exchange to the cabinet, €173 a month for access to the cabinet (although, if you can get two other competitors to join you and DTAG, you’ll pay a quarter of that each), and 43 cents a metre a month for access to ducts.

In other regulatory news, the EFF has something to say about the proposed net neutrality rules, and the GSMA is yelling for more FDD spectrum in the UMTS Extension band.

LG wants to be the world’s second biggest mobile phone manufacturer, setting the scene for an epic battle of the Koreans next year. As LG is heavily committed to Android, whereas Samsung has both its own OS and interests in LiMo, this is likely to have an impact on the OS ecosystem.

Nokia, meanwhile, has put a new user interface design for Symbian out for discussion, and flipped on the Ovi Store for the N900 Linux smartphone. They’re also claiming that the Ovi store has reached 1 million downloads/day.

Amazon has opened its publishing process for the Kindle globally.

And finally, NASA is working on a cloud, called Nebula, which is expected to eventually host all the US federal government’s applications. TSTT and Digicel fight over Beyonce. And panic over “Internet addiction” in China leads to teenagers being subjected to electric shocks.

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January 11, 2010

Telco 2.0 News Review

Telco 2.0 Top Stories

Well, we’ve just had CES and the buzz was of course about the Google gadget. Connected Planet asks whether Google might subsidise apps or content on the “Nexus One”. Although there’s certainly something appealing about the idea of flipping the business model, getting rid of the handset subsidies, and instead pushing the app ecosystem, it seems unlikely - the device is pricey, at $530 a go with no carrier subsidy, so you’d have to push out a lot of subsidised applications in order to make it a financially attractive proposition that way. (Also, this is roughly the model Nokia is pursuing for Ovi.) If the iPhone was anything to go by, that $530 includes a substantial profit margin - but the problem is surely how much subsidy to applications the user could absorb.

iFixit has a teardown out, so the genuinely intrepid can have a crack at costing out the BOM and estimating the margins themselves. We’d guess that the Snapdragon chip doesn’t come cheap. Apparently, the device is actually made by HTC, so you might expect that they’ll get the the lion’s share of the price after the upstream suppliers like Qualcomm, Broadcom, etc. have got theirs.

The capacity crunch is real: shamefaced apologies from AT&T after the fearsome concentration of iPhones at CES brought their data network to a halt. Not that this is new - we well remember helping a restaurant manager by getting their GSM/GPRS merchant terminal to fall back to GSM dialup a couple of 3GSMs ago when the BlackBerries and Nokia Communicators (remember them?) were thrashing Telefonica’s GPRS net to death.

LG launched a Linux-powered iPhone-like entity; they’re using Intel’s Moblin distribution running on Intel’s Morristown chipset. We’d guess Intel had something to do with this, eh. Apparently it’s “half-way between a smartphone and a netbook”, but it’s most certainly not a “smartbook” - must be a netphone then. There was also a great deal of froth about “slates”, which is the new buzzword for “tablet PCs”; Computer Weekly has a nicely calming post pointing out that devices a bit smaller than a laptop with a reduced keyboard and a big touchscreen are far from new. However, T-Mobile UK wants you to have a 7” tablet in your living room as a “family hub”.

Nokia CEO Olli-Pekka Kallasvuo, meanwhile, was pushing the Nokia Life Tools apps-for-the-emerging-markets programme and the need to “democratise the smartphone” - the contrast with Google’s half-a-grand gadget is telling and presumably deliberate. Their Calling All Innovators program is about to start up again; this year’s has dated British cartoons and more importantly a special section for developing-world business innovations with its own $1m prize.

Palm, on occasion, likes to suggest that its WebOS devices are a cheaper, more democratic approach to smartphones. At CES, they announced that the applications developer ecosystem is being opened up to anyone who habitually counts “0, 1, 2…”, that there will be prizes, and that their app store is going to take a Symbian Horizon-like twist - as well as the official one, other app stores will be able to use Palm’s database of application metadata. As well as proliferating app stores, we’ve got proliferating app warehouses, and probably an app containership somewhere.

However, another announcement from Palm shines a different light on WebOS. The core concept of WebOS was that the entire user interface was a Web browser, and all the applications were implemented as HTML/CSS/JavaScript widgets, which could be either local or remote, and which used a Web service API to control the device’s lower-level functions. This offered the promise of eventually getting the various flavours of widgetry to converge, so that the standard graphical environment for mobile would be HTML and the standard applications programming language would be JavaScript. That, in turn, would mean that all a device needed to participate in the apps ecosystem would be a proper Web browser and a BONDI-compliant local API. And all would be love.

Unfortunately, whatever JavaScript may be, it’s not the language you’d immediately pick for performance. And, of course, on a mobile device with relatively limited processing power and battery life, you need to take this seriously. As a result, Palm has announced an API for plug-ins written in C and C++ - perhaps the first time we’ve had C embedded in a Web page made of HTML and JavaScript, rather than JavaScript embedded in a Web page being executed by a browser written in C. Apparently games devs, who need to mangle graphics really fast, are the target market.

Alternatively, you could always do the app for a platform that uses Qualcomm’s coming 1.5GHz Snapdragon. Soon, we’ll have mobiles that are powerful enough to manage the space shuttle’s glide approach while doing 3D computational fluid dynamics…for a total of three minutes before the battery runs out. There will, however, be no WiMAX smarties on the Clearwire network this year.

Motorola announced another Android gadget and declared it was confident that they would lead it back to profitability; AT&T mobility chief Ralph de la Vega, meanwhile, made clear that AT&T is diversifying its smartphone range, with Android and two Palm WebOS devices coming to join the iPhone.

Palm’s CEO, it seems, doesn’t care about the iPhone and wants you to know it. Mind you, we never thought the first generation iPhone would take off, with a grimy touchscreen that invariably won’t work and no radio to speak of, and Telco 2.0’s Alexander Harrowell has still never to handle one. (He claims it’s a deliberate policy to remain rational about these things. Others claim he’s just cheap.)

Interestingly, Apple just bought an ad broker, like Google. So far, the Apple strategy has been clear - sell devices, because that’s where Apple makes money, and then extend from there by getting iPhone users to replace other consumer electronics with Apple kit. The apps are part of the strategy to get users through the door, which is why Apple is happy to distribute most of the revenue. Another extension is selling content through iTunes. We don’t really know what Google’s strategy is for Android, but it’s a fair guess that it’s similar to all other Google strategy - more content to sell ads next to, more users to see the ads.

It’s hard to see how an ad broker fits in, unless the real message here is that both Apple and Google want to have a presence throughout the mobile Internet value chain, and land-grab mode has been engaged.

If you really want a cool device, here’s the Thales Teorem, a smartphone whose USP is that it encrypts your communications to the standard required for French official secrets - which presumably means “good enough to keep the Yanks out”. 20,000 top officials are going to be issued with the devices. Pretty it’s not, but this is the sort of thing you need to launch the independent nuclear deterrent. It’s an advance on the 1970s, when President Valéry Giscard d’Estaing allegedly kept the launch codes on a light gold chain around his neck…

The French government wants to tax Internet advertising revenues in order to subsidise the online music industry. Apparently they want to collect the tax on the basis of who clicked on the banner ad - which seems to mean they want to demand extremely detailed record keeping from every advertiser in the world…although they will have WLAN on trains that go 300 miles an hour, so they can probably remain smug.

It looks like Netflix has proven a Telco 2.0 insight correct; we’ve often said that if content is king, distribution is King Kong. Netflix succeeded through being a pure distribution company - using the Web for signalling and red vans as a media bearer, as it were. Then they decided to buy into the content business. Big mistake; it’s cost a fortune and it fouled up their relationships with the big content providers, and they’re now selling up.

Robin Jewsbury goes to CES, and reports that femtocells are big news. We’ve known for some time about MagicJack, a Voice 2.0 play that routes your calls via their own cut-price CLEC when you’re in range of a femtocell; now they’ve launched. He also, interestingly, mentions that Ubiquisys’s femtocell was being demonstrated on the UK Trade & Investment stand by BBC Research engineers. Hmmm.

Meanwhile, the other UK operators are demanding that Brussels investigate the T-Mobile/Orange joint venture, and TDC may soon be back on the stock market after four years in private-equity hands.

Orange has taken a daring step into the mobile finance future…well, not really. It’s launched a Barclaycard with its logo.

The US national broadband plan has been delayed a month to give the FCC more time to filter a huge pile of public submissions. “Fibher Nowe!!!” scrawled on a torn-up phone bill doesn’t count, so 90% of it can probably be filtered without losing any Shannon information. This post of Brough Turner’s suggests Wi-Fi in the TV white spaces may be more than useful.

The FCC is also demanding an explanation of how Verizon Wireless’s early termination fees came to double.

And it turns out that Kodak’s wireless picture frames, and any other devices that use framechannel.com as the back-end, are accessible from the Internet by anyone who can guess their MAC address and set a fake user-agent header. Worse, it’s possible to make them reset and issue a new activation code, so the attacker could down the frame, create a new account, and put whatever pictures they wanted on it.

Back in the big wide world China became the world’s biggest exporter, as well as the world’s biggest market for cars. Up until now, the biggest exporter had been Germany for years - although, as the Germans point out, China does a great deal of low-value bulk for export, and imports a lot of very expensive German capital goods to do so. With that in mind, it’s interesting that Huawei has just outsourced to India, although it’s got a lot to do with India slapping a huge tariff on Chinese SDH networking gear. The Financial Times, meanwhile, takes a look at Alcatel-Lucent, and reports that unlike Nortel it’s still here. Industry CAPEX is forecast to rise 1.5% in 2010.

There’s been another boss swap at BT Global Services. IBM is keen on industry vertical projects like smart grids and friends:

“We were seeing a variety of projects that you would classify as physical meeting virtual world. These were clearly not back-office oriented but rather out where the business was conducted, like transportation services or power networks.

We saw a significant acceleration in the number of these of physical world projects for a number of reasons, not the least of which is due to the fact that the cost of microprocessors had dropped dramatically. Microprocessors, embedded devices, RFID pricing have all come down to the point where computing at a different scale had reached an inflection point.

The physical world projects started to accelerate and be much more front of mind. All eras, technology or otherwise build on eras of the past. It’s our view that problem-solving via IT techniques can transcend limitations of our past.”

And a scientific paper suggests that exposure to GSM radio traffic rendered mice less likely to get Alzheimer’s disease.

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January 4, 2010

Telco 2.0 News Review

Happy New Year! Top Telco 2.0 Stories this week:

[Ed. - Please help Telco 2.0 improve our analysis service to you, via a short online survey of your research interests for 2010: brief survey here.]

It was probably inevitable that 2010 would kick off with a Google story; the rumour machine is operating at full power ahead of an announcement scheduled for tomorrow. It looks like it’s going to involve Google’s own Android handset, but at the moment it’s hard to say what if anything is special about it. Certainly, selling them for $530 a pop isn’t going to start any revolutions although the margins are probably decent, as they are with the iPhone.

Facebook had a sizable 2009 - huge growth, privacy rows, and increasing fascination with its API. It’s still no QQ, though. Letting that pass, we’re interested to see this Chris Messina article which argues that if they want to reach a billion users, the only way to do it is to get them off facebook.com and instead rely on integrating it into millions of other applications, sites, and services. Perhaps we should rebrand as Facebook 2.0?

A bad start to 2010 for Zhang Chunjiang of China Mobile and former chairman of China Netcom. Having made a career as an advocate of better corporate governance and transparency, he’s been summarily fired as VP and Communist Party Secretary (now there’s a job title for you). The Party announced the sacking using a phrase - “suspicion of serious violations of discipline” - which is usually a code-word for allegations of corruption.

Neither was it a great 2009 for SpinVox, once a British tech darling, now exposed as being made of poor people among other things. TTS specialists Nuance have just bought the company, for $102 million - or roughly half the total capital investment a string of VC funds poured into the company. Invesco Perpetual has already confessed that 90% of the cash it advanced to SpinVox is permanently lost.

Carphone Warehouse/TalkTalk and Sky are pressing BT both to hurry up with rolling out FTTC, and to improve its products and pricing in wholesale. With 30% market share for broadband, wholesale will be crucial to the project’s success - just as access to wholesale fibre will be crucial to the independent ISPs’ success…

Amazon announced that it had sold more e-books than books, for the first time, on Christmas Day. However, they didn’t actually provide any numbers, and you have to make allowances for the fact that the week between Christmas and New Year is a very easy one indeed if you want to get a press release in the papers. We’d also suspect it isn’t the busiest week of the year for Amazon either.

What impact did piracy have on the new Star Trek movie? Remarkably little, points out Fred von Lohmann of the EFF. According to industry analysts, it may have made as much as $100 million in profits despite being touted by its makers, Paramount, as the “most pirated movie ever” - after spending a further $100 million on ads as well as the $140 million it cost to actually make the thing. The EFF were also out to defend bloggers against the Transportation Security Administration.

Microsoft is looking for someone to integrate the Xbox with Windows Mobile and Live - as The Register points out, it’s eerily similar to Nokia’s failed N-Gage project, but there’s nothing obvious that makes integrating mobility, gaming, and peer-to-peer a stupid idea.

Here’s an iPhone game developer making money; Tapulous claims to be selling $1m a month. It’s best known for its rhythm game Tap Tap Revenge 3, but we’d point out that a large chunk of its revenue consists of sales of songs in-game - a Strategy 2 two-sided business model.

Le Monde has a round-up of 2009’s appstore wave, with duelling numbers from Screendigest and Morgan Stanley. According to the first, Apple might make €1.3bn from now to 2013 from the App Store, on volume of 7 billion downloads, with a total market size of €8.6bn across all the app stores. According to the second, Apple might make $217 million in 2009, with $500 million going in revenue shares to developers, and may get to $1.6bn in 2012, with $4bn going out in revenue shares.Try reconciling those numbers - if you dare. Certainly the first lot seem to be expecting rapid growth in all the other app stores, if Apple is going to account for one-eighth of the market…

How many “social media gurus” are there? WhatsNextBlog decided to find out, by searching biogs published on Twitter. They found 15,740 of the things. Don’t miss the breakdown between different silly job titles (even if there wasn’t even one VP and Communist Party Secretary). Peter Drucker did say, after all, that we only use the word “guru” because “charlatan” is too long to fit in a headline…

He’d probably agree that this was more important - India has decided to put back the launch of mobile number portability by three months in order to get it right, and Tata/DoCoMo is offering rates as low as 0.0002 US cents a second.

It’s probably not good when the innovative voice application on your developer forum is a major competitor’s mobile version of their core product, but that’s what’s happened at Forum Nokia with Google Voice Search for S60. On the other hand, they do have all the N900 videos heart could desire. They better be good - the smartbooks are coming.

Orange UK is about to launch high-definition (WB-AMR) voice, having tried it out in Moldova.

RIM confesses to breaking the BlackBerry network with a botched software update; Renesys has a scoreboard for IP transit providers in 2009. The big winner is Level(3).

IBM’s CEO, Sam Palmisano, is confident that Google will not run banks, airline reservations, Indian mobile networks or the like. However, as Connected Planet’s Rich Karpinski points out, we can’t be anywhere near as certain of that for the customer-facing side of telecoms. His colleague Sarah Reedy, meanwhile, sums up key trends in 2009 - apparently they were wholesale, outsourced network operators, policy-enforcement, mobile broadband, and vertical solutions like smart grid applications becoming the main driver of growth.

Brough Turner has an excellent series of blog posts on the nature of traffic, and how it changes over time and with the statistical averaging that comes with big scale. Here, you’ll learn that essentially all the peak/mean variation in traffic on backbone links and Internet exchanges is driven by the time of day, but that the variation is radically different in the access network - so big links can be rendered packet loss-free by providing 10-20% spare capacity, but the access layer is much more difficult. Here’s an explanation, with data, of how packet loss impacts performance and why. And this post puts it all together to explain why you need to overprovision capacity and how much in order to deal with the bursty nature of TCP traffic.

This year’s CCC hacker conference in Germany suggests that a lot of interesting things are likely to happen this year on GSM networks - for some values of interesting. Talks included SCCP hacking, attacking the SS7 & SIGTRAN applications one step further and mapping the phone system, Playing with the GSM RF interface, and Understanding Telecommunications Interception - the Intelligence Support Subsystem. And Karsten Nohl demonstrated a way to crowdsource an attack on the GSM A5/1 encryption protocol. David Burgess explains the latter here, as well as the GSMA’s response (“that’s against the law, knock it off sonny”, in short). But we actually preferred the proposed denial-of-service attack in the second talk, that floods the RACH with spurious setup messages and brings down cells.

Finally, meet the French call centre that hasn’t taken a call since the 25th of November.

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