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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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:

Continue reading "Bonanza or bust for termination fees?" »

Posted at 09:57 AM | Link to this article | 2 comments

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…

Continue reading "Ring! Ring! Hot News, 5th May 2008" »

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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.

Continue reading "Another Kind of Platform: Telcos as Development Environments" »

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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…

Continue reading "Ring! Ring! Hot News, 20th April 2008" »

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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?

Continue reading "Ring! Ring! Hot News, 14th April 2008" »

Posted at 12:30 PM | Link to this article | 2 comments

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:

Continue reading "New Telecoms Business Model: some 'A-Ha' moments" »

Posted at 08:33 AM | Link to this article | 2 comments

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:

Continue reading "Mobile Advertising and Marketing Awards: Roundup" »

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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, Ninemillion.org. Many thanks to the survey sponsor, Qualcomm.

Continue reading "Mobile Networks - Fear Factor" »

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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”?

Continue reading "Plutonium data: prize or problem?" »

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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’…

Continue reading "Google vs Telcos: The Tale of the Tape" »

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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.

Continue reading "TomTom shows Google the way" »

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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?

Continue reading "The Telecoms Transaction Platform: Seven Key Questions" »

Posted at 05:48 PM | Link to this article | 1 comment

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. Salesforce.com 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.

Continue reading "Ring! Ring! Hot News, 3rd March 2008" »

Posted at 04:04 PM | Link to this article | 2 comments

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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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?

Continue reading "Airline 2.0: How Telcos can do miles better with minutes" »

Posted at 03:25 PM | Link to this article | 1 comment

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.

Continue reading "Ring! Ring! Hot News, 25th February 2008" »

Posted at 01:05 PM | Link to this article | 4 comments

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…

Continue reading "Telco 2.0's Private Mobile World Congress" »

Posted at 05:13 PM | Link to this article | 1 comment

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.

Continue reading "How 'Airline 2.0' generates more free cash - Lessons for Telcos" »

Posted at 09:58 AM | Link to this article | 1 comment

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.

Continue reading "Ring! Ring! Hot News, 11th February 2008" »

Posted at 07:07 PM | Link to this article | 1 comment

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.

Continue reading "Re-thinking Skype's business model" »

Posted at 10:19 PM | Link to this article | 1 comment

[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.

Continue reading "Ring! Ring! Hot News, 4th February 2008" »

Posted at 01:27 PM | Link to this article | 1 comment

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.

Continue reading "Building a Monster 2-Sided Business" »

Posted at 01:25 PM | Link to this article | Add a comment

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 Salesforce.com. 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.

Continue reading "Platform businesses: Competing with Big Tech" »

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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.

Continue reading "Ring! Ring! Hot News, 28th January 2008" »

Posted at 11:05 AM | Link to this article | 2 comments

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 INmobile.org, 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 INmobile.org 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:

Continue reading "Open Internet Access on Mobile - framing our thoughts" »

Posted at 08:53 PM | Link to this article | Add a comment

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 Salesforce.com, 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.

Continue reading "Ribbit! The amphibian of telco voice platforms" »

Posted at 01:45 PM | Link to this article | 2 comments

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.

Continue reading "Apple Digtal Media Platform - Showing Signs of Strain" »

Posted at 10:04 AM | Link to this article | 1 comment