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July 24, 2012

‘Billing 3.0’: an enabler of dynamic revenue streams


In this guest post, Transverse’s COO and Co-Founder, Chris Couch, argues that activity-based billing, ‘Billing 3.0’, is an enabler of dynamic revenue streams in multiple sectors that could present an opportunity for telcos.

Consumption is changing. As consumers, we are transitioning from one-off purchases of static goods and services to longer-term, multi-dimensional activities that morph and evolve according to our personal preferences, usage patterns, and vicissitudes of life.

At the same time, businesses exist to make profit. And profit can quickly erode without measures in place to control access. One example of this is the recent implementation of paywalls by many newspapers. News outlets like the Financial Times and New York Times now allow a set level of free content but then block access to non-subscribers past a specific article count. While this is staving off revenue loss, it may only be a short term solution. The New York Times may soon need to adopt greater personalization - say personalized options for coverage of a certain business or just the sports section.

This evolution of consumerism is galvanized by the devices, infrastructure, and mindset changes in an increasingly digital world. Unfortunately, customer preferences are changing faster than the billing system of most content providers or digital retailers are evolving. Homegrown billing systems - often based on Excel - can’t keep up with the constantly changing, web-centric customer world.

To address this, business must first shift to view billing as a critical strategic asset for not only capturing revenue, but also personalizing services.

Digital goods/content providers need to embrace and adopt billing models that give customers more value for the same dollar and the same effort. Give them choices, personalization, easy access, easy payment, easy management, and easy evolution as their interests and circumstances change.

Evolving Billing

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Modern day billing has deep roots into the solutions established by telecom - Billing 1.0. These highly robust and sophisticated systems were built over many years at a huge cost, making them accessible to only very large enterprises. While Billing 1.0 was valuable in establishing predictable and continual contact with customers, usually with a monthly bill, it did little to push the relationship forward and drive monetization.

Billing 2.0 came with the emergence of cloud based services and models. Billing 2.0 shifted billing resources to the cloud, making solutions easier to deploy and highly cost effective for the majority of businesses. These solutions were perfect for simple recurring payments and subscription management. However, Billing 2.0 lacks the sophistication to handle complex billing situations and cannot accommodate activities.

Enter Billing 3.0, which blends the best of the previous models: able to solve complex challenges, yet cloud based for affordability and continual improvement. For service providers, Billing 3.0 allows for creating combinations of services, pricing, and payment options around the dynamics of customers so that every customer interaction and activity becomes an opportunity for monetization.

Shifting Toward Activity-Based Billing

Billing 3.0 enables companies of all sizes and business models to better serve customers and increase revenues. Regardless of where a company is in its billing evolution, there is opportunity to leverage what’s in place to establish relationships with customers, and to build out multiple customer relationship cultivation points that present opportunities for up-sell or cross-sell of services relevant to customers’ circumstances, preferences and usage habits.

In essence, if you know your customer, and more importantly, know how your customer is using your services, you can leverage that knowledge to trigger new activities on an ongoing basis, and monetize those activities - all along improving customer satisfaction and loyalty. This is activity-based billing.

To achieve the benefits of activity-based billing, enabling you to dynamically configure and reconfigure services and pricing around customer activities, businesses must be able to transform not only pieces of subscriptions and other valuable levers, including: sign-up/activity/event fees + bundles + add-ons + incentives + promotional products.

Armed with information on how your customers are using and interacting with your service, you can understand your customers, increase revenue, identify customer trends, and deepen customer loyalty. Don’t let an outdated billing backoffice prevent you from realizing success.

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July 23, 2012

A hard quarter in the West; Microsoft’s reboot?; Amazon’s new EC2 - Telco 2.0 News Review

(Ed. Join us next at Digital Arabia in Dubai, 6-7 November. The Agenda covers the Digital Economy, Digital Commerce and Digital Entertainment in the Middle East and North Africa.)

Horace digs into the Nokia Q2 figures and reckons that the Lumia phones aren’t doing so badly in the US, specifically in terms of dragging the average selling prices upwards. However, in terms of volume, it’s nothing to set the world on fire, and he concludes that the biggest problem for Nokia is time. Of course, part of the problem there is that Microsoft’s Windows Phone 8 won’t run on the Lumias, which leaves 4 million orphan smartphones in the market.

The headline numbers are here and are pretty grim, with a substantial net loss and sales sliding. Asia-Pacific is the only growth market. The stock market was surprisingly favourable, presumably on the basis that it could be worse. Interestingly, the burn-rate has dropped sharply in the last three months, which suggests that the fight for time is getting somewhere.

Elsewhere in smartphones, the key to Apple’s market share turns out to be nothing else than good old carrier subsidy, with every $100 bung translating into 4-5% of market share in the United States, and a cushion of about 6.3% Apple cultists at a zero subsidy level. Hence, the Chart of the Week:

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Huawei’s Ascend P1 climbs down off that big horse from MWC and lands in the UK, along with ZTE’s Grand X. HTC reduces its investment in Beats Audio. Samsung gets a win in court, as a judge orders Apple to state publicly that Samsung didn’t copy the iPad. They also buy most of CSR.

Sensible idea of the week: Qantas chucks out the sporky in-flight entertainment terminals and gets iPads instead. If you’re in business class.

Apple poaches a top chip designer from AMD. Looking back to SavaJe, and wondering how Java won in the end.

It was a heavy results week. Ericsson Q2s were out, and profits were down 63% on poor sales in the networks division and a loss at the STMicro joint venture. Alcatel-Lucent announced a small loss for Q2 and warned on its profits for the year. Of course, last week saw horrible numbers at ZTE, so the whole infrastructure sector is looking sad.

Vodafone Q1s were out, and the pattern from last time was clear - the Southern European markets are getting a battering from the macroeconomic crisis. While service revenue in Germany was up 4.2%, it was down 7.7% in Spain and 10% in Italy, with the UK fitting in between at a 0.8% drop. The emerging markets, notably Turkey, India, and South Africa, did well and overall the company just managed to inch ahead by 0.6% on an organic basis.

The Australian division is still struggling but the Voice 2.0 project OneNet is now up to 2.2 million users and is supporting strong growth in the enterprise segment. Data revenues were up everywhere, but the big question there is margins.

Tele2’s story is pretty clear - sales were up 10% but EBITDA down 3%, due to the spending on marketing that got the additional customers through the door.

Verizon Wireless turned on more LTE, and managed to up its ARPU by pushing more data. Although the caveat about margins is still relevant, CAPEX was down 2.1% after last year’s LTE build-out spree. Dave Burstein reports that Verizon is going to get rid of its copper where the FiOS fibre runs and perhaps also where the LTE coverage reaches.

Also from Dave’s forums, Sprint Nextel LTE is here, and they’re squatting in a Department of Defense IP block. Further, they’re flogging ultrabooks with 2-year contracts and a MiFi thrown in.

Brazilian regulators stop the mobile operators selling at all in much of Brazil. Ouch. BT gets a contract for Welsh fibre.

OFCOM released its annual data-dump this week, showing voice usage falling in the UK. The drop is faster on fixed than mobile, and as a result, there were more mobile minutes than fixed for the first time ever in 2011. 44% of adults have used an OTT messaging option, and 22% VoIP, but despite that SMS traffic is still growing.

Here’s an interview with Rebtel’s CEO Andreas Bernstrom, who argues that VoIP at least ought to be about call quality rather than just free on-net calls and praises Telefonica Digital’s TuMe.

Is AT&T going to start charging extra for Apple FaceTime calls?

The good people at Phono have updated their softphone SDK to support Adobe’s voice streaming protocol, which seems to be the first in their stack to include acoustic echo cancellation.

It looks like WAC has come to the end of the road, with Apigee buying the network-side technology and the rest being “folded into the GSMA”.

On the other hand, the Enyo HTML5 framework, perhaps the most interesting bit of WebOS, lives on. HP announced version 2.0 this week. And here’s an interesting new tool for animations and GUIs in HTML5. Both Android and BB OS 10 updated their SDKs this week.

Here’s a first look at Dell’s “Sputnik” developer-focused laptop. And the 3G and 4G Wireless Blog covers a startup mining geo-tagged social network content for radio-planning information.

Data Center Knowledge updates its valuable series of Google CAPEX figures, putting last quarter at $774m, which is certainly plenty but nothing like the massive surge at the end of 2010.

Marissa Mayer, most recently the head of local, maps, and location at Google, but better known as the company’s user-interface guru when Google was known for really nice user interfaces, has unexpectedly quit and taken on the challenge of being Yahoo!’s fifth CEO in as many years. While also having a baby. No pressure, like.

ZDNet summarises the challenges ahead as relevance, innovation, definition, content, and morale, which anybody would consider a packed inbox. If there’s anything Mayer’s arrival will help with in itself, Wired argues, it’s convincing the best talent in Silicon Valley that there’s any point joining Yahoo.

Of course, as they point out, even in the last few years Yahoo! engineering has had some major achievements - the now-ubiquitous Hadoop data-mining systems started out there, Pipes and YQL are impressive rapid development tools, and the YUI user-interface framework is considered a classic. And they invented the hackday.

Mayer is mostly remembered for the ultra-minimal look and feel of classic Google products, and the exhaustive A/B testing process that underlay them, but her original specialisation was artificial intelligence. Gawker seems to have overstated that a bit: Hologram or Android?

Meanwhile, Wired visits a Facebook hackathon and gets all excited, while the New York Times reports on scepticism about how useful Facebook ads really are. It’s a nice demonstration of how the company sits between Valley/venture capital optimism and Madison Avenue/Wall Street cynicism. We’ll all find out on Thursday, when they publish earnings numbers.

If the Facebook IPO didn’t give you enough of a speculative kick, two biggish tech IPOs are coming up - the (rather good) travel meta-search engine Kayak, and software-defined network vendor Palo Alto Networks.

Microsoft, for its part, announced its first quarterly loss ever this week as it wrote down the value of the Aquantive advertising business it bought in 2007 for a mere $6bn.

Search Engine Land has a fascinating analysis of Microsoft’s search alliance with Yahoo!, arguing that it’s a major disappointment. Yahoo! outsourced search to Microsoft Online Services some years ago, basically becoming the launch-customer for Bing. Under the terms of their agreement, MS has to deliver revenue per search similar to Google’s, or pay the difference in cash. A large gap has opened up, which MS has to pay. MS has frequently tried to get out of this, but Yahoo! has held them to the deal. SEL thinks that a break point is approaching, where Yahoo! will be sufficiently desperate to walk from the deal at the same time as MS gets sick of forking over the guaranteed payments.

The question is, then, whether Yahoo! licenses Google Search, whether it buys a startup (Blekko, DuckDuckGo?), or sets about rebuilding its search product. Marissa Mayer’s arrival adds an unknown - as a Googler, would she be open to a Google-Yahoo! deal? Or would she relish the massive scaling exercise of bringing a search startup to the Yahoo! front page? Or even the epic challenge of a completely new search product?

But that wasn’t the biggest news at Microsoft. Jeff Atwood argues that Windows 8 is the first genuinely innovative product from them since Windows 95, a bet that will either secure their future or else plunge the company into deep crisis. And if it works, it may well be because it takes the hardware market with it away from classic PCs. ZDNet argues that MS is focusing on change in the consumer market above all.

A lot of things have changed at Redmond. For one, the MS Azure cloud developers are substantial contributors of code to the Linux kernel these days, which would have been heresy a few years ago. Even if sometimes, as the Wired enterprise blog reports, their sense of humour is a bit puerile. Azure is very big, although Data Center Knowledge points out that MS’s numbers include all their internal users and may double-count objects that appear in different application layers.

MS aren’t taking any chances in re-engineering Windows for tablets, mobile phones, and the Web. For example, check out this forensically detailed blog post about designing the touch keyboard.

On the other hand, 20% of the world’s supply of stolen logins match a Microsoft account, and interviews with Microsoft staff suggest that Steve Ballmer’s insistence on a curve-grading rank-and-yank assessment process in every workgroup is responsible for Windows 7 looking so much like Win95.

Here’s a bit of Google customer service: don’t bother phoning, but if your blog post goes viral…

The big news in the cloud this week is Amazon Web Services’ new EC2 option, which lets you configure EC2 servers with Flash-based solid-state disks in case you need really fast I/O. This is obviously an interesting use of the cloud - isn’t the point that you don’t need to think about hardware? - and one of the places where the boundary between cloud and dedicated hosting is hard to determine.

James Hamilton has more technical detail. Netflix’s Adrian Cockcroft has a long, detailed, and interesting post on performance testing the new instances. He points out that they made it possible to run one of their most demanding applications with substantially less complexity, as it no longer needed an in-memory cache.

However, the secret sauce here is that the access to the disk is purely local, rather than being somewhere in the cloud over the network. In a sense, there’s a trade-off between the “cloud” element and the “blindingly fast” element. Hamilton points out that one of the main use cases is moving databases into the cloud that use a sharding architecture, splitting the data into independent subsets. If the data is stored locally, you can’t expect the cloud to look after it…so the sharding and replication is vital, in case of a node failure. But wasn’t part of the reason we moved into the cloud to avoid the complexity that involves?

Over the wall in the OpenStack world, the TryStack prototype cloud is running on ARM low-power chips, and Cisco is putting more SSDs into servers. Intel’s Q2 results show 14% growth in the data centre group.

And this is interesting: Apple has filed the planning application for the next phase of its iDatacenter. But rather than another 500,000 square foot behemoth, they’re looking at a 21,000 square foot “tactical modular data centre”, possibly using prefabricated pods. Have data centres got to the point where, like oil tankers, the economies of scale run into practical limits?

Marks & Spencer is preparing to spend £100m moving their IT systems out of Amazon and back in-house.

Meet Floodlight, the latest Openflow software-defined network controller, designed specifically for OpenStack.

Also, did you know that the current iteration of OpenStack is codenamed “Folsom”, like the prison? If you did, you might be less surprised by the latest startup incubator project: the one aimed at the inmates of San Quentin.

O2 makes nice, offering the outaged a £10 service credit. Vodafone femtofail. Syria briefly vanishes from the Internet, all but five networks - and one of those hosts a fake Skype encryption tool. The Internet traffic jam. All the supposed tech laws in one place.

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July 18, 2012

HTML5 - The Catalyst for Network as a Service?


In this guest post. Aepona’s Michael Crossey asks whether HTML5 provides an opportunity for Telcos to drive demand for ‘Network as a Service’ (NaaS), providing access to telco assets and capabilities via APIs, and help them address the OTT threat?

The recent Telco 2.0 report, “Technology Disruptions: What does HTML5 mean for Telcos”, described both the opportunities and challenges that this emerging technology presents for Mobile and Fixed-Line network operators. In this article, Aepona presents another dimension to the potential impact of HTML5 on Telcos, namely the opportunity for them leverage the trend towards HTML5-based applications and services as a demand driver for their “Network as a Service” (NaaS) offerings. This will allow them to extract value from OTT applications, rather than being relegated to the role of “dumb bit-pipe” provider.

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NaaS is a manifestation of the 2-sided business model described by Telco 2.0, in which the Telco’s network, contextual, informational and commercial assets are exposed as APIs to organizations such as enterprises, ISVs, content providers and application developers. These APIs are then used to create additional functionality within those organizations’ applications and services, which in turn enables them to differentiate their offerings, improve productivity and customer service, open new payment channels, and ultimately expand their addressable market.

HTML5 is the latest evolution of the HTML standards, which have formed the basis of the Web since its original incarnation. HTML5 contains several major advances from previous versions of HTML, including rich interactivity features, inherent video support, the ability to work offline, and, increasingly, access to the underlying capabilities of mobile devices, such as the microphone, address book, camera, GPS and the multiple sensors now appearing on a wide range of smartphones and tablets.

These capabilities mean that HTML5 is now paving the way for a new generation of web-based applications that are independent from the device operating system, and not tied to a vendor or ecosystem-specific distribution channel. From the end-user perspective, HTML5-based applications can be designed to behave in the same way as native, OS-specific apps: users will generally not be aware that the application is essentially running within a browser. Moreover, HTML5-based applications can run on a wide range of devices, from smartphones to tablets, from desktop PCs to laptops, and from TVs to in-vehicle systems.

The HTML5-related opportunities for network operators outlined in the Telco 2.0 report were largely centred on the fact that HTML5 has the potential to decrease the dominance of the “Over the Top” (OTT) players, such as Google and Apple, by reducing the dependence of the Mobile Apps market on closed or OS-specific application platforms and ecosystems such as Apple iOS and Google Android. This applies to the app development environment as well as the distribution systems, both of which are currently controlled by the OTT players. The report also identifies opportunities for operators to leverage HTML5 opportunities in non-PC or smartphone markets, in areas such as IPTV, multi-screen services and in-car systems where they can potentially assert more control of the ecosystem, given the typically close integration of these services with the operators’ core networks.

However, Aepona believes the HTML5 related opportunities for network operators extend beyond the areas outlined above, particularly in the context of Network as a Service.

Unlike native OS application development, HTML5 (like previous versions of HTML) is fundamentally based on a client-server programming paradigm. In its simplest manifestation, an HTML client (for example, a desktop web browser) acts only as the presentation layer for the application or service: the application/service itself runs on a web server, which services multiple clients. Although HTML5 introduces additional functionality to the client-side, allowing applications to run locally on the device without a network connection, the optimal user experience will always be provided by the combination of client-side and server-side functionality. There are multiple reasons for this, including the ability for computing resource-intensive processes to be offloaded from the device to the server, the reduced need for large amounts of data to be transferred to and from the device (hence minimizing data charges for the user), and more streamlined security (for example, web servers are generally more trusted than native device apps when making payment requests).

This client-server paradigm of HTML5 lends itself extremely well to Network as a Service, since NaaS is itself based on the model of applications/services “calling” network API services on-demand, using the same types of HTTP requests and responses that are used between the client-side and server-side of HTML5-based apps. These network API services are exposed via a dedicated server, which is either deployed within an individual operator’s network or in a centralized, cross-network API service such as the GSM Association’s OneAPI service. It is therefore a very natural, low-friction step for HTML5 developers to enrich their applications/services with network features, by simply extending the server-side of their application to call the relevant network API services as required.

This contrasts with the native app model: many native applications are designed to run locally on the device without a server-side, meaning that those apps would have to be fundamentally re-designed to incorporate the additional features offered by NaaS. Even then, calling network APIs directly from a native device application introduces additional security requirements on the back-end, especially for services such as Payment, since a local native app is not trusted in the same way as a server. Furthermore, designing a native app to call network API services directly potentially increases mobile data usage, compared with the HTLM5 server-side being used to handle network API requests.

As mentioned earlier, another developing feature of HTML5 is its ability to access device capabilities, such as accelerometers, GPS functions, cameras and so on. This will eventually allow HTML5-based applications to be endowed with the same level of functionality as native applications, for all but the most demanding of apps (such as high-end, graphics-intensive games).

However, the commercial potential for HTML5 applications will be maximized by combining device-side capabilities with network-side services provided by the Telco, rather than relying solely on the device side.

Take location-based services as an example. Device-side location capability based on GPS is limited in that it requires line-of -sight to operate, is power-hungry, can only provide the location of that device, and requires an app to be running on the device (i.e. it needs active user participation). Network-derived location, on the other hand, can locate any device whether GPS-enabled or not, and can operate without user intervention or needing an app to be running. Moreover, the developer can “write once” on the server-side to call the network APIs, versus having to write towards different handset and OS implementations.

Of course there are many other network-side features and capabilities that can be built into HTML5 applications which complement device capabilities to provide the optimal user experience: examples include rich user context (data connection type, roaming status, zonal presence), customer profile information (identity, tariff/data plan, age/gender), advanced communications capabilities (multi-party/multi-media conferencing, instant messaging, network Quality of Service control) and of course Payments (for in-application billing and subscription services).

Therefore, augmenting device-based GPS capabilities with NaaS-based services will provide a much broader addressable market for HTML5 applications whilst enhancing the utility of the app and a differentiated user experience. As described earlier, the HTML5 client-server programming model makes this extremely easy for developers, as they do not have to fundamentally alter the design of their applications enrich them with NaaS features: they can simply extend the server-side of their application to make the required API calls to the NaaS service.

Today, Telcos are rightly seeing the emergence of HTML5 as the pre-eminent platform for future mobile application development as an opportunity to regain some of the ground they have lost to the OTT players over the past 5 years, primarily for the reasons outlined in the Telco 2.0 report. However, the combination of factors outlined above means there is another, perhaps even more significant, opportunity presented by HTML5 - namely, that HTML5 can become a significant demand driver for Network as a Service, providing the catalyst for a huge variety of cross-platform business and consumer app developers to embed the Telco’s core network capabilities within their applications, and allowing the operators to finally realize the full potential of the “2-sided business model” vision put forward by Telco 2.0.

Author: Michael Crossey, Chief Marketing Officer, Aepona

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Euro telcos: fiddling while the platform burns?

As a ‘litmus test’ of industry expectations at the EMEA Executive Brainstorm, Telco 2.0’s Chief Strategist Chris Barraclough presented our forecast that UK core telco market revenues will drop by 24% by 2018 from the 2009 peak. (NB We are working on forecasts for other markets.)

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Two thirds of delegates thought this leading indicator forecast either ‘about right’ or ‘too optimistic’, and it’s clear that most executives across the European telecoms industry accept that the current telco business model is in decline (the ‘burning platform’).

However, wholehearted action to create sustainable new models is not in place. We identify the key barriers and next steps to overcome them in this top-level analysis of findings from the brainstorm.

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July 16, 2012

China’s smartphone leap, new global M2M alliance, more pain for RIM, and Network and Cloud outages - Telco 2.0 News Review

(Ed. Join us next at Digital Arabia in Dubai, 6-7 November. The Agenda covers the Digital Economy, Digital Commerce and Digital Entertainment in the Middle East and North Africa.)

The Chinese Ministry of the Information Industry announced this week that smartphones have overtaken featurephones in the Chinese market. In H1 2012, 195 million phones were shipped and 48% of those were classified as smartphones. Since April, though, each successive month has been over 50% and June hit 56%. The 2G/3G split corroborates this, with 58% of the devices shipped being 3G.

Comment on this centres around the definition of “smartphone”, with Gartner putting the numbers much lower. But it would be foolish to insist that only iPhones count. Meanwhile, it seems that China has become the world’s biggest smartphone market, and Apple claims 17% of the market on Gartner’s definitions. Analyst Charlie Wolf is probably on to something in noting that the big change is that the lower end of the smartphone market is becoming price competitive with the upper end of the featurephone market, and that the growth is being captured by “second-tier Chinese vendors”.

Meanwhile, Lenovo was reported to be closing in on the No.1 slot for PC sales, held for many years by HP. The bigger question, as Horace points out, is whether this prize is good for more than bragging rights in the light of iPad sales.

Even the TDSCDMA world is showing signs of life, as Taiwanese manufacturers start tooling up for TD-LTE handsets.

On the other hand, ZTE announced a massive profit warning, saying that its net profits might be down 80% year-on-year. The shares plummeted. Chinese analysts suggested that the problem was with their line of low-cost handsets, rather than the infrastructure business.

In Telco 2.0 themes, seven global mobile operators have formed an alliance for M2M services and applications. KPN, NTT Docomo, Rogers, SingTel, Telefónica, Telstra and Vimpelcom are standardising on Jasper Wireless (KPN took a stake in them back in 2010, of course) and its web interface for their management tools, and developing a global SIM product.

In Poland, the mobile operators have agreed to provide a single interface to their core networks in order to compete with OTT players more effectively. OpenCloud is providing the API bridging Orange.pl, Polkomtel, and T-Mobile.pl.

Vodafone bought New Zealand’s second fixed operator. They also started an infrastructure-sharing agreement with 3 in Ireland and KPN Mobile in the Netherlands.

But is network sharing all that great? The 3G & 4G Wireless Blog has a fascinating discussion on the challenges and opportunities. It requires a lot of commitment from all parties involved, and usually aims beyond just reducing costs. And what happens if you need to disentangle the deal? After all, in Sweden, the transition to LTE caused one such deal to unravel. This leads us to a really excellent T-Mobile presentation from Kim Larsen:

And if that isn’t enough slides for you, here are 72 on Telefonica’s LTE trials.

In other Telco 2.0 news, Econet Wireless in Zimbabwe is taking off as a m-payments player, the GSMA MMU Blog reports, and Tele2 launches an international VoIP app in a dose of own-brand OTT.

In this week’s Chart of the Week, it looks like VC investment is at levels not seen since the .com boom, and quite a lot of it is going into mobile. Specifically, the way to tap it is with a mobile photo- or video-related startup, as 29% of investment in mobile is following the Instagram hype.

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Here’s a detailed interview with RIM CEO Thorsten Heins.

As the crisis mounts, Developer Relations VP and Calliflower founder Alec Saunders goes after critics who predict an exodus of devs from the platform, spruiking its developer toolkit. At the same time, one of the company’s pair of corporate jets is up for sale, in what looks like either a desperate search for cash or else a very public gesture of humility after the 5,000 layoffs last week.

(Although, perhaps they had two jets because they had two CEOs.)

When it rains, it pours. RIM lost a patent lawsuit and might have to pay $8 for every BlackBerry connected to a BlackBerry Enterprise Server. Weirdly, the court was happy to impose this despite the claimant having filed for the patent after RIM started using the technology.

Benedict Evans charts that the emerging markets, having driven all the growth at RIM recently, have suddenly turned downwards.

Perhaps they should partner with Microsoft? Or perhaps not. AT&T just halved the price of the Nokia Lumia 900 to $49 on a two-year contract, which prices it between the iPhone 3GS and the iPhone 4. Horace explains why - they’re not selling.

Failure, then, is a theme this week. After France Telecom’s mammoth outage last week, O2 UK was down for 21 hours, with users advised to turn off 3G in order to get online. As is traditional, after the crash comes the crash investigation / blame casting.

Elsewhere, Slovenia gets LTE and Uruguay gets fibre to the home. Fujitsu drops out of the UK Broadband Delivery project, leaving only BT and the possibility of a European inquiry.

What’s the betting the UK is actually going to be last at this rate? Some money from the LTE auction will be used to make sure Freeview works with it. Neelie Kroes wants to make sure telcos are providing dark fibre and ducts on a nondiscriminatory basis.

Does Verizon think it can “edit the Internet”? It’s the latest net neutrality row. Frankly, the document involved seems to refer to content they provide themselves, but then we are not lawyers.

Saudi Mobily’s profits are up 22%.

This week saw some more cloudfail. Salesforce lost 6 regions, three of which belonged to its developers and three in production, after a power failure at an Equinix data centre on the US West Coast.

Heroku, meanwhile, published its crash investigation after the Amazon outage last week. Interestingly, Amazon EBS volumes seem to have been a problem, rather like they were the last time Amazon fell over. And, as with everyone, the control plane issues made recovery and failover much harder.

On the other hand, AWS deployed a tool that helps you optimise SQL queries, and there are some jobs going in the developer tools team.

It doesn’t have to be the cloud, of course. Evernote, as if annoyed to be left out of all the excitement, had an outage of its own when a migration of user metadata to a new pair of dedicated servers went wrong.

Strategies for managing peak load, via High Scalability.

Yahoo! engineer Mike Christian has a fascinating talk on the causes of outages, including fires, explosions, false alarms leading to the sprinklers being activated, and a remarkably large number of incidents involving squirrels (note that Level(3) has also been hit by the furry menace).

Meanwhile, Y! lost 450,000 passwords to hackers, and Declan McCullough of CNET analysed the data dump. The depressing thing is that surprisingly few people used “password” as a password compared to the number who used “123456”.

Groupon shares are down 70% on the IPO level and traffic on the Web site is down 15%.

And is Google’s new tablet likely to be profitable?

Interior mapping - it’s the new mapping. Google will let you upload the floor plans of any building you might own that’s open to the public. Here’s a new startup providing interior location.

And here’s a quick look at Spotify numbers.

When routing attacks - India accidentally censors the Internet in Oman. Instant DuckDuckGo results with XMPP. Pinterest strips advertising, affiliate marketing, and tracking material from all links. Bridging Android and iOS games to the TV. Bruce Schneier discusses locking mobile devices. Apple in-app purchases send passwords in the clear. Blocking the Pirate Bay helped - for a week. Microsoft researchers play swordfighting, with smartphone sonar.

And it’s fifty years since Telstar.

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July 9, 2012

Spending - cloud up, tech down; Telefonica 2.0; Deutsche Telekom’s Voice 2.0 - Telco 2.0 News Review

(Ed. Join us next at Digital Arabia in Dubai, 6-7 November. The Agenda covers the Digital Economy, Digital Commerce and Digital Entertainment in the Middle East and North Africa.)

Gartner reckons that worldwide tech spending has slowed down quite a bit, from growth of 7.9% last year to 3% this year, hardly surprising in a very difficult economic environment. The single biggest chunk of that is the $1.7tn market for telecoms equipment, which is braking from 6% last year to 1.4% this year.

Interestingly, public cloud will be the main growth sector - Gartner expects it to reach $200bn by 2016.

In cloud news, the post-mortems and recriminations from last week’s Amazon failure were in full swing this week. The Voice of Broadband points out that the storm damage to the electricity grid was unusually severe, so much so that even the landline phones were still down a week later (a backhanded testament to telco engineering).

Dimitry Samovsky discusses the outage and points out that because the only way to interact with AWS machines is via the API, the control plane is mission critical whenever there is an outage. As a result, it doesn’t make sense to argue that it’s OK if the control plane is down so long as machines are working in other availability zones, because there’s no way to fail over to them.

Ironically, the AWS Blog posted an interesting discussion of Netflix’s Asgard cloud management and automated deployment tools, including this quotable quote:

If you can’t call APIs to create and manipulate infrastructure components such as servers, networks, and load balancers, then you don’t have a cloud!

And if you’re down, like AWS and Netflix were? Meanwhile, 451 Research reports on AWS’s rollout of its CDN, DNS, and load balancer services to Sydney and provides a good discussion of Amazon CDN in general.

Elsewhere, High Scalability reviews Google’s new Google Compute Engine, its infrastructure-as-a-service cloud computing play. Google sees it as a low-level, highly customisable way of building big computing workflows orchestrated by Google App Engine. More discussion is here on Hacker News.

Telefonica Digital’s CEO Matthew Key says the emblematically Telco 2.0 unit is growing at an annual rate of 20% and is on track to become a €5bn business by 2015. So far, its Wayra start-up arm has invested around €50,000 in each of 140 businesses in 11 countries.

He also announced carrier billing agreements with Facebook, Google, Microsoft and RIM, and the start of a mobile ads business in Brazil. RCR Wireless has more details - it looks like the ad play is a clone of O2 Media in the UK. Of course, a major goal of the Digital unit in the first place was to pick up innovations from their national operating companies and R&D groups and spread them around the company.

It may be worth knowing that the big data analytics firm with the slightly disturbing name, Splunk, is also heading to Brazil.

Telekom Austria this week launched its own startup incubator, based at the corporate HQ in Vienna. The first startup is DefectRadar, which is building a tablet app for architects, engineers, and construction workers to log defects in buildings.

The UK’s PayForIt m-payments alliance will come under the premium-rate regulator PhonePayPlus’s responsibility, OFCOM decides.

Samba Mobile launches an ad-supported mobile broadband service, vaguely like a data-centric version of Blyk’s first incarnation. The 3G & 4G Wireless Blog, meanwhile, discusses 3GPP’s efforts to standardise a sponsored/zero charge data service in LTE. Unpromisingly, the interface between the putative upstream customer who wants to pay and the service provider has been left non-standardised.

Rudolf van der Berg has been out pushing his vision of M2M customers controlling their own SIMs again. Interestingly, at least two major car manufacturers are getting involved. Here are the slides.

Elsewhere, we have M2M LTE for the railways. Note the “Mind of a telecoms executive” slide.

Meanwhile, AOL demonstrated its “micro-data centre”. Essentially, it’s a slice through the racks of a much bigger modular data centre, wrapped in a forkliftable pod and entirely remotely managed. They want to use these to create their own CDN and distributed infrastructure. One or two could live behind each local exchange building or next to a backhaul concentrator.

And here’s Deutsche Telekom’s Voice 2.0 strategy: integrate Tropo.com straight into their network and run the billing on their IT platform.

Finally, here’s an interesting historical overview of the phone call.

Horace Dediu reports that the US market is approaching 50% smartphones, and there is no sign of saturation yet. This gives us our Chart of the Week:

Screen-Shot-2012-07-03-at-7-3-3.06.48-PM.png

Another take-away from that chart is of course that things are very bad at RIM. Horace reports on the numbers. CEO Thorsten Heins takes questions from the Canadian public after announcing another 5,000 job losses.

Meanwhile, RIM’s mobile device management solution goes to Brazil in an effort to defend the 47% of the Latin American enterprise market they still have. Here’s a Motorola BlackBerry clone.

HTC’s revenues drop 27%.

As we found out at MWC, Telefonica will be the first to launch a Mozilla-powered phone. Mozilla has, in the meantime, decided to rename the project from “Boot to Gecko” to “FirefoxOS”.

The week’s major piece of speculation: will Amazon launch a smartphone? Interestingly, they have recently acquired a 3D mapping startup.

Nokia has a plan B, it says - but it’s not clear what it is. Meanwhile, a group of key Maemo/MeeGo engineers have set out on their own to create a new smartphone.

France Telecom is offering its customers a day’s free communication after a nine-hour outage of their French mobile network for both voice and data. Ironically, it came only a couple of days after the pioneering Minitel viewdata/telematics system was shut down for the last time. Elsewhere, SFR announced another round of job cuts.

Last week, the whole of the Lebanon lost its Internet service after a cable break. More here.

India has announced terms for the do-over of the GSM spectrum auction. Reliance is planning to IPO its submarine cables in Singapore for some $1bn.

RevK at Andrews & Arnold believes he may have secured the first BT Wholesale layer-2 Ethernet connection over the FTTC network, and has plans with regard to the Communications Bill snooping proposals.

Facebook is a carrier - it’s investing in a new trans-Pacific submarine cable, rather like Google did a few years ago. The imperative of controlling your infrastructure is still a powerful one. However, it looks like a major market for Facebook advertising is spam.

Tim O’Reilly argues that “time on site” is a silly idea, especially for Google - nobody wants to be on a Google search page when they could be getting to whatever they were searching for.

Fred “A VC” Wilson lays out 10 criteria that make a good application.

Apple, Microsoft, Intel, and Google revenues, although Horace might have done a better chart. iOS drives usage of all kinds of mobile Web apps, although it looks like Nokia Series 40 does too (see lower chart).

An interesting new device for livestreaming video. YouView launches - sort of. Ars Technica reviews the Google Nexus 7. Excellent flight search engine Kayak is a go for IPO at $100m.

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July 2, 2012

More CloudFail; Google / Facebook / Twitter; tablet round up; Voice 2.0 apps; and small cells - Telco 2.0 News Review

(Ed. Join us next at Digital Arabia in Dubai, 6-7 November. The Agenda covers the Digital Economy, Digital Commerce and Digital Entertainment in the Middle East and North Africa.)

Amazon Web Services was hit by a massive outage this week, after a hurricane knocked out power to data centres in the US-EAST region. According to the company, only one availability zone was down, but that was certainly enough to cause major disruption to web sites as diverse as Heroku, Instagram, Pinterest, and even Netflix, more often wont to give other people lessons on delivering high availability with Amazon EC2.

Netflix director of cloud architecture Adrian Cockcroft explains the position in a tweet - it seems something to do with the Elastic Load Balancer service went wrong, which would explain why failover into other AZs didn’t happen. Data Center Knowledge has a little more.

Meanwhile, there was a leap second over the weekend, which caused a surprising amount of trouble with applications as diverse as Qantas’ instance of the Amadeus reservation system, some Linux servers (kernels between 2.6.26 and 3.3 inclusive), and some Java virtual machines (notably Mozilla’s).

And, of course, a huge British bank had an entirely unrelated failure with its overnight batch processing. Details.

Does cost containment drive cloud adoption, or does it drive the second move, from the public cloud to the private cloud?

A top HP salesman leaves…to join VMWare. And Sony has acquired a cloud-based gaming company, Gaikai.

It was Google I/O week. Google announced the latest Android version, 4.1 “Jelly Bean”, which brings with it “Google Now”, a search product which tries to guess what you’re going to ask for next. Details, and criticism of the privacy aspects, are here.

There were also gadgets. For a start, there was the Nexus 7 tablet, the first Android device to ship with Chrome as the browser. Discussion of the relationship between the everything-on-the-Web/Chrome and the app-centric/Android side of Google is here.

Android activations are still racing ahead.

Meanwhile, here’s Google Nexus Q, the other big launch. It’s a media-streaming/smart TV device, although this one is designed as a black sphere with a ring of LEDs in an effort to make it look a bit more living-room friendly. It also gets a clone of Apple’s AirPlay features. Informitv says it does less than an Apple TV but costs much more ($299).

Here’s a look back at the first year of Google +.

In the cloud, Google has done a feature review of App Engine. This remark from its Senior Product Engineer is telling:

When asked why App Engine hasn’t rivaled Amazon in terms of the size of its customer base, App Engine Senior Product Manager Greg D’Alesandre told Ars that it’s harder to move code into Google’s service than it is into Amazon’s….

“It’s easier to take code running on a machine under your desk and put it on a virtual machine than it is to put it into App Engine,” D’Alesandre said.

Adobe is going to end support for its Flash Player for Android with the new version of Android.

Facebook, meanwhile, is going to release Q2 results on the 26th. We recently heard Facebook advertising described as “a waste of £2.50” and mostly interesting because of the information you can get on your audience from the planning tool. Twitter, though, is turning out to be a surprisingly good deal for advertisers, says the Wall Street Journal. And Yahoo! is considering outsourcing its tier 1 advertising to…Google.

In this week’s Chart of the Week, a German politician succeeded in getting his mobile operator to hand over six months’ worth of traffic data held under the EU data retention directive. The newspaper Die Zeit built a rather neat Web application to visualise the logs.

Vorratsdatenspeicherung.png

Play with it here. Meanwhile, the storied WELL online community is up for sale, again.

At Apple, SVP of Hardware Engineering Bob Mansfield has retired, apparently walking away from $40m in additional share options, even though the transition to his replacement (Dan Riccio, VP of iPad hardware) is going to be gradual. Mansfield’s role was making sure that Jonathan Ive’s designs could actually be manufactured. Having run the laptop product lines, he took over the iPhone after the iPhone 4 antenna crisis.

Here’s an analysis of the EU smartphone market. Overall, device sales are falling very slowly, while the smartphone segment is growing fast. And Samsung appears to be progressively taking over the old Nokia customer base, starting exactly in the first quarter of 2011.

From burning platform to flaming arrows - here’s an interesting discussion of Microsoft and Google’s respective tablet demonstrators and what they mean for developers. MS seems to be looking to a post-PC future, although the devices seem perhaps less ready than they looked, while Google is looking towards the 7” low-cost tablet bracket.

Horace predicts Nokia breaking up, with Microsoft taking a small stake in the smartphone operation. HP says no to Windows on ARM consumer tablets, leaning towards the “post PC” strategy above

Meanwhile, RIM has enough cash for seven months and BB10 is delayed. Again. AllThingsD is taking a look at the founders’ side-projects.

The latest round of patent litigation. In Japan, meanwhile, a consortium has emerged to promote Apple iOS in the enterprise.

Inter-cell interference - is it the biggest challenge for small cells? KT estimates that the proportion of their network affected by it goes from 25 to 40% with the deployment of small cells. The answer is, of course, the X2 interface between the cells, but the major vendors have yet to publish their specifications. Much more at the link.

There’s also much more detail here about the Cornerstone network-sharing agreement between Vodafone and O2. Ovum reckon the savings may be as much as £1bn by 2015.

Elsewhere, T-Mobile USA CEO Philipp Humm joins Vodafone as CEO of Northern and Central Europe, while Vodafone’s CFO of EMAPA moves to be Finance Director of Kingfisher.

And it is a sad day for the British mobile industry: Vodafone is reviewing its sporting sponsorships. No more boxes at the Lord’s Test or Twickenham and trips to the Grand Prix? How will the industry press corps survive?

Why Sonic.net flushes all its logs every two weeks.

Three new Voice 2.0 products: BlueJeans Network is a browser-based video conferencing solution, and the slightly more established Hookflash integrates its iPad-as-desk-phone-2.0 application with LinkedIn’s directory. And Sendhub, a group messaging application, has grown up to rival Google Voice as a full-featured better voicemail and call routing solution.

Smartphone users spend twice as much time on the Internet (not counting social media apps) than they do making phone calls.

Tablets are now bigger drivers of e-commerce traffic than smartphones.

Windows Update seems to have tried to install Skype on Windows machines as part of an automatic update.

It turns out that TeliaSonera subsidiary Yoigo’s decision to include minutes of VoIP in bundles was just the start - you’ll have to pay for Skype on their main network in Sweden.

Freespee can now let your customers schedule a call back from a web widget. And Tropo demonstrates with OpenBTS and the Tethr Box.

Kim Dotcom gets a win in the courts, as a New Zealand judge struck down the warrant for the raid on his house.

Another mobile card-acceptance startup. 40 years of Atari.

Chinese politician’s family turns out to own key TD-SCDMA companies. Suddenly, a whole range of curious events in the Chinese telco industry become clear.

And why operators care about the international law of the sea.

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