The European Telecoms market in 2020, Report 2: 4 scenarios and 7 predictions

We've just published a new research paper 'The European Telecoms market in 2020, Report 2: 4 scenarios and 7 predictions'. Seven predictions and four scenarios for how the industry might play out in Europe in the next 5 years: 'Digital Renaissance', 'Back to the Future', 'Commoditised Utility' and 'Telco Trainwreck'. Plus what are the take-outs for other markets?

The report is part of the Executive Briefing Service and Telco 2.0 Transformation stream, and you can read an excerpt of the report here.

For more information on any of our services, please email or call +44 207 247 5003.

Extract chart from the report: | 22-Jul-2015 16:14

The European Telecoms market in 2020: Evaluating 10 forces of change

We've just published a new research paper 'The European Telecoms market in 2020, Report 1: Evaluating 10 forces of change'. In the first of two reports, STL Partners evaluates how several powerful forces, within and beyond the control of telcos, look set to change the shape of the European market and considers the options for how these might develop going forward. The forces covered are:

  1. Regulation
  2. Competition
  3. Revenue outlook (for core services)
  4. Technological changes
  5. Capital markets/investor attitudes
  6. Customer attitudes and behaviour
  7. Telco vision and aspirations
  8. Telco culture, skills, partnerships and assets
  9. M&A
  10. Absolute and relative capex and opex (compared with OTT players)

The report is part of the Telco 2.0 Transformation stream, and you can read an excerpt here.

For more information on any of our services, please email or call +44 207 247 5003.

Extract chart from the report: | 15-Jul-2015 14:11

What do telcos need to do to be more agile?

Our latest research How to be Agile: Agility by Design and Information Intensity looks at how agile are telcos today, the barriers and opportunities, and what can be done to improve agility.

We found that the majority of telcos might be described as 'moderately agile', and critically, telcos need to move beyond wanting to be agile to taking actions in terms of how they are organised, how leaders and teams are empowered to make decisions, and the metrics they use. See more here.

The Majority of Telcos Profiled themselves as Moderately Agile | 10-Jul-2015 13:57

Telco-Driven Disruption: What NTT DOCOMO, KT and Globe got right

NTT Docomo earns 15% of its revenues from non-traditional sources, the largest proportion of any telco worldwide. Our latest 'Dealing with Disruption' stream research briefing 'What NTT DOCOMO, KT and Globe got right' looks at how DOCOMO did it, what did it learn, and what else can be learned from other telco attempts at disruptive innovation?

As they seek new sources of revenue, many telcos around the world are attempting to disrupt adjacent markets, such as digital commerce, IT, entertainment and financial services. While many of these moves have proved to be too little, too late, several disruptive plays have had a significant impact on both the telco's revenues and relevance.

As well as NTT DOCOMO's Smart Life portfolio, these include Globe Telecom's GCash service and KT's media business, as well as some of those we looked at in the first report in this series (which included BT Sport, SK Planet and AT&T Digital Life and others). Why do some disruptive moves by telcos succeed and others fail? More here. | 02-Jul-2015 11:02

Mobile Authentication: Telcos' Key to the Digital World?

We've just published a new research paper 'Mobile Authentication: Telcos' Key to the Digital World?'. Mobile Authentication could be Telcos' key asset in the digital economy, but they are in danger of losing out through insufficient action. There are good case studies and an excellent blueprint in the GSMA's Mobile Connect initiative for how to monetise their assets and stay relevant. So why aren't they getting on with it?

The report is part of the Executive Briefing Service and Dealing with Disruption stream, and you can read an excerpt of the report here.

For more information on any of our services, please email or call +44 207 247 5003.

Extract chart from the report: | 24-Jun-2015 16:05

Repremiumization: The dangerous self-deception at work in European Telcos

We've just published a new research paper 'Repremiumization: The dangerous self-deception at work in European Telcos'. As several operators in Europe downsize their Telco 2.0 Digital Services activity, some are seeking to reframe the Piper strategy as a premium-priced differentiation play based on network quality. This report argues this is deluded and dangerous - a Piper strategy is viable but only by developing cost-leadership in a commodity market.

The report is part of the Executive Briefing Service, and you can read an excerpt of the report here.

For more information on any of our services, please email or call +44 207 247 5003.

We see repremiumization as a self-deception strategy... | 17-Jun-2015 18:36

How 5G is Disrupting Cloud and Network Strategy Today

A primary benefit envisaged of '5G' networks is that latency (i.e. delay times for users) will be massively reduced. This would deliver major benefits for many applications providing that the software for those cloud-based applications is located near enough to the users at the edge of the network. This is likely to drive a massive change in the architecture of the cloud and the network industries.

Our latest report outlines likely scenarios and identifies some early moves that are starting to play out now, such as the merger between Nokia and Alcatel.

There's also some interesting analysis that suggests that cloud players are not all just building bigger and bigger data centres (see chart below, for example) which gives some further support to the idea that the cloud is already becoming more local - or at least, is not just moving even further away,

The table of contents plus part of the introduction that outlines the importance of latency are below, and you can read more on our research portal here.

Report Contents:

  • Executive Summary
  • Introduction
  • 5G - a collection of related technologies
  • The mother of all stretch targets
  • Latency: the X factor [reproduced below]
  • Latency: the challenge of distance [reproduced below]
  • The economic value of snappier networks
  • Only Half The Application Latency Comes from the Network
  • Disrupt the cloud
  • The cloud is the data centre
  • Have the biggest data centres stopped getting bigger?
  • Mobile Edge Computing: moving the servers to the people
  • Conclusions and recommendations
  • Regulatory and political impact: the Opportunity and the Threat
  • Telco-Cloud or Multi-Cloud?
  • 5G vs C-RAN
  • Shaping the 5G backhaul network
  • Gigabit WiFi: the bear may blow first
  • Distributed systems: it's everyone's future
Latency: the 'X factor' for 5G

A big stretch, and perhaps the most controversial issue here, is the latency requirement. NGMN (the Next Generation Mobile Networks alliance) draws a clear distinction between what it calls end-to-end latency, aka the familiar round-trip time measurement from the Internet, and user-plane latency, defined thus:

"...measures the time it takes to transfer a small data packet from user terminal to the Layer 2 / Layer 3 interface of the 5G system destination node, plus the equivalent time needed to carry the response back."

That is to say, the user-plane latency is a measurement of how long it takes the 5G network, strictly speaking, to respond to user requests, and how long it takes for packets to traverse it. NGMN points out that the two metrics are equivalent if the target server is located within the 5G network. NGMN defines both using small packets, and therefore negligible serialisation delay, and assuming zero processing delay at the target server. The target is 10ms end-to-end, 1ms for special use cases requiring low latency, or 50ms end-to-end for the "ultra-low cost broadband" use case. The low-latency use cases tend to be things like communication between connected cars, which will probably fall under the direct device-to-device (D2D) element of 5G, but nevertheless some vendors seem to think it refers to infrastructure as well as D2D. Therefore, this requirement should be read as one for which the 5G user plane latency is the relevant metric.

This last target is arguably the biggest stretch of all, but also perhaps the most valuable.

The lower bound on any measurement of latency is very simple - it's the time it takes to physically reach the target server at the speed of light. Latency is therefore intimately connected with distance. Latency is also intimately connected with speed - protocols like TCP (Transmission Control Protocol) use it to determine how many bytes it can risk "in flight" before getting an acknowledgement, and hence how much useful throughput can be derived from a given theoretical bandwidth. Also, with faster data rates, more of the total time it takes to deliver something is taken up by latency rather than transfer.

And the way we build applications now tends to make latency, and especially the variance in latency known as jitter, more important. In order to handle the scale demanded by the global Internet, it is usually necessary to scale out by breaking up the load across many, many servers. In order to make this work, it is usually also necessary to disaggregate the application itself into numerous, specialised, and independent microservices. (We strongly recommend Mary Poppendieck's presentation at the link.)

The result of this is that a popular app or Web page might involve calls to dozens to hundreds of different services. includes 31 HTTP (Hypertext Transfer Protocol) requests these days and 190. If the variation in latency is not carefully controlled, it becomes statistically more likely than not that a typical user will encounter at least one server's 99th percentile performance. (EBay tries to identify users getting slow service and serve them a deliberately cut-down version of the site - see slide 17 here.)

Latency: the challenge of distance

It's worth pointing out here that the 5G targets can literally be translated into kilometres. The rule of thumb for speed-of-light delay is 4.9 microseconds for each kilometre of fibre with a refractive index of 1.47. 1ms - 1000 microseconds - equals about 204km in a straight line, assuming no routing delay. A response back is needed too, so divide that distance in half. As a result, in order to be compliant with the NGMN 5G requirements, all the network functions required to process a data call must be physically located within 100km, i.e. 1ms, of the user. And if f the end-to-end requirement is taken seriously, the applications or content that they want must also be hosted within 1000km, i.e. 10ms, of the user. (In practice, there will be some delay contributed by serialisation, routing, and processing at the target server, so this would actually be somewhat more demanding.)

To achieve this, the architecture of 5G networks will need to change quite dramatically. Centralisation suddenly looks like the enemy, and middleboxes providing video optimisation, deep packet inspection, policy enforcement, and the like will have no place. At the same time, protocol designers will have to think seriously about localising traffic - this is where the content-centric networking concept comes in. Given the number of interested parties in the subject overall, it is likely that there will be a significant period of 'horse-trading' over the detail.

It will also need nothing more or less than a CDN and data-centre revolution. Content, apps, or commerce hosted within this 1000km contour will have a very substantial competitive advantage over those sites that don't move their hosting strategy to take advantage of lower latency. Telecoms operators, by the same token, will have to radically decentralise their networks to get their systems within the 100km contour. Those content, apps, or commerce sites that move closer in still, to the 5ms/500km contour or further, will benefit further. The idea of centralising everything into shared services and global cloud platforms suddenly looks dated.

So might the enormous hyperscale data centres one day look like the IT equivalent of sprawling, gas-guzzling suburbia? And will mobile operators become a key actor in the data-centre economy?

See more on our research portal here. | 13-Jun-2015 17:23

Ericsson and STL Partners reveal Telco 2.0 Agility Challenge award winners: Telus, Zain Jordan & Telecom Italia Digital Solutions

STL Partners are pleased to announce the winners of the Telco 2.0 Agility Challenge, a competition that assesses how agile operators are across different areas of their business. The competition was independently conducted by STL Partners and sponsored by Ericsson, with operators worldwide openly invited to participate. STL and Ericsson presented the awards to the winners at TM Forum Live! in Nice.

'Operator agility' refers to the ability to move at faster speeds and to learn and adapt quickly to capitalize on new opportunities for improved business and operations management. The Telco 2.0 Agility Challenge winners embodied these principles, demonstrating industry-leading capabilities in core areas of competence.

The Winners
Organizational Agility: Telus

Telus are the winner in the Organizational Agility category. Telus have demonstrated that they embrace change and innovation, placing the customer at the forefront of their business. Telus adopted a Customer First initiative across the whole organization; this commitment to customers has led to both a significant increase in the 'likelihood to recommend' metric and a substantial reduction in customer complaints.

Organizational Agility: Establish a more agile culture and mindset, allowing you to move at faster speeds and to innovate more effectively.

Service Agility: Zain Jordan

Zain Jordan, the leading mobile operator in the Hashemite Kingdom of Jordan, is the winner in the Service Agility category. Zain Jordan prides itself on challenging existing approaches and methodologies in order to remain the leader in the competitive marketplace in which it operates. The company believes its receipt of the Service Agility Award comes as a reward for its continuous efforts to develop the capability to create products and services in a much more iterative manner, resulting in quicker launch of a much broader range of innovative products and services, with less investment and that better address customer needs.

Zain Jordan has achieved the speed and flexibility needed to differentiate itself in the marketplace through deployment of state-of-the-art, real time service enablement platforms and solutions. These are managed and operated by professional, specialized, and qualified teams, and are driving an increase in profitability and customer satisfaction. Zain Jordan's highly skilled professionals deliver many innovative service designs each year to customers in the Kingdom. During both the product development stage and post-product launch, Zain Jordan regularly engages in testing and simulating and captures customer feedback to ensure that products better meet customer needs.

Zain Jordan seeks to constantly improve its products and services as well as shorten the length of time it takes to bring them to the market. The level of competition in Jordan is well documented, and in order to remain relevant and successful, adapting to market conditions and satisfying customers is a must. Put in a word, one has to be 'agile' in order to succeed and survive.

Service Agility: Develop the capability to create products and services in a much more iterative manner, resulting in products that are developed faster, with less investment and better serve customer needs.

Partnering Agility: Telecom Italia Digital Solutions

Telecom Italia Digital Solutions (TIDS) are the winner in the Partnering Agility category. TIDS have partnered effectively to deliver innovative digital services, including establishing and launching an IoT platform from scratch within 6 months. They are also developing and coordinating all the digital presence at the Expo Milan 2015. They have demonstrated that they can form beneficial partnerships in fast timescales both for TIDS and for Telecom Italia Group.

Partnering Agility: Become a more effective partner by developing the right skills to understand and assess potential partnerships and ensure that the right processes/technologies are in place to make partnering as easy as possible.

Operator Agility
The Telco 2.0 Agility Challenge follows STL Partners' release of the "The 'Agile Operator': 5 Key Ways to Meet the Agility Challenge" study that was commissioned by Ericsson and based on interviews and discussions with around 30 U.S., European and Asian operator executives. The report provided insights and recommendations on key categories that define the agile operator.

"Operators worldwide know that IT intelligence is essential in supporting real-time customer demands, especially as networks and systems become more complex," said Pam Mallette, head of OSS/BSS marketing for Ericsson. "To this end, legacy systems simply cannot deliver the 'weightless agility' that is needed to deliver the instant gratification that subscribers crave. The winners of the Telco 2.0 Agility Challenge have demonstrated an intense focus on important agility-driven initiatives that will be key to their ongoing success. We congratulate them on this recognition."

About the Awards
STL Partners ran the Telco 2.0 Agility Challenge during April-May 2015. The Challenge was an online benchmarking tool that allowed operators to score how 'agile' their organisation is across a number of key domains. The highest scoring operators within each domain were shortlisted and winners were selected based on follow-up evidencing calls.

The Telco 2.0 Agility Challenge awards are independent STL Partners awards, with the Challenge being sponsored by Ericsson. STL Partners would like to thank Ericsson for their support in this programme.

About STL Partners
STL Partners are a consulting and research firm, focusing on business model innovation in the TMT sector. STL Partners undertake consulting assignments for telecoms operators and technology companies around the globe and produce thought-leading research under the Telco 2.0 initiative. | 04-Jun-2015 19:23

Digital Implementation: One Decision That Rules Them All

In digital, there is one decision that makes more difference than every other: what you choose to measure at a given time. It doesn't sound very 'sexy', but if you get it right, your results will be. This post explains why, how to go about doing it, and some tools we've developed to help select the right metrics for the moment - including metrics for synergies, an important and complex type of measure for digital businesses operating within an existing core business.

Becoming 'digital' is a fundamental drive for all businesses today. It means embracing mobile and online ways of doing business, transforming existing businesses and building new ones. It sounds straightforward, but it's a lot harder than it seems.

Some of the intrinsic and defining characteristics of digital business are:

  • Digital business models are often very different from their non-digital counterparts (if they exist at all)

  • You can change pretty much everything you do relatively swiftly

  • You can count pretty much everything all the time, real-time, if you want to

  • Where there is an existing businesses, some of the key metrics for new initiatives relate to 'synergy' - impacts on and within the core business

These characteristics mean that what you choose to measure, and thus what you base your decisions on, both defines what you see as success and impacts your ability to achieve it. OK, but so what, and how should you choose the right measures?

So what that the business models are different?

Digital businesses often employ very different ways of making money (aka 'business models') than non-digital businesses. The obvious differences can be comprehensive, including different propositions, different pricing models, different delivery mechanisms, etc.

However one of the biggest differences is that digital businesses models do not always start out making money - they need to achieve scale or credibility in some other factor first.

Google is a classic example of this: it initially needed to build significant scale in the number of people searching, and to drive that optimise the perceived quality of its search results, before it could become the massive and hugely effective paid search matchmaker it is today. Google's success was not measured by income for many years after its launch.

So what that you can change everything quickly?

Digital businesses are, or at least should be, relatively agile. This is in theory a good thing - you can do new things and respond to new learnings quickly.

But it's not necessarily good if you are doing the wrong new things or responding to misleading stimuli or learnings. So being able to change quickly can be an opportunity to jump off a cliff quickly too.

Now of course, in theory, you should be able to change back quickly too. But if you are measuring and hence watching the wrong things, you may not get the right signals. And a cliff is a cliff, after all.

So what that you can count pretty much everything?

It's easy to get swamped with information in digital. Just a glance at Google Analytics shows visitors, page views, users, minutes, new users, existing users ... you name it and with a bit of guile you can generally get to it, and that's just a web analytics tool. Add to that financial reports, CRM, billing systems, big data... and in no time at all you can suffer information overload.

But what actually matters? A key concept in the LEAN approach, often used by innovative and start up business, is 'One Measure that Matters' (OMTM) - a single key metric used to measure success. There may be subordinate or supporting measures, but there should be one that is the lead indicator.

Right Moment Metrics

What we've added to this is the idea that the OMTM will change depending on the stage of evolution of the business. Our shorthand for getting the right measure at the right time is 'Right Moment Metrics'.

To make this a bit more pragmatic, we've also established a database of 150 key metrics used in digital businesses, including a method for selecting what is the right metric for the moment for a different types of digital businesses.

Of course another related success factor is ensuring that your stakeholders understand and buy in to the metrics you choose. If they don't, then however much you are on the right track won't matter as the money usually follows the measures.

Synergy Metrics: A Double-Edged Sword?

The prospect of synergies created by new initiatives can be both an advantage and a problem. They are an advantage because they help to stack up additional benefits in the case for early stage activities. But synergies can also present a number of problems. For example:

  • 'Double-bubble' benefit counting. For example, churn can only be reduced by a certain amount and may be impacted by many different factors. It cannot be logical for every initiative to claim the benefit.
  • Complicating the decision-making process. When activities have potential knock-on effects with other parts of the business, or require support from existing resources, conflicts of interests and authorities can occur. This can mire the innovation in unproductive activities and unhelpful cultures, and thereby derail it.

We've looked at this in some depth in our analysis, and our database includes methodologies to help select the most useful Synergy Metrics.

Next steps

If you'd like to know more about our 'Right Moment Metrics' approach please email, and there's more on our research portal in The Digital Dashboard: How new metrics drive success in telco digital initiatives. | 02-Jun-2015 11:44

Gigabit Cable Attacks This Year

We've just published a new research paper 'Gigabit Cable Attacks This Year'. Cable operators are on the verge of a massive and remarkably easy capacity upgrade. Where it has begun, fixed incumbents are already being forced to deploy fibre. Gigabit WiFi is coming too, so mobile operators are very much concerned.

The report is part of the Executive Briefing Service and Future of the Network research streams, and you can read an excerpt of the report here.

For more information on any of our services, please email or call +44 207 247 5003.

Extract chart from the report: | 27-May-2015 19:27

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