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September 30, 2010

10 ‘Innovation Principles’ for success in a disrupted (Telco) marketplace

Just published: 10 generic action-oriented principles of innovation which are applicable to, and adoptable by, all companies within the disrupted Telco, Media and Technology industries regardless of their vision or strategy. For more on the Principles, including a detailed description of two of the ten Principles, case studies and rationale, and a partial extract from the 47 page Executive Briefing, please see our research portal here.

The principles are part of our new strategy research report ‘The Roadmap to New Telco Business Models’. We will be sharing the principles, and more on the ‘Roadmap’ research, at the upcoming Telco 2.0 Americas and EMEA Executive Brainstorms.

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Guest Post: Amdocs on living with Google

This is a guest post by Dana Porter, Vice President and Head of Global Marketing at Amdocs. [Ed - Co-opetition and disruptive strategies also feature at our Americas and EMEA Brainstorms.]

When service providers think of their strategies with Google, there are three facts that need to be taken into consideration:

• Google is here to stay.
• Location is the most recent service to have been ceded to Google. Voice is next in line.
• Google can also drive service providers’ success.

We believe that the convergence of communications and the Internet is a fact - and that service providers, rather than competing with Google on all fronts, should actually seek to incorporate its services and apps as much as possible in order to enrich the overall customer experience for their subscribers.

To do so, service providers need to be clear on what they are bringing to the table and then examine how they can work with Google.

Service providers should focus on their core assets - their network, customer and product data. And they should leverage their core capabilities, such as billing, customer care, and service delivery to create new services they can monetize through partnerships with Google and other over-the-top competitors.

As the Telco 2.0 executive briefing, “Google, Where to Compete, Where to Co-Operate” notes, the service providers’ “golden asset underpinning many of their future models” is their wealth of customer data and that “understanding consumers’ behavior will be the key to victory in the voice, messaging and advertising brokerage markets.”

The exact approach each service provider takes to co-exist with Google depends on its business strategy. Some adopt an experience play, where the service provider is in the front of the customer experience, embedding Google assets to enhance the overall subscriber experience.

An example of this approach is the Vodafone 845 branded device. It’s based on the Android 2.1 OS and includes all Google apps such as Maps, Gmail and Android Market but Vodafone is self-branding the phone and has customized it to incorporate Vodafone content and services such as their Vodafone 360 service. Vodafone’s goal is to manage the user experience and promote their brand equity.

Other service providers adopt the smart enabler play, using their core assets and capabilities to let their customer reach their desired experience (be it by Google or by any other player) as easily and as quickly as possible. For example, instead of fighting or blocking Google’s services, service providers can offer them to the consumer, placing the Google brand upfront with as few steps as possible to reach it. 3 UK and T-Mobile have adopted this enablement approach and let consumers select the Google experience as simply as possible. They provide value to customers by letting consumers choose the experience they want in the most straightforward and intuitive way.


Interests define the level of competition

An all-or-nothing approach is unfeasible. Take the case of AT&T for example. Even though they are publicly fighting Google on net neutrality, Google Voice, and have removed Google search in favor of Yahoo, they are at the same time offering their subscribers Android phones and providing network access for Google’s Nexus One.
The question as to whether a service provider should cooperate or compete with Google depends on whether its business interests are aligned or opposed with those of Google - at any particular time and in any particular market.

This means that most service providers will choose to deploy several tactics to serve their overall strategy. In the strategic interest category, both Google and service providers are after the same end goal, increased Internet usage - whether that be mobile Internet or TV - to increase data usage for service providers and to increase the reach to as many eyeballs as possible to raise Google’s value for advertisers. Orange and Sprint, therefore, have agreements to run Google search within their mobile environments to promote the customers’ use of the Internet, thereby increasing their data revenues.

On the other hand, Google’s business model of offering its platform, applications and content to consumers for free is directly opposed to that of the service providers, who charge for services. Hence the dispute between Google and AT&T over net neutrality in the United States, or Telefonica’s and others’ recent statements suggesting that over-the-top (OTT) players like Google should have to pay service providers for use of their network.

State of co-opetition

Today, most service provider-Google relationships fall somewhere in the middle between cooperation and competition, characterized by a delicate balance of strategic interests on both the service providers’ part and Google’s, creating a state of co-opetition. However, this balance can easily be disrupted by new market conditions or by either party adapting new strategies. What may be a complementary strategy today may not be tomorrow, creating a highly dynamic environment.

Gmail, Google navigation with its location-based service and Google Voice are all examples of Google services and applications that started off as head-to-head competition with service providers, but have now moved toward a more cooperative relationship. Service providers used to charge their subscribers for offering a mailbox with a fixed limit. Then they increased the size of the mailbox to meet increasing customer demand for “unlimited” mailboxes before realizing they couldn’t compete with Google’s unlimited and free Gmail. And so they stopped competing on this front, allowing Gmail to become the default email on their phones. Since service provider core assets have not been compromised here, and users receive free and bigger mailboxes with Gmail, service providers are content to take the enabling/hosting part of allowing access.

In terms of navigation and location services, service providers have also come to the conclusion they cannot compete with Google Earth, and are therefore better off embedding it in their phones rather than trying to force their own location-based service on their subscribers.

Voice is different, in that it directly competes with service providers’ core service of providing a phone service, but we are still seeing a shift toward cooperation in some cases. While AT&T has blocked the ability to download Google Voice apps on iPhones, Verizon hasn’t, because it wants to compete against AT&T’s smartphone strategy and offering Google Voice is one way of attracting subscribers.

Google is a tough competitor for service providers when offering consumers its services for free. But when Google alters its strategy and tries to compete with non-free services, it discovers it lacks some of the service providers’ core assets and capabilities that are a fundamental requirement when entering the non-free, service provider world. Google’s decision to scrap the online sale direct to the consumer of its $595 Nexus One smartphone, due to unresolved support issues and costs, is a prime example of this.

Indeed, the mobile space provides a good example of the dynamic co-opetitive relationship. Service providers have or are launching new phones based on Google’s popular Android operating systems in a move to attract more customers. But at the same time, Google is collecting rich customer data that service providers also want to obtain and this clash of interests makes this co-opetition relationship a moving target on the scale between cooperation and competition, with the relationship changing over time, depending on business interests.


Balance of power does not just rest with Google

There is a tendency to see Google as an all-conquering giant, but this is not necessarily the case - Google has competition, too, in its core markets. Microsoft’s search engine Bing has slowly been gaining on Google for 10 months in a row. Bing currently boasts an 11.7 percent share of the market (to Google’s 65%), gaining 3.4 percent over the last 12 months.

Apple is competing with Google on apps, operating systems and advertising, with their recent announcement of iAd, a specific mobile ad platform, and Amazon is reaching businesses with services such as fulfillment, website building and payment services to compete with Google’s apps targeted at businesses.

This competition opens up the door for service providers to find new opportunities and partnerships with alternative players, changing the balance between Google and service providers by empowering the latter in this co-opetition status quo with Google. It will also have the effect of driving Google to become more cooperative with service providers so as to ensure Google’s goal of having the upper hand in its own competitive landscape with Microsoft, Facebook Apple and others.

No such thing as a free lunch

Google is also not immune to failure, as seen by its decision to close its online mobile phone shop. Google wins when it competes with service providers over services that it provides for free, such as Gmail, Google Earth and so on. But as there’s no such thing as a free lunch in the connected world: When a Gmail account is erased, or a consumer has problems with his Nexus One bought online, the consumer “pays” the price of this free service by not having a customer support team to whom he can turn.

Consumers are prepared to take this risk of no support for free services but the closer we get to the service provider’s core competencies: service availability, customer care, payment flexibility, accountability and so on, the more consumers are prepared to pay in order to have somebody there to fix it in cases of need.

In today’s connected world, people expect to pay for a better customer experience and are willing to pay for services requiring real-time monitoring, real-time operations and management. It is here that service providers, through monetizing their core assets such as network, customer and product data, will continue to thrive and profit. They have a lot to bring to the table in terms of creating a win-win-win situation: for service providers, for Google and for customers.

The writer is vice president and head of global marketing at Amdocs.

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BSG: Technical Perspectives on Net Neutrality

Broadband economics, traffic management and “Net neutrality 2.0” are big themes at the upcoming Telco 2.0 events in Los Angeles on 27-28 October and London on 9-10 November. We’re delighted to be able to share new analysis and use cases from the Telco 2.0 team, Bain & Co, Ericsson and Analysys Mason at the events, as well as hear from the Group CTO of Deutsche Telekom, the Chairman of Project Canvas, and others.

Our in-going point of view is described in our submission to Ofcom here. As additional context please see below a detailed write up of the recent Net Neutrality conference in London organised by the Broadband Stakeholder Group detailing the experiences of the BBC, 3UK, Ericsson, Cisco, and including valuable data on network costs.

One of the things that struck us about the shindig was that in fact, net neutrality and its opposite weren’t really top of the agenda.

The event fell neatly in two halves - geeks before lunch, policy wonks after lunch. The news from the geeks was relatively reassuring - although video demand is storming ahead as predicted, the networks are doing reasonably well in soaking it up. Anthony Rose, the CTO of Project Canvas, reported on the BBC’s experience of streaming the World Cup - at the peak, they were pushing out 800,000 concurrent unicast streams, with a peak throughput on the iPlayer CDN of 450Gbps. He predicted that the London Olympics in 2012 might achieve a peak of ten times that.

The good news is that Canvas is taking shape. At the beginning of the project, they had faced “huge” standardisation problems dealing with multiple incompatible interfaces from the TV vendors, but the latest generation of new TVs have Web browsers and support Flash. Notably, that includes the Android-based Google TV.

A key element in Canvas is the widespread use of IP multicast, a technology that the IETF standardised years ago (the first RFC is from 1994, but the original Internet-Draft proposal dates from 1989) but that is still surprisingly under-deployed - it lets client computers subscribe to a group, in which content is shared between them. This means that the content stream is only multiplied between the subscribers once it reaches the multicast group, analogously to a content-delivery network - a major bandwidth saving. The multicast groups, further, will be drawing their content from a mammoth CDN provided by BT.

Rose made a good point in that we need to avoid taking decisions that will constrain our choices further down the line. Specifically, ISPs that decide to be “non-neutral” (or should that be belligerent?) will encourage non-preferred applications both to encrypt their traffic, and to use common ports in order to hide in plain sight. The problem here is that using SSL on port 443, for example, makes it very difficult to cache video or other heavy content locally and therefore makes the problem worse. Similarly, the shift of much file-sharing from P2P protocols to Web-based direct download, driven by efforts by rightsholders to go after BitTorrent, has had the effect of making this content harder to shift in terms of hardcore packet pushing. (Simon Drinkwater of Limelight Networks produced a very nice chart of the shift later in the day.)

Canvas will eventually consist of a set of specifications and software libraries, almost certainly based on Linux and Flash, and a common infrastructure, which is itself made up of the BT-managed CDN and BT-managed private peering with major broadcasters and content providers to get the content into the CDN. Rose expects it to make heavy use of edge-caching - predictively downloading content during the low-usage phases of the day to a large local hard disk, based on your requirements or possibly on your usage profile.

Brian Williamson of Plum Consulting brought in a rare and valuable commodity - actual data on network costs, which revealed a couple of interesting points. First, the performance leap from WCDMA to HSPA+/LTE is impressive - it seems to be a feature of radio network technologies that they disappoint in the beginning and outperform in the long run.

Second, the real difference between access technologies is between the ones with a steep cost curve and the ones with a flat cost curve. UMTS and LTE all have a steeply rising capacity-cost curve - the only difference is that the curves shift out to the right over time. Copper is flatter, and fibre’s cost curve is the flattest of all, being dominated by the original trenching budget and thereafter influenced by the abundance of bandwidth, the lack of street-cabinet electronics, and the relatively low cost of upgrades. Analysys Mason estimates the cost of serving a user with fibre at 1GB/month as €46, and the cost of serving a user with fibre at 100GB/month as €49.


The unavoidable conclusion is that although fibre pricing needs to be carefully thought out, in order to both upsell the heavier users and reach the low users, there is little or no case for “non-neutrality” on fibre access networks. However, Williamson pointed out, mobile operators needed to impose “cost-based pricing”. That said, it looks like the cost curve for HSPA+-and-beyond is rather kinder than that for DSL. Theoretically, the decision-rule is given by the intercept between the cost curves for different technologies - the advanced wireless curve crosses the DSL curve at a monthly demand of 30GB, and the fibre curve at 45GB.

In practice, of course, serving more than a very few 45GB/month users with LTE would require a lot of spectrum and probably so many Gigabit Ethernet backhaul feeds that you’d need the fibre access network anyway to get the cells deployed. But it’s certainly an interesting data set, and one that tends to validate a hybrid fibre-wireless approach to NGA.


More controversially, Williamson also argued that in general, it would be better to adjust pricing than to prioritise traffic. This was something of a theme for the technical participants - there was a general sense that being “non-neutral” might turn out to be more than a bit of a disappointment, that it had important costs in itself, and that there were valid technical solutions for many of the industry’s problems that were less controversial.

John Cunliffe, CTO of Ericsson UK, took up the same theme - perhaps not surprisingly from a network vendor - reviewing the short-term technical possibilities. He remarked that there was in practice no limit on capacity once fibre was in place, and that it was therefore a choice on the operator’s part which technologies to deploy and quantity/price combinations to offer - once the fibre was in place.


He mentioned bonded DSL but warned that relatively few customers’ copper was in sufficiently good condition to make use of it, and said that wireless would anyway overtake copper very soon. He also presented data on the coverage boost from using CPE devices with external antennas, which is significant and another point in favour of fixed-wireless hybridity.

He remarked that deep-packet inspection is a CPU intensive task, and therefore costly.

Router design and operation is fundamentally about processing as many packets as possible in the dedicated hardware, without troubling the much slower CPU and software logic - some operations engineers use the number of cache misses (events when the hardware cache contains no matching entry and a packet has to be processed in software) as a performance metric. This should be a very serious consideration.

Cunliffe predicted that capacity would easily keep up with demand, but that prices for end users might rise in the short term.

Simon Drinkwater, who we mentioned earlier on, gave some details of LLNW’s work and estimated that CDN traffic was growing 18% year on year. He referred to the problems of handling “planned and unplanned crowds”, and said that he expected content providers to pay operators for preferential service, just as they did CDNs today. Interestingly, he also gave the impression that LLNW was increasingly interested in content management, analytics/reporting, transcoding and the like rather than pure CDNing - which might make sense if they expect their customers to be paying operators out of the budget their existing business comes from.

Philip Sheppard, director of network strategy at 3UK, introduced a data-heavy presentation which began by defining the constraints on coverage, capacity, and speed. He showed that the demand for mobile data had hit an inflection point in December, 2007, and had since been growing rapidly until it was now 20 times greater than voice in capacity terms.


3UK had made selling mobile broadband a priority, which had resulted in quality being a major challenge. Customer satisfaction ratings had fallen sharply in the second half of 2008. Interestingly, satisfaction with 3UK and T-Mobile UK starts to vary together very soon after the creation of their network-sharing joint venture, although it’s not been long enough to tell if this is also true of Orange.


They had addressed the challenge through a combination of network-sharing, capital investment, pricing, and traffic management. Between 2008 and 2010, the network had gone from 7,500 Node-Bs to 12,500, and from 90% to 98% population coverage, while upgrading the air interface from HSDPA 3.6Mbps to HSPA 7.2Mbps.

He stated that one of the biggest differences between traffic classes was sensitivity to latency, and that one of the main motivations for investing in LTE would be the promise of getting typical round-trip delay from 120ms down to 30. There was a trade-off between responsiveness for Web browsing and raw bandwidth.


Because they “had to say something about traffic management”, he described the breakdown of typical data traffic in the busy hour. 41% was streaming, 38% Web browsing, 7.6% SS-7 signalling and other network-infrastructure activity, and 6.4% P2P. In the busy hour in the busiest cells, 3UK is rate-limiting the P2P - and its own signalling traffic! Significant volumes of the P2P consisted of Microsoft Windows Update.


He introduced some data on the time profile of various device classes. Dongles peak at 9 p.m, while the iPad has a significantly more even distribution over the day with a faster ramp-up in the morning. However, like the iPhone, it was a significant source of extra signalling traffic. He stated that the data network was idle 60% of the time, and that this could be used to deliver content to Project Canvas or similar STBs as part of a two-sided business model.

Summing up, he stated that the cost of technology upgrades was relatively trivial (being largely software), and that since the network-sharing deals with T-Mobile UK and Orange, sites and backhaul were much less of a problem. Incremental costs were now primarily determined by spectrum.

When Telco 2.0 spoke to him later, we asked how much he thought 3UK would gain given a completely free hand to prioritise, block, and rate-limit traffic. He reckons that they might succeed in extending their upgrade cycle by 10% - a bit more than three months in the three-year accounting life of the equipment. He also stated that he didn’t consider voice to meaningfully cross-subsidise data - the additional costs of switching, numbering, interconnection, billing, and 999 made it a relatively expensive service to deliver.

Next up was Dominic Elliott, a consulting systems architect at Cisco Systems, who discussed some of the engineering challenges involved in delivering TV-scale video over the Internet. He made the point that video has the curious property that errors are both very obvious - the picture freezes or pixellates - and also recondite and difficult to debug. Broadcasters typically used a few dedicated, private TDM circuits to link their studios with the transmission towers - problems on one of them were immediately obvious, but this wouldn’t be the case on the Internet.

He remarked that he was personally very dissatisfied with one well-known IPTV provider’s service, although he thought that the CPE was part of the problem. In general, advanced CPE for TV was a difficult problem - so-called “set top boxes” tend to actually be “under the telly boxes” with restricted cooling, exposed to dust, dogs, and children. However, it was important to provide the end user with options, especially if prioritisation was considered. The technology existed for the user to make their own decisions on this.

He remarked that Cisco’s main priorities here were quality metrics and reporting, distributed systems, integrating CDN and broadcast, and traffic management. Interestingly, he suggested that traffic management included a large element of operations management - coping with disasters, as he put it - rather than prioritisation, DPI, etc. It would be very important to get real-time performance data. He pointed to a boom in direct peering with content providers and a tendency for CDNs to become more distributed and closer to the user.


He finished by remarking that capacity was solved, but that both the core and the edge of the network needed to be more intelligent. He warned that users expected TV to be very reliable, and that the cost of support would be a real issue.

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September 28, 2010

Guest Post: Blyk - A Message from the Advertising Industry

This guest post by Telco 2.0 partners Blyk contains useful guidance to operators and others seeking to grow the telco-enabled advertising and marketing business. Blyk will be at our EMEA Brainstorm, where we’ll be discussing some of the issues they raise in our Consumer 2.0 session.

You can also find more from Telco 2.0 on our research portal under ‘Advertising & Marketing’, including Mobile Advertising: 100 times more ‘eyeballs’ - Blyk’s Wholesale Strategy. There’s also a summary here of the links from the Telco 2.0 Best Practice Live! videos - ‘last chance to see’ - Tuesday 28th September 2010.

Listen to the Customer

As a provider of messaging media to MNO’s, we sit in an interesting position at Blyk. We spend half our time listening to Operators telling us what they think advertisers want, and the other half hearing what advertisers want from Operators. Considering the number of strategic conversations going on internally at Operators about how to work in a media environment dominated by Google, one might expect there to be attention to the messages emanating from the advertising industry. The message from advertisers is clear and in this article we attempt to clarify those messages and at the same time provide some advice about how to maximise the relevant opportunities.

Firstly, ‘mobile advertising’ itself is a multi-format opportunity. It is not unfair to argue that despite its relative immaturity, each major format is now serving a certain set of advertiser objectives where the release of advertising budget has some basic prerequisites.

Telcos need More Scale and Reach

Display advertising, however interactive the banner or link ultimately proves to be, is a game of scale. Its payment may be increasingly performance-related but there is usually a need for a seven-figure number of impressions to generate a four-figure number of clicks. With that kind of attention generation, then those with largest number of viewers will always be most attractive to advertisers. In that context we fail to see how Operators can compete individually in this area. The major ad networks and digital media giants have global reach and mass-market scale whereas Operators can only ever serve a proportion of their share of the market.

Create a Market, or Stop Wasting Our Time

This game is over - work with the major players to enable this ecosystem to flourish on your network or prepare to fail. What is certain is that the advertisers don’t want to deal with each network individually; instead a proactive approach would involve collaboration amongst operators to ensure the needed scale that attracts a bigger share of advertising spend.

The argument is similar when it comes to looking at Search advertising. Google isn’t necessarily the market leader in every territory but there are always one or two major players who likely have the market sewn up. Again, ‘if you can’t beat ‘em, join ‘em’. Why waste time trying to build your own mobile search opportunity when there is no evidence to suggest that’s what advertisers want you to do?

‘In-application’ advertising looks like a marketplace that will be dominated by handset manufacturers, or at least the providers of the application stores. Again, why should the networks even get a look-in here? Even if they provided their own-brand store to customers of other networks, the operators still don’t have the mass-market, global availability that the likes of Apple, Nokia or Blackberry do.

Some Depressing Numbers

Despite the generally positive growth trends, one very simple factor still undermines all three of these advertising formats. Numbers. Small numbers. Painfully small numbers. Last year Group M, one of the largest advertising agency groups in the world, stated that mobile advertising revenue made up 0.1% of their revenue - enough, in their speaker’s words, ‘to pay for a couple of receptionists’. The plea from such groups is to ‘get real’. Scale and reach are all that matter here.

Hopefully this isn’t starting to sound depressing if you’re in charge of advertising or strategy at an MNO. We’re simply suggesting that if you want to take a slice of the pie when it comes to monetising these formats then you will do better by collaborating with current market leaders. Generating advertising revenue from these formats is their raison d’etre, it is not so for Operators. If you can work with them, there may be a steady stream of cash building over the years, but there almost certainly won’t be if you choose to go it alone.

Permission + Data = Value

However, there is one format where we believe Operators hold a significant strategic advantage. Whether it is termed DM, D2C or labelled with whatever acronym is your personal favourite, gaining access to permissive customers on their phones is a consistently requested need from advertisers. In our view, no other type service provider can currently match Operators in their ability to reach customers on their phones directly.

Currently, direct access to customers is generally provided through messaging formats such as SMS and MMS. As the level of phone functionality increases globally, this may also take the form of e-mail, IM, and any other format where a message is pushed and a conversation started, directly to and on the phone.

For the advertisers, this advertising mechanic not only provides access but a deep, personalised data set, numerous opportunities to innovate and a pricing scheme that is nearly always directly related to performance. If you are a media owner that provides such an opportunity and your channel continues to perform for the advertiser, the flow of money in your direction should never cease. Other formats, where the true level of performance is rarely understood, will never command such unlimited budgets. In essence, get this format right and it will grow faster than any other format in your mobile advertising portfolio.

Some More Encouraging Numbers

At Blyk we have seen evidence of this. In the UK the company was generating over $1.5 of revenue from advertisers for every opted-in customer every month, sometimes up to $4.5. That was with an opted-in base of 250,000 and no obligation on the subscriber to respond to the message. With the scale of an Operator’s subscriber base, imagine what could be achieved for advertisers. Certainly operators such as Orange, O2, E-Plus, Vodafone, Maxis and Turkcell will testify to similarly exciting results in the early days of their own D2C strategies.

How to do it?

To conclude, we’d like to suggest how to execute such a D2C strategy to best effect. Of course any Operator can simply ask any of its subscribers to opt-in to receive advertising. But does simply receiving advertising add up to a sustainable, engaging User Experience? We would argue not.

Therefore it is encouraging to see an admittedly limited number of Operators understanding one key aspect of human behaviour. If you want me, the consumer, to enjoy something I wouldn’t normally choose to enjoy, serve it up with something I know I like. If you want your kids to eat fruit, maybe you give them yoghurt or ice cream at the same time. Maybe you even cut the fruit up into funny shapes. However you do it, you want your kids to enjoy the fruit, not just tolerate it. How does this have any relevance in media terms you ask?

Consumers want a Good Experience

Imagine if Vogue magazine published a magazine full of just ads. Now take another look at the real thing and congratulate the publisher on a product where neither the editorial nor the ads would work so well without the other. The editorial inspires the advertising content and vice versa. We believe that if Operators want to engage subscribers with the advertising it sells then the overall User Experience should consist of a mixture of editorial content and ads, so that it becomes a seamless, engaging, interactive whole. How that user proposition materialises might vary from demographic to demographic but the concept remains the same.

In summary, for Operators to succeed in mobile advertising it’s very simple. Give advertisers what they need, not what you need. Then deliver the advertising the way other media owners have for decades because they didn’t chance upon that formula by accident.

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Mobile Advertising: Making it Scale (Eventually)

From SMS, through Smartphone and browser Apps, the potential of mobile marketing has long been understood and yet unfulfilled. So what is the current status?

This post outlines our recent and new research on telco enabled advertising and marketing.

It’s also the VERY ‘last chance to see’ the material from our first ‘Best Practice Live!’ online event, with the videos coming offline on 28th September, so please watch the ones you want to see before they’re gone. The links are marked* below or can be found here. NB. You will need to register on the first page that the embedded links take you to, or log in if you’ve already registered. If you have any problems please email us at contact@telco2.net.

At ‘Best Practice Live!’ (see all the videos here) two great innovative examples of text-based advertising were presented: Telco 2.0’s search-based use case*; and one from Charlie Hunter-Schyff, Head of Media Planning, O2 Media showing how O2 used powerful customer data*. In video advertising, Eric McCabe, Partner, Ideas & Plans showed how localised screens are to be fired up to target passing users*, while Russell Buckley, Vice President of Global Alliances, AdMob showed how smartphones provide great functionality but campaigns also need to work on the smaller screen*. Nick Wiggin, Head of Advertising Strategy & Partnerships, Ericsson, showed how structural market innovation is also underway via Ericssons’ advertising intermediary service*.

In terms of our research, in Mobile Advertising and Marketing: Operator and Market Growth Strategies 2010 we give our forecasts, plus how Telcos can make the most of the powerful assets available to them to take a valuable role in this market before it is too late. In Mobile Advertising and Marketing: Text-based Local Search Use Case, we show a practical and detailed new application of Telco 2.0 ideas to Digital Marketing, including the customer experience and outline business case. We’ve also created a new category on our research portal titled Advertising & Marketing.

We’ve also just published a really interesting and useful Guest Post from Blyk - A Message from the Advertising Industry.

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September 27, 2010

Telco 2.0 News Review

Telco 2.0 Top Stories

[Ed - a reminder that we’ll be covering Disruptive Strategies, Fibre and ‘Net Neutrality’, Devices, and legitimate forms of Digital Entertainment at the Telco 2.0 Brainstorms: AMERICAS 27-28 October, L.A.; EMEA, London, 9-10 November 2010.]

France Telecom CEO Stéphane Richard is interviewed by Le Figaro, and blames the regulator ARCEP for slow fibre deployment, although he does credit Free with having a “real fibre strategy”. He also says that he’s convened a meeting with Vodafone and DTAG about starting a common operating system.

It’s possible that he may mean joining WAC, using LiMo/BONDI, etc. It’s certainly very hard to see what the case for yet another mobile OS is at the moment. However, he also suggested that it could be as little as a common “apps factory”.

The first connections to the Australian National Broadband Network are expected next month as part of a trial of the first roll-out in Tasmania. Telstra will be providing broadband and TV services over the wholesale Ethernet feed from NBN.

In the UK, community fibre builders held a conference to discuss their problems. Notably, although public-sector agencies have pulled their own fibre in some places, once they are connected to it, nobody else can be. It is worth noting that the US National Broadband Plan explicitly specifies that schools, town halls, and the like are priority cases for gigabit-class links, among other things so that munifibre networks can take advantage of their backhaul.

Some of the people involved found that they could lay fibre for £20 a metre, when BT’s official cost of doing so is £120/metre. However, the big problem remains the business rates attached to dark fibre, which the new government has allowed to remain in place. And the new special £20 tax on getting your broadband from someone who isn’t BT.

After years of litigation, the city of Lafayette, Louisiana finally succeeded in asserting its right to build a FTTH network. Now, they’re rubbing it in - users will now get 100Mbps symmetrical service to anywhere. To begin with, the network provided 50Mbps Internet service and a full 100Mbps to destinations within its own coverage. Now the distinction has gone.

The FCC may let educational institutions use their E-Rate subsidy to buy dark fibre.

In other network news, Verizon opens up 20 assorted APIs for developers, including “coarse location” and the intriguing “link-to-buy”. They’ve also formed a partnership with Bug Labs, which makes Linux-based modular devices - the idea is to encourage developers to build not just applications, but hardware to use through Verizon ODI.

Following last week’s deluge of Nokia news, the Nokians are hitting back: Peter-Paul Koch and Tomi Ahonen blast the critics and try to suggest a way forward. And don’t suggest using Android to either of them…

On the other hand, Stephen Elop was greeted in the CEO’s IKEA bunker by the news that the Nokia N8s have been delayed again. It’s hard to say quite what’s going on here - it could be Nokia’s tendency to analysis paralysis biting, or the shadow of the N97. It could also be a manufacturing or supply-chain issue - which would be very bad news, as this is usually their strength.

Meanwhile, there’s been a key hire: Peter Skillman, formerly Palm’s head of user interface design, has been summoned to banish cruft from future MeeGo and Symbian gadgets. Palm was traditionally considered to be one of the very best of the vendors at user interface/user experience design, so this may be a coup.

And there’s a review of the E5 business-optimised smartphone, a successor to the much loved E71. LG, meanwhile, has sacked the CEO.

Chatter continues about a possible deal between Clearwire and T-Mobile USA, under which T-Mobile would buy a stake in the WiMAX operator and get cheaper wholesale rates in return. Alternatively, Clearwire may decide to raise the funds for the next lot of roll-outs from the banks and sell some surplus spectrum. Relatedly, Sprint CEO Dan Hesse says they have no intention of applying tiered data pricing at the moment, and Clearwire users are averaging 7GB a month. Meanwhile, Vodacom exits from the South African WiMAX op, iBurst.

LightSquared has apparently secured a large loan, $750 million from UBS, and possibly an investment of $100 million from SK Telecom. Let’s hope it goes better for them than the one in Earthlink.

And based on Germany’s 800 and 2600MHz band auctions, it’s expected that the next UK spectrum auctions won’t start any fires.

Vodafone does it again: Samsung Galaxy S users got what they thought was an update to Android 2.2, but which was in fact a drop of Vodafone-branded software they’re not allowed to remove. This isn’t good execution. Meanwhile, T-Mobile UK pushed out the upgrade but forgot to pick the UK localisation, so the happy users found that everything was suddenly in German.

T-Mobile has recently had trouble with a location-based service. Weed Maps responded to SMS messages with the addresses of providers of medically-licensed marijuana near you, until T-Mobile cut them off.

Vodafone also managed to spill its users’ phone numbers and e-mail addresses to anyone who either knew (or could guess) the other piece of information or could guess the user name. It turned out that people who churned away from them years ago are still affected. A fix has been deployed.

A survey suggests that customers are not particularly moved by numbers of apps, nor are they impressed by stuff operators pre-load on their phones (not surprising, see the Vodafone update story…). On the other hand, Chinese users seem to get through a lot of J2ME applications, if the survey sample is valid.

Appcelerator, makers of a popular IDE for mobile developers, surveyed their users and found that they think Android is “best positioned to power a large number and variety of connected devices in the future”, and are also more interested in Google TV and Android-based tablets than the Apple equivalents. Again, typical caveats apply.

RIM is supposedly about to launch a tablet into the iPad’s face. Orange has launched a £99 Android smartphone with Android 2.1, most of the hardware features you’d expect, and a claimed battery life of 9 days stand by and 4 hours talktime, vastly better than any other ‘droid we’ve heard of. (Here’s the first mobile CPU with more cores than my laptop - apparently you can use it to warm your hands and make a nice hot cup of tea, as long as you don’t go too far from a socket.)

Facebook denies it’s working on its own phone. Bloomberg claims it is, with INQ Mobile. The explanation may just be that the INQ phone is going to be deployed into the North American market. Of course, the main story there this week was the mammoth outage. Zuckerberg speaks here on mobile strategy. Apparently he’s interested in “breadth not depth”.

The hackers who hijacked Comcast’s Web site have been sentenced to prison. The attack was simplicity itself - they posed as employees, got the password for an e-mail account used by their DNS administrators, and changed the DNS record to point at a machine they controlled. They got 18 months - this guy, however got 10 years. Edwin Andres Pena identified open ports inside AT&T’s network and used them to route large quantities of VoIP traffic, which he sold while posing as a genuine SIP carrier.

It was also the week they hacked Twitter - someone succeeded in introducing a snippet of JavaScript code into a link, which was executed when anyone’s mouse passed over it, re-tweeting itself.

Here’s a desk phone powered by Skype - Grandstream used the new SkypeKit SDK to implement most of Skype’s features inside a typical corporate phone form-factor. We can’t help thinking Skype looks trapped in there…

Fring has launched its own FringOut PSTN interconnection.

There’s a fund, paid for by 500 Startups, for anyone with a good idea based on Twilio’s Voice 2.0 API. David Burgess is back from the annual OpenBTS deployment at Burning Man. Photos are here; they recorded 40,000 unique IMSIs and handled 7,000 calls.

O2 is launching a monitoring service for the elderly and otherwise vulnerable - we somehow doubt they’re going to brand it “tag a granny”, though. Pity.

Selling stolen unblocking codes.

Another round in the crypto wars. And more.

Helmet cams.

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Cloud Services: Show Me the Money (and Profits)

Cloud Services is a topic that has attracted growing interest in recent years. But what are the realistic business models for Telcos?

This post outlines our recent and new research on Cloud Services, and how we will cover the developments on this topic at the Americas Brainstorm in L.A., 27-28 Oct, and the EMEA Brainstorm in London, 8-9 Nov.

It’s also the ‘last chance to see’ the material from our first ‘Best Practice Live!’ online event, with the videos coming offline on 28th September, so please watch the ones you want to see before they’re gone. The links are marked* below or can be found here. NB. You will need to register on the first page that the embedded links take you to, or log in if you’ve already registered. If you have any problems please email us at contact@telco2.net.

AT&T, Vodafone and KPN’s Cloud Strategies

At ‘Best Practice Live!’, Vodafone told us that they are putting “everything they can” in the cloud, including Vodafone 360 and Unified Communications (sorry, video no longer available) - a strategy of using the Cloud Services in its own business as part of the learning and service development process. Joe Weinman, VP Strategy, AT&T Business Solutions described AT&T’s approach* to Cloud, and Chris Hutchin, Vice President, Oracle Communications discussed how KPN reduced from 150 billing systems to 5*.

Telco 2.0 Agenda

What is the real opportunity for Telco’s in the Cloud? While the Telco’s have a strong reputation for delivering reliable network services, the current Cloud Services market is dominated by others. Is there a real opportunity to move Cloud services beyond their current “best efforts” service level and build a new generation of Cloud Services with Telco-grade reliability, security and support? If so, what strategies should Telco’s deploy to ensure that they capture a significant share of the future profits?

Hypothesis Being Tested

• There is significant current and future demand for Telco’s to provide a set of next generation Cloud Services
• Telco’s have sufficient assets and skills to build a competitive advantage in providing these Cloud Services
• Telco’s can build upon their current network services to provide further significant benefit to their customers

Key Questions to Debate:

• Where are the majority of cloud service revenues likely to accrue: b2c or b2b services?
• Where are the gaps in Telco capabilities and who should Telco’s partner with to fill these gaps?
• What are the pitfalls that Telco’s should avoid?
• Who are the likely competitors and how can Telco’s differentiate their services?

Next Steps

This agenda on Cloud Services will be addressed on Day 1 of the Americas Brainstorm in LA, and Day 1 of the EMEA Brainstorm in London. We will also be conducting further research in this area.

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September 24, 2010

Machine-to-Machine (M2M): Coming of Age?

The application of ‘Horizontal’ / ‘two-sided’ business models looks to be a key part of an effective growth strategy for operators, and has excited great interest and debate at our recent events.

This post outlines our recent and new research on M2M, and how we will cover the developments on this topic at the Americas Brainstorm in L.A., 27-28 Oct, and the EMEA Brainstorm in London, 8-9 Nov.

It’s also the ‘last chance to see’ the material from our first ‘Best Practice Live!’ online event, with the videos coming offline on 28th September, so please watch the ones you want to see before they’re gone. The links are marked* below or can be found here. NB. You will need to register on the first page that the embedded links take you to, or log in if you’ve already registered. If you have any problems please email us at contact@telco2.net.

Latest M2M Analysis & Examples

Enterprise 2.0: Machine-to-machine - opening for business is a Telco 2.0 summary and analysis of leading-edge progress, including an advanced case study from Telenor Objects (also in video form here*), and new research from Intel, Ericsson and SAP. M2M / Embedded Market Overview, Healthcare Focus, and Strategic Options gives an overview of the market, focusing on the cost-crisis needs of the Healthcare Sector, and reviewing strategic options for Telcos and other communications industry players. We’ve also created a new M2M and Embedded category on our research portal.

At ‘Best Practice Live!’, Theodore Forbath, Vice President, Aricent, examined the latest M2M ARPUs and near term growth opportunities*. In the longer term, Ken Figueredo, Principal, Ventura described how M2M needs to move beyond traditional but subscale industrial opportunities to develop the ‘M2M horizontal play*’, and Marie Austenaa, VP Strategy & Products, talked about Telenor Objects* which is a radical new example.

Next Steps

M2M and Embedded are featured in the last session on Day 1 at the Americas Brainstorm, and in the whole morning of Day 2 at the EMEA Brainstorm. Key issues being discussed include opportunities outside connectivity, ‘the internet of things’, the role of horizontal business models, and the relative impact of different wireless technologies (3G, LTE, WiMax, etc.) on M2M.

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September 23, 2010

What’s next for Broadband?

Much recent debate has been focused around ‘Net Neutrality’, and we’ve published our analysis on this in Net Neutrality 2.0: Don’t Block the Pipe, Lubricate the Market. This post outlines our recent and new research on this and Future Broadband Business Models, and how we will cover the developments on this topic at the Americas Brainstorm in L.A., 27-28 Oct, and the EMEA Brainstorm in London, 8-9 Nov.

It’s also the ‘last chance to see’ the material from our first ‘Best Practice Live!’ online event, with the videos coming offline on 28th September, so please watch the ones you want to see before they’re gone. The links are marked* below or can be found here. NB. You will need to register on the first page that the embedded links take you to, or log in if you’ve already registered. If you have any problems please email us at contact@telco2.net.

Future Broadband Business Models

We’ve published a number of strategy reports on Future Broadband Business Models, including the recent New Strategy Report: Mobile, Fixed and Wholesale Broadband Business Models, covering analysis of the latest new ideas in broadband business model innovation, new ‘Telco 2.0’ Opportunities, global forecasts, four future strategic scenarios, and a detailed Managed Offload ‘Use Case’.

In Optimising Mobile Broadband Economics: Key Issues and Next Steps we reported on key issues for mobile operators, and in LTE: ‘Longer Term Enthusiasm’? we described the increasing momentum building for the next generation mobile technology.

Broadband Myths and Maths

In ‘Best Practice Live!’, we focused on mobile broadband, and Dean Bubley of Disruptive Analysis blew apart myths* surrounding the broadband incentive problem, apps-based charging and DPI. His message to operators is clear - concentrate on what you can control in the networks and keep it simple for consumers. Ericsson’s Head of Mobile Broadband, Magnus Ewerbring talked about big numbers* - 3.5 billion mobile broadband subscribers by 2015; 50 billion connections by 2020; operators with greater revenue from data than voice and so on. Ewerbring explains how, where and why these numbers are turning from slideware to reality and the importance of speed to consumers and operators.

Our Agenda

At the Americas and EMEA Brainstorms, we will explore the overall landscape of ‘Net Neutrality’. Based on a set of use cases indicative of the different business models that could be created and supported using prioritisation, traffic shaping and policy management techniques, these sessions will explain the implications of different net neutrality regulatory approaches on these and identify ways to mitigate the impact of regulation.

Hypothesis being tested:

• Multiple mobile broadband and fibre networks are being built without a clear enough understanding of the ideal ‘end state’ in terms of business models that will be attractive to different stakeholders and commercially sustainable for infrastructure providers.
• As a result Net Neutrality debates are being conducted in a semi vacuum.
• The ability to prioritise, constrain, and shape traffic enables new business models for all players in the telecoms, media and technology sector, which can be highly beneficial to consumers and citizens as well.
• There are different models that telcos can adopt depending the severity of legislation
• There are alternative technologies that can provide telcos with the flexibility to support some of new business models if net neutrality regulation makes shaping and management impossible.

Key questions to debate:

• What is the ideal ‘end-state’ for broadband networks?
• What are the new business models enabled by prioritisation, traffic shaping and policy management?
• How important are these business models to the development of Telco 2.0 businesses? How much flexibility and control do telcos need in order to support these?
• What are the possible benefits of these models for content owners, application service providers, public service providers and consumers?
• What are acceptable use cases for techniques such as DPI and policy management? Does prioritisation of one service/application automatically deprioritise others?
• At what point does net neutrality regulation have a severe impact on business model development?
• Are there alternative technology solutions that comply with regulations but offer telcos flexibility? Which models do these support?

Next Steps

We’ll be publishing more on Net Neutrality, and discussing our analysis in depth on Day 1 of the Americas Brainstorm, 27-18 Nov, L.A., and Day 1 of the EMEA Brainstorm, 9-10 Nov, 2010.

We’ve also made articles on Broadband easier to find under on our research portal under the category headings of Future Broadband.

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September 21, 2010

Facebook, Google, Apple: User Data, Apps, and Augmented Reality

Dr. Eric Schmidt, Google’s CEO, sometimes talks of ‘computer-assisted people’, part of Google’s vision being that the world will comprise those who use the power of the internet and the world’s computing resources to aid their everyday lives, and those who don’t. In parallel to the libertarian ideal that everyone possible should get the opportunity to be ‘assisted’, the economic reality of Google’s (and others’) rationale is that those with the assistance will be richer and better customers for their services.

Consumer Data - the Key Asset

Access to consumer data (e.g. call records, browsing histories, the contents of retail shopping carts, finance records), and information about and from the world around us (‘the internet of things’), are key enabling pieces of the business model. Consumer data can provide a lot of answers to the questions of this computer assisted world: “who are you, who are your friends, what do you buy, what are you interested in, what can you spend?” Google is one of an increasing number of players who’s data-matching expertise can bridge between these questions and their solutions and answers, most critically “where is what you want and how can you most easily get this”?

“Re-Thinking Personal Information”

Telco 2.0 is part of a team (which includes MIT, Harvard Berkman Center, Bain & Co and Invention Arts) working with the World Economic Forum on a project called “Re-Thinking Personal Information”. We’ll be discussing this at our Consumer 2.0 sessions on Day 2 of the Americas Brainstorm, 27-18 Nov, L.A., and Day 2 of the EMEA Brainstorm, 9-10 Nov, 2010.

In the rest of this article, we look at:

  • The theoretical framework for the new Consumer Information Economy;

  • The opportunities for telcos and others;

  • The roles of Apps, ‘Augmented Reality’, and adjacent players like Google, Facebook, Apple and Microsoft.

This is the third of five daily posts this week, summarising our recent and new research for the Americas Brainstorm in L.A., 27-28 Oct, and the EMEA Brainstorm in London, 8-9 Nov. It’s also the ‘last chance to see’ the material from our first ‘Best Practice Live!’ online event, with the videos coming offline on 28th September, so please watch the ones you want to see before they’re gone. The links are marked* below or can be found here. NB. You will need to register on the first page that the embedded links take you to, or log in if you’ve already registered. If you have any problems please email us at contact@telco2.net.

Telco 2.0 Analytical Framework

In Can Telcos Unlock the Value of their Consumer Data?, we provided an analytical framework to understand the many applications of consumer data (see below), in addition to expert contributions and detailed analysis on ‘best and next practice’ on privacy issues, legal and regulatory frameworks, technological solutions, adjacent competition, and scenario analysis.

user data diagram sep 2010.png

Source: Telco 2.0

(NB. Philip Laidler gives a great description of how to use the framework in his ‘Best Practice Live!’ presentation*.)

Telcos have the opportunity to act in many areas of this new information economy, in roles from a passive provider of certain anonymous elements of data, through to acting as custodians of ‘digital personas’, giving consumers the power to exploit and manage their own data and identities.

We’ve previously highlighted the relative strengths of Google and the telcos in this regard, and our forward agenda is to:

  • Describe the emerging structure of the information economy;

  • Detail the activities of the main players in this field - Facebook, Google, Apple, Microsoft;

  • Define the optimum roles for telcos, including ‘Use Cases’ as examples;

  • Size the opportunity for telcos.

The World Outside Telcos Will Drive the New Information Economy

At ‘Best Practice Live!’, Prof. Alex ‘Sandy’ Pentland, Human Dynamics Lab, MIT gave a fascinating overview of the latest techniques in ‘reality mining*’ - how development efforts are creating new information technologies that can extract extraordinary insights from masses of raw data. William Hoffman, Associate Director, World Economic Forum (who we’re working with in this area) showed that the key to enabling the wider ecosystem* is achieving wins for all parties, especially the consumer - a key principle we outlined in Consumer Data & Privacy 2.0: Give Customers the Power. Marc Davis, Chief Scientist and Co-Founder, Invention Arts, another visionary and friend of Telco 2.0 now at Microsoft, gave a glimpse of the possibilities of this future*, describing customer data as the ‘crude oil’, and asking what the trading and distribution infrastructure should be.

The economy based on this ‘crude oil’ is still in an early stage of development, and in parallel to the huge developments underway in the equivalents of the drilling and by-product manufacturing processes (think of the development of the plastics industry), the distribution and consumption processes are equally nascent.

Apps: New Kids on the Block

While The Internet is arguably approaching early middle-age, Apps are a relatively new phenomenon, described by Ilja Laures, the CEO of Getjar, as developmentally equivalent to a 1990 website.

Apps, in their current environment of the smartphone, are subject to four particularly interesting developmental forces compared to PC based services.

  1. Apps need to operate as simply as possible on the limited screen of a mobile.

  2. Because they are by definition mobile, location information is particularly useful to Apps.

  3. Mobiles are much more strongly tied to an individual and therefore that individual’s identity.

  4. Consequently, the more personalised and detailed the set up of an App, the more useful they can be to the user.

While some Apps are simply games that are downloaded to the phone, many of the most useful and ultimately monetisable Apps connect to other information sources remotely to aggregate limited sets of information, e.g. a train time-tables for specific journeys based on the user’s location and preferences.

At ‘Best PracticeLive!, Ibrahim Gedeon, CTO, TELUS described the key role of consumer identity data in ‘One API vs Appstores*’, while Tom Hume, Managing Director, Future Platforms, discussed how to make appstores work for developers*.

Augmented Reality: Different Words, Similar Concept

‘Augmented Reality’ (AR) is another term related to the idea of ‘computer assisted people’ and an area in which we are researching the opportunity for telcos for the forthcoming events and our overall research agenda. Apps and location based services are a mobile manifestation of AR, but there are also other aspects, and Roberto Saracco, Director of the Future Centre, Telecom Italia, gave a great ‘Best Practice Live!’ presentation on how telcos can play a central role in the AR business model*.

The Roles of Adjacent Market Players

Google, Apple, Facebook, and Microsoft are all aiming to be significant players in the new Information Economy, albeit with very different objectives and strategies.

In addition to Google: Where to cooperate? Where to compete? that analysed Google’s strategy and recommended of how service providers can plan ‘coopetition’, and articles like ‘How Google’s Chief Magician Stole the Show’ from the 2010 GSMA World Congress, Google is a company that we will continue to cover.

In ‘Best Practice Live!’ we looked at how Google is looking to use its $25Bn cash pile* to expand from the PC and into the mobile and the TV and to develop new services, and at the realistic threats, opportunities, and strategies* for the telecoms industry.

Next Steps

Our next Google features will examine the rise of Android, and Google’s cunning plan to use a two-sided business model to generate extra revenues from copyright protection in YouTube.

In addition, we’re writing major new Executive Briefings on Facebook and Apple, examining their strategies, and the related opportunities and threats for telcos and others in the industry.

We’ll be discussing our Facebook analysis on Day 2 of the Americas Brainstorm, 27-18 Nov, L.A., and Day 1 of the EMEA Brainstorm, 9-10 Nov, 2010.

We’ve also made articles on these topics easier to find under on our research portal under the following headings:

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September 20, 2010

Digital Entertainment 2.0: New Growth Opportunities

This post on new Telco 2.0 opportunities in Digital Entertainment is the second of our daily posts this week, summarising our recent and new research for the Americas Brainstorm in L.A., 27-28 Oct, and the EMEA Brainstorm in London, 8-9 Nov.

It’s also the ‘last chance to see’ the material from our first ‘Best Practice Live!’ online event, with the videos coming offline on 28th September, so please watch the ones you want to see before they’re gone. The links are marked* below or can be found here). NB. You will need to register on the first page that the embedded links take you to, or log in if you’ve already registered. If you have any problems please email us at contact@telco2.net.

Digital Entertainment 2.0: New Growth Opportunities

In Entertainment 2.0: New Sources of Revenue for Telcos?, we showed how telco assets and capabilities could be used much more to help Film, TV and Gaming companies optimize their business model, which is under pressure from new players applying new forces as outlined in our notes on Apple and Netflix.

But what should telcos and other players do to take advantage of these opportunities?

Tackling the Opportunities

We articulated four of these new opportunities* for telcos to monetise this market at ‘Best Practice Live!’, while David Touve, Assistant Professor of Strategy, Washington & Lee University, argued that telcos are at the centre of the digital entertainment value chain*, and Antonio Pavolini, Strategy, Telecom Italia showed how Telecom Italia’s ‘two-sided’ strategy enables telcos to deliver the ‘3 Screen’ Experience*.

In the next phase of analysis, the upcoming Digital Entertainment 2.0 Executive Brainstorms, which are co-located with our Americas and EMEA Telco 2.0 Braintorms, will focus on the following topics.

  • Disruptive strategies and business models: Extracting lessons from the key ‘digital entertainment’ market approaches being experimented with today internationally.
  • Defining the next ‘TV’ experience: Fully exploiting 3-screen capabilities, ‘content anywhere’ (digital locker) and creating a differentiated end-user experience.
  • Optimising the Entertainment Supply Chain: New methods for content delivery, asset management, and workflow efficiency.
  • New Direct-to-Consumer Entertainment Services: Leveraging telco consumer data and reach to create new commerce and advertising platforms.
  • Impact of New Devices on Consumer Entertainment: The role of new devices (iPads etc) in enabling richer consumer interaction.
There’s a great line up of speakers, including CxOs and SVPs from Sony, Fox Networks, Disney, France Telecom/Orange, AT&T, Comscore, YouView, Lovefilm, Televisa, Vodafone, and Turner Entertainment.

We’re also working on new analysis on Apple’s business model, the eReader market, and further research to underpin our Brainstorm agenda.

To Join In

Please visit ‘Best Practice Live!’ before 28th Sept 2010 for a last chance to see the videos, join us at the Americas Brainstorm in L.A., 27-28 Oct, and the EMEA Brainstorm in London, 8-9 Nov, and use our research portal at www.telco2research.com to keep up with our ongoing analysis.

We’ve also made Digital Entertainment 2.0 articles easier to find under on our research portal under Entertainment & Content.

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Telco 2.0 News Review

Telco 2.0 News Review

[Ed - we’ll be covering Devices, Apps, Apple’s and Google’s strategies and more at the Telco 2.0 Brainstorms: AMERICAS 27-28 October, L.A.; EMEA, London, 9-10 November 2010.]

On his way out of the door, Anssi Vanjöki announced that the Nokia N8 had accumulated more pre-orders than any previous Nokia device, as Nokia announced a gaggle of other new phones, including a couple of C-series consumer devices and the E7, a business-optimised QWERTY device described as the “heir to the Communicator”. Nokia shares fell somewhat.

On the other hand, Wireless Watch gives a rundown of reasons to be cheerful - after all, back when Motorola made good phones, they did very well concentrating on North America. There’s no reason why Nokia couldn’t build on its strength in Europe, Asia, Africa, and essentially all the non-American parts of the world. The company has operations excellence on its side - when was the last time they shipped a gadget whose cellular radio didn’t work like Apple, had a wave of strikes like Foxconn, or set an industry record for returns like Moto did with the RAZR? - and they have a major strength in the bits of marketing that involve boring stuff like channels, partners, supply chains, and shopkeeping in general.

Interestingly, they’re putting a lot of resources into development of Symbian Series 40, the mass market software platform, and building a flavour of the Ovi app store to deliver apps optimised for the Series 40 phones on a localised basis. After all, it seems that 24% of Americans use mobile apps, according to a survey. (On the other hand, 11% of those surveyed didn’t know if they did or not.)

So while everyone’s waiting for MeeGo smartphones, perhaps we should be watching the mass-market division headed by Mary McDowell more closely? It’s called “Mobile Phones”, after all. Better than endless Facebook phone!!! rumours - or the MeeGo appstore with no apps in it.

Perhaps a more interesting Facebook story: are they launching a war on the virtual currency market? It was a key element in QQ’s success.

Vodafone CEO Vittorio Colao took the opportunity of a trip to Nokia World to warn everyone to expect tiered pricing on mobile data in the future, rather like Vodafone’s planned LTE pricing in Germany. O2 UK, for their part, suddenly cut the data bundle that goes with the iPad.

Meanwhile, there’s a significant upgrade to Ovi Maps - its route planner now has public transport information and can advise you about trains and trams, but not buses yet, and it’s gained Foursquare-like social functionality. It still probably doesn’t have €8bn worth of a business model.

Elsewhere, RIM reported results, with 4.5 million new BlackBerry users and net income of $800m. Samsung is having a vote on the best app in its Bada Developer Challenge - which will be some fun as all of them were developed in the emulator, because there weren’t enough Samsung Waves to go around. It will be interesting to see what breaks when they are deployed. And the point is well made, in the run-up to Oracle Openworld, that a major reason why Java ME has been overtaken by Apple, Android etc is the horrible code-signing, testing, and distribution process. You may recall our Nokia vs. Apple note.

Verizon is reported to be looking at the upgrade path for its GPON fibre-to-the-home net, while a muni network in Chattanooga is advertising the first 1Gbps residential service in the US, a snip at $350. Meanwhile in the UK, we have the latest implementation of RFC-1149 - 1149, you may remember, specifies how the Internet should handle data transfer by carrier pigeon. In this case, a successful test achieved a data rate of 533Kbps, which was faster than a comparable link using no pigeons. Some people may be amused, in the light of recent events, by the fact that the authors of RFC1149 foresaw an explicit pecking order for different classes of service.

The relatively good news is that BT won’t be charging its existing customers extra to migrate to FTTC when it arrives. If you’re wondering, a list of scheduled exchange upgrades has found its way into the forums over there. Infrastructure is fun - it also turns out that one issue is that a significant number of BT lines still need the white plastic NTE5 socket installing, instead of the old grey box on the wall, before the fibre shows up.

But this weekend, there was no further progress on the job in much of London: has the IETF tackled this problem yet? Perhaps we need a new standard for Explicit Pope Notification.

In the US, the FCC decision on the so-called white space spectrum is expected next week. Northwestern University has carried out a study, meanwhile, that shows that having a duopoly tends to keep prices high.

Singapore impressed everyone with its plans to build a national gigabit fibre network, with open access at layers 3 to zero. Now they’re looking at what they might want to push over the fibre. Specifically, they’re the latest country to look at moving TV onto the Internet. There’s a call out for proposals for a “Next Generation Interactive Multimedia, Application and Services Platform”, which sounds a lot like the back-end element of Project Canvas.

Canvas is showing more and more signs of life. The latest announcement is that it’s grown an operating company and a friendly consumer-facing brand: “YouView”.

In other video news, here’s a glimpse of Google’s content-fingerprinting technology in action - this seems to be the solution for YouTube, in the end. The magic detects if what you’re uploading has been registered with them as copyrighted, and tells other bits of Google to stick adverts next to it. The rightsholder gets a share of the ad revenue. Problem solved, in a Google way.

Samsung wants to be your content centre with its Media Hub product. Boring old TV has some good ideas too - ABC has done an iPad app in support of its My Generation series, that knows what’s happening on the TV screen because it gets messages hidden in the soundtrack. Neat (and a canny re-use of Teddy Ruxpin).

Looking at peer-to-peer video rather than TV, after Cisco’s Cius enterprise-optimised conferencing tablet, here comes Avaya’s take on the same idea. Like Cisco’s, Avaya’s device runs Android, but it’s notably more expensive, bigger, and less mobile-focused. It comes with their Ace application developer SDK (there’s a developer kit for Avaya? who knew?). GMail’s video features get an upgrade. And will Samsung’s new Galaxy Tab beat your network senseless with…video calls?

Neelie Kroes was here - roughly the message from the European Commission, which has set targets for the deployment of next-generation access and declared that open access to both wholesale service and dark fibre is essential. In Italy, though, talks have broken down between the group of three altnets who are building their own shared FTTH network and Telecom Italia. Perhaps it’s not surprising with things like this happening? The result would seem to be that they’re going to compete to roll out the fibre.

Some people in Britain, as we have seen, are desperate enough for broadband that they’re willing to use USB sticks taped to pigeons. A new alternative to this would seem to be buying Internet transit from the Government of Iran. Renesys has two excellent posts - here and here - on how the Iranian wholesale monopoly (DCI) is becoming a significant transit provider to Afghan, Iraqi, and possibly Pakistani networks.

Perhaps they should beware of Persians bearing bandwidth. Last week’s Haystack affair defies summary, but there’s really no need to do anything else than reading Evgeny Morozov’s outstanding reporting. There’s a useful roundup here. Pro tip: if you’re working on a tool to help Iranians get around the national censorproxy deployed in DCI’s core network, it’s probably best not to test it on real live dissidents.

Of course, the secret police could just get you to log into MS Exchange and then erase all your stuff.

With the arrival of the submarine cables in East Africa, the Internet has evolved rapidly around there. Where it used to be international bandwidth that was scarce, suddenly it’s metro- and regional transit and dark fibre, data centres, and the like. Kenya Data Networks is going all-wholesale as a result.

That’s the pattern everywhere, really - Telegeography reports that Internet traffic grew 56% in 2009-2010, but capacity utilisation remained safely in the 50-60% band, while prices fell.

Telenor and Telefonica have started a new partnership for their large enterprise customers. As far as we know, it’s all about the connectivity at the moment, although we do wonder if some of Telenor’s Telco 2.0 products couldn’t be marketed into Telefonica’s customer base.

Developing in Flash, inside Skype.

The “razor and blades” business model is a myth.

HDMI video hacked, although you’ll need either a data centre or some very special hardware. Steve Jobs is rude. Computer Weekly’s archives go to Bletchley Park. Fixing France Telecom’s sick workplaces. Die! Telco Die!

The 10 words users apply to the best apps, and the worst apps.

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September 18, 2010

The ‘Big Picture’: Disruptive Strategies for Growth

This week, we’re publishing a post each day that summarises our recent research in key areas, and the new research we’re working on for the Americas Brainstorm in L.A., 27-28 Oct, and the EMEA Brainstorm in London, 8-9 Nov. It’s also the ‘last chance to see’ the material from our first ‘Best Practice Live!’ online event, with the videos coming offline on 28th September, so please watch the ones you want to see before they’re gone.

NB. To watch the ‘Best Practice Live!’ videos in this post (links marked* below or here) you will need to register on the first page that the embedded links take you to, or log in if you’ve already registered. If you have any problems please email us at contact@telco2.net.

Disruptive Strategies for Growth

We’re currently working on a major new research report, titled ‘The Roadmap to New Telco Business Models’, articulating our perspective on the development of new and ‘Two-Sided’ Telecoms Business models initially described in The $125Bn ‘Two-Sided’ Telecoms Market Opportunity, and following on from the recently published report Telco 2.0 Case Directory - 5 ‘Use Cases’, 10 Case Studies. This new ‘Roadmap’ report examines international comparisons of operator strategies against our innovation framework, and explores what different types of operator should be doing in each region to maximise their chances of success in a Telco 2.0 world.

As part of this, we’ve developed ‘Ten Principles for Disruptive Innovation’ that we’ll be featuring at the forthcoming events. But why do we think it’s necessary for operators to think and act differently, and what should they do?

An Uncertain Environment

The post-Credit Crunch global economy is still highly uncertain, and teetering on stagnation. Yet investors and cash rich tech companies are faced with the most dynamic period of technology innovation for 15 years, irrational valuations, and economic uncertainty - so what will they do? See this Investor View*.

In New Telco Growth: is Time Running Out? We argued that at a time when telcos are being re-rated as quasi utilities by investors, the importance of creating sophisticated and effective strategies for new growth is becoming ever more pressing. The clock is ticking fast and the opportunity could slip away from Telcos as nimbler competitors from adjacent industries take the value.

These forces for change are not new, and have been seen in other markets, so what lessons can be learned from Opera and the Browser Wars* and Amazon’s ‘Flywheel’* business model concept?

Time to Change

It is now becoming widely accepted that the existing Telco 1.0 business model is under pressure, but how should the Telecoms industry think about developing new business models with new customers, revenue sources, cost profiles?

In Telecoms 2015: New Game, New Players, but Who Wins? we argued that the connected ‘digital economy’, underpinned by telecoms, is evolving fast, and examined scenarios of how will it play out in the next 5 years, the rules, and who is likely to win.

So what should operators and vendors do to counter threats and exploit potential ‘Telco 2.0’ opportunities in this environment?

The View from the Top

In the ‘Best Practice Live!’ sessions, senior keynote speakers gave their views:

Ericsson’s CEO* gave his vision of how the future roles of telcos and vendors will change;
Deutsche Telekom’s CTO* presented on strategy, new revenues, cloud services, and the WAC;
BT Wholesale’s CEO* discussed new models of operator wholesale consolidation driven by the ‘20 x’ data explosion;
Telco 2.0’s CEO* described how business model innovation is instigated by leading telco exponents such as Vodafone and adjacent players like Amazon;
Telco 2.0’s MD* described the “gold ore” model of the API value chain and operator collaborative payment services.

What’s Next?

At the next brainstorms, STL Partners/Telco 2.0 Initiative will share extracts from the upcoming new ‘Roadmap’ research, and there are great new line ups of Americas speakers and EMEA Speakers. The agenda on ‘Disruptive Growth Strategies’ covers the following hypothesis:

• Traditional voice and messaging services are being replicated or bettered by freemium internet services;
• A future based on access and connectivity is one of low-growth and low-margin for the Telecoms industry;
• Fresh thinking is needed to determine how the Telecoms industry can add more value and what specific steps are required to deliver this;
• Different strategies will be required for different types of operator;
• Selective collaboration among operators will be required to realise success.

Key questions to debate:

• What principles should the industry consider when developing new strategies and business model?
• What specific opportunity areas will drive value creation and growth in the next 5 years?
• What should the industry do more of/less of/differently to exploit the opportunity areas?
• Where and how should operators collaborate?
• What should different types of operators be doing to mitigate risk and maximise their chances of success?

How to Join In:

Please visit ‘Best Practice Live!’ before 28th Sept 2010 for a last chance to see the videos, join us at the Americas Brainstorm in L.A., 27-28 Oct, and the EMEA Brainstorm in London, 8-9 Nov, and use our research portal at www.telco2research.com to keep up with our ongoing analysis.

We’ve also made strategy articles easier to find under on our research portal under Strategy & Finance.

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September 17, 2010

Net Neutrality 2.0: Don’t Block the Pipe, Lubricate the Market

Telco 2.0’s response to the issue of ‘Net Neutrality’ is now available in full on our Research website here.


‘Net Neutrality’ has gathered increasing momentum as a market issue, with AT&T, Verizon, major European telcos and Google and others all making their points in advance of the Ofcom, EC, and FCC consultation processes.

‘Net Neutrality 2.0: Don’t Block the Pipe, Lubricate the Market’ is our input to these processes.

Telco 2.0’s Position in Summary

We recommend that the appropriate general response to concerns over ‘Net Neutrality’ is to make it easier for customers to understand what they should expect, and what they actually get, from their broadband service, rather than impose strict technical rules or regulation about how ISPs should manage their networks.

The paper summarises the issues, analyses the causes and effects, and gives our recommendations on ‘best practice’ in traffic management and how to regulate it.

Next Steps

We’ll be discussing ‘Net Neutrality’, and working through key traffic management ‘Use Cases’ identified in the paper, at the next Telco 2.0 Executive Brainstorms - Americas Los Angeles, October 27-28, and EMEA, London, November 9-10, 2010.

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September 13, 2010

Telco 2.0 News Review

Telco 2.0 Top Stories

[Ed - a diary reminder that we’ll be covering Device Strategies, Online Video and Entertainment 2.0, ‘Net Neutrality’ and more at the Telco 2.0 Brainstorms: AMERICAS 27-28 October, L.A.; EMEA, London, 9-10 November 2010.]

It’s Nokia World this week, although you might think that isn’t quite the biggest story in the Nokiasphere today. Olli-Pekka Kallasvuo is off, and the new CEO is Stephen Elop. Who he? The former head of the Office division within Microsoft, and the first non-Finn in the top spot at Nokia.

He’s not the only one leaving - so is Anssi Vanjöki, who had taken charge of the newly created smartphones/software/services division (Mobile Solutions) as recently as July, and who appears to have ‘walked’. Elop takes over on the 21st, Vanjöki has to work out six months’ notice.

There is, of course, much comment out there. A lot is going to depend on how Elop works with the existing and highly effective manufacturing/supply chain organisation. Nokia’s biggest challenge, however, is the fight against commoditisation, as a great chart makes clear.

Merrill Lynch analysts are convinced that the Nokia N8 is going to be a hit and bring in at least $1bn in operating profit in the first year, which could be counted as a brave prediction. Details of the launch are filtering through - it looks like the gadget will go on direct sale any minute now at a price of £429, with a carrier launch on both sides of the Atlantic on the 1st October. That’s more publicity than Nokia Home Music is getting.

On the theme of Nokia services disappearing from view, see the sad story of Dopplr - the company blog of the social network devoted to travel reviews they bought in September 2009 hasn’t been updated since and traffic ratings are remorselessly sinking.

In other Nokia news, their data-compressing web browser for Series 40 featurephones is being deployed in production. Fortunately, they’ve also invented M-Cube, the Mobile Maturity Management Model, which looks to be a major innovation in slideware.

ComScore’s latest numbers on streaming video are out, and they will puree your routers - the streaming of live events is up 600% year on year. It comes with a dramatic chart.


At the same time, Blue Coat warns that the addition of HD video and automatic downloads to the BBC iPlayer might whack your network silly. And even YouTube has announced a trial of live streaming with four selected partners (presumably another element in the monetisation strategy).

AT&T’s lobbyists have discovered DIFFSERV, the Internet standard for quality-of-service management. How long before they realise that they could have their routers honour the type-of-service flags and let their customers pick what they want prioritising?

The good news is that at least the BBC’s video delivery strategy is falling into place. Hence the deal with BT to build a really enormous Cisco Systems CDN, with a new private IP network to link broadcasters with the CDN ingestion points. It’s in support of Project Canvas, the UK broadcasters’ planned standard for smarter video delivery. We recently caught up with Canvas CTO Anthony Rose - there are some interesting things planned with edge-caching, storage, and broadcast-broadband integration.

At the same time, though, the BBC is also looking to point its giant video firehose at targets outside the UK - there’s now a director of iPlayer within the broadcaster’s commercial wing, BBC Worldwide.

At IFA in Berlin, Google has demonstrated Google TV and given some details. The idea seems to be mostly an unified user interface between broadcast TV, locally-stored content, IPTV, and Web video. Some special remote controls and other hardware are expected soon, and Android apps will be coming in early 2011. However, the Google TVs themselves won’t have a hard disk and therefore won’t do DVR, although they should work with third party DVRs.

Android tablets are spilling out all over the place, but at the moment it looks like existing apps won’t run on them. 3UK is offering, if you’re interested. There’s also an update to the Google Voice app.

On the other side of the new great divide, Apple has announced that apps written in Flash will now be accepted in the App Store, although they still have a restriction on anything intended to “stimulate erotic rather than aesthetic or emotional feelings” and anything that isn’t either “useful” or “providing lasting entertainment”. It’s nothing but fun in Cupertino. Meanwhile, the latest version of iTunes is criticised.

RIM’s BlackBerry World is up to 10,000 apps. Meanwhile, they’ve bought the company that makes Documents To Go, the mobile plugin for interacting with MS Office files. Not that much fun in Waterloo, Ontario either, come to think of it.

What’s even less fun than reverse-engineering MS Office formats and implementing your solution on a mobile device with a screen the size of a postage stamp and strictly limited battery life? What about sharing cell sites and electric power? Ericsson proudly announces that it’s combined the 10,000th cell site in 3UK and T-Mobile’s (and now Orange’s) joint venture, MBNL. On the other hand, while it may not be riotous fun, there’s a particular joy in improvements to the bottom line, and we’d be interested to know what real cost savings they’re seeing.

Poland’s regulator has given two of its operators, PTK Centertel and Orange, clearance to build a joint wholesale LTE network. Count another!

OFCOM has granted permission for UK UMTS operators to turn up their Tx power some more, so if you start to see St. Elmo’s Fire around your nose during phone calls you’ll know who to blame. You may also read this and feel sorry for the OFCOM staffers who have to read all the submissions. They’re also starting a consultation on mobile broadband.

The FCC is going ahead with the release of the “white space” spectrum. T-Mobile, meanwhile, is about to launch an HTC Android device with HSPA+ support.

Problems of the cloud - what happens when the virtual machine serving your business happens to be supporting a book-burning maniac’s website as well, and you end up as collateral damage in the inevitable distributed denial-of-service attack?

Swiss courts hold that sweeping BitTorrent for IP addresses and then sending out nastygrams is illegal, on the grounds that the addresses are personally-identifying information and therefore consent is required to process them. And the European Parliament votes to make the EU negotiators on ACTA demand that anti-counterfeiting efforts respect fundamental rights.

An interesting idea for Worse Voice & Messaging 2.0. Meanwhile, BT is bringing its call centres back to the UK.

Google has made some changes to the core search product, which now starts trying to offer you results as you type. For the first time, the Google.com front page will involve JavaScript as a result. There’s a fascinating story about how Google measures searches and therefore how things like Google Trends data and AdWords payouts are calculated - did you know that Google remembers anything you typed in the search box and left there for 3 seconds, even if you didn’t load the search?

Vodafone is selling out of China Mobile, booking a nice profit on the way.

Operators are being pressed to improve traceability of their sources of key minerals.

The Netherlands’ mobile operators and banks have agreed to set up a joint infrastructure for NFC-enabled mobile payments, using the SIM as the secure identifier.

A lesson from history on open-source software.

And a really bad morning for Réne Obermann, as the police raided his home looking for evidence of bribes paid during DTAG’s expansion in eastern Europe.

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September 12, 2010

‘Digital Entertainment 2.0’ - New Research Initiative launched

We’re delighted to announce the launch of a new research and events initiative focused on new business models for the Film, TV and Games industry. See website here: ‘Digital Entertainment 2.0’.

This builds on our work in bringing the telecoms and content industries together to look at new commercial models for strategic collaboration, and the success of our 1st Hollywood-Telco executive brainstorm in Los Angeles in May.

Based on new research from Telco 2.0 analyst team, we’re launching the initative via two ‘executive brainstorm’ events, co-located with our upcoming Autumn/Fall Telco 2.0 events:

We’re delighted that senior industry execs from both Hollywood and European entertainment companies are supporting the initiative, and we’re working with Bain, Comscore, the World Economic Forum, Intel, Globecast, Ericsson and others on the programme.

More here, or contact us.

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September 6, 2010

Telco 2.0 News Review

Telco 2.0 Top Stories

Nokia is activating 300,000 devices a day, while Android is doing about 200,000. However, Android’s year-on-year growth rate is 886%. Of course, starting from a low base will do that for your numbers, but it’s still impressive stuff and hardly encouraging for the Nokia/Symbian world. Mostly, that’s good news for vendors and for software developers - Computer Weekly gives the Sony Ericsson X10 Mini a glowing review. Who would have expected that as the mid-market was slaughtered in 2008 and 2009?

[Ed: we’ll be covering the impact of devices on telco strategy at the upcoming Americas Executive Brainstorm in LA on 27-28 October, and EMEA in London 9-10 November. We’ve also recently published a new research report Devices 2.0: ‘Beyond Smartphones’ - Innovation Strategies for Operators.]

Fortunately, the good people at Espoo have a secret weapon. Reality TV. Check out the Ovi X Factor app. Meanwhile, their innovator contest has announced its shortlist.

Meanwhile, the iPhone assemblers Foxconn announced they are cutting their long-term growth target from 30% to 15% annually. Interestingly, they’re also looking at moving manufacturing to the United States and investing in automation…

Android is far from perfect, of course, as anyone who has experienced the challenge of trying to keep an Android device operational for a whole day will know. Wired UK has a list of five key improvements it needs, notably a sensible way to shut down an app after you’ve finished with it. There is, of course, an app for that, but it’s not Symbian’s one key for options, one key for exit paradigm. If you want to find out what’s really been eating the battery, by the way, the engineering test commands for the gadgets are available here.

Have we been having too many mobile-apps stories recently? Quite possibly. What about a few infrastructure stories, then?

After Italy’s alternative operators agreed to build a common fibre-optic infrastructure and make a joint proposal to Telecom Italia, here’s some progress - Fastweb is offering 2 million customer premises 100Mbps symmetrical service for €15 a month plus an activation fee. They’re targeting existing subscribers to begin with. (We’re getting 100/710Kbps this morning. Dude, where’s my country?)

At this year’s IFA in Berlin, Vodafone Germany gave details of its LTE deployment plans. Like DTAG, it’s constrained by spectrum licensing requirements to start with the parts of Germany where broadband is so far unavailable. They expect to cover 1,000 districts by the end of the year. Not surprisingly, given that the government wants them to address gaps in fixed broadband availability, the service is being marketed as part of their Zuhause (At Home) converged product. Vodafone is offering three bundles with tiered speeds and data allowances, with pricing set at a distinctly premium level - €39.99 for 7.2Mbps (i.e. HSDPA speeds) and 10GB, €69.99 for 50Mbps/30GB.

Clearwire was the first “4G” operator to make it into Boston, pipping Verizon Wireless to the post - but when they got there they found that T-Mobile USA was already there, with HSPA+ service in place. This is getting to be a theme - we noted earlier in the summer that users had been reporting significantly better throughput on T-Mobile HSPA than either VZW’s LTE or Clearwire’s WiMAX in the only areas where all three are operational.

Rather oddly, in the light of that news and the fact they’ve turned up HSPA+ on POPs covering 100 million people this year, it’s rumoured that T-Mobile might invest in Clearwire, or perhaps just buy wholesale service. T-Mobile is also rumoured to be a potential launch customer for LightSquared. The wholesale-only (it sounds like one of the fashion firms near my old office in Fitzrovia - much better than “bit pipe”) operator is planning to build out 13,000 cells next year, starting with Dallas, Chicago, and Minneapolis and working outwards.

There’s no evidence that T-Mobile is involved, but as they say, “it is a scientific fact”. In fact, it seems to be a fairly reliable forecast principle that there are always rumours about something dramatic happening with T-Mobile USA and they are usually baseless, so this shouldn’t be overstated yet. It’s Bloomberg’s story - they apparently got hold of a detailed deployment plan, but they haven’t published the document itself - and CEO Sanjeev Ahuja says that a dozen consumer-electronics companies have signed up. Comes with data, eh.

The Federal Network Agency has intervened to share out the German digital dividend spectrum in the 800s and 2600s between the operators after they failed to agree on how to divide it up.

(In other German news, hackers copy a biometric national ID card on live TV.)

Verizon, meanwhile, is offering a boost to DSL speeds, either as a palliative for the slowdown in FiOS deployment or perhaps just a retention move.

India’s row with Huawei looks like it’ll have to get settled somehow as Tata TeleServices has specified their equipment and indeed their services as well for five of the nine circles it won 3G licences in. NSN get the other four. The Tatas usually get what they want. Huawei may also be about to launch an Android-based smartphone.

The FCC has been busy, closing off the idea of giving the AWS3 band away to M2Z Networks (they wanted to offer “free” ad-funded service, and really free service to blue light agencies, on condition they got the spectrum for nothing), and extending the net neutrality consultation. The key issues seem to be the relationship between Internet service and other “specialised services” that are provided over the same last-mile infrastructure - IPTV, for example - and also the inclusion or otherwise of mobile.

We mentioned infrastructure and wholesale-only networks. The UK has moved a step closer. T-Mobile UK and Orange UK are now one in Everything Everywhere. 3UK and T-Mobile already share civil infrastructure through Mobile Broadband Network Ltd. Now, Orange’s network is also integrating into MBNL, contributing several thousand base stations and getting half the T-Mobile stake in MBNL, as this is transferred to EE.

Orange UK this week launched WB-AMR…eh…HD Voice for the few people who have the right kind of phone to make use of it. As The Register puts it, “now a mobile phone can sound as clear as a good Skype connection”.

Skype and Verizon Wireless have pushed out a new version of their mobile Skype client for Android, fixing a bug under which it was impossible to use WLAN while the client was running. Rich Karpinski, meanwhile, argues that the rumour about Cisco buying Skype might be valid. Perhaps - Skype is a great company - but $5bn? Really?

Phil Wolff at Skype Journal wonders what voice would be like if we started from scratch. Probably not Apple Facetime, as one of his commenters apparently thinks - a replica of 3G video calling dependent on one particular hardware device? really? that doesn’t work outside WLAN hotspots? and requires you to make faces at a phone? Note that the last link doesn’t seem to be aware that a lot of mobile devices have cameras in them.

David Burgess updates on OpenBTS ahead of his annual deployment at Burning Man.

Worse voice & messaging: will the police re-open the investigation into the News of the World voicemail hacking?

Having kept everyone waiting, finally, we’re going to let you have some Apple-related news…has Apple just disrupted the cable TV world? The story is the new, cheaper Apple TV and its associated streaming backend. On the other hand, there’s not much content, no iOS apps, and more worryingly, no support for better video delivery. Everything has to come down the pipe, streamed, unicast, and you can’t edge-cache any more as the new Apple TV doesn’t have a hard disk. Faultline rounds up its competitors from Google, Sony, and elsewhere, and thinks Apple has “lost the global over-the-top content war”. Whoo.

In a notably mixed week for Apple, the new Ping music-based social network was launched and immediately invaded by spam. Spotify, meanwhile, announced a deal to integrate their service with Sonos’s hi-fi equipment.

Having fed the Apple addicts, now to distribute the Google Food. YouTube may have turned profitable, with about 14% of videos now carrying ads. Interestingly, it looks like Google may have hit on a solution for the copyright problem - rather than zapping copyrighted material, they put ads next to it and cut the rightsholder in on the money. It’s an elegant solution; you might remember this classic Telco 2.0 post modelling YouTube and Hulu’s economics. We thought YouTube needed to either cut its operational costs to 33% of mainstream CDNs’ or radically boost its ad-serving ratio - back then it was 3-4%, 18 months on it’s 14%. Knowing Google, they probably had a good go at the operational costs too. Tangentially, there’s an interesting post at F-Secure about the economics of affiliate-advertising spam.

It looks like Google is planning to wind up Wave by releasing the code as a standalone application. One question about Wave shutdown would be what happened to existing content - it’s all very well being able to get all your stuff, but what do you do with data for an application that doesn’t exist any more? The answer looks to be that Wave might have an afterlife as an open-source library and you might be able to import your stuff somewhere else.

Wired has a rather nice run-down of a wide range of online advertising and customer-data evil that Google has chosen not to commit (examples: the shoes that wouldn’t stop following her, surprising details on your job candidates). On the other hand, Google did just offer disgruntled Buzz users a cash settlement.

Nokia, meanwhile, has announced that Ovi Files is shutting down and given its customers a month to move all their stuff elsewhere. Why Nokia had a file-hosting service in the first place is possibly more interesting - essentially it looks like a case of “because they could” leading them to buy some random startup or other.

A US court has ruled that there is a legitimate expectation of privacy in one’s cellular location data and related information, and therefore that the police need a warrant to pull it.

NIST has issued a set of guidelines for the security of smart grid systems.

Vodafone 360 code is open and online, and they want a new chairman. The latest version of Ubuntu Linux has an app store.

Cheer up, I’m sure Paul Allen is suing you too!

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September 1, 2010

GMail voice - nice, but no Skype Connect

So you can now make telephone calls from within Google Mail. Well, among other things this is a fine example of something we said back in 2008 in the Consumer Voice & Messaging 2.0 strategy report. Jamie Zawinski said that every program tends to expand until it can read e-mail - we said that the same was now true of telephony. Everything expands until it can place phone calls. As a result, although total minutes of use keep rising, the market is deconcentrating, with the total spread across an increasing diversity of players - games, Voice 2.0 companies, enterprise VoIP networks, mobile apps, perhaps even the odd telco.

But we actually don’t think Google’s move is enormously significant. Consider this: if you’re a telco, and you provide plain SS7 circuit-switched voice, everyone agrees you’ve got a problem. Telephony is now a software application and it’s very often free, which doesn’t leave you much scope. If you’re one of the traditional alternative voice providers - calling cards, carrier VoIP like Vonage, discount MVNO, etc - you also have problems, because you’re trying to undercut a price that’s going to zero. We recall Boris Nemsic, when he was CEO of Mobilkom, saying that their answer to “fixed-mobile convergence” was a new tariff that offered unlimited national and on-network minutes for €10. There wasn’t any point being cute, when they could just cut prices and squash the margin players like bugs.

So you need to find some way to differentiate - to offer better voice and messaging.

Now, we were trying to find out if the Google product was actually Google Voice, which does provide a range of better voice features - visual, integrated voicemail, presence/availability, transcription etc. Hence the reference to Google voice rather than Google Voice in yesterday’s news post. Here’s Andy Abramson, who discovers that the new service brings you that fine telecoms industry product, a traditional IVR voicemail inbox that doesn’t work with either your e-mail or with Google Voice’s unicomms features. Also, the technology leaves something to be desired - it looks like they’ve built a JavaScript JINGLE client that logs into the Google Talk XMPP servers, but some users are reporting that it drops the call if the browser tab or window it’s running in goes out of focus.

If some other company had launched a basic cheap calls service, we wouldn’t have thought that particularly interesting. So we shouldn’t just because it’s Google. Sure, it means even more pressure on voice margins, but that’s hardly news.

So what’s Skype doing? Alec Saunders points out that the big news over there is that they’ve rebranded and relaunched Skype for SIP, now known as Skype Connect. The point here is that devices other than Skype clients can log in to the Skype network - indeed, anything that uses SIP can send a REGISTER to sip.skype.com and get online. That means, for example, that your company’s Asterisk PBX could get its bandwidth from Skype, or your fleet of Avaya call-centre turret phones could log into Skype. Because both SIP and the proprietary Skype protocol support passing a lot of other messages before, during, after, and outside calls, your Voice 2.0 applications should work with it. There’s also a new Skype Manager application to keep track of it all, and of course you can still use SkypeIn numbers, SkypeOut PSTN interconnection, and Skype click-to-call.

It’s $6.95 a channel a month for all the minutes you can eat, and Skype has gone to the trouble of getting Avaya and Cisco (as well as quite a few others) to certify interoperability with their enterprise voice kit, so the IT department can rest easy. So it’s a lot more than just cheap calls - although the calls are pretty cheap as well. What’s genuinely impressive, too, is that they’ve clearly thought through the implications of doing SMB and enterprise voice. The announcement on the official Skype blog says, first up, that this is about connecting unicomms and IP PBX systems to Skype, and goes on to press the issues of certification, channel marketing, deployment, and technical support.

So Skype is lining up a major challenge in enterprise voice. Who makes an awful lot of money selling IP PBXes, unicomms gear, and desk phones? Cisco! Hence this rumour, which would see Cisco Systems acquiring Skype for $5bn. It’s more convincing than the idea that Google voice with a small “v” is part of a huge strategy to destroy Facebook by encouraging people to stay logged into Gmail (the two things are not mutually exclusive…) And Cisco has been expanding its interests in collaboration services for some time - think WebEx conferencing.

It’s harder to see what would be worth $5bn in such a deal. Certainly not Skype’s margins on international voice. Perhaps the idea would be to boost sales of Cisco’s higher-margin hardware. But Skype Connect means that Cisco hardware can already interoperate with Skype. There’s obvious cross-marketing potential, but that doesn’t need the ritual sacrifice of shareholders’ funds on such a scale. It is true that Skype is on the hunt for major partners - Samsung’s coming Android tablet may ship with a Skype client as part of the understanding with Verizon. And there’s evidence that they’re interested in a two-sided business model around click-to-call.

Again, though, the only benefit from burning $5bn would be to the Skype founders - which is a reason for them but not for Cisco.

The really big news for Skype, though, is the developer API coming this autumn. It’s going to be absolutely critical to their future - as this piece on the Fring row makes clear. Can they really have been keeping Phil Wolff waiting for details of SkypeKit for the last 125 days?

Meanwhile, the question of Google’s motivation has been raised. Most of the media/analyst chatter about this has been obsessed by Facebook. We consider this to be purely buzzword-driven analysis. Google has huge software development resources and a culture that prizes innovative projects; it’s both cheap to do a small development project, and highly incentivised. As a result, they do a lot of projects.

Another possibility is that this is an effort to gather social-graph information from GMail users. However, it’s very likely that the call patterns will be dominated by the names in the user’s existing chat roster - the very fact it’s integrated with the roster guarantees this. This is information Google already has, although there is probably a significant degree to which a typical user’s IM and voice networks don’t overlap. (Similarly, my GTalk and Skype rosters are similar but aren’t identical.)

Also, remember when they served links in different shades of blue to randomly selected users, to see which shade got clicked more often? Google likes experiments. It maintains coherence by using the experiments to kill off the dodgy projects. We believe this to be another experiment - perhaps there is some interesting data to be had? Or perhaps Google is just trying to learn a little more about this odd “voice” thing?

Either way, until and unless they develop the sort of understanding of voice & messaging that Skype Connect demonstrates, it’s mostly another cheap calls offering with some extra features. Google could deepen the integration of GMail with Google Voice, and Alec Saunders’ post referred to above offers some valuable pointers - it remains true that cheap calls are no longer enough, and there’s a real market for better voice and messaging. Ask Skype.

We’ll be discussing how to manage the co-opetition with Google, and the challenges of Voice 2.0, at our next Telco 2.0 Executive Brainstorms, in LA on the 26th-27th of October and London on the 9th-10th of November.

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Vodafone 360 on Android, iTunes: Now Getting it Right?

Vodafone 360 was meant to be a new, social-network centred approach to managing the customer interface. Unfortunately, it was also bug-ridden and dogged by a lack of clarity of purpose. Now, its availability on Android Market and iTunes may create a strategic opportunity for Vodafone to access more customers. More here.


[Ed - we will be discussing issues raised in this article at the Telco 2.0 AMERICAS (27-28 October, LA) and EMEA (9-10 Nov, London) events, as part of the ‘Managing the Co-opetition/Facing up to Facebook’ sessions.]

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

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