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Europeans have lost their telecom edge…

November 7, 2011 Leave a comment

Not so many years ago, Europe was the leader in telecom. Nokia was the dominant phone maker. Symbian the dominant operating system. GSM/GPRS/3G driven from within Europe. Ericsson the dominant network solution provider.

Fast forward 2011/2012

Only Ericsson is still leading the network solution market. Their mobile arm is being absorbed by Sony however. Symbian is dead. Nokia is in coma, let’s hope its doctor from the Microsoft hospital is able to revive them. LTE is being deployed widely, except for Europe.

The  new rulers are Apple, Google and Huawei. Countries like South-Korea and Japan have gigabit fiber to the home. Something no European country can match.

What should Europe do?

First of all there is a legal problem in Europe that blocks a lot of innovations from reaching Europeans. Europe does not exist in telecom world. Instead there is a collection of small and medium countries that each have their own incumbant operator and legal framework.

The first thing should be to move the telecom legal framework to European level and stimulate the creation of one open market. It can not be that in Germany or France it is not possible to get a virtual phone number [DID] without having an address of residence. Services like Twilio have a hard time to deploy in Europe because of this.

The European Union should drastically reduce its help to farmers, especially industrial farming, and instead use the funds to build gigabit fiber-to-the-home. The UK model whereby the fixed infrastructure is separated from the go-to-market entities should be a good model to follow. If we want to have more Internet companies in Europe, we should start by having fast Internet in all mid to large cities. As well as LTE access for all Europeans in 2013.

European Silicon Valleys

The next step is to create European Silicon Valleys in which startups and universities get easy access to venture capital. Without European innovation, it is hard to see how the European telecom industry will blossom again. Large telecom operators have shown few success-stories when it comes to telecom innovation. They are better at buying successful startups, then starting new innovations themselves. But before you can buy, you must have them first.

The Alternative

What is the alternative of not doing anything?

European employment will suffer. Telecom hardware and software development will be moved permanently to China and India. With only some small design shops in Europe at best.

Operators will become bitpipes which means that only a fraction of the current employees are needed.

American dotcoms and large corporations will attract all investments.

If there ever was a time to feel European, now is the time…

Tablets are going mainstream. More 3G subscriptions but less calls and SMS…

iPad 2, Samsung Galaxy Tab, Motorola Xoom, Notion Ink Adam, ASUS EEE Pad, Dell Streak / Looking Glass, Archos, Acer Iconia, LG Optimus Pad, Viewsonic ViewPad, Kno, Hannspree Tablet, etc. The list goes on and on. 2011 will be the year the tablet went mainstream. Thank you Steve Jobs!!!

Although a good percentage of tablets will come with 3G connectivity, and even 4G future-expandable connectivity, does this mean that telecom will get another cash-cow? I do not think so!

Yes operators will sell another SIM and the associated monthly data charges. But with people having to buy multiple SIMs, they will want to see discounts. Users will want plans that focus mainly on data. This means to have price plans that reduce calls and SMS monthly costs to the minimum. The idea is that they would use their phone to call and their table to surf.

However what is likely to happen is that users will come into situations where they want to communicate with people from their table. Since calling and sending an SMS is too expensive with their tablet data subscription they will install more and more instant messaging and VoIP apps. Pretty soon users will get accustomed to use video chat instead of just voice calls.

The end result will be a boost to IM, VoIP and video chat apps. If you use them on your tablet, then you are more likely to also start using them on your iPhone or Android. The final result might be that subscription revenue goes up for the operator but call and SMS revenue goes down significantly as well. Perhaps the overall outcome in revenue is positive but the final result is that at the end of 2011 operators are seen as data plan providers, a.k.a. bit-pipes.

There is no quick fix for the operators. Launching some operator-build tablet apps will not reverse the curve. Nobody wants Faceclone or SMSitter. People want the real thing.

A drastic shift is necessary in the operator to form part of this new eco-system, see long-tail telco.

 

Voxtrot will be stealing calls away from mobile operators!

Voxtrot is built by some of the original Skype team members. Unlike other mobile voip apps, this one has a real potential to change end-user’s behavior. The big difference with Skype and others is that Voxtrot does not assign you yet another username or phone number. You register with your original phone number. When you are calling somebody then Voxtrot will check if the other party is also connected to Voxtrot. If both parties are connected to Voxtrot then the default option will be to use VoIP instead of a mobile call. The Voxtrot call will be  “free” – at least if you are on WiFi or have a large enough data plan – instead of paid. As such Voxtrot will have stolen a call away from the mobile operator…

Although Voxtrot is essentially similar to Skype and others in VoIP technology, the easiness of going VoIP together with the social aspect of inviting all your friends, is really setting it apart from the competition.

Voxtrot is currently only available for Android but plans for an iPhone version were made public.

Operators will have to accelerate their search towards alternative revenue sources or risk becoming bitpipes sooner than later.

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