Telruptive

MWC is supposed to show off the best innovations in the telecom industry. The telecom industry is desperately in need of a new business model to substitute falling revenues and pay for exploding data costs.

There were a lot of LTE innovations that were announced. However these will only generate new revenues for the solution providers and not for the telecom industry as a whole.

M2M was another major innovation area. However there was no announcement of any standardization whereby several large operators would push a common standard. Without this standard it will be hard for large scale M2M projects to deliver large profits. If the telecom industry wants to be seen as the leader in the M2M then they should take a leading role in its standardization.

Augmented reality is also pushing strong. However most players are over-the-top companies and not telecom solution providers or telecom operators.

Lots of new phones and tablets but this will also not generate new telecom revenues but will probably push operators into bit pipes sooner.

Cloud computing, big data, collective intelligence, gamification, etc. were under-represented. A lot of slides but few real mind-blowing products.

Operators are probably the once to blame most for this. There is no clear signal from them that they will be investing in revenue generating solutions in 2012-2013. The only thing you can hope for is revenue sharing. Why if you invest in making a stellar product would you want to go to endless RFPs and complex integration solutions if you could launch the product by yourself and become a successful over-the-top-player?

In a recent article on Gigaom, the author is saying that it’s the end of the line for telco. Several arguments are brought to the table to explain that the industry as we know it today has seen its best days. Similar to postal services and railways.

What if the article is true?

What if the complex telecom standards no longer live up to the dotcom flexibility? What if communication is so much more than calls and SMS? How can an industry that seems so alive on the Mobile World Congress be like a dinosaur just before the ice age?

Assuming the industry will only get worse. What are your options?

1) Denial – deny the end of the world is near and focus on daily business. Once the recession is over things will pick up again. Tomorrow an operator will find the solution…

2) Survival – accept the industry is going to get worse so try to focus on those things that still continue: 4G networks for sure but what else:

3) Surrender – move to the winners (Apple, Google, Amazon, etc.). However, what if they are not hiring?

4) Move on – change industry. Where? Hiring freezes are general in most industries. Where do they need SS7 specialists?

Since the list ran out of options, there is only one more thing you can do: revolution.

The current model has failed. Let’s try to focus on the next model.

What if calls and SMS are free? What if monthly mobile subscription charges are €10 max? Where will the money come from in this case?

I have some ideas. They might be good or bad. However for sure there are millions of people that will have ideas. The challenge will be how to test millions of ideas without spending billions on useless ideas.

This challenge sounds very much like the same challenge venture capitalists and business angels have. So why not use their techniques to solve the same problem?

Instead of investing in yet another useless large scale OSS or BSS transformation project, why not set-up a telecom venture capitalist business with this money? There are several companies that use a similar set-up to do product innovation. They allow the crowd to suggest ideas, rank them, complement them, etc. They set-up a team of internals and externals to build prototypes for the best ideas. They allow the crowd and social tools to make publicity and a darwin-like experience to get to a certain level of profits or get killed. External companies could even be willing to participate in some of the ventures.

The best way to motivate is to create a challenge. Every approved idea will get €250K for 6 months. Who can successfully launch a telecom product or service that makes €1M profit within 6 months after idea approval? The team that does, gets €1M investment and stock options. Next challenge €10M in 6 months.

To cater for these telco startups, operators would need to set up separate legal structures, innovation platforms and expert guidance teams. Startups should be owned partially by the operator but also by their founders. Innovation platforms should avoid re-inventing the wheel continuously. Expert guidance teams should help startups with technical, business, legal, marketing, etc. support.

The idea should not be to invent the next SMS but to invent a whole portfolio of profitable new services because the industry should no longer be built around two or three killer apps…

When the first television shows were made they used one camera to record a theatre play. It was only after some time that the real potential of the television became clear.

Virtualization and IaaS is like a one-camera-theatre-play-broadcast

Yes it is great to be able to put software on virtual hardware and as such save some money in hardware costs. But it will not change anybody’s life because renting a virtual server full-time is more expensive than renting a physical hosting server. Companies that focus too much on virtualization and IaaS are not seeing the full potential of Cloud Computing.

Multi-tenancy – a game changer

Cloud Computing without mult-tenant solutions is like a race car without an engine. Making one solution that fits many and installing it once and managing it in one place is the real game changer.

How much time and money is lost in a per customer install? Ordering and installing hardware (4-6 weeks); paying for base software (OS, Cluster, Database, etc.); installing the total software stack; integration with back-up, fault management, single sign-on, performance management, third-party systems, etc.; upgrading and bug fixing; data migrations; etc.

All this can be drastically reduced if the software is installed once and designed for multiple companies and customers.

Best-In-Class Solutions

Best-In-Class solutions used to be those solutions with most features from market-leading companies like SAP, Oracle, Microsoft, etc. However most of these solutions are unnecessarily complex. There is a simple rule to check if you will be overpaying for unnecessary features: Do my business users need training? The more, the worst.

Apple has demonstrated that simplicity and easy-of-use are real demand creators. The real revolution of Cloud Computing is starting now. The real revolution is that business users can ignore the legacy corporate IT systems and use alternative solutions to get things done faster and more efficiently. The Appstore concept of “There is an app for everything”, will now be translated into “There is a SaaS for everything”.

Project managers will stop asking the IT department to install a shared project management server to synchronize their MS-Projects. Instead they will simply use a SaaS solution for project management. The same will be happening for other disciplines.

IT departments can fight this trend, just like they can try to stop people from bringing smartphones and tablets to work. However smart IT departments see a clear opportunity.  Corporate systems are very expensive and often their implementation fails. This wastes a lot of time and money. By letting business users choose the SaaS solutions they want to use, IT departments will see the risk of project failures due to change management issues almost disappear. Using SaaS solutions however does not mean that IT departments are no longer necessary. Once users are over their honeymoon period they will want these SaaS solutions to use Single Sign-on and be integrated with corporate systems and other SaaS solutions.

The next steps in the Cloud Revolution

The next step in the Cloud revolution will be solutions that make easy integration between on-site systems and between different SaaS solutions possible. Project managers will love to manage projects via a best-in-class project management SaaS. However they will still need to get time reporting info, travel expenses, resource allocation, etc. The reality will be that some of these systems can be offered via other SaaS solutions and some will be local. All of them will need to be integrated if the enterprise wants to get real benefits. History has a tendency to repeat itself. Middleware  and EAIs are not death because of the Cloud. They just will become EAIaaS.

The other Cloud revolution is likely to give business users tools to create their own applications in the Cloud. This does not mean programming tools but instead drag-and-drop wizards and dynamic data storage solutions. There are millions of business critical applications stored in Excel and Access files. It is time that business users get the proper Cloud tools to convert these into social corporate solutions. Google Apps and Force.com are ahead of the rest but they are far from being the winner yet. The war has just started…

The Big Data elephant just got a well-connected Giraff friend. Putting it differently, Yahoo and LinkedIn have open sourced scalable social graph software. If Hadoop was the Open Source version of the Google File System and HBase the Bigtable version, now it is time for an Open Source version of Google’s Pregel: Giraph.

In Open Source Social Graph Software Not Ready Yet I complained about the social graph not being ready. Giraph should change this.

So why is this important for operators?

Any service that wants to “be social” needs a social graph solution. A social graph links the Twitter followers, the LinkedIn colleagues, the Facebook friends, etc. For operators a mobile social graph can link callers. Who calls who, who influences who, who is going to churn with whom, who might also appreciate this marketing campaign, who should definitely know about this new service, etc.?

The “Hello World” example of Giraph is Google’s Pagerank. Pagerank is the power of Google search and now it is available to everybody that has millions of users. Be sure to  keep an eye on this Giraph because the “Apache Zoo” just acquired a new important animal in its Big Data Analytics department…

P2P video streaming has finally arrived. It took a little bit longer than expected but expect users to move away from sites like Mega Upload and to move to BitTorrent Live. P2P video streaming allows people to see content in real-time without having to download the content first. Since BitTorrent Live will also be used for official and legitimate content distribution, throttling bandwidth by the operator might be seen as breach on competition laws by the European and American authorities. This will make it difficult for operators to control the flow of data in their fixed and mobile networks.

In a recent article, solutions for both Hollywood and operators were discussed so please have a look there…

Today Friday 13th August 2014, the conglomerate Ericsson Nokia Siemens Alcatel Lucent Networks has filed for bankruptcy protection.

How can it be that only 2,5 years ago the conglomerate consisted of three companies that were employing tens of thousands employees each? Bad management was not the reason for the downfall. Each company was professionally managed and was trying to provide solutions its customers asked for. Their major business was delivering LTE (5G) networks to telecom customers all over the world.

The downfall initiated at the end of 2012 when their customers started to massively launch LTE networks. Subscribers in 2013 noticed that with the new LTE network calls and SMS could be substituted by free VoIP and instant messaging. All of a sudden telecom revenues started plummeting. To make things worse HD digital content distribution moved from broadcasting to streaming, putting heavy loads on the new networks and the associated costs onto network operators. By switching off digital broadcasting, spectrum all of a sudden became less expensive, triggering major accounting adjustments.  Several operators went into panic mode and started large-scale consolidations and cost cuts. This triggered a consolidation between the three major telecom solution providers.

Operators never requested their solution providers to help them build new revenue generating solutions until it was too late. Operators were asking for faster, easier to manage and cheaper networks instead. As a clear example of the Innovator’s Dilemma, telecom solution providers focused on what customers requested, not on what customers really needed.

For the telecom industry IP communications, Cloud Computing, Smart Phones, Tablets,  Content Streaming, Social Networks were all disruptive innovations that changed the status quo completely and faster than anybody in the industry expected. Consumers changed their behaviour faster than telecom providers anticipated. Dotcoms, then also called over-the-top-players, were a lot more agile than operators and telecom solution providers.

After the introduction of LTE, also the complexity of the telecom industry changed. For the first time networks no longer had services entangled in obscure protocols. Standardized web technology could be used which massively invited IT players to enter into areas that used to be the exclusive playing field of telecom solution providers. Ericsson Nokia Siemens Alcatel Lucent Networks had a company structure build around complex proprietary-standards and solutions. When these could be substituted by off-the-shelf standard-based solutions, services daily prices got divided by four. This rendered the existing players uncompetitive virtually overnight.

February 2012: This post is fictional but unless telecom solution providers start asking their customers how they will generate new revenues with LTE, nothing will stop it from happening…

Every system that is deployement within an operator:

• Needs to generate alarms for fault management.
• Generates performance management data for software usage, KPI and SLA management.
• Can have interfaces for remote configuration.
• Can be integrated with a central inventory management for simplified asset tracking and audit tracking.
• Generates logs that can be used for auditing.
• Can have an external security system that controls access.
• Can have an external software management system that manages the life-cycle of the software updates.
• Can have a data export for data analytics.
• etc.

No wonder OSS architectures are complex if in addition to the main functionality all the above need to be managed for every system. Reality is that each system (fault management, performance management, configuration management, inventory management, etc.) has its own standards and expects others to come and integrate with the system.

Can’t this be done simpler?

What if OSS would offer a plug-and-play mechanism? Each new system that is installed would broadcast its availability. Plug-and-play interfaces would be standardized for FM, PM, CM, IM, etc. A plug-and-play interface is a mechanism by which when you add the software, your architecture gets notified of the new system and automatic negotiations happen:

• with the fault management system about what type of traps will be launched and what type of actions need to be taken. Via a Cloud solution, software companies could register once the traps that are launched and the fault management system could “automagically” start monitoring the new system.
• the same is true for the other systems. Performance data configurations are proactively shared with the performance management data. The inventory system receives information about what is happening in the software. The data analytics system receives information about the new system.
• Deployment of the new system should already have happened via a common software management system that also manages updates, high-availability and rollbacks.

Sure there are no standards for this type of semi-intelligence in OSS. However standards in the Web 2.0 era are made by the first dotcom that comes up with a simple system that just does the job.

Software providers would build plug-and-play in their software, hence deployment of a new solution would no longer be traumatic in the OSS area. The idea would be to have a mechanism like a hardware USB plug-and-play. You plug-in a new solution and automatically it configures itself within your architecture…

Killing the mobile broadband oligopoly

For years operators have paid billions for spectrum. Millions of man-years have been spent on building standards like GSM, GPRS, CDMA, 3G, LTE, etc. Can disruptive innovation kill this in a few years?

Yes, it can. The FCC is finding out that large parts of the USA are still not covered by mobile broadband. After years of lobbying by groups like the New American Foundation, the FCC has finally decided to start with White Spaces. White Spaces are also being rolled out in the UK.  White Spaces allows spectrum to be opened for public usage, which was previously used by analog television or to separate different adjacent channels. White Spaces have been referred to as “WiFi on Steroids”.

Another disruptive technology is software-radio networks in which mobile devices use software-driven radio technology instead of hardware-driven radio technology. This allows a mobile device to be compatible with different standards and to switch and evolve quickly. Putting software-radio in a mobile phone will make it possible to use dynamic white spaces, in-door networks, etc.

A final disruptive technology is Openflow. Openflow, is part of software-driven networks, in which routers, bridges, firewalls, loadbalancers, etc. are implemented on software-level. Networks can be virtualized and used with different QoS and configurations at the same time.

Google and Microsoft are major backers of the White Spaces initiative. They also control two important mobile operating systems. Google is also running pilots with fiber-to-the-home. Google has its own routers and other network technology.

Google could easily be the first White Space operator and use a Fon-like way to roll out their network.

Killing ARPU

SMS is already death, and it will be just a matter of months before operators will see deep dives in revenue. Apple could make the iMessage protocol public and Android could come with a standard iMessage-enabled solution and people would no longer send SMSes but would not even realize it.

Next one on the list are calls. Roaming is already seriously being challenged for years by Skype and others. Operators are planning for VoLTE, or voice over LTE, only by 2013-2014. However most will start rolling out LTE in 2012. This is the ideal situation for Voxtrot, and others, to use the vacuum to get people accustomed to free calls. By the time VoLTE will be available there might just be one market price for it: FREE.

Other value-added services, are already being substituted. MMS is called Twitter & Facebook mobile app now. PBX are now on the Cloud. Call centers are now offered as a service.

Killing ROI

Operators are pushed by the market to invest in LTE roll-outs. However why would you need LTE? There is not a single operator service at this moment that will make people queue up in front of their stores to get an LTE subscription. There are a million and one reasons in the form of mobile apps, mobile video streaming, social networks, HD Video-calls, etc. that can push customers towards the over-the-top-players.

So network investment is only going to rise and revenues from the new technologies will be meager at best, if not cannibalizing high-ARPU services.

With Mega Upload and other sharing sites being disabled, illegal file-sharing is not going to go away. P2P is likely to come back with a vengeance. It is easy to shut down large sites. However what if special encrypted P2P apps are used to distribute the location of content and botnets for distribution. There are a lot of computers that are connected to the Internet but are badly secured. Instead of using them for spamming, Mega Upload 2.0 services can use them to store and distribute content. As long as these “hacked” computers use HTTP(S), it will be very hard for operators to distinguish regular do-it-your-self websites from illegal content hubs.

Killing the operator’s established business model

Operators have educated subscribers that everything that comes from them has to be paid for. Disruptive operators like Free.fr are undoing this education by giving a lot of services for free when you pay the monthly subscription fee.

The Freemium business model is likely to find its way into the telecom industry. The model in which 90-98% of the users get the service for free and 2-10% generate the revenue by purchasing premium services. Combined with advertisement, this is the model of big successes like Zynga, Linkedin, etc. Disruptive players that adopt Freemium are likely to start offering services outside of their country borders since the more people participate, the better. With a winner-takes-it-all business model expect roll-outs to be very aggressive.

What can the telecom industry do?

The first thing operators should do it to tell their providers that their top problem is the lack of new revenues that will sustain the industry. Not LTE roll-outs, not fiber-to-the-home, not customer experience management, etc.

Telling telecom providers that new revenue solutions will be a top priority for 2012 will shift R&D budgets into the right direction.

The second thing operators should do is to stop using their existing purchasing techniques to try to generate new revenues. Nobody will be able to invest 5 months into an innovative solution, spend 3 months doing business development, pass 3 months on filling out RFIs, pass another 4 months filling out RFPs, 2 months on contract negotiations and 6-8 months on delivery. The industry can not wait 2 years to launch the first solution. Especially the herding nature of operators is making any introduction of new innovative services difficult because everybody wants a market leading solution but nobody is willing to be the early adopter.

The response should be different. Joint innovation teams that are able to break the “established rules”; that are able to launch “beta-quality” services to early adopters; that are able to innovate with both technology, business model and go-to-market strategy, etc. Operators should be embracing innovation and learn from the IT industry and even better the dotcom industry on how innovation is done quickly, efficiently and successfully…

With the unstoppable trend of bring-your-own-device or BYOD, operators would be wise to focus on ubiquirience…

What is ubiquirience?

It is the combinations of ubiquitous and user experience. But it is easier explained with an example. Today families buy an iPad. One of the working parents will take the iPad to work for email, during the morning rush to find an alternative route and at home to read an e-book. The same device will also be used by the teenage daughter for home work, the 9-year-old will see a movie  and the 6-year-old son will play games on it.

The device has been used ubiquitously and provides a different user experience every time. Operators should not focus on the iOS or the iPad apps but on the fact that multiple people will be sharing one or more devices and expect different user experiences.

Operators should understand which Cloud solutions can help residential and enterprise customers move devices between different locations, use them for different needs and share them with different persons.

With tablets and smart TVs becoming more omni-present,  end-users need to be able to personalize devices based on the activity they are working on. A working parent wants to be able to have access to business solutions from home, be it on a PC, laptop, mobile, tablet or smart TV. Two minutes later that same device might be shared with a toddler.

Today’s services and devices are not ready for ubiquirience. Most corporate approval systems do not allow a business person to approve an urgent travel request from their smart TV. Neither are devices prepared to change between corporate and leisure time.

Telecom operators are in control of many devices and can offer enterprises solutions to push corporate settings to devices. Mobile SaaSification of legacy applications can help move existing custom build applications from on-site data centers to the cloud and make them accessible from any device…

Google App Marketplace was the first marketplace for SaaS. However there has lately been an explosion of SaaS marketplaces. Unfortunately most of them are eCommerce sites that support subscriptions and resell Microsoft 365, some cloud backup and 3 to 5 things more.

Operators that are considering such a me-too marketplace should try harder

There is nothing like an average enterprise customer. Each customer is looking for a unique mix of services. You have innovators, early adopters, early majority, late majority, laggards. You have self-employed, micro, small, medium and large companies. You have industries. Users are working on different functions within a company (finance, operations, sales, etc.).

However never has it been easier to personalize product portfolios according to market segments, industries, adoption likelihood, usage, etc. Operators should not set-up one marketplace but instead set-up intelligent personalized niche marketplaces. Users can tell you which industry they belong to, what their company size is, what their function is and if they are more eager to use the latest and greatest or if they want a full eco-system with a market leading product. This means that a highly personalized portfolio can be shown instead of a bunch of generalist products.

Why sell different products via different channels?

If you have customers segmented, then ideally all relevant products are presented in one personalized marketplace. Ranging from phones, tablets, mobile apps, SaaS, on-site equipment, advanced consultancy services, support, etc.

Bringing in intelligence and social commerce

The next step is to increase the likelihood of selling a product and cross-selling products. Users like product reviews and ratings. However users love product reviews and ratings from people they trust. What if each product in addition to a general section on product reviews and ratings also has a social review section. The social review section would be like:

• these contacts from my linkedin network have bought this service
• these contacts have bought these alternative services
• their ratings are
• in addition they also bought these services

How to go from 0 to 1.000.000 products?

Many operators offer services for “the average customer”. The product catalog is relatively small. Few have more than a couple of niche products per industry. Setting up a social niche marketplace is no good if you do not have a large catalog of personalized services to sell.

SaaSification to the rescue. Every industry has a lot of small companies that have build niche products. Most of these products require on-site installations. This means a lot of CAPEX. Often more is spend on buying the hardware, base software, services to maintain the data center, support services, etc. than on the actual software. By offering these small companies a SaaSification solution whereby they can migrate their on-site solution to an operator-hosted SaaS solution, the product catalog can be quickly extended with thousands of niche products. Offering tools to make single-tenant solutions multi-tenant and to make web solutions mobile-enabled, will substantially improve your chances to attrack ISVs.

New SaaS will move from the innovators towards the early adopters, early majority, etc. Early majority products will be niche market leaders, have strict SLAs, a support eco-system, etc. Leading products can be identified by the market. Operators can spot those niche market leading products and offer special deals, even co-branding. This strategy will allow a personalized long tail strategy without the long tail costs…