Telco 2.0

Telco 2.0 News Review

Mon, 08 Feb 2010 11:11:53 +0000

Top Stories

Broadband and Fibre: BT: all right, have those ducts
Strategy and Finance: T-Mobile USA merger rumours - mmm, spectrum
Online Video Distribution: Everyone loves WLAN managed offload
Advertising: Apple: they're planning something location-based
Technology: UFO spotted among the Google clouds - what is 1e100.net?

Potentially seismic news in the UK: BT changes its mind on duct-sharing. Both OFCOM and the Conservative Party are keen on the idea - OFCOM had a survey of some ducts carried out, and discovered that a surprisingly large percentage of the UK's telecoms infrastructure is full of raw sewage, and the Tories have threatened to legislate to force BT to provide ducts if they win the election. Mind you, they also threatened to abolish OFCOM - work that out. It's a major turnaround for BT, which not so long ago wasn't even willing to provide street cabinet access for the South Yorkshire Digital Region project.

As Richard Kramer pointed out at the last Telco 2.0 Executive Brainstorm, telcos have cash, and one thing you can do with cash is burn it through ill-advised mergers and acquisitions. Connected Planet runs down the rumours about the possible fate of T-Mobile USA; DTAG is apparently considering its options, including floating the network and cashing out, selling it to AT&T, or perhaps trying a three-way merger with the surviving regionals, MetroPCS and Leap Wireless. They make the excellent point that there is a potential fit between T-Mobile's odd 1700MHz spectrum hoard and AT&T's (also unusual) 850MHz 3G net - it's apparently easier to find datacards, dongles, and embedded devices that work with T-Mobile's network, so the 850s could be an overlay network for voice and messaging while much of the heavy data lifting gets offloaded to an urban-centric 1700 network.

Offloading heavy data is a bit of a theme at the moment. AT&T has just cleared the mobile version of Slingbox for launch; that's going to be a bandwidth hog of significant proportions. At TelecomFinance the other week, O2 veep Mike Short was rather proud of all the extra WLAN hotspots they'd acquired in advance of getting the iPhone. Now, Brough Turner has a must-read post on exactly why WLAN managed offload makes more sense than femtocells. He points out that between 96 and 99 per cent of all mobile data usage is heading for the open Internet - so making it transit a mobile switching centre or even just an RNC is pure cost. (Stick a fork in IMS.) Further, WLAN equipment is better than ever and cheaper than femto. And enterprises aren't keen on femtos their spiked-collar network admins don't control.

What's missing? Obviously, a wholesale business model to link the fixed and mobile operators, as well as a smarter telephony client to route voice traffic via the femtocell and the NGN GAN interface. It's almost as if we'd already done it...it's part of our Use Cases project, a key element of our new broadband business models strategy report, and will be a major theme at the next Telco 2.0 Executive Brainstorm.

Speaking of infrastructure and WLAN, there's a great piece at Wired on building a radio network in Haiti with the art of long-range Wi-Fi. Relatedly, TelecomTV discusses SMS after the disaster, and who's sticking to the donations.

Indian 3G watch: BSNL is now targeting 760 cities for roll-out by September, with 400 to be ready by the end of March. Meanwhile, their massive (93 megasubscriber) GSM network buy has been referred to the Indian prime minister's technology advisor, holding it up yet again. Vietnam's MobiFone reported revenues up 52%, as it approaches a planned privatisation. In the UK, OFCOM wants to hike the maximum power limit for 3G operations to 68dBm (it's logarithmic - that's a fourfold increase).

The FCC, on the other hand, doesn't like "cell boosters" - devices that rebroadcast mobile network signals - as sources of radio interference. Come to think of it, they're also potentially great solutions for man-in-the-middle attacks on the cellular network...

Apple seems to be warming up to do something with location-based services. They've filed a patent for an application that shares your location with people who call you (this is questionable - quite a few very similar applications already exist), and they've forbidden App Store users to offer anything containing location-based ads. There's more here, including a very general patent that would seem to claim rights over any LBS at all. Apple, the patent troll? You wonder what Google (think Local Search, among other things) will make of that.

In fact, the big Google story this week was a new piece of G-infrastructure - 1e100.net, a domain that other Google applications and Web pages seem to like talking to. In fact, they fire off constant reverse-DNS queries to it; leading theories about it centre on it being part of Google's global virtualised-datacentre infrastructure. It may be that the applications look it up to be informed which set of Google servers to connect to, as part of an Akamai Edge Computing-like applications CDN; or alternatively, it may be that it's a way of monitoring demand for Google services across the Internet, and informing how work is distributed around the Google cloud.

Or perhaps it's something to do with this - a partnership between Google and the NSA. So far it's apparently about analysing the Chinese hacker incident, but you can see why everyone's paranoid...meanwhile, the EFF is campaigning for a list of tech companies to own up to how much money they made selling spying gear to China.

Meanwhile, TCP inventor Vint Cerf says we need a new set of protocols to make sure that different clouds can interwork and to prevent customers' data from being locked in to any particular vendor. (And he works for Google...) Where Google goes, it's a fair bet Cisco won't be far behind. Cisco is upgrading its Nexus 7000 routers to improve their capabilities in routing traffic within a cloud of virtualised datacentres - the technology, called OTV, encapsulates Layer 2 Ethernet packets in IP so that multiple data centres can be managed as a single LAN.

And Microsoft wants data, so much so that it's letting the US National Science Foundation move a lot of data-intensive projects into its Azure cloud. Did you know some genetics work can produce one terabyte of data per minute?

Someone else who's going to need a bigger data centre is Anssi Vanjöki, who announced this week that downloads of Nokia's Ovi Maps were running at an average of one a second since it went free. Very good, but it's no excuse for spending $8bn on Navteq. (Oddly enough, Telco 2.0 spotted a Navteq car outside the office the other day - and they have cameras on the roof, like the Googlecar. We chased it down a sidestreet but it got away. What are they planning?)

In devices news, Nokia has launched an eerily Palm-like smartphone. Google's Nexus One is selling...slowly. 80,000 of the things are now on the streets, as against a target of 150,000. And you can now get the locations of your family members as an iPhone app from AT&T. Or perhaps your enemies' locations...

With the official "go" for iPhone applications involving VoIP over cellular data, Skype is the first out of the blocks, with a client promised "very soon". We're guessing that they'll probably take advantage of their recent deployment of SIP peering with the Skype peer-to-peer network (can we call it a cloud?) and just do a SIP client that hooks up to sip.skype.com, rather than risk passing calls over the cellular air interface more than once.

In other voice & messaging news, interest in unified comms picks up, and Twitter traffic is free on 3UK. The Guardian's blog wonders where Facebook is going, six years after launch - it's still privately held (unlike Google at this stage), and unlike Google or Amazon, it's not turning a profit yet.

France's telecoms tax, intended to finance the publicly-owned TV sector, has been shot down by the European Union.

Qtel's CEO says the carrier will give up on investing in Africa and concentrate on...Iraq.

Microsoft Internet Explorer users on Windows XP or earlier have been warned to switch off JavaScript and ActiveX support - and therefore, about half the Web - or face the risk that their browser will turn into a Web server and serve files on their machine to the Internet at large. The exploit, discovered by Argentine hacker Jorge Luis Alvarez Medina, is apparently impossible to patch. A better solution is probably to just install Firefox already. Relatedly, Microsoft is planning an unusually heavy Patch Tuesday this month including a fix for a 17 year old bug originating in Windows 3.1! They had to fix it now, before the bug got the vote...

And finally, it seems that someone at Vodafone had a really bad day.

Agenda Preview - 9th Telco 2.0 Executive Brainstorm, 28-29 April, London

Thu, 04 Feb 2010 12:29:48 +0000

The next Telco 2.0 EMEA Executive Brainstorm will take place on 28th-29th April at the Grange Hotel in London, with a pre workshop on 'Core Telco 2.0 concepts' on the afternoon of the 27th. Below is a detailed preview of the agenda for our readers. If you would like to book a place, please email us. Early-bird and alumni discounts are available now.

Event Objective

To move the Telco 2.0 debate on from the conceptual use cases shared at the 7th (EMEA) and 8th (AMERICAS) Executive Brainstorms to actionable next steps. Through a combination of sessions on trends and specific market opportunities that feature real examples of Telco 2.0 implementations, the audience will hear and participate in debates about how and where to start on the Telco 2.0 roadmap.

In April we will be looking at:

* Day One, 28th April: Telco 2.0 Roadmap - Strategic Issues for 2010-2011 (inc. Attracting Investment, Mobile Broadband Network Economics, M2M, Customer Data/Privacy, 'Living with Google')
* Day Two (parallel event 1), 29th April: Digital Entertainment 2.0 - Multi-Platform Distribution (inc. online video, TV 2.0, mobile app stores, devices)
* Day Two (parallel event 2), 29th April: Enterprise 2.0 - New Opportunities in Business Services and Wholesale (inc. Enterprise Voice, Advertising & Marketing, Healthcare, Financial Services, Carrier Services)

We will also run a half day afternoon pre-event workshop on 27th April on core Telco 2.0 principles and business model innovation frameworks for those new to our events, or in need of a refresher.

Participants

Up to 300 execs responsible for the development and implementation of strategy and new business including but not limited to CxOs, Strategists, Strategic Marketing, Business Development, Technology Architects, ICT product developers from Telcos and Vendors; Managers from the Advertising, Media, Healthcare, Energy and Financial sectors focused on the development of digital and/or mobile functionality into their business practices.

The detailed agenda is below:

Event Structure

Day 0: Pre-Event Telco 2.0 Workshop

This is a hands-on workshop providing:

Background on the need for business model innovation in the telco industry

Introduction to the principles of two-sided business models

Explanation of the potential size of new 'upstream' business

Identification of the key enablers, barriers and industry initiatives associated with two-sided models

Who Should Participate

Anyone who is attending a Telco 2.0 Brainstorm for the first time or wants a more comprehensive understanding of the principles, as these form the basis of the debate over the following two days.

Day 1: Telco 2.0 Strategic Issues 2010-2011

This is a full day session combining key industry trends and specific Telco 2.0 market opportunities, featuring interactive debates and audience votes.

Session 1: Investment 2.0 - Building Confidence in Telco 2.0

What to Expect

This opening session explores how the industry can innovate with Telco 2.0 in order to replace the dying telco business model and attract investors back to Europe's telcos. It will feature:

Initial findings from STL Partners' new strategy report, 'From Theory to Practice: the Roadmap to 'two-sided' Telecoms Business Models,' which will be published in full later in 2010

Insights from both the retail and wholesale telco businesses about the steps they are taking and looking to introduce two-sided business models

Insights from Fund Managers about how telcos can strengthen their perceived and real values.

Session 2: Mobile Broadband Network Economics - Creating a 2.0 Cost Structure

What to Expect

Mobile Broadband usage has taken off exponentially following the introduction of flat rate and bundled tariffs, faster technologies, such as HSDPA and game-changing devices such as dongles and the iPhone. These new capabilities create potential for new business growth but we are increasingly seeing cheap services delivered on expensive networks, a trend which is unsustainable as illustrated below.

This session will concentrate on the cost side of operating networks and cover the ways in which operators can change their cost structures to better support the Telco 2.0 world. It will include:

Identification of methods for reducing the cost base including offload, backhaul

A debate on the value and options for traffic shaping and management - white elephant or
industry saviour?

The rise of managed services and what this means maintaining control of the network

Whether the cost controls envisaged support or undermine the functionality required for telcos to fully embrace the Telco 2.0 opportunity

For background on Telco 2.0's views on the broadband incentive problem and mobile broadband economics, see:
The broadband incentive problem
iPlayer Nukes Networks
Video, the Achilles Heel of mobile ISPs
Broadband Business Models - Report

Session 3: M2M - Opportunities Beyond Connectivity

What to Expect

M2M has been routinely referenced over the last decade as a possible source of major industry growth when P2P penetration reaches saturation but it has failed to take off to the scale predicted. Recently, there has been more noise around the embedded market - the so-called 'Network of Things' This session will cover:

Why the time is right for M2M now to fulfil its potential and what the catalysts are

What barriers remain to widespread take-up including cost of modules and cost of operation

Which verticals segments have the most potential for telcos in the short and long term; which represent the low hanging fruit

Real and practical examples of where solutions have been built around M2M that go well beyond connectivity to integrate with business processes much further up the delivery chain.

New research findings from STL Partners' M2M experts

For background on telco 2.0-style implementations of M2M, see this interview with Maurice Thompson, Director of Verizon Wireless's Open Development initiative (ODI).

Session 4: Customer Data and Privacy - Monetising the Opportunity

What to Expect

When discussing telco assets that could form the basis of new revenue streams, customer data always comes high on the list but using that data to sell to third parties is fraught with dangers and difficulties. This session will examine:

The possible role(s) for telcos in the information trade and interaction with other stakeholders

The size of the opportunity

The issues around targeting and aggregation and whether it is possible to do both

The risks and rewards associated with being 'custodians' of customer data

The practicalities and realities of extracting, managing and using the quantities of data involved

And it will feature:

New research findings from STL Partners' Customer Data and Privacy experts

Output from the first International Privacy Summit

For more on Customer Data and Privacy from Telco 2.0 see:
Move Networks: Winning With Customer Data
Overview of the first International Privacy Summit
Unlocking the Value of Customer Data - Report

Session 5: Living with Google - Cooperating and Competing

What to Expect

There is no doubt that Google has made a huge impact on the telecoms business and that it is in the business for the long haul. This session has been designed to provide an in-depth and independent analysis of the realties of what Google has already done and where it might steer its mighty submarine in the future. It will feature:

When and where telcos can cooperate with Google

When and where telcos can compete with Google and what assets and capabilities they need to do this

How telcos can avoid losing another core asset as they did with location

What different strategies have already been employed by telcos in their dealings with Google

Whether different strategies are necessary for Tier 1 and Tier 2/3 telcos

Can telcos expect the other major Internet players - Amazon, Apple, Facebook, Skype etc - to develop in a similar way to Google?

New research on Google and telcos from Telco 2.0

To read Telco 2.0's existing analysis of the position of Google and YouTube see:
How to Deal with Google - Report
How Google Makes Money From YouTube - Report
How YouTube Makes Money - Blog post

Day 2: Parallel Events

Divided into two streams, day 2 provides in-depth analysis of two areas that have the potential to be at the centre of telco 2.0 business development - digital entertainment and enterprise services.

Event A: Digital Entertainment 2.0 - Multi-platform distribution

What to Expect

This day-long event will examine the ways in which fixed and mobile operators are currently involved in the distribution of digital entertainment and the ways in which it should to develop in the value chain for greater value. It will include sessions on critical areas of development, including video and mobile apps, which will define value that entertainment will offer the telco world. Structured in five separate sessions, it also features new research from Telco 2.0's entertainment experts.

Who Should Participate

CxOs, Strategists, Strategic Marketing, Business Development, Technology Architects, ICT Product Developers involved in entertainment-based product and services in the telcos and vendors plus senior managers from the Media, Entertainment and Broadcasting involved in developing new digital businesses.
For background on Telco 2.0's views on digital entertainment, check out:
CDNs and Web Video Dominate the Internet
Amazon versus Akamai
Akamai as a Platform Business
Broadband Video Market Survey

Session 1: Trends in Digital Entertainment

Flat rate data plans and increasingly rich multimedia content are setting the telco and entertainment industries on a collision course. This session will look at the trends in digital entertainment that have already hit the telco and those that are still to come. It will cover:

Established trends in video - IPTV, VoD, Time Shifting and how these impact of telcos

New trends in video - HD and 3D - how will telco networks cope?

The rise of digital publishing and user-generated content

How telcos can make businesses from entertainment

Session 2: TV 2.0 and the Battle for the Home Hub

Communication from the home to the outside world has always bee the telco's domain. However, with set-top boxes, games consoles and even Digital TVs now acting as hubs with telco capabilities, the telco is facing a changing landscape in its back yard. This session will cover:

Are connected set-top boxes, games consoles and TVs a threat to the telco's position in the home and its downstream revenue?

Are the positions of all the players the same or should telcos be looking for partners from broadcasters, games platform providers or media companies.

Are there upstream revenue opportunities to be gleamed from better wholesale agreements in terms of QoS, customer service, billing?

How can telcos better package/integrate their voice and messaging services for these other players to build telco value?

Session 3: Online Video Distribution 2.0

Video distribution has changed dramatically and the Internet is the distribution channel of choice for the ever-growing library of user-generated content and of growing appeal for professional content. For the telco this means one thing - increasing demands on network capacity. This session will cover:

Whether on-line video is commercially viable

Use cases for how telcos can support and build revenue on data-hungry video services such as HD

Evolving IPTV business models - on demand, subscription, pay-per-view, free/ad-funded in a in a time and place shifting environment - can advertising support it all and what are the other options?

What's the relationship between telcos, broadcasters and Content delivery Networks? How can they understand each other better?

Can telcos have a role in the video distribution upstream sell - recommendation engines, social media, IPTV as a retail platform etc.

Session 4: Mobile App Stores - the Race for Retail

Nothing has made more impact on mobile industry headlines that app stores and Apple'sss in particular. This session will search behind the headlines to look at:

Whether operators should create their own app stores - what are the pros and cons and are there different strategies for tier 1 and 2 telcos?

What impact will handset vendor app stores have and what do these mean for operators?

Other than app stores, what else can operators offer developers?

Is the API opportunity a realisable one and in what sort of timescale?

Session 5: Securing Revenue with New Devices

On the back of mobile broadband and to a lesser extend M2M, there has come a new type of app-specific connected device around which value propositions are being built. This session will cover:

The impact of mobile broadband dongles and building revenues on top with pre-pay bundles

The Kindle experience and potential for e-readers. Where's the business model?

How do operators stake a claim in a value chain built around linking a service and device, whether it's the iPhone, e-reader or something new?

With so much data on multiple devices, where will it all the data be stored. Are there opportunities for telcos in storage/cloud either as a churn reducer or revenue generator?

Event B: Enterprise 2.0 - New Opportunities in Wholesale and Enterprise Services

What to Expect

This day-long stream will examine in detail the new enterprise or upstream business development opportunities in a range of key growth areas, including the telecoms itself. Revealing the disproportionate value enterprises can derive from comms-enabled business processes, it will identify the opportunity these upstream businesses offer to telcos and look at the examples of new business models being built by retail, wholesale and carrier services divisions within telcos. Organised in five separate sessions as detailed below, it will also feature new research from STL Partners' 2-sided business model experts.

Who Should Attend

CxOs, Strategists, Strategic Marketing, Business Development, Technology Architects, ICT Product Developers involved in engaging and developing products for upstream customers within the telcos, telco Wholesale and Carrier Services divisions and vendors, plus Senior Managers from the Energy, Healthcare and Financial Services Sectors, Media Planners and Buyers, Advertising Agencies and Brand.

Session 1: Defining and Sizing New Enterprise Market Opportunities

The new enterprise opportunity is beginning to be recognised by telcos as a credible source or new revenue but there is still great confusion over where to start, how to scale and which divisions within telcos should be targeting these markets. It will include:

Defining and sizing the market including identification of major growth areas that will be covered in later sessions

Explanations and examples of comms-enabled business processes (CEBP)

The identification of some of the key assets and functions that are common to multiple upstream customers

Building appropriate platforms to scale up with the business

For background on Telco 2.0's views on Enterprise 2.0, check out:
What Telcos can Offer for Business Process Optimisation
Convergence of CEBP and Voice 2.0 - Report

Session 2: Growth Sector 1 - Advertising and Marketing Services

Concentrating primarily on Mobile Marketing, one of the hottest topics in the telecoms industry as it represents a significant new business model for telcos. It is often surrounded by hype and talked about in vague terms. This session will given practical guidance on mobile marketing and how opportunities in this space can best be realised. It will identify tangible opportunities and debate issues around key points of engagement between telcos and advertisers. Featuring leading mobile marketing experts it will explore:

Case study examples of successful and less successful mobile marketing implementations

Detailed analysis of the key touch points between media owners, media buyers and telcos, including: media planning, media exchange amongst operators, ad booking, campaign management and measurement and metrics

Use cases from Telco 2.0 and partner companies exploring current and future opportunities in the mobile marketing space

For more on Telco 2.0's views on the Mobile Marketing Opportunity, see:
Text-based Mobile Marketing and Advertising Use Cases
O2 and Buongiorno 2-sided Advertising Case Study

Session 3: Growth Sector 2 - Financial Services

Financial services have provided telcos with a rich new vein of business, particularly in emerging markets, where the reach and ubiquity of the mobile platform have proved irresistible to financial institutions and consumers alike. This session will examine:

The emergence of telco carrier service platforms as natural enablers of financial services

Analysis of the models for the integration of financial institutions and telcos to deliver mobile money

An examination of the relative failure of payment solutions compared to transfers.

Examples of payment successes and their applicability to Europe

For more background on Financial Services from the Telco 2.0 team, see:
Report - Mobile Payments: Lessons and Leaders
Intersection of MVNOs, Roaming and Money Transfer
Zoompass, a Developed Market MMT Example
African Money Transfer Leaders - M-PESA and Zain - Report

Session 4: Growth Sector 3: Utilities and Healthcare

These two verticals have attracted more attention from telcos over the last couple of years than any others as both markets are being driven by major trends that cry out for the cost and operational efficiencies comms-enabled business processes can provide. In healthcare, an aging populations and increasing number of patients in long term care, mean cost bases are rising and health services are reaching crisis points. The energy sector, on the other hand, is undergoing a fundamental change as it moves to more environmentally friendly solutions. This session will cover:

The identification and prioritisation of the different areas of activity that fall under the health banner

The barriers to launch including interoperability, regulation, cultural differences and business models

The development of smart grid services and the role of telcos

Output from the Telco 2.0 1st Smart Grid Virtual Summit

Examples of effective services and business models for both sectors
Updates on the latest initiatives aimed towards interoperable standards.

For more background on Healthcare 2.0 and Smart Grids from the Telco 2.0 team, see:
Web-telephony Integration for Better Medical Outcomes
Report: Five Use Cases including Smart Grids

Session 5: Growth Sector 4 - Telco 2.0 Wholesale

Easily forgotten amongst the exciting new vertical markets is what could prove to be the largest upstream opportunity of them all - the telecoms market itself. Wholesale and Carrier Services divisions are predicated on inter-telco business and there is every reason to believe that telco 2.0 will enhance and even transform these businesses. It will include:

The future opportunity in collectively providing multi-modal rich wholesale capabilities

How far has the mobile hubbing concept come and how applicable is it to new service opportunities - which services are most applicable to this?

What additional services can be built on top of existing interconnect and roaming structures

How should wholesale departments of fixed carriers ramp up capabilities to deal with the mobile broadband off load and backhaul requirements?

(NB: if you would like to book a place, please email us. Early-bird and alumni discounts available now):

Telco 2.0 at Telecom Finance

Mon, 01 Feb 2010 15:31:17 +0000

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

1) Fear and loathing

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

2) The vital importance of holes in the ground

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

Darragh Stokes from Hardiman Telecom made the excellent point that operators and their financiers had imagined that all the value would be at layer 3, the network layer, and above, and had therefore gone into the whole telco-as-media company vision in a big way. That had proved to be totally delusional. Web 2.0, software, and content players had won, and now a lot of the operators who did it were stuck without the key assets they sold. There is of course a curious tension here; on one hand, stressing the importance and value of the civil works infrastructure, and also vigorously promoting the idea of selling it to a bank or other investor.

Investors Dread Multiple LTE Rollouts

The explanation of this paradox is that, we suspect, a lot of investors see selling off layer zero assets (like towers or ducts) as the fastest way to get network-sharing implemented. There is real dread among investors at the prospect of multiple LTE roll-outs. On the fixed side, duct-access is also seen as a sensible way to deliver the promises of FTTH - especially the potential OPEX savings - while also pleasing the regulators.

Losing the local loop

The dominating factor here is that the ex-incumbents still probably see their control of the local loop as being valuable - it's the cost of civil works, not anything else, that protects them from other players just laying their own lines. Without it, the whole intricate dance of regulation wouldn't get started. But the deep, dark secret is that they desperately need to do the job; not only is the copper network limited, it's also a fearsome OPEX sink, and its value is draining away.

PSTN - a Spent Force

At the event, Eircom described how customers were actually churning from their ADSL service towards cellular broadband, now about 30% of the market. Of course, this probably isn't a sustainable deal from the backhaul point of view, but it demonstrates that the users perceive less and less value in the copper line, and in fact, it may be losing its traditional status as a recession-proof utility. As Ireland is battered by the economic crisis, rather than cut back on "luxury" mobile services, subscribers have kept the mobile and cancelled the PSTN line. Line loss was running at 7% annually.

Similarly, Portugal Telecom (PT) has been running a major ad campaign to encourage its subscribers to use fixed voice; according to their CFO, since the cable operators bundled it, it's been essentially free but usage has been falling steadily.

Infrastructure sharing, at home and abroad

PT also gave some of the most convincing arguments for FTTH deployment with duct-sharing - they have around 25,000 route km of access fibre in service. In most of Portugal, they don't have to provide wholesale service, but they do have to provide duct access at regulated prices. (Where they don't have to provide duct access, they do have to offer wholesale.) About half the total has more than one operator's fibre in the ground, and PT is pressing on with deploying more. A major driver of deployment is that they can also provide multichannel TV and send it directly into existing in-building co-ax cables to serve the 2.5 TV sets in an average Portuguese household. They put the cost of FTTH deployment on a par with ADSL2 - as long, of course, as you've already got the ducts.

Jumping on the Tower Bandwagon

The same arguments hold for emerging-markets infrastructure, but more so due to the lower ARPUs and unusually high costs of civil infrastructure. Les Baillie of Safaricom put the cost of a rural tower in Kenya at $250,000; Darragh Stokes put the cost of one in India at $70,000. The enterprise value of that India tower is $225,000, so you can see the attractiveness of investing in towers - under a network-sharing deal, he said, carriers would expect to pay $600 a month in rent to use it. At the moment, 1.26 operators use an average Indian tower, so the potential for savings on the carriers' part (and profit on the part of tower-owners) is considerable.

3) The howling void

Strangely, in the light of the black picture above, there was very little interest in or awareness of voice as a product. Nobody seemed to have considered that part of the problem is the product, not just the price, and that voice could be better, as we discussed in the Voice & Messaging 2.0 strategy report.. Eircom talked of being keen to capture corporate customers in Northern Ireland and the UK more broadly; but the Derry-based Asterisk specialists Synetrics are doing a roaring trade in enterprise voice deployments, with the biggest so far being a 150,000 line monster. It's hard to see why anyone would want a traditional Centrex system these days, with companies like the ones in Voice & Messaging 2.0 Innovators' Directory about.

(An honourable mention goes to PT, who noted that if consumers wanted good prices on mobile voice, enterprises wanted special features on fixed.)

Also, with the exception of Safaricom and mobile money transfer, you had to wait the whole conference to hear about transactional B2B Value Added Services (a key Telco 2.0 concept) or better content distribution. In that sense, there was every reason for fear to reign; nobody had very much in the way of progressive proposals to offer other than selling all the towers and paying a special dividend.

The main exception was the emerging markets. Investors are gagging for emerging market projects, especially in Africa; the buzz factor now that the major submarine cables have landed is fearsome.

Consolidation Coming...

However, on the other hand, there's a tension between the fact that the bankers are desperate to get big African projects out of the door and the blindingly obvious point that Uganda does not need or want six GSM networks. It's very likely that a lot of investment is not so much going to over-building infrastructure, as over-starting networks - it could be better used building up capacity, or getting any connectivity at all out to the bush, or building missing infrastructures like long haul terrestrial fibre and data centres, but instead it's being used to start up the sixth mobile network over the capital city's downtown. The outcome - too many MSCs, not enough trenches by the roadside.

Elephant in the Room

There's an African elephant in the room. As Mike Peo of Nedbank pointed out, it's very unlikely that networks 3, 4, and 5 will ever be able to build out to the scale networks 1 and 2 have achieved, so they're going to be stranded investments unless they either consolidate or network-share. Which brings us back to the vital importance of holes. The alternative, of course, is a shakeout with capital destruction.

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

Mon, 01 Feb 2010 13:24:48 +0000

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

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

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

Drivers for change: Services as a source of revenue growth

Many formerly product-centric industries have seen their core product revenues decline because of dwindling scope for innovation, commoditization and resulting price wars. Growth through acquisition and industry consolidation can lead to efficiencies and short term revenue growth. But it is only postponing the inevitable decline in product-based revenues.

One way out of this slump is to shift innovation from products to services: to make the product a platform for the delivery of services. This can create new streams of revenue as well as providing differentiation in the market, thus shoring up the underlying product revenues.

This is exactly what has been happening in the Heating, Ventilation, and Air-conditioning (HVAC) industry. Building owners and operators typically manage the various pieces of HVAC equipment distributed throughout the building. But as many companies in the HVAC industry are facing revenue growth problems due to competition from low cost manufacturers, some companies have started to introduce service packages with their equipment. Rather than sell just a piece of equipment that will sit up on the roof of the building, the companies are selling an entire environmental monitoring service.

New technologies such as Machine-to-Machine (M2M) communications and analytics means that all of these things, all of the heating and cooling devices and sensors are now networked and are accessible and controllable remotely. The companies now sell a service that will give building owner a certain level of energy efficiency or meet certain service level agreements (SLAs) for heating or cooling in an office building or on a manufacturing floor. The companies have transformed their product-based business models into a value added services network.

Drivers for change: Developing a greater customer intimacy

In most product-centric industries the product manufacturers have little direct ongoing interaction with their end customers. But we are now in an era where manufacturers must know their customers, rapidly adapt to their changing needs and involve them in product co-creation. Developing services sold directly to customers is one way of gaining that greater customer intimacy.

For example, high tech manufacturer typically have a multi-tiered distribution business model where it is their distributers and retailers who interact directly with customers. This gives the manufacturers great scale and reach and a simplification of their distribution network, but what the manufacturer does not have is a direct contact with the customers.

They may occasionally interaction with the customers through product registration forms, rebates, promotional programs, or to sell repairs and accessories but these tend to be one-off and occasional.

By turning their base product into a platform for services, high tech manufactures can establish an infrastructure where they now have a direct relationship with those customers. They can continue to deliver their product through their traditional channels and then on top of that product, they add a layer of services which allow them to figure out exactly how customers are using the products and what value they are getting from that product over time. From this information, the manufacturers can find new streams of revenue by up-selling and cross-selling products or other services from the catalogue.

Implications: monetizing customer interactions at high volume

Businesses who adopt the services model like this are generally well organized to do product-based sales through multi-tier distribution. But the dynamics of delivering and selling services direct to customers are very different.

First, services are priced very differently than products. Products have a unitary or bulk price, generally invoiced upon delivery. Selling services means entering into an ongoing contract with a customer. There can be fees charged up front, on a recurring basis and usage-based fees depending on how and when the customer consumes the service over time. Customers may pay for service in advance in a prepaid mode, or they may receive a bill and pay in arrears. So the way in which a business manages pricing, charging and billing of customers is very different for services.

Second, volumes of customers and transactions that must be managed go up by one or more orders of magnitude. When selling into multi-tier distribution, product manufacturers generally only need to manage pricing for transactions pertaining to bulk delivery of goods, and the number of distributors that must be managed and invoiced is generally measured in hundreds or thousands at most.

Selling services direct to customers means managing tens of thousands or even tens of millions of customers. And monetizing service interactions means putting a price on each and every service transaction that happens.

Product-centric businesses need to adapt their business processes and systems to support these new service pricing models and to handle the massive volumes that are entailed.

Implications: Third parties want to join in

Once product-centric industries establish these service platforms the next step is to bring partners into the mix. Having direct customer relationships and a way of monetizing those interactions is a key asset for any company and one which other third parties will be anxious to leverage. Third parties see the service platform owner as a potential distribution channel for their own service offerings. And if the platform owner can take care of the monetization of the bundle of services, then all the better.

For the platform owner the benefits are twofold. First, there are the potential commissions or revenue share to be gained by charging the third parties for access to the customer base. Second, and often more importantly, there is the additional creation of value for the platform as a whole each time a new third party is brought onboard. Bringing in third parties increases the value of the combined offering for customers, which generates increased customer loyalty, increasing the customer base and consequently attracting even more third parties.

This is the multi-sided market model benefiting from inbuilt network effects: participants have a built-in incentive to recruit others to the platform.

Telecom offers best practice for multi-sided service monetization

Telecom operators are familiar with the above trends within their own industry. They have built processes and systems to handle the resulting velocity of change in pricing models, to manage the huge volumes implied when monetizing services for millions of customers and to efficiently share revenues with third-parties in multi-sided business models.

But telcos are just waking up to the fact that many other industries are now beginning to face these same challenges as they move to add more and more services. Other industries are surveying the landscape and seeing telcos as a source of best practice, they want to learn from someone else's mistakes and try to get it right the first time.

This is an opportunity for telcos to not just package and sell their learning and expertise as some sort of best practice business model consulting, although that is very valuable in itself.

Most of these emerging services businesses are powered by changes in communications: hyper-connectivity of devices and people, machine to machine (M2M) technology, and cloud computing. So telcos are involved already in empowering this change.

Telcos should go farther and recognize that monetization of multi-sided business models is a core competency. Service monetization can become a service offering in itself where the telco does billing and revenue sharing on behalf of some other non-telecom business or offers rating and billing to an enterprise as an enterprise solution.

To exploit this opportunity telecom operators need to equip themselves with business systems that are flexible enough to price, charge and bill for any kind of service which is metered and analyzed based on any criteria that makes sense in the target industry. And these systems need to support multi-tenant operations and scale up gracefully as services business take off all over the economy.

If telecom operators do not seize this opportunity then other industries will eventually figure this out on their own, probably poaching good ideas and some good people from the telcos in the process. But having telcos more actively involved would accelerate change for the benefit of all players.

SAP will be exhibiting at Mobile World Congress (Feb 15-18) and hosting a roundtable on this topic of monetizing services across multiple industries in Barcelona on Feb 15. Panelists include representatives from IDC (moderator), Accenture, Microsoft, RIM, and Telus, You can visit SAP during Mobile World congress at booth D82 in Hall 2 and register for the roundtable here. For more information, please contact the SAP Convergent Charging press manager: Michele Landel

Telco 2.0 News Review

Mon, 01 Feb 2010 11:32:06 +0000

Top Stories

Broadband and Fibre: Brazil, New Zealand reach for public dark fibre, shared LTE
Online Video Distribution: AT&T loves WLAN offload, buys $2bn worth of backhaul fibre, makes money
Devices: Q4 smartphone volumes: Nokia, Apple, RIM rule the world
Content: Amazon vs Macmillan: content pulls a goal back on distribution
Advertising: Google Local Search - now with voice

We've said before that the leading actor in the deployment of fibre is increasingly the State. Brazil looks like it could be the latest, and one of the biggest, examples - as part of its national broadband plan, the Brazilian government is considering investing $10.7bn in publicly-owned infrastructure to reach remote and underserved areas. On a similar theme but much smaller scale, the proposals are now in from carriers and others wishing to join the New Zealand government's Crown Fibre Holdings, which intends to deploy open-access dark fibre throughout the country.

They're also looking at shared or public solutions to the mobile industry's layer zero problems; the regulator says that they're keen on the idea of only one shared LTE network, as deploying even one more system would involve doubling the national fleet of base stations. In other infrastructure news, 3UK switched on its 10,000th Node-B as part of a major capacity build that will eventually take their network to 13,000 towers - that's almost six times as many as there are in New Zealand.

The UK's independent spectrum broker - aka regular Telco 2.0 delegate Kip Meek - says there will be no progress on the UK 2.6GHz band before 2011.

AT&T, meanwhile, said it would "wait and see" about the network demands of the Apple iPad. If it's anything like the iPhone, this could be a nontrivial issue; but then, it's a 10" device with a huge touchscreen and no voice capability, so its standard use-case sounds much less mobile and more likely to use WLAN connectivity than the well-known shiny gadget. They expect about half the iPads they sell will be the WLAN-only variant, and are keen to funnel their connectivity through their network of WLAN hotspots. Quote of note:

One long-time vendor in the offload solutions business, Kineto Wireless, has just introduced a new product, called Smart Wi-Fi Offload, which turns Wi-Fi access points into extensions of a mobile operator's network, so that customers can receive all their traditional mobile, messaging and data services, including voice, over theWi-Fi connection. The product will be commercially available next quarter.

You've heard of test-driven development; that's Telco 2.0-driven development.

On the other hand, AT&T announced an additional $2bn in wireless CAPEX, which sounds like it will be mostly spent pulling backhaul fibre to more base stations.

They could blame it on Barack Obama, something which would at least endear them to a sizable segment of opinion. This week, rejection notices went out from NTIA to the unlucky losers in the first round of broadband stimulus proposals. And his State of the Union address accounted for a drastic spike in mobile video streaming, with the White House servers shipping out a terabyte of data in total.

There's something ironic, in the light of all that, in the fact that the iPad is explicitly designed to keep it on AT&T. And despite all the noise about massive data usage, AT&T actually announced rather good fourth-quarter figures this week.

Amid all the iHype, Apple quietly climbed down on the iPhone voice-over-IP row. iCall, Fring, and Acrobits all discovered that their applications now work over UMTS data as well as over WLAN. You could also use Google Voice in a browser, released this week - although you'd still be paying call charges and you can't use either cellular data or a free WLAN hotspot, so you might wonder what the point would be. It is, however, an interesting use of the capabilities of HTML5 - on that, Google and Apple are a model of harmony, as this rant of Steve Jobs's against Adobe Flash suggests.

Meanwhile, it's time to cut to the vidiprinter and the voice of James Alexander Gordon. Strategy Analytics's market numbers are out for Q409, and they're more than interesting. Smartphone shipments were up 30% year-on-year, while the overall market grew 12% - to put it another way, the smartphone segment is taking over the market. The beneficiaries are Apple, RIM, and Nokia - Nokia's share of smartphones was 39.2%, up from 37%, RIM's 20.2%, up from 18.6%, and Apple's went from 10.8% to 16.4%. It's worth noting that Apple doubled its volume while only gaining 5.6 percentage points of share - clearly, a very large proportion of iPhone sales are accounted for by growth in the smartphone sector, rather than competition within it.

So, we're declaring final victory on our prediction from MWC 2009 that 2009 would be the year of the mid-market squeeze. All other vendors' smartphone shipments actually fell, and the growth of the smartphone sector combined with the robust super-discount market to hammer Motorola, Sony-Ericsson and friends. Quite possibly, the phrase "feature phone" is now ripe for retirement.

There were numbers out from Nokia as well. Device shipments were up 12% overall, but sales (i.e. by value) were down 4% - which shows the flip side of the smartphone boom rather well. The smartphone market is expanding, but it's doing so because the devices are getting cheaper. Not sure what to make of this feature, though.

However, Qualcomm cut its sales forecasts, blaming the "muted" recovery in developed markets.

Connected Planet wonders if Spotify will work in the US. Interestingly, they also proivide some numbers - apparently, it needs between 10-12% of the users to convert to the paid-for version in order to cover royalty payments. But only about 4% of users in the UK and Spain, currently its biggest markets, are paying. Oh dear. A possible comment on this is Nokia's decision to offer an X6 without Comes With Music and with less storage.

Verizon Wireless, meanwhile, is offering a micro-SD card with 1,000 "snippets" of music, and some 4GB of spare storage. The idea is that you pay for the card, and then download stuff you like from their VCAST content store. Wouldn't it be better to ship the cards loaded with music they've already paid for, and let them get anything additional from the store? It seems a strangely annoying product.

Meanwhile in content, it was the weekend of the Amazon-Macmillan e-book wars. Amazon.com pulled all Macmillan titles from the Kindle and its websites, complaining that Macmillan wanted too much money; there was a storm of protest; Macmillan refused to give in; and Amazon backed down. An author's perspective is here: come to think of it, Macmillan could have distributed e-books over Cloudfront and used Amazon IT resources, and presumably the margin on traditional wholesaling is better...

This is an example of King Content pulling a goal back against King Kong Distribution, and it's worth thinking about why our usual assumptions are wrong here. If distribution is the dominant factor, it's usually because it's difficult to replace - scarcity, in other words. But e-books are very unlike either paper ones, or some other forms of content like video or music - books are text, and text is light compared to its information payload and hence its value. A lot of Amazon's value is in its logistics operation, but this is less important when the content to be distributed is text.

In other content news, for €0.79, iPhone users can get the speeches of Benito Mussolini as an app.

Firefox is now available on one mobile device at least - the Nokia N900. Details here suggest it has most of the PC version's feature set, and notably the HTML5 Geolocation API.

Meet the world's second most used Web server; the Google Web Server. It's a Web server used by Google, and that's roughly all that is widely known about it, except that Netcraft estimates that about 11 million sites are running on it. You wonder why Microsoft even bothers with its server division these days. You can now link your bathroom scales directly to one of those, via the Google Health API. Hacker project for 2010: get access to them and subtly alter the weight readings, causing all kinds of fascinating disturbance to a million ultra-shallow lifestyles.

More interestingly, Google announced an enhancement to Local Search that lets advertisers embed a click-to-call phone number in their ads, so mobile users can instantly place a call to them. Thought; Google Talk is XMPP, using the JINGLE voice extension. You can already embed an XMPP client in a Web page using strophe.js and XMPP's specification for tunnelling XMPP connections as HTTP. How long before Google lets you embed free VoIP calls in your ad, and sends you a pack of context information as an instant message as well?

Avaya has some interesting news; the enterprise voice company, which recently bought up Nortel's VoIP and PBX assets, is embarking on a partnership with Skype to integrate the global P2P voice network and its various enterprise voice hardware, software, and applications solutions. It is suggested that some Avaya products might be moving into a cloud, and it's even possible that they might be moving into the Skype network. One to watch.

Meanwhile, more buzz about HD voice. And hackers succeed in turning handsets into bugs. If you can't trust your hardware, you can't trust the software, the network, or anything else.

An unusual DDOS attack is under way; the bots initiate encrypted SSL connections, and then drop them. The point being that the cryptographic validation is considerably more resource intensive than just handling an HTTP GET request. Apparently, targets included the CIA, PayPal, and Bank of America, whose site was downed on Friday night.

Telenor's Indian operation, Unitech Wireless, announced a contract with Harris Stratex to supply all its microwave backhaul needs - likely to be "rather a lot". However, there were reports this week that the 3G licencing process might be spun out even more.

Comcast announced it was looking for volunteer users to try out IPv6. The US cable operator is especially concerned by the looming exhaustion of the IPv4 address space, as its CPE devices typically have several routable IP addresses (for user IP traffic, VoIP, cable TV, remote management, etc).

Verizon announced that it's integrating its US and global wholesale operations.

And finally: thinking of using a mobile phone while driving? Think again; thanks to hands-free kits, although people stopped using their phones without them, the rate of road accidents hasn't changed. Talking on the phone worsens your driving as much as being drunk - voice is, after all, the original killer app.

Machine-to-Machine (M2M) 2.0: mHealth Opportuniies

Fri, 29 Jan 2010 10:21:57 +0000

Machine-to-Machine (M2M) appears to be finally coming of age. What business model challenges are bringing this about in Healthcare, and how can Telcos add value? Below are some videos and summary analysis from the Telco 2.0 AMERICA Executive Brainstorm in Orlando:

- An overview of M2M and 'Embedded Mobile', with a sector focus on the opportunity in health, by Ken Figueredo, Principle, Ventura

- Challenges in the US Healthcare market, by Rick Cnossen, President, Continua Healthcare Alliance

- Orange's approach to the US healthcare market, by Niels Helkov, VP e-Health Americas, Orange Healthcare

M2M: a panacea for healthcare?

Ken Figueredo, Principle, Ventura, presented an overview of machine-to-machine (M2M) and embedded mobile, with a focus on the mHealth sector, and an examination of the key strategic choices for operators.

(NB We will also shortly publish a Telco 2.0 Executive Briefing on M2M that we are writing with Ken. This will describe examples and provide additional market data and greater detail on this emerging new sector.)

M2M: An idea that's time has finally come?

Interest and activity in M2M has blossomed recently in projects such as the GSMA's embedded mobile initiative (which Ken has advised), and initiatives by AT&T, Telenor, Verizon and Sprint among others.

Market growth estimates range from 50% to 500% additional device penetration, even though shipments of industrial M2M run at only 40m devices / year compared to 1bn handsets.

The concept of 'Embedded Mobile' expands the traditional industrial M2M opportunity definition by including service innovation as well as device innovation, and considering M2M as a new solution to:

• consumer needs (e.g.s Amazon Kindle, energy consumption and costs)

• industry value chain 'pain points' (e.g. high costs of service)

• the needs of broader sectors including transport, clean energy, healthcare, consumer electronics, and utilities

• government needs (e.g.s improving healthcare and reducing congestion).

These broader market opportunities create the potential for lower prices and higher ultimate market penetration.

But it is not all 'Plain Sailing'

There are also structural barriers to growth. The value chain is fragmented, operators' traditional industry segmentation is vastly different from the segmentation of needs in the industries, and operators do not have a long track record of offering a whole suite of M2M services.

Sector focus: mHealth Overview

As an example of how M2M addresses needs, we focused on US Healthcare.

The $2.3 trillion U.S. health sector costs $7,290 / person. This is much higher than in many other markets, and it is and will be a priority for US Administrations to reduce this cost and improve the quality of care now and in years to come.

Comparison of per capita health expenditures in the OECD (2007)

SOURCE: OECD (2009)

A Global Challenge

With increasing longevity and decreasing mortality, many populations are ageing, and managing costs and improving quality of healthcare will be a significant national challenge in most developed economies. Providing healthcare to developing nations with growing populations presents additional challenges. Managing improvements in healthcare with simultaneously rising populations and reducing costs is therefore a global challenge.

Many 'toes in the water'

There are a large number of operator initiatives in many disparate areas, and Ken covered some of these in his presentation. Examples include providing remote health monitoring services, and tracking people's calorie intake to help manage obesity.

The Key Strategic Question for Operators

What is already clear is that providing connectivity alone is not enough, and that service and business model innovation will be key to monetise the opportunities in different ways. However, the key strategic question for operators is whether to adopt horizontal, platform based solutions, or a vertical focus on a detailed solutions for targeted sub-segments.

Challenges of mHealth: the birth of an Industry?

Rick Cnossen from the Intel Digital Health Group, and President of the Continua Health Alliance that develops standards for mHealth, presented on early US market experiences and challenges.

Rick picked up from Ken's introduction, and reiterated that with costs projected to rise to 20% US GDP, healthcare provides an opportunity to create economic benefits as well as improve peoples' lives.

Opportunities for communications service range from 'here and now' examples, such as creating voice and messaging applications to contact and remind patients, through to full M2M solutions.

Key Challenges from the Early Life of the Industry

Rick detailed numerous examples of applications, and described a number of key challenges to solve in the Health ecosystem:

• Interoperability standards - (Continua's role)

• What are the Business models?

• Gaining Clinician Acceptance (workflow, data overload)

• Regulatory / Liability

• Security / Privacy (identifiers)

• Quality (coverage / bandwidth)

• International solution

Orange's approach to Healthcare in the US

Niels Helkov, VP e-Health Americas, Orange Healthcare, laid out additional compelling statistics behind the E-health demand surge. He pointed out that a baby born today has a statistical life expectancy of 100, while on the other hand, €17.7bn is spent on asthma in the European Union every year and $92bn on diabetes in the US. 25% of Europeans are over 60 and overall, healthcare is growing as a sector at 5% annually, significantly outpacing GDP.

Healthcare and Telecoms: All About Interfaces

Telcos, he said, are naturally intermediaries between actors. The sheer diversity of organisations and interest groups in healthcare implies a wealth of interfaces across which they can intermediate and profit. He gave as examples services for assisted-living, remote monitoring (of values like blood pressure), and "compliance" - i.e. whether patients take their prescribed medications.

In France, Orange is working on a wellness Web portal, a project that is intensely focused on self-care and patient empowerment. Another project, with the Sorin Group, centres on remotely monitoring the performance of heart implants and preventing the patients from being hospitalised. And this was backed with a further element in the form of a B2B2C tech support desk for both patients and clinicians.

Healthcare 2.0: Early Days + Big Opportunity = Time to Get On With It

Health represents a huge opportunity for telcos around the world and particularly in the US. All the demand drivers are there with an aging population, adverse and costly health trends such as obesity and its associated diabetes and heart issues and limited funds. These create a cost base that cannot be sustained in the long run.

Communications-Enabled Business Processes (using initially Voice and Messaging products) offer a way to massively turn around that cost paradigm in every sector of healthcare from equipment tracking, to appointment setting, bill settlement, wellness monitoring, medication alerts and much more besides.

However, the barriers to implementation are not trivial. Perhaps the largest factors will be the inertia of established players, and the initial inefficiency of the complex evolving ecosystem as new players jostle for position.

Nonetheless, there doesn't need to be a 'boil the ocean' approach here though but rather telcos can start where the barriers are lowest - with wellness monitoring, asset tracking and appointment reminders, rather than with medical advice.

What they really need to do is to enter this market soon as some of the lower hanging fruit is already being snapped up by iPhone and other apps.

(Ed. Further information and analysis from the Brainstorms will be made available to attendees and members of the Telco 2.0 Executive Briefing Subscription Service. For future Brainstorms and Virtual Events, please see here or email contact@telco2.net.)

Voice and Messaging 2.0: Growing Enterprise Revenues

Thu, 28 Jan 2010 22:32:49 +0000

Voice and messaging are the mainstays of telco revenue today yet there are still opportunities to grow the value of these services using innovative business models. At the 7th and 8th Telco 2.0 Executive Brainstorm in London and Orlando, two thought-provoking presentations provided concrete examples of embedding voice and messaging into business process for SMEs (so called 'Communications Enabled Business Processes' - CEBP) and proffered ideas about how telcos can turn these into significant revenue streams.

Below are videos and analysis of presentations on:

- 'Cooking with Voice' by Thomas Howe of the Thomas Howe Corporation,

- Telco Applications in the Clouds by Irv Shapiro, CEO IfByPhone

Cooking With Voice

Thomas Howe develops around six voice applications a month for enterprise clients and, speaking at the 7th Telco 2.0 Executive Brainstorm in London in November, called on the telco industry to monetise their data to reinvent voice services.

(NB We will shortly be publishing a detailed Executive Briefing by Thomas, describing detailed Voice and Messaging Use Cases, both for customers of our research subscription service and sale as a standalone report.)

Voice is a Spice

He equated voice to a spice in that in the enterprise application world it isn't a service in its own right but a feature that can be used to enhance a process. As an example he related the experience of Mercedes Benz when it added a simple click to call function to its corporate website.

As a result of having data about where the customer was calling from and which web pages he had previously been to, sales conversions doubled from 10% to 20%, call abandonment was reduced and the average selling price increased.

Monetising Hard to Replicate Data

It wasn't about the voice call per se; it was about putting the call together with information that was relevant to the call and valuable to the corporation and that is worth paying for from the corporation's point of view.

Monetising such hard to replicate data by combining it with voice is where telcos have a great opportunity to grow, said Howe. There are many areas where only telcos can deliver voice and have the information that will add value to the call, such as authentication, location, even availability.

Location, Location, Location

Telcos may have lost the lead with location in consumer apps but there are many examples of where location information in conjunction with voice or messaging could be monetised for businesses large and small. Examples cited included simple business process integration to automate a call to confirm a person is home to receive a delivery, to more complex notification of the need to leave for an appointment based on an individual's location and the distance they are from the location of the appointment.

These and many more are highly valuable to businesses as they can save them huge amounts of money, primarily by cutting back on wasting time and resources.

Identity Authentication

Identity authentication could become another major growth area when combined with voice, according to Howe. The authentication of a caller is something that is highly valuable to a whole host of businesses. By adding location, phone identity and perhaps additional applications such as voice analysis, finger print readers or iris scanners on phones, a telco could verify a caller is who they say there are for banks, government departments, schools etc. This links closely with the work Telco 2.0 is engaged with on customer data and privacy which is discussed in Customer Data and Privacy 2.0 - Telco Goldmine?

Telco Applications in the Clouds

Speaking at the 8th Teleco 2.0 Executive Brainstorm in Orlando, Irv Shapiro, CEO of IfByPhone, claimed to be an outsider to the telecom industry. He then proceeded to demonstrate how his company was monetising telecom's primary services, voice and messaging with 2.0 applications. He even suggested how telcos could do the same - not bad for an outsider.

Stop Analysing and Start Doing

Shapiro said that telcos are in real danger of suffering from 'analysis paralysis' in the face of declining margins from voice and data. They need to start to act to find alternative revenue streams and he used examples from his own business to demonstrate how the value of voice and messaging could be reinvented.

Telephones as New Access Devices for Apps

Rather than iPhones and app stores, these applications involve the integration of voice and messaging into business processes to improve the efficiency of SMEs. The technology for this is based in the cloud and works by automating phone calls for SMEs in three lines of business.

Do-It-Yourself App Building

The first comes from providing a web portal through which SMEs can drag and drop voice and messaging functions to configure their own apps into business processes. There is no requirement to integrate the applications for the SME as they do it themselves but the clever and monetisable part provided by IfByPhone is in hiding the complicated work required to allow the drag and drop capability.

Diabetes America is a user of the service and used the web portal to replace its outsourced call centre costing $400,000 a year, with an IVR app and six people in house, amounting to a saving of $240,000. IfByPhone now charge them $1500-$2000 dollars per month, which may sound low given the savings but equates to a 70% gross margin.

The other two revenue streams for IfByPhone come from outbound customer notifications and click to call capabilities where a click on a website triggers a phone call.

Savings, savings everywhere

Go Configure, a company that builds flat packed products for customers in their own homes, provides a typical case for the value of automated notifications. They spend $1500-$3000 a month with IfByPhone to arrange appointment times, a process previously conducted by secretarial staff and taking an average of five calls per appointment. The change has saved them $70,000 a year.

The value of Click to Call applications was previously referred to by Thomas Howe.

Telco Opportunity

Currently, telcos either benefit from this as wholesale sellers to IfByPhone or as partners if they have the relationship with the SME. However, an even bigger opportunity could exist if telcos could turn PSTN phone numbers into SIP addressable end points, said Shapiro.

PSTN Boost

If that were the case then telcos could charge for the initiation and for connecting to those end points. In some ways this is similar to receiving party pays cellphones in the US or international roaming where both the sender and receiver parties pay. However it doesn't have to be a sender and receiver, it could be the sender who pays twice, if the application is valuable enough. He challenged the telco industry to boost the PSTN in this was and then encourage app developers to create apps that would drive traffic to those end points.

It's Voice Jim - But Not as We Know It

Seemingly all that remains for simple voice connections is a race for the bottom of the voice market. However, voice remains a core service and a core asset to the telco and one that has significant potential to be monetised in combination with other telco assets.

Take Howe's Spice analogy a stage further and say voice isn't a spice but salt, something that enhances the flavour of everything it is combined with. In order to build new revenues streams from voice telcos need to combine voice with other functions in order to create a service whose value has nothing to do with call time and distance.

Would You Like Voice With That?

The examples cited by Howe and Shapiro demonstrate that for the business community that value is huge. Similarly the number of potential customers for such services is limited only by the number of businesses. However, it will be impossible for telcos to sell individually tailored services to all of these. They must pick their targets carefully, create platforms that make adding voice to a business process as simple as adding fries to a fast food order and encourage app developers to see voice as an essential part of the developer portfolio.

It will also require the development of business models based on direct, partnership and wholesale routes to market and Shapiro's suggestions for boosting the PSTN are food for though, although need working through with real use cases.

Voice 2.0 will be a more complicated proposition than its predecessor but it has the potential to be highly lucrative, and highly valuable to its customers.

How to Profit from Cloud Computing?

Thu, 28 Jan 2010 09:40:25 +0000

Following from the success of the Cloud Computing sessions at the recent Telco 2.0 Executive Brainstorms, we'd recommend the Fifth Annual Parallels Summit to those looking to deepen their knowledge. It takes place on 22-24 February at the Fountainbleu Miami Beach Resort, Miami Beach, Florida. Parallels are offering free places (worth $3000) - see below.

Making money from, and best practices in, cloud services are the focus of the Summit, which aligns well with Telco 2.0's agenda.

Please visit the Parallels Summit 2010 web site to learn more here or register now here.

More details on agenda, features and benefits below (from Parallels):

"Why join the Fifth Annual Parallels Summit?
The Parallels Summits have become the premier Cloud industry leadership forums for driving innovation, creating differentiated service offerings and building businesses that profit from the Cloud. This Summit's key points are:

• Focus on Profit - Specific emphasis will be placed on enabling networking opportunities that help grow your revenue and optimize your operations.

• High-Profile Speaker Line-Up - Sessions will include Warren Adelman from GoDaddy.com, Melanie Posey from IDC, Lance Crosby from SoftLayer, John Zanni from Microsoft and Jason Waxman from Intel.

• Expert Knowledge - Learn the best practices of how to launch and market new cloud services.

The Fifth Annual Parallels Summit ties everything together - industry experts, networking, knowledge and training - all in one place to provide you with the tools to grow your business and increase profit.

Better yet, Parallels is picking up the conference registration fee - a $3,000 value! Don't miss out on this opportunity to grow your cloud services business and increase profit!

Who are Parallels?

Parallels is the leader in cloud enablement solutions. Parallels' breadth of services allows its clients to offer a wide range of profitable services from hosted email and website hosting to VPS and SaaS. Over 5,000 cloud service providers worldwide rely on Parallels to deliver best-of-breed applications and services for their customers."

Customer Data and Privacy 2.0 - Telco Goldmine?

Wed, 27 Jan 2010 11:04:58 +0000

Key to many of the value-added services opportunities presented by the 'two-sided' telecoms business model, the presentations on customer data and privacy were some of the most inspiring and intriguing of those at the Telco 2.0 AMERICA Executive Brainstorm in Orlando in December and the EMEA Brainstorm in London in November. It is also the focus of the Privacy 2.0 Forum in February 2010. Below are videos and analysis of presentations on:

- whether Telcos could be the bankers of the information economy, by Marc Davis, Partner, Invention Arts and former Chief Scientist at Yahoo! Mobile

- the opportunity in the US and globally, and technical solutions for operators to give customers the ability to control and interact with their 'digital self', by Cody Bowman, Head of Business Solutions at Telco 2.0 Partners Nokia Siemens Networks (NSN)

- the four steps for operators to unlock the value of customer data, by Paul Magelli, Head of Subscriber Data Management, NSN

Telcos: the bankers of the information economy?

'Personal data is hot' said Marc Davis, Partner, Invention Arts, and former Chief Scientist at Yahoo! Mobile. Marc practices 'invention by design', identifying technological investment opportunities 5-7 years out and designing IP for them.

He drew the analogy that user data is the "broken currency of the information economy" and is not yet managed or traded like money. He said that the first companies to build the institutions for trading information currency will be 'big winners'. Could this be a profitable role for telecoms operators?

No shortage of demand

Many commercial and government institutions want to access and use this data, and privacy is an increasing concern for customers. Telcos, along with internet companies and others such as financial services institutions, are contenders in this space. But do they have the right approach to succeed?

No shortage of power

The power of available declared, observed and inferred data is significant in the hands of expert analysts. Marc cited the example of the 'best face recogniser in the world' that doesn't even look at the photos, but at the contextual data - when and where it was taken, who by, and the connections related to these pieces of information.

No Shortage of Competition - or Regulation

The use and management of customer data is consequently an area of regulatory concern, and information held or used without the user's implicit or explicit consent is increasingly subject to regulatory scrutiny.

Internet companies such as Google and Facebook make money by matching what people enter on their websites with their consumer behaviour. These organisations capture and make sense of as much customer data as they can and increasingly must obtain explicit user consent to do this. They are therefore starting to take a different approach to managing it, granting users rights of portability and control to their own data.

Could telcos compete as 'Information Institutions'?

Despite the richness of the data they hold (primarily for the purposes of delivering communications services, charging for them and complying with legal requirements), telcos' legal approach is typically a combination of 'your data is ours' and 'it's too sensitive to handle'. Their technical approach is usually to hold the data in silos, and their operational approach is often to avoid using it at all costs. This will need to change if they want to compete as an 'information institution'.

Is it a realistic opportunity for operators?

At the US brainstorm, Cody Bowman, Head of Business Solutions at Telco 2.0 Partners NSN, talked about technical solutions for operators to give customers the ability and control and interact with their 'digital self', and described the opportunity as realistic both in the US and globally.

Operators have some significant assets

As well as the raw data, a strength of operators is that they are trusted partners, and that customers are used to them providing secure services such as billing. A recent NSN survey covering 14 countries and 9,200 respondents showed that communication service providers (CSPs) are in a good position to protect customers' privacy, and that customers want an active solution - they want to be able to set their own policies on how their digital data is used.

But it needs a different technical approach

To do so requires a different ecosystem and operational structure in order to aggregate the data, and give consumers the means to make informed choices on what is done with the data.

Four Steps to unlocking the data

At the EMEA brainstorm, Paul Magelli, Head of Subscriber Data Management NSN, described four normal steps for operators to unlock the value of customer data:

Step 1. Recognising the value of the data.
Step 2. Collecting and managing customer data as an asset.

Step 3. Improving and personalising the services they deliver.

Step 4. Helping the customer exchange that data in the info economy

NSN's strategy is to provide the infrastructure to help manage the data and build information exchange.

Paul thought that ultimately there will be market level information exchanges because it will be difficult for some individual operators to provide this. He also said that there is a window closing on the potential value available to operators as many other networks - phone, location, internet social communities, and internet companies that are moving in this direction and could outflank the operators if they don't act effectively now.

Yes, it is a Goldmine - but you have to dig to extract the value

Information is valuable and increasingly tradable. Some customers already know this. Some of them see it as an opportunity, others are fearful.

Crooks know this, which is why they steal identities. Governments know this, which is why they are huge investors in invasive technologies to defend national interests. Brands and businesses know this, which is why they spend $ billions trying to obtain, refine and use it. Internet companies, phone makers, and telecoms vendors know this, and many of them are adopting increasingly refined strategies to evolve their own positions in this new economy.

The social, government and economic needs will ultimately be served by the market. Telecoms operators have many of the assets and a central position in the digital economy. Operators also have the offer of technologies that could enable them to participate in the solution, and can benefit from other immediate benefits of making better use of their data such as improved customer loyalty.

Many operators are increasingly aware of the opportunity, but they do not have unlimited time or an uncontested field, and have not yet acted effectively to address it. Will they get there in time?

(Ed. Further information and analysis from the Brainstorms will be made available to attendees and members of the Telco 2.0 Executive Briefing Subscription Service, and we will report further from the Privacy 2.0 Forum in February 2010 on progress on the debate. For future Brainstorms and Virtual Events, please see here or email contact@telco2.net.)

Digital Advertising 2.0: A New Value Chain

Mon, 25 Jan 2010 22:49:10 +0000

Mobile advertising is starting to come of age. Agencies are beginning to build successful campaigns based on a growing understanding of the strengths of the channel, and opening interesting new business model opportunities for telcos in the process.

That was the view of David Lang, President Mindshare Entertainment, speaking at the 8th Telco 2.0 Brainstorm held in Orlando in December. He said that agencies and clients are starting to use its two-way capacity to build communities and content and therefore creating alternative value chains in which telcos can play more than just a distribution role.

Lang comes to mobile advertising from a creative angle - he has a TV production background - and his message was one about the potential for advertising to become cool content for operators to promote and attach their own brands to, rather than just being a channel.

He described two examples of just how valuable that can be to both advertiser and telco. Both involved Sprint Nextel, and in both the distinction between content creator, advertiser and distribution channel roles had blurred.

Mum's the Word
The first, 'In the Motherhood', was designed to tap into a rich vein of creative angst from women with painfully funny stories about life as a mother. It called for stories to be submitted on specially chosen subjects and the online community voted on the best. The winning stories were then turned into professionally written and produced mini episodes that were available on line and through Sprint's WAP 'What's New' page. In fact, they also crossed over to TV and the concept was even taken up by ABC to turn into a TV series, although this wasn't particularly successful.

What started as a brand association campaign for Suave hair care products had become a content phenomenon attracting 763,000 hours of engagement, 25 million web views and outperforming Greys Anatomy and Deal or No Deal for hits on Sprint's 'What's New' page. In effect it was akin to ad-funded YouTube content.

Doubling Up
Far from being just a distribution channel Sprint Nextel became associated with cool content, which effectively became advertising for the telco as well. In Lang's second example, Sprint set out to maximise that association from the start and become a channel for content creation.

Home for Heroes
In conjunction with the producers of the TV show, Heroes, Sprint and MindShare produced a campaign to create a new Heroes character. Using text submissions and voting as well as on-line, the campaign built to climax with the introduction of the character created by consumers into the TV show and taking the TV trailer concept to a whole new level.

Reinventing the Ad Value Chain
Lang's presentation is interesting because it reflects just how much advertising is changing to take advantage of multimedia distribution channels. Those changes impact on the value chain and business models for both on-line and mobile advertising, particularly when consumers are used to create content as in the examples cited.

Lang didn't talk about revenue sharing, so the monetary value of either campaign to Sprint is impossible to gauge. However, his case studies do offer up examples of a telco playing twice in the advertising value chain and hints at potential for selling social networking, voting and other interactivity as platform or cloud services to advertisers.

Consumer Data & Privacy - Industry Framework

Mon, 25 Jan 2010 17:13:28 +0000

The 1st Privacy 2.0 International Summit that Telco 2.0 is running in collaboration with MIT and Nokia Siemens Networks in Boston next week is looking like being highly productive. It's a gathering of 60 experts from North America and Europe with the objective of defining a strategic framework for the potential role of the telecoms industry as custodians of consumer data (described in more detail here).

We're delighted to have the key people from Strategy, Public Policy, IT and Marketing functions representing the following organisations participating in the brainstorm: AT&T, Amex, Bank of America, CenturyLink, Comcast, DARPA, Federal Trade Commission, IBM, Microsoft, NokiaSiemensNetworks, Orange Group, Rogers, Sprint, Telefonica, Telenor, Telus, Verizon Business, Verizon Wireless, Vodafone, WPP. They'll be joined by some specialist innovators in this space, state Information Commissioners and the leading academics from MIT Media Lab, Harvard Berkman Center, and St.Galen and Goethe Universities.

Phil Laidler, Telco 2.0's Director of Consulting, is currently preparing stimulus material for the event, building on output from the last Telco 2.0 Exec Brainstorms. Below he covers some of the key issues on a video panel with TelecomTV broadcast last week called 'Customer Data - who owns the clickstream?':

Telco 2.0 News Review

Mon, 25 Jan 2010 12:12:04 +0000

Telco 2.0 Top Stories

Strategy & Finance: Ericsson: everywhere's awful but the US, China, and India
Regulation:Google vs. China: escalation, no Androids for you!
Technology Disruptions: DNSSEC deployment, IPv4 down to 10% - a complicated week for the Internet
Voice & Messaging 2.0: Truphone MVNO is go for launch; Vodafone femto blitz; O2 virtual PBX problems
Special: Haitian relief effort, powered by...SMS shortcodes

Don't assume the crisis is over; horrible sales figures from Ericsson were published this week, with fourth-quarter revenues down 13 per cent and profits positively crashing. Another 1,500 jobs are going. However, they did manage to cling on to market share. According to CEO Hans Vestberg, the trouble was concentrated in the emerging markets, where many of their customers were still unable to raise funds for their network deployments. Interestingly, Ericsson's best performing markets were the US, China, and India - you might think that those three would be enough to support a half decent business, and it's telling that China and India no longer come under the heading of "emerging markets".

The Google China crisis escalated, as Hillary Clinton criticised Internet censorship in a major speech and the Chinese demanded to know why Google hadn't just called the Chinese CERT. Bruce Schneier is arguing that the very existence of lawful-intercept features is a major security risk.

Google, for its part, attacked what its enemy values most - shiny gadgets, deciding to halt the release of two new Androids in China, including its own Nexus One. Speaking of which; IBM announced that there would be a Lotus Notes client for the Google phone, and Android devices more broadly, this year. Hackers gave the device its multi-touch capability back, which had been disabled for reasons not made clear. The Chinese will just have to make do with Lenovo's new Android device, the LePhone (does it look just a bit like an OpenMoko?).

Meanwhile, Microsoft moved Windows Mobile out of the Entertainment & Devices division and into the Windows division, so whereas in the past Windows Mobile wasn't in the division responsible for Windows, now their mobile device operating system isn't in the division responsible for devices. Bureaucracy does its thing. And the new Apple product has moved into the leak phase.

Stand by for some upheaval in the Internet infrastructure; this week, the DNS rootservers are expected to implement part of the plan to deploy DNSSEC, the technology intended to cryptographically sign all DNS records and therefore obviate a wide range of attacks. It's worth remembering that DNSSEC depends on EDNS, which means that anyone who is filtering DNS messages longer than 512 bytes will break the new implementation. If you're doing that, you'll also be unable to make use of ENUM and unable to interoperate with anyone who does....

It was also the week that we hit the last 10 per cent of the IPv4 address space, as the network 1.0.0.0/8 was released by IANA. It immediately turned out that a number of fancy applications, notably the AnoNet anonymous overlay network and some peer-to-peer radio systems, were squatting in it...

The production version of Netalyzer, a project to detect non-neutral behaviour by ISPs, was launched this week. At the same time, BT announced some details of its planned VDSL service; apparently, it's going to be called "BT Infinity" and subject to a 20GB download cap, or something like one hour at 40Mbits. Ah well, at least there's Tor...as long as you remembered to get the urgent security patch.

Alcatel-Lucent launched the world's most powerful optical switch, the TeraTransport Switch 1870, which lets you switch optical traffic at terabit speeds based on IP and MPLS headers as well as on raw optical technologies like SONET and Layer 2 things like carrier Ethernet. Rich Karpinski has more, including the point that Verizon is in the market for such a beast. Just the ticket if you needed to slurp a whole telco's worth of traffic into some sinister government data centre; the EFF is appealing after a judge threw out one of the warrantless wiretapping cases.

Alcatel landed one of the first major contracts for Australia's National Broadband Network, as the supplier of DWDM kit, optical switches, and remote network management services to Nextgen Networks, which has one of the regional NBN contracts.

In the access loop, Brough Turner reckons new technologies will mean that 802.11 will be a serious option for wireless broadband access and a better idea for data traffic than femtocells. He points out that the IEEE802 world has been consistently faster in adopting new radio technology than cellular. A commenter points out that UMTS broadband has won customers from Wi-Fi because, thanks to the USIM card, it just works.

China Telecom and China Unicom are going to share their 3G base stations in Shanghai, 500 of them. You might wonder what China Mobile did wrong; not only do they have to build a TD-SCDMA network, they have to rent all their own cell sites as well...

Etisalat reports that it uses about 73% less energy to serve each one of the 5,000 properties on its FTTH network than it does for comparable properties on copper. And they need a building every 7.5 route miles compared to 2.5 for the copper network.

Vodafone initiated a major push behind its femtocell product, which has been rebranded from the original Vodafone Access Gateway or VAG for short to Vodafone Sure Signal, which is both less unintentionally funny and less boring. Further, they've slashed the price from £160 to £50, or £5 a month on contract for a year. Brough Turner reckons they're only of use for voice; others suggest this is Vodafone's way of tackling the surge of traffic expected now it has the iPhone.

In voice news, O2 UK suspended new sign-ups to its Mobile Landline service, which lets you add a landline number as an alias to your mobile number, with calls being forwarded without further connection charges. Apparently, the service was actually reselling GoHello's virtual-PBX, and seeing as their web site has disappeared, you might not be surprised if a service disruption followed.

Telegeography estimates that Skype traffic in minutes of use on-network grew 51% in 2008 and 63% in 2009, compared to 8% annual growth in international voice overall. Skype also commissioned a survey of small businesses, which unsurprisingly showed they love it.

Truphone has begun its new life as an MVNO, with the first two countries in its "Local Anywhere" service being the UK and US. Roaming in the UK, for example, costs 12 US cents a minute, but you pay for this by not having a cheap home operator - although, of course, you can use Truphone VoIP at home. The secret sauce is a SIM with multiple phone numbers, so you're essentially a local customer of any carrier they've got a deal with; hopefully, inbound calls to a Truphone number get routed to the right one.

Google, meanwhile, is testing the native video capabilities of HTML 5 on YouTube. Unfortunately, nothing open-source will play it because they're still using proprietary codecs. There is also a new playlist feature.

Connected Planet asks an excellent question. What video content really needs to be live, other than sport? Isn't the live broadcast model actually value destroying for most use cases? A Cox Comms vice president offers some interesting answers. TiVo, Microsoft, and AT&T are suing each other.

Omnifone's music service will get bundled on Hewlett-Packard computers. The UK government's data site launches; it's content, of a sort. There's a rumour that Apple might switch to Bing as the default search engine on the iPhone. Nokia has decided to make its Ovi Maps and Navigation services available free, and there's going to be an API as well; Google says the future is local.

In Haiti, guess what the most valuable piece of new technology is? SMS shortcode interoperability. There's much more detail here and here; Sahana, the open-source disaster management system, is heavily engaged. The NANOG community is helping keep the Haitian NAP on line; Bill Woodcock has sage advice over there.

Mobile operators would do anything for more spectrum, and one operator in the area is pressing for a temporary serve of unused 850MHz AT&T style GSM to cope with two major problems; first, the remaining cell sites have to overlay the ones that were destroyed, secondly, 5,000 aid workers are constantly phoning and also hammering the GPRS data network, not usually a problem in Haiti. Perhaps the least expected form of US aid is now on the scene: DISA's Defense Spectrum Office.

Appstores: Toys or Tools?

Thu, 21 Jan 2010 11:40:34 +0000

The value of Apps and Appstores was a hotly debated theme at both the Telco 2.0 AMERICA Executive Brainstorm in Orlando in December and the EMEA Brainstorm in London in November. Below are some videos from the events:

- The CEO of Getjar, the 'World's second largest Appstore', presentation on who's using what apps and why.

- VPs of Strategy from Amdocs Interactive present and discuss a 'value framework' and App strategy for telco operators, based on a comparison with the activities of Apple, Nokia and Google.

Who uses what Apps and Why?

Ilja Laures, CEO of Getjar, 'the world's second largest Appstore' (60 million downloads per month), presented details of a recent global analysis into the behaviour of Getjar customers.

Some Highlights

An increasing number of Getjar's 18-24 years old customers are switching from feature phone to smart phone, although usage and demographics differ quite widely by country.

The dominant reason that people use and shop for Apps is 'to pass the time'. Shopping for Apps often takes more time than downloading, and 'discovery' is an important part of the entertainment. 40% of users download apps several times a week.

For this group of 15 million 'early adopters' browsing the phone for 20 minutes before going to sleep is not unusual, and 73% of Getjar app users use mobile internet much more than 'desktop' internet.

The App Ecosystem

At the Orlando Brainstorm Scott Adler, VP Strategy at Amdocs Interactive, presented an analytical framework for mapping App ecosystems from user through to appstore and apps, and looked at the strategies of Apple, Nokia, and Google, and for Service Providers. A video of his presentation is here .

Source: Amdocs Interactive

In a subsequent video interview (here), he describes apps as "lots of little hooks into customer loyalty" for the device manufacturers, and discussed how the future of apps is about becoming much more personalised, taking advantage of more advanced network APIs.

His view is that while apps have started as 'entertainment', they will ultimately become increasingly important to consumers in daily life.

What should the Telcos' App Strategy be?

At the EMEA Executive Brainstorm in November, Gil Rosen from Amdocs Interactive, argued that the best strategy for operators is not to recreate the device appstore, but to create and own the cloud platform that adds richness to cloud services.

Apps & Appstores: toys or tools?

'Apps' started out as a fun thing and the primary motivation for getting them is killing time.

The segments that are now using them are the earliest adopters. Some are kids, but some are grown up kids with highly paid jobs, expensive phones, high current ARPUs, and high likelihood to need, want and try new services in the future. Apps may be the thing they value most in the end, so ultimately, can telcos afford not to serve them?

With the right strategy for Apps and Appstores, operators may have found a great loyalty tool. But will it drive any significant new revenue? As many of our delegates observed, it is still early days and a lot of the winning business models have yet to emerge.

The Telco 2.0 team will be providing more detailed analysis on this issue over the next few months on this blog and via our research programme, in the build up to the 9th Telco 2.0 Executive Brainstorm on 27-29 April in London.

[Ed: Orlando Exective Brainstorm delegates and Telco 2.0 Subscription Customers will shortly be able to access a more detailed write up of the Brainstorm, including analysis of the panel sessions and votes. To join the next Telco 2.0 event, please see here, email contact@telco2.net or call +44 (0) 207 247 5003.]

Cloud Computing: AT&T, Juniper and Openet on the Telco Opportunity

Tue, 19 Jan 2010 21:22:17 +0000

Cloud Computing was a popular topic at both the Telco 2.0 AMERICA Executive Brainstorm in December and the EMEA event in November, although the subject came with strong 'hype alert!' warnings. Below are videos of some of the stimulus presentations from the events:

- AT&T Business Solutions' VP Strategy, Joe Weinman, on the role of telcos in Cloud Computing.

- Scott Stevens, VP Worldwide Technology at Juniper Networks, on the challenges of Building the 'Responsive Cloud Network' beyond the data centre.

- Joe Hogan, Openet's CTO, on the dynamic real-time charging and capacity management that operators need to deliver a good cloud experience.

AT&T - the Critical Role of Telcos in Cloud Computing

Joe Weinman, VP, Strategy & Business Development, AT&T, shared his insights on 'Cloudonomics' - the economic and business rationale for Cloud Services:

Joe questioned the limited usefulness of the standard definition of the 'cloud of internet services' available via a browser, and explored the multiplicity of end products and mediums used to access 'the cloud'.

In his presentation, he describes 38 'hard-nosed reasons' for clients to use cloud services, and explored several use cases including flexibility to deal with peaks in demand. (This is described more fully in his Telco 2.0 interview here).

Here he argues that the critical role of telcos in cloud services is the delivery of the service via secure and capable network. He also argues that his company, at least, has a unique set of assets to deliver these services and has made significant investments to monetise the opportunity, emphasising the importance of optical transport to guarantee quality.

Building the 'Responsive Cloud Network' beyond the data centre - Juniper

At the EMEA Brainstorm, Scott Stevens, VP Worldwide Technology, Juniper Networks, described the challenges of building a 'responsive cloud' in the network. This is needed to scale and adjust the security, VPN and experience delivery of the network to match changes in the configuration of the Cloud Computing infrastructure in the data centre.

Dynamic, Real-time Charging to Manage Cloud Capacity - Openet

At the EMEA Brainstorm, Joe Hogan, CTO of Openet, discussed the practical need for dynamic, real-time charging and policy systems to monetise and manage Cloud Network Services effectively.

From Openet's experience with a number of operators, the real challenge for operators is balancing the money made with the traffic carried. Managing capacity, congestion and how to charge for it are the key issues

In his presentation above, Joe explores pricing strategies that allow operators to manage capacity issues, including dynamic tiered approaches, and described three levels of applications: 1.) sponsored, 2.) an evolving set of cloud applications, and 3.) non-strategic.

Cloud Services: Windy Vapour or Serious Money?

Despite a powerful and contagious attack of 'hype' indicators, such as rabid geek interest and outbreaks of impenetrable industry jargon (e.g. 'the cloudburst scenario'), Cloud Services appear to have a sound basis. They solve an economic and business need, and the technologies appear to be coming of age.

The next challenge appears to rest with the sales and marketing community - how to make sense of 'Clouds' beyond the enterprise CTOs to the CEOs, many of whom have strong instinctive dislikes of anything hinting of gas. The complex operational challenges of delivering on the marketing promises will then follow. Then, perhaps, cloud services money will rain into Telcos' coffers.

'Profit from the Cloud'

For more on making money from Cloud Computing, Telco 2.0 Partners Parallels are holding their 5th Annual Cloud Computing Summit on February 22-24, 2010 at the Fontainebleau Miami Beach Resort, Florida.

Innovation Strategy: Sprint, Verizon ODI, and Ericsson's 2020 vision

Mon, 18 Jan 2010 14:50:25 +0000

Telecoms innovation strategy was a big theme at the Telco 2.0 AMERICA Executive Brainstorm in Orlando in December. Below are some video interviews from the event:

- Sprint's VP Corporate Strategy on reaching "Silicon Valley speed" innovation.
- Verizon Wireless's Open Development Initiative (ODI), on accelerating the network's ability to connect external devices.
- Ericsson's vision for 2020.

Sprint - 'Breaking Big Bell Dogma'

Russ McGuire, VP, Corporate Strategy, Sprint, says that changing innovation from 'carrier speed' to 'Silicon Valley speed' needs Telcos to break "Big Bell Dogma" by embracing open innovation processes.

Interview Summary:

A key challenge for telcos is to participate without slowing down innovation, which is as much a cultural as a technological challenge for telcos.

In terms of the big picture, Sprint sees the traditional one-sided model remaining essential in the near term (as indeed do we at Telco 2.0), but also an increasing role played by 'two-sided' business models to enable 3rd parties to create value for their customers via telecoms capabilities and/or the telecoms channel.

Russ describes a business model he calls 'the carrier inside': a wholesale provider entirely within other businesses' propositions. He also suggests near term opportunities in voice such as supporting 'at risk' mothers-to-be with a push to talk phone directly connected to medical advisors.

Verizon Wireless ODI - faster, more practical innovation

Maurice Thompson, Director of Verizon Wireless Open Development initiative (ODI), explains how the programme enables new external devices, including machine to machine (M2M) devices and e-Readers, to get on to the network in less than four weeks.

Interview Summary:

The aims of ODI are to speed more new innovations to Verizon's customers, to enable wider innovation from external sources, to give a greater choice of devices for customers, and thereby attract new customers. Maurice also gives more detail on examples of the types of new devices connected.

Ericsson 2020 - Future Innovation 'Turned on its Head'

Pankaj Asundi, VP Media & Content at Ericsson, describes how the global telecoms innovation process is changing and provides insight into Ericsson's view of the market in 2020 - with 50Bn connected devices.

Interview Summary:

Innovation is changing from an internally driven, PC focused process, to one driven by external mobile developers and led by customer choice. What will be the key segments, where will telcos make money, and what key developments will unlock the market? How will networks operating 'two-sided' business models leveraging unique assets be able to profit from the new openness?

Innovation Strategy: What's New?

'Innovation', n. in-no-vay-shon, change in an established practice by the introduction of new methods, etc.

It's clear that the Telecoms industry is waking up, starting to open up, and starting to pilot new business models. It is at least increasingly talking about doing so.

Richard Kramer, investment analyst at Arete Research, said in his opening presentation on shareholder value at the Orlando event that it is the most interesting time he can remember in the Telecoms and Tech sectors. Despite, and possibly because of the world's economic problems, the telecoms industry looks like it is starting to reinvent itself by looking outside its own doors for inspiration.

As part of the warm up for the 9th Telco 2.0 Executive Brainstorm, on 27-29 April in London, we will publish more output from the last events on this blog, along with additional analysis, over the next few weeks.