Wednesday, June 13, 2007

Telco 2.0 Mashups - an alternative to IMS?

There’s a fascinating debate currently around how mobile and fixed operators should develop new revenue-generating services. The now traditional view centers around IMS and SIP. But some are now saying that instead operators will have to adapt to the Web 2.0 world, using the concept of "mashups" to quickly create new Web-based services. A recent report from Light Reading delves deep into this idea: Telco Web 2.0 Mashups: A New Blueprint for Service Creation.

Basically, the argument goes something like this:

Should mobile and fixed telcos:

1. Continue on their path of trying to become media and content companies or
2. Move toward a ‘network abstraction’ model where they back away from providing content directly and instead provide APIs which are valuable to 3rd parties (e.g. location API, identity API, micropayments…..).

To be successful at (1) you need economies of scale. You’ve got enormous burdens of content licensing, content management and delivery technology, market research costs, software development, etc. If you want to put this all in IMS, then you’ve got that burden as well. Then add to it the network-level table stakes – cell sites, FTTx, transmission and routing capacity. Only companies like Voda, Orange, ATT et al have a chance of making this model work. But this model clearly implies (in my mind at least) a mass market approach – again, economies of scale are critical. Anyway, telcos by nature are mass market beasts. Operators that don’t successfully insert themselves in the value chain, probably by wielding their sheer mass alone, will be disintermediated. They’ll be forcibly transformed into a utility as their data/internet-hungry customers churn away.

Model (2) requires a bit of enlightened self-interest. Operator realizes that they could not succeed at (1), but rather than be relegated to utility or pipe status they create a position in the value chain for themselves. What can an operator offer Google, MySpace and every dinky web developer out there? Info about the customer that only they have access to – location and identity pop into my head but there could be more. This model reaches the long tail as well and encourages web companies to come to the operator rather than the other way around which is how it is today. This space is wide open at this point in time.

My thoughts on the matter….. I think operators who use IMS to go head to head with web and media companies will lose. The only exception to this could be Voda, Orange, ATT and the like. Due to their sheer size they could entrench themselves in the value chain and refuse to budge. But model (2) is still a long way away. So, in the short/medium term operators should stick with what they are good at - mass market services. During this period they should continue to drive costs out of their businesses which will give them longevity. Also during this period they should work with web companies to develop the tools needed to make model (2) work. I don’t have an opinion on standards based vs proprietary at this point. A well-respected colleague of mine has a more stony view on the situation - he believes that this trend will accelerate telecom operators’ transformation into utilities – no matter how much they fancy themselves to be “content providers”.

Tuesday, April 17, 2007

Forum Oxford - Future Technologies Conference

Forum Oxford's Future Technologies Conference was last Friday 13th April. Unfortunately I wasn't able to attend as I was finishing up a presentation for this year's TNMO in Budapest where I'm speaking.

Focusing on next gen mobile applications, business models and industry issues in general, Forum Oxford is an online 'discussion forum' that has over 1000 members from something like 70 countries. It's free to join and lots of very smart people are members. Check it out.

Thursday, March 29, 2007


Apologies for the radio is very easy to fall out of the habit of writing.

Let's talk about Femtocells. These small, low-cost indoor base stations promise substantial cost savings and new service opportunities and are generating intense interest from operators.

The main benefits of Femtocells are:
1. Fixed-Mobile Convergence (FMC): 3G femtocells enable MNOs to offer relatively inexpensive, high quality voice for users when they are at home. Also helps to maintain the "mobile premium" when subs are out and about.
2. Bundles and group subscriptions: to attract all household members to the network.
3. Compete effectively with WLAN/UMA: without the need for dual mode handsets.
4. Cheaper to deploy and manage than macrocells.

Some analysts predict that 3G femtocells have far-reaching consequences for the industry. Operators need to improve in-building coverage significantly, and 3G femtocells offer a practical, and potentially much less expensive, alternative to further investment in 3G macrocell networks. They believe that femtocells in sufficient densities could even make macrocell investment redundant. Note I said in sufficient densities.

Analysys Research claims that "Mobile operators could benefit significantly - particularly if they have a small number of customers. A typical small operator could save an average of about USD45 per customer per year by deploying 3G femtocells in 60% of customer households by 2012."

That's equivalent to adding around 10% to ARPU. Sounds pretty compelling. Let's buy a bunch.

Not so fast....They then go on to say that operators could end up shooting themselves in the foot: "Mobile operators that fail to adopt a large-scale approach may find themselves expending great effort on integrating a large number of 3G femtocells without avoiding significant macrocell investment, if most of their customers do not take up femtocells. 3G femtocell deployment to 20% of households by 2012 would only save about USD20 per customer per year, because significant numbers of macrocells would still be needed."

Sounds like an 'all or nothin' ' situation. No doubt operators will have to subsidize the Femtocells, quite likely footing 100% of the bill. At only USD45 per person savings in the best case, Femtocells won't make sense unless the sub signs up for some bundle or a family subscription. It will help the business case even further if the MNO is also the broadband provider. However, even with all these potential revenue sources, it still seems to me that the operator will have to more or less blanket a region for Femtocells to make economic sense.

Thoughts and comments welcome.

Tuesday, January 16, 2007

3 scraps roaming fees - Viv must be ecstatic

'3' announced today that they're scrapping roaming fees in the 8 countries where they operate 3G networks - Italy, Sweden, Denmark, Austria, Hong Kong, Australia, UK and Ireland. Called '3 Like Home' there are no one-off fees, no connection fees, no incoming call termination fees, nothing. Voice minutes and messages come out of your bundle. And presumably, if you're on X-Series, then your data usage is free.

What a great development - I applaude the guys at '3' for really taking the lead. They took the wrecking ball to the walled garden with X-Series and now they're doing the same with roaming fees. Vivien Reding of the European Commission must be very happy indeed.

I have long ranted about how the mobile industry suppresses the mobile internet and finds any outside (3rd party) innovation incredibly suspicious and even dangerous. Even '3' was like this for the longest time - they were one of the strongest advocates of the walled garden and a restricted mobile experience.

No other operator has moved in response to X-Series.
And now '3' has upped the ante again.

Vodafone, T-Mobile and O2 all cut their roaming fees last summer presumably to delay any meddling by the EC. I guess at the time they were even seen as being 'leaders' - certainly relatively speaking since roaming fees were so extortionate to begin with. But now '3' has one-upped them on roaming as well as data.

I can't wait to see what's going to happen next.