News$172bn Telecoms revenue threat: disruptive defence strategies and growth opportunities
Our latest report The Future of Voice and Messaging shows that telcos could lose up to $172bn from core revenues in five years, but also how they could make dramatic improvements to their voice and messaging strategies worth as much as $80bn.
Whether you work for a telco or a business that serves telcos, we believe there are three fundamental ways in which the insights in the report can add value to your business:
- Optimise your strategy - there's $80bn to play for
- Base your business on more realistic forecasts and deeper insights
- Learn how to compete with disruption
Covering each in turn, the key points are as follows.
1 Optimise your strategy - there's $80bn to play for
All is not yet lost, and there are very few areas in which telcos can make a difference to the scale of $80bn, much of which is highly profitable, marginal revenue. Whether you are a telco or a key partner, investing in benchmarking your plans against the best in the market could produce major returns.
The report shows how telcos can fight to reduce this loss by $80Bn through intelligent optimisation of prices and bundles, service enablement, exploiting new standards such as WebRTC and VoLTE, creative approaches to own brand OTT services, and a greater focus on enterprise communications.
2 Base your business on more realistic forecasts and deeper insights.
Our forecasts have been the most prescient, aggressive, and sadly the most accurate, in the market. Even if you don't particularly like what we are saying, how much better would your strategy and investment decisions be if your plans were based on an independent, expert view of the market?
The report contains an in-depth analysis of the changing needs of both consumer and enterprise markets, and detailed mobile and fixed voice and messaging forecasts for US, Canada, Singapore, Taiwan, UK, Germany, France, Italy, and Spain.
3 Learn how to compete with disruption
Invaluable lessons in how to compete with disruptive competition can be found in our analysis of the successes and failures of telcos to deal with the incursion of such services into their heartland revenues. The report contains 'OTT' case studies on e.g. Whatsapp, KakaoTalk, and 'Telco OTT' plays such as TuGo.
The report comprises a concise executive summary, and totals 260 pages and 163 figures. Further details here.
telco2.net | 11-Dec-2013 19:05
Telcos could lose up to $172bn from core revenues in 5 years
Our latest major report The Future Value of Voice and Messaging shows that telcos could lose up to $172bn from core revenues in five years if they don't make dramatic improvements to their voice and messaging strategies.
The declines are due to so-called 'Over The Top' (OTT) competition, vulnerable pricing structures, economic pressures and societal changes. The research shows how Telcos can fight to reduce this loss by $80bn and improve their relevance to customers through intelligent optimisation of prices and bundles, service enablement, exploiting new standards such as WebRTC and VoLTE, creative approaches to own brand OTT services, and a greater focus on enterprise communications.
It includes detailed forecasts for 9 major developed markets (US, Canada, France, Germany, Spain, UK, Italy, Singapore, Taiwan), in which the total decline is forecast between $92bn (-25%) and $172bn (-46%) on a $375bn base between 2012 and 2018, giving telcos an $80bn opportunity to fight for.
The report also shows impacts and implications for other technology players including vendors and partners, and general lessons for competing with disruptive players in all markets.
One of the most surprising things the report shows is how effective some telco strategies have been in defending against disruptive competitors like WhatsApp. Then again, there are some markets, such as Spain, where the combination of telco pricing and economic conditions have played right into the hands of the so-called 'OTT Players'.
Equally, there are some great opportunities for telcos to build new value, particularly in the Enterprise market, where some of the more traditional technology companies like Cisco face increasingly disruptive competition from players like Google and Microsoft.
More on the report
This report provides an independent and holistic view of voice and messaging market, looking in detail at trends, drivers and detailed forecasts, the latest developments, and the opportunities for all players involved. The analysis will save valuable time, effort and money by providing realistic forecasts of future potential, and a fast-track to developing and / or benchmarking a leading-edge strategy and approach in digital communications.
- Our independent, external market-level forecasts of voice and messaging in 9 selected markets (US, Canada, France, Germany, Spain, UK, Italy, Singapore, and Taiwan).
- Best practice and leading-edge strategies in the design and delivery of new voice and messaging services (leading to higher customer satisfaction and lower churn).
- The factors that will drive best and worst case performance.
- The intentions, strategies, strengths and weaknesses of formerly adjacent players now taking an active role in the Voice & Messaging market (e.g. Google & Microsoft).
- Case studies of Enterprise Voice applications including Tropo, Twilio and Unified Communications solutions such as Microsoft Office 365.
- Case studies of Telco OTT & enterprise Voice and Messaging services such as Telefonica's TuGo and Vodafone One Net.
- Lessons from case studies of leading-edge new voice and messaging applications globally such as WhatsApp, KakaoTalk and other so-called 'Over The Top' (OTT) Players.
A summary of the report can be found here.
telco2.net | 29-Nov-2013 09:14
The Future Value of Voice and Messaging: >$80 billion to play for
Our latest strategy report The Future Value of Voice and Messaging shows how telcos can slow the decline of voice and messaging revenues and build new communications services to maximise revenues and relevance with both consumer and enterprise customers. It includes detailed forecasts for 9 markets, in which the total decline is forecast between -25% and -46% on a $375bn base between 2012 and 2018, giving telcos an $80bn opportunity to fight for.
It also shows impacts and implications for other technology players including vendors and partners, and general lessons for competing with disruptive players in all markets. It looks at the impact of so-called OTT competition, market trends and drivers, bundling strategies, operators developing their own Telco-OTT apps, advanced Enterprise Communications services, and the opportunities to exploit new standards such as RCS, WebRTC and VoLTE (more here).
telco2.net | 20-Nov-2013 23:36
Innovation Souq! - 6 Demos in 42 Minutes
The Innovation Souq session at our Digital Arabia event is a new format in our events that we're hoping to roll out more broadly. Each participant pitches their innovation for 7 minutes, and when all of them are done, the delegates can wander around the souq and meet them informally.
Etisalat's demo combines mobile payments, advertising, and augmented reality. You can point a mobile device camera at products to see more detail and perhaps offers, and then pay for them using their m-payments service, while the merchant sees this on their POS terminal. The detail we liked, though, was that the AR element doesn't have to be projected over something physical - it could also be registered against scenes in a TV broadcast, opening up a lot of new possibilities for advertising and commerce. Not just those, of course - it also creates some new possibilities for media in general.
Smartpipe wants to dig into your CDRs and generate advertising opportunities based on insights from them.
Tmob, a Vodafone-linked mobile payments startup, is using the proximity features that arrived in iOS 7 and Android 4.x to implement location-based offers and surprises. Apple call it iBeacon, and you should probably expect to see more of this.
Zangbezang is a rather impressive solution that lets you set up offers with geographical and demographic targeting and then redeem them. The transactions element of the cycle is based on QR codes and the smartphone camera, so there's no need for either NFC or a Square-like credit card dongle as all the financial processing happens via a website. There's quite a bit of richness to explore in the targeting and recommendations process.
NPTV is a cloud platform for producing richer, interactive video with multiple camera options, AR overlays, and the like that the viewers control. Think telemetry or the driver view camera in a F1 race, or the reverse angle camera in a football match. The rendering happens in the cloud, unloading a lot of computing demand from the user's device or your Web servers. As usual with the cloud, there's quite a bit of innovation in the infrastructure that's hidden from the user, including a new chip.
Telkom Indonesia and EBay are cooperating on a mobile commerce platform for small businesses - the facts that stick with us, though, are that there are 5.7 million blogs in Indonesia and it's the world's second biggest userbase for Opera Mini. That's quite a mobile Web market.
telco2.net | 13-Nov-2013 06:59
Innovations: Customer Experience, Analytics, Smart Grid, M-Commerce and Monetising Content
The Innovation Souq! at Digital Arabia in Dubai next week (11th-13th November) has a fascinating line up of demos of innovations by innovators from across the digital ecosystem. We're really looking forward to seeing these short, sharp demonstrations - the rules are that they have to be real innovations that can be applied now. We've also got a fantastic group of participants lined up to see them. [Ed: If you haven't booked yet there are a few spaces left - email email@example.com or call +44 20 7247 5003 ASAP. ]
There's such a broad range of innovations on display that it's hard to categorise without doing some a dis-service as many cover more than one area of innovation. However, the main themes we anticipate are:
- Customer Experience: Accenture will show 'Call Centre 2.0', showing analytics in action enhancing real time customer experience; Intel are showing Communications-Enabled Video Conferencing, enhancing conferencing with APIs; and ZangBeZang are demoing 'Customer Engagement 2.0'.
- Building on the Data Analytics and Smartgrid themes, IBM are demonstrating city traffic data analysis, and Ericsson 'Enabling the Smart Grid', enabling enterprises such as utilities to use network capabilities to drive third-party innovations.
- In M-Commerce, Etisalat are demo-ing Mobile-Id-as-a-Service, and Mobile 'Point of Sale' (M-Pos) innovations, while 5th Tier's CEO Tanya Field (ex-O2) is showing Mobile Advertising and Mobile-Id-as-a-Service. Turkey's Tmob are showing Mobile Wallet 2.0, Minutrade 'mobile as a loyalty currency', and Mastercard in-content web payments.
- Relating to Monetising Content, Etisalat are also showing 'TV Monetisation 2.0', and ex-Rovio COO (Angry Bird, also ex-CEO Tele2 and C-level in Sonera, TeliaSonera and Wataniya) Harri Koponen is demonstrating NPTV's cloud-based real-time interactive video.
telco2.net | 06-Nov-2013 14:23
Digital Commerce 2.0: Disrupting the Californian Giants
Amazon, Google, Apple, eBay/PayPal and Facebook are the big five brokers of digital commerce. But the disruption caused by the rise of mass-market smartphones, and the personal data they generate, means the medium-term leadership of these California-based companies is not assured. Each of them has weaknesses that could hinder their progress towards securing a strong strategic position in the new Digital Commerce 2.0 marketplace, and render them potentially vulnerable to competition from telcos, banks and/or start-ups.
Read an excerpt from our new briefing Digital Commerce 2.0: Disrupting the Californian Giants here, and join us at Digital Arabia, 11-13th November, Dubai to explore digital commerce opportunities in the MENA region.
telco2.net | 29-Oct-2013 09:30
Cloud 2.0: Securing Trust to Survive the 'One-In-Five' CSP Shake-Out
The Cloud market is on the verge of the next wave of market penetration, yet it's likely that only one in five Cloud Service Providers (CSPs) in today's marketplace will still be around by 2018, as providers fail or are swallowed up by aggressive competitors. So what do CSPs need to do to survive and prosper? Download our latest free research briefing here.
telco2.net | 23-Oct-2013 10:46
Telcos can grow total revenues +5% in 5 Years with 'Digital Commerce 2.0'
Our major new report Digital Commerce 2.0: New $Bn Disruptive Opportunities for Telcos, Banks and Technology Players shows that if telcos fully commit to taking new roles as 'intermediaries' and 'enablers' in Mobile Commerce (advertising, marketing, payments, loyalty) and Personal Cloud, they could grow new revenues amounting to 5% of today's core revenues in 5 years.
Using a unique business model analysis framework, and dissecting the strategies of leading players (including Google, Facebook, Apple, Visa, Amazon, Weve, Isis), the report provides the world's first comprehensive strategic guide for players looking to disrupt markets and deliver new growth within the digital commerce space.
It also includes evaluations of the related strategic opportunities of 'raw big data', professional data services, and internal data use, and a detailed strategy (including proposition, organisation design and business modelling) substantiating how telcos could achieve this growth. More here on our research portal, and join us at Digital Arabia, 11-13 November, Dubai.
telco2.net | 10-Oct-2013 16:56
Do you work for AT&T, Axiata, Etisalat, Ooredoo, Singtel, Telefonica, Verizon or Vodafone?
If so, and you work in technology, IT, product development/management or strategy we would very much like you to contribute to a unique research programme about business model transformation.
Your input would be to complete a 20-minute survey focused on technology transformation and we would give you the results of the survey in return.
For those not ready to click, more details follow below...
STL Partners is conducting a global survey with 8 major Communications Services Provides (CSPs) to explore technology transformation as part of a wider benchmarking of business model transformation. The 8 CSPs we are exploring initially are AT&T, Verizon, Telefonica, Vodafone, Etisalat, Ooredoo, Axiata and SingTel . You can see some initial analysis on Telefonica's marketplace and competitive position here.
We would very much like to access the 'wisdom of crowds' in the technology survey rather than get input from one or two senior folks (though it would be great if they take the survey). It will take around 20 minutes to complete and participants will get a free copy of the results which should be fascinating and insightful.
Again, you can access the survey here.
It covers 3 core technology areas:
- Existing technological capabilities
- The technology changes needed to develop and deliver new 'Telco 2.0' business models
- How well each CSP is doing in making these required changes.
Responses will be aggregated and each CSP will be benchmarked so you can see how your company is doing against its peers.
telco2.net | 03-Oct-2013 09:53
Operator Opportunites in the "New Mobile Web"
We've just published a new research report showing that the emergence of the New Mobile Web will challenge native ecosystems as the primary format for delivering content and apps to mobile devices. This shift will create new opportunities for operators seeking to re(enter) the digital marketplace.
STL Partners define the "New Mobile Web" as the culmination of technological advances that have transformed the level of functionality of the mobile Web, creating a user experience that now rivals PC browsing and native applications.
Register and download the full report free from our research portal here.
The Mobile Web's coming of Age
The 'old' mobile web was only as strong as its weakest link; often websites were not optimised for mobile devices and network connectivity was slow (not to mention expensive), leading to a poor user experience. This tarnished and diminished the use of mobile browsing and hence native apps have come to dominate - they provided more intuitive and engaging ways to access mobile content and services.
However, we are now coming to the stage where market and technical developments are creating a more consistent and widespread mobile experience that rivals PC browsing and native apps.
- The HTML5 standard is maturing and being further refined and improved (the W3C plans to finalize the HTML5 standard by July 2014 ). It now offers improved functionality within web-apps, including the ability to access and harness the resource capabilities of devices as well as working offline.
- Network connectivity has improved significantly - the launch of 4G networks provides users with ultra-fast, reliable connectivity.
- Better mobile devices - devices are now more powerful and are better optimised to display web content.
- Improved browsers - the majority of mobile browsers now support the HTML5 feature set.
A bumpy transition to the New Mobile Web
One obvious question to ask is, 'even if the New Mobile Web can deliver a similar user experience to native apps, why will a transition occur?' Native apps already deliver a great user experience and are a popular and established format for users and enterprises.
Indeed, STL's recent research in this area (Figure 1) highlights the importance of this question. The app ecosystems are ingrained in the mind-sets and processes of mobile users. Furthermore the key players in the app economy are keen to preserve the status quo - they have built and now benefit from a marketplace that provides discovery and distribution of apps and content. They will not relinquish this easily.
Despite this inertia, the transition to the New Mobile Web will occur. The New Mobile Web is disruptive - it will prove to be the cheaper and more-efficient solution for delivering content and apps to mobile devices.
Gaining access to Apple and Android's 'walled ecosystems' requires a major cost and investment by app developers and enterprises - the fragmentation of the ecosystems also forces enterprises to develop a number of apps in order to provide functionality across the different platforms and devices, which can be costly. Furthermore, these native ecosystems can produce significant delays in getting to market as the apps may have to go through rigorous checks before they are approved. HTML5 web-apps only need to be developed once for all operating systems and devices and can be rolled out directly to market. This is a much cheaper and easier long-run solution for enterprises.
Indeed the issue may be even more fundamental; the pure Web and standalone apps are inherently different beasts. The sheer scope of the Web means that it can represent and deliver much more content than apps. Business and organisations that provide information and engage customers/users over the web often find it hard to justify the investment in producing and maintaining an app; it may not be suitable for their business or organisation and it may be relatively costly. They will however still maintain an active presence on the web and with the rise of the smart phone, engagement is now even more important for mobile. Therefore they embrace a single service that allows users to effectively access their content on mobile devices as well as PCs. The New Mobile Web offers this.
This trend towards the 'mobilificaiton' of web content will drive users towards the New Mobile Web, helping to break the app-first mind-set and lead to a shift in the balance of power away from the native app ecosystems.
A word of caution, STL does not believe that this shift will destroy the app world. It will simply rebalance the marketplace so that it more fully reflects the key strengths of both delivery formats. Apps will still play a significant role; their continued advantage is that they are able to offer greater cutting-edge functionality - this is particularly useful for games and other sophisticated software.
How can operators capitalise on this transition?
As previously stated, the pieces of the puzzle are now coming together. The technology has now evolved to a stage where mobile web functionality is approaching that of apps and PC browsing. STL believes that it is not a question of 'if this transition will happen' but a question of 'when and by how much'.
This transition will create opportunities for innovative players. STL's research has indicated that the main opportunities in the New Mobile Web are around Monetisation, Discovery, Distribution and Loyalty .
Telecom operators should look to capitalise on this rebalancing and the opportunities it presents. Many operators are looking to digital for growth (and many have struggled due to the dominance of the native ecosystems). This shift presents a new arena for them to compete in. Operators are placed to succeed here - they have the requisite assets and capabilities (e.g. experience in billing, loyalty, customer data, device and network management etc.) and the desire to (re)build their presence in digital.
STL have recently published a free research report outlining the opportunities for operators in the New Mobile Web and the different strategies they could implement in order to succeed (which can be found here). The emergence of the New Mobile Web is going to create opportunities for innovative players. Operators should therefore look to ride this wave of digital disruption rather than again remaining marginalised in another power shift.
telco2.net | 18-Sep-2013 17:56
MEF Launches Annual Meffy's Awards in Silicon Valley: Deadline 23rd Sept
MEF, the Global Community for Mobile Content and Commerce, have launched their 10th annual Meffy's awards in San Francisco.This year there are 14 award categories recognizing the best in mobile content & commerce with four Innovation categories that focus on the innovation of the product or service, rather than proven success in the market.
DEADLINE FOR ENTRIES IS 23rd SEPTEMBER 2013 - ENTER HERE NOW
Winners will be announced at a gala dinner on 14th November 2013 at the InterContinental San Francisco. The celebrations are just one of the highlights of the two-day event connecting global mobile leaders. Confirmed speakers include senior executives from Shazam, Evernote, Silicon Valley Bank, Visa, Mozilla plus many more.
Get $400 off MEF Global Forum tickets with the early bird discount until 23rd September. The MEF is an official Event Partner of Digital Arabia 2013.
telco2.net | 17-Sep-2013 11:56
Verizon vs. Vodafone: who's best off after the $130bn 'amicable' VZW split?
Breaking up is always hard to do, but there are some things that make it easier. In this case, the partners' interests have drifted apart, there are no kids, and the financial settlement looks like a reasonably good deal for everyone. Vodafone wants the funds for a mixture of transformation and diversification in Europe and other markets; Verizon wants to consolidate using the control and cash flow of Verizon Wireless (VZW), and is betting big on the continued growth of mobile in the US market. But will they both be better off after the split?
[NB. We will soon be publishing further in-depth analysis of both Vodafone and Verizon in the Telco 2.0 Transformation Index, the first benchmark of future telecoms business models. Also covered are Telefonica, AT&T, Singtel, Etisalat, Ooredoo (formerly Qtel), and Axiata. Email firstname.lastname@example.org to find out more, and join us at our Executive Brainstorms in Arabia, Asia, Silicon Valley, and Europe.]
Selling Verizon Wireless: a big deal
In the third largest corporate transaction in history, it was announced on Monday 2nd September 2013 that Vodafone has sold its 45% stake in Verizon Wireless to Verizon Communications for $130bn.
This has been a long time coming. In 2004, there was the AT&T affair, when Verizon almost succeeded in buying out Vodafone's stake in Verizon Wireless. Vodafone had agreed to sell VZW should it win a bid for AT&T Wireless, but this (and therefore the original deal) fell through. Autumn 2012 saw talk of marriage - discussions of a full-blown merger, but Verizon got cold feet over Europe's prospects. In April of this year Verizon was contemplating a $100bn bid, but Vodafone's advisers said this was an undervaluation - with the true value closer to $120bn. It was not until this summer's anticipated interest rate hikes and a falling stock price that Verizon "finally got serious about paying a full price", as Vittorio Colao (CEO of Vodafone) put it.
The $130bn settlement, expected to complete in Q1 2014, can be broken down as follows.
Of particular note is the sheer level of debt Verizon has agreed to take on: it has raised $61bn via a bridge loan, which is split roughly 50/50 between bank and public bonds - making it the largest bridge loan in history. So Verizon certainly cannot be accused of a lack of commitment to gaining ownership of VZW given the level of debt it is prepared to take on to remove Vodafone's name from the register. As part of the sort-out of the couple's record collection, Verizon has also returned its 23% stake in Vodafone Italy.
Vodafone has announced that it will return all of the shares and $23.9bn in cash directly to shareholders, which equates to an overall $84.1bn or 65% of the total consideration. This should make its shareholders happy in the near term at least. Indeed in many ways, Voda's shareholders are the biggest clear winners, benefiting from a better valuation than the stock market had placed on the VZW stake, including some in cash and some in Verizon shares so that they can carry on their relationships with Verizon if they want to.
This may be a key lesson for CSPs holding minority strategic stakes in quoted groups: sell out when you can get the best valuation, and above all keep the shareholders happy.
Although impressive in its scale, this must not overshadow a more basic question: what does this all mean for Verizon and Vodafone?
Verizon: betting big on continued growth of the US wireless market
In its presentation to investors, Verizon identified two key strategic benefits of the deal: access to all of Verizon Wireless' cash flows and the US wireless marketplace being in a growth phase. These tell an interesting story of the rationale behind (and prospects for) the deal.
Verizon Wireless is the 'superstar' operating segment of Verizon. It has enjoyed year-on-year revenue growth since 2010 at an annualised rate of 9.4%, whilst its other operating segment, Wireline, has contracted year-on-year at an annualised rate of 1.8%. Unsurprisingly, Verizon would have had access to an additional $5.3bn in free cash flow in 2012 - had it owned all of Verizon Wireless.
Although cash-augmenting in the long run, Verizon has leveraged itself heavily in the short run. Its borrowing of over $60bn to fund the deal will lead to a large increase in interest payments which, for the near future, will crowd out funds available for capital expenditure. Verizon will also need to allocate most of this cash to paying down the debt in the short term should it wish to return to a more normal debt level. Its step-change in leverage is demonstrated by STL Partners' analysis of Net Debt/EBITDA before and after the deal.
This will have the worrisome effect of leaving Verizon more vulnerable to shifts in the US wireless landscape. With such a stretched balance sheet it is not preparing for strategic investment should the need arise.
Risks include disruption from Sprint Mobile after its merger with SoftBank, intensifying competition from OTT players in voice and messaging, and a slowing of US wireless growth. Indeed, the IMF, for example, recently revised downwards its growth forecast for the US economy. Any of these or other disruptive events might leave Verizon needing to spend without the means.
Verizon has therefore made a $130bn bet on status quo in the US wireless industry. It has made itself larger but also less manoeuvrable. In one sense this is conservative, since it is 'sticking to its knitting' and has not invested in non-core revenue sources, but the sustainability of growth in core services - and therefore the ability of these to make the deal self-financing - is uncertain, and the highly leveraged bet is not without risk.
Vodafone: funding transformation to regain lost momentum
Although Vodafone remains either the largest or second-largest operator in eight of its nine Western European markets, its prospects have soured in recent years. Service revenue might have grown 0.3% during FY2011/12, but it then fell 4.5% during FY2012/13, and this has been compounded further by a quarterly fall of 3.5% in their most recent release. It is also facing increasing competition from cable companies offering bundled packages in many of their core markets.
It is therefore of little surprise that Vodafone has chosen now to sell its stake in Verizon Wireless. With a 'war chest' to both pay down much of its debt and expand its offerings in core services, Vodafone hopes to reverse - or at least stop - this turning tide. By contrast with Verizon, therefore, the deal makes Vodafone financially more manoeuvrable. Colao told reporters that the deal will "enable the company to be very robust and take opportunities if they arise." He might be "super committed" to the next chapter in Vodafone's development, but how will this chapter read?
One clue lies in Vodafone's announcement of 'Project Spring', a $9.4bn organic investment programme over the next three years to build out and modernise their core services - particularly 4G LTE and fibre. This is significant: FY2012/13 saw capital expenditure of $9.8bn. So, assuming that 'base' capital expenditure remains unchanged and that Project Spring is spread equally over the next three years, it represents a yearly increase in capex of 32%. Ironically, by separating itself from Verizon it is now able to adopt an aggressive network-expansion programme reminiscent of Verizon's own during the last few years.
The following is a breakdown taken from its investor presentation.
Though substantial, the question remains whether Project Spring is sufficient to change Vodafone's fortunes. In the long run, Vodafone will also have less in the way of interest expenses which should enable it to look beyond organic investment: it intends to use some of Verizon's cash to help pay for its takeover of Kabel Deutschland and, once this deal has completed, expects to have reduced net debt to approximately 1.0× EBITDA. Vodafone could look to pursue further in-market inorganic investment or even expand its footprint in emerging markets. Given the discouraging prospects for much of Europe - the IMF has also revised downwards its growth forecast for the Euro Area - investment in non-core services or emerging markets appears increasingly necessary.
There is of course the question of the value that Vodafone is now choosing to give up: the significant growth it has received from VZW. We imagine that Vodafone's internal views of growth prospects in the US wireless market are not as positive as Verizon's. But since the days of the pin-stripe suited and red-braced Chris 'City' Gent, Vodafone has long had a reputation as a shrewd financial operator, and given the valuation they have extracted from Verizon, we doubt they let this colour the negotiations.
Indeed, a difference of opinion over such matters, however much it was communicated during negotiations, is likely to have been a driver of the timing of the decision. When shareholders start to hold diverging views of this nature it can often be a good sign that the time is coming to part ways, as it is difficult to operate together effectively strategically and commercially with such differences.
So in summary, we think Vodafone has struck a good deal, although despite the clear benefits of the injection of funds it will receive, Vodafone's prospects after the deal are also not without risk. It has given itself the opportunity to expand and diversify its offerings in both core and non-core services and markets, but the question of how it chooses to use this opportunity remains.
As with Verizon and the USA, the prospects of Europe and the emerging markets will play a substantial role in determining the return on Vodafone's investment - and whether it was right to return its stake in Verizon Wireless. However, Vodafone has more of its destiny in its own hands than Verizon, as it has new money to invest, and neither its existing nor potential new assets are tied to the prospects of just one marketplace.
The cynical old joke runs as follows: "Why is divorce so expensive? Because it's worth it." For Vodafone and Verizon, the ultimate worth of this split will depend on what they do, and what else happens next. As with the aftermath of any split, we'll be watching with interest to see who is back in the market first.
telco2.net | 10-Sep-2013 10:08
A different commitment: how Online Retail & Telecom can Innovate Together
This is a guest post by Peter Briscoe, Executive Director of Innovation, Business Unit Support Solutions at Ericsson, on the opportunities for telcos and retailers to innovate together.
Currently there is a strong drive within the telecom's industry to define future service models and the focus on digital services has never been stronger. The recent New Digital Economics Brainstorm in London was a welcomed opportunity to not only discuss and debate the future among colleagues, but also to discover alternative points of view from banking, online retail, web service and other sectors.
By looking at existing online retail models we can see some challenging areas with fundamental differences that Communication Service Providers (CSP) will need to address, including zero future commitment and short duration services.
Until recently, only a small number of CSPs used payment models based on zero future commitment, where there is no recurring component and involve no additional cost for the consumer after the initial purchase. In most cases, this model is based on pay-before-delivery.
In contrast, most non-retail services, including utilities and telecommunication services, involve a minimum commitment - usually more than one day and in many cases months or years. It is therefore interesting to see how a CSP could adapt this alternative approach and address the challenges it can bring.
This lower level of commitment drives a new breed of short-duration services. With care, these service can provide higher margins and compensate for declining revenue streams elsewhere. People are willing to pay more for a short-duration service if it can be delivered in an immediate, efficient and simple way such as watching a downloaded film.
For short-duration services, greater real-time service enablement will necessitate additional partnerships and introduce new methods that do not require the same level of device pre-configuration and network configuration as required today.
The ability to bring all of these different views together will be the balancing act that many operators will attempt, and centre stage to this approach is how to create the right service enablement platform that can meet all of these demands and drive new business.
For us at Ericsson, the brainstorm was also a great opportunity to hear how companies are looking at new ways in which they can experiment and innovate on top of these new service enablement platforms. Mobily's Head of Innovation, Gaurav Basra, provided a great example of this. He explained not only how they enable internal innovation but bring gamification to the process with a virtual internal stock market for employee ideas.
Mixing retail and telecommunication companies shows that there are great benefits to be found in better understanding the existing online models and exploring how we can enrich them together. With this combination, I believe it will spark the next transformation in both markets.
Background on Author
Peter Briscoe is executive director of innovation, Business Unit Support Solutions at Ericsson. He directs new programs intended to address evolving priorities in telecom software operations platforms. Briscoe has spent more than 19 years working in telecom operations support, with experience in consulting and software creation spanning fault management, service fulfillment and planning. He has worked on several large deployments around the world, specializing in new network technologies and equipment.
telco2.net | 28-Aug-2013 18:09
Gold iPhone; Kindle by satellite; China Mobile LTE contracts; exit Ballmer - Telco 2.0 News Review
- Smartphone Roundup: Any iPhone you like as long as it's gold; Amazon looks at satellite Kindles
- Broadband Connectivity: China Mobile LTE contracts are out, and the lucky winner is...
- Cloud Computing: VMWare and Savvis roll out hybrid cloud; The Data Centre as a Computer 2.0
- Voice 2.0: RingCentral is go for IPO, Calliflower gets refreshed
- Valley Roundup: Ballmer exits Microsoft; a fly on the wall at Yahoo!
Digital Arabia is coming to Dubai on the 12th-13th of November.Any iPhone you like as long as it's gold; Amazon looks at satellite Kindles
The Apple rumour machine is operating at nominal capacity this week, and the pick is probably the suggestion that the new iPhone will be gold. Of course, Apple would no doubt come up with some sort of elegant champagne hue, but would they really indulge in Vertu-style bling?
A bit more seriously, Apple Store staff have apparently been briefed about a new trade-in program for old iPhones as an effort to increase the proportion of the devices that sell through Apple's own retail channel. We note that they've been in an investment phase in retail for some time.
It's suggested that the frame-rate might be dramatically increased.
And Apple has patented the "silent disco", a recent trend according to TechCrunch but one we remember happening in Waterloo Station as long ago as 2005.
Amazon's next lot of Kindles may use Globalstar's satellite network for their Internet connectivity rather than the cellular operator partners in Whispernet. If they do go ahead with this, it suggests that they're more than ever convinced that the devices are about receiving and consuming content and their general-purpose features are secondary - the latency would make browsing very sporky, but then if you're browsing the web on a Kindle you're probably desperate.
The mother of all infrastructure contracts is here: China Mobile announced the first $3bn in a $7bn rollout of TD-LTE, including some 200,000 eNodeBs. Unsurprisingly, the biggest winners were Huawei and ZTE, who each got 25% of the job. The other half of the contract was divvied up between Ericsson, Alcatel-Lucent, and Nokia. China Mobile may yet spend as much as $18bn in CAPEX this year over and above what it's spent already, so there's plenty more to play for.
We shall see whether the share-out is enough to prevent a trade dispute between China and the European Union - the EU trade commissioner has been sitting on a complaint, waiting for the result of the China Mobile deal. Now the result is in.
China's .cn DNS root was the target of the biggest ever DDOS attack over the weekend.
AT&T, meanwhile, promised to add another 50 LTE coverage areas by the end of the year. FierceWireless has a good overview of US LTE deployment - even with the new deployments, Verizon Wireless is still well ahead.
AT&T also opened another of their "Foundry" innovation centres this week, in Atlanta:
VZW stopped offering unlimited data plans in 2011, but had to "grandfather in" the existing customers who insisted on their right to renew the contracts. They're now trying to persuade them to give up the sought-after contracts by offering them more shiny, via their "Edge" get-a-phone-quicker program.
Turkcell's long-running ownership dispute, between the local investor Cukurova and Russian telecoms group Altimo, got so bad lately that there weren't enough board members to sign the Q2 results. They've now had two neutral members imposed by the regulator, and as a result, we know the company's profits were up 4.1%.
Telefonica, meanwhile, upped its bid for E-Plus quite substantially, and scored the approval of Carlos Slim in his effort to acquire its owner, KPN. The deal would give Telefonica control of E-Plus and merge it into O2 Germany, while also leaving KPN with 20% of the combined company as well as the €8.5bn in cash.
Slim also OK'd Telekom Austria's plan to issue €500m of new stock. America Movil owns 24% of the operator, second only to the Austrian government's 28%.
The recent surge of emerging markets angst has shaken up some operators. Telkom in Indonesia, for example, responded to the slide in markets and a request from the government by offering to buy back stock. In India, Reliance is talking about selling a stake in its submarine cables, but then it has been for the last 12 months.
Orange, meanwhile, is planning a visit to South Africa, where it intends to start an MVNO and also to join a joint venture operating WLAN hotspots. Benoit Felten looks at some options for the Aussie NBN.
And meet the people worried about BT turning off dial-up service because they can't get broadband. In Uzbekistan, meanwhile, where the government ordered MTS out of the country a while back, they still can't find a buyer for the operator, and now mysterious new billboards are appearing. Detergent? Green tea? Or...a new mobile operator?VMWare and Savvis roll out hybrid cloud; The Data Centre as a Computer , 2.0
VMWare held its annual shindig this week and Ars Technica was there. Major announcements include a new (ish) SDN solution, "NSX", which claims to provide a full networking stack in software from Layer 2 to Layer 7, more detail on their hybrid cloud service, and the new version of the core virtual machine, vSphere.
Savvis will be providing data centres and connectivity for the new cloud product. China Telecom, meanwhile, has been building what it claims is "Asia's largest cloud computing base" on the grasslands of Inner Mongolia, where (among other things) the wind power is cheap.
Update your local buzzword cache: welcome to Fog Computing, which is what Cisco calls a view of the cloud that moves more processing to the edge, closer to the user, and emphasises M2M and mobility.
Here's a half-hour talk on how Reddit scaled up.
And Google has published the second, completely revised edition of the classic The Data Centre as a Computer, the paper that launched the cloud. You can download it here, free.RingCentral is go for IPO, Calliflower gets refreshed
Chetan Sharma notes that voice and messaging revenue fell year-on-year in 21 different Vodafone markets.
The good news: RingCentral, a cloud-based unicomms product for SMBs, is going for an IPO at $100 million. Or, a valuation equal to last year's sales...
Voice on the Web reviews the refreshed Calliflower, including its new look and feel, its WebRTC support, and its use of the Opus HD voice codec.
Chris Kranky argues that Rogers Wireless' OneNumber FMC product is a buggy mess and should probably have been built in WebRTC to begin with.
DialDrive is a comprehensive marketing and virtual call centre tool based on Twilio's WebRTC client.
A Balancing Act talks to the Microsoft exec responsible for Office Online, the communications module for Office 365, and hears that it "just works" whenever latency is better than 250ms - which includes more of Africa than you might think.Ballmer exits Microsoft; a fly on the wall at Yahoo!
Steve Ballmer leaves Microsoft, saying that he didn't want to be IBM and that there is no real enterprise/customer distinction. We'll remember him for "developers, developers, developers" - something Apple and Google grasped and Nokia never did.
Here's a form guide to the potential candidates for the succession.
Here's a deep profile of Marissa Mayer.
Mark Zuckerberg explains Internet.org, which turns out to be much like 0.facebook.com.
Baidu has a new HTML5 app store that is designed to save you downloading apps you only use once.
And it's time to kill Windows XP before it comes for you.
telco2.net | 27-Aug-2013 12:56
Location Insight Services (LIS): Monetising an $11bn Resource
We've just published a free new research report, Making Money from Location Insights that provides a detailed analysis of the $11Bn Location Insight Services opportunity, with specific use cases and an explanation of both why and how operators are uniquely placed to secure a significant share of this exciting new market.
Although the market has been quick to capitalise on 'location' by developing a range of Location Based Services (LBS), which some analysts say is already worth nearly $10bn, there is a growing conviction among operators that a wider opportunity exists in Location Insight Services (LIS). These, as opposed to LBS, do not necessarily require real-time data.
Location Insight Services have a simple premise: by leveraging the aggregated and anonymised data asset derived from connected consumers' mobile location data, Telcos can identify patterns in location activity over time. This not only enables a much deeper understanding of the consumer in terms of behaviour and motivation, but also builds a clearer picture of the visitor profile of the location itself.LIS could be worth $11bn globally by 2016
Following consultation with key stakeholders within the emerging ecosystem, STL Partners has developed a detailed market taxonomy framework to help operators identify and prioritise the potential demand sources for LIS. Of particular note is the scale of the LIS opportunity in both retail and sales & marketing. An illustrative use case at the intersection of these is advertising evaluation:
- Problem: "I know that advertising has an impact on sales, but how effective are my promotions in generating store traffic?"
- Solution: LIS groups sites and catchments by promoted and non-promoted, and enables calculation of relative uplift (broken down by audience profile).
- Value: Improvement in advertising attribution and media efficiency.
For more, please visit our research portal to register and download the report here. Report Background
This analysis was independently conducted and written by STL Partners and kindly sponsored by JDSU. The following interview with Tim Davis of STL Partners and Dr Michael Flanagan, CTO of Arieso, a JDSU mobility solution, gives further insight and background.
telco2.net | 27-Aug-2013 11:00
Telco 2.0 Transformation Index: Understanding Telefonica's Markets and Market Position
Over on our research portal we've just published an extract from the Telco 2.0 Transformation Index that shows our analysis of Telefonica's markets and market position, including economic and digital market maturity, regulation, customers, competition and pricing.
It is one part of our overall analysis of Telefonica's progress towards transformation to the Telco 2.0 business model. The other parts of the Telefonica analysis are: Service Proposition, Finances, Technology, Value Network, and an overall summary. Telefonica is one of the companies analysed and compared in the first tranche of analysis that also addresses Vodafone, AT&T, Verizon, Axiata, SingTel, Etisalat and Ooredoo (formerly Qtel).
There will be also a world first preview of highlights from the Telco 2.0 Transformation Index at our Digital Arabia Executive Brainstorm in Dubai on 11-13th November 2013. To find out more about any of these services please email email@example.com or call +44 (0) 207 247 5003.
telco2.net | 16-Aug-2013 20:03
5-Minute Survey Invitation: Can Telcos fight back in digital commerce?
The growth of the internet giants and their associated success with appstores has resulted in many telcos being marginalised from the provision of digital services to customers. We are now conducting research to explore if recent market and technology developments could result in a shift from the native (Android, Apple) 'app economy' to a new mobile web experience.
Such developments include:
- More powerful smartphones with larger screens capable of delivering a good mobile web experience
- Faster (3G and 4G) networks that can deliver rich web-based content to mobile devices
- Momentum building around the latest incarnation of HTML, built specifically with mobile in mind
- Stronger web discovery capabilities on mobile devices
As part of the research into this topic, STL Partners is conducting a survey with industry participants. It will take only 5 minutes to complete and the report resulting from this and other analysis will be sent to all participants.
telco2.net | 16-Jul-2013 16:19
Can HTML5 trigger a telco comeback in digital commerce?
The growth of the internet giants and their associated success in mobile with appstores has resulted in telcos being largely shut out of consumer digital services and digital commerce.
STL Partners is conducting research with Buongiorno! to explore whether recent technological developments will result in a shift in power away from the 'app economy'.
Such developments include:
- More powerful smartphones with larger screens capable of delivering a good mobile web experience
- Faster (3G and 4G) networks that can deliver web content to mobile devices
- The latest incarnation of HTML being built specifically for the mobile
- Stronger web search capabilities on mobile devices
If the internet on mobile begins to more closely resemble that on fixed networks and devices, it begs the question whether mobile operators can play a bigger role in the digital commerce value chain?
As part of the research into this topic, STL Partners is conducting a survey with industry participants. It will take only 5 minutes to complete and the report resulting from this and other analysis will be sent to all participants.
Click here to participate.
telco2.net | 01-Jul-2013 14:35
Google Enhanced Campaigns - An inflexion point for HTML5?
There has been much anticipation and commentary around HTML5 and how it will alter the mobile "app" landscape (see Telco2.0 posts on this for more background). Many believe the web standard is not yet mature enough to deliver on its promises. However, recent STL Partners' research suggests that we could be reaching an inflexion point in HTML5 adoption and that this could create new opportunities for telcos in the mobile web & apps value chain.
In this blog post, we argue that we shouldn't consider pure HTML5 "apps" as a direct competitor to native apps (e.g. from Apple's appstore and Android Play). Firstly, we point to the next-generation of Google's Adwords as both a driver and indicator of HTML5's progress.Google Adwords - Enhanced Campaigns
Google Enhanced Campaigns is more than a minor upgrade to Adwords. It will have a major impact on the world of search advertising. Google is bringing a host of improvements to its ad platform and also some smaller yet significant changes. One of these relates to the way that advertisers can determine which devices their ads appear on. Today, marketers & merchants can decide to only advertise to PC browsers (this makes sense if the website is not designed for other devices and many advertisers choose not to place sponsored links to smartphones). However, from the 22nd July, desktop and tablet bids will be forced to be the same as mobile bids, creating a new, unified device targeting functionality.
Website owners who have not sought to build a good mobile user experience will face a predicament. Although not the only solution, HTML5 offers developers a way out as (amongst other things) it is intended to deliver a much better user experience on all devices. It also allows for more functionality to be supported "off-line" in the browser allowing developers to create feature-rich app-like webpages that can be saved as icons on devices.
If a website offers a poor mobile experience, then it is unlikely that the owner will want to pay to drive mobile traffic to it. However, as Google Adwords is removing the option to distinguish between desktops/tablets and mobile users, this provides incentives for the rapid uptake of mobile friendly content. Mobile browsing (increasingly HTML5 content) is expected to receive a boost from this. It is unlikely that Google would do something that would upset a significant proportion of customers, so this is also an indication that Google has confidence that the vast majority of its adwords customers will be ready for the change; many using HTML5.Don't compare pure HTML5 "apps" with Native apps
Industry commentators are focussing too heavily on a "contest" between pure HTML5 "apps" and native apps. HTML5 is a fast and cost-effective way to create a better mobile web experience using app-like interfaces, but this does not necessarily mean it competes directly with Native apps. For example, smaller companies that do not have the resources to create and maintain a native app (or multiple versions across the different OSs) can use HTML5 to deliver both a desktop and mobile experience that work on any mobile device. It can be developed once and it will run on many different platforms, making it cheaper and easier to maintain.What is telcos' role in the growth of HTML5?
STL Partners has recently undertaken research into HTML5 and the opportunities, rewards and challenges that its growth can bring for Telcos. Our findings suggest that there is a real chance for Telcos to secure a role in an emerging content and apps value chain, especially as the growth of HTML5 creates needs around monetisation, discovery and distribution (since HTML5 apps do not have to be sourced though a traditional native app ecosystem, such as Apple's appstore or Google Play).Complete our survey and receive a complimentary copy of our research report
What is your perspective on HTML5? We'd like to hear from you through our online survey, whether you are from a Telco or non-Telco. The survey will take approximately 5 minutes to complete and we will send a complimentary copy of our research report for your participation. Please use the following link to complete the form.
telco2.net | 25-Jun-2013 16:27
Cloud 2.0: Surviving the Commoditisation Crunch
We're currently researching the current drivers and barriers to the adoption of cloud services in the enterprise market, and will be sharing some of the initial findings tomorrow at the EMEA Brainstorm in London. Here's a preview from Bob Brace, Senior Analyst Telco 2.0, who leads our Cloud 2.0 Programme, and who is the lead author on our research report series Cloud 2.0: Telco Strategies in the Cloud. (NB We also run Cloud 2.0 Strategy Workshops - please email firstname.lastname@example.org for more.)
Enterprises of all sizes have started a journey to cloud, but there is no single path that will suit all organisations. Some will stay with "in-house" solutions; others will look to cloud brokers. We are interested in what the "end game" might look like for enterprise cloud adoption and identifying some of the steps along the way or options that service providers might take to accelerate adoption.
One of our hypotheses is that Cloud Service Providers who are able to best help their enterprise customers to move more activities, more quickly, into cloud services will have a survival advantage when the inevitable commoditisation "Cloud Crunch" takes place as the market matures.
Enterprises moving to cloud are facing a number of issues; there may already be a degree of cloud adoption within their workforce as users adopt seemingly harmless external services such as Evernote, Google Drive, etc. They are also faced with a number of inter-related technology decisions that could have a major impact on how they manage and grow their business in the future. Decisions taken now may impact or influence future service roll out or the ability to offer seamlessly integrated services to their users. But what are the key drivers and barriers?
STL is undertaking research with Cloud Service Providers and Enterprises into the forces and trends that are shaping cloud service adoption. We are seeking answers to a number of key questions such as:
- What sort of cloud services will enterprises finally adopt (Private Cloud, Virtual Private Cloud, IaaS, PaaS, SaaS... and various hybrid)?
- And perhaps of more importance, how will they get there and who can help them?
In exploring the "Cloud End Game" we have identified the three following potential scenarios that apply both to individual Enterprises and the wider industry. Each scenario corresponds to a "type" of cloud provider model.
1. Global Platforms. In this scenario, any given enterprise has adopted the cloud services from one or more of the big global providers (Google, Microsoft, Salesforce etc) and has either their own private cloud or a virtual private cloud from a cloud service provider. They are in effect doing their own integration between the external services and their own and are competent to provide their own support and manage multiple billing relationships. They are also confident that their data is secure and cannot be accessed by other companies who use the big global providers services. Enterprises that buy their horizontal business enablers as SaaS direct from Microsoft (or Google) have a billing relationship with Microsoft and in addition, the standard Microsoft or Google solution stores all their user data (files). The enterprise may also use Microsoft Dynamics or Salesforce.com for CRM and this will mean yet another billing and technology relationship. Vertical applications such as Finance, HR, stock control etc are candidates to be hosted by a Cloud Service Provider. At this point we see the enterprise with at least 3 billing relationships, multiple locations for data storage plus security concerns over data location and access and more than one place to go to get support issues resolved.
2. Bespoke Cloud. In this scenario, System Integrators provide enterprises with Cloud services much as data centres' services and hosting were the past. Services running on this infrastructure are "built to spec". Although such a tailored approach has its merits, it does not deliver the full promise of cloud services. However, unless specifically paid for on an exclusive basis, the infrastructure is virtualised and shared with other public users. Generally data is not encrypted and platforms are multi-tenant. Enterprises must be confident that the CSP has adequate controls and systems to protect their data.
3. Service Brokerage. In this scenario, enterprises work with Cloud Service Providers who provide a brokerage service. Cloud service brokers aggregate, integrate and customise multiple cloud services as well as provide (ideally their own) secure data storage and connectivity. Combining multiple best-in-class SaaS services with single sign-on, billing, support, compliance and end-to-end security, we see cloud service brokerage as a potential sweet spot for the Cloud Service Provider (CSP). By offering what is effectively a brokerage solution, the CSP could manage the other providers, provide support and even host and secure the data stores providing encryption and migration tools.
We anticipate that these three scenarios will continue to co-exist for many years along with in-house IT. This hybrid scenario is most likely to persist for some time (physical, virtual, cloud in combination) and managing the data across these boundaries, with consistent security policies/management, will be the biggest challenge.
However, as stated above, we believe that the third scenario offers the best potential for addressing the needs and overcoming potential concerns of most enterprises. Furthermore, this scenario offers the best prospective outcome for many Cloud Service Providers (CSPs) including those originating from telecoms and hosting as it allows them to provide clear differentiation and USP's.
However, to succeed, these CSPs must convince their customers that they have overcome the key concerns of moving to the cloud:
Although some CSPs are already doing so, most still need to rethink their approach to security and their associated capabilities to successfully sell and deliver Cloud Brokerage. Rather than limiting security to a functional sign-off step in product development, some of the more advanced CSPs are putting security into the very core of their proposition and building the capabilities to deliver this: encryption, policy enforcement, migration assurance and auditability, for example.
Like all emerging and new technologies the Cloud is going through a hype cycle and before the end game is reached, we expect many CSPs to either fail or be subsumed by more successful rivals. The survivors will be those that have set out their stall and focused on delivering services that meet their customers' needs and overcome the biggest barriers to adoption.
These and other initial findings from this ongoing research programme will be shared by Bob Brace of STL Partners and Rik Fergusson of Trend Micro (that has kindly sponsored part of this independent research) at our New Digital Economics Event in London tomorrow (June 5th), and we will be publishing our full findings from this research in June.
telco2.net | 04-Jun-2013 19:52
Telefonica UK's new vision and the role of Customer Data
Here's a presentation from James Morgan, Telefonica UK's head of information strategy for business intelligence. It's well worth a few minutes of your time, especially if you're interested in how to define the policies and terms of business around the re-use of customer data.
The most interesting thing, though, is Telefonica UK's articulation of its new 'vision': "To be The Most Trusted Provider of Brilliant Digital Experiences". This is very much in line with Orange Group's proposition and a direction that most mobile operators are heading towards, as their businesses evolve.
In the presentation James says:
"We are on a Transformation journey and arguably, our customer data is as big an asset as our brand. Our biggest opportunity to grow our business is to leverage information to delight our customers, putting them at the heart of everything we do."Readers of Telco 2.0 will know that for the last 4 years we've been saying operators should be focusing on just this. So, it's nice to see them starting to do so...
The slides are available here. Don't worry - they're not all like this one.
telco2.net | 29-May-2013 11:51
SDN, NFV, Elastic Networks: Big Deal for Business or Just 'Buzzword Bingo'?
There are a lot of new concepts bubbling under in the world of Digital Infrastructure, Cloud and Networks: Software Defined Networking (SDN), Network Functions Virtualisation (NFV), and Elastic Networks to name but a few. But what does it all mean at a business level?
Next week at the EMEA Brainstorm in London, 5-6 June, Cisco's Paolo Campoli joins peers from Telco 2.0, Amazon, Verizon, Trend Micro, Tekelec, plus representatives from other leading EMEA telcos and tech players, to explore the business benefits and opportunities that could and should be driven by the latest developments in Digital Infrastructure (email email@example.com for more). This guest post by Paolo's colleagues lays out the four key themes of Cisco's vision of future networks.
There aren't many people who question whether or not networks need to become more programmable. Software Defined Networks (SDN) will bring many new technologies. Cisco is actively driving the concept of SDN across broad industry efforts in forums, standards bodies and opensource communities, like Open Networking Foundation (ONF), OpenStack, Network Function Virtualization (NFV), IEEE, IETF, ITU, OpenDaylight and many others. The bigger issue however is about what people want to be able to do on programmable networks and how we make that happen.
"Saving Money" and "Making Money" are the primary motivations. As discussed at the previous events by STL Partners, "The Hunger Gap" forces SPs to streamline operations to make networks more efficient. There are many new tools and technologies that achieve just that. However, the next step is to break out of that gap. SPs are looking for capabilities that help to monetize their network services and assets in new ways that are dictated by the new digital economy. The key objective here is to "Bring the Network to Applications". Service Providers need to harvest the intelligence in their networks, which today is untapped to a very large extent. We outlined the requirements and opportunities that the "Internet of Everything" brings to service providers networks in a recent blog by Sanjeev Mervana, Cisco's Senior Director of Marketing for Service Provider Business "Programmable Networks Will Power the Internet of Everything)".
The essence is that the Internet of Everything is not just built upon a single technology or domain. It is about a future that is highly interconnected where everything is intertwined and sharing data creating entirely new business opportunities, applications and services. The Cisco ONE vision looks at programmability in a very broad manner to maximize its value and impact. There are four key elements to this vision.
1. "Programmability" is more than just being able to program networks. It's also about the ability to extract useful information from the network itself and making it available to applications to use in real-time. We call this a "dynamic feedback loop". Applications and the network work much better when they can work together and this means being able to share information in both directions.
2. There are a number of technologies proposed in the industry that enable programmability: APIs, controllers and agents and virtualization. The Cisco ONE vision sees a tremendous value in developing and deploying all of these together in a single concerted effort to fully unleash the potential of network programmability, rather than just using one or the other. We call this the "Power of AND".
3. A key aspect that Cisco ONE is pioneering is "multilayer programmability". Service Provider networks, like Wide Area Networks (WAN), are very different from the network that you will find as part of the data center. Rather than being fully meshed with unlimited bandwidth, service provider networks and WANs are very complex, layered and segmented and bandwidth is the most precious resource therein. In an early blog Cisco's CTO and Chief Architect David Ward discussed this as just one of many technical details as to why service provider networks are different from Data Centers. You can find more on this in his blog: "Software Defined Networking for Service Providers: Data Center Fabric Analogies breakdown in the WAN".
4. The fourth objective of Cisco's ONE vision is for programmable networks to achieve full "Cross Domain Support" across mobility, video and cloud. Today's applications are running in the cloud, leveraging all assets. Programmable networks need to be built for this from the very start.
The CISCO ONE vision combines elements from Software Defined Networking (SDN) and increments this suite of capabilities with multi-plane programmability, analytics, orchestration, automation, platform APIs and many more to deliver a more comprehensive solution that helps service providers realize more value from their networks.
To explore Cisco's and other approaches, network with peers, discover new potential opportunities, and develop action plans to address them, join us at the EMEA Brainstorm, London, June 5-6 (please email firstname.lastname@example.org for more).
telco2.net | 28-May-2013 20:25
Customer Experience: Is it Time for the Mobile CDN?
Changing consumer behaviours and the transition to 4G are likely to bring about a fresh surge of video traffic on many networks. Fortunately, mobile content delivery networks (CDNs), which should deliver both better customer experience and lower costs, are now potentially an option for carriers using a combination of technical advances and new strategic approaches to network design.
Our new research briefing Customer Experience: Is it Time for the Mobile CDN? examines why, how, and what operators should do, and includes lessons from Akamai, Level 3, Amazon, and Google. We'll also be discussing the latest opportunities in Digital Infrastructure at our EMEA Brainstorm, June 5-6, London.
telco2.net | 24-May-2013 16:39
Software Defined Networking (SDN): A Potential 'Game Changer'
Software Defined Networking (SDN) is a technological approach to designing and managing networks that has the potential to increase operator agility, lower costs, and disrupt the vendor landscape. Its initial impact has been within leading-edge data centres, but it also has the potential to spread into many other network areas, including core public telecoms networks.
Our latest briefing analyses its potential benefits and use cases, outlines strategic scenarios and key action plans for telcos, summarises key vendor positions, and why it is so important for both the telco and vendor communities to adopt and exploit SDN capabilities now. We'll also be discussing SDN at the EMEA Brainstorm, 5-6 June in London. Email email@example.com to find out more.
telco2.net | 16-May-2013 12:27
Cloud, SDN: Disruptive Innovation & Supply Side Disintermediation
Cloud and Software Defined Networking (SDN - on which we're also about to publish a new report) are increasingly important topics that will be covered at the EMEA Brainstorm, 5-6th June, London. As part of our preparations, Telco 2.0 spoke to Alex Jinivizian, Head of Enterprise Strategy, Verizon, who's joining us to discuss some of the latest developments and opportunities in these areas. Alex told us he'd just posted a piece on disruptive innovation on the Verizon site - here's a teaser...
"Disruption is occurring on both the supply and demand side: the value chain is shifting, and new business models are emerging resulting in value creation, and value destruction..."
telco2.net | 06-May-2013 13:17
Mobile Wallets: Time for a Rethink
The 'Mobile/Digital Wallet' needs to evolve to support authentication, search and discovery, as well as payments, vouchers, tickets and loyalty programmes. Moreover, consumers will want to be able to tailor the functionality of this "commerce assistant" or "commerce agent" to fit with their own interests and preferences.
This was a key finding of the Digital Commerce 2.0 Executive Brainstorm, 20 March 2013, part of the New Digital Economics Silicon Valley event - our full report and analysis can be found here. We'll be looking further at the practical actions needed to make M-Commerce a reality at the EMEA Brainstorm in London, 5th-6th June 2013. Please email firstname.lastname@example.org or call +44 207 247 5003 for more.
telco2.net | 02-May-2013 08:36
Softbank-Dish Round 2: Smartphone Samurai vs Satellite Cowboy
Since we published our Sprint-Softbank: how it will disrupt the US market analyst's note, a fair few things have changed. Everything has been slower and more complicated than it seemed. The minority investors in Clearwire have been troublesome, something we pointed out as an issue. (NB We'll be discussing Disruptive strategies further at the EMEA Brainstorm in London, June 5th-6th).
But the real surprise was the intervention of satellite TV operator, DISH Network, which as regular readers of our news review will know, has tried to muscle-in on the deal with a rival bid for the whole thing. There's some more detail here, for background.
And the soap opera continues, with the latest gripping instalment. Softbank has issued an unusually combative response, in a presentation from CEO Masayoshi Son which describes DISH's proposal as "inferior", "incomplete", "inefficient", and "illusory", and asserts that Softbank's is "superior" no fewer than 7 times in 46 slides not counting front-matter. Clearly someone's read, marked, learned, and inwardly digested the bit of their Big Book of Behavioural Marketing where it says "If you do not repeat, you won't compete."
Son's presentation also goes after Charlie Ergen, DISH CEO, personally, endeavouring to scare the shareholders with the prospect of a company substantially controlled by Ergen personally (he would speak for 85% of the combined company, although he would only own 36%). Here's the action replay:
"I just deliver the results, instead of big-mouthing about the future," Son said. "Do you want to attach a satellite dish to your smartphone? It's going to become much heavier. I don't see any real meaningful value that he can offer to the smartphone customers."...."He himself admits he's an amateur to our mobile industry," Son said at the Tokyo event. "He does not have any history in our industry. So he's a newcomer -- totally, totally a newcomer."
There's certainly a bit of needle here - Son is punching upwards at Ergen, No.100 in the Fortune 500 with $10.6bn as against Son's No.128 with $8.6bn. Like Iron Mike in the streets of Brooklyn. Or something. Certainly, this is shaping up to be the most personal and embittered merger in telecoms since Vodafone-Mannesmann or perhaps the feud between the Ambali brothers at Reliance.
The ego wars besides, Softbank has some valid points.A Cunning Plan?
Operationally, DISH's strategic concept can be described as "wireless quad-play". DISH's satellite TV network mostly serves rural or exurban customers who can't get decent broadband or cable thanks to long DSL copper runs and sparsity. DISH proposes to add a fixed-wireless broadband product - essentially Clearwire - to their TV product and then round it off with a mobile product, essentially Sprint mainline. And Charlie Ergen is talking about selling advertising across all three channels.
They have their reasons - subscriber growth in their satellite business has slowed to a crawl, and therefore they're looking for an upsell that would add some juice to their ARPU and margins. Son's presentation put it this way:
In the original, this appears next to Softbank's global subscriber numbers, which isn't really a fair comparison - why would Japanese UMTS subscriber growth tell you anything about US satellite TV? But who said this was a fair fight?
On paper, or rather slides, it makes a sort of sense - the idea of pushing TV alongside broadband is fairly standard. DISH has looked at the idea of broadcast-broadband integration before, cooperating with Verizon Wireless to develop a CPE device with a high-gain external antenna (the so-called "cantenna") that would get its TV from satellite broadcast and everything else from VZW's 700MHz LTE network, benefiting from the low frequency and the less demanding form-factor.Tale of the Tape...
But this is slideware. Vendors love to tell you that LTE is the new DSL, but Sprint's spectrum position is massively skewed towards the higher frequencies. They have some 800MHz, but this is mostly earmarked for voice, and they recently had to swap some of it for 1900MHz space. They have quite a bit of 1900, but the mainline network and the growing LTE deployment lives in there, and 1900 is high for rural anyway. And of course there's the massive 2.5GHz Clearwire block.
Here's a Sprint graphic explaining their future plans for the spectrum:
DISH controls 45MHz of spectrum, but it's in a satellite service band at 2GHz, which makes it precisely non-standard for anything mobile. Note that the DISH contribution fits in where they don't really need it - up between the 1900 and the 2500, well in the "urban high-capacity" bracket, while the DISH-Sprint concept could really do with more 800MHz spectrum. Of course, you can always add more cells, but more cells mean more costs, and they also require getting permission for each one.
And although there is no such thing as a good LTE spectrum option - they all seem dreadful in subtly different ways - 2.5GHz looks more promising than 2GHz, simply because other people are using it. In our previous note, we pointed out that Sprint has suffered hugely from getting diverted off the LTE development path, and that Softbank's spectacular performance in Japan after 2008 was very much because they were the only pure UMTS operator in town (rather than FOMA), therefore benefiting from the iPhone 3G and cheaper equipment. Sprint shareholders and managers would be very unwise to get involved in another freak deployment, especially given the epic pain it's been closing down the old iDEN network.
Further, the whole LightSquared saga ought to be an awful warning for anyone who has the idea of trying to repurpose US satellite spectrum for cellular use.Barclaycard? This man's in no state to go shopping!
Sprint has always had partner-network relationships, and they were a source of endless and expensive trouble during the Nextel merger. The consolidation of Clearwire is going the same way - in the courts again this week. The main reason for putting up with all this trouble was to raise capital outside Sprint itself. So, does it really make sense to do a deal that involves borrowing quite so much money? DISH, a much smaller company, plans to finance the transaction almost entirely by leveraging up. Specifically, they're borrowing most of the money from Barclays' Bank.The Bear Blows First
Another of Softbank's objections is speed. Changing course now will mean more delay. Obviously this is self-serving, but there's a point here.
In our note, we pointed out that one of the biggest risks to Sprint-Softbank was that T-Mobile USA might get its act together and launch the disruption first, before the deal closed. And, well, that's happened. T-Mobile has tied up the funding from Deutsche Telekom, turned up LTE service, closed the acquisition of MetroPCS, secured a supply of iPhones, and initiated a new strategy based on no-lock-in, low-cost plans where you either bring your own phone, or else pay for a new one in instalments.
Our readers will no doubt recognise this as Softbank's old strategy. It's currently the cheapest way to acquire an iPhone 5 without breaking the law, so it should be no surprise that T-Mo has had customers queuing out of the doors and has registered net subscriber growth for the first time in years during Q1.
Meanwhile, although Sprint mainline added 351,000 net subscribers in Q1, and upped its service revenue to boot, it wasn't anywhere near enough to compensate for the loss of Nextel iDEN subscribers - another 771,000 left in the quarter. The iDEN-ers are leaving at rather more than twice the rate mainline is picking up subscribers. Perhaps killing off the first voice application developer community ever wasn't such a good idea.Conclusions
The Softbank strategy for Sprint is simply to manage Sprint better as a pureplay mobile operator, making full use of the spectrum and the procurement efficiencies it brings with it and setting a disruptive price-point to reset the market. This basically implements the Happy Pipe option. The problem, though, is that T-Mobile USA is already in the field with this strategy.
DISH's proposal is far more ambitious, combining a challenge to the incumbents' carrier business with (yet another) attempt at the telecoms-as-media strategy. But it depends on pushing the limits of current LTE radio technology and working around a structurally deeply problematic spectrum position. It probably won't work.
Whatever happens, either Softbank-Sprint or T-Mobile or both are determined to smash the US price premium. From our Softbank-Sprint note, here's a (typically aggressive) Softbank chart that illustrates the point.
Softbank sees this as illustrating an "increasing trend" in their ARPU. But the decrease in everyone else's is far more dramatic. The worry for the other US operators is that Son's strategy to win this fight may drag his opponents' ARPUs down to SoftBank's level.
telco2.net | 01-May-2013 19:14
The Internet of Things (IoT): What's Hot, and How?
'The Internet of Things' (IoT) is one of the big ideas of the moment. But what are the areas in which value is being created now, and what is still technological hype? Our summary of the findings of the Digital Things session at the Silicon Valley Brainstorm 'The Internet of Things (IoT): What's Hot, and How' is now on our research portal.
Practical steps to develop and execute strategies in the Internet of Things will also be explored further at the EMEA Executive Brainstorm in London, 5-6 June, 2013, and we also run dedicated IoT Strategy Workshops.
telco2.net | 26-Apr-2013 12:21
Digital Entertainment: What Gets Measured Gets Money
For mobile entertainment services to generate revenues commensurate to the attention they receive, the industry needs to improve 'discovery' tools, create more effective creative inventory, and deliver proof of its effectiveness. Our summary of the Digital Entertainment 2.0 session at the Silicon Valley brainstorm 'Digital Entertainment: What Gets Measured Gets Money' is now on our research portal.
Practical steps to deliver better consumer experiences in digital services (including service 'discovery'), the Digital Economy overall, Digital Commerce and the Internet of Things will also be explored in depth at the EMEA Executive Brainstorm in London, 5-6 June, 2013. Please email email@example.com or call +44 207 247 5003 to find out more.
telco2.net | 26-Apr-2013 12:21
EE: Running To Stand Still
Everything Everywhere, the joint venture between Orange and T-Mobile in the UK, recently announced its Q1 results that give a little further insight into the industry's journey into the 'digital hunger gap'. (Ed. We'll be exploring this and what can be done about it at the EMEA Brainstorm, 5-6th June in London).
EE is very proud of adding 166k postpaid subscribers, for a total of 348k since the launch of their LTE network, but the two underlying operators also shed 571k prepaid customers, while the "steady service revenue performance" is steady in the sense of "steadily falling", down -0.4%, or -5.4% counting the effects of changes to the termination regime.
Importantly, EE is now a majority-data carrier, with 51% of its revenue being non-voice, and 82% of its postpaid subscriber base on smartphones. The problem is illustrated by the following chart:
Although data revenues are going up, voice and messaging are eroding fast, and the chief answer seems to be migrating more customers onto the LTE network. The problem here is that migrating them over usually implies supplying a top-of-the-range phone, and therefore a slug of handset subsidy, and also that whatever uplift in data revenue is achieved must both compensate the loss of voice and messaging revenues and also pay for CAPEX as the new network rolls out.
(This said, it's worth pointing out that there EE decommissioned 548 cell sites in Q1. So there may be savings from LTE deployment, providing that the decommissioning is not instead a result of post-merger network rationalisation.)
The change in user behaviour is well illustrated by the infographic EE included with the results presentation.
It wouldn't be quite right to say that the voice and messaging that accounts for 49% of their revenues is hidden in the 8.2% of traffic marked "video calling and other" - having opted to provide 4G voice via circuit-switched fallback, this traffic would be carried on either Orange or T-Mobile's 3G or 2G networks. But it is certainly illuminating just how dominant general Internet activity, web-based video, and web-based music are.
We're also a little amused by the fact 0.77% of total 4G traffic is accounted for by Speedtest.net, the 10th biggest single attraction - that's got to be worth something in terms of publicity.
telco2.net | 23-Apr-2013 19:38
Digital Commerce: Show me the (Mobile) Money - Actions for Key Players
Many companies are struggling to build a mobile commerce business case that generates significant incremental revenues in the next five years. But some will ultimately use digital wallets to create a valuable platform that bolsters customer loyalty and produces substantial revenues from location-based marketing, advertising and the management of personal data.
Our latest research report Digital Commerce: Show me the (Mobile) Money describes the barriers, how can they be overcome, and the key actions for telcos, major Internet players, banks and payment networks. Digital Commerce strategies and the findings of this report will also be explored in depth at the EMEA Executive Brainstorm in London, 5-6 June, 2013. Email firstname.lastname@example.org / call +44 (0) 207 247 5003 to find out more.
telco2.net | 18-Apr-2013 10:22
Facebook Home: what is the impact?
Facebook has launched 'Facebook Home', technically a shell around the Android OS, that in theory creates valuable new advertising inventory on the screens of users' phones. What will its impact be in practice for Facebook, and on Google, mobile operators, and other device manufacturers?
Our new analysis on Facebook Home is now on our research portal, and we'll be discussing these issues further at our Brainstorms in London, 5-6 June, and Dubai, 12-13 November. Call +44 (0) 207 247 5003 or email email@example.com to find out more.
telco2.net | 11-Apr-2013 11:04
The Great Compression: surviving the 'Digital Hunger Gap'
In the next 10 years, many industries face the 'Great Compression' in which, in addition to the pressures of ongoing global economic uncertainty, there is also a major digital transformation that is destroying traditional value and moving it 'disruptively' to new areas and geographies. For the incumbent industry players we call the near-term results of this disruption 'The Digital Hunger Gap' - the widening deficit between past and projected revenues.
Our analysis of the top-level findings of the Silicon Valley Executive Brainstorm is now on our research portal (here), and we'll be discussing these issues further at our Brainstorms in London, 5-6 June, and Dubai, 12-13 November. Call +44 (0) 207 247 5003 or email firstname.lastname@example.org to find out more.
telco2.net | 10-Apr-2013 10:54
40 years of mobile; Apple draws ahead again; growth at T-Mobile USA; "copper luddites"; Facebook Home; Hulu - Telco 2.0 News Review
- Smartphone Roundup: 40 years of mobile; Apple starts to draw out the lead again
- Strategy & Finance: T-Mobile USA sees actual subscriber growth!
- Broadband Connectivity: BT CEO denounces "copper luddites"
- Voice 2.0: Twilio on Google App Engine
- Facebook: "Facebook Home"
- Apps & Content: Hulu for sale again
- Technology Disruptions: Web of Things > Internet of Things?
[Ed: Don't forget to book now for the Telco 2.0 EMEA Executive Brainstorm, in London on the 5th-6th June]
It's been 40 years since the first cellular mobile call, from Martin Cooper of Motorola Research to the tribal enemy at Bell Labs. And if Gartner and ReadWriteWeb are right, mobile has "killed the PC market".
And this week, Comscore's rankings suggest that in North America, Apple is catching up on Android. 57% of US subscribers now have smartphones, with 91% of those being with the Big Two platforms. Horace argues that the increasing availability of older iPhones on free offers, and more carriers providing them, is behind this. As usual, the charts are pretty good too.
On the other hand, pioneer smartphone vendor HTC is suffering. Profits for the last quarter hit a record low, dropping through the analyst estimates, after their latest phone launch went off at half cock. The HTC One was meant to launch in 80 markets and made it to the start-line in three.
Here's the first low-cost BlackBerry OS 10 device, the R10 Curve. Meanwhile, Canada's export promotion agency vendor-financed 500,000 BlackBerries for Telefonica.
T-Mobile USA has joined the price disruptors, and it's working - for the first time in four years, its "branded" customer base - i.e. excluding wholesale - is growing. Overall, they added 587,000 customers in Q1, concentrated in prepaid and in wholesale.
You'll also note that last week's AT&T/Verizon x Vodafone merger story has been denied to death, although of course the tale of the Verizon Wireless shares runs on.
Italy may be heading down to 3 MNOs, after Telecom Italia and Hutchison 3 Italy confirmed they are planning to merge.
Bouygues Telecom is going to launch LTE on the 1st of October, once its 1800MHz refarming is complete.
TIM Brasil has gone with Nokia Siemens Networks to build a LTE network in time for the footy.
China Mobile and Vodafone are jointly bidding for a licence in Burma.
Etisalat, which is trying to buy Vivendi's 53% stake in Maroc Telecom, has taken out a $8bn loan to pay for it.
Zain has put off floating its Iraqi operation until the second half of the year, while their boss is apparently "keen" on moving into Libya. Maybe life is boring after they sold the old Celtel sub-Saharan businesses to Bharti Airtel.
And Idea Cellular gets a $710m tax bill.
BT CEO Ian Livingston complains about his competitors being "copper luddites", because they want regulated access charges for BT's FTTC network.
He's responding to Charles Dunstone of Carphone Warehouse's remark that "there is so much government money going into subsidising higher broadband speeds but no one really knows where it is going and how it is being spent" - of course, Dunstone knows very well where it is going, because it's essentially all going to BT, strengthening its position as incumbent vis-a-vis the, er, "copper luddites".
The Daily Telegraph also runs an uncritical profile of Openreach CEO Liv Garfield.
The UK's emerging small cell industry is being bought up. PicoChip was snapped up by Mindspeed Technologies, Cisco grabbed a stake in ip.access, and now Ubiquisys is a Cisco division for £205 million.
Indosat is looking to double its WLAN assets, in what it describes as "WiFi offload". We must have heard that one before?
Tests on UK 4G deployment suggest that TV interference isn't a problem.
Twilio is now available with Google App Engine, and they're giving away minutes for new GAE users. It just gets easier to deploy voice. They also took part in a hackathon sponsored by the FCC, which set a challenge to do something about robocalls. The upshot, basically a voice spam filter, is described here.
As well as fixing the problems with HTC One launch, HTC is pinning its hopes on a new product. Facebook announced its "Facebook Home" this week. It's not exactly a Facebook Phone, but rather a UI overlay for Android, but it will mostly be shipped with the HTC First phone on AT&T and Orange, so a lot of users will probably experience it as such. We're covering this development in far more detail in a separate note, so watch this space.
Hulu is up for sale again, and the leading bidder for the TV networks' online TV network is a former News Corp executive, Peter Chernin, whose buyout vehicle is offering $500 million. As always with Hulu, and indeed media operations more generally, the key will be the terms on which it can get content from the rightsholders.
Dan Rayburn is scathing about the hype around Aereo, the company that wants to pick up broadcast TV and re-stream it on the Internet. We would go further. If Aereo is meant to compete with cable TV, it has a huge problem: the cablecos are very good at distributing online video, whether because they have more capacity for Internet streaming, or because they can just broadcast it via the traditional CATV channel. It makes no fundamental economic sense to take content from a more efficient distribution system and distribute it via a less efficient distribution system, unless something subsidises the distribution heavily.
Dan also thinks you should calm down about HEVC, the magic video codec that will solve all your problems according to its promoters. It's still expensive and there's no content, and those are the least of the problems.
What's the online business model most likely to succeed? According to a leading VC investor, it appears to be selling something to people who will give you money for it, an option so radically new you can be certain nobody's considered it before.
However, TenCent says it has no intention of charging for WeChat or QQ. But Nokia is charging the equivalent of 1.5p a month for Nokia Life, its emerging market SMS-based service, which just landed in Kenya.
Free Android apps are worryingly spammy.
After Google shuttered the Reader, Should Yahoo! jump in to save RSS as a format?
A group of Sun Microsystems veterans are working on a big data/cloud optimised storage module that integrates some processing into the storage. Understanding Google's flit from WebKit. Firefox 20 update drops.
Ever wondered where all the patents are coming from? A study suggests the US Patent Office lowered its standards to keep up with the pace.
From the Internet of Things to the Web of Things: High Scalability notes an interesting dissertation on the future of M2M.
BBC Research introduces the Stagebox, a device that plugs into TV production equipment and puts it on the Internet, thus making an all-IP production environment possible.
Don't miss UKNOF 25 in London on the 18th April, which has a truly impressive line-up.
telco2.net | 08-Apr-2013 13:14
European Telecoms: Peace with OTT, War on the Regulators
So, what broad, strategic themes are emerging this year? We've been mulling over the news, discussions with clients and within our team, and our experience at the GSMA's Mobile World Congress (MWC) 2013 in particular.
In this article we briefly examine developments on two perenially important themes: regulation and competition. [You can also join us at the EMEA Executive Brainstorm, 5-6 June in London to explore strategies relating to these issues.]Hating The Regulators
One important function of the keynotes at MWC is to act as a lobbying megaphone for major operators and the GSMA. The common theme in all the megaphoning was that the regulatory environment, especially in Europe, lacked "industrial focus" and was putting too much emphasis on consumers as against infrastructure development and, to be blunt, the industry's desire to make a reasonable return on capital.
Plus, as we pointed out in European Mobile: The Future's not Bright, it's Brutal and this update on Voda and Telefonica, the commercial and economic enviroment is quite rapidly deteriorating for many European telcos. So the telcos' exclamations of pain carry a lot more conviction and validity these days.
The main case study of this is, of course, Free Mobile (see Free Mobile: A Prototype for Disruption? and this update on the latest numbers). ARCEP and the French government spent a lot of time giving the operators precisely what they wanted, an orderly, not-too-competitive market. It also gave French users prices around €10 a month higher than in the UK or Germany for services that weren't obviously better.
The Free Mobile experience has shaken everyone up. A major message was "Please don't do it to us". A further message was generally complaining about roaming and termination rates. That's not news, although it will always be important. But on the other hand, the operators were keen on something called "internationalisation"....Give Us Competition But Not Yet
What does that mean? Well, in part it's consolidation. The UK has gone from five operators down to four, with a considerable degree of infrastructure sharing via MBNL (the infrastructure company that links the EverythingEverywhere partners with 3UK) and Cornerstone, the Vodafone-O2 UK partnership. A similar story can be found across Europe. But according to one of the panellists, the UK is "operator hell" - what must they make of Uganda?
Obviously the so-called EU5 operators would very much like to take their markets down to 3 operators or even fewer, as in Switzerland, but the French experience suggests that regulators are going to be chary of this. And the general scepticism that must be applied to mergers and acquisitions is required here. Although MNOs are cheap at the moment, compared to historical levels, big mergers across a wide range of industries tend not to deliver the economic benefits they promise.
But there is another kind of consolidation. This could be described as internal consolidation. Operators could consolidate internally and be more "international" by centralising more of their functions and by hollowing out their national operating companies.
The structure of multinational operators is determined by regulation, specifically the fact that licences are national and require a substantial OpCo organisation in each country. Although many operators have set up centralised IT functions and service centres, and regionalised some of their management, their OpCos are usually quite substantial, especially when the group has grown by acquisition. The cost of this comes both in maintaining the organisations and in the variety of IT systems that result. Vodafone is an example of an operator that has made progress in horizontalising its structures and consolidating its IT into a small number of strategic data centres. They have also worked hard in providing central shared services for back-office functions, such as procurement and finance.
This is likely to hit first in Europe, and we did hear the phrase "single European networks" used at MWC. It's also a possibility in Africa, where a lot of operators already regionalise their smaller OpCos.
Something new, though, was the sight of vendors arguing for infrastructure sharing and internal consolidation. Gabrielle Gauthey, Alcatel-Lucent's VP of government affairs, gave a presentation in the network track arguing for "moving away from facilities competition" and much more passive infrastructure sharing. Vendors are normally more than keen on facilities competition because it helps them shift more units. She also argued for carrier-neutral investment, perhaps including public investment, in the 700MHz band when it becomes available in Europe, although the European Union's recent budget decision to zero out funding for broadband networks makes this sound less likely.Declaring Peace with the OTTers
In a sense, all the bluster targeted at the regulators can be seen as a smokescreen protecting a strategic retreat. A major theme we've picked up is that the operators appear to be preparing to bury the hatchet with the so-called OTT players. This is of a piece with the increasing acceptance that the core business going forward is being a profitable data-centric ISP, the Happy Pipe option, plus whatever Telco 2.0 services seem advisable. (See A Practical Guide to Implementing Telco 2.0 and Dealing with the 'Disruptors': Google, Apple, Facebook, Microsoft/Skype and Amazon for our analysis on the best steps to take in new services and with respect to the 'OTT' ecoystem, respectively)
Réne Obermann's keynote was a case in point; having joined in with the regulator-bashing session to begin with, he then moved on to presenting a strategy heavily influenced by "own-brand OTT" and partnerships with more OTT brands. With the voice & messaging wars over, in a sense, everything is now an OTT service. Obviously, this will only accelerate the move towards zero-rated voice.But Something Needs Doing...
Perhaps the most shocking statistic of the show was that 8% of global LTE investment and 5% of FTTH investment is in Europe. 70% of world LTE investment is going into the United States. Part of this is the dreadful macroeconomy, of course, but then again our view is that improving the climate for investment in broadband would provide much-needed help in fixing the EU economies.
telco2.net | 26-Mar-2013 11:26
Snails, Gazelles, Damn Lies and Average Broadband Speeds
Telco 2.0's Senior Analyst Keith McMahon is not usually an angry man, but today he's uncharacteristically incandescent with rage. The reason is that he has analysed the latest stats from the UK's regulator OFCOM and he smells a rat. Or more accurately, a mixture of snails, tortoises, humans, gazelles, and twisted statistics. Here, only lightly edited to protect more sensitive readers, is what he shared with the Telco 2.0 team this morning.
Another day brings another bunch of misleading statistics released by OFCOM. The headline today was "UK average broadband speeds up to 12Mbit/sec". This headline figure, which was lazily lapped up by the majority of the British press as a sign that things are hunky-dory, hides a lot of truth about the underlying state of the British broadband market.
The chart above and vast qualification adequately describes the real state of the UK broadband superhighway. Basically we have three lanes: tortoises (between 2Mbit/sec and 10Mbit/sec), humans (between 10Mbit/sec and 30Mbit/sec), and gazelles (above 30Mbit/sec). The tortoises and humans haven't improved at all - the gazelles have merely pulled away. Using the speeds above, one gazelle carries the same weight as five humans and ten tortoises in calculating the averages.
Virgin Media announced in March 2012 that it was effectively tripling its speeds at no extra cost. The tiers are now 30Mbit/sec, 60Mbit/sec, and 100Mbit/sec.
The impact on its base has been transformational - humans turned into gazelles, at no extra cost, without the need for a truck roll. The chart above shows the situation at Q3. By Q4, Virgin Media now had 2.2m gazelles on their network, which is around 50% of their base. A truck roll and more money are required for a customer to transition to the Openreach gazelle network, which almost certainly means adoption is much slower, but BT conveniently do not release consumer adoption figures.
OFCOM's estimate of the split between gazelles, humans, and tortoises are shown above. But where are the snails (below 2Mbit/sec), which count for 1% of the market? They are conveniently not monitored anymore. I'm not sure of the logic for this, but it certainly helps to keep the charts looking good.
There are some other tricks which have been included not only to improve the presentation but also keep the averages up. The first trick is ignoring rural customers for the tortoises' comparison. Market 1 is defined as where BT has no unbundling in the exchanges. When OFCOM announced the market definitions, this accounted for 11.1% of UK homes. As these tend to be in rural areas with long copper lengths and therefore lower DSL speeds, the snails appear less sluggish then they really are.
The second trick is ignoring copper loops of over 5km for the humans' comparison. This is another 15% of UK homes, although there will be a substantial overlap with the Market 1 homes. Again, this only ups the human average.
The third trick is to only include on-net customers for Sky, TalkTalk, O2 and Everything Everywhere, i.e. where they have been unbundled. Theoretically, this could be either a positive or negative to the calculated averages, but the mere fact that they have been excluded from the sample raises my eyebrows. In fact, I'm not sure whether this has really happened, as Everything Everywhere figures are included in the detail of the report. As far as I was aware, Everything Everywhere gave up its LLU a couple of years ago and ported the base onto BT wholesale unbundled products.
The fourth trick is that the gazelles are overrepresented in the samples, which may be self-selecting. This, of course, ups the average. This self-selection was my main issue when OFCOM announced the broadband speed project. Basically, the people who would volunteer to have an extra piece of CPE in the home monitoring their connection are tech-savvy users. The type of users who insert the correct filters to the main phone line and try to achieve the best possible speed for their connection.
This is not representative of the average UK broadband user, who probably connects the router to the most convenient phone extension in the home, and thus has reduced speed. The fact that more of the sample are upgrading to superfast broadband only reinforces my belief that the sample is not representative of UK broadband users.
I know the founder of Samknows, the company that OFCOM subcontracts the project to. The original project was conceived from the belief that the UK consumer deserves to understand the true performance of the UK broadband providers, rather than accept the advertised headline speeds. The project also sought to educate them that peak hour speeds, latency, and packet loss were just as important as absolute speeds.
Today, I feel that the project has been hijacked and exploited by OFCOM for political propaganda - "look at how fast our average broadband speeds are". The truth is that our broadband highway has four lanes for snails, tortoises, humans, and gazelles, and speeds are not significantly changing within these lanes. What has happened is that the company with the best overall network, Virgin Media, has decided for competitive reasons to upgrade speeds to a large part of its customer base. Good for Virgin Media and good for their customers. Meanwhile, the rest of the UK awaits BT Openreach to upgrade its crumbling copper network. The politicians have a great headline grabbing message, but most of the UK remains unaffected.
Brave readers can find the full report here: http://stakeholders.ofcom.org.uk/market-data-research/other/telecoms-research/broadband-speeds/broadband-speeds-nov2012/
For what it is worth, I am human, on an ADSL2+ LLU network achieving speeds of around 3.5Mbits/sec. I'm gutted.
telco2.net | 15-Mar-2013 16:14
Voice: free, dead or the killer app? It's certainly in disruption...
So, Telefonica O2 Germany is offering free voice and messaging on four tariffs with pricing determined by data rate, from €19.99 for basic with 3.6Mbps up to €50 for 50Mbps LTE up to 5GB.
Meanwhile, back at the Mobile World Congress, the CEO of KT told us that his voice business is "rapidly collapsing", with fixed revenues nearly halving between 2010 and 2012 and mobile down by a billion dollars in the same space of time. And Hakam Kanafani, the Group CEO of Turk Telekom, was positively apocalyptic:
"Voice is God's gift to humanity. It's what differentiates us from the animals. And we position voice at zero -- you don't have to pay for voice. Voice is dead."
Much drama indeed, though regular readers of Telco 2.0 will know that we've been talking about the business model transition facing voice and messaging for a number of years. We've also recently published bleak views on the outlook for voice in Europe in European Mobile: The Future's not Bright, it's Brutal, and we're working on further global analysis on both voice and messaging as a whole, and the stage of the transition of telecoms and other digital industries.
We'll be sharing more of this at the Silicon Valley Brainstorm in San Francisco next week, and at the EMEA Brainstorm in London, 5-6 June (please email email@example.com to contribute or find out more).
Anyway, going back to one of this year's CEO bandwagons at MWC, Vittorio Colao of Vodafone didn't go quite as far as say that 'voice is dead', but then he doesn't have an incumbent fixed network to worry about. However, he did discuss the RED tariffs, introduced first in Spain, which work much the same way at different price points. The new pricing strategy, he argued, is "unlimited voice & messaging with generous data" - which implies that voice isn't a significant driver of cost any more.
Voice: becoming decoupled from costs?
The good news is that, because voice is no longer a significant driver of cost, going to "unlimited bundled" or "free" voice isn't as big a problem as it might seem. It's pushing packets, specifically video, that drives cost. And it's never been cheaper to provide voice. One data point comes from Viber, an OTT voice & messaging app whose CEO Talmon Marco spoke at the event - it costs $200,000 a month in OPEX to serve 175 million users with VoIP and instant messaging.
In our Free Mobile note, we point out that Free's cost structure is a "tell" here - it needs to charge enough for mobile voice to support a thin overlay cellular network, and to pay termination on only that fraction of their offnet voice that doesn't get least-cost routed onto SIP peerings that are either free or very cheap.
It's all about the experience, isn't it?
That said, as Viber's CEO pointed out, price isn't the problem. One of Viber's highest-penetration markets, at 90%, is Monaco, after all, where they're aren't short of a bob or two and anyway the local MNO bundles unlimited SMS. He said that the customers use it because they like the experience better.
As we've been saying since 2008, the future of voice is that voice becomes a software application, and as such, it will sell on features and user experience rather than a utility-like model. To dip into our Twitter feed, KT's CEO repeatedly made the point that future telco services must be better than OTT competitors.
Or is it in the OTT-bundle?
Alternatively, another answer is to declare peace with the OTTers. Essentially, this takes the strategy of bundling voice and messaging and eliminating out-of-bundle costs a step further. Assuming that everyone ends up bundling unlimited voice, how do you differentiate in order to compete, if not on the features and the user experience? Viber at least is (possibly too) enthusiastic, being "delighted to integrate with your IMS".
But that doesn't mean telcos have no future in their own right. While Vodafone's RED tariffs adjust down to unlimited voice and messaging and managed data revenue growth, their One Net enterprise Voice 2.0 product is doing good business, with 2.4 million customers globally.
In fact, you could characterise Vodafone's strategy as being "Happy Pipe in retail, enrich products in enterprise".
Or is it 'getting hacked into apps'?
Meanwhile, the Voice 2.0 community was much in evidence at MWC with vendors like Voxeo, Twilio, AcmePacket, and a few even we hadn't heard of, plus the emerging WebRTC community, which these days includes Ericsson and Metaswitch. Voxeo's technology, in particular, is now deployed with telcos as gigantic as AT&T and Deutsche Telekom, supporting the Call Management API and the voice aspects of DeveloperGarden respectively. And Telefonica is pushing its Tu GO product out to more markets, while buying AcmePacket technology to support the scale-out. At the WIPJam hackathon on day four, we were struck by how many of the projects involved telephony of some form.
And longstanding Telco 2.0 ally Tim Panton, of PhoneFromHere fame and now with Voxeo, was struck by the fact that one of the developers entered the same app in the DTAG and AT&T hackathons - both carriers implemented Voxeo's Tropo.com platform without being tempted to alter the API, so the app could be ported between them without needing further integration work. Hackers gonna hack.
Disruption is temporary, change is permanent
So, the future is here, for good or ill. We're now moving fast into a world where voice and messaging are zero-rated products.
At a little more length, we would argue that the industry faces a disruptive transition in terms of customer behaviour, which will not flip back to pre-crisis conditions. Fortunately, for many operators the core business is no longer reliant on voice revenues, but rather on running a profitable happy pipe ISP. Future voice business models are based on features and freemium. And the Voice 2.0 technologies were in the euphoric sector of the hype cycle in 2008-2010, and have now crossed the chasm.
We'll be discussing this in much more depth in our forthcoming Voice Strategy Report and at our brainstorms. Watch this space.
telco2.net | 15-Mar-2013 12:22
Smartphones: when will Huawei be No.1?
We were surprised to hear Huawei's objective of becoming the world's No.1 Smartphone maker at last year's Mobile World Congress, and somewhat dubious whether it would achieve that goal. However, at this year's show Huawei demonstrated impressive progress, and we consider it is no longer a question of if, but when it will achieve its goal. In this analysis we explore industry scenarios and their consequences.
telco2.net | 14-Mar-2013 16:43
Free Mobile hits 8% share, wins with 'reverse quadplay'
When we published Free Mobile: A Prototype for Disruption? before MWC, we didn't yet have Free's indicators for Q4. We still don't have full financials, but we do have some subscriber and turnover information now, and our analysis of what that means is below. For further reference, Les Echos summarises the story nicely, and the press release is here.
We've also recently published Sprint-Softbank: how it will disrupt the US market, and analysis on the ongoing disruption in Europe in European Mobile: The Future's not Bright, it's Brutal. We'll be looking in further depth at disruptive digital innovation strategies in telecoms, music, video, commerce, and 'the Internet of Things' next week at the Silicon Valley Executive Brainstorm in San Francisco, and at the EMEA Brainstorm in London, June 5-6. Email firstname.lastname@example.org to find out more.Another 805,000 net adds - Free's break-in phase has gone very well
Free Mobile scored another 805,000 net-adds in the fourth quarter, taking them to 5.2 million subscribers after one year in operation or 8% of the French market by subscribers. There is still substantial momentum, with 55,000 net number ports to Free in the week before the announcement compared with 26,000 to SFR and less than 17,000 for both Orange and Bouygues. The total is positive because the MVNOs have been hammered, and also because penetration has risen by 10% in 2012.
This penetration figure is to a degree understated, because there are about 6.5 million dongles and M2M devices in circulation, and Free Mobile doesn't currently compete in these sectors, so additional growth will be concentrated on what might be called the human market.Mobile drives fixed sales, fixed cash flow finances mobile investment
This turnover in mobile was €844 million for the full year, equivalent to a monthly ARPU of €16.70. Although it is tiny compared to France Telecom-Orange's €10.7bn turnover in mobile, Free started 2012 at zero. But perhaps the most interesting feature here is that the mobile offering is driving "reverse quadplay" - all the publicity, plus the sell-through opportunity and the discount on mobile if you take fixed, is bringing in net-adds in the fixed sector, which added 107k net subscribers in Q4 (vs. 110k for Bouygues, 66k at Orange, and 35k at SFR).
For the year, that's 515k net-adds or 9% annual growth. In many markets, it's been assumed that fixed broadband is now an ex-growth sector. Clearly, this isn't necessarily true.
This is important, even critical. In H1, Free's fixed operations generated an EBITDA margin of 40% and €229 million in free cash flow, with an ARPU of €38/mo for users on the latest Freeboxes. Obviously, new signups driven by mobile will be getting the new devices.
So, mobile net-adds drive the cash-cow fixed business, and its free cash flow helps to finance the mobile roll-out.
A critical question is how much of the potential for reverse quadplay has been exploited already. There are 5.4 million fixed subscribers and 5.2 million mobile; if there were no reverse quadplay customers among the fixed base, that would be enough to almost double the mobile subscriber base. If all the mobile subscribers have already taken fixed, this source of cross-selling growth is practically exhausted. We know that the truth is somewhere between the two extremes, but Free is keeping the actual number close to its chest. Its Q4 turnover statement just says that it's "globalement equilibré", or "balanced overall".Subscriber growth may top-out early, but profitability is nearer than you think
Looking ahead, we used a Bass diffusion model to estimate the Q4 market share number for our analysis, which predicted market share of 8.11%. Updating the model with the out-turn, we expect that mobile subscriber growth will level off in 2013 as Free Mobile approaches 10% national market share. Rather like the French paratroopers in Mali, they have successfully seized the airfield and unleashed mayhem on the enemy. But what happens next?
One of the amazing things about the Free Mobile story is that it's actually not that far from breakeven at the EBITDA level, this early in the game; it lost, or rather spent, €44 million in H1 on revenue of €320 million. In the light of our forecast for market share, we expect that having achieved their break-in to the mobile market, Free will now consolidate their position and concentrate on moving the mobile operator towards profitability by:
- Upselling fixed products to the new mobile subscriber base;
- Managing down the national roaming bill.
If our diffusion model is right about total subscribers, and "globalement equilibré" means "roughly 50/50", that means there are about 2.5 million potential candidates for upselling.
In the Free Mobile note, we mentioned that (admittedly unaudited) data on how much user time is spent on their own network shows a step-change when 900MHz spectrum became available in January. As Free Mobile's OPEX is closely linked to how much traffic is carried by Orange under national roaming, and Free has no control over Orange's roaming tariff, bringing traffic on board improves their margin, as does then offloading it to WLAN.
We therefore expect that profitability will surprise on the upside and subscriber growth on the downside. This is subject to the possibility that they will choose to hold profitability down, by bringing forward capital investment and rolling out faster, or by cutting prices again. This depends on their preference for growth vs margin, and on regulatory/political issues.Key risk factors
The major threat to Free Mobile's success is probably self-disruption, that is to say a failure to manage the consequences of success. The fixed operator is under pressure regarding customer experience and quality of service issues, possibly because of the effort to harvest its cash for the mobile operator's CAPEX needs.
Given that Free Mobile subscribers are not tied in to a long term contract, and the French mobile market has well-functioning mobile number portability, an "Instagram event" - i.e. a misjudgment that goes viral and causes a sudden exodus of users, as when Instagram changed its terms of service and accidentally revived Flickr - could reverse a chunk of the subscriber growth rapidly. This is much more likely in the case of the mobile-only subscribers, as opposed to the quadplay subscribers, who are also more likely to be committed fans and advocates of the company. It is therefore urgent to carry out the consolidation we described above.
We do not think there is a threat of a regulatory reversal, for example, lifting the national roaming requirement. This would essentially imply killing off Free Mobile, and would certainly be held up in the courts for an indeterminate period of time if it was not struck down immediately. Further, the French regulator ARCEP's recent statements still express satisfaction with the impact on consumers, and the political level is still under more pressure to deliver consumer buying power (pouvoir d'achat) than it is to please the original three operators. ARCEP's latest decision can be summed up as "no move before 2018, and don't frighten the horses".Additional opportunities
We have assumed a relatively simple scenario in which Free Mobile, having smashed its way into the market, has raced up the diffusion curve to arrive at an enduring share of around 10%, and then moved to consolidate the customer base by integrating them into its profitable fixed services.
Free is historically an innovator, though, and they may not be satisfied with this. It is possible that they will seek a new S-curve to ride, especially as they will soon need to look at 4G with its concomitant investments. They are already very much involved in online services in fixed, but they have wisely never been tempted to declare themselves a media company. M2M and wholesale are ruled out by the lack of a full national coverage footprint.
However, their in-house strength in software, UX design, and product management creates a lot of option-value. Many observers were expecting something disruptive in voice or unified communications, which remains a possibility. Free is also mostly a consumer/power user business. A move in the SMB space is therefore also a possibility, as is a further price disruption, perhaps in roaming.
telco2.net | 13-Mar-2013 07:32
We're recruiting: Marketing Communications and Communities Manager
STL Partners is seeking to recruit a Marketing Communications and Communities Manager as a key part of our plan to help take the business to the next stage of growth. Responsibilities will include producing marketing and customer communications (e.g. newsletters, websites, brochures), digital marketing (e.g. SEO, social media, and email marketing), and the management of our database.
A key measure of success will be to achieve a significant increase in inbound sales leads within the next year as a result of this appointment. This is a full time role and will be based in Shoreditch / Liverpool Street, London. Please see full description and application details here.
telco2.net | 20-Feb-2013 17:24
Cloud 2.0: CxO Lunch in Barcelona - 27/2/2013
At MWC this year Telco 2.0 will be hosting a private roundtable lunch with Cordys, on Wednesday 27th February 12:30-14:00. The topic for discussion will be 'Opportunities for Telcos in the Cloud'. The debate will be facilitated by Telco 2.0 Senior Analyst, Bob Brace (formerly Global Head of Cloud Services, Vodafone Group). Bob will present highlights from the Telco 2.0 Cloud research covering: market growth, size and service development; key players and their strategies; telco activity in the cloud market and key opportunities for telcos in the cloud market.
Bob will also be joined by former Head of Cloud Strategy, Orange Business Services, Peter Martin, who will draw on his recent experience as Head of Cloud Strategy for Orange Business Services focusing on the services and applications of tomorrow, future infrastructure, and how telcos might offer unique value to their customers.
If you would like to join this session please email: email@example.com and someone will be in touch to reserve your place.
telco2.net | 18-Feb-2013 17:36
AT&T 'loves' OTT; India gets even more competitive; Cloud comms grow - Telco 2.0 News Review
- Online Video: AT&T's Stephenson to OTTers: we love you really
- Voice 2.0: Indian WISPs get voice licence; cloud UC growing 24% to 2018?
- Broadband Connectivity: EU funding for broadband networks canned
- Smartphone Roundup: Apple retail - "send more staff!", Ubuntu Phone makes it for MWC
- Cloud Computing: Major investor pivots to tactical datacentre trend
[Ed. Five weeks to the brainstorm in Silicon Valley, 19-20 March 2013, and then on to our European Brainstorm, 5-6 June 2013. We'll also be at the Mobile World Congress next week for which we can offer discounted passes - email us at firstname.lastname@example.org to find out more.]
Randall Stephenson of AT&T has been known to say aggressive things about the OTT players who use his network "without paying" and so on and so forth. Here he is, though, on a very different tune.
"If the world moves to the OTT video model, that doesn't keep me awake at night," he said, adding that AT&T has approximately 4.5 million U-Verse IPTV video customers but the company's real driver is its broadband customers. "Our money is made off the broadband product ... The consumer who acquires video off our broadband is not a bad model for us."
In related broadband and video news, some results are in from the French three-strikes experiment. Traffic to P2P sites is down. Hurray. Traffic to digital-locker sites is down. Perhaps half a hurray. But so are record industry sales. No hurray. The lurking-variable is probably the shift from P2P systems to streaming services.
Free are involved in a new row; their Freebox Replay video on demand service has been suffering for a while from bandwidth issues, and now they're suggesting that customers affected might want to pay a fee for "priority access". Existing customers suspect that the problem is being deliberately left unsolved to bring in the money.
Dan Rayburn reviews Amazon Web Services' CDN activities, and specifically their increasing support for dynamic content. Over time, the offering has gained many more features incrementally, and AWS seems to be following a Google Ads-like strategy of trying to expand the addressable market by drawing in customers who otherwise wouldn't have used CDN at all.
He also reviews another media-streaming gadget.
And the BBC is supporting an effort to add DRM features to HTML5.
In India, the holders of BWA (Broadband Wireless Access) spectrum have been told they can start providing voice if they pay a relatively small fee. With this, plus the price-war conditions, and a regulator increasingly keen to soak the carriers, it gets difficult to see how many of the Indian operators can be profitable.
SK Telecom's Joyn implementation has a million subscribers.
No Jitter makes a case that Cisco CEO John Chambers is wrong in saying that "video is the new voice". Instead, they argue, "text is the new voice", for reasons rooted in the user anthropology of telephony.
That said, Unified Communications as a Service (UCaaS), things like Vodafone OneNet, is forecast to be worth $7.62bn by 2018, growing at 24% CAGR.
Skype is getting a video-messaging feature, which is coming first to non-Windows platforms.
Truphone has been through a couple of evolutionary stages, from mobile VoIP client, to roaming MVNO, and now to hybrid WLAN/MVNO. Their new app takes over the dialler, checks quality metrics on the cellular network and nearby WLANs, and decides whether to route calls over the cellular channel or SIP over the WLAN. If the WLAN is good enough, it will offer HD voice.
AcmePacket argues that WebRTC standardisation will go faster than expected, and at the very least, much faster than SIP (although that says more about the development of SIP).
The Fonolo blog links to five key posts on WebRTC. This argues that applications come two to three years after protocol stacks. This one argues that WebRTC doesn't matter, at least not in the enterprise context, because the real problem is the call centre.
Using WebRTC to adjust the fonts on your website, by tracking the user's head in their webcam. You may find this a little creepy.
CEBP specialist Voicesage's revenues are up 32% on the first half of its year.
BigMarker is a web-based conferencing service aimed at teachers that provides for record, transcribe, and replay.
A nice video from Phono:
OpenBTS is coming to MWC.
Is fax finally dead? And EU has a budget "for European growth", says Neelie Kroes's blog. In a manner of speaking. The outcome of the budget negotiations was an overall cut to the union's budget that mostly came from investment, and the Information Society DG is no different.
As Neelie's blog points out later on, this means that EU funds for broadband infrastructure under the Connecting Europe Facility have been zeroed out. Apparently there's still some money for "digital services", and the European Investment Bank might have some, but projects like this B4RN community fibre build shouldn't expect much.
You've got to do something, so the EU Commission is taking an interest in duct-sharing.
Horace reports on Tim Cook's comments about Apple retail, and includes a chart that shows that the pattern of being heavy on the staff goes on. While the ratio of profits to employees in retail is very gradually rising, the head count is going up faster and therefore the business is only expanding.
Elsewhere, there's a map of Apple suppliers, and Ars Technica tracks down a weird rumour about Apple engineers being assigned to "fake projects" and finds it baseless, and Cult of Mac reviews one analyst's predictions about Apple.
More seriously, weak PC sales are a thing for Apple as well, and they responded by cutting prices as much as 15%, especially on the MacBook Pro line.
Data-centre landlord DuPont Fabros is looking at building more, smaller data centres to appeal to enterprise customers rather than Facebook-sized Web monsters. They're now planning to invest in units of 4.5 megawatts, compared to increments of 18 MW and 400,000 square feet in the recent past.
AWS's Redshift data warehouse product is now broadly available, which isn't quite generally available in Amazonspeak.
And here's this week's cloudfail. RapGenius, your No.1 source for hip-hop lyrics, runs on Heroku, and is spending $20,000 a month with them, making them one of Heroku's biggest customers.
They observed that measurements of latency from their own analytics and Heroku's could be dramatically divergent, and eventually discovered that Heroku's load balancing algorithm had changed dramatically, from a fair-queueing approach to a random distribution approach. They simulated the difference and concluded that they were being overcharged by a factor of 50.
Gemalto and Ericsson are working on an embedded, soft-SIM M2M product. A buyer for Telecom Italia's TV operation? Fearsome Chinese hacker also sells Facebook likes. Marissa Mayer kills 60 Yahoo! apps and buys a couple. INQ ventures into content recommendation. Renesys tracks the impact of a Black Sea cable cut. Sinister mystery with Singapore, Huawei, and advanced semiconductors.
telco2.net | 18-Feb-2013 12:36
Cisco VNI; EE, Virgin Media bids; WebRTC milestone; BB OS10 'positive' - Telco 2.0 News Review
- Broadband Connectivity: Cisco VNI says thank you for WLAN offload
- Strategy & Finance: Heavy weather for Vodafone; bids for EE, Virgin Media
- Voice 2.0: Mozilla and Google get WebRTC interworking
- Smartphone Roundup: More BB OS10 reaction; did Cook oppose Apple vs. Samsung?
- Content 2.0: Flickr: a turnaround on the web
[Ed. Six weeks to the brainstorm in Silicon Valley, 19-20 March 2013, and then on to our European Brainstorm, 5-6 June 2013. We'll also be at the Mobile World Congress for which we can offer discounted passes - email us at email@example.com to find out more.]
Cisco's VNI report is out and there are basically three stories in it. First up, and no surprise, traffic on mobile networks is dominated by video, just like the fixed kind. Secondly, overall traffic growth has been revised down by 30% since this time last year. And thirdly, almost a third of smartphone traffic is being offloaded via WLAN. Between that and better cellular networks, the average smartphone is enjoying a download speed of just over 2Mbps. Interestingly, the distribution of traffic is flattening out - in 2010, the top 1% of users accounted for 52% of the total, but now, this is down to 16%.
In the US, the FCC is keen to break out the 600MHz band for white-space operations. A fierce political row is under way, while the press were immediately convinced that free Wi-Fi for everyone was coming. Ars Technica cleans up the mess.
Microsoft is interested in whitespace technology as a way to deploy better Internet connectivity in Africa.
Meanwhile, France Telecom and Alcatel-Lucent deploy a 400Gbps wavelength link for the French NREN, the first in the world. That said, ALU's Q4s were dreadful and Ben Verwaayen is on the way out.
Benoit Felten links to an infographic on US broadband that only contains two actual charts. Is this a record? Much more to the point, he's been interviewed about STOKAB, the Swedish prototype of municipal fibre deployments.
A massive debate on that subject took place last week on NANOG, and the upshot is a succession of threads rich in information and experiences. Start here and move on here, here, here, here, and here. It was also time for the NANOG meeting itself, and as usual the notes - available here - are fascinating.
Meanwhile, here's the Aussie NBN's page on how to deliver content efficiently with its IP multicast service.
Muni-fibre isn't the only way to get to universal high-speed connectivity. The DOCSIS cable route has worked pretty well too. Virgin Media is up for sale, with a £15bn price tag, to John Malone's Liberty Global.
Vodafone numbers are out, and they're not good. Revenues are down groupwide by 2%. Southern Europe is dreadful, of course, but things weren't good enough in the relatively healthy economies of Northern Europe to compensate. The UK, for example, wasn't particularly healthy economically and was hit by fierce competition from EverythingEverywhere.
Also, there are signs of customer behaviour changing, rather as there are in southern Europe. Out-of-bundle usage is down sharply, as customers counteroptimise their usage to save money. In the South, meanwhile, they're having to up the bundle sizes to defend market share. Fortunately Germany and Turkey were better.
EE, for its part, might be the subject of a mammoth private-equity bid. The proposed deal would involve about £3bn of the buyers' own capital plus £7bn of borrowing from the banks, so a classic leveraged buyout. Don't expect them to be in a hurry to roll out more 4G.
In France, ARCEP is marking up the score from the first year since Free Mobile launched. The impact has slashed the three historic operators' revenue by 10% while adding an additional 4.5 million subscribers and close to doubling the number of subscribers who are free of contract.
Meanwhile, Xavier Niel has gone on the record to say that the Google Ads-blocking episode was deliberately intended as a bargaining chip in their peering war.
A huge milestone in WebRTC, says Dan York. Mozilla and Google have demonstrated voice interoperability between Firefox and Chrome without using any plugins.
Meanwhile, Voxeo's browser telephony lib, Phono, gets WebRTC support. Here's a walkthrough of how to get a WebRTC test rig going, which does tend to make clear just how new the technology is. (Hint - if you already have an Asterisk server, you can skip most of it.)
Oracle has acquired Acme Packet, maker of session border controllers, SIP servers, and things Voice 2.0, adding more telco-like capability to its products and its cloud.
Here's a good sceptical blog on telephony APIs, arguing that Twilio and Voxeo are probably category killers as far as this niche goes. We might not agree with that, but we can certainly relate to this post:
All too often what is a declining business for some is in fact a growth business for others. I sit daily with what we would refer to as "telephone companies" who bemoan to me that their voice business revenues are declining. I offer various suggestions and provide viable companies actually growing in this space. "But that would mean we would have to invest and take risk", is the normal reply. Well yes.
And John E. Karlin, who founded Bell Labs' human factors department and redesigned the telephone for touchtone dialling, has died. Don't miss the story about how he decided how long the cord should be.
Reuters has a detailed piece on the Apple-Samsung relationship, arguing that Tim Cook and the supply chain/manufacturing side of Apple was opposed to suing Samsung and fighting the Android patent wars in general but Steve Jobs insisted.
Meanwhile, Horace argues that the drop in Apple's margins is entirely explained by higher production costs, and that Apple production costs usually fall as the company moves along a learning curve. He also looks into the business model of iTunes under its new accounting dispensation and estimates its margin around 15-17%.
Vodafone and 3 Austria have both advised iPhone 4S users not to update to iOS 6.1 due to unspecified technical problems.
HP is trying to impose rules on its Chinese suppliers to stop them using student and other temporary labour forces.
Wired reports on the turnaround of Flickr, driven by Instagram's terms-of-service fiasco, Facebook privacy dread, Flickr's new mobile app, and perhaps just the rediscovery that it was a pretty good product to begin with.
Quite apart from the privacy issues, loading your website up with third party widgets has risks - a succession of super-high traffic websites were downed this week when Facebook widgets stopped working. Similarly, advertising during the Super Bowl has its challenges.
Eric Schmidt is selling about half his shares in Google.
DVD rental firm Redbox is integrating its streaming product into the Xbox.
Boston Consulting tries to estimate how much satisfaction consumers get from different media. Top two: books, and social media.
telco2.net | 11-Feb-2013 13:32
New BlackBerry, BT Dash for Share, Rackspace: Telco 2.0 News Review
Telco 2.0 Top Stories
- Smartphone Roundup: New BlackBerry is New: reactions
- Strategy & Finance: EE to float; BT rips out the usage cap in dash for market share
- Online Video: Sky vs. YouView, Superbowl streaming #fail
- Cloud Computing: Amazon results, Rackspace push with OpenStack, scaling out DuckDuckGo
- Voice 2.0: DTAG having trouble with Joyn
[Ed. Seven weeks and counting to the brainstorm in Silicon Valley, 19-20 March 2013, and then on to our European Brainstorm, 5-6 June 2013. We'll also be at the Mobile World Congress for which we can offer discounted passes - email us at firstname.lastname@example.org to find out more.]
It was BlackBerry Week, with the new OS and the first gadgets at last dropping. ReadWriteWeb's review of the Z10 is positive, but warns that the initial learning curve may be steep as the user interaction paradigm is radically different to older BlackBerries, Android, or iOS. The design is heavily oriented towards productivity, and tries to integrate data from apps rather than foregrounding the apps themselves. For example, you can consult a notifications feed without having to quit the app you're using.
Speaking of apps, all the shiny RIM scattered among the developers seems to have worked, as the new OS launches with 70,000 titles, of which 40% are ported from Android.
And we're not meant to call them RIM any more - the company is rebranding as just "BlackBerry". All the US national carriers wil be carrying the Z10 in principle, but as Dan Rowinski points out, you can ask several vendors about the gap between carrier support in principle and in practice.
Meanwhile, Reuters points out that BlackBerry's third biggest market is Indonesia, and a $750 Z10 is more than pricey in that context. So, is there an emerging market BB10 device in the pipeline? Nokia's Lumia 620 is coming in at £150.
More ugly results from HTC. Samsung invites journos to Monaco to play with the shiny gadgets. Horace scores Apple Q4 as disappointing. Tomi Ahonen discusses the emerging mobile OSs and plumps for Samsung and Tizen.
EverythingEverywhere may be about to float on the stock market, says Reuters, who believe that it has appointed bankers to advise on carrying out an IPO. Morgan Stanley, JP Morgan, and Barclays were said to be involved.
OFCOM, meanwhile, has proposed to let British mobile operators refarm their spectrum for 4G without many restrictions at all.
TeliaSonera's CEO has resigned after an inquiry into their acquisition of radio spectrum in Uzbekistan. The CEO couldn't adequately prove that there had been no bribery or corruption in the transaction, something which could be said of almost any transaction in Uzbekistan, especially one involving the business interests of the president's daughter like this one.
On the other hand, MTN says it's been cleared over that whole business of whether they helped Iran's nuclear programme in return for a GSM licence. More precisely, it's been cleared by a committee it set up itself; the US Supreme Court will rule later this year. Meanwhile, QTel's investment in Iraq had a good first day on the stock market.
BT, meanwhile, is feeling aggressive. New tariffs, just announced, offer 16Mbps for £16/mo and "up to" 76Mbps on FTTC for £26/mo, with 50GB of online storage and six months' introductory free service.
They're also getting rid of their usage caps. TelecomTV quotes John Petter, MD of BT Consumer, promising that their network "can stand up to the extra bandwidth demands from totally unlimited products everywhere across the UK". Wot no exaflood of OTT video taking our jobs?
What's going on here is a sort of political business cycle applied to telecoms. Technology improves, operators invest, and then the temptation to rip out the cap and price to go kicks in. The pipes fill up, and soon the squealing begins, and we start to hear about taxing the OTTers, etc, until the next upgrade cycle kicks off and suddenly all is love again.
One thing that will certainly fill up the tubes is streaming high-definition TV, especially if it's from a live event that can't be cached and everyone wants to watch it. Like football. BT has started promoting the YouView set-top boxes heavily, to go with its new portfolio of sport, and as a result we have some first data points on the platform. So far, it's insignificant.
Sky, for their part, added 50,000 customers in the UK in the quarter, and half of them took their IPTV service. So far, 4.5 million of their 10.3 million customers have the Sky+ box, but only 1.7 million have plugged the network cable into the back of it. That's still about 1.6 million more than YouView.
Dan Rayburn reviews CBS and Akamai's streaming of the Superbowl, and finds it inadequate.
Amazon Web Services launches Elastic Transcoder, a video transcoding service in the cloud, thus getting closer to having a full-service video workflow.
Google is investigating subscription channels on YouTube, having asked some of its original content creators to have a think about what they might do for a subscription of between $1 and $5 a month.
Google has also, it turns out, been talking to the French government. The row between French publishers and Google has been going on for years - remember when AFP sued them for indexing their Web site? Now, Google has agreed to put €60m in what sounds like investments in digital publishing startups and to offer French content firms advice about how best to use Google Analytics and other products. In a sense, rather than set a precedent, Google has voluntarily pulled out some money to hush the problem.
Meanwhile, Facebook reckons its mobile revenue is up to 23% of the total.
Up in the cloud, Amazon's results were a little disappointing, although their usual weak point, margin, was up. That might explain why the shares soared on the news. Wired argues that they are growing like WalMart in the 1990s, but you have to wonder about a company with sales of $21bn and net profit of $97m.
That said, here's Jim Young of ESRI, makers of the world-standard ArcGIS mapping server, talking about running mapping and geographical information systems in the AWS cloud:
OpenStack wouldn't exist if it wasn't for Rackspace. They've just published reference architectures for private clouds using hardware from three vendors on the OpenStack platform. Meanwhile, GigaOm introduces OpenFlow to the readers.
Competing with Google is tough: here's how DuckDuckGo is trying to do it, from High Scalability.
And EVE Online, as you might expect, has some pretty impressive scaling challenges. The nice thing about being an alternative universe, though, is that you can fix them by adjusting how fast time passes. If you can't do that you might want to optimise your web site for better browser caching.
Bad news for the GSMA's Voice 2.0 project, Joyn aka RCSe. Deutsche Telekom has put off deployment until further notice, citing serious technical problems, notably to do with Android fragmentation and also with interoperability.
DTAG is also operating a Voice 2.0 platform, Voxeo Labs' Tropo, as part of its Developer Garden programme. Speaking of Tropo, here's an app from their AT&T hackathon.
That said, will the explosive growth of Android make telco voice irrelevant?
Republic Wireless is deploying VoWLAN on a serious scale.
Now Skype is Microsoft and not really peer-to-peer, who's listening to it?
RevK says that the IPv6 consumer routers are here, but where are the VoIP phones?
What will we do with peer-to-peer LTE?
The FOSDEM conference, as usual, has a really superb Voice 2.0 lineup. Learn!
telco2.net | 04-Feb-2013 13:13
Mobile World Congress 2013 Preview: reading the CEOs
The GSMA's Mobile World Congress (MWC) 2013 in Barcelona on Feb 25-28 is a key fixture in the mobile industry. Telco 2.0 is again delighted to be official partners of the event. Not only does this mean that the Telco 2.0 analyst team will be attending in force, but also that we're able to offer our readers a special discount on MWC passes. (Email us at email@example.com if you'd like one).
It's at a new venue this year, the brand new Fira Gran Via. While it's a little out of the centre of town, we're looking forward to a change of scene, and Barcelona is small enough to enjoy the centre of town in the evenings.
Apart from the allure of the city of Barcelona, we like going for three reasons.
- It's a great place to feel the pulse of the global telecoms industry, and we'll be analysing and reporting what we see and hear in the weeks after the Congress. We've had a look back at our analysis from the last three years below, and are reasonably pleased on the accuracy of our predictions and conclusions we drew from watching and listening to the great and good from Google, Microsoft, Vodafone, Telefonica, et al.
- It's a good place to do business, and we're hosting activities for a number of clients at the Congress.
- It's a superb opportunity to simply catch up with many key clients and friends in the industry. So if you are going, do let us know and we'll try to catch up with you.
So what happened in the last couple of years? In the rest of this article we reflect on what we read in the performances of some of the world's top technology and telco CEOs (Google, Microsoft, Vodafone, AT&T and Telecom Italia), and other highlights from Congress.
For a start, Google's Eric Schmidt gave one of the best big stage performances we've ever seen. With the benefit of hindsight, this may have happened at around the apex of the Stamford man's career at Google, and his second appearance illustrated a fascinating change in both his, and Google's, strategic approach.
Back in 2010, in How Google's Chief Magician Stole the Show, we wrote how the then CEO had in a tour-de-force performance told the telecoms industry exactly which parts of their lunch Google will eat, while simultaneously appearing to offer peace. We thought that his most revealing remark was an offhand comment about customer data, and about how much more of it that Google would have in five years time. Big customer data was of course the telcos' lunch we were referring to - the oil of the future information economy, an area we've been working on for a number of years.
Two years later Schmidt seemed like a different man when he spoke again at the 2012 Congress.
While still a consummate performer, in 2012 he seemed like an elderly uncle of the man who presented at the 2010 show. It may have been that Schmidt's new role of Chairman suited a lower octane style, or that his true objective was to anaesthetise the industry to the distrust it then felt toward Google. It may also have been that by then, the high intensity 16-hour-a-day CEO lifestyle that Schmidt had described as the norm for his team had taken its toll.
In contrast, in 2011's Microsoft CEO fails to land all punches, but..., we described how the pugilistic Steve Ballmer was all fist-pumping action while making a slightly less than convincing case for Microsoft's Windows 7 mobile OS. Despite our own doubts about the near term prospects for Microsoft in mobile, we sounded a cautious note of longer-term optimism, saying that Microsoft could be back in contention within 5 or 6 years given its corporate IQ and resources.
It's still early days, but consumers and reviewers seem to have warmed to the OS at least. Recent results appear to show Apple beginning to plateau, and Samsung powering ahead, so the smartphone OS wars are far from over. Operators still have the strategic need to nurture more than two smartphone ecosystems as we pointed out in Dealing with the 'Disruptors': Google, Apple, Facebook, Microsoft/Skype and Amazon, so Microsoft is still in the game.
The motivations and contrasts between the outwardly composed and cerebral Schmidt and the combative Ballmer, and indeed the emotional tone and temperature of all of the CEO performances we watch, are always among the most interesting aspects of the Congress. CEOs are, after all, the centre of something akin to a company's 'ego' - the embodied expression of what it collectively believes it is and should be doing.
In the case of the 2012 opening addresses of the CEOs of Vodafone, AT&T Mobility, and Telecom Italia, we noted a slightly comical 'Goodfellas' tone, giving the impression of powerful gang bosses addressing peers at a fraternal gathering. The President of China Mobile, in contrast, simply spoke in Chinese: the clear message being 'now you must come to us' - as well as some intriguing thoughts on its vast mobile platform. We also reported on Apps & Devices, Network Technologies, M-Commerce, and Facebook's somewhat content free appearance.
So we look forward to the star turns and content of the MWC 2013 agenda, and what it all tells us about the state of the industry. There are some interesting speakers there this year, though notably, no heavyweights from Google or Facebook, and of course nobody from Apple, which has infamously always eschewed public appearances at the Congress. On the non-telco side, Deezer, Dropbox, Foursquare and Viber will be there, and the telco C-Level line-up is strong, so there's plenty to look forward to.
And perhaps we'll see you there too - email firstname.lastname@example.org if you'd like to know more about the special discounted passes.
telco2.net | 31-Jan-2013 10:47