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November 29, 2013

Telcos could lose up to $172bn from core revenues in 5 years

Our latest major report The Future Value of Voice and Messaging shows that telcos could lose up to $172bn from core revenues in five years if they don’t make dramatic improvements to their voice and messaging strategies.

summary V&M forecast slide.png

The declines are due to so-called ‘Over The Top’ (OTT) competition, vulnerable pricing structures, economic pressures and societal changes. The research shows how Telcos can fight to reduce this loss by $80bn and improve their relevance to customers through intelligent optimisation of prices and bundles, service enablement, exploiting new standards such as WebRTC and VoLTE, creative approaches to own brand OTT services, and a greater focus on enterprise communications.

It includes detailed forecasts for 9 major developed markets (US, Canada, France, Germany, Spain, UK, Italy, Singapore, Taiwan), in which the total decline is forecast between $92bn (-25%) and $172bn (-46%) on a $375bn base between 2012 and 2018, giving telcos an $80bn opportunity to fight for.

The report also shows impacts and implications for other technology players including vendors and partners, and general lessons for competing with disruptive players in all markets.

One of the most surprising things the report shows is how effective some telco strategies have been in defending against disruptive competitors like WhatsApp. Then again, there are some markets, such as Spain, where the combination of telco pricing and economic conditions have played right into the hands of the so-called ‘OTT Players’.

Equally, there are some great opportunities for telcos to build new value, particularly in the Enterprise market, where some of the more traditional technology companies like Cisco face increasingly disruptive competition from players like Google and Microsoft.

More on the report

This report provides an independent and holistic view of voice and messaging market, looking in detail at trends, drivers and detailed forecasts, the latest developments, and the opportunities for all players involved. The analysis will save valuable time, effort and money by providing realistic forecasts of future potential, and a fast-track to developing and / or benchmarking a leading-edge strategy and approach in digital communications.

It contains:

  • Our independent, external market-level forecasts of voice and messaging in 9 selected markets (US, Canada, France, Germany, Spain, UK, Italy, Singapore, and Taiwan).
  • Best practice and leading-edge strategies in the design and delivery of new voice and messaging services (leading to higher customer satisfaction and lower churn).
  • The factors that will drive best and worst case performance.
  • The intentions, strategies, strengths and weaknesses of formerly adjacent players now taking an active role in the Voice & Messaging market (e.g. Google & Microsoft).
  • Case studies of Enterprise Voice applications including Tropo, Twilio and Unified Communications solutions such as Microsoft Office 365.
  • Case studies of Telco OTT & enterprise Voice and Messaging services such as Telefonica’s TuGo and Vodafone One Net.
  • Lessons from case studies of leading-edge new voice and messaging applications globally such as WhatsApp, KakaoTalk and other so-called ‘Over The Top’ (OTT) Players.
It comprises a concise executive summary, and contains 260 pages and 163 figures.

A summary of the report can be found here.

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November 25, 2013

Voice Strategy Report out now: Telco 2.0 News Review

Focus on voice: new Telco 2.0 strategy report, alarming ETNO forecasts, Sprint gives it away, innovating with the cloud PBX, more disruption

Our new Telco 2.0 Strategy Report, The Future Value of Voice & Messaging, is out now. The news is not good. According to our detailed forecasts for 9 markets, we expect a total decline in voice revenues between -25% and -46% on a $375bn base between 2012 and 2018, giving telcos an $80bn opportunity to fight for. We discuss in depth the changes in user behaviour driven by the economic crisis, the technologies of future voice, the opportunities they create, and the design considerations of new voice applications.

It’s not just us.

ETNO reckons Europe-wide telecoms revenues will fall 3.7% this year. They also note that CAPEX in Europe is actually falling, no surprise given the falling revenues. Being an industry lobbying group, the immediate Pavlovian response is to monster the regulator, complaining about roaming and termination changes and consolidation. A major take-home message from the report, though, is that the impact of regulatory changes is on the level of the curve rather than its slope. It’s still a major problem, even granted a huge let-off from the regulators.

Sprint, for their part, is giving away service to anyone who can prove they’re a student. You have to pay the full list price for your phone, but with that you get free voice and messaging and a gigabyte of data. Presumably the idea is that they will be able to retain the students, but it looks desperate.

Too much despondency would be a mistake. Sweden was a pioneer market for both FTTH and LTE, and their regulator reports that revenues are actually rising, driven by surging data volumes in mobile and growth of 16% year-on-year in FTTH, enough to outweigh line losses in the copper and cable industry. So perhaps that CAPEX might still be worthwhile.

The real problem is how to change the business model of voice to support the technology economically. Here’s a great presentation from this year’s Astricon about just that. Note that he’s approaching it from the point of view of a cloud/hosted PBX provider, not a telco - but the problems are the same ones. The question for telcos is whether they can develop the same sort of agility.

Last week, Tropo deployed with Starhub. The week before, Etisalat. This week, it’s Questar, a company that runs huge consumer surveys for the retail sector. They were using an IVR platform they built in-house for this, but now they’ve replaced it with Tropo. Whether they use the cloud API or a private deployment it doesn’t say.

Elsewhere, BlackBerry Messenger is still the No.1 iPhone app in 27 countries, three weeks after launch. The strength is coming from Asia, Latin America, South Africa, and the Middle East.

Yahoo!, meanwhile, is struggling to persuade its employees to move off MS Outlook to their new webmail app. Only 25% of their users have migrated, resulting in a really embarrassing cutesy all-hands memo. Really. You’ve got to see this one.

The new FCC chairman sees the PSTN transition as a priority, and NPR interviews Harold Feld and some subscribers about the problem. How will universal service be maintained? Is acting as the carrier of last resort just a burden, or could there be an opportunity in there? Here’s an interesting piece on the background to Verizon’s now infamous Voice Link product.

And telcos aren’t the only ones disrupted by smartphones - developing world cybercafes are suffering.

Telefonica acquisition hunt in Mexico, held up by legislative queue; no more “cramming” with US SMS

Telefonica says it’s looking for an acquisition in Mexico, after it hit a debt reduction goal early and cheered up its banks.

There’s a complication, though - although Mexico has at last legislated to challenge Carlos Slim’s monopoly, the secondary legislation implementing the new regulator in detail is held up in parliament and probably won’t make a deadline of the 9th of December. Ahead of it is a controversial oil-related bill that is dependent on an electoral reform measure passing first to ensure it gets the votes.

Elsewhere, all the US national wireless operators except Verizon Wireless have settled with an alliance of 45 state regulators to stop charging their subscribers to receive unsolicited SMS. This will make premium SMS business models much harder, although you might ask who bothers any more in these days of app stores. The answer is “spammers, and some charities”. Two of the operators have exempted charitable donations from the measure.

Centurylink has quietly been building up its wholesale and cloud operations. Then it bought one of the old-school Tier 1 ISPs, Savvis, hopping right into the premier league. Now they’ve acquired Tier 3, a VMWare-based cloud provider best known for supporting .NET apps.

Things may not be going so well at Sprint, but it’s not holding the Softbank Samurai back - he’s just added a Finnish games developer, Supercell, to the empire for $1.5bn. He believes games are the key category of mobile content - which may well be right, and has the advantage that a developer shop that can do good games can tackle other kinds of content as well.

Now the rows between Altimo and TeliaSonera are being wound up, this beef between Etisalat and Pakistan Telecom is one of the longest-running left in the industry. This week, Etisalat said it wouldn’t pay PTCL $800m it owes them under a deal originally signed in 2005 until 10 further properties are handed over from the Pakistani government to PTCL. In the meantime, the Pakistani market has opened up to competition and Telenor’s Mobilink division has eaten PTCL’s lunch - its net profit is down 58% compared to what it was in 2005.

Operating in the country has some special challenges. The government frequently orders the networks turned off at major events to hinder terrorist activity, which cost the operators $16m for just one incident this year, the Shia festival of Ashura, when young men dance wildly in the streets covered in their own blood streaming from self-inflicted wounds. Just imagine the selfies, and the frustration if you can’t get them on instagram because the 3G net is down.

MTN Rwanda is deploying Ericsson’s mobile wallet solution.

In Finland, after third operator DNA failed to sell itself, the CEO is off. Apparently falling voice revenue is part of the problem. Who knew?

In the UK, infrastructure JV MBNL is having major management changes - the boss, Graham Payne, is leaving, as is FD Brian More O’Ferrall. They’re replaced by Pat Coxen and Gervase King, seconded from EE and 3UK respectively.

And Lu Xiangdong, head of China Mobile’s marketing and digital services, is going to jail for accepting $2.5m in bribes between 2003 and 2011.

China Mobile 4G deployments; Indian, Aussie, and Singapore NBNs; Google Fibre, Kampala

China Mobile is going all-in on TD-LTE, planning to roll out in 15 Chinese provinces covering 63% of the population. Although they’re going with the Chinese flavour of the technology, they’re also trusting Ericsson to implement it. Ericsson got 10% of the China Mobile 4G master contract, but they’re claiming that the new order gives them rather more market share than that - probably because it includes work on the 2G and 3G networks as well. They’re providing base stations for the 4G network, plus EPC and HSS/HLR technology for a converged core serving all three RANs.

Alcatel-Lucent also declared victory, claiming it had secured 24% of the whole EPC order - but do they mean for the LTE, or the converged network, or what?

Apparently, Nokia really did consider buying the IP router and cellular bits of Alcatel-Lucent but decided against it.

An unconfirmed story suggests that Indian state infrastructure companies PowerGrid (guess) and Railtel (again, guess, but the railways’ telecoms division) are going to be providing the right of way for BSNL to deploy a major fibre network.

Singapore’s national broadband network is probably the most structurally separated in the world - separate actors own the right of way, the dark fibre, provide Layer 2 services, and provide Layer 3 services. SingTel this week got regulatory clearance to reduce this and acquire OpenNet, the company responsible for the build-out.

NBN Co, meanwhile, is pressing on with fibre-to-the-building, issuing a call for expressions of interest from retail ISPs for a group of buildings that will go live in February.

Google is building a wholesale dark fibre network in Kampala, Uganda.

SpiderCloud claims it has the first multimode small cell, supporting 3G, 4G, and WiFi on the same chip. It won’t be the last, as it’s based on a Broadcom chipset and others will be along shortly.

About 22 per cent of new capacity this year will be provided by Wi-Fi, although that will be much higher in hyperdense settings.

Apple builds a sapphire factory, fails to impress Detroit

Apple is buying up technology again, like they did with PA Semiconductor some years back. PrimeSense is an Israeli chip maker that develops machine-vision technology, notably the 3D sensors in the original Microsoft XBox Kinect.

They also acquired a pair of companies in the business of fabricating very, very thin layers of sapphire through a process that actually includes an ion cannon. The applications include optics, high-performance solar panels, and of course, touchscreens that don’t crack easily. A couple of other Apple themes are observable - the new factory is going to be in the US, specifically Arizona, and Apple is lending the owners the money to build it via the device of making a huge down payment on the products.

Here’s an interesting piece on iOS in the Car, Apple’s initiative to integrate connected cars with iGadgets, iTunes, etc. Apparently it’s not going well, in part due to ecosystem issues. Car manufacturers aren’t keen on anything that smacks of a lock-in and would much prefer a standards-based solution, but Apple doesn’t want to just be an option.

Two contrasting BlackBerry stories: the ingenious hack that got Android apps running unmodified on their OS, and a blog devoted entirely to whining about the Q10.

Speaking of Android hacks, Google is now paying for fixes to Android security issues.

LG, though, is planning to de-emphasise smartphones and concentrate on smart TV.

Really impressive Ads, 2.0; drift at Google search; Wozniak really not pleased with Glass, iPads, or telcos

Now here’s a genuinely novel use of augmented reality: British Airways has some billboards that know when one of their aircraft flies overhead, tell you the flight number and destination, and encourage you to look up.

We mentioned iOS and machine vision earlier on - here’s an original marketing application, the app that uses two or three photos and a mirror to estimate your bra size and make some recommendations. This officially replaces the Sherwin-Williams app that matches paint colours as our favourite mobile marketing play. As someone said at Digital Arabia the other week, utilities are great.

Don’t forget to read the Telco 2.0 Digital Commerce report if this interests you

That’s an example of advertising/marketing technology that facilitates buying. This, on the other hand, is an example of trying to mould the customer. Google has patented an application that suggests what you might want to say when you share something on a social network.

Danny Sullivan of what we used to call SearchEngineLand points out that nobody seems to be in charge of Google Search and as a result it’s drifting.


Meanwhile, Steve Wozniak says he thinks Google Glass is like Bluetooth headphones, and nobody uses it for more than two weeks. He also really doesn’t want an iPad for Christmas, but if you think he’s hard on Apple and Google, wait ‘til you hear what he has to say about telcos.

So why doesn’t Woz have broadband, which is pretty much as essential as running water in most tech bods’ homes? He blamed it on his “lousy phone company”, before philosophically adding: “But that’s life. It is really sad as I was the one that had a 1Mbps line back in the day when everyone else was on dial up. I was the king of the hill.”

Mozilla’s deal with Google paid it $274m last year, out of a total of $311m.

MySpace cofounder, Chris DeWolfe, says that News Corporation ruined MySpace through a succession of ill-thought-out decisions motivated by a drive for immediate profitability, but he didn’t have an affair with Rupert Murdoch’s wife.

26k servers per Facebooker; learning from Google; submerging chips for extreme power savings

Facebook really believes in DevOps and data-centre automation. Each of their sysadmins manages about 20,000 servers, on average, with a maximum of 26,000. This is achieved through close attention to the hardware design - servers are specified to be entirely maintainable from the front of the rack and accessible without tools - but most of all through a lot of software work, notably a system called Cyborg that reads their server monitoring system’s feed, tries to fix problems automatically, and failing that, reports to their ticketing system.

Interestingly, part of the motivation is to retain and develop operations staff by letting them spend more time improving the software and hardware rather than power-cycling boxes. Quite how impressive the figure of 20,000 is should be clear in the light of this High Scalability post.

Google says it’s actually better to mix workloads on your servers in order to get higher average utilisation.

Liquid cooling was a theme last week. But who wants liquid around electronics? Chilldyne is trying to make it a safe proposition, but the world’s most energy-efficient supercomputer lives in a tank of sinister green fluid in a Japanese laboratory, like a sci-fi brain in a jar, literally submerging its chips directly in the fluid.

James Hamilton of Amazon Web Services explains why you might not be that excited by putting solar panels on your data centre.

BGP route hijacking; more Snowden; p2p web serving through WebRTC; Theremin app

Renesys reports on a new security threat, using BGP route hijacking to funnel your traffic through some random network for nefarious aims.

Edward Snowden drops some more NSA slides, and this one purports to show everywhere they collect Internet traffic worldwide. It looks like a map of the Internet.


Is there anything they didn’t document as PowerPoint slides?

Here’s a project that uses WebRTC to create a web server inside your web browser.

British telecoms software and consulting house Aircom sells up.

And is this the best mobile app yet? Theremin I/O is, as the name suggests, a theremin for your iPhone using the camera as the sensor.

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November 20, 2013

The Future Value of Voice and Messaging: >$80 billion to play for

Our latest strategy report The Future Value of Voice and Messaging shows how telcos can slow the decline of voice and messaging revenues and build new communications services to maximise revenues and relevance with both consumer and enterprise customers. It includes detailed forecasts for 9 markets, in which the total decline is forecast between -25% and -46% on a $375bn base between 2012 and 2018, giving telcos an $80bn opportunity to fight for.

It also shows impacts and implications for other technology players including vendors and partners, and general lessons for competing with disruptive players in all markets. It looks at the impact of so-called OTT competition, market trends and drivers, bundling strategies, operators developing their own Telco-OTT apps, advanced Enterprise Communications services, and the opportunities to exploit new standards such as RCS, WebRTC and VoLTE (more here).

Voice and Messaging Cover Image medium Oct 2013.png

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November 18, 2013

Vodafone H1s, UK focus, T-Mobile USA, MTN, Voice 2.0, Apple CAPEX: Telco 2.0 News Review

Vodafone endures hellish H1, hopes for European recovery. Will the users change back, though?

It’s Vodafone H1 time and the results were fairly awful, with service revenue down 4.2%. Europe was the problem, again, with the Southern European markets down 14.9%. But even the North & Central European businesses were down 3.9%. In fact, however grim things have been in the UK, it was the least bad of the European markets, with a drop of “only” 2.5%. VF blames “intense price competition”.

This is precisely the situation our new The Future Value of Voice & Messaging Strategy Report aims to understand. To order or find out more please email contact@telco2.net or call +44 (0) 207 247 5003


The whole justification for selling out of VZW was that the US market was a disruption candidate, and Europe was about to see a strong recovery. Vittorio Colao’s slides literally say this, promising a return to growth in 2013-2014 and an end to pressure from regulators. But the Eurozone has just had a quarter perilously close to deflation, and a strong case can be made that users’ behaviour has been permanently reset, with much lower voice and messaging usage, high sensitivity to the edge of the bundle, and a strong preference for WLAN where possible.

That said, Vodafone has made its choice. Implementation is focused on “Project Spring”, an additional £7bn in CAPEX over the next two years, and on deepening its engagement with customers in general, by adding more content, more fixed-line, and more unified comms. Colao is talking about going into UK pay-TV and owning content, and perhaps acquiring more cable assets. Telco-as-media is surely the business model option with the worst record in the industry, although cableco distribution and network capacity would no doubt be handy.

Out on the blue water, Vodafone’s emerging markets businesses in the AMAP division turned in a solid six months. South Africa is now the second-biggest contributor of EBITDA in the Vodafone Group, for example, and India is the fourth. Project Spring money is being channelled partly into building up 3G and backhaul provision ahead of 4G, and partly into a major expansion of M-PESA.

Elsewhere in the UK, TalkTalk provided some qualified encouragement, adding 167,000 new TV customers by pricing below the sports-focused operators for a basic service. That’s more, as they boasted, than Sky, Virgin Media, and BT added put together. They also pulled through 5,000 net adds for broadband.

The prime minister asked for a meeting with the heads of the five families…sorry…the UK’s major telcos and ISPs to ask them nicely to lay off the prices a tad.

Broken Telephone has got hold of a report drawn up for TalkTalk claiming that BT’s pricing for wholesale and LLU access to their FTTC network has been arranged to make it impossible for competitors to survive. Officially, the pricing should be “close” to their estimated costs, but OFCOM doesn’t actually regulate this, making it a dead letter.

Meanwhile, BT resorts to frankly notable tactics in its effort to keep all the BDUK money. Perhaps the prime minister’s time could be better spent. Our own sources suggest extending price regulation to FTTC is exactly what OFCOM is considering, but don’t hold your breath.

Ironically, Openreach CEO Liv Garfield is off to join Severn-Trent Water, which is itself subject to a nice letter from the minister asking them to, you know, go easy on the, ah, pricing.

And here’s an Economist award for RISC and BBC Micro inventors Steve Furber and Sophie Wilson.

T-Mobile USA grabs another million subscribers; US spectrum; where did that exaflood get to?

T-Mobile USA’s Q3s are out, and they show a continued streak of subscriber gains. They added another million net subscribers, just behind the heavyweight champ Verizon Wireless and ahead of AT&T, and beating Sprint into a cocked hat. Churn was also down. This came at a price - ARPU was down by $5 year-on-year at a still respectable $45. The carrier made a $33 million loss in the quarter.

Looking ahead, they’re planning to float a substantial amount of stock in order to pay for more spectrum. And the Satellite Cowboy, DISH’s Charlie Ergen, is still interested in bidding for the company now he can’t have Sprint.

Sprint, for its part, doesn’t want to bid on the H-Block 1900MHz spectrum. This is the block the Cowboy had to get rid of in exchange for clearance to use the 2GHz satellite band for mobile. Now, he’s suggesting he might buy it back, or maybe sue LightSquared, or both. Sprint, for their part, are keeping their powder dry for the 600MHz auction.

Meanwhile, Republic Wireless, the hybrid MVNO/WiFi operator, is offering plans that start at $5 a month if you pay $299 for a Moto X, not a bad deal. That rises to $40/mo for unlimited LTE. Either way, they’re punching prices.

Chetan Sharma reckons US mobile data revenues grew 15% in the last year. But what about volume? Now this is ironic.

Sandvine, a vendor of network monitoring and DPI kit, has issued a report on Internet traffic growth, and DSLReports reports that it’s fairly steady and there is no sign of the famous “exaflood” that was going to cause “Internet brownouts”. DSLReports goes on to investigate the political background to the exaflood concept and you might be surprised by what they find, but surely the best bit of the story here is that the debunking comes from one of the firms that makes the equipment you need to selectively throttle video streams.

In further irony, swinging off the same report, BitTorrent accuses Netflix of being a bandwidth hog, because US downlink traffic by type looks like this (note that Sandvine evidently trimmed the protocol classes that are less than 1% of the total):

They also make the point that their own protocol is designed to back off from congestion, and P2P distribution is fundamentally efficient, and that perhaps Netflix could make some sort of deal? As usual, when this issue resurfaces, it’s because there’s something important happening at the FCC. A court is due to hand down its decision on the Open Internet Order, and at least one senator is planning to replace it with a bill putting Internet disputes under the authority of the anti-trust regulators.

AT&T, meanwhile, is getting interested in software-defined networks via something it calls the Supplier Domain Program 2.0.

And ISIS has launched, quietly.

Facebook joins the GSMA; South African market may be about to change; “We’ll happily prioritise Skype”

Facebook is the newest member of the GSMA, which frankly stretches the notion of an association of GSM operators. Of course, they’re only an associate member until they actually buy spectrum and turn up service, but it’s telling that they want to be involved.

In South Africa,Telkom is considering its options about what to do with the mobile operation. A sale may be on the cards. Their competitor, Cell C, meanwhile argues that MVNOs in Africa should target the premium market, rather than being hard discounters like they usually are in Europe. Virgin Mobile Australia is an example.

Telekom Austria spent a billion on LTE spectrum last week. This week it reported Q3 profits down by 48%.

LTE operator Smile has launched in three African countries (Nigeria, Tanzania, and Uganda) with a data-only service, and this week they said they would “happily prioritise Skype traffic”. They’d also like to launch in South Africa.

MTN, meanwhile, signed up with Etisalat to use their Smarthub IPX based at the Fujairah cable landing in the UAE. SAP reckons 56% of operators are now connected to at least one IPX, up from 30% in 2011. Interestingly, the most common service hooked up is still voice.

Did you know patent trolls go around sending hotels that offer WiFi nasty letters?

Amazon - the cloud is all about energy; Kinesis massive stream processing; Mayday customer service; Workspace virtual desktops

It’s the time of year Amazon’s AWS:Invent shindig rolls around. James Hamilton usually brings something special in terms of presentations to the show, and this year’s surprise is that AWS is making its own electricity substations, which involves writing firmware for the electrical switchgear. He pointed out that once servers are installed, any price point that is higher than the cost of the power draw and cooling is worth having, explaining both why AWS can be so cheap and why they are so militant about energy.

It’s not just AWS. This Data Center Knowledge post has the week’s top five stories in their view, and all but one are about energy. Facebook is buying wind turbines to drive a new data centre. 3M is offering immersion cooling for servers. Schneider Electric is rewiring old car showrooms into data centres. Apple is operating a pair of solar power stations. And Microsoft is looking at generating electricity with fuel cells directly in the rack, getting rid of the whole power distribution network.

How long before someone gives their DC its own nuclear reactor? It’s the kind of thing Google would do, surely?

AWS, meanwhile, announced products. Amazon Kinesis is a solution for capturing and processing very high volume streams of data in real time, natively sharded and distributed among AWS Availability Zones.

Amazon Workspaces is their move into the virtual desktop market, which lets you run Windows 7, Microsoft Office, and that sort of thing in the cloud and access it from a whole variety of client devices (notably iPads). You need an Amazon virtual private cloud instance and a VPN to set it up.

Amazon Mayday, the tech-support solution built into the Kindle Fire, is discussed by Asterisknik Tsahi Levent-Levi, who thinks it’s an example of the future of contact centres and a threat to telcos’ business with them.

LooseBolts has a list of people worth listening to about data centres.

Tropo rolls out to Singapore and the UAE; more contact centre innovation

Tropo has more carrier deployments. Last week in Dubai, we heard from Etisalat about their deployment of the Voice 2.0 platform, its first step outside the global north. This week, Starhub in Singapore turned on its SmartFoundry developer platform, based on Tropo.com for the voice and messaging features.

Here’s an interview with the developer behind OnSIP’s integration with WebRTC.

We blogged a hackathon project to log, transcribe, and analyze service calls with Twilio and an undocumented Google speech-to-text API the other week. The Twilio blog has more detail and an interview with the developers.

HD voice makes its way into the contact centre and enterprise.

And here’s the read-out of last week’s VoIP Users call, which focuses on the key open-source tool that is Kamailo, your first choice for a big SIP proxy.

Netflix redesigns, drops the embedded HTML5 browser

Netflix is carrying out a major UX redesign, which requires it to drop its purist HTML5-everywhere approach. In order to guarantee a seamless cross-platform user experience, Netflix was actually shipping a whole headless web browser based on WebKit as part of its app, providing its own runtime for the HTML5.

This is obviously clumsy, and tied up a lot of engineering resources maintaining a browser project, while even then, the cross-platform experience wasn’t perfect. Roku devices, for example, couldn’t look at individual profiles or auto-play TV content. So it’s back, or perhaps forward, to native code.

There’s some more detail at the Netflix blog.

Meanwhile, do the service ecosystems, and even content, pale in comparison to Apple’s sales of hardware and the software that goes with it? The 3G & 4G Wireless Blog thinks it’s just wisest to get your Netflix fix over WiFi.

Apple doesn’t just buy tooling, it invents tooling; Chen gets the $1bn for BlackBerry

Apple is going to spend $10.5bn in 2014 on CAPEX. Some of that is a new headquarters building, but as usual, a very large chunk will be invested in machine tools for Apple’s supply chain. Fascinatingly, Apple employs roboticists and production engineers who are deployed for long periods of time to their suppliers’ facilities, and they even sometimes invent their own tools.

Bloomberg Businessweek quotes the example of when the iPhone 4 gained a gyroscope. This had to be tested, and nothing suitable was on the market. As a result, Apple made one:

The resulting contraption has a granite base and cubes that spin several iPhones around 30 degrees a second to test that the movement-tracking technology is functioning, said the person. Apple then had enough of the machines made to place at the end of suppliers’ assembly lines in China for iPhones to run through

Apple also often provides suppliers with finance out of its cash pile, typically by paying for part of the production run in advance. Horace, quoted in the piece, blogs that Apple’s 2014 CAPEX budget is about 75% of a US Navy aircraft carrier. Samsung’s may actually be more, depending on how much of the Display Products division you reallocate.

John Chen, the new CEO of BlackBerry, says he’s confident in his plan to “rebuild for all our constituencies”. He’s got the $1bn of financing he was after, which no doubt helps.

Jolla’s first SailfishOS phones should land on the 27th of November. They’re preloading Yandex’s unofficial Android app store in order to have a reasonable app inventory at launch.

Cyanogenmod now has a somewhat less user-hostile installer.

Who gave the NSA your stuff? Paranoia hits Cisco’s sales

Major US tech companies are suddenly keen to make a clean breast of their cooperation with NSA surveillance, Forbes says. As a result, here’s a neat infographic.


What is Yahoo! up to? (Probably running outsourced e-mail, is our guess.) Meanwhile, it emerges that the NSA tried to persuade Linus Torvalds to compromise Linux.

Cisco, whose quarter just came round, has seen a sudden and dramatic plunge in emerging market sales, notably in Brazil. CEO John Chambers thinks it’s because nobody trusts US vendors any more and other companies will be similarly affected. There’s some more here at the Financial Times.

A good piece on the security of baseband operating systems.

And did you know the President of the United States pitches a tent in his hotel room in the name of communications security?

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November 13, 2013

Innovation Souq! - 6 Demos in 42 Minutes

The Innovation Souq session at our Digital Arabia event is a new format in our events that we’re hoping to roll out more broadly. Each participant pitches their innovation for 7 minutes, and when all of them are done, the delegates can wander around the souq and meet them informally.

Etisalat’s demo combines mobile payments, advertising, and augmented reality. You can point a mobile device camera at products to see more detail and perhaps offers, and then pay for them using their m-payments service, while the merchant sees this on their POS terminal. The detail we liked, though, was that the AR element doesn’t have to be projected over something physical - it could also be registered against scenes in a TV broadcast, opening up a lot of new possibilities for advertising and commerce. Not just those, of course - it also creates some new possibilities for media in general.

Smartpipe wants to dig into your CDRs and generate advertising opportunities based on insights from them.

Tmob, a Vodafone-linked mobile payments startup, is using the proximity features that arrived in iOS 7 and Android 4.x to implement location-based offers and surprises. Apple call it iBeacon, and you should probably expect to see more of this.

Zangbezang is a rather impressive solution that lets you set up offers with geographical and demographic targeting and then redeem them. The transactions element of the cycle is based on QR codes and the smartphone camera, so there’s no need for either NFC or a Square-like credit card dongle as all the financial processing happens via a website. There’s quite a bit of richness to explore in the targeting and recommendations process.

NPTV is a cloud platform for producing richer, interactive video with multiple camera options, AR overlays, and the like that the viewers control. Think telemetry or the driver view camera in a F1 race, or the reverse angle camera in a football match. The rendering happens in the cloud, unloading a lot of computing demand from the user’s device or your Web servers. As usual with the cloud, there’s quite a bit of innovation in the infrastructure that’s hidden from the user, including a new chip.

Telkom Indonesia and EBay are cooperating on a mobile commerce platform for small businesses - the facts that stick with us, though, are that there are 5.7 million blogs in Indonesia and it’s the world’s second biggest userbase for Opera Mini. That’s quite a mobile Web market.

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November 6, 2013

Innovations: Customer Experience, Analytics, Smart Grid, M-Commerce and Monetising Content

The Innovation Souq! at Digital Arabia in Dubai next week (11th-13th November) has a fascinating line up of demos of innovations by innovators from across the digital ecosystem. We’re really looking forward to seeing these short, sharp demonstrations - the rules are that they have to be real innovations that can be applied now. We’ve also got a fantastic group of participants lined up to see them. [Ed: If you haven’t booked yet there are a few spaces left - email contact@telco2.net or call +44 20 7247 5003 ASAP. ]

There’s such a broad range of innovations on display that it’s hard to categorise without doing some a dis-service as many cover more than one area of innovation. However, the main themes we anticipate are:

  • Customer Experience: Accenture will show ‘Call Centre 2.0’, showing analytics in action enhancing real time customer experience; Intel are showing Communications-Enabled Video Conferencing, enhancing conferencing with APIs; and ZangBeZang are demoing ‘Customer Engagement 2.0’.
  • Building on the Data Analytics and Smartgrid themes, IBM are demonstrating city traffic data analysis, and Ericsson ‘Enabling the Smart Grid’, enabling enterprises such as utilities to use network capabilities to drive third-party innovations.
  • In M-Commerce, Etisalat are demo-ing Mobile-Id-as-a-Service, and Mobile ‘Point of Sale’ (M-Pos) innovations, while 5th Tier’s CEO Tanya Field (ex-O2) is showing Mobile Advertising and Mobile-Id-as-a-Service. Turkey’s Tmob are showing Mobile Wallet 2.0, Minutrade ‘mobile as a loyalty currency’, and Mastercard in-content web payments.
  • Relating to Monetising Content, Etisalat are also showing ‘TV Monetisation 2.0’, and ex-Rovio COO (Angry Bird, also ex-CEO Tele2 and C-level in Sonera, TeliaSonera and Wataniya) Harri Koponen is demonstrating NPTV’s cloud-based real-time interactive video.
So join us for the Innovation Souq!, the Digital Commerce and Digital Entertainment workshops, and the Digital Economy brainstorm. See you there - or get in touch if you’d like to participate in future innovation demos - email contact@telco2.net or call +44 20 7247 5003). To share this article easily, please click:

November 4, 2013

Apple iNumbers, BlackBerry falls through, Cisco H.264, “Swiss Cloud”: Telco 2.0 News Review

Apple numbers - 270m iGadgets in 2014, Qualcomm in for BlackBerry, ARM strategy

Here’s an extensive review of Apple’s 10-K, which makes the point that although Apple sells more into China than Japan, sales in Japan are growing much faster. This is possibly explained by the timing of product launches in the two markets, although it also makes sense in the light of all those cheap Androids spreading around China. Also, R&D spending is up a little, but this post puts it in context, pointing out that it’s been averaging about 3% of net sales since 2005.

Horace also updates the CapEx/unit shipments model and forecasts 250-285 million iDevices for the year.


Meanwhile, Nokia Lumia shipments hit 8.8 million a quarter, but it’s still nowhere near breaking out of also-ran status. Nokia renewed its patent agreement with Samsung for another five years this week.

This afternoon, the Fairfax bid for BlackBerry fell through. Thorsten Heins resigns as CEO and the company is seeking $1bn in funding soonest. AllThingsD reported earlier that Fairfax Financial, the private-equity firm bidding for BlackBerry, was struggling to raise the cash it needs to close the deal.

The main - indeed the only confirmed - “other bidder” is the former half-CEO, Mike Lazaridis. His bid has just become more serious, having signed up Cerberus Capital Management, and also drawn interest from Qualcomm, which is apparently in talks to join the club with a view to a major downstream market for all those Snapdragons.

ARM, meanwhile, gives The Register some detail about its strategy with the 64-bit chips they provided for the iPhone 5S. They expect the slightly less fancy version, the A53, to be shipping next year in a wide range of devices, although they might only use it in 32-bit mode. ARM’s director of mobile strategy, James Bruce, also says that the feature phone market is actually shrinking as $45 basic smartphones take over, many of them with a Cortex-A5 processor.

Some of the A53s will be manufactured by Intel, albeit for network equipment applications rather than end-user.

Motorola, or Google Hardware, is talking about Project Ara, an effort to develop a kit of modules that you can plug together to make your own mobile form factor. We remember research projects from NTT DoCoMo and Nokia that did this; they didn’t go anywhere.

Meanwhile, VMK Tech wants to assemble Android devices in Congo-Brazzaville.

AT&T to bid for boring bits of Vodafone? BT results; Carrier roundup; Viacloud keeps staffing up

Is life getting boring now you can’t have Vodafone-Verizon rumours any more? Perhaps it is. So why not try Vodafone-AT&T rumours instead? The story seems to be that AT&T approached Verizon during the run-up to the bid for Verizon Wireless, suggesting they might want to buy the whole company, sell the emerging markets operations to America Movil, and the rest to AT&T. As it happened, Verizon found a way to buy VZW without all this complexity. Now, the idea has been refloated, just with the emerging market operations being sold to “America Movil, China Mobile, or Orange”.

Why a bidder would want to get rid of the growing, profitable bits of the company is an interesting question, but then that’s what Vodafone did with VZW. Elsewhere, Telefonica asked the regulator for clearance to buy E-Plus, while the sale of Czech O2 was expected to clear today.

BT reported Q2 consumer revenues up 4%, although overall revenue was flat and “core” profits were down 4%. The secret to both was football - on the one hand, 2 million subscribers signed up for BT Sport, plus as many via wholesale, on the other hand, it costs a fortune, even for the company that got literally all the UK rural broadband money.

DTAG, for their part, is concentrating on selling a second-screen experience in cooperation with Sky rather than buying more rights. They also say that 43% of their customers would sooner give up beer than smartphones.

After years of embittered disputes, TeliaSonera has had enough, or rather, the Swedish and Finnish governments who own much of the company have had enough. The networks in Central Asia, Turkey, and Nepal are up for sale as a job lot priced at around $10bn.

LTE spectrum began by selling unexpectedly cheaply. But as the process begins to tap the frequencies around 1GHz and just below, are we seeing a swing to higher prices and the potential for another bubble?

Meanwhile, LightSquared is suing GPS manufacturers for not suing them earlier (in effect). Ooredoo has signed up the 1 millionth mobile money customer. And MVNO shop Viacloud makes another big signing, recruiting Vodafone’s former head of wholesale James Gray.

Alcatel seeks cash; Telstra, EE testing LTE Broadcast; Turnbull turns back towards FTTH

More Alcatel-Lucent news. After the 10,000 job cuts, and the better-than-expected but still pretty awful results, ALU is looking for cash. Shareholders are getting tapped for $1.29 billion through a rights issue, while the company is going to sell $750 million of high-yield bonds and draw down an existing $675 million line of credit. The main point of the exercise is to refinance debt that matures in the next two years - the CFO reckons that once the shuffle is complete, the company’s net debt will be about €50 million.

Telstra is trialling LTE Broadcast, using Ericsson’s implementation. Interestingly, their interpretation is analogous to IP multicast, assigning heavily requested streams of video to radio channels. Fierce Wireless swings off this to discuss the technology in general, review the sad fate of DVB-H, MediaFLO, and IPWireless’s TDTV, and argue that part of the problem is coming up with a business model.

They also note that EE is planning a trial next year, and Qualcomm has an SDK that should be getting into devices by the second half of the year.

Elsewhere, Malcolm Turnbull, the Aussie Minister for Broadband, has given an interview suggesting he may be warming to the FTTH element of the NBN after all.

And the 3G & 4G Wireless Blog takes a look at ANDSF in Hotspot 2.0.


Cisco offers WebRTC free use of H.264, with strings; Voice 2.0 examples; telco impact

Cisco offered the WebRTC community an ambiguous gift this week. Chris Kranky summarises the issue as “free drug samples”. Basically, Cisco has forked out to license the H.264 video codec and make it available for WebRTC implementers - but as Chris says, what happens if Cisco ever decides to stop paying the fees to MPEG-LA? Suddenly, every application that uses it will be vulnerable to their lawyers. Some WebRTC people go so far as to suspect Cisco, heavily invested in SIP-based hardware, of trying to sabotage them.

Meanwhile, there’s a distinct sense of everything in the Voice 2.0 world draining into WebRTC. You may remember Hookflash, among other things, making a desk phone-like dock for iPads as well as an enterprise-focused VoIP client for them. Now they’re working on an alternative JavaScript API for WebRTC, the Object-RTC (ORTC) API.

Here’s a neat example application from the Twilio blog - a plugin for a CRM package, FullContact, that handles calls via Twilio and generates a screen pop with information pulled from the database based on the phone number when a call comes in.

Here’s a hackathon project that provides an analytics dashboard for voicemail and calls, using Google’s speech-to-text. Google speech-to-text? Yes; there’s an undocumented API and a client library here. And this is what happens when Twilio tries to transcribe a fax.

This all has impacts on telcos. Orange’s voice minutes of use are falling, for the first time (and Free Mobile is credited with pushing down ARPU 10% year on year). Softbank shells out for Ericsson’s VoLTE solution in Japan.

Android Home is Google Search; Wallet gets rid of Secure Element; Google Boat less interesting than feared

Someone else who wants to show you information on phone numbers as your calls come in: Google. Android 4.4 “KitKat” moves the homescreen app inside the Google Search app. Ars Technica rather snarkily says that Google “just pulled a Facebook Home”, but this has some nice features, like automatically pulling up Google searches of phone numbers in the dialler (although that does mean Google gets to reverse-engineer your CDRs).

It also means that yet more Android functionality migrates into Google service apps, rather than the open-source trunk. It has also always been surprising that Android isn’t more of a search-centric UI than it is.

Meanwhile, Google makes some changes to Google Wallet, specifically getting rid of the requirement for an NFC Secure Element. Instead, it uses another protocol, letting the software emulate the Secure Element. This means Wallet can deploy onto devices where the carrier doesn’t accept it as part of the SE - like the ISIS carriers’ devices. On the other hand, it drops whatever additional security the carriers brought to the table.

Here’s an interesting piece about whether Google will put ads in G+. Apparently, they’ve considered something like the “sponsored stories” in Facebook, G+ items advertisers would pay to have injected into the content stream. But, interestingly, there is a school of thought at Google that argues that this sort of advertising is not very valuable compared to search-based. Jessica Lessin also offers some data points about adoption of G+.

Putting them together, you can make a case that Google thinks most of Facebook’s ads are brand-building, with fairly low marginal value, and G+ doesn’t have the reach to make this up on volume. Therefore, it needs to offer targeting and hot leads. That was, of course, true of the original Google Ads.

Elsewhere, did you know that Viacom is still suing YouTube, despite the knockbacks and the fact that they have no objection to YouTube since 2008 and the deployment of ContentID?

And Google Boat turns out to be a “high-tech showcase for Google Glass”, or perhaps yet another train set in the world’s best shed. The Hamina data centre in Finland, though, is very much serious business, and Google is investing another $450 million there.

Schmidt furious about NSA tapping Google WAN, buys $190,000 crypto linecards; whole of Europe “in it up to neck”; supermarket tills are looking at you

Eric Schmidt, meanwhile, expresses “outrage” at the revelation, by the now-traditional means of an Edward Snowden document dump, that the NSA (and GCHQ) tapped the company’s inter-data centre links. They also did it to Yahoo! and much more detail is here. He also says that the company has no current plans to expand further in China. Perhaps the most interesting point here is that the Wall Street Journal bracketed the two issues.

Interestingly, crypto specialist Jacob “ioerror” Applebaum, a key figure in the support network for Snowden, has suggested that someone close to him informed Google in advance of publication. Google has been urgently deploying optical-layer encryption on these links for several months. An interesting thread on NANOG from June 2013 refers (subtly).

Further revelations showed that European intelligence services were sharing enormous amounts of data with the NSA and co-operating in tapping various fibre-optic cables. France’s DGSE, according to a British report, has a

“main industry partner, who has some innovative approaches to some internet challenges, raising the potential for GCHQ to make use of this company in the protocol development arena”

No prizes for guessing that one. As for Spain’s CNI:

the CNI have been making great strides through their relationship with a UK commercial partner

No prizes for that one either.

Meanwhile, Brazil is passing a new law to require that personal data be stored inside the country, and Google’s public DNS servers in Brazil appear to have shut down. Germany and Brazil are also going to the UN over the issue.

British supermarket Tesco wants its tills to recognise your face so they can show you adverts. Adobe’s password leak is worse than we thought. And Barclays Bank won’t let you use their mobile app if you’ve got root on your Android phone.

Put your dodgy data in a Swiss Cloud account; HP ARM; use AWS without needing a server

Swisscom, meanwhile, is hoping to take advantage of all the paranoia to snag some more cloud and managed hosting business. They promise to keep all your data in Switzerland and to comply with strict local privacy laws, rather like Swiss banks used to. They should probably expect to end up with quite a lot of “dirty” data, too.

Here’s some detail about HP’s Project Moonshot, the system that lets you build a cloud out of plug-in microservers. Over at ARM’s annual shindig, HP announced a couple of vendors offering ARM-based plugins, and described its Discovery Lab program that demonstrates the technology.

Amazon Web Services has a new JavaScript API, which means you can build web pages that use AWS services without any server-side code, just the page and some AWS services (at the moment, storage, queues, notifications, and the DynamoDB database).

Some detail about LINX’s new data centre in Ashburn, VA. TeleCity has encouraging Q3 sales.

And finally, a journey in the footsteps of the Australian Overland Telegraph, and the cable and microwave systems that followed.

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