New sources of value from merging the best of Telephony/SMS with Skype/Yahoo

July 19, 2016

Telco Digital Customer Engagement Benchmark

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Customers are more educated, more empowered and have more options available to them than ever before. They are also engaging with companies through more channels than previously, as social media and search engines overtake print and television as the most effective way of reaching out to customers. In a 2015 ‘point of view’ report Deloitte stated that 45% of smartphones owners were making purchases using a mobile device every month, and in addition complaints and queries are increasingly being made online rather than in person or via the phone. This shift in the market highlights how important customers’ digital engagement and satisfaction is, as more and more customers are assessing companies’ services through their digital brand experiences.

Creating a seamless, intuitive and trusted digital experience should be at the forefront of all telecom business models, such as through innovations in omni-channel strategies. An omni-channel approach, i.e. integrating online and bricks and mortar customer experiences, can help improve the effectiveness of telecoms’ marketing as a more sophisticated ‘single-view’ picture of their customers allows for better targeting of their wants and needs. This will help reduce churn and increase ARPU.

An omni-channel focus will also bring increased conversion rates and reduce cart abandonment through a larger availability of convenient online shopping options and secure payment solutions. This can help improve customer satisfaction, retention and loyalty. Not only will omni-channel solutions increase revenue in these ways and more, it will also save companies money, through, for example, reduced time spent on resolving customer service issues. There should be no need for customers to repeat simple information or be passed around to different areas of the company as a clear and unified picture should be available rather than customer data remaining stuck in specific siloes. The need to develop omni-channel solutions should be clear, and many telco companies are some way to providing this seamless picture to their customers.

STL Partners has created a Digital Engagement Benchmarking Tool which can assess your operator’s performance in digital maturity, and highlight areas where omni-channel development would be beneficial. A free, bespoke report will be created which benchmarks your company against industry competition and ‘best-in-class’ performers outside telecoms, the metrics covering digital sales and marketing, digital customer experience and omni-channel strategy. The report will be sent to you by the end of August. If this is something you would be interested in, complete our 5-10 minute survey now. All information submitted will be treated as strictly confidential and your operator (or its data) will not be identified in any reports to send other participants in this study, or other third parties. 

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March 7, 2012

M-Commerce: can Voice 2.0 make mobile ads work at last?

One of the things that our Facebook pre-IPO analysis highlighted was that Facebook has 425 million mobile users and isn’t making a penny from them. It’s a top priority for them to change that, and the constraints of designing a good mobile user experience mean that it will take all their ingenuity to shoehorn adverts into the mobile client.

Further, even within the online version of Facebook, customers are in ‘social’ rather than ‘shopping’ mode, and many mobile users are on third-party apps that talk to the Facebook API, so Facebook doesn’t control the user interface “chrome” that surrounds the content.

JCPenney's Facebook store, now closed JCPenney’s Facebook store - now closed. source

Facebook’s big idea is to inject “sponsored stories” into the content itself. But will anyone accept that? And might the integration of Voice 2.0 communications into mobile advertising help turn it into a lead generating business? There’s starting to be some signs that it could.

[Ed. We’re looking at local advertising and commerce strategies at the Silicon Valley Brainstorm (27-28 March), and at Voice 2.0 strategies both there and at the London Brainstorm (12-13 June).]

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March 5, 2012

MWC 2012 Network Tech: Edge Power, Super WiFi, Van Jacobson

It’s been Mobile World Congress again. To tide you over until we’ve finished the traditional period of fasting, sleeping, and using no technology invented more recently than the sundial, we’ve put together a mini-series of blog posts about major trends we noticed. This one covers what’s happening in networks and infrastructure: Edge Power; Super WiFi; and Telco 2.0’s Top Network Tech moment - a Living Legend on QoS vs. QoE.

(NB For further Telco 2.0 research on future broadband strategies see ‘The value of “Smart Pipes” to mobile network operators’, and our broadband research stream.)

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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).

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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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March 29, 2011

Voice 2.0 Startup Watch: Fonolo

Fonolo, a Canadian company that essentially provides a search engine for IVR menus, has recently showcased an interesting new market application. We think it’s a good example of innovation in ‘Voice 2.0’. Skype Journal reports that visitors to Sirius Satellite Radio’s website can now search for the person they need to speak to, and then click-to-dial them directly without going through the IVR.

Not just that, they can click-to-schedule the call at some time in the future. And they don’t need to wait on hold, either. Everyone who has ever struggled to navigate the IVRs, kicked their heels in the call queue, taken down the same details from the same customer three times in a row, or experienced the amazing inefficiency of call centres in general should be able to appreciate this.

Person-to-organisation voice is a product that should deeply embarrass our industry. Information doesn’t follow calls, far too much of it has to be read out and retyped, callers are expected to wait on the line at their own expense, metrics are poor, and it’s normal for one side of the conversation to have to trust the other’s record of it sight unseen. Very large percentages of calls are abandoned. Call centres are notoriously horrible working environments. As much as half of some call centres’ traffic is made up of so-called failure demand, repeated calls that didn’t work the first time. This is equivalent to rework in manufacturing - notoriously the biggest killer of productivity.

Business voice service is stuck in the mindset of General Motors in the 1970s - obsessed with throughput come what may at the expense of quality, sapped by constant rework, unable to turn around new products, trapped by its over-specialised tools, and apparently unable to think of any better ideas than trying to keep the workers from unionising and running the line ever faster.

And, amazingly, most companies rely on this service for sales.

Now, the equivalent to the quick-reconfigurable general-purpose machine tools that the European and Japanese car makers used to beat GM is already here - it’s the Toolkit of Voice 2.0. But where are the people who will make use of them? Who will build the Toyota of service?

We first reported on Fonolo in this post from April, 2008. Back then, their product was a pure-play search engine like the ones we’re all familiar with on the Web. In fact, it worked exactly like that - they had a bank of Asterisk servers automatically dialing into corporate call centres and trying each option on each IVR menu in turn, mapping all the possible routes through the wilderness of menus in the same way that the Googlebot follows links through the Web.

All this information was made available on a Web site, so you could search through it, and they used a click-to-call package, so you could dial direct to the person you needed from the search result. They also wanted to let the users log what happened during the call, providing a handy record of what you said to them last time and also a source of crowdsourced reviews and comments on the service. Their CEO, Shai Berger, appeared in virtual form at that autumn’s Telco 2.0 event.

At the time, they were expecting to monetise the service through advertising. We suggested, however, that a more direct form of two-sided business model might be appropriate. Essentially, Fonolo was offering to do a lot of companies a favour by getting rid of some of the major sources of failure in their call centres - misrouted and misdialed calls, calls that hang up in the queue, stress and aggravation for customers and employees - and significantly improving their lead generation, sales, and operational KPIs like first-call resolution. So why shouldn’t those companies simply pay for it?

Further, they had a problem in that the indexing process might be perceived as an attack, and their range of NPA-NXX phone numbers might be blocked. Also, there was a risk that their search engine would send a firehose of calls direct to a company desk that didn’t have the resources to handle them. Changing the relationship with the upstream customers - the call centres - from an adversarial relationship to a customer relationship would resolve that. It would also let the upstreams cooperate with Fonolo pro-actively, by providing it with information about their phone system, rather than just waiting for the robot spiders to attack.

Of course, this idea isn’t new - on the Web, it’s almost as old as search engines themselves. A parallel would be Google’s Webmaster Tools product, which basically provides a structured way of pushing information about your website into Google pro-actively, rather than waiting for the spiders to show up and hoping that Google’s automated judgement gets you right. Another, very basic one is robots.txt, the text file most Web sites use to tell search engines not to index certain pages.

Another example would be Internet routing - networks announce the prefixes they route into the global routing table, and update them when this changes or a link goes up or down. One advantage of this is that it permits traffic-engineering - you can influence how your traffic is routed, for example to use cheaper links preferentially, to balance out the load equally between multiple sites, to maintain a production network and a hot-standby network, or to ensure that requests are served by the closest possible machine.

By letting the upstreams actively contribute information about how they would like to be reached, Fonolo gets rid of the problem that the search engine might drop thousands of calls onto a hitherto obscure and under-resourced desk. It also permits its upstream customers to engineer their call flow to suit their own needs without forcing their customers through a tortuous IVR menu tree.

So, Fonolo is now out to sign up major call centres as upstream customers. In return, they get to integrate Fonolo’s service into their own Web site, as well as pushing their site-map into the system. What else?

Well, there’s something we didn’t make much of back then - Fonolo’s click-to-call element has a callback architecture like Jajah’s. You click, the Asterisk starts dialling, and when the call is connected, it rings you up and bridges the calls together. This is necessary to deal with the problem that not everyone uses desktop VoIP and most telcos still don’t have an API for voice. But it has some useful features in itself.

For example, you can eliminate waiting on hold. There’s no reason why, of course, the Asterisk server has to place the call at once - you could send it an AMI event specifying that the call was to be dialled at some point in the future. So you could click-to-schedule a call at some time when you’re going to be free. It’s better than that, though. Because it’s a call-back, there is no need to wait on hold - it’s as if you sent a robot to wait in the queue and summon you when it reached the front.

Of course, good programmers have known for decades that high performance requires you to replace polling patterns (repeatedly checking to see if something has happened) with push-notification and other event-driven ones (being informed proactively when it does), and to replace blocking calls (where the process that calls some function has to wait for it to return before continuing with the program) with callbacks (where the function reports back to the first process, which can get on with some work in the meantime). This goes double or even triple for telecoms. If our voice switches were reliant on constantly checking back on their input queues or waiting on the line for an answer before doing anything else, we’d never have scaled beyond the systems of the 1920s.

But it’s only now that these insights are being applied to customers’ needs. And it’s still a startup, not a telco, that’s doing it. There’s much more to be done here; why should Canadians have all the fun, for a start? The crowdsourcing/logging element of the original Fonolo plan really needs work - it’s part of the whole vision of VRM. Also, we’re still not so good at sending along more information with the call, and therefore eliminating the whole tiresome business of reading stuff off one screen so someone else can type it back into theirs. Metaswitch’s new Thrutu product is a crack at that. And there’s surely a lot to do in changing the call centres themselves - both their software and their organisation - to take full advantage. (Hint: Toyota put a big red STOP button at each workstation and encouraged people to press them and stop the line if they noticed anything dangerous or sub-standard. It stayed stopped until the problem was fixed. What would be the equivalent?)

So there are plenty of opportunities out there. But have the operators simply lost interest?

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November 18, 2010

FT World Telecoms: VNL, Disruptive Rural GSM

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

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September 1, 2010

GMail voice - nice, but no Skype Connect

So you can now make telephone calls from within Google Mail. Well, among other things this is a fine example of something we said back in 2008 in the Consumer Voice & Messaging 2.0 strategy report. Jamie Zawinski said that every program tends to expand until it can read e-mail - we said that the same was now true of telephony. Everything expands until it can place phone calls. As a result, although total minutes of use keep rising, the market is deconcentrating, with the total spread across an increasing diversity of players - games, Voice 2.0 companies, enterprise VoIP networks, mobile apps, perhaps even the odd telco.

But we actually don’t think Google’s move is enormously significant. Consider this: if you’re a telco, and you provide plain SS7 circuit-switched voice, everyone agrees you’ve got a problem. Telephony is now a software application and it’s very often free, which doesn’t leave you much scope. If you’re one of the traditional alternative voice providers - calling cards, carrier VoIP like Vonage, discount MVNO, etc - you also have problems, because you’re trying to undercut a price that’s going to zero. We recall Boris Nemsic, when he was CEO of Mobilkom, saying that their answer to “fixed-mobile convergence” was a new tariff that offered unlimited national and on-network minutes for €10. There wasn’t any point being cute, when they could just cut prices and squash the margin players like bugs.

So you need to find some way to differentiate - to offer better voice and messaging.

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October 30, 2009

RebelVox: really mission-critical voice & messaging

Ed. - To warm us up for the forthcoming Telco 2.0 Exec Brainstorms on new business models (this week in London and 9-10 Dec in Orlando, Florida), Telco 2.0 reports from last week’s eComm. We’ve said before that if you want to do better communications, you’ve got to understand the social conventions of telephony. Why is it that we treat telephone calls as sacred, interrupting any human activity whatsoever to answer the ringing phone, to any one of 4 billion or so possible callers? More to the point, telephony even takes precedence over face-to-face conversations, alone among all forms of communication. Nobody breaks off a conversation to read e-mail.

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October 29, 2009

Voice 2.0 is Coming!

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.

eComm is, of course, a good listening post for monitoring the progress of Voice 2.0. The news is that once you get out here to the cutting edge, it’s already taken as given that voice is an application and that value will be created in future by integrating it with other processes, applications, and services.

So Voxeo demonstrated their new cloud telephony platform; this provides an API for scripting-language developers to use in creating applications that use voice, based on Voxeo’s existing VoiceXML hosting infrastructure and interconnection. It’s impressively simple, and leaves you wondering what the telcos have been doing all these years.

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October 8, 2009

China’s Monster ‘Facebook’ QQ: coming to a screen near you


The world is full of fast-growing, hyper-fashionable social networking and user-generated content plays. Almost to a man, they lack one thing - profits, or even revenues. An English-speaking technology media and analyst/investor community obsessed by the US West Coast has practically ignored, one example of spectacular success, because it’s Chinese.

A Profitable and Valuable Social Network

At the 30th of June, Tencent (QQ’s owners) had thrown off RMB993 million (US$145 million) in free cash in six months, even after spending RMB1.9bn in CAPEX and a further RMB593 million in financing costs. For comparison, Facebook went marginally cashflow positive for the first time in August and isn’t yet profitable.

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June 23, 2009

Developers - That’s where Telco 2.0 comes in…

Ericsson is promoting its Java SDK on YouTube:

Well, it’s good to be reminded of the fundamental need for communication. Netscape legend Jamie Zawinski said something similar in a now-classic blog post about groupware, social networks, and contacts management:

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June 10, 2009

RIM: APIs are crucial, enterprises are the target

Blogging from the Open Mobile Summit, we were interested by some of RIM Senior Vice President Alan Brenner’s remarks about developing for mobile devices.

Brenner argues that the fundamental use cases for mobile applications are very different to those for desktop apps; whereas most desktop applications are “sovereign”, demanding your full attention as you analyse data, process e-mail, edit documents, work with graphics, play games, write code, etc, mobile applications are usually transitory. You’re doing something else when you briefly stop to check e-mail, send a text message, or look up information from the Web.

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May 28, 2009

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

Below is a summary analysis of the Enterprise Services 2.0 session at the May 2009 Telco 2.0 Executive Brainstorm. It builds on some of the issues we described before the event here.

The premise we explored was this:

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May 7, 2009

The Vital Importance of Frivolity

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

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April 16, 2009

Re-thinking Skype’s business model - again!

Over a year ago in February 2008 when there were rumours that eBay were looking to sell Skype we wrote an article on the opportunities to re-think Skype’s business model here. It’s still just as relevant today given the current news.

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April 9, 2009

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

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

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March 25, 2009

QQ: Quite Quality

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

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

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February 23, 2009

Rich Communications Suite: Really Considered Significantly Obsolete

It was a curious Mobile World Congress last week; half Telco 2.0 triumph, with things like the OneAPI project, O2 Litmus, and a truly impressive focus on developer communities, and half a harking back to the days when IMS was the solution, whatever the problem might be.

Take the GSMA’s ‘Rich Communications Suite’ (RCS). We’ve discussed the imperatives for voice telephony recently here. So, we’re at a loss as to the relevance of RCS to the market, as one of our analysts vociferously describes below.

But we’d value an open discussion with readers who support the initiative. Do read the analysis in the rest of this article, and tell us what you think via the ‘comments’ function on this blog…

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January 28, 2009

Thomas “Voice Mashup” Howe Answers Your Questions

As we discussed a few weeks ago, there’s a huge opportunity for telcos to help enterprises (big and small) reduce costs in everyday business processes by using telco voice and messaging capabilities. The ‘communications-enablement’ cost is tiny versus the operational savings.

Enterprise CIOs are starting to see this and telcos are making more and more API’s available. But telcos need to insert their platforms into the IT value chain more proactively now. It’s specialist developers like Thomas Howe (one of the millions of developer “ants”) who are showing the way. Here’s his presentation from the last Telco 2.0 event and below that some answers to questions. Thomas will be joining us again on 6-7 May in Nice.

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January 21, 2009

Me2Me: building the foundations of contextual voice

Every now and then we encounter a really interesting product someone’s come up with. Last time it was Fonolo, the search engine for call centres that digs through all the IVRs in the world, tries all the options, and plots their structure on their Web site. Then, it lets you click-to-call directly to the organisational function you want to talk to, and log the results of your call so that others can learn and do better.

Now it’s Me2Me. A Swisscom Ventures-funded startup, Me2Me uses voice-recognition technology to provide a sort of telephony-based personal organiser service. You call it, leave a note, and later retrieve it, either in a pull mode (you go looking for it) or in a push mode (it comes looking for you, for example when a pre-set reminder comes up). It’s not the first time this has been done, but the crucial thing here is that the message you phone in is itself converted to text and stored in a relational database along with the actual recorded sound.

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January 13, 2009

Enterprise CRM 2.0 - integrating Voice

We talk a lot about new forms of voice & messaging. We also talk quite a lot about context, and about Web service APIs. And we also talk a great deal about the importance of the enterprise market. Now, we’re going to put them all together in a sort of Telco 2.0 ‘Turducken’; after our 2008 Voice & Messaging 2.0 strategy report, which concentrated on new communications services for consumers, we’re working on one which has evolved from an initial working title of “Call Centre 2.0” to Customer Care 2.0. It’s all about how new voice technology can change the way organisations and their customers interact, for mutual pleasure and profit.

On the way, however, we’ve noticed an interesting technical problem.

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November 24, 2008

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

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

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

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November 12, 2008

Voice telephony: death or glory?

At our most recent Telco 2.0 brainstorm, the second session concentrated on the business opportunity in the core voice and messaging business. Here we review the key messages, and explore some of the future business model scenarios.

The timing of this discussion is rather apposite. Despite our belief in Vodafone’s long-term strength, they have just announced that their core voice business has stagnated:

The performance of the company’s European operations suffered from the tough economic climate with margins decreasing from 38.2% to 36.2% on revenues that were down 1.1% on an organic basis. The company blamed ongoing price pressure on core voice and messaging services.

As we said before, if you don’t improve your core product at all since launching digital networks, and assume two-sided Internet business models won’t have any effect on you, you get all you deserve. [Ed - if you feel you deserve better, why not invest in our new Voice & Messaging 2.0 report?]

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November 5, 2008

CDR = Customer Data Revolution

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

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October 27, 2008

Mobilkom Meets Fring

So, Mobilkom Austria has signed up mobile SIP developers Fring to create their new voice & messaging service. This is an exciting development; Mobilkom reckons it’s the first time a carrier has taken such a step, and we’re fairly sure they’re right. The nearest example would be BT and Ribbit, and there’s still plenty of uncertainty about how that will pan out. Fring is a mobile VoIP startup we covered in our Voice & Messaging 2.0 report.

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October 21, 2008

Enterprise Contact Centres - a revenue opportunity for telcos?

HTK is a specialist supplier of ‘voice 2.0’ services. They’re one of the interesting group of companies who’ll be participating in the ‘Innovators Zone’ at the Telco 2.0 event. We’ll be presenting some of our new analysis on the (significant) market opportunity for telcos to provide services to enterprise contact centres on Day One of the event. In the meantime, we asked Marlon Bowser, HTK’s Managing Director, for his thoughts on this topic:

Chasing the Rainbow

The telecom industry is going through a time of arguably unprecedented change, with more opportunity for “service innovation” than ever before. With change comes the need to adapt and many Telecom Service Providers are opening up their networks to enable integration of third-party application services. The question is whether fostering such a culture and community of innovation is a business model that makes sense, and how it can be harnessed to generate significant financial growth.

Companies like BT and Microsoft are catalysing the market for innovation, with service delivery platform vendors waiting in the wings to prove that they’re the best bet to host the next big thing. The problem is that innovators and early adopters of new technology are often driven by an agenda of “cool” rather than one of “cash” - it may create excitement, but it rarely creates significant revenue growth.

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October 13, 2008

Ring! Ring! Hot News, 13th October 2008

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

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

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September 30, 2008

The inversion of the telephony business model

We are currently doing consulting work on the future of telephony and what future business models might look like. A recurring theme is understanding what the underlying sources of value are in the voice and SMS products that we take for granted. The excerpt below from our report on the future of consumer voice and messaging highlights some of our core ideas and themes.

As telephony becomes a feature of other applications, rather than a service in its own unnecessary right, we expect to see a corresponding inversion in the business model. The graph below compares average per minute wages in the US to average per minute fixed and mobile telephony prices, all rebased to 2006 prices. Ten years ago, it would have made sense to employ a college graduate for an hour if that saved you the cost of a one hour wireless phone call.


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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 26, 2008

Guest Post: Google’s First Handset - strategic implications

Both customer data and product-service systems are critical to future telco business models. Google’s Android platform puts Google in a better position to capture customer data and integrate its services with mobile handsets. This brings a powerful Internet player into direct competition with established telecoms players, such as Nokia and their Series 60 and Ovi platforms. Marek Pawlowski, a director at mobile consultancy PMN and founder of the Mobile User Experience conference, outlines the strategic implications of Google’s mobile ambitions below (this article was originally published at this link):

Google, T-Mobile and HTC this week announced the G1, the first handset powered by Google’s Android platform. The press event in New York confirmed specifications already leaked out through various fan sites over the last few weeks: a touchscreen 3G handset, with a QWERTY keyboard and trackball. Other features include GPS, a 480 × 320 screen and 3 megapixel camera.

It will debut in the US next month, followed by a UK launch in November.

The G1 device itself is already attracting considerable consumer attention: the BBC’s morning news programme picked it up on the day of launch and asked me to give an interview explaining what it meant for users and the industry (if you’re in the UK you can catch it on BBC iPlayer here until Tuesday, 30th September).

However, this is a much larger and more complex story than the single handset being announced on the T-Mobile network.

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Ribbit and BT’s evolving platform strategy

One of the challenges facing telcos right now is to open up their network and IT assets to create more value. A common issue is how these initiatives are being driven from the IT side, who intuitively understand the importance of platforms and a developer ecosystem. Meanwhile, the rest of the business fails to comprehend the importance of external innovation, isn’t organised to sell and support it, and the technology platform struggles to have the impact on the business that was anticipated. It’s a familiar story.

In the inbox this afternoon we find a message from JP Rangaswami, BT Design’s MD Strategy & Innovation, telling us that their Web21C SDK platform is no longer going to be supported after the 10th of October. Their developer-ecosystem efforts are now concentrated on Ribbit. Web21C was always a great idea — an SDK for various programming languages that let you interact with BT’s voice switching, making, receiving, rerouting calls, sending and receiving text messages, and carrying out location dips and authentication checks.

But somehow it didn’t quite get traction; the forums over at the Web21C site are a fairly good index, there being hardly any activity. For some reason, having created the most capable telco API suite yet, BT didn’t really promote it. More recently, BT acquired Ribbit, “Silicon Valley’s Phone Company”, VoIP/Web integration specialists who aim to let Web developers build CEBP applications, which immediately raised the question of what they would do with Web21C. Now we know; it’s going to vanish.

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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 17, 2008

Jazinga: SoHo voice done right

We’ve a bit of a fetish for little broadband boxes that sit around your home and office under desks and TVs. A key battleground for the future includes equipment like home hubs, femtocells, and set top boxes. If the edge of the network is where the smarts are, it’s also where the money will be made, since these are gateways to the customer for all kinds of voice, video and data services. They are also key enablers to two-sided markets.

We recently were loaned an interesting new box from Jazinga. It’s a PBX and wireless hub rolled into one, targeted at the SoHo/small business market. It highlights some key principles and issues in designing consumer premises equipment (CPE), and also raises some interesting questions around the role of telcos in a 2-sided market model.

Consumer premises equipment in its native environment: One Jazinga box

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Telco 2.0 Interview: Steve Zimba, Microsoft

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

Steve Zimba

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

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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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August 31, 2008

Telco 2.0 Research Programme, Autumn/Winter 2008

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

5 x New “Research Practices”

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


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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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July 31, 2008

Guest post: Why Ribbit is worth $105m to BT

We’ve long believed that the real reason you build an open telco platform is to facilitate interactions between merchants and users, not to enable a supply chain of media or entertainment products. The telco industry uniquely has relationships with nearly every economically active person, a means to reach them, and customer data that nobody else has. We’ve asked Thomas Howe, an authority in the space of communications enabled business processes, to explain the real significance of BT’s entry into the telco platform space — the start of a global telecom platform war.

As I reported a few weeks ago, Ribbit has indeed been sold to BT. The selling price — $105 million — has caused some surprise. However, it makes complete sense to me.  Here’s the math that makes that work:

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July 2, 2008

GupShup — ad-funded mobile services done right

In our Voice & Messaging 2.0 Report we listed over 70 new services we’d come across in our travels. One that’s come to our notice since publication is SMS GupShup. Whilst there were many ‘me too’ Internet messaging services we reviewed, this US/Indian start-up is noteworthy for its business model.

As operators find voice and messaging markets mature and revenues stagnate, they are looking for new growth. One route is to try to create elaborate new services and persuade consumers to part with money for them. The other is to find ‘upstream’ parties willing to pay to interact with telco retail customers directly with the telco as an intermediary. Advertising is the starting place for many such initiatives, and GupShup as a template for this begs the question: what is the role of the operator? Bit pipe, enabling platform or complete services provider?

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Telco 2.0 Use Case: Trading Hub for the Transport Industry

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

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

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June 16, 2008

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 12, 2008

Skydeck: Robin Hood of customer data

A key Telco 2.0 theme is getting more value out of customer data. Nearly all of that data remains locked up inside the telco, with a few side businesses around paper and online directories. Could operators suffer from an ‘over the top’ problem with their data assets in addition to the network? We’ve found an interesting example.

One of the more interesting start-ups we’ve seen pass by our eyes is Skydeck. It’s a concept we’ve pondered over a beer or two in the past. Users are investing some of their most valuable assets — time and money — in making phone calls. By definition, telephony can’t be completely automated away. You (almost always) need at least one person burning a moment of their life on the call, even if the other end is a computer. In theory, this call data is extremely valuable, if also very sensitive.

Ideally the call history would be exposed in a way that could be used to improve the service features and user experience, such as intelligent call routing. In practise this is hard because the telco is terrified of privacy and liability issues, and bound up in regulations, and thus is loathe to pass it to anyone but the user. Hence, cue Skydeck, which liberates customer data and returns it to the people.

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June 2, 2008

Vodafone: Too much da, not enough vo and fone?

As there’s a change in leadership occurring at Vodafone, it’s a good time to reflect on the direction of the large convoy of opcos and investments being led by the good ship Newbury. Arun Sarin has stepped out of his asbestos business suit, albeit scorched by the flames of investors and board members, safe in the knowledge that his mission to vanquish more timid enemies is won. Although they don’t say it aloud, The Economist notes that the core of this success was clinging on to markets where vertical integration is turning a profit (USA, emerging markets), and exiting those where is isn’t doing so well (Japan), whilst cost-cutting elsewhere the inevitable detritus of a decade of hyper-growth.

However, as the more acerbic tongues at The Register point out, rather choppy waters lie ahead. The business is rapidly maturing, cost cutting reaches its limits, and new revenue streams (entertainment content, advertising, data) are either slow to ramp up or come with significant supplier costs that dilute margins.

According to their corporate history website, the name Vodafone is derived from ‘voice and data phone’. True or not, the conundrum of whether ‘voice is just data’ persists to this day. So as Vittorio Colao becomes fleet admiral, our burning question is: what to do about the stagnating core product? Along with its peers, Vodafone has conspicuously failed to significantly enhance its voice telephony offer, beyond offering better coverage. We don’t think that’s going to be a long-term winning position as access becomes hyper-abundant, and people’s time does not. Rather than ask how data services can replace lost voice revenue, ask how data can be used to rejuvenate that voice business. And as the biggest player in the international scene, Vodafone is very well placed to do something about it.

Telephony is built on false assumptions

The chart below (from our recently published Consumer Voice & Messaging 2.0 Report) compares the cost of telephony and labour. We show the per minute cost in the USA of using a telephone (fixed or mobile), along with hiring someone (high school or college graduate). What it tells us is that the ‘scarcity’ used to be in the telephone network, and now it is in our time and attention.

Only a decade ago, it was worth paying a graduate for an hour if it would have saved you from making an hour’s worth of mobile phone call.

Today, we barely factor in the cost of calling into our lives. Yet we are buried in voice messages, missed calls, emails and texts. Delivering ever more data to the user is not the same as creating ever more value. The value comes from brokering the right relationships, helping interactions occur at the right time and medium, eliminating unwanted intrusions, automating flows of information, and making users productive.

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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 22, 2008

Another Kind of Platform: Telcos as Development Environments

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

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April 21, 2008

Ring! Ring! Hot News, 20th April 2008

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

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

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

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

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

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April 14, 2008

Ring! Ring! Hot News, 14th April 2008

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

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

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April 7, 2008

IVR search: a ‘Google’ for phone menus?

We’re putting together our Voice & Messaging 2.0 report, which includes a directory of all the interesting companies in the space we’ve come across. We’ll be presenting some of this at our event next week of course. But in the meantime, we’d like to tell you about one new company that’s extra-interesting.

When we speak about Voice & Messaging 2.0, we’re usually thinking in terms of services, software, or devices that offer… voice or messaging! But it doesn’t have to be limited to this. Our conception of the “ultimate communications experience” doesn’t imply that we’re looking for a killer app, a single, perfect integrated client; it could as well be provided by a school of independent, specialised but interoperable components. They might be within a common user interface, or might not.

So as well as new forms of telephony, we’re also interested in new auxiliary technologies. What, for example, is the new telephone directory? Web search engines are already great at digging out telephone numbers, but then again, numbers themselves are getting less important. When we’re using the phone to interact with an organisation, rather than an individual, anyway, the phone number is not particularly important. What we need to find is a function.

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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 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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Voice Revolution Watch

The vision of our Voice & Messaging 2.0 project is coming ever closer in reality. Two pieces of news this week underline this; first, Sony extends in-game VoIP to more PlayStation Portables. (You’ll remember, of course, that earlier this week Sony filed patents on a PSPhone.). Second, IBM pours $1bn into unified comms. In this article we explore where the telco can fit in…

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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

Re-packaging voice minutes to raise margins

The price of a marginal voice minute is falling all over the world. A basic access bundle of voice, messages and data is becoming the norm in many markets. That bundle offers an ever-larger, or even unlimited, amount of traffic. At the same time, there’s a dramatic explosion of new kinds of voice going on — embedded in games, mobile VoIP, IM clients growing a voice capability, web-based click-to-call, extensions to enterprise VoIP systems — and none of them are by default inside the telco.

In case you missed it the first time, here are the results from our Broadband Business Models survey on this score:


The message is simple: non-operator voice-enabled application are going to grow very fast. That’s not our opinion, but that of you and your peers. (Our opinion is that the numbers are a little aggressive, but not by much. It may take a 2-3 extra years. Still, contrast mobile in 2008 with 1998 to see how dramatically the world can change.)

If you’re a phone company, and you’re still on Plan A of selling large buckets of voice minutes, it doesn’t look like a very attractive future. At the moment, telco voice is still just about growing in volume, although margins are often vanishingly tiny on fixed line, and falling fast on mobile.

So what could we do about that? The Telco 2.0 way is to divide up your bulk product, and re-package it and distribute it in new ways. We’re going to use dating as an example of how to do it.

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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 16, 2008

Ribbit! The amphibian of telco voice platforms

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

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

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

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December 19, 2007

Voice & Messaging 2.0 Survey - Last chance to have your say

If you’re winding down for Christmas this week and have a spare 15 minutes before midnight this Friday to contribute your thoughts on the future of consumer voice and messaging, please take part in our online survey here. (You’ll get a free copy of the summary results later in January as a thank you).

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December 4, 2007

Consumer Voice & Messaging 2.0 — New survey

We’re pleased to announce a new online survey about the future of voice and messaging. The survey takes 15-20 minutes to complete and is designed (as always) to be thought provoking. It closes on the 19th December.

All those who complete the survey will receive a free set of summary results. The full results, as well as a deeper analysis of the changes in the industry and a full directory of every “2.0” player in the field will be published in our Consumer Voice & Messaging 2.0 report at the end of January.

Voice and messaging service operators face increased competition: fixed-mobile substitution, converged services, new low-cost entrants, as well as external competition from rich Internet communications services. The survey is designed to identify the key changes likely to happen in delivering consumer voice and messaging services for fixed, mobile and converged operators. Respondents are invited to identify the best operator strategies and select the key unmet user needs.

This survey has 4 short sections:

  1. Introduction & Your details
  2. Consumer Voice & Messaging Market Scenarios
  3. Best Operator Voice & Messaging Strategies
  4. Voice & Messaging Service Execution

Based on feedback from last year’s voice and messaging survey, we’ve made this one shorter and simpler. If you did the survey last year, you’re very welcome to do it again this year so you can get a copy of the new results.

Please take part here.

(Thanks too for everyone who participated in our previous survey on the future of broadband. Those who completed the survey were mailed the summary results a few weeks ago — we’re always keen to hear feedback. The resulting Broadband Business Models 2.0 report is in the final assembly stages.)

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November 7, 2007

VoiceSage and the business of…business

One of the most interesting companies that took part in October’s Telco 2.0 Executive Brainstorm is VoiceSage, a small Irish firm that develops innovative enterprise applications using telco services. This was a major theme of the event - if you want MySpace for monkeys on LG Prada phones, or the nth twist on music downloads, you’ll be fine asking Vodafone or Sprint, but if you ask anyone who gets Telco 2.0, they’re probably working on something for business users.

There is a very good reason for this; compared to telecoms, most of the trades that conventional wisdom thinks will provide growth and margin in the future are tiny. Telcos could completely crush the ad business - eat every ad agency in the world - and notice only a minor blip in their revenues. The telecoms industry could take over Hollywood and barely feel the bump, like some grey-suited monster lumbering over the Los Angeles canyons. For an encore, they could crush their way up the coast to San Francisco and eat the computer game industry. And it still might not be enough.

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October 17, 2007

Empowering the User through CDRs

CDRs - Call Detail Records, the database entities that permit telcos to bill their users - are getting a bad press at the moment with the latest revelations about US networks’ willingness to let the NSA dig through their databases without getting warrants or accepting any other quaint legal restrictions.

But at Telco 2.0 yesterday, we heard how CDRs might actually empower the users in a Telco 2.0 future. Keith Wallington of mobile SIP insurgents Truphone suggested that “in the future, this will be bigger than mobile number portability”. Wallington proposed the ability to have calls routed intelligently depending on your preferences and the patterns of use revealed by network data. And this brings us right to his point.

If all your contextual services depend on the contrail of signalling data you leave behind in the operator network, the ability to take that information with you when you churn is going to be crucial. Perhaps we need a right to claim our data; however, the really important point is as always the practical implementation of such a thing, just as it was with number portability.

So, of course, are the legal and privacy problems; the incentives for the operator to implement a platform for interesting contextual services are all about the clever things the operator could do with the data, but the strongest protections for user privacy essentially rule this out. If the user data, for example, was encrypted with a key the user controlled, the user could grant access to it for each service they wanted. But the operators will insist on being able to analyse the data themselves; or they probably won’t do it.

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October 8, 2007

Nokia’s dilemma: operator friend or foe?

One of the interesting questions in our online survey on the future of broadband is “who will own the network?”. The current results for cellular-style networks look something like this:

The points of note are that a lot of people think the mobile operators need to increase their efforts at sharing networks; and Openreach-style regulated structures from the fixed side aren’t so popular for wireless. (If you’ve not done the survey yet, you’d better click here quick and contribute your opinion too — and you’ll be on the mailing list to get the free summary results, which you won’t otherwise get.)

However, one respondent came back and asked me why I didn’t offer the handset providers or network equipment makers as an option (at least we had an “other” box!). Which set me thinking — why would someone vertically integrate the different parts of the mobile value chain? This is distinctly topical since Nokia has been busy entering the services space with its Ovi music and entertainment store (which potentially competes with operators, even if not intended to). They’ve also just bought Navteq, which offers an opportunity to bypass operators by baking the mapping data into the device.

We’ve done extensive work in the past for the mobile handset vendors on the co-opetition they have with network operators and how to manage that in an all-IP world. So let’s ponder Nokia’s situation and what their “Telco 2.0” strategy ought to be. Despite their protestations of being an Internet multimedia services company, they’re still a mobile phone maker at heart, and their destiny surely depends on how the core voice and messaging experience evolves. (This will also be the focus of our debate at the Digital Product Innovation Summit at the Telco 2.0 event next week.)

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Going Over The Top: MXit

Mixit is the root of all evil whether controlled or not…Hermanus - (creator of mixit) I hope you sleep at night cause I’ve prayed many times that the fleas of a thousand camels with infest you!! (Link)

Surprisingly, this remark about South African hit mobile messaging app MXit didn’t come from a telco marketing director. Neither did it come from a telco data network engineer struggling to cope with demand. In fact, its author was more worried about the content of messages than their quantity; but being common carriers, of course, telco people should be quite the reverse.

And MXit should be giving you nightmares. Since its launch in 2005, the service has been recruiting users at a rate of 10,000 a day. It’s one of the first examples of a really successful over-the-top strategy in mobile; the heart of the service is an instant messaging client that uses the mobile packet data channel and the Internet. But as you will see, it’s far from being “just” mobile IM.

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October 4, 2007

Evolving Internet ‘Platforms’ - Lessons for Telcos?

Says über-geek Marc Andreessen (Co-Founder of Netscape, and ex-CTO of AOL):
“One of the hottest of hot topics these days is the topic of Internet platforms, or platforms on the Internet. Web services APIs (application programming interfaces), web services protocols like REST and SOAP, the new Facebook platform, Amazon’s web services efforts including EC2 and S3, lots of new startups talking platform (including my own company, Ning)… well, “platform” is turning into a central theme of our industry and one that a lot of people want to think about and talk about.

Indeed. Andreessen is certainly right to say that there is a lot of confusion about it, too - we mentioned this in our post on jNetX. In an attempt to clarify this, he defines a platform as any system capable of modification by the user; we broadly agree with this. What we find more interesting is his three-way typology of platforms, and the importance he attaches to them.

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October 1, 2007

The Future of Messaging and its Role in Mobile Advertising

As we discussed back in August, it’s been 15 years since the first txt msg pinged into humanity’s consciousness, between two engineers at a company we used to know as LogicaCMG but now call Acision. LogicaCMG’s Telco Products division, which has now been spun off into Acision, is best known as the world’s leading maker of SMSCs (Short Message Service Centres), the machines that handle SMS messages.

But it’s not all they do.

Below is a Q&A with Steve Van Zanen, Acision’s VP of Marketing, covering the future of messaging, the role of IP, mobile advertising and strategies for saturated vs emerging markets. (Steve and colleagues will be joining other expert stimulus presenters at the Digital Advertising & Marketing Summit, and the Product Innovation Summit - Voice & Messaging 2.0 - both on the 16th October in London.)

Telco 2.0: How far do you think subscriber growth in mobile has still to go? We’re already well into the majority phase of the Bass diffusion model; at what point will all the people who can have phones have them?

SVZ: I think there is still a huge amount of growth ahead of us. In terms of subscriptions, for instance, we can expect at least another billion net adds over the coming 4 years as penetration levels are soaring in regions like the US, China, India en Latin America. If we take SMS, as an example, volumes are expected to double from 2 to about 4 trillion per annum. Even in highly penetrated markets the ‘basic’ SMS service is still growing in terms of both penetration and frequency of use.

We shouldn’t forget that the mobile device, in the end, is just a channel for a rapidly expanding range of services. In markets where everyone already owns at least one phone, it is service innovation which represents the key area of growth. From our point of view, enabling operators to provide innovative services at high volume and performance levels is a definite growth area.

Telco 2.0: Text-messaging is the mobile industry’s gift that keeps on giving. Your infrastructure products are already migrating to IP. How rapidly do you expect messaging traffic to migrate to its own IP-based solutions, such as the various instant messaging apps? Will we see widespread adoption of IP-based SMS origination bypass services (e.g. Vyke, smsbug)? How might it affect operator pricing and revenue?

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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 6, 2007

Rave Wireless at the Digital Youth Summit

This year’s Telco 2.0 Executive Brainstorm is rushing up at us with telco-shattering force again, and that means it’s also soon going to be time for a ‘Summit’ session focused on the ‘Digital Youth’ market. Pushing on the debate from the last session in March, we’ve invited some interesting people to tackle in more detail the paradox of a market segment that’s neophilic and increasingly rich (in mature markets at least), but is also dramatically turned off by obvious efforts to appeal to it. For example, there’s Raju Rishi, COO and co-founder of US-based company Rave Wireless.

Rave gets around the paradox by primarily doing business with universities and schools, not with the youths themselves; essentially it’s a MVNE (Mobile Virtual Network Enabler) that creates micro-MVNOs for these institutions, buying bulk capacity from whichever carrier suits. The carrier gets a targeted marketing effort to shift bits, and the institution doesn’t just make a turn on the deal, but also gets to chuck out its desk phones without needing to buy a ton of SIP or UMA devices and a huge LAN upgrade. You can do that when you are your own telco.

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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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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 14, 2007

Facebook: a voice & messaging competitor?

We’re wary of crying wolf about threats to core operator voice and messaging revenue. Too often you end up vigorously licked by a cute puppy instead of viciously dismembered by some noisy new disruptor.

For example, Skype still represents only around five percent of global voice traffic, and most of that appears to be incremental to paid PSTN use. Only the narrow segment of international calling cards got hit. On the basis that your enemy’s enemy is your friend, and Skype also drives voice termination minutes and broadband uptake, the short-term impact has probably been positive. Skype was a form of “better telephony” but hobbled by the form factor of the PC — “much worse handset”, and thus served different needs from traditional fixed and mobile services.

We’re not so sure that complacency is in order when it comes to the new challenger for user attention, social networking services (SNS). Chatter has been a function of the Internet from before the Web; and indeed geeky users were communicating via bulletin boards long before even home Internet access became the norm. People have always been far more willing to commit time and money to talking with each other than they have in absorbing packaged media goods. The proximity of music, video clips and celeb gossip is just fodder to feed the users’ conversations.

We’ve been thinking about this area as a prelude to our forthcoming Telco 2.0 event and Digital Product Innovation Summit. So this is the first part of the Telco 2.0 outlook on the social networking phenomenon and what it might mean for operators.

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August 8, 2007

Happy Birthday, SMS

SMS celebrated its 15th birthday in July this year, demonstrating just how remarkable the service is - still at the top of its game long after many younger mobile applications have died a death. SMS is often called the “accidental hero” of the mobile industry, but just what is its history? Steven Van Zanen, VP marketing for Intuitive Messaging at Acision - the company formerly known as LogicaCMG - gives us the low-down. (You can meet Steve and the Acision team at the Telco 2.0 event in October.)

As we all know, the Short Message Service (SMS) is a means of sending short messages to and from mobile phones. SMS was defined as part of the original GSM standard in 1985 as a means of sending service messages of up to 160 characters to and from GSM mobile handsets. Since then, support for the service has expanded to include alternative mobile standards such as CDMA networks, satellite and landline networks. At the time of inception, just what this messaging capability would be used for was not immediately clear - some were planning for telemetry, some thinking of voicemail or service alerts, but person to person messaging? That was never the plan.

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August 2, 2007

What Stops Marketers Creating Solutions Customers Want?

As many of you know, we are in the middle of an ambitious research project looking to tap into a global panel of experts to forecast revenue scenarios in the Telco industry for the next 5-10 years. As well as gaze into the future and set the Telco industry to rights, we also felt it would be beneficial to consider how service providers and vendors can improve their propositions and products NOW. There is a lot of talk about ‘innovation’ in the industry at the moment, but what needs to be done to turn the words into effective action?

We have decided to undertake another (much smaller) piece of analysis to test our hypothesis about what is inhibiting innovation in marketing and product development departments today and what needs to be done to improve this situation. In this post we outline our hypothesis. At the Digital Product Innovation Summit in October (part of the Telco 2.0 event), we will feedback the results of our interviews with senior marketing executives from across the service provider and vendor community, presenting delegates with an ‘insider’s view’ of the current drivers and barriers to proposition/product innovation and a set of recommended actions to improve this.

Our Hypothesis:

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July 25, 2007

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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July 18, 2007


An SMS message! Who’s it from?

TELCO. (They can be anonymous for now.) Apparently they think I might be travelling to Europe, and therefore that I might want to know about their new roaming rates. Fair enough - that would be some of the contextual messaging stuff the people at Acision/ex-LogicaCMG Telco Products are always talking about, no?

Well, it would if I actually was travelling to Europe. Given that TELCO knows my phone has been in the same cell, near my home address, all day, you’d think they would have thought of this - strikes me that the trainload of phones zooming along the Channel Tunnel Rail Link every 30 minutes or so must show up quite impressively in TELCO’s switching centre as a lot of the same devices sending CC SETUP messages very quickly indeed.

They’re probably more likely to be heavy mobile users than the general population, too. Similarly, Heathrow Airport is full of people who certainly are travelling to Europe, as well as picocells deployed in the sprawling terminals..there’s surely an opportunity here to put some of the talk about advertising that “users will value” into effect, by targeting devices that have just turned up in those cells.

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April 25, 2007

Is SMS under threat?

One of our Telco 2.0 event speakers, Tomi Ahonen, has written a passionate eulogy on the end user joys of SMS. We’re soon publishing our Consumer Voice & Messaging 2.0 report, and have been looking at the evolution of arbitrage and toll bypass schemes. Will the future be as rosy for operators as it is for their customers? Could SMS revenues be under threat despite growing volumes and adoption?

At the event we ran some survey questions on the first day with the full plenary audience. Given that SMS is a super-high margin product delivering between a third and half of most mobile operators’ profits, we asked if this service could be Skyped? These alternative services let you connect to a third party SMS gateway over the Internet (using GPRS, 3G, or Wi-Fi) and send SMS messages at well below standard operator prices. It’s much more plausible than VoIP displacing mobile voice, since there are few quality of service issues sending a one-off message.

The question we asked was:

What proportion of SMS messages will be originated from non-operator third-party services in 5 years time?

The results were quite interesting:

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April 19, 2007

Vonage’s woes and “better telephony”

The hot VoIP gossip at the end of last week was the departure of the Vonage CEO following a legal assault by Verizon over patent infringement, as well as some disappointing financial results (increasing customer acquisition cost, stagnating customer revenues).

Any pundit loves to point to correct predictions (whilst quietly letting the duds slide into the memory hole), and we’re no exception. Over three years ago, we forecast that Vonage’s business model was a dodo and wouldn’t fly. If your sole value proposition is access arbitrage and low price, you will lack differentiation from landline voice, and be subject to regulatory attack that raises your cost base to comparable (or even higher) levels to incumbent operators.

So, what could they have done differently? Here’s a sneak preview from our forthcoming report - Consumer Voice and Messaging 2.0:

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February 19, 2007

‘Free’ as the new ‘Premium Content’

Short version: The ultimate high-margin premium content is an international roaming call, and anything that provokes one — even if you need to forego some revenue to create the stimulus — is a net positive.

Long version: Sometimes, you’re just plain wrong. For the forthcoming Consumer Voice & Messaging 2.0 report, I’d been planning a section on “The end of pricing plans as the focus of competition”. In doing my research, I’m coming to nearly the opposite conclusion: there’s lots of mileage left in mining out pricing. It’s just buried deeper — North Sea oil, not Persian.

If you’ve survived a basic economics course, you’ll have seen supply and demand curves. The more you pay, the more the supplier is willing to supply. Today’s telco pricing has worked by segmenting the market and offering a handful of bundles at fixed price points along the supply curve to cater for the different demand curves of various market segments and usage levels. A few operators (e.g. Sprint’s Fair and Flexible and T-Mobile’s Flext) have taken this to its logical conclusion: rather than offering a few discrete choices, let the user pick any point along the curve. Hence the thesis that there’s nowhere more to go — every combination of geography, service, timing and quantity was being covered off.


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February 5, 2007

Telco Services Survival Strategy: Open, Focused, Collaborative

In our previous post we looked at the challenges of understanding the true end-user value in existing and new services. So what does this mean in practise for network operators looking to deploy new voice and messaging services?

Well, nobody really foresaw the rise of SMS, or why it was so compelling to users. We’ve learned our lessons, but it’s still hard to tell whether new services and features will be successful. Value analysis is difficult. Hence the Web 2.0 phenomenon of the eternal beta product: you’re never finished, because you’re always trialling and retiring features to learn where value lies. It’s not embarrassing to be less than omniscient about user needs, since they themselves don’t know how they’ll use tools that don’t exist yet.

So should you push feature innovation and differentiation? Or should you insist on cross-operator standardisation — raising all telco boats, but to the same level?

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Sources of Value in Messaging and SMS

As part of our forthcoming Voice & Messaging 2.0 report we’ve been researching every innovative new application we can get our hands on, looking for common themes. A skill we think most operators could do more to develop is understanding what the true sources of value are in their products. The problems of MMS are the obvious case in point, but the absence of compelling examples of IMS-based use-cases beyond PSTN replacement suggests a deeper lack of insight as to what creates value and what the telco role really is.

Let me take as an example some work I did for a mobile handset vendor some time ago, decomposing the value proposition of SMS. (You can see similar work for voice services from my O’Reilly Emerging Telephony keynote last year here.) Once you understand how you create value, you’re in a better position to create profitable products and partnerships.

The basic misconception is that transport of the bits always constitutes the value of the service, just because that’s how we market and bill for it. This results in endless analyst reports with tables like the following (we’ve made up our own to protect the guilty):

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January 25, 2007

Voice & messaging survey: first impressions

We’ll be closing our Voice & Messaging survey early next week, so if you want a freebie copy of the summary results, you need to get going and complete it now. If you just do the mandatory questions it takes about 15 minutes.

We’ve had a few surprises. Either the Prozac’s been on special offer this month, or things are looking up. You’re overall quite positive about revenue growth in mature markets — but opinions are divided. We’ll be doing some “slide and dice” to find out who and why.

There’s a lot more appetite than we expected for operators to engage in product and feature innovation. We asked:

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January 4, 2007

Are telcos communications companies?

The return-to-work week at the beginning of January is always a time for reflection and self-examination. We continue the theme of “What industry are we really in?” with some thoughts about personal communications.

The question for operators is: to what extent they should be innovators in their core voice and messaging products? After all, these services still account for the majority of the revenue of most telcos, be they fixed or mobile.

It’s an old debate, but one which in 2007 will take on a lot more significance as the march of technology releases us from the constraints of legacy infrastructure. Broadband has become mass-market in developed countries. Some smaller operators like Telio already have all-IP infrastructures. The leading-edge incumbent operators are getting close to launching IP-based replacements for much of their legacy equipment. Mobile operators are making similarly heavy technology investments to enable fixed-mobile products. Wi-Fi marches on and the power, QoS, security and provisioning issues start to ease. WiMax reaches the market, and creates new possibilities in markets with weak or no fixed access.

Customer expectations are rising

The rising Digital Youth generation of users aren’t going to stick with 1990s telephony and messaging products forever. The decision time is approaching:

  • Invest in core communications service innovation, define differentiated software and devices, build channel.
  • Partner with someone else who has these capabilities, and be a platform enabler for payments, service, logistics, etc.
  • Exit the services space, and focus on pipes — or diversify into other areas.

At the moment we see a confusing mix of these in the market — as our survey results have confirmed. So, if you do engage in services innovation, where should you focus your money? We think we’ve got a slightly different angle on the problem.

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December 21, 2006

Telco 2.0 ‘Disruptors’ - Packetmobile

This is the second in our series on “disruptors”, who combine both new technology and business tactics. We’ve chosen them because they aren’t just arbitrage plays (even if they can be used that way), and they present opportunities for operators as well as realistic migration opportunities to an all-IP world.

Today’s is the mobile IM and VoIP service from Packetmobile. Whilst there are several technology competitors out there, we think their operator-friendly approach deserves a lot more attention than most.

In our ongoing Voice & Messaging Survey we got a big surprise to this question:

In competing with Internet voice and messaging services with rich functionality (e.g. IM vs. SMS, Skype vs fixed line), rank each of the following tactics: FIGHT, EVADE, CO-OPETITION, CO-OPERATION, RETREAT.

(The full descriptions are in the survey — off you go, if you’re burning time reading blogs, you’ve got 15 minutes to spare to do the survey, and you’ll get the summary results for free when we do the analysis next month.)

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December 14, 2006

Voice & Messaging Survey

In the new year we’re launching a report on the future of the operator voice & messaging businesses. We’d invite anyone with an involvement or interest in this area to complete this survey. It takes around 15 minutes, and all but two of the compulsory questions are multi-choice.

All those who complete the survey (and don’t just enter their names and email addresses!) get a free copy of the summary results in January.

We’re still processing the results of our earlier Telco 2.0 survey — thanks to the over 500 of you! Some of the highlights will be posted up here on the blog (we’ve done some already). The full results will be in the second edition of the Telco 2.0 report, coming out soon.

You can also look forwards to another survey soon on advertising-funded services within the near future, as we’re exploring this as an opportunity area for network operators.

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December 7, 2006

Value-based vs. abundance pricing

If there’s one thing telcos are indisputably king-of-the-hill at doing, it’s value-based pricing and tariff obfuscation. Even the airlines with their sophisticated yield management systems and variable pricing don’t come close. The airlines’ forte is price discrimination, which is selling basically the same thing to different people at different prices based on willingness to pay. Airline prices are easy to compare, and the product is fairly homogeneous — we fly you from A to B.

Telco bundles are deliberately fiendish to compare. The services are quite diverse (e.g. SMS, video calls, broadband, handsets and a zillion phone call rates), which gives plenty of scope for innovation in creating a unique non-comparable packaging of the offer. There’s a whole sub-industry grown up around this.

There’s just one, small, tiny problem.

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November 21, 2006

The phone company’s beautiful children

Last week we proposed a rather gloomy assessment of the long-term trends that ultimately erase the value of the traditional phone company as a business. Voice interactivity is becomes a feature of applications and services users acquire from an increasingly diverse set of sources. The play closes with the body of the phone company slumped in the stage corner, the spotlight fading to black. There is no villain, no violence; the victim died of loneliness and old age.

However, this theatrical production need not be a tragedy, let along a farce. Instead it can be a complex mystery, with an intrigue of possibilities of mistaken and revealed identity. There are things network operators can do to transform themselves so that when time is called on telephony they have moved on already. The phone company is dead, but a smart telco will have ring-fenced that business a long time ago and grown a replacement identity. We think it is possible: telesalvation follows telepocalypse. And we’re not alone.

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November 14, 2006

Death of the phone company

It’s 2.30am here in Helsinki, but my body clock is firmly locked onto Silicon Valley time. Sleep seems impossible, despite a perfunctory rest last night after arriving at the hotel at 3am. The alarm is anyway set for 5.15am to catch a flight to London, so maybe I’ll get a nap slumped up against another aircraft wall.

This hypothalamus abuse has served a good purpose, however. Jumping back and forth between the leaders in Internet and telecom, I’ve caught a glimpse of the future of communications. It shockingly lacks any involvement of a phone company as service provider, at least in any traditional sense.

Without betraying any client confidences, here are a few pointers.

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October 12, 2006

Friends and Family 2.0

I’ve taken to conducting all my telecom research in the departure lounge of Heathrow’s terminal 3. If there is a crossroads of the world — Shibuya writ large — this is it. (Kansas City likes to promote itself as an international airport based on one flight a day to Toronto. Heathrow is so secure as the world’s top intercontinental airport it doesn’t need to shout. Although I pity anyone who ever has to navigate the northern perimiter road to return a rental car.) My last visit to LHR, I was perched at the T-Mobile wifi outlet, and it gave me a fascinating insight into Skype usage. I simply overheared the adjacent conversation between two travellers sat beside me on how they used Skype and it had changed their world.

Today’s intensive primary research was conducted with an abandoned copy of the Daily Telegraph. (For non-UK readers, they used to be nicknamed the Torygraph for their dogged support of the Conservative Party. The publication is having an identity crisis as the Tories turn social democratic and their aging supporters shuffle from the news pages to the obituaries.)

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September 12, 2006

FMC: Do the users care?

Flavour of the month in telcoland is the idea that fixed-mobile convergence (FMC) will save voice revenues from collapse, extend high mobile termination fees into new domains, eliminate churn and generally make investors rich and executives happy (or was it the other way round?).

Needless to say, the Telco 2.0 opinion is that we’re unconvinced of the business case. The obvious thing to state up front is that the key fixed-mobile convergence feature was available on day 1 of cellular: the ability to call between fixed and mobile phones. So we’re only looking at some relatively small improvements compared to that monumental advance.

The problem is that FMC tends to be a network-centric vendor and operator solution in search of a user problem. Pretty much every aspect of the FMC value proposition can be replicated (at least in part) by cheaper, simpler solutions. Therefore whilst we see user benefit, we don’t see rewards that justify sky-high investment in network equipment and marketing. Someone else can come in with 80% of the solution at 20% of the cost and ruin the economics.

So what’s the user problem?

  • Handoff between fixed and mobile networks? This is already solved for mobile-to-fixed! You just keep your mobile on. The other direction just doesn’t make sense: going outdoors generally means putting clothes and shoes on, or driving a car. The use case just doesn’t seem compelling.
  • Single device? My smartphone can do WiFi calls already. No new network required. Given the chipset can do FM radio, Bluetooth, 2G and 3G, I suspect it’s not beyond the bounds of possibility the throw in DECT too.
  • Single address book? This could be done by other means. For example, an enhanced DECT phone — even without broadband — could dial a freephone number in the night to sync with a networked address book. Or you could put a SIM slot in and just shuffle the data around that way.
  • Single inbound number? Easily emulated with call forwarding, and bundling/pricing changes would erase the cost issue. With ever larger buckets, mobile-to-fixed forwarding isn’t expensive anyway.
  • Single outbound number (i.e. same caller ID presented to anyone)?. Easily emulated today by IP services — just as Skype confirms your mobile number before “faking” it as your ID for outbound SMS messages (using a code sent to your mobile you then have to enter into the client).
  • Single bill? Just pay by credit card and deal with it once a month, or direct debit and never think about it again.
  • Single voicemail inbox? More interesting, but doesn’t require IMS or UMA. After all, it’s nothing more fancy than an email inbox, and we have no problem managing multiple accounts today in a single client. Plus forwarding busy/no answer calls will solve the problem for you anyway.
  • Extend in-building coverage? The picocell/femtocell solution sounds like the way to go here: backwards-compatible, simple and incremental. (Just more bad news for UMA/IMS vendors…)

There’s benefit to the operator, no doubt. Getting the users to pay for their own backhaul, and lowering spectrum costs. Mobile operators have more control over service and handsets, and want to extend this control to the liberated fixed world. Yet the price in terms of customer service and support, dealing with user-supplied gateways and contention with bandwith-hungry P2P downloads and gaming just doesn’t seem worth the effort and hype.

So far FMC has only offered small distribution gains on “standard telephony”. What would make more sense would be to expand the “better telephony” opportunities of VoIP into the cellular device. Wideband audio, presence, privacy and improved multi-modal UIs. However, we’re not holding our breath. Unless we’re supposed to infer that downloading a Yahoo or Skype client to our mobile phones is the route to the converged future…

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August 30, 2006

The lessons for FMC operators from airphones

Today’s announcement by Ryanair that they plan to enable GSM roaming on their flights provides a useful lesson to carriers thinking of deploying fixed-mobile convergence (FMC) solutions. Historically telephones on aircraft have been a commercial flop. As we will see below, they have failed to satisfy the user need. It is possible most FMC technology has the same problem, but from the opposite direction: attempting to solve every problem at great expense to ensure lock-in, rather than the parts of the puzzle of most value to the user.

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August 4, 2006

IMS Reality Check

Just posted on the IMS Insider blog our ‘hypothesis’ for the IMS Services Forum, which runs in parallel with the Telco 2.0 brainstorm on 4-5 Oct in London.

The hypothesis trys to give some clarity re the purpose/status of IMS in the market, and is designed to provoke strong reactions from the IMS community. We will be discussing ‘antitheses’, and hopefully reaching a ‘synthesis’ at the event.

Summary: focus IMS on supporting better basic voice and messaging services, and forget all the futuristic combinational and ‘multimedia’ stuff.

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July 18, 2006

Should we build PSTN 2.0?

The Telco 2.0 team have been enjoying some much-deserved vacation time. One of the side-effects is it gives you intellectual space to ponder some of the big issues.

Our industry survey told us that defining the services that IMS is due to support is a big issue. We also know that traditional voice service dominates industry revenue. Unlike Internet-based competitors, this voice service offers ubiquitous availability (every device supports it), universal interoperability (“direct dial” isn’t even in the vocuabulary any more, it’s assumed), and sophisticated pricing and payment options.

What happens when you put IMS and voice services to together? What’s the evolution path? Is IMS only good for cost elimination of legacy circuit-switched gear? Or should IMS really be the bedrock of PSTN 2.0?

After all, the GSM Association has plans to keep the messaging money tap open by evolving SMS into mobile IM. Could the telecom industry out-distribute the Internet players in new voice services? Can “phone companies” extract enough value from their billing, identity, distribution, support and retail assets to overcome the inevitible functionality gap with nimbler Internet players?

Undoubtedly the challenge is steep, sufficiently so that many would hesitate to even ask the important questions:

  • Do the features of advanced telephony require common standards, or are most compelling features ones that each operator could deploy independently?
  • What would PSTN 2.0 look like if it came to pass?
  • How in practise could it be brought to life?
  • What are the competitive challenges and technical problems with it?
  • What alternatives are there to maintain revenue from voice telephony?

So, let’s lie back in the sand, plug in our headphones, move our sunhat over our face, and contemplate each of these.

As if by magic, my voice whispers in your ear from across the world

If I’m going to talk to you, we need to have a common means of doing so. The constraints of SS7 gave us a pretty uniform experience in POTS. Internet protocol creates a new neutral interface for underlying connectivity. SIP (despite some standards fragmentation and design problems) provides a common signalling mechanism, and likewise there’s no shortage of standard media codecs.

Yet, to create an application we need a common meaning overlayed on top of that SIP infrastructure. This is both a technical and social issue. To have the option of depositing a message directly in your voicemail inbox without your phone ringing, we need to agree the API.

I also need to know what your social expectation is. In today’s telephony, if I call your mobile number, it’s not my embarassment it wakes you at 3am in your hotel room whilst roaming on the other across the world. Add in explicit time zone support as an ‘availability’ feature, and it does become my concern. If you assume I ignored that information, when in fact I didn’t have access to it, we’ve got a problem. Without a common social framework, the application may break even if technically flawless. This implies a common underlying meaning (“semantics”) to the application, identities, service capabilities etc. with relatively small operator-specific enhancements that don’t disturb that.

So that answer to the question of “Do we need a new common application standard?” is “Yes!”. Features will cross operator/application network boundaries, necessitating common technical standards; and a common set of features is required to make the system socially scale. (I’ve also not mentioned resisting voice spam, which also demands no leaks and common defenses.)

The question is who gets to do it, and what’s the business model given the ultimately inevitible demise of the metered minute?

Features, features, everywhere

Before we get to the business model, let’s just look at what people actually do with existing IM/voice clients such as Yahoo! Messenger and Skype that they can’t typically do with a cell phone or landline:

  • Ability to send multiple media types (audio, text, emoticons, URLs, pictures, video, files) as part of a single conversation.
  • Presence, availability and “meta-presence” (e.g. additional mood text as well as “Available”).
  • High levels of privacy and access control via buddy lists, multiple identifiers and opaque directory data only visible to approved receivers.
  • Integrated directory, history and search of users and past communications.
  • Extension across multiple device types.
  • Always free on-net usage (that’s “free” without an asterisk).

They sometimes offer integration with voicemail or message storage systems, although the functionality and integration tends to be weak and may come at a price. Communications may also be encrypted, although this is not universal.

This list gives us the baseline functionality: this is table stakes. Yes, even free on-net calling between consumers once they’ve paid for the underlying connectivity — remember, we’ve already said last rites for the metered minute.

Yet this list tends to address the strengths of the IM players (i.e. PC software development) whilst ignoring those of telcos: payment, universal access (including businesses), advanced management, distribution and support, high quality, and strong identity (SIM cards, credit checks, or simply knowing where you live and who you are). Most notably, current IM systems fail to cross boundaries between consumers and businesses, as well as performing poorly at scaling to mass, open public use in the way the PSTN has (this requiring pre-approval as a “buddy” of potentially hundreds of people).

Thus we should expect additional features from a PSTN 2.0:

  • Explicit negotiation of any charges between sender and recipient of any media type, including voice calls.
  • Ability to bundle connectivity for free (“next-gen 800 numbers”) for all types of media.
  • Acceptance of multiple types of identity, not just phone numbers, and to behave appropriately in each case.
  • Strong forms of privacy to protect users from intrusion by businesses with whom they interact.
  • Conversely, the ability to reveal a great deal more identity information via digital means to businesses or other users. No more dictating names and addresses to bored Indian call-centre operators.
  • Integration of payment systems for completion of transactions with businesses.
  • Integration of all forms of device and personal identity into the communication. This offers stronger privacy protection and blurs the difference between a buddy and a general contact or address book entry.
  • Higher and more predictable service quality.
  • Stronger audit and encryption for commercial use.
  • Better integration with other identity sources (e.g. enterprise directories) as well as fine-grained role-based management of all these relationships.
  • Radically better voicemail and messaging, given the comparative advantage here to IM systems.

The roadmap for the telco telephony system thus diverges significantly from most of the Internet players. Adverts, auctions, entertainment content and operating systems take a second place to simple communication that scales beyond circles of friends to all public spheres. Some revenue may come from select premium features, such as centralised storage, or aggregation of capacity to enable conference calling. The big bucks come from from bridging the islands of consumers and businesses, as well as lowering the barriers to safe conversation between strangers.

A hard journey with many dangers where most get lost and perish

The soothing waves sloshing up the beach have lulled us into a dream state that allows us to imagine what the destination might look like. Is there any viable route from “here” to “there”?

This is where things start to unravel. Your correspondent naturally took a plane to the seaside, and discovered a few things along the way. Sending text messages whilst roaming sometimes simply doesn’t work: Message send failed. (You still get charged.) The “+” international prefix for making voice calls doesn’t work everywhere as it should; dial “00” as the prefix from your mobile phone, and the call goes through.

If the industry can’t get vanilla voice and messaging to work properly (let alone reliable interoperable MMS), what chance is there of executing on such a grand plan? And how likely is the target functionality going to fit the real needs of users (again, shades of WAP, MMS, and unused portals)? Services designed by committee don’t have a good track record of market traction.

The rapid iteration and permanent “beta” status of Web 2.0 applications is an outcome of Darwinian commercial evolution: anyone with a heavyweight approach to discovering real user needs went out of business in Web 1.0. Few telcos are likely to acquire such competence; and a mass outbreak of excellence at application design and implementation is even less likely.

Thus the Telco 2.0 suspicion is that operators have only weak competence at the content and applications space. Timescales for deployment are glacial — and like the glaciers, such efforts are prone to melt and disappear before their time. It is necessary to specialise in the horizontal functions you do well. That means realising some of the same commercial goals of liberating value from payment, billing, identity, etc., — but without the baggage of application and hardware design that defining a full service entails.

So, how do we get the feature list and revenue, but without betting everything on one particular application architecture?

Collaboration, collusion or cartel?

We already have the capability to replicate POTS using SIP and ENUM. However, the definition of advanced features is almost totally absent. Rather than invent a new application called “PSTN 2.0”, it may be necessary to take a more nuanced approach. To see why, you need to understand the competition.

There are thus two ways in which common technical and social understanding of a communications system can come about. A group of telcos and vendors get together to create a new public standard, or a private entity grows to become such a de-facto standard. An analogy might be with payments: “Cash 1.0” was based on analogue paper and only required you, a government (the public standard issuer) and the merchant with no interlocutor. “Cash 2.0” is digital and tends to be mediated by a private payment network such as VISA.

Ideally, telcos would like that private entity to be themselves, collectively — just like VISA and the banks.

Ultimately, the telecoms operators are competing against a number of other players: the Internet giants, media companies moving into social media and communications, and transactional players such as those same banks as well as Ebay/Paypal/Skype. We suspect the industry is going to polarise as a number of associations based around different scarce resources: telcos and their licensed spectrum; commerce hubs (Google, Ebay) which introduce buyers and sellers; Microsoft, as a 3-way network effect between users, software/interactive content developers, and OEMs; and media players like Yahoo! and BSkyB/News International. Whilst the telcos think they’re competing against each other, others plot to snatch away the pie before the winner is chosen.

So if the network operators might struggle to define new application standards, they instead need to ensure they win regardless of the power struggles between the above axes of power. That means adopting a platform play around the assets the others lack. This is a much richer idea than just technical APIs, and broader than IMS. It means defining means of access to billing, distribution, logistics and support systems — in other words, the whole business, not just the network.

Perhaps the best current example is SMS short codes. These are a very simple instance, but you can easily imagine a common platform for creating and managing these; standard means of short code business customers interfacing with the telco CRM and support systems; common interfaces to manage payments and refunds, and so on. A business platform, not (as with IMS) just a technology platform. The seed is there; it just needs watering and fertilser to grow.

The network operators will have to work together to protect their turf. This, luckily, is something they are more than accustomed to doing. It will require some careful positioning with the regulators, however, for them to see that genuine inter-system competition is emerging, and that real public benefit is being generated. Moving from technical standards to common business standards carries political risk.

Fight for your right to profit

The “phone companies”, for want of a better term, are at risk of carrying all the costs of the physical infrastructure (network and distribution) and messy credit and fraud management, whilst receiving few of the spoils. The traditional telephony system will slowly erode, as new forms of communication that are more convenient to their context encroach, and people with powerful hubs external to the industry use their leverage to the maximum.

At the moment, the telephony industry isn’t even in the ring to put up a fight, having lost its confidence following a half-decade of doldrums and decline. The worst-case outcome a decade hence is that Skype takes the 800 number business through integration with Ebay and Paypal, Yahoo the premium call revenue by extending other premium content businesses, some unheard-of upstart the consumer-to-consumer calls (“MySpace/MyTalk”?), and Microsoft/Nortel federate every business communications server. Many other combinations are plausible — pick your own bogeymen. In each case, the telco outcome is bleak.

The escape route is a “Telco Industry Inside” platform approach that ensures consistency and interoperability, low cost of development to business users, and an unaccustomed openness. The outcome may not be called PSTN 2.0, but a Telco 2.0 platform and connectivity business will most certainly lurk underneath.

Sunny days beckon if the right moves are made, even if immediate retirement to a beachside property remains a distant prospect.

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July 5, 2006

Worse quality, more profit?

Following on from our paradoxical suggestion of free products generate more profit, we can see another potential lesson from outside of telecom on price discrimination based on quality.

According to the combined distribution and ediorial forces of The Register and The Guardian

Universal Music Group is to bring no-frills CDs to the UK in a bid to match the iTunes Music Store’s price point. The scheme targets old, back-catalogue releases rather than new or recent titles. […] Universal will split its CD line-up into three formats. The cheapest series is expected to retail for just under £7. The CDs will ship in a simple card slip cover with no booklet. […] The other two are the standard jewel-case package and a double-pack which bundles as DVD with the CD.

Traditionally VoIP has offered somewhat variable quality over best-effort networks. The alternative is substantial investment to implement QoS and network-based session management. But what if we took a differenet view, and saw such quality issues as a price discrimination virtue, not a technology vice?

In this case we have an opportunity to give away the low-end product to entice customers in for the up-sell to the premium experience, or to cross-sell calls to those that offer higher revenue potential?

Are you missing opportunities to promote access to non-geographic, premium, personal numbering service, freephone or international destinations? How could you re-invent your pricing to encourage users to feel more comforable paying significant roaming or Wi-Fi fees as part of a bigger apparent bundle of value? What sub-prime services could you offer to gain the user’s attention and affection? How does the need to price discriminate affect your IP services vision? Is delivering maximum quality in all circumstances really the right approach?

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June 30, 2006

Voice and Messaging 2.0 - HYPOTHESIS

To help structure our thoughts on Voice & Messaging 2.0 (“Telephony & SMS meet Skype and Yahoo”) - for the workshops we do with clients, for the research we do on the topic, for this blog, and in preparation for the Telco 2.0 Industry Brainstorm where there’s a major breakout focusing on this - we’ve put together a ‘Hypothesis’, an ingoing point of view to stimulate debate.

The ‘hypothesis’ looks at: Situation, Complication, Question, Answer. We’d be very interested in your thoughts.

VOICE & MESSAGING 2.0 - how to make more money out of core comms services

1.) Situation:

• Erosion of user-to-user voice revenue: marginal price of zero on landline, rapid drops on wireless as bucket sizes grow.
• New entrants: fixed into mobile; mobile into fixed; new competitors (traditionally structured as well as novel).
• Regulatory pressure on mobile termination and roaming rates.
SMS margins healthy, but market saturating.
• Large, generally unmonetised VoIP and IM traffic from Internet providers.
• Growth areas in premium/non-geographic/personal numbers; and premium/shortcode SMS.

2.) Complication

- Almost all voice and messaging services are relatively undifferentiated against each other.
- Internet IM systems ultimately threatens bulk of SMS revenue, with an expectation of “free”.

Continue reading "Voice and Messaging 2.0 - HYPOTHESIS" »

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June 23, 2006

New Product Development - Lesson from Old Media

Interesting example here of ‘Media 2.0’ and very relevant to Telcos looking to develop new services that add value to what users already do each day, rather than trying to get them to do new things at huge cost to the telco (eg. mobile TV).

In this case it’s Old Media - the Guardian newspaper in the UK - applying some relatively simple (low cost) technology to improve the customers’ everyday experience with a simple, potentially very ‘sticky’ service that leverages the newspapers core skills and assets, and opens up more opportunities to advertisers. Those should also be, of course, the key criteria for telco NPD (‘Voice/Messaging 2.0’).

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June 21, 2006

Spam: a telco’s best friend?

A Skype user reports his first telemarketing spam:

While having a conversation with my friend, Joe Klein, of the PodcastVoiceGuys he told me that he had another call coming in and asked me to hold for a moment. A couple minutes later he came back on the line and told me that the call was a recorded message that appeared to be a telemarketing pitch-in Spanish!

Joe said he couldn’t believe that he just received what he thought to be a telemarketing call on Skype. I jumped out of my skin, realising that this ghastly plague may already be affecting the vast Skype community!

It has long been obvious that the price of telephone calls between people who know and trust each other was heading towards zero. The good news is that not everyone knows or trusts each other. Here lies a possible replacement revenue stream for the metered minute.

Unlike with email, telephony has traditionally always come with a bill attached. That billing could be used in new and innovative ways. When Alice wants to connect with Bob, Bob may set a toll price before someone requests to become a buddy. If Bob accepts your request, Alice pays nothing. If Bob rejects it, Alice loses her stake, with a commission to the telco.

There are many other possible variants of the scheme by which Alice and Bob establish their relationship and excluse those who would otherwise abuse our attention. No matter which one is the right one, you know that by the time the talk starts, the opportunity for a telco to make money has stopped.

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June 19, 2006

Telco’s Get a Helping Hand from Tom Tom

I installed Tom Tom Navigator 5 on my Treo 650 over the weekend. It’s not quite as easy as they make it sound on the box - I finally confirmed that I live where I thought I lived at 1am this morning (having started the process at 11pm on Sunday night).

However once it’s set up, it works like a dream and has a really simple interface - Tom Tom have done a great job with the software. One thing I really liked was that they have pre-loaded loads of useful contact numbers for Petrol Stations, Restaurants, Hotels, Airports, Parking and other things. This means, for example, that if you want to call a local restaurant the GPS system will give you telephone numbers based on their proximity to you and it is a simple click to be connected. I suspect that if you are travelling to someone who is in your contact list, you can also click to call them (and tell them, for example, you are running late). I haven’t yet discovered this feature but I am sure its there.

What a great example of providing connectivity for people in a contextually relevant way. This is just the sort of thing the Telco’s should be doing. After all, it is they, not Tom Tom, that benefits from this feature through increased Voice and Messaging revenues. I am convinced there is a great opportunity for Operators to push harder at working with software developers to ensure that Telco network services are integrated with software applications so that it is really EASY for users to spend money on Telco products.

Anyone got any good examples or ideas?

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June 14, 2006

IPTV - effective business case lacking

An article today about the value of IPTV and Triple play re-iterates the analysis that’s in our Telco 2.0 Report: many more opportunities to innovate in voice and messaging and leveraging mobile to support upstream advertisers/retailers than in content per se.

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

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