Telruptive

For the last year and a half Telruptive focused on trying to save operators from becoming bit pipes and with it trying to save employment in the telecom industry. This has been a major limitation for the type of blog posts that could be published. Starting today Telruptive’s focus has been extended. Any innovation, disruptive technology or business practice that has to do with communication between people as well as machines is valid. Communication is not seen as pure telecommunication but is seen in its widest interpretation, moving information between one or more parties.

Why is saving operators no longer a priority?

There has been no proof in the last year and a half that most operators will not become bit pipes. Most operators will either become bit pipes, consolidate or worse. Telecom solution providers will either shrink, consolidate or worse. Only real innovative operators will have a chance to be active outside of communication infrastructure. Unfortunately there are very few of those. LTE will seriously disrupt the operator’s monopoly on voice calls. iMessage, Whatsapp and similar services already crossed the tipping point and are disrupting the SMS business. Operators ‘ answer has been nothing or too-few-too-late. The telecom industry resembles the titanic more each day. It was once the most luxurious cruise ship of its time. But disruptive icebergs are making it sink. Instead of building lifeboats with material found on board, the operators seems to have taken the decision to play music and await what will happen.

Telruptive wants to inform innovators about new ways of communicating, new disruptive technologies they should use, new disruptive business models they should implement, etc. Innovators can be operators, telecom solution providers but can also be dotcoms or people not linked to the telecom industry. This is what Telruptive will be focusing on in the future.

When you ask a company about innovation, they talk about how their product manager asks customers what they want and how their R&D delivers new features or new products. Lots of companies are following the pain points to solution approach and engage in evolutionary innovation.  Although evolutionary innovation is the best way to grow revenue from an existing customer base in the short run, there are several disadvantages that most underestimate.

Evolution means assuming the status quo will never change

Evolving products based on customer feedback assumes that the current solution is the best possible solution for the customer and only some features are missing. Showing status-quo-breaking innovations, a.k.a. disruptive innovation, to customers will often yield a negative response.

Whoever went to the postal service to try to sell email servers as the next generation letter [letter 2.0], will have had a very negative reply. The postal service would not understand why they would want to offer free-of-charge instant delivery to their customers because it canabilizes their existing business. Instead if you would offer a sorting machine that can sort double the amount of letters in half the time for half the cost, you are a lot closer to a sale.

Whoever read “the innovator’s dilemma“, will understand that disruptive innovation is often rejected by the current customers because it either canabilizes their business or is not resolving their specific pain points.

World-leading companies focus at most 90% on evolution and at least 10% on disruptive innovation. Some like Amazon and Apple seem to invert the equation.

Companies that do not focus on disruptive innovation will sooner then later run into problems. Disruptive innovations are becoming more common place and occur more frequently. Whole industries are being transformed as we speak. Existing players can disappear in a few years:

Media:

• Books versus Kindle and eBooks
• CD, DVD and Blu-ray versus P2P, mp3 and DIVX

IT:

• Harddisks versus memory cards
• Data center per company versus Cloud IaaS
• PC with Windows versus Tablet with Android

Telecom:

• Physical PBX versus Cloud-based PBX
• Roaming versus VoIP
• Nokia feature phone versus iPhone and Android
• Circuit networks with pay per minute versus flat fee data traffic
• Physical routers, firewalls, loadbalancers versus virtual networks and Openflow
• High priced spectrum licensed versus white spaces

Towards a world of demand creation

Companies that want to innovate disruptively should focus on demand creation. Demand creation is about understanding customers hassles. Customers hassles are different from their pain points in the sense that customers do not always understand their own hassles, and even less tell you.

People never told Nokia that their phones were such a hassle to navigate the internet and to install applications on. Customers will not tell you that you need to build a touchscreen phone and app store to solve the hassles.

Disruptive innovators find those activities that customers waste a lot of time with, think are ackward, cost a lot but deliver few value, etc. by questioning, observating, networking and experimenting.

Disruptive innovators at the same time focus on developing technology capabilities in innovations that have a potential to change industries, e.g. VoIP, cloud computing, big data, collective intelligence, etc.

Disruptive innovators work together with early adopters to map out their hassles into hassle maps. To understand if solutions for these hassles are like painkillers [big market] or just vitamines [no or small market]. They propose the simplest solutions possible. Those that do not require a user manual.  First on paper and only when everything is validated [technical solution, business model, distribution, purchasing stakeholders, marketing] do they build a real prototype. Ideally customers can personalize the new solution towards their individual needs. Listening to customers is key. Being able to add features frequently and validating in a statistical manner which one contribute to the bottom line, allows innovators to rapidly go from an early beta to a ground-breaking product.

Disruptive innovations do not need to cost millions to launch. Good books on the matter are: Nail it then scale it, Demand: creating what people love before they know they want it, the lean startup, etc.

Innovation used to be something related to an R&D department that would experiment with new technologies and a marketing department or product management that would ask customers what new features they required. The business team would be killing any innovation that did not present a business case which complied with company rules: e.g. x% margin, €yM revenue in two years, etc.

Why is traditional innovation no longer good enough?

The cost of launching a disruptive innovation that changes a complete industry has come down dramatically. There are many examples: Skype and roaming, Amazon’s Kindle and paper books, P2P and network bandwidth / media revenue, Salesforce and shrink-wrapped software, iPad and Windows PC, iPhone and Nokia, etc.

Disruptive innovations are more frequent than ever and enablers like Cloud Computing, Open Source, Off-shoring, 3D Printing, etc. allow innovators to launch big solutions on a modest budget.

Most traditional innovation is about evolving a current product by adding new features and improving current functionality. Traditional innovation focuses on prototyping new features and products and showing them to potential customers. However process innovations (e.g. Toyota Production System), business innovations (e.g. freemium), marketing innovations (e.g. Intel Inside), disruptive innovation, etc. are often overlooked.

Every one should innovate

More and more companies are convinced that every one in the organization should innovate and not only R&D and product marketing. By putting special innovation processes in place in which employees can share innovation ideas and use collective knowledge to improve them and get funding, innovation becomes more democratic and often more successful. Companies like Google allow employees to focus one day a week on innovation that can be totally unrelated to their day jobs. People vote with their time which project is worth it. Ideas are shared hence collectively the services get better.

Also upper management is no longer looking from above but should innovate by example. Name all big innovative companies and you see that founders are a big part of innovation and participate in it every week: Google (Larry Page and Sergey Brin), Amazon (Jeff Bezos), Apple (former Steve Jobs), Facebook (Mark Zuckerberg), Salesforce (Marc Benoiff), etc.

Daily Innovations instead of Product Releases

The large dotcoms (Google, Facebook, Amazon, etc.) no longer do market research in the traditional way to find out if users like a feature or not. They also no longer focus on major product releases. Instead they focus on incremental innovations on a daily basis. Users request new features via social CRMs and the most voted features get implemented. Often a feature can have multiple implementations. Users are divided into different groups and new features get enabled for subgroups. If a new feature has a positive effect then it survives and gets rolled out to the rest, if not it gets killed or adjusted.

New products no longer get productized from an idea and afterwards customers are searched for it. Instead customer’s pain points result in paper prototypes that get validated and redrawn until they solve the problem. Afterwards real prototypes are made that get launched in beta or even alpha shape towards real users. Beta can already mean that users are paying for it.

Discovering New Innovations

Discovering new innovations is done by combining groups of people with different expertise (marketing, psychology, arts, technical, business, etc.), to understand a new domain and to question a status quo. Most of the time the best innovations are those that remove a status quo and make a painful activity into a joyful activity, e.g. LinkedIn: networking with people and keeping up to date your business network.

After questioning experts and novice users, innovative companies also observe how users use their products. Often heavy users or first-time users are unsatisfied with current products. New ideas are shared inside but also outside of the company with a network of experts as well as people with completely different skills. Afterwards solutions are built based on experimentation. A very important aspect is also being able to transport solutions from other industries. Making associations between unrelated topics and understanding how things are done in a completely different environment can bring new inside…

It is very important that different departments (business, marketing, operations, maintenance, etc.) all work towards launching new innovations and removing obstacles because killing innovation is very easy, making it succeed is not.

Some good books on innovation are: The Innovator’s Dilemma, Nail It then Scale It and  The Innovator’s DNA…

Recently I wrote an article about Ryancom. I received a comment that Fon.com was already doing certain things like making broadband access available for free globally.

I want to take the opportunity to make some suggestions that would make Fon a really disruptive player.

Fon has some really nice residential WiFi routers. A basic version, the Fonera Simpl with an optional antenna, Fontenna, to reach more distance. Additionally there is the Fonera 2.0 N which allows a community of developers to extend the product with new functionality. Finally they can embed their software into operator’s existing WiFi routers.

Fon’s routers are based on OpenWrt, an open source Linux firmware distribution for embedded devices. Developers can create extra plugins / packages that can be deployed on the router.

How to make Fon more disruptive?

For many technical people having access to a global set of WiFi points all over the globe is a really good reason to buy a Fon WiFi. Unfortunately non-technical people might be lost in the technical details about how you can access somebody’s else Internet and might be scared of other people using their Internet. So for most people the Fon offering is like a vitamine and not really a painkiller.

By changing the value proposition of Fon towards becoming a painkiller for more people, Fon would be able to get more active demand for its products from consumers and also via telecom operators.

Fon painkiller example: Parental Control

Most parents would not care less which router is used to access the Internet. The only thing they know is that their offspring knows a hundred times more about Internet then they do. Additionally they know that Internet is full of dangers for kids and teenagers. Children always tell their parents they need Internet to do their home work. But reality is that most surfing is not done for homework

So what if Fon would have an OpenFlow compatible WiFi router with FlowVisor combined with a Cloud solution. To spare the technical details, the summary is that parents would be able to partition their Internet access based on who is accessing. What would this bring?

Kids Internet – 3-8 year olds would only have access to a strict whitelist of Internet pages. Parents would not have to find this white page themselves. Instead people and companies could make white lists and parents could subscribe to them. Examples could be a Disney white list, a SuperNanny [the television show] whitelist. Parents would know that their young children could never go to pages that are unsuitable. Young children would have a start page with icons like the iPad in which they can click on the page and immediately go their favourite games or watch cartoons. Children could be limited in the time they can spend on Internet and special bonus points for good behaviour could buy them more time or bad behaviour could be punished with less time. Parents would need an “Apple” friendly interface to pick whitelists and set-up and manage Internet access times.

Pre-teens / Teens Internet – 9-17 years od – restrictions apply. Parents could define studying time slots in which only certain Internet content can be accessed, e.g. Wikipedia. Also here external entities could define whitelists. Time-based filters for open Internet access could also be set. Additionally special purpose filters are set-up, e.g. Facebook, Twitter, MSN, Skype, eMule, Google+ etc. This would allow teens to access Facebook and other sites but to have their behaviour screened. Teens could be prohibited to upload pictures of persons, share email/telephone or physical addresses, use F* words, access adult content, etc. There would be a dynamic firewall for each service. Parents could have a high-level reporting interface to see what their kids are doing.

Other painkillers

Parental control is just one example of how a generic router that is connected to a niche Cloud application could be a painkiller for parents. Operators could have other pain points, e.g. reduce botnets, spam, P2P content optimization, etc. Shop owners could have other pain points, e.g. social games for bars, etc.

A lot of possibilities are opening up if routers could be externally managed and very specific easy to use interfaces and solutions are build towards which communities and external companies can contribute and generate new revenue with.

The fact that every Fon router will give you access to a global free broadband network will be a nice add-on for most…

Most telecom operators are still thinking that software should be upgraded at most twice a year. Oracle RAC is the only valid database solution. RFQ’s bring innovation. If you pay higher software licenses, the software will have more features and as such will be better.

All of these myths will have to be changed in the coming 12 months if operators want to be stay on top of the game.

Upgrade twice a year

For telecom network equipment, two upgrades a year are fine. However for everything related to services that are offered to consumers or businesses, that means that operators are 180 times less competitive then their direct competition. The large dotcoms like Facebook and Google make software upgrades on a daily basis. 50% of all the files that contain Google software code change every month. Even if “a revolution” would happen and software upgrades would come every month, it would still mean a 30 times lag.

Operators need to start using cloud computing, even if they are private clouds, to deploy their back-office systems. The business needs software solutions to move at market speed. That means that if a new social networking site is hot, then it should be integrated into telecom solution offerings in days. Not in months or a year.

There are many techniques to make deployments more predictable, more frequent and more reliable. Offering extra features or integrations quickly can be done via plugins. You can have a group of early adopters, give feedback. If they don’t survive this feedback, kill them. If they do, scale up quickly.

Oracle RAC

Nothing bad about the quality of Oracle RAC but it is a very expensive solution that needs a lot of man-power to keep on running smoothly. Operators often pay a premium for services that could run equally well on cheaper or Open Source alternatives. Also NOSQL should be embraced.

If the cost of deploying a new service is millions, then only a couple of them will be deployed. By lowering hardware and software costs, innovative projects are more likely to see daylight.

RFQ’s and Innovation

It takes 3 months from idea to finalizing an RFQ document. 1,5 month to get a reply. 1,5 month to do procurement. Half a year in total. Not counting the deployment time which is likely to be another 6 months. The result is that the operator takes 12 months for any “new” system.

Now the question is if that system is really new. Because if an operator was able to define in detail what they want and how they want it, then the technology was probably quite mature to begin with. So operators spend fortunes installing yesterday’s technology 12 months late. Can anybody explain what innovation this is going to bring?

First of all operators should not organize multi-million RFQs for business or end-user solutions. These are likely to come late to market and can only be focused on mass markets.

Instead operators should focus on letting the customer decide what they want by offering a large open eco-system of partners the possibility to offer a very large list of competing services to their customers. The operator should offer open APIs to key assets (charging, numbering plans, call control, network QoS, etc.). As well as offer revenue share and extra services like common marketplaces and support 2.0 (social CRM, helpdesk as a service, etc.). This is called Telecom Platform-as-a-Service or Telco PaaS.

High licenses, more features, better

More features does not mean better. Most people want simplicity, not a long list of features. Easy of use comes at a premium price. Look at Apple’s stock price if you don’t believe it.

It is better to have basic systems that are extremely easy to use with open APIs and plug-ins. A feature by feature comparison will make you choose the most expensive one. However it is hard to put as a feature that the system needs to be easy to use.

In telecom, there is a natural tendency to make things hard. In Web 2.0 the tendency is the opposite. You can see the difference between Nokia and Apple. The Nokia phone would win every feature on feature comparison but the iPhone is winning the market battle…

Instead of organizing an RFP, let end-users and employees play around with early betas or proof-of-concepts. No training, no documentation. Let’s see which solution makes them more productive, the feature rich or the more straight forward. Just ask open APIs and a plugin-mechanism and you will be set…

With the world looking more at XML, SOAP and REST these days, it is perhaps  anti-natural to think binary again. However with Protocol Buffers [Protobuf], Thrift, Avro and BSON being used by the large dotcoms, thinking binary feels modern again…

How can we apply binary to telecom? Binary SIP?

SIP is a protocol for handling sessions for voice, video and instant messaging. It is a dialect of XML. For a SIP session to be set-up a lot of communication is required between different parties. What if that communication is substituted by a binary protocol based for instance on protocol buffers? Google’s protocol buffers can dramatically reduce network loads and parsing, even between 10 to a 100 times compared to regular XML.

What would be the advantages:

• Latency – faster parsing and smaller network traffic reduces latency which is key in real-time communication.
• Performance – faster parsing and lower load means that more can be done for less. One server can handle more clients.
• Scalability – distributing the handling of SIP sessions over more machines becomes easier if each transaction can be handled faster.

Disadvantages:

• No easy debugging – SIP can be human ready hence debugging is “easier”. However in practice tools could be written that allow binary debugging.
• Syncing client & server – clients and server libraries need to be in sync otherwise parsing can not be handled. Protocol buffers ignores extensions that are unknown so there is some freedom for an old client to connect to a newer server or vice-versa.
• Firewalls/Existing equipment – a new binary protocol can not be interchanged with existing equipment. A SIP to binary SIP proxy is necessary.

It would be interesting to see if a binary SIP prototype joined with the latest NOSQL data stores can compete with commercial SIP/IMS equipment in scalability, latency and performance.

Cable operators and telecom IPTV providers are delivering a hundred or more channels to each subscriber. However teens are no longer enticed by TV broadcast and like the Youtube model more. Even a video-on-demand service would not fully cater to their needs because they are interested in the top 5 minutes of a show or gossip program, not the other 40.

In the Twitter-world we got accustomed to URL shorteners like: TinyURL, Bit.ly, Is.gd, etc.  They take a long URL and make it short so it fits. What if a cable or IPTV provider would allow such URL shortening to be made for television programs?

TV Links

In search of a better word, let´s call them TV links. A TV link would be a short URL to a part of a television program that the viewer found interesting. By adding semantics to the part that is being linked, the viewer can provide information about what the TV link is about and why it caught his attention. Also automatically the program title and channel can be added from the public EPG.

Why would you need TV links?

A crowd of viewers that is watching all the hundreds of channels is filtering what is of interest to them and makes TV links to them. They can use the TV links to forward them to their friends on social networks. However by aggregating different TV links you can make social EPGs (electronic program guides). A social EPG is a collection of TV links that a group of viewers find interesting and often has a common theme or interest. Viewers that are under time pressure or from the Youtube generation can then easily pick the social EPG that most interests them and get all the content that peers with similar interests have preselected.  Collective intelligence can be used to find those social EPGs that are more similar to your tastes.

The Social EPG technology

You would need to have a TV or set top box that allows applications to be executed while you watch television. Most Android systems can do this already. Via the TV link app, you would be able to indicate which part of a program you want to create a link for and how you want to tag it. Via the social EPG app you would be able to search for TV links and combine them into a social EPG. The SocialCast app allows you to find and watch social EPGs.

Cloud DVR (digital video recorders) would be needed to be able to rewind and play what was broadcasted in the past. These could either be provided by the cable or IPTV provider but could alternatively also be provided by the TV channel. At the moment TV is wasting a lot of content because each program is being aired and afterwards it disappears in the archives. By having social EPG and TV links this content could be repeated over and over again. Content from years back would all of a sudden get a totally new dimension because the cute little boy that was singing a song has grown into a major star. Fans would collect these TV links into their social fan EPG and post them on their Facebook Walls.

The business model

Having viewers aggregating content so special interest groups can take a look at it, is the ideal marketing vehicle for targeted publicity. The Social EPG for a music star will have publicity around the latest concerts and music downloads. A CSI Fans Social EPG will get you all the CSI merchandise via a single click. Car programs get car publicity.

Hollywood

I am pretty sure that some Hollywood executive would have some objective towards replaying content that was broadcasted before. So a revenue share for the content generators and producers should be part of the eco-system.

The dotcoms of this world generate massive amounts of web server logs. Users upload files. Make comments. Vote on items. All this data is unstructured data. Google has just pushed the bar higher with their Google instant that is able to change almost instantly* their search results based on real-time data changes. Percolator is the real-time indexing that makes it all possible. Really impressive to see indexes change almost real-time for a company that moves daily 20 peta bytes of data [= almost 30.000.000 CDs].

So if Google is able to index all our web data, what about our voice and video data? Google Voice brought voice transcription to the general public. Voice transcription is based on machine learning. Every time a voicemail is incorrectly transcribed, users are able to “teach” Google how to do it right. This will make Google’s voice transcription quickly the best trained in the world. From there it is only a small step to also connect it to all Google Voice calls. Next step is to index what you say. Real-time indexing is key to interpret this vast amount of new content! So not only when you send a Gmail message talking about a trip you are planning to Paris, will you get advertisement from travel agents, but also when you talk to your friends about the trip.

Can Google go any further? Yes of course. Don’t forget Google Talk and Android. Two more sources to get voice data from. Google Talk can be used now. Android probably only if you use Google Talk or Google Voice on your mobile given the excessive data charges you would get if you would send “normal circuit” calls to Google.

Where are today’s limits of image recognition? Especially in videos? Taking a video with an Android phone and uploading it to Youtube could also mean that GPS data of where the video was taken could be included. Google Goggles ‘ technology could then find out what it is you were doing.  Probably not possible today but let´s wait some months…

What this means is that Google will very likely be able to subsidize more customer services if you are willing to trade-in some extra privacy. “Free” calls and even video calls for Android will definitely set it apart from iPhones, Nokias, etc. Google would need to subsidize wholesale interconnects to other providers, which are not that bad compared to end-user prices. But could marketing dollars also subsidize a monthly data plan? If yes then Google could become an MVNO and offer free phone and data services. This would be a killer feature to subscribe to Google Voice on the mobile. Killer in both senses, but not the positive sense for operators…

Where does this leave operators? Again a piece of their voice and SMS pie will disappear. But also a large piece of monthly subscription fees. Today there is very few operators can do to defend themselves if they don’t change their own rules. Every operator that thinks their assets are sacred, RFQ’s will bring innovation and scalability is about writing a large check to Oracle, will likely suffer.  Those that are willing to experiment with disruptive innovations and are open to discuss the previously unthinkable, still have a window of opportunity…

Note:

* There are delays between the time a page is updated and the new results being visible due to crawler and indexing delays so real-time indexing does not mean real-time search results.

A mobile virtual network operator, a.k.a. MVNO, is a telecom operator that does not have its own network. However what would happen if companies or even groups of friends could create their own MVNO.

These micro and nano MVNO’s would need tools that are directed at the size of their “customers”. A micro MVNO would span all employees of a company. Why would you want a micro MVNO? Enterprise contracts exist that have virtual numbering plans and a lot of more features. However you could extend the number of business and enterprise features a lot more and with a micro MVNO you would be able to provide a personalized experience to every company:

• Companies would be able to centrally define the pricing plans that best suite them. Even make custom pricing plans. Calling cheaper during working hours, even if those working hours are different from the “normal” data plans. Cheap pricing to call to customers and partners. Calling from the network cells around the office, would be equal to fixed line prices. As a perk, each employee can provide a list of five phone numbers that can be called for free after business hours. Roaming between employees in different countries could have very low tariffs…
• A common address book with all employees, customers, suppliers and partners.  Common virtual phone numbers to send group SMS to a department, to all customers, to all partners, etc.
• Pre-loaded mobile apps and auto-provisioning of applications to all employees.

Nano MVNO´s would be focused on groups of friends, associations or family. Except for virtual numbering plans, custom pricing plans, a common address book, group messaging, auto-provisioning, etc. there are other services that could be of interest:

• Joint reward points, so the group decides what to do with them.
• Know one another’s location so you can easily do friend-finder type of applications.
• One-click group conferencing
• Group ringtones, operator logos, etc.
• etc.

These lists of services would be just the beginning, especially if you add mobile applications, social networks and cloud computing offerings to the mix. However there is one base principle for these micro and nano MVNO’s: “More customized services, combined with group pressure, will make churning harder and group spending higher”.  It will be harder for an individual to churn. Also the “alpha” member of the group will push others towards using new services.