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

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