What's wrong with being a dumb pipe - lots of money here. New ways of pricing and funding networks (MuniNets, End2End, Wimax, Wifi)

March 15, 2013

Snails, Gazelles, Damn Lies and Average Broadband Speeds

Telco 2.0’s Senior Analyst Keith McMahon is not usually an angry man, but today he’s uncharacteristically incandescent with rage. The reason is that he has analysed the latest stats from the UK’s regulator OFCOM and he smells a rat. Or more accurately, a mixture of snails, tortoises, humans, gazelles, and twisted statistics. Here, only lightly edited to protect more sensitive readers, is what he shared with the Telco 2.0 team this morning.

Another day brings another bunch of misleading statistics released by OFCOM. The headline today was “UK average broadband speeds up to 12Mbit/sec”. This headline figure, which was lazily lapped up by the majority of the British press as a sign that things are hunky-dory, hides a lot of truth about the underlying state of the British broadband market.


The chart above and vast qualification adequately describes the real state of the UK broadband superhighway. Basically we have three lanes: tortoises (between 2Mbit/sec and 10Mbit/sec), humans (between 10Mbit/sec and 30Mbit/sec), and gazelles (above 30Mbit/sec). The tortoises and humans haven’t improved at all - the gazelles have merely pulled away. Using the speeds above, one gazelle carries the same weight as five humans and ten tortoises in calculating the averages.

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May 14, 2012

What if they threw a net neutrality party and nobody came?

We’ve recently linked to several presentations from Informa’s 3G & LTE Optimisation conference, via the 3G & 4G Wireless Blog. But this one, from DTAG’s Kim Kyllesbech Larsen, is really outstanding on the practicalities of working with the mobile data explosion, what works, and what doesn’t. Notably, fair-use policy enforcement doesn’t help, but small cells and WLAN offload do. We’ll be publishing more on this in the coming months.

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May 9, 2012

NGMN Industry Conference & Exhibition 2012

We are delighted to be partnering with this year’s NGMN Industry Conference & Exhibition taking place in San Francisco, June 13th - 15th, and we’ll be represented by Dean Bubley, one of our Senior Associates, who’d leading a session on Day Two of the event on Global Mobile Broadband Devices. Do catch up with Dean if you go.


Further details: The NGMN Industry Conference & Exhibition is taking place at City View at Metreon Yerba Buena Gardens, San Francisco, USA.

This year’s conference will be a platform to explore the latest status of LTE network deployment and operation, to review the upcoming network and device trends and to embrace technology and service innovations. NGMN Partners and key players of the industry will share insights while start-up companies and research organisations present innovations and visions.

For group discounts & more information about the event contact or visit the Web site. Let them know we sent you!

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January 11, 2012

Free Mobile: Very Telco 2.0 Indeed

The web is agog about the launch of’s mobile network, long awaited. Om Malik interviews CEO Xavier Niel, and it’s quite impressive how much Telco 2.0 comes up.

“Since it is our own set-top box, we can innovate around it,” he says. “In the U.S., they buy their set-top boxes from other providers.” That’s a mistake and lost opportunity, Niel says and proceeds to outline how pivotal these set-top boxes are for his company and its future.

They’re referring to the Freebox Revolution devices Free pushed out last year. We’ve long been arguing the importance of better CPE, and pointing to Free as a case study of how to do it (they engineer them in house, based on open-source software).

l1011414-1.jpg (from here; by)

For example, used the set-top box for automatically sharing a portion of one’s broadband connection via Wi-Fi with other customers. Over five million set-top boxes means has a free Wi-Fi cloud enveloping major cities such as Paris. Even when away from home, you can easily get broadband instead of resorting to an expensive 3G network.

This Free.Fr free Wi-Fi network is going to play a pivotal role in the soon-to-be-launched service, which will be using 42 Mbps HSPA+ technology. The company has built a network of 15,000 macrocells, but those 5 million “nano cells” are going to be the key difference maker, Niel points out.’s newer set-top boxes will have built-in femtocells. On top of that, Free is going to be beefing up its macrocells with high-capacity fiber connections being fed by Iliad’s dark fiber. And when the time comes, he is going to embrace LTE and include that in his network as well. “We will go to wide area network (3G and 2.5G) when we are not in Wi-Fi coverage,” he tells me.

WLAN offload, multiple radio networks, and small cells? Telco 2.0 has been covering this ever since we first encountered FON.

He believes telecoms should charge for access and make money by selling the ID and payment services, not voice and SMS. It’s one of the reasons he loves Square, Jack Dorsey’s payment company, where he is an angel investor. “It is crazy to pay for voice by the minute as voice is so cheap,” he says. Even SMS texting is a lot of money and he finds that crazy. “We are trying to be the cheapest mobile service in France,” he adds. Don’t be surprised to see Google Voice-type services built into the service itself.

ID, personal data, and mobile payments as services to upstream customers? And better voice and messaging? You heard it here first.

The really big question is whether the cost savings from providing so much connectivity via the Freeboxes will be enough for Free to keep its promises on price. Then we’ll see whether there really is more to the disruption than just another round of commoditisation. And if so, Free will again be a world example of Telco 2.0 best practice.

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May 4, 2011

LTE & Wholesale: Time to Get Aggressive?

In this new free analysis on our research site ‘LTE & Wholesale: Time to Get Aggressive?’, we examine four examples of the growing trend of wholesale-oriented LTE operations, their key challenges and opportunities, and recommend that incumbent operators should be more aggressive in wholesale. More here.

We’ll also be exploring LTE and Wholesale networks further at the 13th Telco 2.0 Executive Brainstorm in London next week, 11th-13th May 2011 - for more or to join us please see here.

Report Extract - Figure 46: Fixed and mobile broadband wholesale revenues

Telco 2.0 Broadband Wholesale Forecast

Source: Telco 2.0 Source: Telco 2.0 New Mobile, Fixed and Wholesale Broadband Business Models Report

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December 6, 2010

Virgin Media: a UK “Happy Piper”

As part of our increasing focus on ‘Digital Entertainment 2.0’, here is an analysis of Virgin Media’s recent investor day:

The last man standing in the UK Cable Industry, Virgin Media (VMED), appears to have turned the corner and now for the first time in two decades is actually providing a return to shareholders. Although it is outperforming BT, VMED is still trailing BSkyB - especially in terms of revenue and overall converged home market share growth. The big question is whether VMED has a sustainable competitive advantage going forward, and more generally, who will be the other industry winners and losers as VMED moves onto the front foot.

Virgin Media held their first Investor/Analyst day in two years a few weeks ago, with CEO Neil Burkett showcasing VMED strategy going forward and described its competitive advantage as having three arms: network, brand and people. Here are our two pennies’ worth:

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November 18, 2010

FT World Telecoms: Broadband & Fibre

So Telco 2.0 went to the Financial Times’s World Telecoms event. Despite its very traditional format (Telco 2.0 event formats are much better!), this event does provide a platform for C-level execs to promote the wonderful things they are doing and (sometimes) open up about their business challenges.

Here are our thoughts about a number of key topics.

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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

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 23, 2010

What’s next for Broadband?

Much recent debate has been focused around ‘Net Neutrality’, and we’ve published our analysis on this in Net Neutrality 2.0: Don’t Block the Pipe, Lubricate the Market. This post outlines our recent and new research on this and Future Broadband Business Models, and how we will cover the developments on this topic at 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

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September 17, 2010

Net Neutrality 2.0: Don’t Block the Pipe, Lubricate the Market

Telco 2.0’s response to the issue of ‘Net Neutrality’ is now available in full on our Research website here.


‘Net Neutrality’ has gathered increasing momentum as a market issue, with AT&T, Verizon, major European telcos and Google and others all making their points in advance of the Ofcom, EC, and FCC consultation processes.

‘Net Neutrality 2.0: Don’t Block the Pipe, Lubricate the Market’ is our input to these processes.

Telco 2.0’s Position in Summary

We recommend that the appropriate general response to concerns over ‘Net Neutrality’ is to make it easier for customers to understand what they should expect, and what they actually get, from their broadband service, rather than impose strict technical rules or regulation about how ISPs should manage their networks.

The paper summarises the issues, analyses the causes and effects, and gives our recommendations on ‘best practice’ in traffic management and how to regulate it.

Next Steps

We’ll be discussing ‘Net Neutrality’, and working through key traffic management ‘Use Cases’ identified in the paper, at the next Telco 2.0 Executive Brainstorms - Americas Los Angeles, October 27-28, and EMEA, London, November 9-10, 2010.

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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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June 2, 2010

Top 10 Technology-Led Approaches to Mobile Broadband Traffic Management

Many mobile operators have to deal with short-term problems around capacity utilisation and improved management of their existing networks, as well as evolution to 3.5G/4G networks and new business models (as featured in our latest strategy report New Mobile, Fixed and Wholesale Broadband Business Models).

Last week we published the articles Optimising Mobile Broadband Economics: Key Issues and Next Steps, analysing the output of the mobile broadband session at the latest Telco 2.0 Brainstorm, and ‘LTE - Long Term Enthusiasm?’, an analysis of the recent LTE Summit by our long-term associate Dean Bubley of Disruptive Analysis.

This week we’re highlighting the publication of a new Disruptive Analysis research paper: The Top 10 Technology-Led Approaches to Traffic Management for Mobile Broadband which focuses on solutions possible in the near term with existing technologies.

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March 17, 2010

US National Broadband Plan: good in theory…

The FCC has published its National Broadband Plan - you can get it here from the horse’s mouth. We haven’t finished reading the 376 closely printed pages of exhaustive detail quite yet (we’re on page 62), but we do have some initial thoughts about the plan based on what we already knew, what’s in the recommendations, and what we’ve read so far.

In brief, it looks good in theory, but the proof of the pudding will be what the complex US market structure turns it into in practice. In addition, in terms of global impact, we see the National Broadband Plan as another piece of evidence for the Telco 2.0 concept that telecoms is increasingly too important to be left to the telcos. The growing influence of Governments and Regulators on broadband is a major theme in the broaband business models strategy report we’re about to publish, and will be examined in detail at the 9th Telco 2.0 Executive Brainstorm in London, 28th-29th April 2010.

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February 1, 2010

Finance 2.0: nice assets, but where’s the business model?

Telco 2.0 had the opportunity to attend Telecom Finance last week, a conference for investors, bankers and advisors working in the telco industry. Here are some of our impressions of the key themes…

1) Fear and loathing

Everyone was putting on a brave face and trying to talk up M&A deals, but there was an undercurrent of dread. As one of the speakers said, “the Macquarie deals aren’t coming back”; finance for big LBOs and mergers is no longer available, and you’ll struggle to get big network upgrades in developed markets funded. Further, whatever major deals do manage to get financed are likely to come on very strict terms. The days when infrastructure funds, like Macquarie, was able to borrow dirt cheap and take out equity from their investments have gone with the crisis.

2) The vital importance of holes in the ground

There was a lot of interest in holes - the civil engineering infrastructure. Specifically, everyone at TelecomFinance was keen on buying towers, rights of way, dark fibre etc, as well as promoting network-sharing deals. Of course, these are the kind of low-risk projects, backed up by steady cashflows as well as a near-indestructible asset base, that are likely to be feasible in a traumatised financial environment. And they are also large. No wonder the financiers like them. But it wasn’t just that - access to ducts, towers, and passive infrastructure generally was highly popular as a strategy for FTTH and LTE deployment and also for managing regulators.

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December 18, 2009

BitTorrent’s uTP: The Art of Getting Out Of The Way

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Media vs P2P vs Telcos: The Internet’s Civil War

At the 8th Telco 2.0 Executive Brainstorm in Orlando last week, Eric Klinker, CEO of, had some fascinating things to say about technical solutions to the interlocking intellectual property and bandwidth issues we’re constantly debating around online video. (He also remarked that the whole debate about P2P, piracy, and intellectual property had begun to remind him of the US Civil War - by 1863, it was clear that the South could never win, but the war went on anyway, and the majority of the casualties died pointlessly between then and 1865.)

He said that both the telecoms and media industries hated BitTorrent, but that this was in part a reflection of their own mutual distrust. BitTorrent was a very small company being ground between these two huge interest blocks. Despite that, it’s still global - the only country where there are no BitTorrent applications running is North Korea - has 66% of the market, and the monthly peak throughput of the BitTorrent network is 4 terabits per second.

Congestion, not Traffic, Drives Cost

ISPs tend to be concerned about BitTorrent because they see it as a bandwidth hog. Klinker pointed out that he had himself been an ISP engineer and that he therefore understood their concerns. He remarked that traffic was not, in fact, a driver of cost - congestion was.


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December 16, 2009

If LTE Disappoints, What About WiMAX? (Guest Post)

Ed: Below is a guest post by Ofer Karp, President, Wireless Broadband at Alvarion. In it, he addresses some of the issues we raised in our LTE - Late, Tempting, Elusive? article and at the November Telco 2.0 Exec Brainstorm to make the case for WiMAX. We’d be interested in comments from our readers…meanwhile, you can help Telco 2.0 improve our service to you by taking a brief survey.

A recent study by Unwired Insight claims that growth in data traffic will bring about a 3G network capacity crisis from some mobile network operators as early as 2010. As 2G users continue to migrate to 3G services, the available capacity per 3G user will decline rapidly in networks utilising HSPA, to less than 100MB per user per month in some cases.

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October 29, 2009

Delivering FTTH with

Ed. - To warm us up for the forthcoming Telco 2.0 Exec Brainstorms on new business models (next week in London and 9-10 Dec in Orlando, Florida), Telco 2.0 is blogging from eComm this week. This is probably the best event series on strategic technology developments, and we’re delighted to partner with it. Below are some highlights so far. NB: Google Wave users can follow the conference backchannel by searching “tag:eComm with:public”; presentations will be posted to the individual session waves in due course.

Benoit Felten introduced a presentation typically rich in chewy data on an economic model of FTTH deployment he and his Yankee Group colleagues have prepared. The take-home message is that their sensitivity analysis shows that the primary drivers of return on investment in FTTH deployments are:

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The Promise and Reality of LTE

Ed. - To warm us up for the forthcoming Telco 2.0 Exec Brainstorms on new business models (next week in London and 9-10 Dec in Orlando, Florida), Telco 2.0 is blogging from eComm this week. This is probably the best event series on strategic technology developments, and we’re delighted to partner with it. Below are some highlights so far. NB: Google Wave users can follow the conference backchannel by searching “tag:eComm with:public”; presentations will be posted to the individual session waves in due course.

Spectrum and LTE: promise and reality

Telco 2.0 ally Brough Turner argues that the scarcity of radio spectrum is an illusion brought on by telcos and the limits of current receiver technology. He described experiments in measuring the actual utilisation rate of the US CMRS (Cellular Mobile Radio Systems) bands; the highest utilisation rate they were able to observe was only 13%, during a US political party convention.

Surely, then, there’s plenty of room at the bottom.

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October 8, 2009

Strategy 2.0: The $375 billion growth and efficiency opportunity - update

In preparation for our EMEA and AMERICA brainstorms,the Telco 2.0 team has been reviewing and debating some of its core theories and previous analysis.

Two important reports, which also helped launch the Telco 2.0 Initiative, were “Beyond Bundling: Future Broadband Business Models” and “The ‘Two-Sided’ Telecoms Market Opportunity”. Together they described a $350bn growth opportunity for telcos that was about leveraging their distinctive assets to create interoperable platforms that enabled third party organizations to optimize their everyday business processes and interactions with customers. The focus was mature markets, because that’s where the greatest business model pressures existed, and the time horizon was 10 years.

It wasn’t a forecast; it was (and still is) an opportunity to add greater value to the wider ‘digital economy’ and grow ahead of market projections.

But we all know it’s hard making predictions, especially about the future. Suggesting fundamental adjustments to how successful industries make money is also not without its pitfalls. As part of a preview of two new reports on Fixed and Mobile Broadband End-Games and ‘Two-Sided’ Business Model Use Cases, we thought we’d take the brave step to revisit our original analysis to see how things have changed and what interim lessons we could draw out. This first article focuses on the broadband. The next one will address the lessons from the 2-Sided Business Model report.

A bit of Telco 2.0 Background

Back in the autumn of 2007, just as the great financial crisis began to bite, we had two key messages - the first was that the current broadband business model risked seeing costs escalate without limit while revenues fell behind, and the second was that telcos and ISPs could escape this by mastering a richer suite of digital logistics skills, seeking adjacent as well as end-user revenues, and embracing structural separation.

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Cisco/Oxford Broadband Quality Study Backs Telco 2.0 on Fibre

Remember this post from April? Especially, do you remember this chart?

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September 8, 2009

When should wireless operators share network resources?

Ed: In some circumstances, and to support evolving and new business models, it may be in everyone’s interest to allow customers to access certain resources across all available wireless networks, for example when bandwidth hungry users cause network problems for other users. So argues Chris Hoover, VP, Product Management at Openet, in a guest post below. (Openet are Platinum Partners of the Telco 2.0 Initiative).

A recent Wall Street Journal opinion piece by Andy Kessler calls for operators to provide access to their “airwaves” to anyone. Mr. Kessler’s message was that individual subscribers could benefit from expanded choice of service (e.g. by choosing whichever network suited, similar to a Wi-Fi hotspot).

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August 6, 2009

LTE: Late, Tempting, and Elusive

AreteThis is a Guest Briefing from Arete Research, a Telco 2.0™ partner specialising in investment analysis.

The views in this article are not intended to constitute investment advice from Telco 2.0™ or STL Partners. We are reprinting Arete’s Analysis to give our customers some additional insight into how some Investors see the Telecoms Market.

Wireless Infrastructure

LTE: Late, Tempting, and ElusiveLTE is the new HSPA is the new WCDMA: another wave of new air interfaces, network architectures, and enabled services to add mobile data capacity. From 3G to 3.5G to 4G, vendors are pushing technology into a few “pioneer” operators, hoping to boost sales. Yet, like previous “G’s,” LTE will see minimal near-term sales, requires $1bn+ of R&D per vendor, and promises uncertain returns. The LTE hype is adding costs for vendors that saw margins fall for two years.

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July 21, 2009

African Communications - Waves of Investment

The outlook for the African Communications Industry is uncertain, at best. For sure, there is currently massive infrastructure investment across the continent. And this investment not only covers mobile technology, there are also major fibre and satellite projects working towards bringing the internet to the population. But a storm is brewing: major African players, such as MTN and Zain, are reassessing their corporate strategies; in-country consolidation in mobile looks inevitable in several countries as too many players have been licensed; and the business case for mass market internet services is unproven.

However, the lesson learnt from the mobile expansion through the continent is that innovation will flourish. This innovation is not only seen in products such as M-PESA, but also in business models. Africans seem not to be frightened and are innovating with their own business models for their own environment as well as adapting the tried and trusted business models which work in Western Europe. This article discusses some of the structural problems in some markets, examines some of major players and explores the new projects.

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July 7, 2009

Mobile Broadband: Urgent need for new business models


This is an edited extract of our new Executive Briefing Report “Mobile Broadband: the urgent need for innovative business models”, available in full to members of the Telco 2.0 Subscription Service. Non-members please see here or here to buy the full report.

Mobile broadband – a reason to be cheerful?

The last 18 months have seen a huge upswing in the adoption of mobile broadband (MBB) globally, especially relating to PC connectivity through 3G USB “dongles”, as well as high-end smartphones like the Apple iPhone. For the mobile industry, MBB has been one of the few bright spots, especially in mature markets where the recession (and regulation) has impacted voice and SMS revenues. For many operators, PC-based data revenues have eclipsed lacklustre growth of content and data services on handsets.

Figure 1: Global mobile broadband computing users


Source: Telco 2.0, Disruptive Analysis

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April 29, 2009

Apple on Verizon: Reinventing Laptop Connectivity?

Building on our previous analysis of ‘Device 2.0’ strategy and in preparation for the Telco 2.0 Exec Brainstorm next week, below is some inportant news and analysis that could have far reaching consequences for business model innovation across the telecom-media-tech value chain:

Denny Strigl, President of Verizon, made a very interesting aside during their Q1 earnings call:

You know, we have said in the past we are always open to discussions with any suppliers. We have no announcements to make relative to Apple today. But let me say that we historically have not been dependent on any one device.

The commentariat moved immediately into speculative overdrive discussing the possibility of a change in strategy at Apple and whether the iPhone, or some variant thereof, is due to arrive on the Verizon Wireless network.

The Telco 2.0 view is that something far more interesting could happen and we present below a scenario on how Apple could completely disrupt the laptop connectivity market and in the process vastly improve the user experience:

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April 9, 2009

Fibre Down Under: It’s All Part of the Master Plan…

Australia, New Zealand, and Singapore’s ambitious plans for publicly owned FTTH show that if you want Real Broadband (speeds heading for at least 100Mbit/s, a high degree of symmetry, and OPEX low enough to support a healthy ISP market), only Pakistan-style anarchy or state-run technocracy will cut it. That’s also the conclusion we reached in our Online Video market study; and data from Akamai bears it out.

It’s the 40th anniversary of the Internet, in a deep sense; 40 years to the day the first RFC (Request For Comments) document was issued, essentially founding the ‘Net’s very specific culture and institutions. RFC1 was written in a shared toilet in a college dorm at dead of night, by a student who was mostly concerned with avoiding tripping over anyone’s toes; but the approach it began would be replicated in the entirety of Internet engineering and culture. And the word was this:
The early R.F.C.’s ranged from grand visions to mundane details, although the latter quickly became the most common. Less important than the content of those first documents was that they were available free of charge and anyone could write one. Instead of authority-based decision-making, we relied on a process we called “rough consensus and running code.”

Rough consensus and running code. Right. We would like to think that’s how we’ve been suggesting that fibre-to-the-X should develop - rather than either the IMS-infused visions of the telcos, or the technocratic vision of giant publicly-owned networks, we were putting our money on messy progress - common standards, open interconnection, and a happy mix of incremental muni-fibre, telco-muni cooperation (like KPN, Reggefiber, and Glasvezelnet Amsterdam), layer zero openness, and perhaps more.

So, this is very interesting news.

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March 27, 2009

iFlood: How better mobile user interfaces demand Layer Zero openness

Networks guru Andrew Odlyzko recently estimated that a typical mobile user consumes 20MB of data a month for voice service, but that T-Mobile Netherlands reports their iPhone users consuming 640MB of data a month; so upgrading everyone to the Jesus Phone would increase the demand for IP bandwidth on cellular networks by a factor of 30.

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February 24, 2009

Cisco: The Future of the Mobile Internet

Here’s an interesting view from Cisco about the consequences of 4G wireless access - just as important as higher bandwidth will be that the 4G networks are all-IP, and that the great driver of traffic will be video, as Cisco’s Simon Aspinall pointed out at the last Telco 2.0 event.

We will, of course, be discussing the problems of online video distribution at our next event, in Nice on the 6th-7th of May,

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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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December 15, 2008

Mobile Broadband in 2009: ‘Credit Crunch’ and ‘Capacity Crunch’ demand new business models

In a previous article for Telco 2.0, Dean Bubley of Disruptive Analysis discussed the likely slow adoption of embedded-3G laptops. Now, having published the full report on Mobile Broadband Computing, he examines what happens when huge long-term potential market growth clashes with more short-term business model challenges.

2008 has been a banner year for mobile broadband computing. It is already one of the most successful new service areas for wireless operators. In parallel with their well-publicised adoption of smartphones, business and consumer users have also demonstrated a huge appetite for mobile Internet access on laptops.


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November 25, 2008

Amazon Cloudfront: Lessons for telcos in content distribution

Following our article on the Future of Online Video and on Amazon’s platform business model we look here at another interesting product from Amazon - Cloudfront - to tease out some more lessons for telcos:

Everyone’s impressed by the low low prices Amazon Web Services is offering for content delivery from its new content delivery network (CDN), CloudFront. Heavy users might pay as little as $0.09 a GB! This feeds into another story — the paradox of CDNs’ increasing importance, but decreasing profitability. Nobody seriously considers working with heavy traffic sources like video without using a CDN of some description. This is chiefly because their importance has led to a wave of new entrants - both VC-funded startups and telcos who integrate CDN capability in their networks - and a price war. Surely, Amazon’s entry to the market must mean a further wave of price-slashing?

But there are reasons to suggest that CloudFront is considerably less revolutionary than it sounds:

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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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October 20, 2008

Ring! Ring! Hot News, 20th October 2008

Just when I thought I was out, they drag me back in: Siemens shows a concept phone using the “big touchscreen” iPhone design meme to include a large solar panel in the device. Nice; but hasn’t Siemens given up making phones?

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October 3, 2008

Why 3G ­Embedded Notebook Forecasts are Overhyped

We’re delighted to be working more closely with Dean Bubley, one of the most insightful analysts on wireless technology and author of the superbly acerbic Disruptive Analysis blog. Dean will be helping us to create more tangible roadmaps to the two-sided business model.

After our upbeat post on embedded broadband, we asked Dean to share some of his detailed analysis and give us a ‘reality check’:

The last few weeks have seen much fanfare about notebooks shipping with built-in 3G modules. Vodafone announced it was selling Dell’s new Mini 9 netbook, while T-Mobile is working with LG, Acer and Asus on embedded notebooks of various types. The GSMA has just announced its “Mobile Broadband” certification scheme and sticker for PCs, backed by $1bn of marketing. It hopes this will emulate the past success of the WiFi Alliance and Intel’s Centrino badging in driving the “attach rate” of embedded connectivity. In the background, various silicon and module providers (notably Qualcomm and Ericsson) have been loudly evangelising their products.

Disruptive Analysis has been working on a new report, due for publication soon, on Mobile Broadband Computing, which examines the various options for connecting PCs and new “MIDs” (Mobile Internet Devices). One early finding of the research is that embedded-3G (and, for that matter, embedded-WiMAX) notebooks will not follow the rapid growth trajectory of WiFi. Instead, the overall proportion of PCs attached to mobile networks will grow relatively slowly, and those that do will use a mix of dongles, embedded modules and other options.

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September 29, 2008

Ring! Ring! Hot News, 29th September 2008

In Today’s Issue: Bankers’ favourite BlackBerry bears brunt of banking bust; IBM and, again; MSFT’s new Unified Comms server, works with Asterisk; Cisco launches Web-based unicomms with VZ; Dell’s business model diverges; Apple lawyers’ war on books. FACT!; Motorola deploys android hordes; HTC keeps on making Windows gadgets; funny prepaid broadband prices; awful EU telecoms bill defanged; roll-your-own MVNO; Joost and the browser plugin to end plugins; CWN vs Pirates; Roshan’s M-PESA deployment vs Taliban; Singapore’s fibre deployment, none more Telco 2.0; global M2M alliance formed

Crisis at RIM; the maker of BlackBerrys issued a profits warning for the fourth quarter, as thousands of bankers handed their company-issued devices over to the administrators, filed last-minute expense claims, and packed their belongings in the traditional cardboard box.

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September 22, 2008

Ring! Ring! 22nd September 2008

In Today’s Issue: Symbian bashes mobile Linux; LiMo counterbashes; Cisco buys Jabber, threatens protocol switch; new Nokia E-series; iTrojan; building stuff for the BlackBerry; data roaming price war in Asia; Reding insists on open access to NGNs; Nortel exits optical Ethernet; EU telecoms packet in trouble; Vodafone+Vodacom; RIP Mobilink CFO

Department of “He would say that, wouldn’t he?”: Symbian claims there’s no hope for Linux on mobile devices, LiMo disagrees, and Google is accused of deliberately causing fragmentation to boost cross-platform and Web apps.

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September 18, 2008

Embedded Broadband on the Verge

Just as dongles swept datacards before them, embedded chipsets for broadband connectivity are about to sweep dongles away. The Telco 2.0 team believe that eventually they will become as ubiquitous as WiFi connectivity is in today’s generation of laptops.

We can see the beginnings of a classic virtuous circle:

  • for laptop manufacturers, who potentially sell more products in a shorter replacement cycle;
  • for embedded chipset manufacturers, especially Qualcomm & Ericsson, who sell more product and indirectly create extra demand for their network equipment;
  • for mobile operators who develop and sell more connections and therefore gain more service revenue; and
  • users are offered ease of use and the potential to connect to any network where there is coverage - and the ability to change network over the approximate current 3-year lifespan of the laptop.

As production volumes increase silicon economics and miniaturisation will kick-in thereby opening up the market for a whole new series of devices with broadband data connectivity. In developed economies penetration of mobile device will shoot up towards the Verizon Wireless target of 400%.

However, challenges exist for mobile operators to develop an appropriate business model that not only provides a decent return for shareholders but also avoid the mistakes of the fixed broadband market.

In particular, whilst it’s OK to be a dumb pipe, it’s not OK to be a undifferentiated dump pipe where costs and revenue incentives are misaligned, and where there are no value-added upsell opportunities. Here’s how to think about it:

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September 15, 2008

Ring! Ring! Hot News, 15th September 2008

In Today’s Issue: Nobody wants landlines; Apple zaps apps, caps AppStore competitors, Winer flaps; Open Hack Day@Yahoo!; implementation of sci-fi dystopia for the iPhone; Vodafone deckchair redeployment; T-Mobile Android phone; C&W builds non-virtual GSM operator for Tesco; free airtime for ad viewers, human or not; attack of the terminators; 3UK says no; KPN-Bouygues MVNO deal; the Internet interprets America as damage and routes around it; screen-scanning check-in; warrants needed for LBS snooping

A sign of the times: David Isenberg points out that the University of Kentucky has stopped providing fixed phone lines in the halls of residence, as nobody wants them. And before mobile operators start to gloat, don’t think those same students will forever tolerate voice and messaging services that in no way integrate with the rest of their online lives. Where are the voice and messaging applications of the future?

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September 2, 2008

New Internet Video Distribution Survey - have your say

Today we launch a new survey, part of a major investigation into new business models for internet video distribution (kindly supported by the TM Forum, TelecomTV, the Mobile Entertainment Forum, and TVoverNet.)

By ‘internet video distribution’ we mean: any video material (movies, TV, infotainment, sports, UCG) distributed via internet technologies (IPTV, web streaming or P2P downloading) over any bearer (fixed or mobile broadband networks) to any device (PC, TV, handheld). We exclude traditional broadcasting and physical means of distribution, although the consequences of internet video distribution are looked at.

Do take part here. It takes 15-20 minutes to complete and you’ll get a free copy of the summary results if you invest the time to complete it properly. (The system allows you to come back to complete it if you need to take a break). Survey closes 1st October 2008.

Some of the questions are pretty challenging, so it’s well worth reading the context for it below first:

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August 22, 2008

BBC iPlayer Bandwidth Wars

It’s August; not much going on in the telcosphere. But the summer calm was shattered this week by some news — and, despite what you’d read elsewhere, it wasn’t the Ericsson/STMicro merger. We documented, with a little help from Plusnet and their happy wurlitzer Ellacoyas, just how heavily the BBC’s iPlayer TV streaming service hit British ISPs. We also noted that even if the Beeb is sucking up a lot of bandwidth, it’s still not as big a deal as YouTube.

Now, it looks like a second wave of iPlayer-related disruption is heading for the British DSL providers’ bottom line. And the pattern is likely to repeat itself all over the world, since you have a misalignment of interests between media players (who want free or cheap online distribution), and ISPs (who want to sell ‘unlimited’ plans to users in the hope they never use any of the capacity sold). The answer will inevitably be a new more dynamic market for bandwidth and content delivery. In the meantime, we can watch the old industry structures strain and buckle. So what drives the economics of online video delivery? [Ed - We will be launching a major new research report into online video delivery this autumn, more details to follow.]

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August 4, 2008

Ring! Ring! Hot News, 4th August 2008

In Today’s Issue: Moto splits again, makes actual money; CDMA - the edge of darkness; Nortel loses customer, 15% off shares, gains WiMAX obsession, 13% back on shares; most pointless network tech announcement?; the LTE voice problem; FCC KOs TCP RST DPI; good news shock at FT, NTT; Indian WiMAX speccy shocker; IKEA is a mobile operator; BT shareholders panic; free N810s

We’ve been following the crisis at Motorola for some time. The latest reorganisation is here. As well as selling off the failing handset division, they’re now planning to split up the rump of the firm into several chunks. The set-top box and related business goes in one, the cellular business in another, and the WiMAX operation in yet a third. (Motorola’s declared tech strategy assumes that WLAN, UMTS, and WiMAX are the default radio network technologies, and these roughly map on to this structure.)

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BT fibre roll-out: Do the numbers add up?

BT is at last moving on fibre. This is of interest because BT don’t own a cellular network, and their current residential copper access network is functionally separated — a very ‘Telco 2.0’ horizontal model. Is it possible to make money on new network builds without complete vertical integration and a monopoly on services?

We dig into the numbers, and work out whether BT’s shareholders should be concerned, or delighted.

The details are more than a little sketchy at the moment, but we can be fairly certain of some points:

  1. Both FTTC and FTTH are in prospect.
  2. Speeds are to be “up to 100MBits/s” for the FTTH element, 40-60Mbits/s for the FTTC element.
  3. The service will be available wholesale.
  4. The project is costed at £1.5bn over five years.

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July 28, 2008

Ring! Ring! Hot News, 28th July 2008

In Today’s Issue: All the Vodafone that’s fit to print; just what’s in that tall glass of mobile data?; the Spanish builder menace; AT&T discovers principled objection to mergers, porcine aviator sighted; Sprint flogs towers; Sprint’s multi-gigabit radio backhaul, departure from the NGMN; is MediaFLO short of spectrum?; frantic open-source activity; Nokia pays for friends; Intel dumps Ubuntu from its mobilinux; Win95 on a Nokia N810; better voicemail for all; Bundesnetzagentur’s odd idea of regulation; BT begins to move on fibre

Vodafone found that once the stock market doesn’t like you, there’s very little you can do about it this week. You wouldn’t imagine that interim results including the phrases “first-quarter £9.1bn revenue” and “expecting full-year profits around £11bn” could scare the markets, but that’s what happened — vodashares were marked down by around 11 per cent. The monster carrier responded by offering to buy back a billion pounds’ worth of stock. Yet if the best repartee is a parliamentary majority, as Prime Minister Disraeli once suggested, the best trading statement is usually a bag of cash.

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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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June 26, 2008

Next Generation Access Networks - International Perspective

Following the popular article last week on FTTH prospects for the UK, Benoit Felton of Fibrevolution sent us some excellent material looking at the issues from a more international perspective. He says:

In April this year I attended a very interesting conference in Stavänger, Norway, organised by the OECD on Next Generation Access Networks where I conducted a number of interviews with experts. The end result is two podcasts:

The Stavänger Show - Part One: FTTH Policy focuses on the challenges raised by next generation access when it comes to government policy and regulation. The people interviewed are:

Marvin Sirbu, Prof. Engineering and Public Policy at Carnegie Mellon University; Antony Walker, Head of the Broadband Stakeholder’s Group; Grant Forsyth, Head of EMEA Regulatory Affairs at BT Global Services; Dimitri Ypsilanti, responsable for the OECD Working Party on Communications

The Stavänger Show - Part Two: Deployment Models focuses on the various approaches to NGANs, from municipal open access to incumbent vertical integration. The people interviewed are:

Herman Wagter, CEO of Glasvezelnet Amsterdam; Dennis Weller, Chief Economist at Verizon; Christian Berg, Consultant at Dansk Energi; Richard Clarke, AVP of Regulatory Planning and Policy at AT&T

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June 19, 2008

Prospects for FTTH in Britain: considered slow

So, with two major US carriers rolling out fibre to the home, a string of European cities doing the municipal-fibre thing, Iliad fibreing-up their own network in France, and Japan and Korea having long started wiring up whole apartment buildings, how soon will the UK get cracking? Telco 2.0 went to the Broadband Stakeholder Group’s conference to find out.

Background to the issue

The broadband incentive problem tells us how there’s little incentive for network owners to invest in networks when they can’t capture much of the incremental value of the traffic. One way out would be to make a radical cut in the underlying incremental costs of bandwidth, and to stretch budgets further. And that’s precisely what we’re seeing all over the world, as operators upgrade in order to substitute new CAPEX for old OPEX.

There are many ways of doing this: deploying fibre, DOCSIS 3 cable systems, and advanced wireless in the access loop; moving to technologies like Carrier Ethernet inside their networks; and substituting peering for transit whereever possible. Mobile operators are increasingly pulling fibre to their cell-sites in order to cope with a rising tide of data traffic encouraged by the arrival of megabit-plus radio links.

Verizon estimates that it saves up to 70% of OPEX on every link it converts to FiOS. So you’d think the pressure would be on to get the fibre out there in Britain, a country criss-crossed with high-maintenance copper in a damp climate. The UK is also perhaps the guinea pig for the broadband incentive problem. But FTTH is further behind in the UK than almost anywhere else in Europe. So far there is literally no SOHO fibre access anywhere in Britain. What’s going on?

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June 16, 2008

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 11, 2008

Video - Achilles heel of the mobile ISP

There has been an ongoing online and offline debate recently about whether video is going to create some kind of “exaflood” of data with bad consequences for the telecoms industry. We’ve got a different point of view to most observers on the matter: video doesn’t ‘kill the Internet’, but it does kill the traditional stand-alone ISP business model. To see what’s happening, though, you don’t need probes in Internet backbones, but rather in ISP balance sheets.

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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 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 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 28, 2008

Ring! Ring! Hot News, 28th April 2008

Meet JIL; that’s the Joint Innovation Lab, a project worked out between Vodafone and China Mobile that’s meant to establish standards for mobile widgetry. Apart from the obvious point that only telcos could come up with anything like a standards body for widgets, what’s the betting the standard turns out to be a lot like the Nokia Web Runtime?

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April 24, 2008

BBC and its paymasters: Cutting the Gordian knot

At the Telco 2.0 event last week there was much debate about whether online video (a fast growing phenomenon) would kill the ISP business, not only fixed, but mobile too. Our analysis of the real life effect of the BBC’s iPlayer on ISPs in the UK was used to challenge the optimism around mobile broadband. Two senior execs from the mobile world agreed that the issue was an important one and, no, their companies, and the industry in general didn’t have a solution…but needed one…pretty fast. They’re lucky, they have some time on their hands, relative to the fixed world.

So, here is some more analysis to fuel the debate:

In our recent report on future broadband business models we have several case studies on how you need to match the distribution system to the content — and how some people get it right (e.g. Sky), and others get it wrong (e.g. Joost).

The BBC is providing us with a fascinating experiment in the economics of distribution of digital goods. Who will pay for the postage and packing charges of all the content being delivered in future?

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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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April 7, 2008

Ring! Ring! Hot News, 7th April 2008


In Today’s Issue: 60 WAP sites - meh; Tellabs - beware big telcos; Google not buying Skype; Carphone Warehouse joins forces of Righteousness; cars! with periscopes!; Visto on the skids; Yahoo! Other people who searched for Yahoo! also searched for Yes!; unofficial iPhone SDK; cheap iPhones; new Nokia E90 firmware; WiMAX optimism; LTE promises; iClones; dumb terminals for your smartphone; 35 years of mobility

NBC Universal offers a thrilling new content play: “direct access to more than 60 WAP sites on your handset”, no less. We thought you already had “direct access” to considerably more than that. Of course, what they mean is that they’ll yuck up all the menus with ones they want you to visit so they can show you ads. So very 1999-dotcom-boom. Just don’t tell us there’s another bust coming…

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April 1, 2008

PNSol: Answer to the broadband riddle?

For some unknown reason, I have this mental image of 1940s actress Hedy Lamarr, glamorous co-inventor of spread spectrum radio, doing her work in some swanky Manhattan hotel suite. A grand piano sits in the corner, and servants flutter by. Who wouldn’t want to be a fly on the wall as an eye-catching actress chalks up one of the foundation stones of modern communications? And all over afternoon tea and cake.

Wait a few decades for the invention of the transistor, mix in some incomprehensible algebraic magic, et voila - CDMA radio, 3G and footie clips on your mobile.

In stark contrast, we’ve been down in an anonymous terraced house in Clapham in south London, quietly watching agape at a technology that could unleash a revolution of equal magnitude, only this time targeted firstly at fixed networks. Just as with CDMA, a bunch of boffins have applied some clever maths, and worked out how to get a ton more value out of your communications network.

The company is a tiny start-up, Predictable Network Solutions (PNSol). And it’s got “disruptive” written all over it in big neon capitals. We don’t have any shares. They’ve not paid us anything (although they’re generous with cups of tea). We’re just fans.

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March 31, 2008

Ring! Ring! Hot News, 31st March 2008

In Today’s Issue: Motorola gossip: the demerger cometh; cablecos’ Comcast-Clearwire concert party; HOWTO deploy fibre in NZ?; here’s an answer from San Francisco; Symbian OS platform security is hacked; free WLAN in BA lounges; 3UK is profitable, pigs fly; another MVNO casualty; Virgin Mobile India “not an MVNO”; Miss Bimbo; $20 a month on ringtones; Cuba Movil!; Chinese 3G; really fast stuff; 3G iPhones; another startup-without-money.

Inside gossip at Motorola; someone claims to have been the Richard Kinder figure of their crisis and accuses Ed Zander of working their past CMO to death, and also playing too much golf. Which of these sins is more serious is left as an exercise for the reader. It was also this week that saw Moto finally take our repeated advice. They got rid of the handsets operation, thus leaving it “floating downwards to find its own level”, in the immortal words of Sir Norman Fowler describing the collapse of Sterling.

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March 25, 2008

Ring! Ring! Hot News, 25th March 2008

In Today’s Issue: 37% of Ultra-Mobile PCs to get WiMAX; Virtual PBXs could eat your business customers; low-cost telepresence like low-cost spaceflight, i.e. not very; MSFT buys callcentreco; Don Price on managed services; topology aware P2P; variable speed limits for the Net; price war rages; i-mode fails in Europe; huge telcos win huge telco auction; epic Aussie brawl over WiMAX; Sprint’s new core network - platform perfection or IMS infection?; Vodafone & MTN; French FTTH; Deutsche Telekom disaster; sickening “human skin” phones.

37% of ultra-mobile devices to fit WiMAX. So says Intel — but then again, how big will the market for ultra-mobile PCs really be? Time will tell…

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March 18, 2008

Broadband: but not quite as broad as advertised

The most popular forms of broadband whether ADSL, Cable and HSPA Wireless all suffer the same technological limitation — it is almost impossible to predict the actual speed that the consumer will enjoy. And therefore, the marketeers take over and sell the maximum theoretical speed and in some small print actually describe that only in exceptional circumstances will the maximum speed be realised.

The following graph based upon a sample of 175k Plusnet customers illustrate the scale of the challenge.


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March 17, 2008

Ring! Ring! Hot News, 17th March 2008

In Today’s Issue: Big Trouble over Phorm; no immunity for US telcos; mystery letters from Apple; iPhone hacked, cracked, and rehacked; 500 million Flash devices; unified comms drives datacentre demand; Deutsche Telekom looks at OTE; Sprint merger dread; Virgin Media USA suffers; Verizon does topological P2P; Safaricom IPO back on; BSNL looks for prepaid packet-pushing partners; Bharti Airtel looks for wholesale customers; broader broadband beats basic broadband

BT get caught over using personal data in Phorm trials: real customer data was used to test the system. The Phorm Ultimatum highlights two key considerations for any successful platform: privacy and rewards. The Pope of the Web himself, Tim Berners-Lee puts its succinctly:

It’s mine - you can’t have it. If you want to use it for something then you have to negotiate with me, I have to agree; I have to understand what I’m getting in return.

At the same time, the US telcos are back on the hook for illegal wiretapping after a new version of FISA, without immunity, passed the House of Representatives. It makes you wonder who you’d prefer to spy on you.

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March 7, 2008

Next Generation Mobile Networks Alliance - CeBIT ran a half-day conference at CeBIT on mobile broadband. The presentations - from Vodafone, LG, Nokia Siemens, and Texas Instruments - can be downloaded here…but Hamid Akhavan’s, CEO at T-Mobile International, seems to have been withdrawn from the site now. We managed to grab it before it was. The key image is below. It shows the economic unsustainability of mobile broadband, especially on flat-rate tariffs. If you understand that low quality YouTube videos now account for 10% of all global web traffic, then imagine what will happen when the quality improves. In fact you don’t need to imagine: see the real stats of the impact of the BBC’s iPlayer (high quality streaming video) on UK ISP’s in the last 8 weeks since launch (a doubling of streaming traffic and a trebling of costs - analysis here). Then you have to ask: “Don’t we need a new business model here, in parallel with the 4G technical developments?” The answer is of course, yes, and we explained why to in detail over a year ago on this blog (here). But, of course, we’ve had a deafening silence from the tecchies about this (“Not our problem!”). Hence the 4th Telco 2.0 Executive Brainstorm in April to bring 200+ tecchies and commercial people together to look at this in a structured way.

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February 25, 2008

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 20, 2008

BBC’s iPlayer nukes “all you can eat” ISP business model

The UK’s largest broadcaster finally launched its online video streaming and download service on Christmas Day. Plusnet, a small ISP owned by BT, has provided a preliminary analysis of the traffic and the results should send shivers down the spine of any ISP currently offering an unlimited “all-you-eat” service.

The iPlayer service is basically a 7-day catch-up service which enables people who missed and didn’t record a broadcast to watch the programme at their leisure on a PC connected to the internet. The iPlayer differs from any other internet-based video service in certain key respects:

  • It is funded by the £135.50 annual licence fee which pays for the majority of BBC activities. The BBC collected 25.1m licence fees in 2006/7. No advertising is required for the iPlayer business model to work.
  • It is heavily promoted on the BBC broadcast TV channels. The BBC had a 42.6% share of overall UK viewing in 2006/7 and therefore a lot of people already know about the existence of the iPlayer after one month of launch.
  • It is a high quality service and is designed for watching whole programmes rather than consumption of small vignettes. This is sharp contrast to the current #1 streaming site, YouTube.

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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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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 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 15, 2008

Ten things you need to know about the future of broadband

“…our business is about scope and scale and having superior incremental margins. If you are looking to tax content and bundle device, application and network, it isn’t going to work. You had better be good at moving information if you want to be a network service provider.” - Jim Crowe, CEO, Level 3 at Citigroup 2008 Global Entertainment, Media and Telecommunications Conference.

As some of our readers will know we’ve just completed a major 6-month study into the future of broadband, including an online survey responded to by over 800 industry insiders, interviews with leading figures and actors in the industry, and desk research into comparable networked industries like container shipping and power distribution. We’d like to share some of the key findings with you, which very much echo Jim Crowe’s comments above.

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January 14, 2008

Ring! Ring! Hot News, 14th January 2008

This year, we’re focusing on seven themes in the industry; Investment and Market Valuations, Disruptive Threats, Two-Sided Business Models (a key theme in the forthcoming Platforms report), Adjacent Markets, Core Products and End-User Needs, and of course Regulation. So these news posts will be centred around these concerns.

Despite everything, it looks like Sprint is going ahead with the big WiMAX rollout; launch is scheduled for mid-April, and a gaggle of new contracts have been issued to hardware vendors like ZyXEL. The mob that is the Apple fanbase is working itself up over the thought that this year’s Macworld might see the launch of a WiMAX-capable device of some sort — apparently they’ve got ad banners reading “There’s something in the air”. There’s conclusive evidence for you.

However, it’s true that Sprint is looking at bundling WiMAX connectivity with devices, just as it wraps EV-DO data in the price of the Amazon Kindle (“In Amazon, book reads you!”), so perhaps there’s something in it. Meanwhile, China Mobile doesn’t want the iPhone.

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January 7, 2008

Ring! Ring! Hot News, 7th January 2008

BT strikes in the set-top box market; they’re the first to ship Xbox360 consoles as IPTV endpoints. And there’s more; BT Vision gets an “on-screen magazine” based on the same single platform. We’ve often said that the fixed-line world doesn’t get user equipment, and that this creates interesting opportunities; BT has just leapt right on it. See our case study on Iliad’s Freebox in the Broadband Business Models report.

PS: we’re trying out a new format for Ring! Ring!…

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December 17, 2007

Ring! Ring! Hot News, 17th December

Telco 2.0 Strategy

Structural separation? We don’t need no stinkin’ separation! So says Belgacom…

Telco 2.0 Comment: They built a VDSL network, and now their competitors want to play. Belgacom of course claims they took the risk and therefore should reap the rewards; but the biggest competitor is the company that laid the fibre already everywhere else, and now wants to offer unbundled service in the rest of the country. Will profits come from pleasing customers, or regulators?

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December 10, 2007

Ring! Ring! Hot News, 10th December

In Today’s Issue: Asia goes crazy for network sharing, plastic fibre, fixed-line videocalls (yes, really), Opera Mini conquers all, make a widget and win a Nokia N95, UMA gadget with 2GB storage, data centre heists, iFlop, BlackBerry WiFi on a plane, Nokia threatens UGC boom, new torrent tracker tech terror, free music, ads in P2P movies, and Telco 2.0 Recommends…

Broadband Connectivity

Vodafone, Bharti, Idea in monster network sharing deal.

Telco 2.0 Comment: Shared, structurally separated, and community-owned infrastructure is a major industry trend in responding to the broadband incentive problem. This deal is especially interesting due to its sheer size; India is getting a giant shared mobile infrastructure operator, which will probably draw in other carriers.

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December 3, 2007

Ring! Ring! Hot News, 3rd December

In Today’s Issue: 3.3bn Mobiles, Open VZW, 3UK sues the world, Peter Erskine spends more time with his money, another WiMAX outbreak, Japanese data prices tumble, Dutch fibre prices untumble a tad, Saudi Mobily buys huge IP network, Vodafone and Telefonica and adverts, Lithuanian and Brazilian IPTV, rapid withdrawal from Iraq, Nokia’s cool tools, sinister stalkerware from Google, and Telco 2.0 Recommends: the best of the blogs.

Telco 2.0 Strategy

3.3bn mobile subscribers worldwide

Telco 2.0 Comment: And that’s still only 50 per cent world penetration. The big question is now just how close to the world adult population it’s possible to push; is more than 75 per cent achievable?

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November 28, 2007

Carphone Warehouse: Broadband Video Decision Time

David Goldie, CEO of Carphone Warehouse Telecoms posed half a dozen big questions around broadband video strategies at the Telco 2.0 brainstorm last month. He was honest enough to say he currently didn’t know the answers. Below is our response, which we’re sharing on our blog because we feel lots of other telcos around the world can learn from this.


For those not familiar with the company, Carphone Warehouse is the number one retailer of mobile phones in Europe and is currently expanding in the USA through a partnership with Best Buy.

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November 26, 2007

Plusnet: We traffic shape and are proud of it

Basic economics says that when demand exceeds supply, rationing is one possible solution. In the ISP world, this is achieved by traffic shaping and we believe it is a perfect solution as long as it is implemented in an open and transparent manner to customers. Plusnet, a mid-sized UK ISP recently acquired by BT, provides a possible template for all ISPs worldwide.

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UK Broadband Market Gone Wild

Could it be that Britain is edging towards a major high-speed deployment? Minister for Competitiveness (and ex-telecoms analyst) Stephen Timms is expected to call in BT and other telco execs today for what promises to be a heavy meeting; see here and here for details. The figure of £7bn mentioned is believed to be for a deployment of fibre to the street cabinets.

There are reasons to think some of the telcos who will go to see Timms might be keen on the idea. After all, cable neo-monopolist Virgin Media has just given up on its plans to deploy triple-play over ADSL outside its cable footprint, thus leaving Cable & Wireless’s troubled DSL operation (ex-Bulldog) hanging again. However, Virgin is going ahead with the Sky Sports clone channel they are developing with Setanta.

Carphone Warehouse, meanwhile, who led the “free” broadband burst in Britain, is having some problems of its own; it’s running out of metro backhaul in London. This is roughly what you might expect; selling the product for cheap with no explicit limits, Carphone must have had to pack its infrastructure ruthlessly, and now the cracks are showing. They showed plenty of moral fibre going ahead with it, a certain amount of dietary fibre marketing it, and now they are desperate for optical fibre.

Obviously, the best strategy to adopt in this situation is to bribe more people to sign up - right? Well, that’s precisely what Carphone is doing - giving away Playstation 3s to new subscribers. Which is rough on other retailers, but will do nothing at all to help Carphone’s creaky backhaul net or creakier balance sheet.

And, apparently, the industry still hates its customers.

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November 19, 2007

Ring! Ring! Hot News, 19th November

In Thiis Edition: Vodafone’s first data billion, investment plans in China, Romanian call centres, Expansys’n’Truphone, China Mobile switches off Everest, India joins Google in the WiMAX queue, a contest for rural mobile apps, Sarin vs the iPhone, and just how difficult is it to develop for the thing? Plus, of course, Telco 2.0’s favourite blog posts this week.

Telco 2.0 Strategy

Vodafone makes a billion from data

Telco 2.0 Comment: Possibly the first operator to break a billion sterling from data traffic? It’s where the disrupters are, after all. More importantly, note that Voda had to shift 19 per cent more minutes of use to gain a 2 per cent uplift in revenue.

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November 15, 2007

Market Dynamics - UK Broadband, Q3 07

This is the first in a new series from Telco 2.0 looking at commercial developments in important Markets. We start with Fixed Broadband in the UK because it is consolidating fast and the players are starting to differentiate their bundles through Value Added Services.

In the future, we will be examing other interesting markets around the world: fixed, mobile, media, technology, mature and emerging.

Let’s kick off with some key stats just in from UK players for Q3 2007:

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November 13, 2007

CDNs: A Logistics Service for the Digital World

One of the key lessons of our current research activity is that Telcos (fixed and mobile) and CableCos need to better understand CDNs (Content Delivery Networks): in particular how they can improve operator economics and help enable a better service for customers (upstream and downstream). Here is your CDN primer (it builds on our previous article):

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November 12, 2007

Ring! Ring! Monday ‘Hot News’, 12th November

In this edition of Telco 2.0’s ‘Hot News’ : Viviane Reding wants the power; The iPhone fails to explode in Europe; Who needs Google Android when we’ve got LiMo?; TD-SCDMA gadgets, at last; T-Mobile Shadow under test; 900MHz 3G is here; Sprint and Clearwire fall out; Helio burns yet more cash; BT buys Sonus kit; COLT buys an IMS. Plus, ‘Telco 2.0 Recommends…’: the best from last week’s blogosphere.

Digital Politics and Regulation

Reding wants the power…the power to unbundle all Europe.

Telco 2.0 Comment: Proposed; a single regulator for everything that’s European and telecoms, with you-know-who in charge. It’s a fearful vision if you’re Telco 1.0, and pretty scary if you’re Telco 2.0, come to think of it. Expect much more structural separation if this happens.

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Beyond bundling: the future of broadband

This is an edited version of the keynote presentation of Martin Geddes, Chief Analyst at STL Partners, at the Telco 2.0 Executive Brainstorm in London last month. It provides some initial findings from our research into future business models for broadband service providers (BSPs), including our recent online survey. (The summary results will be mailed out to respondents in the next few days.) Those wishing to find out more may want to take a look at our forthcoming report, Broadband Business Models 2.0.

To save you the suspense, here’s the headlines for what’s upcoming for the telecoms industry, based on what insiders are saying through our survey and research:

  1. Operators are going to face a slew of non-traditional voice service competition. To corrupt the words of Yogi Berra, “The phone network? Nobody goes there anymore, it’s too crowded.” The volume may linger on, but the margins in personal communication will move elsewhere.
  2. Content delivery is a logistics problem that spans many distribution systems. Those who can solve the delivery problem by sewing together many delivery services, rather than those focused on owning and controlling one channel, will win.
  3. Wholesale markets in telecoms are immature and need to evolve to support new business models.
  4. Investors aren’t up for more “loser takes nothing” facilities-based competition capex splurges. Time to look hard at network sharing models.

So, read on for the background and evidence:

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November 2, 2007

MSP: ISP plus Content

Our good friend Keith McMahon blogs on Playlouder, a British company which plans to offer unlimited, DRM-free music downloads to its customers who buy their DSL service. Naturally, there’s a premium associated with the music, which is the core of the business.

Now, interestingly enough, Playlouder describes itself as a “Media Service Provider” rather than “just” an ISP, which tends to confirm that their content business is part of their solution for the famous broadband incentive problem. The economic value created by widespread Internet use mostly happened after always-on broadband became available and cheap. Flat-rate broadband gives the user every incentive to use as much of it as possible; but the network operator has no corresponding incentive to create more capacity. Therefore, usage tends to increase until the network becomes congested.

Certainly, Playlouder expects their customers to run the copper hot downloading all that music; but they’re paying for it, and presumably Playlouder’s sums assume that the content charge covers the extra traffic, the licensing costs, and some margin. What they are offering, then, is connectivity plus. When we carried out a survey of industry experts recently, the idea of offering inclusive content as a way of managing costs was very popular; you can learn more in our Broadband Business Models 2.0 report when it comes out in December.

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October 30, 2007

Guest Post: IPTV - Gateway to New Business Models?

Alcatel-Lucent is one of the major sponsors of the Telco 2.0 Future Broadband Business Models study, and was a Platinum sponsor of the Telco 2.0 Executive Brainstorm, two weeks ago in London. We asked Martine Lapierre, Vice President Marketing Programs, and one of our panelists at the event, to sum up the potential of IPTV to support new business models, rather than just emulating existing broadcast services.

One of the important insights to come from the Telco 2.0 Future Broadband Business Models survey, and a recurring theme of the Brainstorm event, was the need to give more consideration to end users as a critical telecom asset, and not just as a profit centre. Survey respondents certainly believe broadband service providers should focus on revenue opportunities from partners who want to reach and do business with this customer asset.

We believe that broadband service providers can keep their customers brand-loyal by packaging third party services in a way which addresses end user demands for convenience and simplicity. They can attract upstream revenue by providing meaningful customer intelligence to these third parties (advertisers, government organizations, content providers), who can in turn make their marketing targeted and relevant to end users.

One of the strategies operators are employing to realize this vision is the deployment of IPTV services to households around the world.

Why? IPTV services give broadband service providers the following:

  1. A touch point within the customers’ home network — strengthening the broadband service provider’s relationship with that all-important customer asset.
  2. Ownership and management of a back-end channel capable of providing very rich customer behaviour and intelligence, which can be monetized.
  3. The ability to broker engagement between a number of 3rd parties and consumers through the most-watched screen in the household today.
  4. An anchor to evolve towards more sophisticated ad insertion, ad-sponsored distribution, and other models of content distribution.

The survey — sponsored in part by Alcatel-Lucent — will finally close at midnight tonight GMT. Last chance to complete it if you want a free copy of the summary results!

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October 29, 2007

Ring! Ring! Monday News Analysis, 29th October

Portals, Partners, and Platforms

Apple: sorry, we don’t accept money. Seriously; you can’t buy an iPhone for cash. Unless you’re a telco, in which case Apple may be after as much as $400 in revenue-sharing for each gadget.

Telco2.0 Comment: There are a couple of interesting things here. First up, the relationship between Apple and AT&T; handset subsidies have landed in North America with a vengeance. One wonders how long AT&T will stick it; if they have any choice. Secondly, Apple’s increasingly desperate efforts to keep control of the devices - they have started refusing to sell iPhones to cash buyers, presumably so they know where their customers live. [Business idea: French law prohibits sales of locked devices. Stock up on iPhones there and re-sell them around the rest of Europe and/or re-import them to the US!]

O2 and Orange, meanwhile, plan to recoup the Apple Danegeld from data charges.

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New Ideas for Incremental Muni-Fibre and Metro-Fibre

We continue to be fascinated by the presentation by Roy Gradwell, Director of Connected Real Estate Ltd, at the Telco 2.0 Digital Cities session. We think the ideas he floated deserve a much wider audience. He presented a new option for financing network build-outs, different from existing vertically integrated models (e.g. Verizon FiOS) or Muni/open models (e.g. Amsterdam’s Citynet).

What interests us most is that it provides a practical framework for realising Malcolm Matson’s open access vision of the future, where networks are funded and owned by long-term low-risk investors and any service provider can ride on top. This is called an OPLAN (Open Public Local Access Network), and implies both the end-user access and metro backhaul are part of the same open network. It’s an intellectually attractive proposition. The trouble is finding the route from “here” to “there”.

Some of the biggest problems with municipal fibre deployments are down to the fact that it’s a big, expensive, monolithic project. The up-front cost is hefty, and its repayment means you have to be very sure there will be enough demand to pay it back. It’s difficult to trial the idea of muni-fibre (or any other kind of metro-fibre rollout) without making a huge investment and therefore taking a big risk. This is the “anchor tenant” problem Dave Hughes, Director of BT’s Wireless Broadband division, mentioned during the session. Other speakers noted how hard it was to co-ordinate the purchase of connectivity across multiple public services given their varying contract commitments and buying cycles.

Plus, if you’re the city government, you can run into problems in the courts - in some places you might get sued by an incumbent telco, and in the European Union quite a few cities have run into trouble with the legislation on state aid to industry.

On the other hand, as Roy points out, for enterprise and government users the bottleneck is between the LAN and the WAN; and in the UK, there’s been hardly any metropolitan area network investment since the end of the cable boom in 1996.

The principle doesn’t need too much stretching to cover residential users either - after all, there’s not much difference between a LAN-wired office block, a LAN-wired factory, or a LAN-wired block of flats from this point of view, and getting fibre reasonably close to the home is the precondition of fibre-to-the-X, VDSL, WiMAX, and the like.

Nobody wants to build a metro backhaul network without access network customers; but nobody wants to build an access network without a plentiful supply of cheap metro backhaul. And few are willing to risk doing both. So, what is to be done?

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October 18, 2007

BT Wireless@Telco 2.0; Getting away from “Why-Fi”

On the Digital Cities track at Telco 2.0 today, Dave Hughes, BT’s boss of wireless access networks, was talking about
the importance of pragmatism and the difficulties metro-WLANs face in cities that don’t have an American grid plan.

It’s well known that there have been a succession of metro-WLAN deployments that have gone bad; the sector’s icon, the Google-championed San Francisco deployment, is currently stalled after EarthLink pulled out. And Hughes offered a quick review of dozens of press reports on failed projects. Typically, they launch in a burst of hacker idealism and city-booster hype, but soon discover that radio engineering is actually quite hard, a point IT people seem to have to learn the hard way.

But there’s worse; what about the economics?

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October 17, 2007

What will those 40Gbits Grannies download?

One of the less-discussed points about the joy of muni-fibre, and for that matter commercial FTTH, is what happens in the next hop. At the moment, the last mile is the slowest hop, in terms of data rate. The backbone is usually considered to be OK, thanks to the dark fibre phenomenon, technical improvements such as DWDM, and the fact it’s easier to lay more fibre in one dig next to the highway than ten thousand digs in the city centre. Especially in L2TP/bitstream markets, the sector from the aggregation point to the ISP’s gateway router is more of a problem, but this is usually a matter of ex-incumbent pricing rather than a real shortage.

But if the access network gets replaced by fibre, what then? ISP engineers deal daily in interconnects up to Gigabit Ethernet, but if 40Gbits Granny’s in town, there’s going to be a quantum leap in demand at the next hop after the fibre access ring. In fact, it’s worse than that; Granny is a special case, but a town’s worth of 100Mbits/s Mums means you’ll rapidly reach genuinely huge demands on the pipe out to the backbone. For that matter, you wouldn’t need that many to strain your friendly local IX.

That’s the sort of thing you have to think about when you’re sitting next to Ad Ketelaars of Eindhoven’s munifibre deployment, while Chris Schoettle of Akamai is presenting. Shoettle, unsurprisingly, thinks CDNs are great, and so do we; but there’s better than that. He makes an important point about distance and speed - quite simply, going from less than 100 to 500-1000 miles’ worth of speed-of-light latency means that a file you could be pulling down at 44Mbits/s (if you have fibre) instead arrives around 4Mbits/s. If you’re constrained by the local loop, you’re unlikely to notice the difference; once the speeds go up, though, you certainly will.

No wonder, then, that Eindhoven is keen to get not just CDN capacity in their backyard, but another IX somewhere in southern Holland or Belgium to take some of the load off AMS-IX. Screaming-fast local loops will force us to invest in content-delivery networking and related problems.

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October 8, 2007

Ring! Ring! Monday News Analysis, 8th October

As a preview to the Telco 2.0 event next week in London, here are some relevant news items from the last week to help stimulate the furious debate among the participating cognoscenti:

Ever wanted to physically wave a game controller round your head? Now you can, thanks to Nokia researcher Paul Coulson.

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October 2, 2007

How’s your Google Strategy?

At the 21C Global Summit a few week’s ago former BT Chief Scientist Peter Cochrane - an industry ‘guru’ who likes to shake things up - presented a number of thought-provoking ideas about telcos competing with Google, including this rather cryptic slide:


This is how we decipher it:

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October 1, 2007

Ring! Ring! Monday News Analysis - 1st October

Digital Product Innovation

Here’s an example of negative product innovation: an Apple software update that kills hacked iPhones. Hacking was once defined as unauthorised innovation; all third-party apps, among other things, are eliminated by the patch. So all the enthusiasm that oozes out of that video is now going to waste, or else turning to virus-building bitterness..

Telco 2.0 Comment: Apple’s decision to bundle its own services with the iPhone made it rather less like a computer company and rather more like a telco. Fascinatingly, it’s now behaving in a way that shows all the worst features of telcos.

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September 19, 2007

The Joy of ‘Functional Separation’ - Panel on Telecom TV

Following our Q&A last week with Steve Robertson, CEO of Openreach (“proud guardians of the UK’s local access network”), we organised a panel on Telecom TV to discuss the impact on business model innovation of the ‘functional separation’ of this unit from the BT Group (see vid below). Anne Heal, (MD, Openreach) and Kip Meek (Chairman, BSG) were there too. They were on opposite sides of the Ofcom-BT negotiations that led to this groundbreaking separation two year’s ago. Beware: The European Commission is very interested in how this model could be spread elsewhere…

We met the Openreach team yesterday to discuss Steve’s stimulus presentation for the Telco 2.0 Executive Brainstorm Plenary on the 17th Oct. Building on the Q&A and the panel, Steve is working up something new for the event: his analysis of the technical, commerical and cultural/organisational changes that could have the biggest impact on business model innovation for ‘communication providers’ in the next 3-5 years. Also, his rating and criteria for judging how easy/difficult these might be to implement. The audience will then feedback their views via the ‘Mindshare’ interactive process. This should stimulate a great panel discussion with Gord Graylish from Intel (who’ll have spoken about innovation opportunities around new device categories) and Ross Fowler from Cisco (who’ll unveil latest thinking on how to deal with OTT players). A big thank to all these guys for putting real effort into contributing something new - not the toothless corporate presentations we see so often at events… Here’s the Telecom TV panel:

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September 18, 2007

Broadband Still Sold Like Phone Lines - Time to Change?

We’ve been ploughing through the first 300-odd responses to our survey on the Future of Broadband and there are some very interesting results. (If you’ve not done it yet, just click here — we’ve extended the end date to 30th September as a number of organisations are circulating it internally to stimulate thinking about business models).

I’ve picked on one question that’s given me a bit of a surprise. When a consumer purchases “broadband”, what is it they are actually buying?

Today, on both fixed and mobile networks, the standard means of provisioning is to sell the user an access line. You then get a broadband connection where you can attach any device and use any application. The “line” is identified by a SIM card for mobile networks (at least on GSM-derived networks) or some kind of physical port and/or login credentials on fixed networks.

The chart below shows three possible alternatives to the current status quo, where the act of provisioning is centred on an individual person, device or application.

Summary of combined fixed and mobile respondents for 2012, % of responses.

Taking these alternatives in turn:

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Vodafone: A “Total Communications” Company?

The Times recently interviewed Arun Sarin, CEO of Vodafone. The Newbury empire once held ambitions of global hegemony as the biggest, baddest vertically integrated telco of them all. In a more pragmatic era, they’ve been working on getting the basics of business right, with their own glasnost and perestroika programmes to re-invigorate the mobile operator model.

Sarin’s remarks are consistent with the strategic move Vodafone is making into a new phase of its business. In the last year or so they have moved away from being simply a really big mobile network operator. He says he wants Vodafone to become a “total communications company”. In pursuit of this, they’ve been investing in fixed-line DSL and PSTN activities, either as a reseller (as in the UK) or by buying up assets (as with the acquisition of Tele2), or just by integrating more closely with their once forgotten fixed assets (as with Arcor in Germany), .

There’s a clear Telco 2.0 angle here; a key point in Telco 2.0 analysis is that the connectivity is no longer special. Rather, it is becoming a commodity — something easily purchased on the open market by any entrant for a predictable price. Further, its tight coupling with other parts of the value chain is melting away. Therefore, the distinctions between mobile and fixed operators, between networks and virtual network operators, and between telcos or ISPs, content providers, IT service providers, and consumer electronics firms are increasingly irrelevant. What now matters is the assembly of elements from the horizontalised soup into attractive propositions to customers. As we said about France Telecom, this may mean that integrated fixed-mobile telcos have more life in them than you might think. (Our current Survey will help to clarify that point anyway).

Sarin spoke of “mobile plus”, and pointedly mentioned that the company is getting into mobile advertising but would not become a content producer. Could this perhaps signal that Vodafone — traditionally the most telcoish of mobile operators — is thinking of a platform strategy?

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September 14, 2007

21C Global Summit: A Weird Consensus…

Telco 2.0 was supporting the 21C Global Summit at Blenheim Palace this week. And what did we find?

Well, it’s increasingly clear that our ideas have traction. Everyone who so much as touched on telco business models, or the infrastructure that underlies them, agreed on key points; points that could have been taken from the last few months of this blog or the main texts of Telco 2.0. The challenge now is to fully internalise what these mean within telco organisations and create some action plans to do something about it. This requires stronger leadership - a recurring theme of the event.

For example, Andy Zimmermann of Accenture’s Technology Strategy practice opened the conference pipes on Wednesday morning by explaining the importance of some Ps; portals, partners, and platforms were all there. Another was “plexes”, which rather than being another word for your navel was used to refer to big IT infrastructure. Again, that’s certainly a theme you’d meet in your daily Telco 2.0. Further, Zimmermann cited content-delivery networking, secure control of sensitive data, and payments as crucial functions telcos need to develop.

Not just that, but the means he recommended had a notable Telco 2.0 feel; specifically, telcos needed to work on their service-delivery platforms, which don’t need to be IMS. (See Martin’s post for more on this…)

He wasn’t the only one, either; Ross Fowler, Cisco’s VP in Europe, drew everyone’s attention to the curious way the functions of content providers are converging with those the GSM/UMTS standards world think are the core functions of a telco. For example, they require high-level applications such as video editing and collaboration, policy/authentication functions to control how their output is released - and the indispensable networking infrastructure to haul bits. Ross, by the way, will be going into more detail about this at the Telco 2.0 Executive Brainstorm on the 17th of October.

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September 5, 2007

Making Structural Separation Work: Interview with Steve Robertson, CEO, Openreach

Readers of Telco 2.0 are probably well aware that we like the British model of structural separation, where the local loop is controlled by a specially-created company with a duty to provide nondiscriminatory access to all-comers, a lot. This approach helps to mitigate risk across the BT Group and, theoretically at least, liberates the individual units (Retail, Wholesale, Access) to be more innovative and responsive to customer needs (levelling the playing field a little with internet players like Google). (More on the benefits of this here).

Naturally, we jumped at the chance to interview the good people at Openreach, the BT access division. Especially in the light of rumours that BT might be considering a KPN-like deployment of fibre to the street cabinets; which would make the Local Loop Unbundling model Openreach was formed to defend partly obsolete.

Our interview with Steve Robertson, CEO of Openreach, (who will also be a stimulus speaker at the Telco 2.0 Executive Brainstorm in October) is below the fold…

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September 3, 2007

Ring! Ring! Monday News Analysis - 3rd September, 2007

This week we look at important stories concerning Product Innovation, Broadband Connectivity, Technology Disruption, Regulation, Partners.

Digital Product Innovation

Nokia is reconceptualising itself; it wants to be an “Internet-driven experience company,” not just a crummy old vendor. To that end, its web presence is being shuffled into a new portal called “Ovi” (it’s Finnish for “door”), which will integrate its new music shop, its Web 2.0 activities (eg Lifeblog), and a rebooted mobile games division. Even N-Gage looks like it might get a new lease of life..

Telco 2.0 Comment: Horizontalisation isn’t just for travel agents and bloggers, y’know. Nokia is probably the keenest of the vendors on trying to shunt the carriers out of the way and get a direct relationship with users; this was only to be expected.

100 million prepaid subs in the Middle East.

Telco 2.0 Comment: Note the surging growth at Iran’s two heavily prepaid networks, Taliya and Irancell (MTN Investcom); contrast the sluggish incumbent MCI. The recipe for emerging markets is still low prices, prepay, credit transfer, SMS, and autonomous distribution. These strategies also work pretty well in Germany too…

China Telecom’s business is hammered by mobile.

Telco 2.0 Comment: It’s not just in the 100% mobile penetration world that the fixed-line business model is sinking fast - it’s also in rural China.

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August 28, 2007

Music as DSL Subsidy, and Cuffware

French ADSL operator Neuf Cegetel has turned platform, recruiting Universal Media as a partner in its new music service.

For €4.99 a month over and above their usual €29.90 triple-play tariff, you can download as many songs as you want from the entirety of Universal’s back catalogue. A less extensive service is free. It’s clear what Neuf Cegetel is up to, right? Facing the usual DSL operator’s struggle to survive incumbent competiton, they’re adding new revenue-generating services that cross-subsidise the ISP operation. And, as usual, one of the simplest ways to do this is through platforms and partners.

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August 27, 2007

Ring! Ring! Monday News Analysis: 27th August

These weekly news roundups are a new Telco 2.0 service; they focus attention on news items that might not be Telco 2.0-related at first sight, or big enough to warrant a whole post to themselves, but do contain important developments. They are grouped under the same categories as the rest of the Telco 2.0 blog.

Digital Politics and Regulation

Rene Obermann, CEO of Deutsche Telekom, wants to keep some monopolist privileges; and who can blame him?

Telco 2.0 Comment: It’s curious how some of the regulations introduced to create competition in the telco market are actually profoundly anti-competitive. Network-sharing, for example, was discouraged in order to create competing physical networks. Now, of course, it’s becoming ever clearer that competition is horizontal; and requiring duplication is really a way of protecting big telcos by increasing the barriers to entry.

Viviane Reding is reportedly plotting a new, broader European regulator on the model of Ofcom.

Telco 2.0 Comment: As the competition spreads horizontally, so does the regulator.

700MHz auction set for the 18th of January.

Telco 2.0 Comment: It’s gradually coming closer; soon we’ll see the colour of Google’s money. Speaking of money, the FCC seems very keen to insist on big reserve prices, a total of $10bn. As usual, the notion of free spectrum is a long way away.

Digital Product Innovation

Microsoft Windows Live apps on your Nokia N-series phone.

Telco 2.0 Comment: It may “only” be Live Messenger, Hotmail, Contacts and Spaces, but please note that these are all communications applications. And the carriers? They’ve been disintermediated.

New MVNO offers cheap roaming rates…with an interesting twist.

Telco 2.0 Comment: Now this is interesting; we wonder what the “network” they claim to own is. Clearly they haven’t got spectrum rights in 110 countries, nor have they bought enough base stations to cover the world. Perhaps this is one of the first rogue core networks?

Damned cool idea from Hewlett-Packard: the printer that is everywhere.

Telco 2.0 Comment: Here’s a cracking idea; rather than print documents and take them with you, why not print-to-file on one of HP’s servers, which gives you an SMS shortcode in return? When you need the document, you send them the code as an SMS, and they either send you a PDF file, or route it to a publicly-available printer of your choice. There’s a Google Maps mashup to help you find them. HP is bringing in chains of copy shops as commercial partners, Google as map provider, and acting as a platform itself; so where are the telcos?

Digital Worker

Unified Communications vs End Users

Telco 2.0 Comment: Is the vision of unified enterprise communications, so dear to companies like Cisco, opposed to end-users’ freedom to organise their own communications and communities? Skype, and the Asterisk folk, seem to think so.

Digital Youth

Security expert: beware security threat. According to F-Secure there are now some 400 items of mobile malware in the wild.

Telco 2.0 Comment: It’s not malware, it’s unauthorised innovation!

Online gaming shoots past social networks

Telco 2.0 Comment: We’re talking low-investment casual games here; but even if the margins are tiny, the growth rates here show that there is real potential in this sector. Clearly, it addresses some human motivation.

Broadband Connectivity

Indonesia ; mobile network number 10 launches

Telco 2.0 Comment: No-one should need telling that the emerging markets can’t get enough telco, but this is extreme. 10 mobile operators? It’s also interesting that the new entrant, Smart, is a greenfield CDMA operator. Far from common..

Hutchison 3UK loses slightly less money.

Telco 2.0 Comment: Perhaps their new role, competing with T-Mobile as the geek’s mobile operator and throwing out partnerships with MSN, Yahoo!, Slingbox, and Skype, is beginning to help? You’d do well to remain sceptical, though. It’s not as if 3 hasn’t spent enough money being cool.

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August 21, 2007

Variable Speed Limits for the Internet

A key feature of Telco 2.0 analysis is our effort to understand the limits of the end-to-end principle; how stupid can a stupid network be without being, well, stupid? Networks have to be intelligent in some ways; routing, for example, requires a lot of intelligence although restricted quite tightly to one task.

So we were very interested by a recent NANOG thread regarding improvements in how the Internet deals with major congestion on backbone links. Famously, the Internet is meant to route around damage, but this only works when there is enough route diversity to absorb the diverted traffic. In a major outage, for example the one that followed an earthquake in the Luzon Strait earlier this year, the problem is often that too many people are trying to fit through the remaining links at once.

This is where the fundamental principles of internetworking bite you in the behind; most Internet protocols work on the principle that, if one attempt to do something fails, you try again. TCP achieves reliable delivery by resending packets that are not acknowledged within their time-to-live, until a timeout. The problem is that if there is a major problem, very large numbers of users’ applications will all try to resend; generating a packet storm and creating even more congestion.

So wouldn’t it be nice if you could tell everyone to slow down?


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August 20, 2007

Ring! Ring! Monday News: 20th August, 2007

These weekly news roundups are a new Telco 2.0 service; they are meant to focus attention on news items that might not be Telco 2.0-related at first sight, or big enough to warrant a whole post to themselves, but do contain real insight. They are grouped under the categories used in the rest of Telco 2.0.

Digital Youth

When Search Attacks: Participants in a fancy ID-business social network were horrified when a bot used to auto-populate their profiles libelled leading sci-fi author John Scalzi. He’d repeatedly written about disgraced congressman Mark Foley and used the word “paedophile”; guess what the bot decided to put in his “description” field?

Telco 2.0 Comment: Remember, automatic robots and highly personal information are a dangerous mix. If the AOL security breach was farce, this is tragedy, especially as Spock includes a function for users to vote on each other’s reputations.

T-Mobile Tees Up 3G: First 3G device for T-Mobile USA leaked…but the real news is that even without UMTS, data usage ex-SMS is booming.

Telco 2.0 Comment: T-Mobile is better known for its open-slather Web’n’Walk tariff in Europe, but how to explain its US data boom? Our theory is that its historic price leadership, going back to the days of Voicestream, captured a demographic that’s now adopting new gadgets and services rapidly. Note that AT&T just got FCC approval for the US’s first HSUPA data card - 2Mbits/s uplink, 7.2 down.

Digital Cities

Wi-Fi…Why? Cali-utopian geeks’ dream of free Wi-Fi everywhere doesn’t work. Maybe they could have a crack at the space elevator instead?

Telco 2.0 Comment: There’s a reason why mobile operators have lots of radio engineers, you know. And billing departments.

Paranoia in the palm of your hand: New Sprint service lets you browse sex offenders’ register from your phone; so you can find a sex offender in a hurry? No, of course, it’s for your peace of mind..

Telco 2.0 Comment: “Checking for local offenders is free…after normal data charges” It’s one way to get those metered bits moving. In Telco 2.0 terms, this is somewhere between Digital Home and Digital Town. Notably, some other carriers offer various security-related services; MTN in South Africa streams your home CCTV camera feeds to your 3G device and texts you if the alarm goes off. At least you can do something about that other than “move house” or “collect angry mob”.

Digital Politics and Regulation

AT&T spotted wielding censor’s scissors! Astonishingly, David “Stupid Network” Isenberg isn’t at all pleased that AT&T’s web music portal censored Pearl Jam being rude about President Bush. Perhaps it says more about AT&T that they’re hoping to make a profit streaming Pearl Jam over the web? Isenberg, again unsurprisingly, thinks this is an argument for network neutrality.

Telco 2.0 Comment: So that’s what they wanted all that IMS gear for! More seriously, as John Waclawsky said, monitoring is the first step to control.

ESPN’s efforts to have fewer customers are a roaring success; the cable-TV sports channel may give up on a scheme to restrict access to its website to customers of ISPs who pay it for the privilege.

Telco 2.0 Comment: The idea was that viewers who couldn’t get to see the videos would complain to their ISP; it could have perhaps been predicted that they would complain to ESPN’s website about not being able to see content on their website. Further, the economics of this are a little strange; there is no pot of gold in the customer ISP world for content providers to get their hands on, quite the opposite with margins tanking all over the world.

Too many zeros; Telekom Malaysia bills subscriber 17 times the GDP of the United States. Sorry, that should be “bills deceased ex-subscriber”…

Telco 2.0 Comment: When you do something often enough, even 99.999% sometimes isn’t enough.

Digital Product Innovation

3UK to offer cheap mobile data; 1GB/month=£10, 7GB/month=£25.

Telco 2.0 Comment: In the future, data transfer will be cheap. Cheaper and cheaper. How will 3 make money from this?

Nokia does identity and social networking: sadly, they call it Mosh. In other awful branding news, will Sprint-Nextel call its WiMAX service XOHM?

Telco 2.0 Comment: I, ah, hope you know what you’re doing with that ad budget.. Seriously, there’s so much interest in SNS these days it’s no surprise Nokia is interested, if only as a research project into user interfaces. It probably helps if your users can pronounce the service..Oh God, they’re actually going to do it…

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August 17, 2007

404 Skype Not Found

Centralised architectures can always cause trouble. Not that this is a point in distributed systems’ favour, necessarily; look what just happened to Skype, which has suffered a whole day’s outage.

We at Telco 2.0, as you may know, are actually a group intellect, structured rather like the brain of a large cephalopod. Rather than one single brain, there is a node for each tentacle, the whole being interconnected by the highest-bandwidth nerve fibres known in nature. Unlike the squid, the Telco 2.0 team uses Skype quite heavily in order to maintain coherence among its multiple cerebellums (cerebella?), so we may be forgiven for feeling a little sporky. We’ve been debased to using Google Talk for much of the day.

Telco 2.0 in its natural habitat
Telco 2.0 in its natural habitat

So all day, access to Skype has been to all intents and purposes impossible, starting around 1000 hours GMT. The pathology takes the following form; on start-up, the Skype client successfully registers on the network (often with considerable delay), but rapidly logs-off again, and struggles to reconnect. During the brief intervals of successful operation, the number of logged-in users is very low; between 100,000 and 320,000 according to our own observations.

What was up? Surely the nature of a peer-to-peer network means that there is no single point of failure? Well, everyone speculated, so why not us too?

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August 1, 2007

40Gbits Granny and the Future of Telecoms

The news that Sigrid Löthberg, Peter Löthberg’s 75-year old grandmother, has the world’s fastest Internet connection has now passed through the Web’s digestive tract. All the oohing and aahing is complete. It’s certainly very cool that she has 40Gbits/s connectivity and a CRS-1 router in her garden shed, but it is only a demonstration project.

However, it does tell us quite a lot about how Cisco thinks the future will be. And there will not be a CRS-1 in every pot any time soon. The fibre, well, that’s a different story. Sweden, like some other countries, has a number of projects that aim at the creation of shared, open-access fibre infrastructure. It’s a question of getting the institutions and economics right; aggregating enough customers to spread the capex while guaranteeing open access to preserve competition. And that, by the way, is what the Digital Town strand of Telco 2.0 is all about, and the focus of the Digital Cities summit on the 18th of October: find out more here.

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July 30, 2007

Google anchors its carrier off the coast of Telcoland

So what’s up with Google and the 700MHz spectrum? Well, Google has “pre-bid”-that is, declared its interest in bidding-for a large block of radio spectrum in the US’s 700MHz ex-TV band. (See here.) The big friendly search engine (or menacing, Orwellian data monster, depending on point of view) doesn’t just want the spectrum for itself; it wants it to be sublicensed for public access.

Traditionally, the economic value of radio spectrum has been largely an economic rent, originating from the fact that licenses grant a monopoly of its use. No cash changes hands when the various unlicensed bands, such as the 2.4GHz swamp beloved of Wi-Fi users worldwide, are used; even though, of course, its use creates value for the user, this isn’t accounted for.

So why would anyone want nonexclusive spectrum? Isn’t it a contradiction in terms? And what does Google plan to do with it? Google, after all, is a model Telco 2.0 company, designed around the
horizontalisation of the industry (NB: in the plenary session of the Telco 2.0 Executive Brainstorm in October we’ll be talking about ‘coopetition’ strategies based on some new analysis by our senior stimulus presenters).


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July 25, 2007

France Telecom, Part 2: Little Boxes, All The Same

So we mentioned Liveboxes. The box contains an ADSL modem, a four-port Ethernet/WLAN router, and some other stuff running on its kernel. Specifically, there’s a socket for a standard PSTN handset, so you can use FT’s carrier-VoIP service, and a Bluetooth radio so you can walk about with the same service. There’s also an IPTV client, so you can watch FT’s TV.

Now, I don’t know what’s actually driving the thing - but many of these boxes have a real operating system, usually a small Linux distro. (Note that if you want to DIY, there’s a Linux available for the Linksys WRT54G router.) A lot of them can be remotely managed by a system administrator over the Internet - something which has already had embarrassing consequences for at least one ISP, whose CPEs shipped with the default passwords set and were promptly hacked.

This has all been a little techie by Telco2.0 standards so far. But here is the vital upshot: this is what a platform for new services looks like. Once you have a little box in the customer’s living room with an IP address, a general-purpose OS, and remote admin access, you’re in a position to come up with new ideas and get them out to the market very quickly indeed.

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Hidden Potential: France Telecom

How do major telcos respond to the challenges of Telco 2.0? France Telecom’s experience offers some answers.

FT is perhaps the archetypal traditional PTT; still part-nationalised, with a dominant position in fixed-line, ISP, and mobile markets at home. During the .com boom, the carrier expanded heavily and ran into debt (it didn’t help that the government hit it up for some cash to meet the requirements of joining the Euro). Meanwhile, the fixed-line voice market began a steady slide as the first alt.telcos, VoIP, and fixed-mobile substitution began to bite. Although the French government was slower than some to take regulatory action, eventually the new regulator ARCEP began to hammer at the de facto monopoly.

So, what did they do about it?

FT’s acquisitions turned out to be better deals than they looked in the smouldering aftermath. Among other things, they had given the company one of the strongest brands in the industry, Orange, a strong ISP in France (Wanadoo), and stakes in global cable backbones and other world-wide presence that permitted them to build strong businesses in bulk IP networking (Opentransit) and enterprise VPNs (Equant). More recently, the company has decided to go all the way, rolling the entire consumer side into Orange.

In terms of a business model, F Tel/Orange is very keen on bundling. As an integrated full-service carrier, it can offer quad-play in France. Interestingly, it’s trying to take advantage of industry horizontalisation to expand this vertically integrated model elsewhere; in the UK, Orange Broadband is providing PSTN and DSL service over Openreach’s wires through local-loop unbundling, and selling GSM/UMTS mobile service along with it as part of a “free broadband” offer. Telco 2.0 readers are of course well aware that “free broadband” really means “compulsory old technology”.

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July 19, 2007

By Grand Central Station SunRocket declared Chapter 11

The US’s second-biggest VoIP carrier, SunRocket, is bankrupt. You wouldn’t have been very surprised, had you read this article on Telco2.0, or even this one from back in 2003.

Not so long ago, Google bought a small company called GrandCentral Technologies that provided a hosted SIP gateway - permitting its customers to route multiple PSTN/PLMN or carrier VoIP numbers, or SIP names, to a single inbox they can access from any Internet connection. What connects these two facts?

First up, companies like SunRocket and Vonage originally succeeded because they confiscated some of the traditional telcos’ economic rents. An economic rent is defined as a return which is entirely due to scarcity; you don’t do anything to get it. In the past, bandwidth was scarce and difficult, and bound tightly to the telco’s infrastructure of identification, billing, and authorisation. With the plummeting cost of moving bits over IP, the proportion of a telco’s profits which are attributable to artificial scarcity has greatly increased - as Li Mo, chief network architect at ZTE USA put it, “the network is so much simpler when you take out the charging mechanisms.”

With the arrival of IP, it became possible to separate addressing, identification, authorisation, and payment from any one particular network. Instead, you can now assemble functions horizontally across different companies. VoIP carriers do their own number allocation and billing, and use other people’s networks for access (but usually their own in the backbone, whether real or virtual). It’s what we call Voice & Messaging 2.0.

Using really cheap transport, and being willing to accept lower margins, providers of what we might call “bog-standard VoIP” were able to capture some of those rents. But the same principle applies to them, in so far as their business model depends on the difference between the price they charge an average customer per bit and the price they pay to their transit providers, less the cost of customer care. Somebody could always come along and undercut them, and they did; traditional carriers entering a price war with deep pockets, new VoIP providers, and software-based VoIP operations like Skype or Gizmo - who don’t carry their own bits and whose product is often free.

These companies rely for their money (where they actually make money, that is) on the sort of alternative value propositions you’ll find at Telco 2.0 - and especially in our Data Transport Systems project - on a regular basis - presence/availability control, integration with other applications, and premium interconnection with older systems. So what does this have to do with GrandCentral?

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April 3, 2007

Online Video Market and the Broadband Incentive Problem

A super piece of analysis by Jeremy Penston, one of last week’s Telco 2.0 brainstorm participants, here on the Online Video Market and the Broadband Incentive problem.

Jeremy’s analysis provides good rationale for the ‘New Telco Models of Distribution models’ we proposed on the Telco 2.0 Business Model Map - 1.) service-funded connectivity; 2.) ad-funded; 3.) P2P/Content Delivery Networks, 4.) Device-funded; and 5.) explicit tiering a-la Paris Metro Pricing.

I think the GBP 2.10 figure Jeremy mentions as the average cost to telcos/ISPs of delivering HD (Hi-Def) video assumes that all the bits are backhauled. A topology-aware P2P program that preferentially pulled content from nodes close by would probably lower this cost significantly. And the assumption that HD is the critical medium, whilst it makes for big delivery cost headlines, is probably wrong for some time to come - YouTube shows there’s a healthy market for low-res long-tail and my brother in Sacramento wants his fix of Top Gear (popular TV car show in UK) in whatever format he can get it in…

More on this topic to come once we’ve processed all the ideas and comments generated at the Telco 2.0 event.

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March 16, 2007

Broadband Incentive Problem - some new data points

A useful post here by Jeremy Penston from the IP Development Network about the online video market and the effect on ISPs and telcos (summary stats below, here). It supports, of course, our premise that the ‘Broadband Incentive Problem’ is getting worse - providing broadband services will increasingly become less economically viable, as the trends in South Korea and Japan are showing us.

What to do about it? Well, that’s what we’ll be debating with Cameron Rejali, MD of BT Wholesale, Hossein Moiin, VP Group Tech Strategy and T-Mobile International, and Antony Walker, CEO of the Broadband Stakeholder Group on the first day of the Telco 2.0 brainstorm.. I’ve asked Cameron to cover the following points in his stimulus presentation:

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September 13, 2006

BT 21st Century Global Summit - walking the talk?

We didn’t go, but we’ve had some interesting feedback on BT’s 21st Century Global Summit last week from those that did get the gold embossed invitation and accompanying chauffeur-driven limo. Lots of senior people there, very strong marketing/brand presence (for BT) but, although everyone ‘talked the talk’, there was little evidence that there was any clarity of strategy. Hopefully we can help to fill this gap at the Telco 2.0 brainstorm. More Group Strategy Directors signing up every day now…

One of our stimulus presenters (Day Two, Broadband Connectivity workstream), Malcolm Matson of the OPLAN foundation (Open Public Local Access Network Foundation) and ex-CEO of Colt Telecom, was invited to BT’s event and makes some very useful observations on his blog here.

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September 11, 2006

Vodafone fixed-line broadband - good start, much, much more needed

News everywhere today that Vodafone UK is to sell fixed broadband via BT Wholesale…

So, another big name enters the fray in the UK (after Orange, O2 and Carphone Warehouse). This will put yet more pressure on the minnows (Pipex, Easynet etc.) and continue to drive margins down in the broadband space. The UK comms market is looking crowded again (reminiscent of the fixed market in 2000/1) - everyone is looking to take a piece of someone else’s revenue.

The contract could be worth up to £500 million to BT, depending on take-up. But Vodafone will not be installing its own equipment at local exchanges. Instead it will resell BT’s IP Stream product. This contrasts with the fixed-line broadband strategies adopted by Orange and O2 which use suppliers that set up their own kit at the exchange level.

Unfortunately, there is only so much wallet available so only the leanest will prosper. Vodafone has an advantage with its scale but we don’t see them making a bean out of fixed broadband. Vodafone’s share price had a rise today, but is still trading at a very low level.

Some thoughtful questions here and an initial response from Dean Bubley here

But the key question is still - where’s the money going to be made from providing ‘access’ and how? This is of course the focus of the Day Two workstream on Broadband Connectivity at the Telco 2.0 Industry Brainstorm. We’re getting more and more distressed broadband operators booking into this session (ingoing hypothesis here) right now…

…who will be stimulated by a keynote from James Enck of Daiwa Securities and EuroTelcoBlog. James will start the session by laying bare the facts and trends re broadband. See his extremely useful post today on Illiad and the fibre revolution in France.

From an investors point of view, James would like to see some genuinely ‘out of the box’ thinking from operators. Our challenge is to create some on the 4-5th Oct.

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September 4, 2006

The Demand-side Equation in Broadband

Next week, in preparation for the Telco 2.0 brainstorm on 4-5 Oct, we’re briefing Stuart Collingwood, VP Europe for Sling Media, makers of a rather nifty piece of hardware called the Slingbox. A big disruptive success in the USA, Sling Media is now rapidly expanding in Europe.

Stuart is a stimulus presenter in the ‘Broadband Connectivity’ workstream on Day Two. He’ll be talking about the ‘Demand-side Equation in Broadband’. Slingbox is a technology that all telco Broadband execs should fully understand.

Below is the first draft description of Stuart’s presentation. Next week I’ll be looking to de-code this to ensure we have a rich stimulant for our brainstorming:

“In the presentation Sling Media will discuss how the company’s positioned to be a great partner for Telco’s looking to push customers to broadband services as well as bumping them up via tiered services (faster download/upload speeds).

We can all agree that broadband usage is increasing, but what is driving adoption of more than just introductory levels of broadband? Certainly faster download speeds are great for music or video downloads, but the average consumer who just uses broadband for surfing the web or email is not going to look for faster downloads.

However, Slingbox drives the adoption of “Turbo Broadband” services given the fact the Slingbox uses the upload capacity of your broadband connection to deliver your home TV or video signal to you wherever you are in the world.

Slingbox in Europe is moving into the market of mobile TV on handsets as it has done already in the U.S. The novelty of having mobile video or live mobile television on a handset has worn off as mobile TV is now appealing to a small percentage of early adopters. What will drive adoption of handsets capable of displaying mobile TV and services capable of delivering mobile TV is content that is familiar and relevant to that customer. What will drive the adoption of broadband services on mobile handsets is compelling applications that justify much higher monthly services and actually use the large “pipe” that is now available to consumers.

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July 27, 2006

Interview: Iain Johnstone, Zen Internet — “Superior customer service”

Internet Protocol is specifically designed to abstract away as much as possible of the underlying transport infrastructure. Thus if you’re in the business of retailing connectivity, you have to find some means of differentiating yourself in addition to the technical aspects of the product. Zen Internet is a medium-sized UK ISP that was conceived around a strategy of superior customer service. They sell into both the residential and business markets. Their success in executing this service strategy is evidenced by the many industry awards that Zen has received, as well as its commercial success.

We interviewed Iain Johnstone, who is Sales and Partner Program Manager. Given the price wars in the UK broadband market, we wanted to know more about what Zen do differently that enables them to maintain margins and profitability.

This is an edited version of the conversation, and is not a verbatim transcript. As always, we have no commercial interest in the companies we highlight unless disclosed - although one of the Telco 2.0 team is a satisfied Zen domestic customer.

Who are your customers?

We aim to be the #1 ISP for business users. We aren’t in competition with the AOL/Time Warners of the world.

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July 17, 2006

Guest post: Nick Hutton, Backchannel - telco yield management

We recently met with Nick Hutton, CTO & Founder of BackChannel, a unique intelligence service on commercial buyers of telecom services. In a nutshell, they crawl public networks and perform traffic and routing analysis to see who is connected to whom, and thus who is buying what. We were fascinated by how they enable a more intelligent approach to acquiring and retaining customers. As such it represents a good example of how to go about creating a Telco 2.0 connectivity business. You get an opportunity to differentiate yourself on how the back office is run, rather than the product per se.

For the record, we at Telco 2.0 have no commercial interest in BackChannel.

Following the airlines, but a quarter-century behind

Telecommunications service providers are facing a number of significant challenges.

  • Competition from traditional and non-traditional sources is increasing.
  • Churn has risen sharply in both PSTN and now IP services.
  • Long term debt, raised in the 1990’s, is coming due.

Service providers are experiencing similar economic difficulties to those faced by carriers of the airline industry in the 1980’s. Namely, an inability to generate promised economic profit from a fixed asset, paid for with long-term debt. In the case of the airlines that asset was their aircraft fleet; for telcos it’s their network.

These challenges conspire to drive down shareholder value, shorten the careers of chief executives, and starve these companies of the capital they will need to deliver the next generation of network services. Their environment has changed.

Those airlines who minimised the empty seats flown, and maximised the economic profit from every passenger carried, became the sole survivors of the industry. They did so by the application of Yield Management (YM). YM attempts to answer the question “Given our operating constraints, what is the best mix of products and/or services for us to produce and sell in the period, to generate the greatest economic profit?”

With seemingly many similarities between the economics of the two industries, YM sounds like plausible way for maximising revenue from existing products, services, and infrastructure for telcos under pressure.

Not as easy as it looks

As is often is the case, the devil is in the detail. Straight application of airline-style YM practices have not been successful for telcos.

  • Aggressive overbooking results in significant customer dissatisfaction when their traffic is congested or dropped. How would you feel about getting half your gas pressure when you are cooking? Customers expect their telecoms to perform like a utility.
  • Prioritisation leads to resentment, particularly from long-standing customers who feel their service has been degraded for the benefit of newly signed “premium” customers. Particularly when the long-standing customer may be paying a higher price than the “premium” customer due to continuing price decline year on year. To paraphrase a TV advertising campaign for a major UK lender, “Sorry, premium customers only!”.
  • On-peak and off-peak pricing is familiar to most voice customers, but its practice has steadily declined in recent years and there seems to be little acceptance of that model for IP-based products and services, which are the industry’s future.
  • We are still waiting for the “space-filling” services that can be used to monetise otherwise empty bandwidth at a low priority. This is the network equivalent of the £1 flight deal where you take your chances with being bumped onto the next aircraft.

This is why YM has yet to work its magic on the telecoms industry.

Given undeniable benefits of YM and the obvious similarities between the telecom sector and many other sectors using it, we ask the burning question:

How can we bring this discipline to our industry in a way that generates higher returns for operators and their shareholders?

Our answer: create a custom market intelligence approach for telecom

At its core, YM is about finding the most profitable new customers for your services, and converting less profitable accounts into profitable ones by service them through lower cost channels or up-selling them value-added services with better margins. This is the financial services industry view of YM, where they think of their customer-base like a portfolio of stocks, some of which are star-performers and some of which need to be carefully managed into performing better. Some customers are never going to perform, and should be offloaded on the market before they destroy too much shareholder value.

BackChannel is developing software that enables IP Telecommunications Service Providers to do Yield Management. BackChannel’s software knows:

  • Which corporate customers are buying which IP products from which providers?
  • How much are they buying (bandwidth size, number of hosted servers, sites)?
  • How likely are they to churn to your particular service?
  • How likely are they to stay with your service over the long term?
  • Which are a natural fit for your service, because they can be served at a competitive cost to you without eroding margin?

By using this information it is possible to target your sales and marketing activities on only the most profitable customers, thereby increasing overall yield of your network resources and your reps.

This enabling technology allows IP carriers to employ a conservative, proven, and disciplined approach to increasing sales force efficiency in a way that already produces extraordinary returns for transportation, financial services, and hospitality industries worldwide.

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June 30, 2006

Broadband Connectivity - HYPOTHESIS

As per the Voice & Messaging 2.0 ‘hypothesis’, here’s our ingoing suggestion for ‘Broadband Connectivity - new ways of funding and pricing networks’

1.) Situation

• Huge growth in all markets, but low margins.
• Where unbundling (wholesale DSL or raw copper) exists, there are many competitors.
• Emergence of “free” broadband in some markets as adjunct to fixed or mobile calling plans.
• Significant inter-modal competition, mostly coax vs. twisted pair; limited wireless penetration.
• A few telcos “going for broke” with fibre deployments (e.g. Verizon, HKBN, KPN?, DT?, BT??).
• Emergence of municipal network movement (US, northern Europe, Taiwan).
• Bulk of traffic is generally peer-to-peer (P2P) file sharing. Paying for explicit QoS is rare; “best effort” is the de facto norm.

2.) Complication

• Attempts at price discrimination of network traffic meet regulatory/political or technology barriers (“network neutrality”, IMS beyond IP-based PSTN replacement).
• Users are competing against bundled telco video and voice offerings using peer-to-peer file sharing and VoIP; ultimately you can’t compete against your own customers.
• Paradox of best (heaviest usage) customers being kicked off because of inadequacies of QoS, pricing, metering, ownership, technical and billing models. No other market works like this!
• Many fibre assets are underused; and penetration remains unimpressive as many users fail to see value, often despite being avid “old media” consumers.
• Duplicative competing access infrastructure harms business case (based on premises passed/take-up rate).
• Cost of sales, marketing, billing to individuals and households is high.

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June 27, 2006

Guest post: John Cooper, MetroNanoNet

We’re pleased to have John Cooper, an entrepreneur and consultant based in Austin, Texas, provide our first guest post. Given the high cost of sale, provisioning and billing for traditional broadband service providers, we were interested to hear about his proposed alternative model, the MetroNanoNet. This fills a space between traditional service providers and municipal networks. The natural unit of commissioning of connectivity may not be the household or individual, and the most promising sources of differentiation may come from how you fund and price infrastructure, not technology, or bundling with services. Although like any new venture, its success is not guaranteed, we feel this is a strong “Telco 2.0” story, as it combines a hard-nosed business approach with a lower cost model and highly differentiated sales approach.

Sometimes a “whack on the head” can cause us to look at things with an entirely new perspective. Take telecommunications, for example.

What would voice and data connectivity and services look like if you landed on this planet today and were given our present day resources to use? Would you put together something that looked just like a traditional telecom or cable company? Would you borrow aspects of the old while adding new features? Or would you develop an entirely different approach? Would you build a ubiquitous network for as cheaply as possible like a utility? Or would you build a commercially-sponsored network like the US TV network from 50 years ago? Would it be a cooperative rather than competitive effort? Would revenue from applications, advertising, content, or subscription fees subsidize the cost? Would a handful of large companies provide services or a multiplicity of small companies?

How could you leverage the huge, newly connected broadband market that the new network created? Would content and infrastructure go together, or be provided separately? The chart below compares how differently we could look at telecommunications and the Internet, when we start with a contrarian view to the traditional telecom model.

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June 22, 2006

A new diversity of connectivity options

One of the most useful pieces of framing we are using in our Telco 2.0 workshops is the explosion of diversity in the connectivity options people have available. The table below summarises them, but from a business rather than technology viewpoint. In which ways does the money flow between applications/service and data transport, if at all?

NameTechnical relationship of service and connectivityFinancial relationship of service and connectivityExamples
vertically integrated interactive serviceIntegratedIntegratedPSTN, mobile voice, SMS
vertically integrated broadcast serviceIntegratedIntegratedFM radio, DVB-H
stand-alone best-effort connectivitySeparateSeparatedial-up, today’s broadband
QoS and billing enhanced connectivityApplication-aware; session/control plane integratedIntegratedIMS
service-funded connectivityApplication-aware; no technical integrationIntegratedSkype Zones
user- or community-built free connectivitySeparateSeparateOpen Wi-Fi, basic muni service, mesh
local unrouted connectivityVariesNo monetary exchangeBluetooth, Family Radio Service
other connectivityApplication-agnosticTieredParis Metro pricing

The relationship can be charted out over time. We divide up the total value of the connected communications products and services that users engage in. The relative value contribution of each channel to the user is what we track over time.

The picture for services access through mobile handsets is below.

Naturally, similar diagrams could be drawn for fixed technology, where broadcast would dominate today. The numbers are our own, but there are decision science tools out there that can drag out quantitative analyses from large group qualitative evaluations.

The world in 2016 is the destination: Telco 2.0, but there is already significant change in the market well before that.

Do you have a strategy for each of these forms of connectivity? Do you agree with the division of the world and the straw man numbers? Comments, as they say, are open.

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June 14, 2006

Can you have your connectivity cake and eat it?

The telecom industry is facing a fast and traumatic shift in structure, from vertical integration, via various “oblique” business models, to a more horizontally layered structure of transport, platform, service and relationships.

A common lament in the meeting rooms of telcoland is that “we don’t want to become a dumb pipe”. Regardless of the merits or otherwise of the pure connectivity business, there’s an important lesson to be learned here. Many other highly profitable and innovative industries exist despite their services being “commodities”. Thus, in finding inspiration for new strategies and products, you are unlikely to find satisfaction from looking at traditional industry journals, research reports and market intelligence. Each one is likely to be framed around sustaining the current broad status quo.

One of the greatest masters of customer segmentation and relationship management is the UK retailer Tesco. Unlike Wal*Mart, it has adopted a broad spectrum approach to the market, offering both own-label “value” products, as well as the aspirational “Finest” sub-brand.

In its early days they used the brand to introduce pre-packaged meals above the usual quality of factory fare. Over time the brand has been stretched to include more of their range. Indeed, by now even some of the plainest of foods — in this case a sponge cake — have received the margin-enhancing treatment. It can only be a matter of time until Tesco Finest Toilet Roll features in every second British home.

If Tesco are able to create significant margin boosts with relatively modest improvements to product, packaging and promotion, what are the parallel opportunities in telecom?

Our “serving suggestion” is that connectivity is most emphatically not a pure commodity. Operators face many opportunities to differentiate their service by quality (and not just network QoS), bundle together different combinations of connectivity, enable more seamless interoperation of devices such as wireless home gateways and cellular devices, and enable the service to grow with the user. Indeed, the deeper one digs, the more recipes there seem to be, many of which appear untried. You hardly need look further than how Tesco themselves manage the sales and marketing of their own telecom products for ideas.

Who will be the first to offer a pre-paid broadband plan which you can top-up at the supermarket check-out? High free cash flow, no billing costs, no bad debt or fraud. If it turns out to be Tesco who get there first, shame upon the industry.

By drawing inspiration from outside the industry, and benchmarking against best practice, you increase your chances of sweeter, moister and more satisfying returns.

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