November 1, 2011

Telco 2.0 CEO at ITU World speaking on ‘Personal Data’ on Futurists Panel

As a warm up to our EMEA Brainstorm in London next week here’s a link to a video of Telco 2.0’s CEO, Simon Torrance presenting at the ITU World event in Geneva last week on ‘Personal Data as a new class of Social and Economic Asset’ on a panel of ‘futurists’ looking at the Future of the Networked Society. Simon’s presentation is about 11 minutes into the session and there are charts accompanying the video.

simon at ITU video screenshot.png

The graphic below was created by artists at the show, trying to summarise the key themes.

Visions networked graphic sarah clark oct 2011 ITU.JPG

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July 29, 2011

Great response to Telco 2.0 ‘smart pipes’ survey

Thank you to the 66 people that have completed the survey we launched yesterday.

A few others have kindly completed their mailing details but not answered any questions! Remember: the full ‘Value of smart’ report will only be sent to those that complete the survey and it only take 15 minutes.

To prevent influencing those that have yet to complete it, we can’t share early results to questions but we are pleased with the mix of respondents - lots of operators and vendors as well as analysts and consultants (in the ‘Other’ category). It would be great to get more internet players. Also, would like to see input from those outside western europe!

Click here to take survey

Survey  - first 66 respondents.png

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July 28, 2011

Take the Telco 2.0 survey on the value of ‘smart pipes’

We are publishing a report on the value of operators being ‘smart’ in early September. It is being produced 100% independently and kindly sponsored by Tellabs. It will be freely available.

As part of the research process, we are conducting a short survey. Click here to participate

The survey covers:

  1. The definition of a smart network and smart services strategy

  2. The value (or otherwise) of being ‘smart’ for an operator

  3. The challenges involved in becoming smart

The survey takes only 15 minutes to complete and, better still, all participants will automatically be sent the report. The link again.

It closes on the 5th August - so hurry!

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June 15, 2011

Guest Post: Dynamic Price Plan Innovation

This is a guest post by John Giere, SVP Products & Marketing, Openwave Systems, covering some of the latest creative mobile data pricing approaches, and solutions to bring them to market faster. It includes options from basic tiered plans to broader ‘shared-wallet’ and micro-segmented data plans, and builds on some of the pricing innovation themes we reported in our recent research note Mobile Broadband Economics: LTE ‘Not Enough’, and which we will be discussing in the upcoming Best Practice Live! free online virtual event, 28-29 June 2011.

Openwave pricing plan options June 2011.png

Source: Openwave Presentation, Telco 2.0 EMEA Brainstorm, May 2011

In the world of the Web, innovation happens quickly. Start-ups spring up like wildflowers. A few succeed; most die, but almost all add to the collective momentum that drives progress faster than any other industry. Witness the disruptive power that digital commerce, digital publishing and digital music have unleashed in such a short period of time. The Web is fertile ground where creativity and risk are encouraged, iteration is more important than perfection, and where the value of ideas lie in how fast they can be put into action.

As the Web has gone increasingly mobile, its convergence with a far more mature telecommunications industry not only highlights a clash of cultures, but it draws sharp contrast between the pace at which the two industries advance. The telcoms space is comprised of larger, more cumbersome entities that tend to move slower and are more resistant to change. While these characteristics may lend a certain stability to the essential services provided, the last few years have seen agile competitors from the online world successfully capture value and revenue from the incumbent carriers. From Skype to YouTube to Facebook, over-the-top providers of popular services have a distinct advantage over the network operators: they innovate quickly. Four years ago there was no such thing as an app store; today the top app store has served over three billion apps.  

If mobile operators want to provide value above and beyond data access and transport they must take a page out of the Web playbook while still focusing on their core strengths. A perfect starting point is pricing.

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March 22, 2011

Guest Post, How operators can transform their portals into subscriber-centric interfaces

What if, rather than trying to second guess our customers’ needs or trying to shape them through advertising with essentially no reliable feedback on its impact, we got the customers to define the packages they buy themselves? In a new whitepaper, Momac sets out their guide to the future of your portal, contact centre, and customer relationships in general.

The explosive growth in ‘off portal’ data traffic combined with the success of smart-phone application stores has led many operators to reassess their portal strategies. In the face of declining content sales and an increasing trend for users to navigate directly to their favourite mobile Internet products and services, many operators are questioning the role of their predominantly content-led portals, with some even considering closing the portal altogether as the declining content sales push portal P+L’s into the red.

In positioning the operator portal as primarily a source of value-added services revenues, however, operators are overlooking the huge impact that portals, and operator branded applications, can have on overall customer experience, and the drive towards customer centricity.

In the new subscriber-aware world, operators need an on-device interface that provides the subscriber with access to all of the compelling new products and services offered by an intelligent, subscriber-centric network. The subscriber interface should be the key point of interaction between subscriber and operator, a place to manage the customers’ complete relationship with the operator, whilst providing access to key 3rd party services (social media, e-mail) which are relevant to each individual. Mobile World Congress 2011 included much discussion concerning subscriber-centric networks and how evolving subscriber data management (SDM) systems can help drive personalized operator services.

Without a portal, or on-device application, the operator website is the de-facto subscriber interface. Accessed via a mobile device, the website can never offer the level of subscriber centricity and customer experience that a made-for-mobile portal or application is able to (a recent study carried out by O2UK highlighted that consumers preferred the experience offered by the carriers O2 Active mobile Internet portal over that offered by browsing the O2 website on a smart-phone), and by failing to understand the potential of a truly subscriber-centric interface, operators risk giving up their most relevant channel. Surely the question operators should be asking themselves is not “Why do we need a mobile portal or branded application?” but rather “Why would I ask my subscribers to browse a desktop website or call a customer service centre when I can give them total control via their mobile device?”

This whitepaper will explore how mobile operators can transform their portals and applications from the typical content store front into a highly personalised, subscriber-centric interface accessible on all types of devices including phones and tablets, and focused on enhancing customer experience and, hence, loyalty, driving core voice and data revenue, and reducing OPEX.

Click here to read more.

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March 16, 2011

Running through the Playbook

Thomson Reuters have a rather good rundown on the BlackBerry Playbook tablet and RIM’s future. Is it a high-end device with an interesting feature set that spans the enterprise and gaming markets, or a curiosity that Apple will brush aside?

We met the Playbook at RIM’s developer day at MWC - although they’re marketing it as “the first professional grade tablet”, their demo showed one running Need for Speed: Undercover and Quake in separate windows at the same time. Our information is that RIM is internally divided about whether to play the device’s media and gaming potential up, or whether that would detract from their image with enterprise customers. However, we do think their developer services, business products, and BB Messenger make up a powerful integrated device-software-media ecosystem.

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March 2, 2011

World Economic Forum’s Personal Data white paper launched

The World Economic Forum’s new report on Personal Data: The Emergence of a New Asset Class is now available for download (PDF, 7.2MB). STL Partners/Telco 2.0 were one of a small group of organisations asked to contribute, along with MIT Media Lab, Harvard’s Berkman Center for Internet & Society, Bain & Co, and frog design. A previous description of our work on it is here.

As a result at Mobile World Congress last month we were kindly invited to join the WEF’s ‘Global Agenda Council’ meeting at the Arts Hotel to discuss the Personal Data project in the context of their mHealth and mFinance initiatives. The other attendees at this meeting were the CEO’s from Bharti, Qualcomm, Juniper, Hutchison Whampoa, Alcatel-Lucent APAC, Saudi Telecom, Cisco Europe, Microsoft Europe; Hamadoun Toure from the ITU; Telefonica Group’s COO, EVP’s from AT&T, Telenor and Huawei, and representatives from The World Bank, the GSMA and the United Nations Foundation.

The good news is that the Personal Data topic that Telco 2.0 has been promoting for some time now is now starting to get the prominence it deserves.

Our upcoming ‘Personal Data 2.0’ Exec Brainstorms in Palo Alto (7 April) and London (13 May) will be used to drive the WEF thinking as well as deliver some tangible shorter term outputs to direct telcos’ strategies in this area.

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January 2, 2011

BlueVia: Telefonica’s new global developer platform

Back in February 2009, we blogged about O2 UK’s Litmus project, a developer platform that offered more than any other. As well as a range of useful network APIs and the typical revenue-sharing element, it provided access to crowdsourced testing from Mob4Hire, hosting with Rackspace, and to an internal Telefonica venture-capital group.

Six months later, we reviewed Litmus again, finding a worryingly empty web forum, and were able to interview Jose Valles Nunez and James Parton from Telefonica and O2 respectively about it. They argued that one of the main goals Telefonica had with Litmus was to spot potential star applications that could be integrated with their mainline products in a process of “co-creation”. (An example: Sun Microsystems was eventually so pleased with the open-source community’s version of its Solaris operating system that they decided to use OpenSolaris in their commercial products and have the engineers who worked on Solaris contribute code to the community version instead.)

Developer communities are a major concern for Telco 2.0 (see our Apple vs. Nokia note) and therefore we’re following the story further, in the build up to a new research and event programme for 2011 called ‘Mobile Apps 2.0’.

A few weeks ago, just before Christmas, Telefonica launched BlueVia, a further development of Litmus that will be deployed across the whole Telefonica footprint rather than just O2 UK or Telefonica O2 Europe. Here’s the latest public presentation on Bluevia:

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December 14, 2010

Analysis of UBS Media & Comms Conference - Some like it Hot

As part of our increasing focus on ‘Digital Entertainment 2.0’, here is an analysis of UBS’s recent Global Client Conference:

The top brass of the Media and Communications industries gathered in New York last week for the final investor jamboree of the decade and the word on everyone’s lips was “online”, and specifically, whether it was a creator or destroyer of value for the industry.

It was apparent that it is far too early in the game to pick winners and losers. Perhaps more importantly, the playbook of the move online in the video world will be completely different from the music and newspaper industries where significant value was, and still is, being destroyed.

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Strategy 2.0: Vodafone’s ‘Happy Pipe’ Vs NTT’s ‘Two-Sided’ Approach in APAC.

Presentations by NTT Research and Vodafone’s division containing its African, Indian, and Asia-Pacific operations revealed very different market strategies. Here’s a quick preview - we’ll be looking at these in more depth in the strategy report ‘The Roadmap to New Telco 2.0 Business Models’, plus a more detailed Analyst Note on these two case studies, and at our US, EMEA and APAC Brainstorms in H1 2011.

At the recent FT World Telecoms event, Naohide Nagatsu, general manager of NTT Research in Europe, presented on their plans for transition to an all-IP NGN. They intend to switch off the PSTN relatively quickly, which is hardly surprising as 68% of Japanese subscribers are on either FTTH or DOCSIS 3 cable and 96% of mobile subscribers are on one 3G technology or other (there being a choice of NTT DoCoMo’s Japanese-flavour 3G, Softbank’s UMTS, or KDDI Mobile’s CDMA-2000).


NTT is currently making an actual majority of its revenues - 58% - from its ISP and IT solutions businesses, the ones BT terms its New Wave operations. They expect that voice will be down to 25% of revenues in two years’ time - a little behind the schedule Telco 2.0 delegates expected way back in 2006, but not by much.

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November 18, 2010

FT World Telecoms: VNL, Disruptive Rural GSM

A genuinely fascinating presentation at last week’s FT Conference
was given by Rajiv Mehrotra of VNL, an Indian startup that aims to deliver connectivity “where the roads stop”. The big issue here is OPEX - the GSMA estimates that by 2014 there will be 640,000 base stations operating beyond the reach of the electricity grid, which will cost a round $15bn a year in diesel fuel alone. We can only realistically expect the price of oil to go up, and storing tanks of it in a basically unpoliced environment brings its own problems. 60% of a typical African MNO’s OPEX is diesel. 37% of a typical Indian MNO’s OPEX is diesel.

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October 14, 2010

Guest Post: Future Broadband - Free, Funded by Apps?

Could ‘free’ broadband connections for the unconnected be funded by a bundle of apps paid for by ‘upstream customers’ - such as banks, supermarkets, etc.? This is a guest post by Thomas Sachson, Founder and CEO of Box Top Solutions, Inc.

[Ed. The ‘Freeband’ model Thomas proposes raises a number of interesting questions, such as how to regulate, commercialise, and manage such a system. Thomas will be presenting this concept at the Americas Brainstorm, 27-28 October in L.A..]

Background - Can the ‘Digital Divide’ be Bridged?

In January 1996, the New York Times published its first article on the “digital divide” and highlighted the pitfalls of a society of two halves - those with online connectivity and those without. Fifteen years later, the divide is still pronounced, which is surprising given the prevalence of communications technologies. But the broadband adoption gap nonetheless exists and should be resolved. As stated by the FCC in their recent National Broadband Plan, the unconnected simply cannot afford connectivity as it is currently offered. And, short of an enormous government subsidy (not likely in the current economic environment), this reality is not going to change. However, there is another model that has just become viable in the digital world - the toll-free online access model - and it could finally connect millions of unconnected homes globally without the need for taxpayer subsidy or expensive new access infrastructure.

The ‘Toll-Free’ Online Access Model

By way of background, the toll-free model, from when it was introduced in 1967 to the present, became one of the most visible and successful telecommunications strategies for marketing (“1-800”, “freephone”, “provider pays”). It was based on the powerful observation that there was a market-driven, three-way trade possible in the field of telecommunications commerce. A voice carrier would ensure that a caller would not be billed for making a call to a merchant if, in advance of that call, the merchant agreed to pay the carrier for the cost of carriage. As a result, carriers generated many tens of billions in additional revenue, with merchants transacting many hundreds of billions. And nearly every customer on the planet now knows the how, why and consequence of using a “1-800” number and, more importantly, is comfortable using this technology in their daily lives.

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September 30, 2010

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

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

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

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Guest Post: Amdocs on living with Google

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

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

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

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

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

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

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

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BSG: Technical Perspectives on Net Neutrality

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

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

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

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September 28, 2010

Guest Post: Blyk - A Message from the Advertising Industry

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

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

Listen to the Customer

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

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September 20, 2010

Digital Entertainment 2.0: New Growth Opportunities

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

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

Digital Entertainment 2.0: New Growth Opportunities

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

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

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September 18, 2010

The ‘Big Picture’: Disruptive Strategies for Growth

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

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

Disruptive Strategies for Growth

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

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

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June 28, 2010

Rapid Telco 2.0 Implementation - “Yes, we can!”

One of the questions we are most commonly asked by strategists is how Telco 2.0 business models can be deployed in the face of opposition from IT and other management divisions which claim the technology involved in servicing upstream customers will be too expensive, too disruptive and will take too long to implement. At the 9th Telco 2.0 Executive Brainstorm held in London at the end of April, Infonova’s Andrew Thomson offered up one possible solution in a specially arranged session entitled, ‘Yes we can! Rapid implementation of Telco 2.0 Business Models.’

The session was created to look at moving from Telco 1.0 to 2.0 with minimum disruption to existing services and Andrew Thomson began by saying that upstream customers genuinely wanted to consume, bundle, and re-use telco services and assets. However, typically, telco IT departments struggled to deal with this, and even worse, telco management was loath to invest in changes to the billing platform. His

The Vital Importance of Multi-Tenancy
He introduced details of Infonova’s billing platform, specifically its ability to operate as a multi-tenant platform. Multi-tenancy, he explained, enables telco systems to accept upstream customers as operator-like entities, which could inject their own business rules into the system, use its development APIs, and run their product management independently. The whole system therefore adds up to a modular ‘order-to-cash’ platform that permits the operator to sell to many upstream customers, while the upstream customers themselves get a wide degree of control of their own order to cash cycle.

Telco 1.5 in 10 weeks
He cited cloud computing, logistics services, and a KPN-like multi-MVNO strategy as early use cases and also identified smart grid, e-health, and other utility services as major markets of the future. He argued that the Infonova system could deliver “Telco 1.5 in 10 weeks”, and had the advantage that the deployment of new tenant businesses could be repeated again and again without further software development on the side of the operator. This, he claimed, made the move to Telco 2.0 much more possible in the real world.

A video of Andrew’s presentation at Telco 2.0 is here.

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June 16, 2010

Press Release: Broadband ‘Happy Pipes’ worth $416Bn by 2020

Both fixed and mobile broadband markets will continue growing in revenues, up to $416bn in 2020, but operators face some hard decisions about future business models, according to a new study published by the Telco 2.0 Initiative.

The report, “Mobile, Fixed & Wholesale Broadband Business Models: Best Practice Innovation, ‘Telco 2.0’ Opportunities, Forecasts and Future Scenarios”, finds that telecom operators will benefit from both new types of broadband wholesale and more sophisticated direct-to-consumer retail propositions and tariffs. Recent introductions of new tiered and capped wireless Internet data plans are early evidence of this trend.

Key findings from the report include:

  • Global broadband access is forecast to increase from $274bn in 2010, to $416bn in 2020, an increase of 52% in revenue terms;

  • More than half the revenue growth will come from wholesale and “two-sided” fees for improved access capacity and quality;

  • By 2020, mobile broadband will be worth $138bn, or 32% of the total broadband industry revenues;

  • Three new revenue streams are identified: “Bulk Wholesale”, “Comes with data”, “Slice and Dice”;

  • New ‘upstream’ customers are forecast to generate over $90 billion in broadband revenues globally by 2020.

Today, many operators fear the supposed risks of becoming “dumb pipes”, but the study suggests the forecast market value means the term “happy pipe” is more appropriate for some. Certain telecom carriers will be able to add further value through enhanced “Telco 2.0” services and platforms, but it is important to note that the basic carriage of data can itself be profitable and a source of substantial growth.

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April 11, 2010

Google: Where to Collaborate, Where to Compete?

Yesterday the Financial Times did a big splash on the joint assault by Deutsche Telekom, Orange Group and Telefonica on Google about the ‘free ride’ the internet giant gets on their pipes. Clearly Telco 2.0’s work on how telcos can best collaborate and compete with Google becomes even more pertinent.

As readers may know we have a major session dedicated to this topic at our next Executive Brainstorm on 28-29 April in London, involving panelists from Vodafone Group, Deutsche Telekom, Amdocs Interactive and Ericsson. Telco 2.0 will be presenting a summary of our analysis to kick-start the debate. Should get lively…

In the meantime, for those who missed it, our analysis of Eric Schmidt’s address to Mobile World Congress in Feb is here, a new syndicated research project designed to de-bunk the myths of wireless data traffic is described here, and below is a video interview with Telecom TV on ‘Living with Google’, filmed with Telco 2.0’s CEO and MD ten days ago:

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February 17, 2010

MWC Watch: Developers, Developers, Developers

Telco 2.0 is, of course, at Mobile World Congress this week. Something that’s very obvious this year is the come-back of the North American industry, and specifically anything that involves Android or developers. All the device vendors who ship substantial volumes of Android devices are heavily present. Samsung is practically rolling in Androids. Despite the announcement of the new version of Microsoft Windows Mobile, HTC is big on Android as well. Android software developers are everywhere.

However, an interesting phenomenon is making itself felt. Rather than - or as well as - being a top-end product for the latest smartphones and early adopters, Android has been heavily adopted by vendors looking for an economical platform to get into the smartphone market. This places some strains on the technology itself and may have significant long-term consequences for the Android ecosystem.

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February 1, 2010

Two-Sided Telco Transaction Processing for Upstream Industries: Guest Post

This is a guest post from Fergus O’Reilly of SAP. Fergus has written here on the subjects of Billing as a Revenue Opportunity and Monetising app stores. Here, he tackles CRM and two-sided business models. SAP will be exhibiting at Mobile World Congress (Feb 15-18) and hosting a roundtable with Accenture, RIM, Telus and Microsoft on this topic of monetizing services across multiple industries in Barcelona on Feb 15 (details here).

The dynamics of the multi-sided business models for the Telecoms industry are well explored by the Telco 2.0 initiative. But what are the implications as this model is adopted by other industries? And how can telcos leverage their rating and billing capabilities to gain new business by empowering these other industries in their business model transformation?

The global explosion of the Internet, of wireless networks, and the rise in broadband capacity is constantly transforming how we connect to the world. Due to product commoditization, shrinking margins, and the need to develop greater customer intimacy, many industries are capitalizing on these technologies and launching innovative new services. By focusing on value-based services, companies stand to find new revenue streams and to profit from greater customer intimacy, but only if they can master the increased volume of transactions with customers and the complexity of the expanding value chain between diverse business partners.

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October 7, 2009

The Business Case for ‘Two-Sided’ Telecoms Business Models

Many industry corporate strategists buy into the two-sided telecoms business model and now want to prove the quantifiable benefits to drive action. Here’s an update on Telco 2.0’s current data and plans.

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September 23, 2009

Google vs Telcos Through Two-Sided Strategy

The following is an extract from our new Telco 2.0 Executive Briefing on Google’s strategy and what it means for the telcos.

Members of the Telco 2.0TM Executive Briefing Subscription Service can click here for the full report. Non-Members, please see here for how to subscribe, here to buy the individual report, or email or call +44 (0) 207 247 5003.]

We’re just putting the finishing touches to our in-depth analysis of Google’s increasingly active telecoms strategy in our forthcoming Executive Briefing, from which we publish the following edited extract covering some of the latest developments. We’ve also written on Google in some depth before, including Google Vs Telcos: the Tale of the TapeGoogle Anchors its Carrier off Telcoland, Google’s Complex Execution of Simple Two-Sided Business Model Strategies, and How Google Profits from YouTube

The Battle of Scale: Customer Data and IT Infrastructure

Google and Telcos share a speciality in operating IT systems at very high scale - either the traditional switching, data centre and call centre capabilities of the Telcos, or the cloud computing infrastructure Google specialises in. Telcos have a lot of work to do to rival Google on cost and adaptability, but in general terms, this is an area where they have little choice but to compete - carriers are building up cloud computing capability, while Google is investing in dark fibre and other Telco-related services.

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September 18, 2009

Vodafone - Ever More Two-Sided Strategy!

Here’s a fascinating slide from Vodafone CEO Vittorio Colao’s presentation to a Goldman Sachs investors’ conference in New York this week. Note that Vodafone’s future strategy seems to be getting more and more Telco 2.0 - they want “efficient pipes”, i.e. a broadband network that’s cheap to run in the radio, transport, and core elements, “smart pipes” as wholesale services, and top-level products for the consumer market.

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September 8, 2009

M-PESA: Agents are the Key to Mobile Money Transfer

New data from M-PESA shows clearly how its success is directly related to its network of trusted agents. This is further support for our repeatedly argued point that the biggest possible network of trusted agents - shops, street vendors, anyone who sells your pre-paid airtime vouchers - is vital to the success of any mobile money project. Get the agent model - their recruitment and compensation, the wholesale process that supplies them, the OSS back-end that settles the transactions, the fraud prevention and audit measures applied to protect users’ money - right, and you’re 90% of the way to success. A presentation by Safaricom’s head of investor relations, Les Baillie, allowed us to quantify this with actual data - specifically two charts, one of subscriber growth and one of agent recruitment.

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September 2, 2009

New Telco 2.0 ‘Use Cases’

We mentioned before our research agenda for rest of 2009 and 2010. As a key part of this we’re in the middle of a project with leading x-industry figures developing new ‘Use Cases’ to bring to life the two-sided business model concepts we’ve been promoting. The areas we’re focusing on are:

  • Digital Marketing and Advertising 2.0: Exploiting Telco data
  • Mobile Broadband 2.0: Managed data offload service
  • Digital Money 2.0: Mobile Banking in mature markets
  • Digital Utilities 2.0: Telcos role in Smart Grid
  • Voice and Messaging 2.0: SME productivity platform

These (along with case studies from inside and outside telecoms) will be available in a report in November and some will be presented and discussed at the upcoming Telco 2.0 Executive Brainstorms in Nov (EMEA, London) and Decembe (AMERICA, Orlando). More here.

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August 20, 2009

Mobile Advertising: 100 times more customers - Blyk’s Wholesale Strategy

What is happening with Blyk? There has always been a slight whiff of cordite around the ad-boosted, two-sided MVNO, with mutterings aplenty around the viability of their retail business. We’ve been long time admirers of elements of their business model, even if we have admittedly sat on the fence about their prospects.

Now, Blyk is apparently preparing to hand its customers over to Orange UK; some people are describing this as Blyk “giving up”, or as signs of serious problems there. We disagree, and we would like to point to the simultaneous deal they signed with Vodafone in the Netherlands as evidence.

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July 23, 2009

Twitt-o-nomics: Can Twitter ever make money?

Twitter’s business model seems to be the familiar - “Web 2.0 Flip” - build an audience and sell to someone who thinks they can monetize it. There are key lessons to be learnt from Twitter for Telcos and other service providers.

Our analysis shows that Twitter:

  • Has built its success on its ability to serve the fundamental human need to participate
  • Has built a big user base on a low-ish cost base
  • Does not yet appear to have a credible plan for attracting or growing revenue
  • Has made a strategic commercial error on APIs during its rush to scale
  • Enables 3rd party messaging services using the free API that could cannibalise SMS revenues thereby destroying value
  • Will probably need to be sold soon to a buyer with a suitable revenue model in mind to maximize value


Twitter is the current Social Network Service (SNS) flavour of the day for the media. It has been promoted for diverse causes: from the rallying call for Iranian government opposition to a public diary of Hollywood stars’ hourly insights into life. It’s appeal to and massive success with users is rooted in the need to participate (analysed in-depth in our new report “Serving the Digital Generation”).

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July 15, 2009

Mobile Payments: Lessons from the world’s leading exponents

Payments technology and how telcos can profit from it is a favourite topic for study by the Telco 2.0 initiative. Fundamentally payment systems are two-sided markets - payers and payees interact not directly, but through a platform to conclude transactions. Pricing, and which side pays, is crucial to maximize participation, volume and liquidity on the platform. Interconnection strategies with other payment platforms also play a vital role, not only in increasing convenience but in determining share of the value chain.

In this article, we examine in depth two African mobile payments solutions that we consider to be the leading examples of mobile payment, M-PESA and Wizzit. These payment solutions take very different approaches - M-PESA is very much a classic Telco 2.0 style platform business, and Wizzit is designed as an extension to traditional banking. We consider lessons learnt from both for operators worldwide.

Prior posts on this topic include Oi Paggo, ZAP, and Zoompass.

The full article is available on the Telco 2.0 Subscription Service. Members of the service can read the full article here. Non-members: please see here for how to subscribe.

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June 4, 2009

Open APIs 2.0 - Unifying Commercial Framework Needed

Below is a summary analysis of the Open APIs 2.0 session at the May 2009 Telco 2.0 Executive Brainstorm which, for the first time gathered together leaders of the major telco API programmes - GSMA, TM Forum, MEF Smart Pipes, OMTP BONDI, Orange Partners, Alcatel-Lucent - and some of their potential users (BBC, Yahoo, Amazon etc).

The premise we explored was this:

Platform-based 2-sided business models need APIs to enable upstream customers to use telco assets and processes. There are a huge variety of APIs and enablers being developed in the market by industry bodies (GSMA, TM Forum, OMTP, MEF), by individual operators (Vodafone Betavine, Orange Partner, O2 Litmus), and by ad hoc consortia (such as Vodafone, China Mobile, and Softbank’s JIL). But what is the commercial strategy that underpins these programmes? What needs to be done to ensure that APIs are valuable for upstream customers (developers, merchants, advertisers, and government) and profitable for operators?

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May 28, 2009

Retail Services 2.0 - Output from Telco 2.0 exec brainstorm, May 09

Below is a summary analysis of the Retail Services 2.0 session at the May 2009 Telco 2.0 Executive Brainstorm. It builds on some of the issues about selling to the ‘digital generation’ that we described before the event here.

The session involved short stimulus presentations from leading figures in the industry, group brainstorming using our ‘Mindshare’ interactive technology, a panel discussion, and a vote on the best industry strategy for moving forward. Below is the vote, followed by some of our post-event analysis on key lessons and industry next steps:

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May 7, 2009

Yahoo!, COLT and the Customer Data Revolution (CDR)

Alireza Mahmoodshahi, CTO of COLT, seems to have caught the Telco 2.0 Executive Brainstorm’s imagination with COLT’s plans for a carrier-grade cloud computing platform.

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The Vital Importance of Frivolity

“Rather mad, but silly things are important”. So said Rory Sutherland of Ogilvy at Telco 2.0 yesterday. And he’s right - we’ve pointed to the vital importance of frivolity before. So what if one of the biggest-selling iPhone applications makes a fart noise? It beats a ton of unsaleable PowerPoint engineering. Silly things frequently show up the things people actually find valuable, compelling, or interesting; we owe much of the broadband business and the whole of the technology of Web video, essentially, to porno Web sites, and we would know much less about scaling transactional Web applications while maintaining security if it wasn’t for gambling.

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May 4, 2009

Making a Successful Mobile Developer Platform

As stimulus for the debates we’ll be having at the Telco 2.0 Exec Brainstorm in Nice this week, below we discuss what distinguishes successful mobile development platforms from the many, many unsuccessful efforts we’ve seen before?

[NB: If you can’t come to Nice this week, check out the new ‘distance participation’ packages which allow you to access all the brainstorming input and output without the travel, at a time that suits you.]

Everyone loves them these days, especially if they come in windows with bevelled corners and are called “app stores”. But the idea covers a lot of very different practices and products. In order to understand it a little better, in this article we track its development and examine what it needs for success.


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May 3, 2009

Nokia’s Strange Services Strategy - Lessons from Apple iPhone and RIM

Over the last 10 years, Nokia has sustained a keen interest in applications and services as a complement to its dominant position in hardware and operating systems. Equally clearly, it’s hard to say that they’ve made any progress in making a business of it. The profuse proliferation of poorly integrated projects suggests either - if we’re being charitable - a deliberate policy of experimenting with many different ideas, or else - if we’re not - the absence of a coherent strategy.


Clearly Nokia is aware of the secular tendency in all information technology fields that value migrates towards software and specifically towards applications. Equally clearly, they have the money, scale, and competence to deliver major projects in this field. However, so far they have failed to make services into a meaningful line of business, and even the well developed software ecosystem hasn’t seen a major hit like the iPhone and its associated app store. Why is this?

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April 15, 2009

Case Study: Lessons from the Shipping industry

We’ve quite frequently referred to shipping containers and containerisation on this blog as a useful parallel to trends in the telco industry, especially the importance of big-scale IT, personalised and integrated logistics services, the relative weakness of systems based on deep packet inspection, and the vital importance of standards. If you’re a recent reader, you might not know why we care so much; so below is a case study originally published in our Future Broadband Business Models report.

In 1956, the first all-container ship, Ideal-X, sailed from Newark to Houston. In 1956, containers weren’t actually new technology; in fact they made a distinctly slow start. In the 1920s, the London, Midland, and Scottish Railway already had thousands of containers, as did SNCF, the New York Central, and several other major railways. There was even an international trade association, the Container Bureau, trying to promote their use. And the US Army was shipping soldiers’ personal effects and equipment around the world in small Conex boxes. But take-off had to wait for Sea-Land and the pioneering voyage of the Ideal-X

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April 9, 2009

Google’s Complex Execution of simple Two-Sided Business Model Strategies

While researching a forthcoming Executive Briefing on Google’s business model, we realised that there are certain strategies that come up again and again when you deal with two-sided business models. In fact, these are so regular we numbered them - Strategy One, Two, and Three.

Strategy One: Transactions

If your business is all about facilitating transactions, as two-sided businesses frequently are, then an obvious way to make money is to work on commission - to charge a percentage of each deal for your services. This is of course the traditional way of remunerating people whose jobs consist of buying and selling - salesmen , stockbrokers, investment bankers. It sets up incentives to maximise the number of deals and secondly to maximise their value.

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IfByPhone: Two-Sided Business Model, Comms-Enabled Business Processes, and Open Source Telephony

We recently had the chance to speak to Irv Shapiro, CEO of IfByPhone, a start-up company we featured in the Voice & Messaging 2.0 report that operates a hosted platform for voice-enabled CRM applications and which lets you integrate your Web, e-mail, and phone sales activities while maintaining common metrics across the whole company (Read more here, and note that Thomas Howe is a fan.) Irv Shapiro describes it as being “like Salesforce with phones”. A couple of interesting things….

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March 25, 2009

QQ: Quite Quality

Below is one of the case studies that our forthcoming Serving the Digital Generation report is founded on. QQ (a huge social network in China) is a key example of successfully understanding the participation needs of the digital generation, and one we should all be learning from.

QQ has claimed to be the world’s third-largest IM network (after MSN and Yahoo), based on a figure of 355 million ”active users” as at November, 2008. A further claim of 570 million ”users” exists from earlier that year.

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March 11, 2009

Vodafone: “Smart Cooperation” = Telco 2.0

Vittorio Colao, CEO of Vodafone, has been saying this recently:
I don’t like the word ‘carrier’. A ‘carrier’ is not what Vodafone wants to be.”
Instead, he’s keen to become a provider of “smart pipes” and perhaps even of “NaaS” - that’s “Network as a Service” for fans of MLAs*. We’re not so sure about that bit - all telcos are providers of their network as a service, and they have been since the days of Alexander Graham Bell. But there’s a nice definition of it here, which in summary says:
Operators are finally moving towards exposing network intelligence to third parties - thus moving from closed network model (NetCo) to an open platform model (WebCo), often referred to as Telco 2.0

Most importantly, Colao has been talking about “smart cooperation”, the limits of walled gardens, and the need to seek new ways to monetise the services that run over your network.

We say: Yes! “Smart cooperation” sums up the essence of two-sided business models, which usually emerge at the frontier between competition and cooperation.

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February 18, 2009

O2 Litmus: Better than the Apple App Store

A major buzz source at this MWC has been developer communities and telco APIs - as you can probably imagine, Telco 2.0 is more than pleased about this (especially the number of companies involved that are current or former customers of ours). For a start, there’s the GSMA-backed OneAPI effort, where our friends at Aepona have been standardising a developer API based on Parlay-X Telecom Web Services. James Aitken, who will be familiar to some Telco 2.0 event participants, demonstrated its location capabilities live on Tuesday.

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February 12, 2009

Coming Soon: Serving the Digital Generation

There’s a new Telco 2.0 strategy report rolling down the tracks.

It’s a natural inclination to imagine that the difference between young people and their elders is simply that they’re young. But at times of rapid technological or social change, quite often, nothing could be more wrong. Instead, patterns of behaviour and culture that you might assume are the caprices of youth will last a lifetime and will become the conservative norm that the youth of the future will rebel against.

Serving the Digital Generation: Innovation for a new breed of customers is Telco 2.0’s attempt to characterise future customers and explore what operators should be doing to better serve them. Statistically speaking, the customer of the future is already with us, in the form of South Korean, Chinese and Japanese youngsters, and is a user of at least one of many social networks, games, and virtual world applications that have sprung up in the last few years. In the report, we analyse a whole range of such services in order to understand the business models and product features that have succeeded. We’ll also be running a major session on this topic at the Telco 2.0 world event in May -

We identified a number of major factors and new opportunities that constrain and liberate the customer of the future. On one hand, parental paranoia, rapid urbanisation, and proliferating surveillance systems have led to a public space that is ever more restrictive for the young; on the other hand, the digital world has created huge opportunities to escape this and to pursue what we describe as the ‘Participation Imperative’. We have developed a framework to help service providers clarify these user needs and how to serve them.

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February 3, 2009

Telco 2.0 Launches ‘Executive Briefing’ Service

The NEW Telco 2.0 Executive Briefing Subscription Service launches today. It provides a searchable online resource for the best thinking and practice on new business models at the intersection of the Telecoms, Media and Technology sectors.

The Service is designed to keep leaders and strategists comprehensively ahead of the game. It comprises market analysis, new theory, new product ideas, case studies, and use cases from around the world. It also features relevant examples of business model innovation from other industries.

From now on, some of the detailed analysis that has been published in this blog will only be available via the Briefing Service. Don’t worry - we’ll continue to keep you up to date with key headlines, news and trends via this blog/newsletter - but do consider upgrading to the Subscription Service for the detailed analysis, particularly if you are in a strategy role.

Full details at the site here.

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January 25, 2009

The High Road and the Low Road to Fibre

Telco 2.0 ally Brough Turner points everyone to an interesting story from Lahore in Pakistan, where not only can you get fibre to the home, but it’s cheap as well. It’s well worth reading.

Essentially, the government and the incumbent telco don’t know or can’t enforce their control of the right-of-way, which means that they have effective Layer Zero openness. Anybody can, in practice, string cable from the existing power and telephony poles; and it turns out that quite a lot do. Using basic IT gear, they place cheap Ethernet switches on the poles and run Cat5 or 6 cable into their customers’ homes, then get an aggregator to link the whole thing to a PC running an open source router implementation and a fibre-optic cable to their HQ.

The Low Road: Rawalpindi The Low Road in Rawalpindi. (Flickr user temp 13rec.)

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January 14, 2009

Credit Crunch (Part 6): Happy New Deal!

Below is the sixth article in our series on the Credit Crunch and its effect on the TMT sector (previous here). We note that telecom stocks are weakening versus the market, but opportunities look likely from government fiscal stimulus packages, especially around ‘Smart Grids’.

Anyone expecting a change in tone from the economy to start 2009 was wildly optimistic. The situation is deteriorating, and telecom will come under pressure. The stock market’s feeble attempt at a rally over the past month has landed telecom in third quartile, in keeping with our views.

However, telcos should resist the knee-jerk reaction to cut personnel and investment - there are interesting opportunities on the horizon from fiscal stimulus programs. Remaining focused on, staffed for, and invested for the longer term opportunities is key.

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December 17, 2008

Akamai: Blueprint for Building a Platform Business

Akamai operates a classic two-sided business model and has moved well beyond its roots as a pure content delivery network (CDN).

The recent product development and acquisitions activity provide a great lesson to all how to leverage a platform and build barriers to entry. Even before the credit crunch, the plethora of new entrants into the CDN space would find competing with Akamai difficult.

Below we explain the roots of Akamai’s success and how it stays one or more steps ahead of the competition.

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November 24, 2008

Ring! Ring! Hot News, 24th November, 2008

In Today’s Issue: Internet forecast wars on again; Odlyzko fights the nonsense; experimental high-def YouTube, and how to get it; BT: OFCOM ate my homework; Amazon’s CDN has landed; Telefonica wants a spaceship or two; T-Mobile UK is down; T-Systems blows the German secret service’s cover; VZW peeks at BHO’s CDRs; SearchWiki, another Google web-hoover; Ubuntu for mobiles; Lotus Notes for Nokia; Nokia and Yahoo!; Nokia and TD-SCDMA, possible faster Chinese rollout; HOWTO manage devices OTA in S60; GPS SIMs coming; Qualcomm’s WLAN LBS; CTIA fights for lucrative convict market; Clearwire-Sprint JV signed, shares tank; Indian consolidation coming; T-Mobile USA’s digiframe comes with data but no music; a cautionary tale about age verification.

It’s another round in the Internet traffic forecast wars. The vendors’ side last week published research claiming that a coming exaflood would lead to “Internet brownouts”; as TelecomTV points out, not only did they use identical language to everyone else who’s predicted this over the last 16 years, but just as always, world authority Andrew Odlzkyo disagrees and is probably right (his MINTS project claims that backbone traffic actually fell recently).

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November 13, 2008

‘Two-Sided’ Telecoms Business Models - Hunger for Adoption Now

We are currently analysing the huge amount of material generated by the participants at the 5th Telco 2.0 Executive Brainstorm last week - both qualitative and quantitative and captured by our ‘Mindshare’ method. We will share all of this with the participants next week, and highlights of it with readers of this blog over the next few weeks.

But in the meantime, below are the results of two important votes with the 250 senior execs at the event which demonstrate the growth in the perceived relative importance of the ‘two-sided’ telecoms business model versus the existing telecoms business model. It’s useful to compare this with some of the output from the 4th Telco 2.0 event in April 2008 (described here) and then to reflect on the changes in attitude by forward thinking people in the industry in the last six months alone. One of our associates Dean Bubley, a seasoned industry analyst who runs Disruptive Analysis, summed this up very well in a note he sent us this morning, which we’ve published in full below. Here’s the first chart:


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November 5, 2008

CDR = Customer Data Revolution

The opportunities and pitfalls of the telcos’ vast stash of CDRs (Call Detail Records) and phone bills have been a top theme here at the Telco 2.0 event. Last year, you may remember, we said on this blog that in the future, so many new applications will need contextual data to function that we’ll need to think of how subscribers will take their data shadow with them when they churn. It looks like this is going to be more important than ever.

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October 28, 2008

Credit Crunch: Silver Lining for Telcos? (Part 4)

Over the last six weeks on this blog we’ve been examining why telcos, in the current climate of uncertainty, are perceived as ‘defensive’ by investors - namely low financial leverage and robust cash flow generation (see here). This trend appears to be continuing, but telcos shouldn’t grow complacent about their popularity - this will wane as the market eventually normalizes.

At that point, investors will return to their relentless reassessment of the long-term potential for sustainable shareholder value creation, and the historical record is not encouraging. Our discussions with investors this week strongly suggest that they share many views with the Telco 2.0 initiative - a need to identify and sweat core assets, develop creative approaches for areas of weakness, define a clearer vision, embrace partners, and focus on the wholesale platform.

In the article below we provide evidence suggesting that the interests of telcos and investors may actually be closely aligned in embracing a two-sided business model approach to redefining the future of the telecom sector. (We’ll be presenting a summary of this and the previous analysis at the Telco 2.0 event next week as stimulus for the debate on how to work with the investment community):

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October 20, 2008

Credit Crunch: Is there a silver lining for telcos? (Part 3)

As a preview to the Telco 2.0 event in a few week’s time and a follow up on our analysis of the credit crunch, we were delighted to take part in a panel on TelecomTV last week:

This is how they billed it: The troubles affecting the world’s financial markets is having a knock-on effect on just about every industrial and business sector on the planet. However, the good news is that telecoms is suffering much less now than it did when it experienced its own recession between 2000 and 2005. Today, mobile operators facing a potential slowdown in developed and saturated markets are able to move quickly to exploit growth opportunities in emerging economies whilst the big incumbent fixed line carriers suddenly find themselves back in the limelight and investor’s good books. Watch the panel to find out why the Telco market could just survive the current economic storm and act as the lubricant to the digital economy.

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October 15, 2008

How BMW uses mobile marketing

As readers will no doubt have seen, we have a major session with strategy execs on ‘telcos role in the marketing/advertising value chain’ on the second day of the Telco 2.0 event in November. It builds on output from our ‘Advertising & Marketing 2.0’ research practice and work we’ve been doing with the GSMA and others (see also new analysis re Blyk here). In particular we will will be drilling down on:

* The practicalities of exploiting the rich customer data that resides within telco networks?
* How to help marketers and content owners engage more closely with consumers via the telco channel?
* Where and how should telcos collaborate in this market to deliver the reach that marketers value from a medium?

We have a great panel who will bring some new perpsectives to stimulate the debate: Paul Magelli from NSN (on the first point, more here); Will Hodgman, EVP from ComScore/M:Metrics (on the GSMA’s recent metrics project); Mark Johnson, CMO of SAP (on how to integrate processes with the content industry and the practicalities of real-time segmentation); and Hugo Drayton, CEO of Phorm (the pioneering and ‘controversial’ online advertising service in the UK, talking about industry collaboration, how to engage with consumers and deal with regulatory issues!). We’ll also be sharing some of our future ‘use case’ work in this area, pulling on best practices in marketing/advertising from around the world.

In the meantime, one of the best practices, from a brands perspective, of using mobile as a marketing tool is BMW. The case study and interview below demonstrates the huge potential of the medium. But you’ll see that there’s very little value that the telco operator currently extracts from these scenarios. Our ongoing efforts are to define a far more valuable role for the telco in the marketing/advertising value chain:

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October 13, 2008

A Quick Slick Unpick of Blyk’s 2-Sided Business Model Trick

The title is Doctor Seuss’ fault as his rhymes are lodged in this writer’s head after years of reading them to his children:

Look, sir. Look, sir. Mr. Knox, sir. Let’s do tricks with bricks and blocks, sir.
Let’s do tricks with chicks and clocks, sir. First, I’ll make a quick trick brick stack.
Then I’ll make a quick trick block stack.
You can make a quick trick chick stack.
You can make a quick trick clock stack.

We thought it might be helpful to review the Blyk business model in a bit more detail following our pre-launch analysis where we were bearish on the company. Its business model ties in nicely with our 2-sided strategy for operators about which we have written on numerous occasions on this blog.

This piece, therefore, seeks to answer the following questions:
1.How does Blyk make money?
2.What are the benefits and risks of the business model? (Are we still bearish?)
3.What are the broader ‘Telco 2.0’ lessons for other operators?

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Ring! Ring! Hot News, 13th October 2008

In Today’s Issue: Crunch crunches Chinese corporate creativity; Nextel spinout shaky; Sprint execs “industry’s most overpaid”; WiMAX smartphone leaked; VZW starts charging for bulk SMS delivery; IfByPhone understands your call centre campaign; vendor-pays data is here; RIM’s AppStore for enterprises?; Comcast gets social TV; Vodafone buys more of Vodacom; IBM: still has money; Indian cellsites get fuel cells; MBNL-BT backhaul superdeal; xG shenanigans; yet another security nightmare at DTAG; GSMA without the GSM; mobile filmmaking to fight the Taliban. scary!

This week’s main theme was telcos calling off planned corporate action in the face of the financial crisis; Huawei, like so many other vendors, has been thinking of getting rid of its handsets business, a low-margin job better left to cheap Chinese ODMs…hold on, some of us remember when Huawei was a cheap Chinese ODM. But this week, the sale was put on indefnite hold for fear someone might bid one euro and get it.

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October 1, 2008

Use Cases for Telco 2.0 - making it tangible

Our readers and clients are asking for more details on how the two-sided business model concept can work in practice. As a result we’re developing a set of ‘use cases’ that illustrate how telcos might get to the $375bn opportunity that we modelled and sized in great detail in our recent report (currently selling like hot cakes).

Below are details is a draft list of the Use Cases we’ll be developing. We’ll be presenting some of these at the Telco 2.0 event on 4-5 Nov in London. (PS: early bird discounts end this Friday).

First, though, here’s a new presentation on the two-sided telecoms business model that we’ve been presenting around the world to senior execs recently.

The Use Case project is described below.

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September 17, 2008

Telco 2.0 Interview: Steve Zimba, Microsoft

Continuing our series of interviews with major industry thinkers, Steve Zimba is Microsoft’s Managing Director, Global Telecoms Business. We interviewed Steve about their ‘Telco 2.0’ strategy. This integrates their PC, IPTV and mobile offerings with a combined software and services offering, supported by telecoms-specific capabilities and a third party ecosystem.

Steve Zimba

Microsoft is a particularly interesting company to us because they are in a unique position. They bridge the consumer and enterprise markets, which places them well to create technologies and operational businesses for two-sided markets. Their Internet competitors are consumer-centric, and don’t have channels into the enterprise. Rivals such as IBM don’t have the consumer brand or media properties to run experiments on the scale Microsoft can. Furthermore, Microsoft is active across all of the B2B value-added service areas we believe will drive future telco growth: identity, advertising & marketing services, e-commerce, order fulfilment, content delivery, billing & payments, and customer care/CRM. The difficult challenge is whether Microsoft can make the whole more than sum of its software conglomerate parts.

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August 31, 2008

Telco 2.0 Research Programme, Autumn/Winter 2008

Following the publication of the new Telco 2.0 Manifesto, we’ve refreshed our overall strategy research programme for the coming year. (Like the fashion industry, our products change with the seasons.) This new programme will address the key strategic challenges that lie at the heart of creating new value in Telecoms and adjacent markets. Here’s a quick preview.

5 x New “Research Practices”

We’ve organized our research into 5 Research Practices to address the key Telco 2.0™ strategic challenges.


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July 16, 2008

Verizon’s P4P initiative: will it support the value chain effectively?

The Telco 2.0 research team is undertaking some detailed business modelling around ‘Rich Media Distribution’ over the summer. We’ll also be debating this with industry leaders on 4-5 November at our next event in London. More on both of these anon. In the meantime, here’s some analysis of Verizon’s P4P next generation file swapping initiative:

We’re not sure how it happened, but Verizon appears to be turning into one of the most interesting telcos around. For a start, there’s the fibre - but then again, even AT&T has an FTTH roll-out of sorts going on. Then there’s ODI, their developer platform initiative. The whizzy portal-like Dashboard application Verizon Wireless is putting on its LG Chocolates has a publicly available API so people can do evil things to it. But perhaps the most significant change at Verizon is P4P, an attempt to reconcile the huge RBOC with the world of peer-to-peer applications, using a technology developed at Yale University as Haiyong Xie’s PhD research project.

We’ll start by noting that a lot of people read “P2P” and think copyright. Of course, the means by which you distribute something don’t determine its content, and certainly not its intellectual property status, so this is a red herring. Anyway, we’ll recognise this and move on - we’re interested in the telecoms aspects, not the record industry.

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July 9, 2008

Two-sided markets: why do they matter?

In a previous article we provided an introduction to what we believe is the template for future growth in telecoms: two-sided markets. Having got the basic facts laid out, now we can take a closer look at some of the consequences of moving from one-sided to two-sided markets.

Two-sided markets in a nutshell

A brief reminder of what we’re talking about. In a one-sided market, merchants buy in equipment and services, taking on inventory risk. They combine them in some value-adding way, and sell the result on to end users (or other intermediaries in a value chain). The suppliers and customer do not interact directly. Most of telecoms works within a one-sided model today.

In a two-sided market, the middleman facilitates two groups on either side to interact with each other via some platform. This lowers transaction costs and builds scale. Critically, the price structure of using the platform is set to encourage participation from the most price-sensitive side, maximising platform revenues overall, rather than separately for the two groups. For example a newspaper typically charges a cover price well below that which would maximise reader revenue alone, because it needs a big audience to attract advertisers.

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July 2, 2008

Telco 2.0 Use Case: Trading Hub for the Transport Industry

Telco 2.0 readers will be well aware that we’re very keen on any application that uses telco capabilities to remove friction and inefficiency from the wider world of business - perhaps the fundamental insight in the 2-sided business model is that the telco doesn’t only sell telephone calls as a finished product to end users, but also a much wider range of functions for upstream businesses to integrate into their production process. In terms of economics, these communications-enabled business processes usually exist to reduce transaction costs and thus facilitate trade that would otherwise not happen. Alternatively, they help larger enterprises to overcome their internal diseconomies of scale.

This use case is of the first kind; the telco platform as a trading hub, allowing the many companies that would never be able to build the mass-production IT systems that their bigger competitors use to benefit from increasing returns to scale.

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June 16, 2008

Qualcomm’s Ambitious Mobile TV platform - Blueprint for Others?

Last month, Qualcomm purchased at auction 40MHz of spectrum (1452-1492 MHz, known as ‘The L-Band’) for £8.3m ($16m). Since then there has much speculation about Qualcomm’s motives and the services that they will deploy, focussing upon Mobile TV. The answer tells us a lot about how new platforms and intermediaries emerge, and could hold some keys to the future of a far wider set of services than just television content.

Qualcomm has a long track record of both buying spectrum and vendor financing, in order to seed and kick start the market for new technologies that they have developed. We believe that Qualcomm will use the L-Band spectrum as their personal seed-bed for mobile TV in the UK, and as a potential beachhead into mainland Europe. In addition, 40MHz is more than enough spectrum to deploy not just mobile TV, but also other services in the future.

We believe Qualcomm understand the needs of a platform business much better than other comparable companies, having experienced the ups and downs of initiatives like BREW. We do not expect Qualcomm to deploy either a typical “over the top” offer that bypasses the operators, or a vertically integrated solution. Rather, the story behind the L-Band spectrum is how Qualcomm will try to create a platform which offers opportunity and profit for all the main players in the value chain: consumers, broadcasters, networks and device makers.

Here’s why, and how…

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Ring! Ring! Hot News, 16th June 2008

In Today’s Issue: Mobile spam horror looms; Gyahoo will eat your ad business anyway; Nokia starts its own ad platform; open-source unicomms for prison warders shames telco engineers; roaming in Africa; Reding on the rampage again; Swedish military intervention; MTN-Reliance sporked by brothers’ brawl; Clearwire’s world domination plan; Nortel ducks for LTE; Sprint-powered jukebox; the end of WAP; Carphone in trouble; AT&T caps hogs; BT fibre - not all it’s cracked up to be; when number portability works too well

Computerworld asks - are we on the edge of a mobile advertising disaster comparable to the spam phenomenon? A close reading of the story would suggest that their definition of a disaster might be quite close to a mobile advertiser’s definition of success - however, Telco 2.0 would point out that in telco terms, advertising alone is just not that big a deal and operators need to look to facilitating a far wider set of interactions between users and enterprises.

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June 15, 2008

Two-sided markets: what are they?

This is the first of a series of articles celebrating two years of Telco 2.0 blogging, and focused on our favourite hot topic, two-sided markets. In this first article we’ll be going into some depth exploring what two-sided markets are. (For a shorter high-level introduction, look here). Later, we’ll explore why they matter, and how these ideas can be applied to the telecoms industry. By opening up their platform we believe there is about a $350bn/year opportunity in a decade’s time, as telcos transform into logistics businesses for digital supply chains. A sizeable chunk of that opportunity is in the form of two-sided markets.

The bottom line is this: Two-sided market theory tells us about how platforms work economically. There are many such ‘platforms’ from operating systems to stock exchanges to nightclubs. The theory models the pricing and demand for certain types of platform services which involve interactions between two distinct groups. Specifically, it studies the allocation of prices for using platform services between those two sides, where typically one side is a ‘seller’ and the other a ‘buyer’. The platform typically attracts one side by giving away services below cost (or free) to attract the less price-sensitive users on the other side.

Telcos are busy creating platforms at the moment to open up their networks and other OSS/BSS assets, but the assumed business model tends to be one-sided: we’re buying an IMS/SDP/NGN platform so we can launch new services. We think there will be a significant shift towards 2-sided market models in telecoms — with the telco as a facilitating platform for a much broader range of interactions between consumers and businesses. This will seriously disrupt current market structures and pricing for broadband and voice/messaging. (Video is already enmeshed in a 2-sided structure based on advertising revenue.) So it’s worth being clued up on what’s going on.

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June 4, 2008

Use Case: Optimising Rolls-Royce’s ‘Product-Service’ business

This is a ‘Use Case’ taken from our 2-Sided Business Models report, which is out now (10% discount to readers of this blog). We have chosen Rolls-Royce as an example of both the type of target business model (mixing services with products) and a specific B2B VAS (Value Added Service) opportunity - field service - for telcos to sell into.

A major trend of the times is the blurring of the distinction between service industries and manufacturing, creating product-service systems — in our own technology field, we can already see plenty of examples. Is IBM a manufacturer or a service provider? Ever since its early 90s crisis, it’s put a lot of effort into its services businesses (consulting, systems integration, hosted/managed service operations), but not only does it still make computers, it carries out fundamental R&D on topics like semiconductors, lasers, batteries and magnetic materials — even more hardware than the chip makers.

Similarly, everyone would agree that Ericsson manufactures telecoms equipment, but one-third of its profits come from Ericsson Professional Services. On the other hand, Google would seem to be a quintessential services company, but it actually makes its own servers. Further, some functions that are typical of tech manufacturers - R&D, design and engineering - are found in companies that outsource all their manufacturing, but whose output is still recognisably a physical product, like ARM Holdings.

But this trend is even more pronounced outside the IT/telecoms world. Many, many companies turned to integrating their products with services as a way of fighting commoditisation over the last 30 years - and it’s often cited as a way of making industry more sustainable (pdf). We’ve picked one example which offers insights into where telcos might take their business.

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June 3, 2008

Telco 2.0 Case Study: Telenor CPA

Lars Godell, Telenor’s VP of Group Strategy, is one of the earliest Telco 2.0 thinkers — his work on this goes right back to his Forrester Research paper on The Rebirth of European Telecoms in 2001. So it should come as no great surprise that he was speaking at the last Telco 2.0 Industry Brainstorm a couple of months ago. And as Telenor is, among other things, the world’s seventh-biggest mobile operator, with 140 million subscribers in 11 territories, there is every reason to listen.

In his presentation, Godell explained how Telenor is trying to develop a two-sided business model, to make wholesale the centre of its business, and in general to move towards “Telenor 2.0”. The key to all this, he argues, was their decision back in the rah-rah days not to spend heavily on “content”, however good the parties were. Instead, Telenor decided to concentrate on selling, billing, and delivering content on behalf of its creators. Regular readers will obviously recognise this as touching on several key Telco 2.0 themes: selling to upstream (producer) customers as well as downstream (consumer) subscribers, logistics services for valuable data, the importance of wholesaling, and the value of telco OSS-BSS capabilities to third party developers.

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June 2, 2008

Ring! Ring! Hot News, 2nd June 2008

In Today’s Issue: More spy scandal at DTAG - Ricke implicated; your insecure mobile; iPhones that look like Windows!; killer photos hack RAZRs; “Safari” browsing, not browsing with Safari; FeliCa hacked; shareholder revolt at ALU; Isenberg on teleconferencing; Google’s app store; BREWidgets; Intel - they’re back; UK WiMAX delays; it’s Christmas for Openreach; Phorm demonstrations; Virgin Media adds more limits to unlimited broadband; KPN launches mobile TV - sort of; mobile phone shipments sink in Europe

Oh dear, oh dear; the Deutsche Telekom spy scandal takes another turn for the worse, as it turns out the spy was receiving money from the firm as recently as early last month, although the company had claimed it had all ended in early 2007. DTAG management, of course, claims that they were paying for something different and entirely aboveboard…they just don’t seem clear what. Interestingly, the spying included the mapping of targets’ movements using the mobile CDR stream — now that’s what we call a location-based service.

The Frankfurter Allgemeine Zeitung, meanwhile, claims that the spying project’s bills were sent to the same cost centre as the then CEO Kai-Uwe Ricke’s office.

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May 29, 2008

Telco 2.0 Case Study: Mobile Signature

We first encountered Mobile Signature at this year’s Mobile World Congres with Telefonica, but the system’s big success has been with Turkcell. And we think it sums up a lot of the possibilities and challenges posed by Telco 2.0.


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May 26, 2008

Profiting from gigawatts, not gigabytes

Reading about novel energy trading company EnerNOC, what sticks out is just how big the opportunity is for ‘Telco 2.0’ operators and business models. Remember, your job as a _personalised logistics services provider for valuable data_ is to help get the right information to the right place at the right time, securely, swiftly and cheaply. And rather than trying to squeeze an extra millicent of termination fees from the regulator, why not solve some problem in the world of energy instead?

One of the biggest barriers to making use of the huge quantities of energy the sun provides for free every day is reliability. The sun doesn’t always shine, and the wind doesn’t always blow. So, in most places, the most plentiful (and cheapest) forms of renewable energy are subject to a discount. They are not, as the electrical engineers say, despatchable. This is a serious problem, because electricity cannot be stored easily. Even without the added complexity of variable wind power, the grid has to match supply and demand in real time, all the time, whilst observing some very intricate technical constraints (pdf).

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May 19, 2008

Ring! Ring! Hot News, 19th May 2008

In Today’s Issue: Motorola in the psychiatric ward; Verwaayen takes a bow;Bharti/MTN deal in the offing; Vodafone buys social network app, customers; Orascom: Iraq, Syria, Zimbabwe, North Korea, and now Cuba; C&W soon to be C and W; data from space cheaper than SMS; Qualcomm in the UK; more mobile-TV alphabet soup; Sprint launches WiMAX, loses 1 million customers and Embarq wholesale contract; MacBooks with WiMAX?; new J2ME toolkits; Verizon Linux; NFC SIMs in Thailand; death of muni-WiFi

Oh dear. Evolving Excellence have a killer detail about the crisis at Motorola and the rather non-obvious solutions they’re adopting - namely, picking a CEO who refuses to use computers and cutting back on R&D. Because, you know, they stopped meaningful product development for two years after the RAZRs came out, and that worked so well. Not just that, but the new guy’s background at the company was in the automotive business, which they’ve now sold as non-core.

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May 12, 2008

OSS/BSS: vast untapped reserves of value

If you (or colleagues) are coming to the TM Forum’s Management World event in Nice in two week’s time, why not maximise your time investment and join the Leadership Summit on the Monday (18th May) - starts at 11am.

Telco 2.0 will be facilitating using our interactive ‘Mindshare’ method as well as presenting new analysis (new since our own event 3 weeks ago!). There are also 4 luminaries on tap to stimulate and drive the debate. Details here.

Here’s the rationale for coming: Ref our post on ‘Two-Sided Platform’ FAQs: “…telcos’ real value is in the service-creation and relationship management capability of their OSS-BSS”

There are tens of thousands of enterprises (large and small) that could benefit from telco assets that can help optimise time-sensitive and trust-sensitive business processes. There are vast untapped reserves of these buried within the OSS/BSS.

As we’ve modelled in our latest research report, the value to enterprises of optimising certain business processes is way in excess of the cost of the telecoms element - the latter is a ‘rounding error’. That means that there is plenty of room for high telco margins and what we’re calling ‘next generation termination fees’.

At the TM Forum’s Leadership Summit we’ll be discussing how to make the transformation to realise this opportunity.

PS: We’ll have 3 analysts at Management World till the Wed pm, so if you’d like to schedule a meeting just email us here.

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May 8, 2008

Bonanza or bust for termination fees?

One occasionally controversial, but always lucrative, part of the telecoms business is the collection of termination fees. For example, the UK regulator Ofcom estimates that approx. 15% of UK mobile industry revenue is via termination (in other words £2bn of a £14bn industry in 2006). What might happen to this voice and SMS wholesale revenue base as we move towards more open ‘Telco 2.0’-like models? We’ve got a surprising answer for you, based on two-sided markets.

In the very early days of the telephone network there were multiple competing access networks, which did not interconnect. You could have half a dozen lines coming into your property. This was clearly a non-scalable solution, since to be able to reach everyone you needed to subscribe to every network. This soon led to interconnected networks, with users choosing a single access provider, and fees levied to carry a call off-network. This naturally favours particular market structures, with dominant players receiving considerably more than they pay out, and with little or no price competition on termination fees. After all, if someone wants to reach you, what choice do they have except to go through the retail carrier the call recipient has chosen?

As a result, regulatory intervention has been commonplace to attempt to tie termination fees to actual costs. In a capex-intensive business, this creates a lot of creative work for lawyers and accountants attempting to allocate those costs. Traditionally telcos have done well out of this system, particularly GSM operators with calling party pays, but the pendulum might be about to swing the other way. Indeed, there are lots of arguments over whether this system is a good to a bad thing, or whether there should be a ‘bill and keep’ alternative without any termination fees. We’re agnostic, as we just have to deal with the world as we find it.

These fees are a kind of degenerate two-sided market. Like a full-blown two-sided market (e.g. Google Adwords), you attract an audience and then charge someone to access that audience. Those wishing to reach your subscribers potentially subsidise the acquisition of that audience. For example, we saw this in the past with free calling ‘on island’ in many territories in the Caribbean, but with very high termination rates for outsiders wishing to call in.

Not really a two-sided market when a telco is on both sides

However, it isn’t quite a real two-sided market. One of the attendees at our last Telco 2.0 Executive Brainstorm noted in the feedback:

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May 5, 2008

Ring! Ring! Hot News, 5th May 2008

In Today’s Issue: DT/Sprint murder’n’acquisition poses world’s biggest OSS BSS MESS; shareholders scared; political egos swell; warming up by buying OTE; and a side order of Nokia Ovi content, please; Mobistar MVNO mastery; Microhoo muffed; Yahoo+Jajah; huge Brazilian mergermonster slithers out of rainforest, eats shareholders; Virgin Media intros TV-over-IP-over-TV-over-IP; Globe Tel intros TV-over-3G; Sony Ericsson offers nightmare coding turducken; all-open-source mobile dev framework Flyer

No! Don’t do it! Think of your family! It’s one of those moments where someone’s about to be very ill-advised indeed, and the rest of us can but watch in horror and incredulity. Yes, we said Deutsche Telekom was a company with a huge overseas acquisition in their future, and guess what? They want to buy…the Telco USSR, Sprint Nextel. Apparently DTAG considered a bid for Nextel way back when - so no wonder they’re interested in getting it cheap, with Sprint thrown in free (they spent $40bn on Voicestream alone - they’re now looking at $23bn for the whole Sprint empire). But you have to wonder why anyone would want this: let’s see, that’s German, British, Dutch and US GSM and UMTS, German DSL, VDSL and even some ISDN, CDMA2000 at mainline Sprint mobile, iDen at Nextel, WiMAX at Sprint XOHM, more GSM/UMTS in Central Europe, FLASH OFDM in Slovakia and UMTS TDD in the Czech Republic. To say nothing of their competing global carrier operations, and WLAN hotspots, and SprintLink US fibre, and T-Systems call centres…

It’s like a charming screwball comedy entitled Converge This!, in which we follow the exploits of two hilariously ill-matched OSS-BSS engineers, Sven and Sven, as they strive to integrate the back-office operations of a giant mobile phone company that uses literally every network protocol in existence…no wonder the Frankfurt stock market doesn’t like it at all.

What is considerably less funny is the answer to our question: basically, the German government, which owns a large chunk of DTAG, is mad keen to see them do a “Made it, Ma! Top of the world!” moment in Washington (well, Overland Park, KS) by becoming the US’s biggest mobile operator. They may have forgotten that the character in Raoul Walsh’s film said that whilst standing on top of a giant tank of petrol in an oil refinery on fire, being shot at by the police….

But what is funny is that some US politicians apparently think German ownership of Sprint would be a menace to national security…

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April 22, 2008

Another Kind of Platform: Telcos as Development Environments

Another common use of the word “platform” that sometimes confuses people is the way it’s used to describe the technology that goes around individual applications in a computer system. Like Microsoft Windows, Linux, Adobe Flash in the browser, Symbian S60 in a mobile phone, or what have you. IT people spend a lot of time arguing about them, which is probably less stupid than it sounds, because the history of IT has been the history of development platforms.

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April 21, 2008

Ring! Ring! Hot News, 20th April 2008

In Today’s Issue: Online businesses crave telco capabilities (potentially…). Motorola rearranges the deckchairs. Nokia profits up 25%, but you wouldn’t want to see what went into that. Is Comes With Music a lossmaker? Nobody pays for the stuff anyway. Silverlight everywhere. And Moonlight. Is Microsoft IBM in 1993? 1,788 entries in the Android dev competition, but Google can’t keep a SIP server running. They can send a man to the moon… O2 users optimise radio network by whingeing. FTel+TeliaSonera=nightmare on Wall Street? Truphone gets a cash dump. UPS saves fuel with a platform. Pat Robertson, selfless crusader for your digital rights? AT&T fearmongering vs Andrew Odlyzko; there can only be one winner. Data centres in containers will eat the world. EBay finds giving away telephony is not a business. And there’s the day the YouTube died.

Ed Wray, CEO of Betfair, the world’s biggest betting exchange, came to last week’s Telco 2.0 Executive Brainstorm and told the assembled crowd of telcosians he would be delighted to pay a telco to solve his ‘digital logistics’ problems. Authentication is crucial to Betfair’s business, not just to prevent fraud but also to prevent Americans and the under-age from using the site, something which can lead to an executive jail problem. And telcos, he says, can provide it. At the moment, it’s costing him $22 to verify the identity of each new customer; with 1.5 million active customers, you could see how that might get expensive.

“There’s a tendency when building a platform business to do too much yourself - I come back to payments, I come back to authentication. People in this room can do this,” he said. A couple of telco execs came up to him afterwards to double check that he really was supporting the analysis on which the event was based.

In a keynote the day before, Sally Davies, CEO of BT Wholesale, described the 2-sided business model opportunity as “exciting and compelling”, but with many challenges in execution ahead. If there was a single theme of the conference, that was it; you couldn’t move for people who’d independently come to similar conclusions to those in the newly released the Voice & Messaging 2.0 and 2-Sided Business Model reports. The issue, of course, is how to disseminate these ideas more widely…

Much more analysis of last week’s Telco 2.0 event to come…

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April 14, 2008

Ring! Ring! Hot News, 14th April 2008

In Today’s Issue: Data surge at 3UK; price war in Sweden; Vodafone (powered by BT); what next after Big Ben?; more Phorm horrors; Carphone vs BT vs OFCOM; BT vs WiMAX; UK 2.5GHz auction coming; Qualcomm: Is a Telco; flying femtocells and Truphone; bad science at NTT; Apple zaps SDKs; Opera for Android; mystery MVNOs; Sonopia is toast; Embarq embarks on Telco 2.0; big chip merger; Safaricom caught fibbing about subscribers; mobile banking hits Orascom

There’s been a surge in data traffic and revenue at 3UK after they launched their wave of HSPA dongles last year; can anyone guess their secret? That’s right, they radically cut prices, and guess what, demand went way up. While it’s certainly good news for anyone who wants mobile Hovisnet service (it’s the Net wi’ nowt taken out), how long will it be before they find themselves stuck between raging demand and yet another trip to see the nice man from Ericsson?

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March 20, 2008

New Telecoms Business Model: some ‘A-Ha’ moments

We’ve been presenting the concept of the ‘two-sided telecoms business model’ to numerous parties over the last few weeks - boards and corporate strategy teams at large telcos in Europe and N.America, internet leaders in Silicon Valley, CEOs of mobile operators in emerging markets, CTO gatherings, equity researchers in investment banks, public policy lobby groups, and officers of large trade assocations. We’ve found that there are certain parts of the presentation that we might call ‘A-Ha’ moments. An ‘A-Ha’ moment has nothing to do with the 1980s Danish pop group, but refers to some key slides which grab the attention.

We’ve captured these below, then picked out some highlights of our the Telco 2.0 event in April to show how we’re looking to expand on these concepts to help answer the number one question we get asked at the moment: “How do we move forward from here…?” Here’s the first ‘A-Ha’ slide which wakes up those getting too excited about mobile broadband:

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March 19, 2008

Mobile Advertising and Marketing Awards: Roundup

Guest post from Mobile Enterprise CEO Tony Riley:

The first Mobile Advertising and Marketing Awards Conference was held in London on 12th/13th March 2008. The event continued many of the themes from the GSMA’s CMO Forum and the Telco 2.0 program. It added its own unique sound bites enhancing previous debate and also a few new insights into “what the industry is really facing.” Here are a few thoughts from the conference:

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Mobile Networks - Fear Factor

Together with our friends over at TelecomTV, we are in the process of surveying Telecom Executives about their expectations around the brave new world of communications.

Over 400 people have currently completed the survey and it is still open for a short period. Please take a few minutes to complete the survey — it won’t take long. In return not only will we share the findings with you for FREE, but we will also donate $1 to, UNHCR’s charity, Many thanks to the survey sponsor, Qualcomm.


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Plutonium data: prize or problem?

When the British government inconsiderately lost in the post details of all our children, the event was rather aptly described as a “privacy Chernobyl”. Once out in the open environment, there’s no undoing the contamination that the release of such data can cause.

By coincidence, we’ve been privately using a metaphor of “plutonium data” for some time to describe the most sensitive data that telcos, by their very nature, must gather and store. The paradox is that this data could hold a key to evading the “dumb pipe” fear of so many operators. It also provides a differentiator and advantage to telco building a B2B services platform, at least compared to IT platforms such as Google’s. What if the telco brand could be redefined as a trust mark to mean “privacy protected”?

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March 17, 2008

Google vs Telcos: The Tale of the Tape

We are close to finishing our latest research report, The Two-Sided Telecoms Market Opportunity, which outlines in detail how operators can achieve growth by adopting a two-sided business model. We’ve invested a huge amount of time and effort in sizing the opportunity for operators a.) by capability (Identity, Authentication, Security + Advertisng, Marketing, Business Services + E-Commerce + Off-line Order Fulfilment + On-line Order Fulfilment (content delivery) + Billing & Payments + Customer Care) and b.) by vertical industry. This helps us not only show how and why operators should tackle this opportunity (the usual strategic focus of our research), but also demonstrate the potential size of the pot.


We discuss the different functions of 2-sided platforms in the report and then look at Google, Amazon, Monster, iTunes, Betfair and AP Moller-Maersk in detail, pulling out appropriate lessons for telco operators. In this article we explore Google and, in boxing parlance, who measures up better in the ‘tale of the tape’…

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March 7, 2008

TomTom shows Google the way

For all of Google’s intellectual brilliance, they currently do not have a business model for their maps — they have a superb tool, a lot of customers using it, no doubt a lot of costs … and unfortunately no outward sign of revenue. Even the attention-grabbing tiddly text ads don’t make an appearance.

On the other hand TomTom, the mapping specialists, have just declared record profits of €317m for 2007 on revenues of €1.7bn, expanding market share, and expanding into new areas by signing MVNO deals with Vodafone.

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March 4, 2008

The Telecoms Transaction Platform: Seven Key Questions

Telco 2.0 is all about new business models telcos need in order to survive the crashing price of their staple product, voice. We reckon that addressing entirely different markets and needs — in particular the two-sided business model — is the answer. But sometimes it’s hard to explain this; so we came up with a new framework for it. So we’re going to try to work out what, precisely, goes into one of these “platforms” we keep talking about, how much of it there is, and eventually, how much it will cost.

To start, remember there are two things that go to make up this model: 1.) the ability for partners to re-package distribution assets (broadband networks, voice networks, etc.) independent of the telco’s own retail efforts, via rich new wholesale products; and 2.) B2B value-added services you build on top that use telco network and customer data assets to support largely non-telco business processes. In this article we’re just talking about the great big transaction platform that support the latter of these.

We assume the underlying infrastructure gets “Openreached” (for the access loops) or “Level(3)’d” (for the backbone). In other words, physical access ultimately becomes part of a multi-utility company, based off a model more like that for estate management, with 30+ year investment horizons and stable annunity rents. The core belongs to specialist wholesalers who thrive on volume. Also let’s assume telcos remain weak at feature-based product development (which seems fair). So, what is left? Quite a lot. But surely it’s now useless shorn of being an end-user services innovator? Absolutely not.

The remaining telco assets are capable of answering seven very important questions:

  1. Who are you? We’re talking authentication and identity here, based on the verified billing records in the BSS and OSS, plus security assets such as the SIM.
  2. Where are you? Mobile operators especially have a huge resource of information about location.
  3. How are you? We already see some rich presence-and-availability services, though driven by a desperate bid to compete with Web 2.0 apps. Some instant messaging addicts (think of it as “digital chocolate”) spend a surprising amount of time updating avatars and mood messages to reflect their emotional state, not just doing one-to-one messaging. Capture these behaviours and you will create major opportunities in anything that involves changes of status. Presence is to time as cell-site location and GPS are to space — we just need to figure out the business model still.
  4. Do you have credit? All the data by-products of billing; telcos can make your application aware of money. The Internet can route packets, but not payments.
  5. How can we reach you? Operators not only can reach you via their own communications services, but often can associate together multiple addresses or identifiers.
  6. Who do you know? No-one has more social graph data than a telco. Users have invested their most previous assets — time and money — in creating this data. It’s very valuable.
  7. Any questions? However good the processes, there are always problems that have to be dealt with by a human being. Telcos have massive call-centre capability, and are used to providing support to both enterprises and consumers.

Does anyone really doubt that there’s money in those capabilities if they can be packaged and promoted appropriately?

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March 3, 2008

Ring! Ring! Hot News, 3rd March 2008

In Today’s Issue: Mobile apps RIP? And are mobile RIAs the killer? Control your private plane with a Nokia N810; or develop for IMS. It’s your choice. NEC pushes “It’s not IMS”. Sprint = Telco USSR? British ISPs; how not to do it. Comcast: much the same. iPhones; hacked again. Hackers deploy platform strategy. menace rises. Big changes ahead at Telecom Italia. Nokia GPS-tags photos. Virgin Mobile in India. EU “worse than communism”. And cancerogenic BTS doesn’t exist after all.

Have downloadable mobile applications died the death, to be replaced by a Web-based future? Former Palm and Apple exec Michael Mace thinks so; Carlo Longino agrees. The argument is that the diversity of possible platforms, the difficulty telcos (especially) and vendors have relating to the developer world, and the restrictive terms of business they apply, have rendered it just too difficult for a real developer ecosystem to emerge. Meanwhile, the surge in things like Microsoft Silverlight, Adobe AIR, and JavaFX means that the richness of applications that run in a browser is beginning to challenge what you can achieve reasonably quickly in a native application. This is a significant change in the balance of power between the Web 2.0 players and telcos, since you don’t need a special (telco-issued) digital certificate or pre-installation for web applications.

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February 28, 2008

$250bn? You’ve got to be kidding…

In preparation for the big Telco 2.0 event in April, we’ve been spending a lot of time socialising the ‘two-sided telecoms business model’ concept and our market sizing analysis with senior execs from different parts of the value chain and in different geographies. We’ll be releasing more supporting analysis on this blog over the next week (to follow up the supremely popular posts on the effect of the BBC iPlayer on ISP costs and price discrimination in voice). We had a good 3 hour grilling last night from Andrew Bud, Founder of mBlox and the Vice Chairman of the Mobile Entertainment Forum. Extremely useful, thank you Andrew.

Here is a more gentle probing of our CEO by Telecom TV at the Mobile World Congress:

[Ed. - The 4th Telco 2.0 Executive Brainstorm on 16-17 April in London will debate how to realize this opportunity. Free Telco 2.0 research for all participants. Details of offer here. (Supported by GSMA, Yankee Group, mBlox, Intel, Telecom TV and others.)]

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February 25, 2008

Airline 2.0: How Telcos can do miles better with minutes

In our previous post on the airline industry, we noted how they had created a 2-sided business model using frequent flyer miles. These sub-divide the product (seat reservations, i.e. “options to fly”), and the sub-divisions can be sold at a significant profit to upstream partners like banks and supermarkets. Furthermore, this generates considerable free cash flow. So how can we apply these lessons to telcos?

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Ring! Ring! Hot News, 25th February 2008

In Today’s Issue:: Flat-rate menaces US cellcos, mobile voice volume booms, COLT feels the pain, Voda/Orange mast-share, OFCOM after the fibre, mobile filth disappoints, DVD Jon turns on mobiles, Pakistan breaks the Internet, GSM crypto cracked, BlackBerry down again, Facebook loses traffic, microwave spectrum in demand, France resists Reding, pretty PDFs, and Sprint-Nextel goes all Telco 2.0…

It was the week of flat-rate: all US national mobile operators are now offering flat-rate calling plans, as well as flat-rate data plans. Some day this war’s gonna end. We knew T-Mobile USA’s UMTS rollout would boost competition; we just didn’t think it would happen quite that quickly. Broadband incentive problem, meet US MNOs; US MNOs, meet broadband incentive problem…as Telegeography points out, this is ugly news for the landline world as well.

Here we go; mobile voice minutes of use in Europe are expected to whizz past fixed any time now.

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February 18, 2008

Telco 2.0’s Private Mobile World Congress

So everyone else has done their 3GSM…sorry…Mobile World Congress round-up posts; what did Telco 2.0 think was cool? As you’ll no doubt guess, it wasn’t the shiny gadgets that got us; even at MWC, the anti-shiny goggles all Telco 2.0 team members get issued still block them out. It was a very serious conference this year; we think it may have been the first to get serious about the kinds of communication and enterprise-focused activities that will eventually make serious money for carriers. We broke them down by themes…

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How ‘Airline 2.0’ generates more free cash - Lessons for Telcos

Our next Telco 2.0 event is coming up in April, and is sub-titled “Is there $250bn in new 2-sided telecoms business models?”. As with all marketing, sometimes accuracy is an early victim at the altar of the gods of simplicity and clarity of the message. A more correct title would be “Is there $250bn in new platform-enabled rich wholesale models that allow telco assets and services to be re-packaged to reach new indirect retail distribution channels, as well as generate entirely new revenue streams from upstream partners, where some of these propositions also fall under the technical definition of ‘2-sided business models’”.

Somehow I don’t think we’d get the same interest and attendance. Our graphic designer would be less than amused too. The point, though, is that there are many flavours and shades of grey in business model design. We’ve been coming up with a long list of examples (more in our new report), and would like to pick two involving the airline industry to illustrate the range of possibilities.

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February 11, 2008

Ring! Ring! Hot News, 11th February 2008

Telco 2.0 comes to you from the Mobile World Congress … sorry … 3GSM this week; not only were we covering the news but we were part of it, but that’s another story.

A big theme in the news this week was mobile Linux; Orange joined the LiMo Foundation, the outfit Motorola ginned up to boost open-source operating systems on shiny gadgets. Azingo, an Indian software house that markets a LiMo-compliant Linux distribution and developer kit, was showing off some of the unexpected capabilities of the technology.

Specifically, using a Broadcom reference gadget running their system, they were successfully using Nokia S60 widgets on a device that was neither a Nokia nor a Symbian S60 platform; we’re not sure if this is fantastic or scary. Which one depends whether you work in the S60 or Maemo Linux groups at Nokia, presumably.

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February 5, 2008

Re-thinking Skype’s business model

Skype is rumoured to be for sale by eBay. At least they’ll waive their own listing fees when it goes for auction. We do hope the buyer pays up and one golden-edged Skype share certificate duly arrives in a padded envelope. It doesn’t really matter if the rumour is true, because Skype has clearly failed to shine as brightly as it potentially could have under eBay’s stewardship. That’s because it’s got a business model that is tied into the past. And the greatest irony is that eBay itself is a closer model to what Skype needs to be than almost any other company.

We’re going to draw together some key messages from three of our recent and forthcoming reports to demonstrate what’s wrong and how to fix it:

  • In the Voice & Messaging 2.0 report, we examine how there are different kinds of communication, even within a single phone call, and they provide different opportunities to re-think the user experience. Skype bolted a VoIP and IM client together in uneasy alliance, rather than creating a truly new experience that solved a problem others couldn’t solve.
  • In our Broadband Business Models 2.0 report, we look at how different distribution systems for digital goods compete. In particular, you have to play to the special affordances and capabilities of the system, in Skype’s case the Internet. Skype didn’t go far enough.
  • In our report on The 2-Sided Telecoms Market Opportunity, we look at how you can create “platform” businesses. Skype hasn’t really become one, and should.

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February 4, 2008

Ring! Ring! Hot News, 4th February 2008

[Ed - reader promotion: If you’re thinking of coming or sending a delegation to the next Telco 2.0 Executive Brainstorm - 16-17 April, London - there’s a 20% discount if you book before 12th Feb. Details here]

This Week: Winners and losers from the cable cut crisis; Deutsche Telekom loses 2 megasubscribers, copies BT’s homework; AT&T EDGE outage; Sprint relaunches iDEN to battle $31bn writeoff; Dunstone darks DunBlog; Vodafone in data price cut, number porting case; Moto considers handset sale; MS vs Yahoo; Android phones are coming; Nokia-Trolltech analysis; IMS pony still yet to be located; 2.5 million SMS news subs in India.

It was the week the network died, what with no less than four major submarine cables getting backhoed (or rather, anchored). Some thought terrorists were assailing the world’s communications infrastructure; others that the giant squid were getting restless down there. Others thought it was the prelude to a US air-raid on Iran; Todd Underwood and his team at Renesys, though, had the data; Iran wasn’t even in the top 10 countries for outages as a percentage of BGP prefixes. As the operators of FLAG & Co scoured the world for cableships, divers and the like, their competitors who still had capacity in the area (like SMW-3, SAFE et al) were circling like vultures.

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January 31, 2008

Building a Monster 2-Sided Business

A large focus of our analysis currently is on two-sided business model for operators. We recently explored the opportunity for ‘Broadband Service Providers’ (fixed and mobile) from an access and delivery standpoint (we estimated a $250bn opportunity in 10 years time in mature markets alone…subject to some significant change in the industry) and are now researching how operators might build a portfolio of value-added platform, services that build on their early activities in advertising.

As well as identifying key platform opportunities and strategies and sizing the market, part of our work has involved looking at existing two-sided plays within and outside of Telecoms. Of course, the two-sided business model is not entirely new for Telcos. Fixed players have long since provided Freephone (often 800 numbers) to enterprises wishing to attract consumers. Benefits accrue to both parties - consumer pays nothing for call and the enterprise increases the volume of inbound calls. The normal business model is reversed and the enterprise is charged for receiving the call. This is akin, in the Telco advertising model, to the advertiser paying for a click on a banner or for a response to a short code promotion.

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Platform businesses: Competing with Big Tech

When you’re lost in the cycle of product development, marketing and customer support it’s sometimes hard to see the big picture of the forces reshaping the structure of the telecoms industry. In particular, telcos are in an unfolding position of co-opetition with what you might call ‘Big Tech’ — the IT technology, commerce and services giants. These increasingly overlap with telco functions. Many of these companies have platform business models. These create value for end users as well as upstream suppliers, and extracting revenue from joining the two sides together. Think Google, Amazon, Sun Microsystems or Companies like IBM specialise in construction and servicing of platforms, even if they don’t always feel the need to own them.

We strongly believe that telcos need to form a platform around their own unique assets. But what drives the economics of platforms, how should the telco platform be positioned against those IT platforms, and what lessons can telcos learn from them?

Mass-produced IT processes for a mass-production world

It’s often been suggested that various so-called network industries exhibit increasing returns to scale; whether or not you accept Metcalfe’s law, it’s empirically obvious that the Internet years’ most significant companies have been ones that made their first priority to build scale and volume. For all the above examples, their businesses are all centred on very large IT platforms and their economic models often involve selling at very low prices, or even giving services away, in order to pull in more volume.

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January 28, 2008

Ring! Ring! Hot News, 28th January 2008

A very selective tech downturn: as the stock market tanked, Nokia reached its world-domination target of 40% total market share. They celebrated with a recreational acquisition, buying Norwegian mobile-Linux specialists Trolltech. This brings not only their Linux technology, but also their cross-platform development environment Qt on board; this is presumably a means of hedging against Google Android et al. The mobile development race continues.

Meanwhile, a closer look at the figures for handset market share suggests one thing. It’s not just that Nokia is doing well; Motorola is doing catastrophically.

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January 24, 2008

Open Internet Access on Mobile - framing our thoughts

Last week Mark Lowenstein, former strategy VP at a major US telco (now Managing Director at Mobile Ecosystem) presented some issues around ‘Open Internet Access on Mobile’ on, the private community for senior executives in wireless. They prompted a ‘Telco 2.0’ response from us. We thought the exchange, captured below here, would be useful to our readers [note: normally discussions are private, but Mark allowed us to reprint his comments here…]:

Mark said: “Open access [to the internet on mobile] is going to be a key area of development in 2008. Its strongest proponents point to the PC industry and the experience we all have on the Internet. I’d like to raise some issues we all need to consider as the framework for open access is developed over the next couple of years.

First, we have to keep in mind wireless industry economics. It costs hundreds of times more to deliver a megabyte of data over a wireless network compared to residential broadband. There is no technology on the horizon that radically changes that framework.

Second, customer service is an aspect that open access proponents have under-considered. If you experience a problem in the PC world, you know that getting help can be cumbersome and costly. Having a problem on Facebook or MySpace? Try actually reaching a human being for help on these “social networks”. By contrast, wireless operators today are the default for all manner of customer service, even when problems have nothing to do with the actual service provided by the operator. How is this going to be handled in an “off-portal” world?

Third is the area of privacy and security. We’ve experienced tremendous growth in wireless data, and have been relatively untouched by the spam and virus problems so pervasive in the PC world. Can you imagine the backlash if there’s a high profile instance if minors [children] - the majority of whom now own cell phones - start receiving the sorts of inappropriate messages we all see daily in our e-mail inboxes?

Finally, we have to think hard about what the user experience in an “open access” world is going to be like. Consider that a superior user experience in today’s digital world tends to come from the most closed and tightly integrated offerings. I think of three examples here: iPod/iTunes; Blackberry; and console gaming.”

The Telco 2.0 response:

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January 16, 2008

Ribbit! The amphibian of telco voice platforms

We’ve been putting together a directory of all “2.0”-type players for our forthcoming Consumer Voice & Messaging 2.0 Report. One newcomer, Ribbit, is offering an early foretaste of what the future environment for developing voice and messaging services might look like.

Ribbit reckons it’s “Silicon Valley’s First Phone Company”. Silly us, we thought that was AT&T. So what is it? The actual product is a VoIP softswitch, available either as a standalone installation or a hosted service, which offers an unprecedentedly extensive collection of APIs for developers to work into their sizzling lashups. Then, there’s a Flash toolkit intended to let the front-end developers design interesting user interfaces to the system’s voice functions, whether on desktops, laptops, or mobile devices. All very Telco 2.0, really.

Perhaps the most impressive thing about Ribbit is that one of the existing applications for it integrates it into, the hugely successful web-based sales/CRM system; you can’t get more platform-based, enterprise-focused, or two-sided than that. We’re sure there’s huge scope for creativity and user-driven innovation here; but there are some issues that worry us.

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Apple Digtal Media Platform - Showing Signs of Strain

The Apple Digital Media Platform has been one of the runaway hits of this decade and driven a 400% gain in Apple’s share price over the last three years. Yesterday, Steve Jobs announced the entry into the movie rental business and a new version of the Apple TV Set Top Box. The bigger story which went unmentioned is that business model underlying the platform is showing real signs of strain and the players are showing signs of restlessness.

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

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