GSMA and networks of compatibility

The GSM Association has recently conducted some research on which services users most value. We've taken their headline list of ranked services and added our own spin. We've categorised the types of services being offered ("chatter", information, content or transactions), and what parts of the value chain are the operators involved in (service promotion/portal, service delivery, data pipe charges, and payments).

Operator roles in value chain
1Text messaging (SMS)Chat
2EmailChat + Info(✓)
4Alerts via SMS/MMSInfo(✓)
5Instant messagingChat(✓)(✓)
6Web browsing and searchingInfo
7Location-based servicesInfo
8Mobile radioContent(✓)(✓)
9Financial transactionsTransaction(✓)
10Downloading contentContent
11Mobile TVContent
12Video callingChat
13Video sharingContent(✓)

(Partial or optional involvement is in parentheses; no doubt hours of pointless debate could be had on some table cells.)

Our take away is that content continues to not be king. Hopefully you knew that already after the roll-out of 3G data and the public's consistent failure to find expensive packaged entertainment a better way of passing time than just calling a friend. The most elevated purpose of any human communication system is chatter and gossip.

The operators are also embedded across the value chain. There's an opportunity to extend the portal part into general search, as well as extend the reach of the payments into more services.

The real question is so what? for industry associations like GSMA. They have recently announced a collaborative operator effort for near-field communication (NFC) standards. We think that this is a smart move.

Thus far the tendency has been to focus on networks of connectivity first and foremost. This is clearly a necessity, and most of the work of GSMA and 3GPP has focused on the business and technical issues here. Yet the networks themselves are capital-hungry beasts which are hard to differentiate. Furthermore, the weakening of vertical integration is eroding the benefits of network ownership. Google didn't need to buy an inch of fibre before launching the world's most successful networked service.

The next phase has been defining networks of interoperable services. Unfortunately, this results in the following user experience problem:

Expensive, fragmented and limited solutions, based on products created by committee with little user input. Can you imagine the Internet with a menu of just four services? Me neither.

This track continues with the current 3GPP2 efforts to define new IM and real-time services, and features like multimedia ringback tones. Operators will deploy these, some successfully, but the standards effort seems disproportionate to the rewards. Advanced communications functions are increasingly adjuncts to other services like dating sites or photo sharing. Furthermore, the operator desire for differentiation tends to weaken the interoperability argument. We can barely agree on a dialect of SIP to talk, let alone what the messages actually mean.

The real opportunity lies in networks of compatibility, and the NFC example is a good one. In this case it hooks into the billing and identity assets of the telco, and sidesteps the dumb pipe problem. We've seen other such networks before, such as Bluetooth. With a bit more vision, openness and business sense, Bluetooth could have been a bigger money spinner. For example, for a fee merchants could have been able to download new signed profiles extending the device capabilities. Or, for a fee, you could access the SIM card authentication.

Future examples could easily revolve around part-pieces of service delivery, such as presence. Without defining the whole service definition, the GSMA could help operators to publish "push" presence data ("I'm in a call!") in standard formats and with low-friction business models for partners spanning multiple operators.

What we like about the GSMA is its business-centric outlook. It has a far better chance of success in creating new business model extensions for carriers than a technology-driven services world of IMS, particularly if it keeps adding new columns to the table for operator business activities.

There are other types of networks too, such as market-makers. Naturally, we'll delve into more detail about the different types of networks and network effect in our next Telco 2.0 Insider.