A little test. Name a European dotcom that has changed people’s life in the last years? No clue? With only a minor change, substituting European for American and the list would be long: Google, Facebook, Twitter, LinkedIn, Zynga, etc.

Even when innovations make it over the ocean, Europe is limited to doing business development, sales and some limited support. Look at the job pages of the big dotcoms and you will see the VP of Engineering in California and the business development manager in Europe. So the future is defined in California and Europe is just a market to sell the innovations that have been tried and certified in the USA.

Most people would not care less if Zynga would come from the USA or Tongo [No harm meant to anybody from Tongo]. However Europe is missing out on some major innovations that can boost the productivity of any small or medium enterprise. Think about Square, Quickbooks, Dwolla, etc. as examples.

Europe some years ago was leading the mobile and telecom industry with Ericsson, Vodafone, Telefonica, Orange, Deutsche Telekom and Nokia being clear examples. Nowadays it is Apple, Google, Facebook, etc. that lead the mobile and telecom revolution. Many might not realize it but Google has not only disrupted the mobile operating system market. Google has the first global software-defined network in the world. Google is writing history and being a major driver behind Openflow. Also the USA is leading together with Britain in White Spaces and other future wireless innovations.

What needs to change in Europe?

The European Union and local governments have always had a preference to over-protect the communication industry. Many laws protect former state-monopolies from getting real competition. The European Union should really look at White Spaces as a way to bring much-needed innovation back into the industry. Instead of selling the licenses to White Spaces to the usual suspects, the European Union should declare White Spaces as a “free” WiFi on Steroids alternative to LTE. White Spaces can be the solution for rural areas that want to get 21st century broadband connectivity.

Also the laws that oblige telecom companies to give national service are outdated. We do not have gigabit fiber-to-the-home in big cities because competitors are obliged to give universal service. Why not let 10 competitors fight without obligation to connect everybody? The free markets will connect those people and companies that are economically viable. By obliging universal connectivity, everybody is connected to a slow network. Leading to European broadband mediocrity.

Telecom companies that have started to set-up venture capitalist offerings are going the right way. Unfortunately too little money is poured into new ventures. Telefonica’s Wayra is offering $30-70K during a 6 months incubation. That means €46K to €109K on an annual basis as seed capital. What can you buy for this kind of money? Virtually nothing. Only one or two people teams at most. Great people would earn more money in their day job so they are unlikely to jump on Wayra. More realistic numbers would be €150-200K, which would allow teams of 3-10 people plus potential for hardware and other types of innovation. The chances that a 2 people team on a small budget makes a world-changing impact are very slim because you need multiple skills to really innovate.

Crowdfunding  should also be high on the list of the European Union. Let people participate in ventures as very small minority stakeholders via collective seed investment. Give Europe some chance of building a European Kickstarter on steroids. Cross-European laws would need to be put in place for this.

We need European Entrepreneur Heroes as well. Europe needs a European version of Steve Jobs, Jeff Bezos, Larry Page, Mark Zuckerberg and Marc Benioff. People that can convert a vision into a multi-billion industry. People that will be role models for future generations.

If Europe wants to leave the current recession behind, it needs to think about moving away from farming subsidies into investing in innovation. We need modern digital laws and a general legal simplification to allow more entrepreneurs to start innovative companies. European corporations should set-up more venture capitalist funding and crowd funding should be high on everybody’s agenda.

Enterprises no longer have a lack of data. Data can be obtained from everywhere. The hard part is to convert data into valuable information that can trigger positive actions. The problem is that you need currently four experts to get this process up and running:

1) Data ETL expert – is able to extract, transform and load data into a central system.

2) Data Mining expert – is able to suggest great statistical algorithms and able to interpret the results.

3) Big Data programmer – is an expert in Hadoop, Map-Reduce, Pig,  Hive, HBase, etc.

4) A business expert – that is able to guide all the experts into extracting the right information and taking the right actions based on the results.

A Big Data PaaS should focus on making sure that the first three are needed as little as possible. Ideally they are not needed at all.

How could a business expert be enabled in Big Data?

The answer is Big Data Apps and Big Data PaaS. What if a Big Data PaaS is available, ideally open source as well as hosted, that comes with a community marketplace for Big Data ETL connectors and Big Data Apps? You would have Big Data ETL connectors to all major databases, Excel, Access, Web server logs, Twitter, Facebook, Linkedin, etc. For a fee different data sources could be accessed in order to enhance the quality of data. Companies should be able to easily buy access to data of others on a Pay-as-you-use basis.

The next steps are Big Data Apps. Business experts often have very simple questions: “Which age group is buying my product?”, “Which products are also bought by my customers?”, etc. Small re-useable Big Data Apps could be built by experts and reused by business experts.

A Big Data App example

A medium sized company is selling household appliances. This company has a database with all the customers. Another database with all the product sales. What if a Big Data App could find which products tend to be sold together and if there are any specific customer features (age, gender, customer since, hobbies, income, number of children, etc.) and other features (e.g. time of the year) that are significant? Customer data in the company’s database could be enhanced with publicly available information (from Facebook, Twitter, Linkedin, etc.). Perhaps the Big Data App could find out that parents (number of children >0), whose children like football (Facebook), are 90% more likely to buy waffle makers, pancake makers, oil fryers, etc. three times a year. Local football clubs might organize events three times a year to gain extra funding. Sponsorship, direct mailing, special offers, etc. could all help to attract more parents, of football-loving-kids, to the shop.

The Big Data Apps would focus on solving a specific problem each: “Finding products that are sold together”, “Clustering customers based on social aspects”, etc. As long as a simple wizard can guide a non-technical expert in selecting the right data sources and understanding the results, it could be packaged up as a Big Data App. A marketplace could exist for the best Big Data Apps. External Big Data PaaS platforms could also allow data from different enterprises to be brought together and generate extra revenue as long as individual persons can not be identified.

Social Enterprise Apps are the next buzz. Companies like Salesforce with Chatter, Yammer, Jive, Google with Google+, etc. all want to change the way employees work in 2012 by adopting Facebook and Twitter-like solutions.

At the moment it is too early to tell who will be the winner. Most products however are still just offering only basic features like status messages, connect to colleagues, share documents, etc.

The real interesting features are still to come. Employee driven process creation and management should make it possible for plain humans (not über-programmers) to define and manage company processes and to transfer a world of Excel, Access and other homegrown solutions to the Web and mobile world.

Operators should jump on the social enterprise apps bandwagon because calls and SMS can still be incorporated into this new portfolio of products. However not in the traditional manner. Since everybody has access to a phone, it could be used for quick approvals either by calling in, getting called or sending an SMS. Even faxes could be incorporated. Traditional companies might be more willing to move from paper faxes to online faxes instead of moving from zero to Facebook speed right away.

The key will be the ability to people to define and manage things themselves without needing support from IT or five level of approvals…

eBay’s CEO, John Donahoe, says that ecommerce is over and social commerce is the next thing. Social commerce is all about having a mobile with you and checking which of your friends or family has bought this item in the past. If your friends say “not good”, then you are likely to say “no purchase”. Additionally social commerce allows for online shops to steal away purchases from brick-and-morter shops.

Social commerce in its most basic form should be about having your social network help you to make the right decisions. However for guerilla marketers this is a new heaven in which mouth-to-mouth publicity can be “influenced” with the likes of Facebook…

How can operators do social commerce?

For their own services, it can be as easy as having a Facebook integration in their online shop that says which friends have purchased the service and how satisfied they are. It means that all the telecom catalog is added to Facebook’s social graph so people can see who is using what and what is their feedback.

Operators could go a step further and make a social commerce PaaS to allow everybody that has something to sell to use social commerce. A good social commerce PaaS should offer:

• The basics for a regular white-branded web and mobile shop (web/mobile store, unified catalog, shopping carts, white-labelled billing, analytics, reporting, provisioning, payment gateways, etc.).
• Integration into social networks (all catalog items are automatically added to Facebook, Twitter, etc.; tools to engage communities with loyalty/rewards; open stores in Facebook, eBay, Amazon, etc.; blogs, socialCRM, Youtube videos, etc.)
• Support tools (sales tracking, ERP connectors, helpdesk tools, etc.)
• APIs to manage all back-office tasks (e.g. procurement, shipping, etc.) and to automate all processes (adding products to a catalog, etc.)
• Value-added services: NFC payment for mobile that support it, billing & subscription management via your telecom invoice, call center on-demand to support customer’s customers, etc.

Operators should not reinvent the wheel and partner with existing players or solution providers that can provide parts of the overall platform.

Revenues can come from sign-up fees, monthly subscriptions, revenue share, resource usage, etc.

Long Term Evolution, LTE or sometimes also referred to as 4G, is the next generation mobile network technology.  It promises to bring network speed to the mobile that can beat the current ADSL offerings. In the beginning LTE prices might be high but competition especially from new entrants – “the Ryanairs of telecom” / “4G Bitpipes” – are likely to bring affordable pricing plans soon. The US already has the first “4G Bitpipe players”: Clearwire and Lightsquared.

So what does it mean if tomorrow you can have ADSL-like speeds for an (almost) flat-rate. In practice, end-users would be crazy to still pay €0,15 for minute for a call or per SMS. Skype with its optimized codecs (e.g. SILK) will offer better voice quality and will throw in video for free. Instant messaging, Twitter and Facebook chat will completely substitute SMS. This will be the end of the telecom cash-cows: calls and SMS…

What will be the next cash-calf? For those operators that are still looking for the “Killer App” – that single technology that only telecom operators can offer and is extremely successful – I have some news. Postal services are still looking for their killer app after the stamp was substituted by email. So is the music industry. There is no economic law that says that a former monopolist has the right to pick its next monopoly.

So if there is no “Killer App” does it mean that all telecom operators are doomed to become bit-pipes tomorrow? Over time several will but not necessarily all. Although dotcoms have the sexiest solutions, large corporations are unlikely to massively shift their communication services to a heavily indebted 25 people company close to a surf-paradise beach. So due to inertia the abyss is still some years away. However should you just give up and let  consumer ARPU drop year by year?

I believe there is still a window of opportunity for telecom operators to bring new appealing services. However they must be willing to abandon some important historical laws of telecom.

1) Standards slow innovation

Collectively negotiate a standard that is more a political compromise then the simplest, most effective way of doing things is not helping innovation. In the Web 2.0 era, dotcoms launch new ideas all the time. Most of the time it is a “winner takes it all or at least most” market. So the winner sets the standard. How many Twitter competitors do you use?

By designing an architecture around obscure standards, few operators have employees that can explain their company’s architecture. Google and others have invested heavily in their architecture. They constantly update it. But on a blackboard a Google architect can draw you exactly why they choose Bigtable, GFS, etc.

2) Don’t talk about subscribers, call them users

A subscriber is an entity that signs a monthly contract with a telecom operator. By doing so a subscriber seems to subscribe to a list of applications that the marketing department of the telecom operator has preselected as the most adequate for him or her. The operators seems to know what is best for their subscribers. WRONG!!!!!!!!

Call them users and give them the tools to select/create/design/customize/configure the services they want. Let the community vote about which feature is needed. Ask users why they stop using a new service after a week. Let users define the price they are willing to pay by offering multiple alternative solutions in different price ranges with different feature sets.

3) Go from a catalog of few to an infinite catalog

If Telecom can no longer survive based on a few hit services, then they could go to the other extreme: the long tail telco. A long tail telco offers an almost infinite catalog of solutions that combine communication assets with other solutions in order to solve user’s problems, to make them more productive or to entertain them.

Users should be able to combine products to resolve their needs. A good example is what is offered by Invox. Via wizards, templates or a Yahoo Pipes drag-and-drop configuration, small to large enterprises can configure their own telecom services like call centers, PBX, etc. They can easily integrate the best of the Internet (Salesforce, Google, Yahoo, etc.) with IP-based communication. You use what you need. You configured it the way you want it.

What is missing is a market in which those users that don’t want to do it themselves or who need specific support (e.g. custom integrations), can go and find the right help.

Telecom operators should no longer focus on end-user services but on enabling the end-user and an eco-system of independent third-parties to be able to create and sell solutions and services to one another. As long as it is easier, faster and cheaper for a third-party to use an operator’s tools and assets they will see no need to design an alternative solution. This brings us to the next point…

4) Monopolists die because of greediness

Revenue shares of 40-95% are often not in line with the value and risk the operator takes in the value chain. Those operators that think that “squeezing partners until the last drop” is a good long-term strategy, will be the first to die. Innovation needs out-of-the-box thinking. People don’t take risks if they don’t see rewards.

You will need to do more than to just blindly follow these four rules. But by applying them and listening to users, you are on your way to create new cash-calfs…

At the moment teenagers are accustomed to paying for SMS (bulk tariffs) and voice calls (if they use them at all). However since mom and dad pay, they are just worried about staying below their parents ‘ anger limit.

Everything else in the digital world is free to them. Either legally free from the likes of Facebook or Twitter or illegally free from the likes of eMule.

We are at the doorstep of most teenagers switching from SMS enabled phones to smartphones and tablets. This means that there are two possibilities: telecom becomes free or mobile Internet becomes paid.

My guess: telecom becomes free. SMS will be substituted by Twitter and Instant Messaging. A 100-300MB of data traffic can easily pay for thousands of instant messages and social network updates. Likely free mobile apps that optimize data exchanges will be very popular with teens. The net effect will be that teens will no longer see the relationship between sending a message and paying for it. This will prompt them to move massively to the free mobile Internet.

However is there a way to move paid to the mobile Internet?

Not at the current prices. History would repeat itself like in the music industry. A digital technology comes but Hollywood tries to maintain an artificial high price even if distribution prices fall close to zero. CDs cost cents. Digital distribution even less. However you still find CDs that cost more than €15-€25. The result is that teenagers find ways not to pay.

How to do it differently? Move from micropayments (5-15 cents/SMS) to nanopayments (0.01 or 1 cents/event), micro-subscriptions (5-15 cents/month) or freemium. If mobile app designers could have access to a simple interface to charge nanopayments on your phone bill in a uniform matter, then they would not give you an article for free but they would want you to pay 0.05 eurocents for it. You wouldn’t mind such a small fee but lots of nano-cents convert to real money for a successful site. Also micro-subscriptions would allow teenagers to subscribe to a premium service without having any parents worried about phone bills. The last business model (freemium) has been described in another article.

Failure to teach today’s teenagers to pay for the Mobile Internet will mean that free will be tomorrow’s only Digital business model. This is not necessarily bad for site owners that can find ways around it via advertisement or selling customer’s data. However telecom operators will see their only income come from monthly subscription fees that will only go downwards…

SS7 networks or “intelligent networks” have been the core reason why network-based services can not be rolled-out quickly. Specialized skills are needed to launch a new SS7 service.

Currently operators are investing in service delivery platforms or SDPs to move the network intelligence out of SS7. These SDPs will be holding modern copies of the SS7 services.

However do we need intelligent networks? Why can’t we have dumb networks?

The Internet is a dumb TCP/IP network. Intelligence is not in the network but in the applications that run on top of it. Why are telecom networks different? Why do routers have to know if the application is voice, SMS or data? Why does the network have to know about conferencing, numbering plans, etc.?

One example: MSISDN

Why do you want to hard-code an end-user identifier throughout your network & billing systems? Why can’t we have a mechanism like a unique IP address and several DNS names for it. I don’t want to learn a long list of digits to identify a friend. I would like to control my own numbering plan. My direct family starts with 1xx. My friends 2xx. Alternatively I can use their email. I should be able to call a company with its DNS. Ideally I can use the Facebook or Twitter id as well. This would all be possible provided that an internal identifier would be mapped to an end-user identifier instead of using one unique identifier.

Example two: CDRs

Why should every network element know that for every call you need to generate a CDR. However for data, charging is not based on seconds or minutes but data volume? Cannot the metering be done outside the network? Why are we generating millions of CDRs when end-users have a flat-rate or are calling a free number? With software-as-a-service metering can be different per application (pay per GB of storage, per MB of network traffic, per user per month, per company per year, etc.).

The proposal: Define the metering mechanism for each call, SMS or application ad-hoc and use specialized meters outside of the network to meter the service. Time-based meters allow any type of data to pass through to the network but will bill by nano-second, millisecond, second, minute, hour, day, week, month, year, etc. You just configure that this voice application needs second-based billing, that adult entertainment application needs minute-based billing and that compute server needs hourly-based billing. Flat-fee calls would not have to be metered and as such don’t need a meter. Meters could be gateways that scan if data goes through. However they could also be event-based and delegate complex metering into an application to warn them when an event has to be billed, e.g. application download, new user registration, etc.

Simplifying the network by taking out complexity to manage/launch/meter/monitor services would substantially reduce the cost of network equipment. Perhaps to such extend that it becomes too small to meter services and as such also metering can be eliminated. Pure bit-pipe operators could probably do with an Excel or Access database as their billing system.

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.

Any operator that has not started a project on Cloud Computing is late. The typical data center at an operator is filled with servers that are under utilized e.g. application servers and database servers are running at 30% of memory, disk and CPU. Just by doing step one of getting to Cloud Computing: virtualization, operators are able to save substantially in the cost of hardware, electricity, maintenance, etc. Virtualization means decoupling software from hardware. This allows to run multiple operating systems on one server.

However this would only be focusing on the tip of the iceberg. Cloud Computing is so much more…

Private Clouds

Automatic Scaling

Let´s first focus on the internal systems of an operator. After solutions have been virtualized, then you are able to scale them to more or less servers. The first step is to automate this process. If you have an application server cluster, do you need 8 nodes all the time? You probably only need them the week before Christmas or during some other peak period. So the ideal is to be able to measure the load and to automate the deployment of more or less cluster nodes based on load. The same can be done with the database. During the night you have 2 nodes. In the morning 3. During the day 4. During peak moments 8. In the evening 3 again. You could save massive amounts of money if application servers and databases can be scaled in this way. You ideally also are able to pay licenses based on what you really use and not on your maximum number of nodes during a yearly peak.

Redesigning Applications and Data

Both Amazon and Google found out that if they redesign their applications then they can get even more gains than pure virtualization. Amazon´s S3 service is a clear example. However internally they started with services like Dynamo on which S3 is build. The first step is to build general data stores. Multiple applications should be using a common data store instead of needing a separate database cluster each.

Unlike popular believe in the IT world, the dotcoms are not filling their data centers with Oracle RAC clusters. The dotcoms are designing special purpose data stores. The data volumes any market-leading dotcom has to deal with are so massive that a SQL database can not keep up. SQL databases are very good at running efficient queries on structural data or making sure transactions are consistent. However they fail when data is unstructured, write operations are massive or data volumes grow with terabytes every data.

Relational Data

So for all low-volume applications that need transactional data and read more than they write, you could still use a unified Oracle RAC cluster to serve multiple applications. An alternative approach are the data stores that have been build by Amazon (Relational Database Service or SimpleDB) or Google´s App Engine (Datastore with JDO).

What other alternatives are there?

Read Mostly Data

Data that needs to be read a lot and is not updated frequently can get an enormous performance and scalability boost by using an in-memory data store. The dotcom standard is memcached. Facebook (800 servers and 28TB) and Twitter are addicted to memcached.

Documents, Images & Videos

Binary and media files are best stored outside of a database. In small numbers they are often stored on a file system. However they occupy a lot of disk as well as network bandwidth when moved around. The ideal is a document store with a content-delivery network or CDN as a front-end. Amazon´s S3 and CloudFront are examples. Storing them in a compressed format, e.g. LZO can save valuable space. Also transcoding into different formats, e.g. thumbnails or preview can help save network bandwidth.

Unstructed Realtime Data

Data that is unstructured and needs to be stored and accessed in real-time in high volumes are best stored in special purpose data stores. You can write a book about the latest NoSQL solutions. Write an email to maarten at telruptive dot com if you are interested.

Analytics Data

Twitter has described most extensively how they use all the unstructured data they get from their logs and other sources. They use technology from Facebook to stream it into a high-available file-system from Yahoo. There they run massive parallel map-reduce operations to get to know a lot more about what users are doing and who is influencing who, etc.

Social Graph

The social graph is about who knows who and what kind of relationship you have. This data is best stored in graph data stores.

Collective Intelligence

Again a chapter by itself but dotcoms are also heavy users of collective intelligence which often means dedicate systems.

Accessing Data

Instead of stove pipes with data, the dotcoms are making data accessible to all their applications. Either via search interfaces, web technology to access data (e.g. REST and JSON) or efficient binary interfaces (Thrift and Protocol Buffers).

Messaging and Notification

Amazon is having a simple queue service and a simple notification service to make sure applications communicate in a uniform matter.

Applications

If applications have access to all the above services then the architecture of an application is simplified enormously. Most of the famous dotcoms don´t use middleware. They prefer the SOA principle. However unlike the IT SOA solutions, a dotcom would take an application and make it into a chain of reusable services. Let´s take an IVR application as an example. There would be a service to do voice recognition. Another one for voice transcription. Another one for text-to-speech. A transcoding service to transcode between different media formats (e.g. high-quality voice and low-phone-quality voice). And so on. Each service has independent load-balancing and can be scaled separately. Services can be re-used between applications. An application is very short because it just need to define which services need to work together and how.

Application Deployment

The dotcoms deploy new features on a daily and even hourly basis. This means that all application deployment is fully automated. When a new feature is deployed it does not necessarily overwrite an existing feature. It is possible that a new functionality has been solved in 5 different approaches. Dotcoms would split the total user base and let small parts of users try out the different approaches. Depending on the user´s feedback they would take the preferred approach and slowly scale up from 1% to 100%. If they detect that the feature has a performance problem or a bug then they would be able to roll-back or decrease the load, fix it and deploy gradually again.

The Network, OSS and BSS

There is a substantial effort needed to redesign a network to be cloud-aware. Some components need latencies lower than 10 milli-seconds (e.g. antennas), hence most of this logic will have to be processed locally. However all systems that can live with 100 milli-seconds latencies benefit from a cloud make-over.

Especially in the area of OSS and BSS there is room for optimizing applications and making them cloud-aware. Global services like a network inventory service, a user profile service, a device profile service, etc. would mean simpler applications and less data duplication.

Opening the Cloud

So the network and IT infrastructure is being redesigned to allow for faster innovation and lower costs. However Cloud Computing can also be used to increment revenues.

Being a Cloud Infrastructure Provider

Many IT consultancies and software/hardware vendors will tell an operator that they could be a Cloud infrastructure provider. On slides this really looks nice. However unless an operator is not using the cloud computing principles for their own systems as described in the first part, they are lacking substantial knowledge about how to manage such an infrastructure. Without this knowledge it would be hard to have a very optimized solution and as such be price competitive with the existing players.

Being a Cloud Platform Provider

Although closer to the operator´s core competencies, being a cloud platform provider would still be for those operators that are Cloud experts. A Cloud platform provider would allow others to use the infrastructure services to create applications on top. The complexity lies in the fact that malicious users try to break the platform which could have a very negative effect on the infrastructure if not handled correctly.

Being a Cloud Service Provider

This is the default option most operators should explore first before moving into the other areas. Being a service provider also has a roadmap:

Reselling SaaS

The easiest step is to be the storefront and to resell IT applications from others, e.g. cloud backup storage, security solutions, etc.

Offering Telco SaaS

The next step would be to offer specific telecom applications. Applications that are build for the operator or even better applications that can be build by others based on the operator´s assets. An example would be a PBX in the Cloud.

Open Market for SaaS

Building all telecom applications yourself is hard. Attracting others to do it for you is easier. However just putting a “Net App Store” and an SDK on the web will not get you to dominate the market. Only an open market with a large eco-system of companies and developers can generate large quantities of “Net Apps”. If you are thinking about building an open market, why don´t we talk first. Send an email to maarten at telruptive dot com.

In the telecom domain a scalable real-time architecture means paying a lot of money in hardware and licenses. You buy the Oracle RAC solution, build a Weblogic cluster, set-up a storage area network, etc.

In the dotcom world things look differently. Facebook, Google, Twitter, Yahoo, Amazon, etc. have more active users then any telecom system. However they have build their architecture on top of open source solutions and average servers. Some even build their own software and sometimes open-sourced it.

Some of this software has very exotic names: Hadoop, Bigtable, Cassandra, Pig, Elephant-Bird, Dremel, Pregel, Dynamo, etc. Additionally design decisions are taken that would surprise every IT teacher: “do not normalize”, “do not expect immediate consistency”, “no transaction support”, “store in memory instead of on disk”, etc.

However if you can support 500 million users, 100 million daily hits, 130TB of logs, 20 billion tweet messages, 1 million servers, etc. then something you should be doing right.

The telecom software industry seems to have been isolated from the Internet during the last five years. With the shift to IP it is expected that more IT companies will be able to provide telecom solutions. Is this the solution? Not sure! Also IT companies are still playing catch-up in the cloud computing domain. Few IT solutions providers are demonstrating, they now think Map-Reduce instead of Middleware.

Google Voice is coming and most operators seem to be still more worried about churning subscribers. Google Latitude and Maps demonstrated that with new technology and innovation you can destroy the telecom monopoly  on location-based services overnight…

If you are a telecom operator and you are worried, perhaps it is time we talk.