I recently took part in a round-table discussion in London organized by OpenCloud on the changes occurring within the telecoms landscape: how operators need to change to keep up with market dynamics, with a focus on innovation in services and service-charging.  This was in conjunction with OpenCloud's launch of Rhino Sentinel to help operators boost service innovation.  Also as part of this event Heavy Reading (Caroline Chappell) produced a free white paper providing more insight into this topic.

The round table included:
Jo Rabin, Director at Mobile Monday Limited;
Caroline Chappell, Heavy Reading;
Sebastian Grabowski, Orange Labs, Service Platforms & Middleware Division Director;
Adam Filisinski, Orange Labs;
Jeff Gordon, CEO OpenCloud; and
myself.

As hard as the industry likes to focus on the continued top line global revenue growth, as discussed in this previous weblog article.  Evidence is mounting that the two core services of voice and messaging are becoming applications.  Free, an MVNO in France, has recently launched a flat fee of €19.99 a month for a plan that includes unlimited texts, multimedia messages and calls, a fair-usage policy of 3 GB of mobile data and free calls to 40 countries in Europe and North America, and unlimited WiFi data. This compares with €49.40 for a similar offer at Orange France's new "Sosh" unit, which is their competitive response to Free.  Though Free have not released customer numbers, estimates indicate they've rapidly reached over 1 million customers.  The game is changing more rapidly than most of us would like to admit in the industry, and Free indicates its a race to the bottom on regulated services.

This article reviews some of the discussion from the round table, which will be available to review on the OpenCloud website soon (link to be added here).

Question 1: Comparing the telecoms landscape of today with that of 5 years ago, what do you see as being the greatest differences and what impact have these changes had? To what extent is it necessary for today's CSP's to change? Technologically, organizationally and in the services they offer?

Let's think back 5 years to 2007, the year the iPhone was launched.  No, let's start 10 years ago, in 2002 when WorldCom filed for the largest bankruptcy ever, and the VoIP hype was starting on how they would kill the telecom business.  Skype wasn't founded until 2003.  It wasn't until 2005 that the Economist caught onto that theme and did their infamous article: "How the internet killed the phone business: Almost-free internet phone calls herald the slow death of traditional telephony."  Actually the most successful VoIP providers by revenue turned out to be the Cable Companies in the US which didn't even call their VoIP service VoIP, choosing instead Digital Voice, and had a similar price plan to that of the fixed line voice incumbents.  Though they too are suffering as people turn away from fixed line telephony in favor of mobile and over the top voice services.

The reality we keep ignoring is people change very, very, slowly, this has been to the Telcos favor, BUT people's expectations are changing thanks to Skype, Apple, Viber, Amazon, Netflix, WhatsApp, Vonage, etc.  And the risk is it reaches a tipping point, where things happen fast.  As a personal example, I still have a home phone line as part of a triple play bundle.  There's a term called "being bundled" which means paying $150-200 per month for services I rarely use.  Once I get the FTA (Free To Air) aerial set up in the attic, we're cutting the video and home phone cord.  Neighbors, friends, relatives are all in similar positions of working out exactly how and when to jump.  We do appear to be moving towards a tipping point in some markets.

At the end of 2011 just a few relevant figures:

• Skype is used for 700M minutes of calls per day;
• There's 300M minutes of Skype video per day;
• Skype is roughly 20% of the international call minutes;
  
• Skype has nearly 100% of international consumer video call minutes, leaving operators consumer video services in the dust;
• Telia Sonera saw a drop of 22% in Christmas Eve SMS messages this year;
• Some iPhone users are reporting SMS traffic dropping to <10% once iMessage is running across their friends.  My wife's SMS traffic has roughly halved.  Wait till WhatsApp catches on...
  

The numbers are finally impacting some revenues; and critically looking forward we have the greatest uncertainty in regulated service revenues (voice, video and data) in the history of this industry, as discussed in this previous weblog article.  However, it's like boiling frog syndrome, global telecoms revenue continues to growth so the water is hot but not uncomfortable.  The challenge is if we wait any longer we'll miss the point to jump out and end up cooked.


Question 2) What should the top issues be for Telcos given the new shape of the telecoms landscape? What role does Service innovation have to play?

Changes in Telcos are necessary; but aren't Telcos in a constant state of change?  They always seem to be going through some kind of reorganization which means decisions can not be made, as discussed in this article.  But seriously, its critical for operators to recognized they have 3 domains in their business: IT, Network and Services

IT and Network are well understood in Telcos today, the mantra is "It must not fail."  And this mantra impacts all decisions, even project selection.  The Services Domain is different, innovation is impossible without failure.  As a domain it spans people, processes and technology; and all are different compared to Network and IT.

Take for example operators' approach to open innovation, they say: "Here are my APIs, here is how much they cost, I'm big you're not, thank you and good bye."  While APIs are about internal, partner and external service innovation.  And partner and external innovation require business development, something only the more IT-focused parts of an operator's enterprise business  has some experience with.  For those of us on the supply side, we take business development and sales for granted, they are simply a necessity for doing business.  While for Telcos, customers have limited choice, they can not live without their mobile phone and internet access, sales / business development are simply not required in Telcos, only marketing. 

Service innovation requires a different type of organization (people, process and technology), recognition that service innovation covers internal, partner and third party; and critically it requires business development and sales: a rare quantity in telcos today.  I review this in more detail in the report I'm currently writing called: "The Services Domain. Market Status, Case Studies and Strategic Analysis."

Examining the top issues facing telcos, it all revolves around the customer:

• Customer Advocacy;
• Customer Satisfaction; and
  
• Customer Loyalty.

As an industry we're loosing the customer, we're seen as a tax on having an iPhone. Skype has a much better quality service; I find myself asking to use Skype rather than mobile as I can hold a conversation with Skype rather than simply communicating over the limited bandwidth and distortion of a mobile phone service that is being squeezed as a legacy asset by the Telco.

If customer advocacy / satisfaction / loyalty really mattered more than shareholder value we should have by now:

• Launched HD Voice;
• Opened up voice mail so you can receive it by email;
• Started are API programs the same time the rest of the world started and in the same way;
• Launched unified communication; etc.

The fatter pipes, the high penetration of smartphones and data plans means voice and messaging are now apps that can equally be delivered over the top in some markets.  So we're left with a game of hide the margin as we bundle voice, messaging and data into a single price.  But as Free in France has shown us, this is a dangerous strategy as it ends up as a race to the bottom to win customers.

Question 3) In what ways do Telcos need to change in order to innovate competitively? What makes these key barriers so problematic? What makes "cost" a critical issue for service innovation?

The top two issues quoted around improving service innovation are Time To Market and Cost.  Both are related to the requirement of getting the whole organization to agree, across IT, network, services and marketing.  This weblog has reviewed those issues at length.

But what does it mean to get to market faster when the customers do not know you've arrived?  Customer awareness is critical.  Most operator websites focus on shareholders not customers.  Many operator app store have been left to rot as Apple and Android dominate.  But an operator sells much more than apps, they sell services.  There a gap in that we do not sell our services, we somehow expect customers to discover the service and the value that service can provide to them, the services domain addresses this gap.  The report "The Services Domain. Market Status, Case Studies and Strategic Analysis" reviews case studies on how operators are solving this issue.

The bottom-line is we must recognize the existence of the Service Domain to support service innovation and customer focus, it is managed differently to the Network and IT domains across people, processes and technology.

In the 9 years I've been running my business working with people around the world, the one thing I've found uplifting is people can be trusted, their word is their bond.

However, I've met what I consider to be a cheat, hence I'm making sure people are forewarned, as it's important to expose such people, its the only way to stop them in the long run.

The cheat is Mark Maritz, the owner of Vital Training, based in Johannesburg, South Africa.

His Linkedin profile is here: http://www.linkedin.com/pub/mark-maritz/17/197/150
The company's website is here: http://www.vitaltraining.co.za/

Currently, 4 invoices remain unpaid from August 2011, with numerous promises made on payments that have been repeatedly broken.  Over the holidays he started playing a game on which currency he was talking about.  I'll update this weblog the moment any are paid in full.

Unfortunately, I recently discovered I'm not the first to suffer this fate at the hands of Mark Maritz, as described here: http://mcpeurope.posterous.com/vital-training-and-mark-maritz and here: http://www.skills-universe.com/forum/topics/training-companies-that-dont (search on the page for Maritz to find the article.) 

My recommendation can only be, do not do business with Mark Maritz or Vital Training.  I will not be involved with TV Africa nor African Service Provider IT conferences.  And finally I ask my colleagues and friends in South Africa to be very careful who you select to do your training, especially if the organization's address is in the Centurion area and they use the surname Maritz or Bridger.

This entry shares some interesting data on the total global telecom revenue gathered in putting together a report I'm currently writing called: "The Services Domain. Market Status, Case Studies and Strategic Analysis."

The term Services Domain is used as the term SDP (Service Delivery Platform) is simply too ill-defined, abused by suppliers, and limits its scope by presuming a box with interfaces (legacy telco-thinking).  Rather today operators are implementing an IT-centric architecture so they can deploy new services faster and maintain / improve legacy services at a lower cost.  Depending on the operator's situation the services domain can vary from a global multilayer, multi-country architecture; through an extension of the existing back-office SOA (Service Oriented Architecture); to a web-centric, cloud based architecture.  Its is becoming as important as the network domain and the IT domain, hence the term Services Domain is used in the report.

The report brings together over two decades of experience from being at the bleeding-edge of service innovation in telecoms. Producing a report is not something I typically do for a number of reasons. People tend not to want to pay for reports; their vendors provide free consulting services, and analyst firms in co-operation with the vendors (the analysts' main source of revenue) produce free reports and guidance. Unfortunately people in the industry tend to ignore the vested interests behind such free advice. So if making money from this report is going to be difficult, why bother?  Someone's got to try to act as the industry's conscience, so I'm having a go.

The share of voice in our industry is dominated by the vendors; the messages in that voice have a singular purpose, encourage operators buy more stuff. We've seen it in 3G/UMTS and IMS and are currently seeing it on LTE and RCS-e. As an industry we need to spend cash more pragmatically, being first to launch something is not necessarily the wisest move. Announcing yet more confusing terms to customers such as LTE or VoLTE or RCS or 4G, without a clear meaningful customer benefit is simply wasting cash we increasingly cannot afford to waste. We're going to need to start tightening our belts and make pragmatic investment decisions that impact our customers' experiences not our network bragging rights. 

Services are critical to the industry's past, and will be to its future. We obsess about being a "dumb pipe" while there are opportunities everywhere that we choose not to grasp, or grasp in embarrassing self-focused ways. Telcos are currently structured to institutionally kill service innovation. Just look at the track record over the past two decades. People and Processes must change before technology.

The Services Domain has emerged due to the reality of IT economics, technology maturity, and learning from three decades of failure in trying to get an SDP (Service Delivery Platform) to work.  The aim of the report is to bring together the successes we're seeing in the market through a series of case studies, an independent survey of the market to capture the reality of where we are and what we are planning, with a set of independent recommendations on how we can move forward and better institutionalize service innovation rather than kill it.  I'll review the report soon on this weblog, currently I'm still working through the 100+ questionnaire responses...

But back to the interesting data.  I show below three diagrams.  The first is an average of the Telecom industry's total global revenues from supplier estimates, my analysis, and CAGR (Compound Annual Growth Rate) estimates from 38 operators in both developed and developing markets for 2013.  It shows there is increasing uncertainty in telecom revenues.  And the unregulated services (not voice, messaging and internet access) are going to become critical to future revenue growth, hence the Services Domain is fundamental to the industry's future revenue growth as it addresses those unregulated services.

Examining some of the sources of the uncertainty in the estimates:

• Some of the markets contributing to the numbers are re-entering recession, and some have backed off growth estimates from earlier in 2011.  So the figures for 2013 should be viewed in the light of a prolonged period of recession / stagnation for the majority of the revenue making up the industry.  For example 70% of Vodafone's revenue comes from Europe, so even though it has many operations in high growth markets, the growth is for a much smaller proportion of revenue.
• The over the top threat from services such as Viber, WhatsApp, social network apps, Apple iMessage, Skype, etc. are in some markets finally starting to impact SMS and international voice revenues.  This is due to high smartphone penetration and a critical network effect being reached that means such over the top mechanisms are generally successful in connecting people.  The almost transparently integrated iMessage service is particularly powerful as the customer isn't even aware in most cases SMS has been bypassed.
• Mobile broadband continues to substitute fixed broadband, especially in market segments such as young singles.  The roll-out of LTE (Long Term Evolution) and the introduction of family data plans are expected to accelerate this trend.
• Market saturation and aggressive price competition from non-incumbent service providers, or new entrants from low ARPU markets is impacting revenue even in markets with strong subscriber growth and minutes per customer growth, for example South Africa.
• Fixed to Mobile substitution for voice continues in most markets, the home phone is becoming less common, at about 68% penetration of all households in developed markets, down from the 75% of 2005.
• And a final factor, the elephant in the room of telecoms, most telecom operators are structured to kill-off service innovation.  Most of the telco boards came to that position when the business was about building networks and customers came running.  They did not have to sell the service where customers may choose inaction, most people need a phone and internet access.  The market is changing, business is more difficult, operators have to adapt to greater competition, shorter product cycles, lower margins, and not killing off service innovation.

The next two figures shown below take this analysis and extending it out over the following 6 years for the regulated services only, again based on supplier and operator estimates.  The industry has a much better handle on the likely trends in regulated services.  Unregulated services predictions for the period were generally not available.  In the optimistic case the industry revenue growth varies between 1-1.75%, with mobile and fixed data driving the bulk of the growth, and mobile voice remaining flat and fixed voice continuing its decline.  Giving a total regulated revenue of $1.6T in 2019.  In the pessimistic case the decline varies between flat in 2014 to a nearly a 2% decline in 2019 with a total revenue of $1.4T.

Developing markets are much more upbeat on their revenues compared to developed markets, but developed markets dominate by revenue.  At first sight the graphs shown below look broadly similar; however, it does not reflect what will happen to the stock values if the industry does enter such as revenue decline. 

Service Provider P/E (price earnings ratio) are currently 15-30, while for a commoditized industry, such as paper or cement, the P/E is 3-5. This difference impacts the industry's ability to invest, its head count, salaries, etc.  Essentially an organization 5-6 times as small will be required.  So the optimistic view is business as usual.  While though subtle in the graphs, the pessimistic view heralds a quite dramatic restructuring of the industry. And from the survey I'm conducting, we're just not sure where we're going to be between these two.  Though the emotional bias of those interviewed is towards the pessimistic.  This is a distinct change from the continuous growth of the past three decades.  We're entering uncertain times. 

Optimistic View on Regulated Revenue


Pessimistic View on Regulated Revenue

For US payTV subscribers the ESPN bouquet of channels is in the basic package, they have no choice, they just have to pay for it. ESPN is owned by Disney, which owns other assets such as ABC Television Network, cable networks including ESPN, the Disney Channel, SOAPnet, A&E and Lifetime, 277 radio stations, music and book publishing companies, production companies Touchstone, Miramax and Walt Disney Pictures, Pixar Animation Studios.  So its virtually impossible to say no to Disney given their clout in the industry.

ESPN has agreed to pay a 70 percent increase in fees to the NFL (National Football League) for an eight-year agreement to broadcast games, and indications are that the NFL will also be able to bump its CBS, NBC and Fox deals 60-70 percent.  This just gets passed directly through to the PayTV subscriber.  ESPN costs between $5-7 per subscriber.  In the TV industry everything is negotiated so the rate varies between PayTV providers based on the number of subscribers and ability to negotiate.

The current fee of $5-$7 for the ESPN channels could become $8-$12.  Channel fee inflation will also hit other channels, e.g. Fox (News Corporation) will also pass on the price hike in its channel fees.  Some estimates claim the basic cable subscription will be pushed up from $30-$40 to $40-$55 over the next 3 years, once the full impact of the charges is felt across the whole ecosystem.  NFL raising its fees 70% to ESPN is just one of a number of content inflation factors raising channel fees.  The NFL are doing this in part fund the crazy salaries of people who play with balls for a living, and perhaps also in part to fund their direct to consumer (Over The Top) business.

25% of the US population live on less than $25k per year, that leaves an average personal disposal income (PDI) for a family in that bracket of only $3k, which means basic cable is over 20% of their PDI.  Given the choice of internet access for the children or TV, the choice is obvious, they cut the TV cord.  For me, I remain frustrated at the lack of control, I'm forced to pay for content a do not want nor like.  Please note PayTV providers, this type of behavior is not called customer service, rather customer dis-service.

My Verizon FiOS triple play is coming up for renewal, I'm seriously thinking about whether its time to cut the cord and just subscribe to Amazon Prime and Hulu+.  Yes there are compromises in the available content, but we have hundreds of unwatched programs on the TiVo so loosing access to a few of them will not seriously impact our experience. 

I'm currently updating the TV Delivery Evolution Report and the research is proving quite interesting.  The industry is entering a tipping point.  No matter what the PayTV public relations and analysts feed to the media to claim, "everything is OK, TV cord cutting is a myth." PayTV customer surveys show subscribers are restless with the current situation, and the PayTV providers' lack of response to their customers' concerns will result in significant churn over the next 3 years.  We are going to see PayTV penetration begin to drop in the US.

A few data points:

• From Nielsen, the anticipated TV household penetration for 2012 is in decline. The estimated percentage of US homes with a TV set fell to 96.7 from 98.9%.
• From SNL Kagan, nearly 4% of occupied US households will employ over-the-top (OTT) video services in lieu of subscribing to a multichannel video package at the end of 2011. Equivalent to 4.5M households.

Examining 2010 total PayTV households of 100M: Telco IPTV subscribers stood at 7M, Cable stood at 60M, and Satellite at 33M.  It will be interesting to see how 2011 shapes up, some initial indications show a drop of up to 2% to 98M total PayTV households, with Cable hit the hardest.  Its hard to get specific numbers as they're now hidden in total subscribers which includes internet and voice, there's increased unwillingness to break out PayTV household numbers. 

When an ecosystem becomes detached from its customers, as payTV has become, forcing some customers to pay for what they do not want, changes happen fast, as we've seen in video rental, print media and fixed telecoms industries.  The PayTV industry needs to get its act together fast and start listening to its customers and responding to their needs (its called customer service).  The studios are not its customers, its the people paying those monthly PayTV bills.  PayTV providers must focus on meeting their customers' needs, else their customers will simply vote with their feet.

This weblog has discussed previously the technology bias of the telecom industry given its history.  Building a reliable, cost-effective, national network requires significant focus on technology and architecture. However, people need a phone service, so selling isn't required only marketing, the business side is relatively easy.  But when the objective is a service not the network, and a service where the customer can choose inaction, the focus unfortunately remains technology.  Well, to be frank its an obsession about technology and architecture to the detriment of business success.  I'm seeing this happen with the network API (Application Program Interface) initiatives.

Here are a few pointers on network APIs for operators:

• First and most importantly, APIs are simply a technology to deliver a service.  The API in itself has little value.  Look at the successful API initiatives on the web such as Netflix; it's the Netflix service not the API that customers are paying for.
• Most APIs on the web are free, so operators are competing with free, which is not a good situation.  The business focus must be beyond the API, its the services enabled by the APIs that matter.
• APIs in operating systems (iOS, Android, Windows Phone, etc.) are not the same as APIs in network or on the web.  Don't get confused between the app store and network APIs, the two are quite different though complementary.
• When an Aggregator delivers services to your customer using your APIs, the customer is no longer your customer, it's the Aggregator's customer.  Customers buy services not APIs.  And Aggregators will increasingly go over the top, you've got to make them vested in mutual success.  This means you have to get off your a^$* and actually sell the network API enabled services to your customers in co-operation with you partners.  APIs are not about sitting back on a state granted monopoly / duopoly / oligopoly and waiting for the money to start rolling in; do that and over the top will be the preferred option.  This is an example of why a business plan is essential as if forces operators to think through exactly these type of scenarios.
  
• What are you doing organizing developer conferences in Las Vegas?  Seriously, the Bay Area, London, Boston, New York, and Tel Aviv come a long way before Las Vegas.  It just reaffirms you're out of touch with developers.
• There are many types of developer out there, they have a vast range of needs, problems, requirements, and relevance to network APIs.  You've got to segment and focus, I've seen only a couple of operators attempt to do this.
  
• Most developers have someone pay their salary, you need to focus on who's paying the salary as well as the developers.  Don't get me wrong, the unknown developer that creates something amazing with your API is out there, but they're more likely to do it with Apple, Amazon and Google than you, so you need a real business plan not "wishful thinking".
• Why the current obsession with opening innovation centers in the Bay Area?  You did this at the end of the 'dot com' boom and it didn't work, what are you doing differently?  Who are you putting there?  Do they have any credibility?  Are they just telco middle managers with little experience of the outside world?  Just because they tweet doesn't make them credible.  You're wasting funding that should be pumped into making the API program a success.
  
• Focus, just offering APIs without a clear business plan is called "wishful thinking", it is not how successful businesses are built.  Where's the network API business plan?
• Partner, until operators get the internal people and processes right to enable service innovation, they're set up to institutionally kill service innovation.  Just look at your track record over the past two decades.  People and Processes must change before technology.
  
• Expecting partners to work with you simply because you're big is not a business plan.  There should be a policy that removes anyone from the network API project that uses such a statement as justification for why partners will work with them.  You're both going to have to put 'skin in the game' around your specific co-operation.
  

There is another more insidious problem than technology bias in telcos, that is organizational politics.  As telco API's start to show potential the institutional 'anti-bodies' are getting involved, that is middle managers adept at creating confusion to drive their specific agendas to get to the next rung on the corporate ladder. Telco boards need to realize they do not understand the API business.  A few board presentations cannot educate them, they got into their positions when it was about building a network and customers came running.  Telco boards need to put a leader in charge that understand the API business, has credibility with partners, is empowered to the same level as the CMO or CIO, and is completely vested in the project, that is if they miss their objectives they are fired not reassigned to another project.

There are glimmers of success in some of the API initiatives, and some of the smaller operators such as Telenor are building a solid API business through focusing on partnering and having a clear network API business plan.  But I'm seeing the glimmers of hope get squashed under the technology bias and organizational politics that plague our industry.  Let's not kill the API business just as its about to getting going, we've still got much work to do to get the telco house in order to make this a success.

Voxeo has quietly built over the past 12 years an impressive enterprise voice and messaging business.  Their business began in hosted IVR (Interactive Voice Response) where they've achieved a leadership position as shown in the Ovum analysis below.  However, through their 250k strong developer community they're really now a leader in communication enabled business processes. 



Voxeo is profitable and management owned, which avoids all the headaches caused by trying to achieve "the exit" for investors within 5 years.  Instead it keeps them focused on their customers and partners.  As an example, they're standards-based using VoiceXML and CCXML, which makes it easy for customers to switch them out, unlike their competitors.  Voxeo is run by engineers whose view is openness forces them to provide excellent customer service and give customers confidence in choosing Voxeo.

Customers include Comcast, TATA, Telefonica, T-Mobile, Vodafone, Swisscom, 1800Flights, Versatel, Proximus, TelWorks, governments, banks, healthcare, utilities,  etc.  Really any business that needs to communicate with customers.   Their communications platform is also behind innovative services such as:

• Ringio is a CRM friendly Virtual PBX that helps smaller companies improve the quality of their customer interactions.  With hosted PBX plugins for Salesforce.com, Zoho, SugarCRM and Batchbook.
• Opiniator provides real-time customer feedback from mobile phones.  Its a customer feedback technology, supplying real time, actionable, point of experience feedback, using the customer's mobile phone. With analysis and alert management, a business knows how it is performing, can fix issues or recover a dissatisfied customer.
• SendShorty is a professional services firm with a cloud based text messaging service that makes creating mobile campaigns and sending targeted text messages to groups of people easy for businesseses.

Voxeo has built up over the years a global cloud to run its communications platform and a global community of over 250k developers using its open APIs that use web-centric standards.  This brings me to why Voxeo is one to watch from a telco perspective, not only has it achieved success in services operators should be providing to their customers.  Voxeo has created "Voxeo Labs" enabling operators to quickly and profitably deliver thousands of commercially available and proven network API-enabled enterprise communications services (third party, co-branded or operator branded). Fast-tracking an operator's network API program to address the potential $120B+ per year in network API-enabled communication services.

Voxeo Labs uses the operators' existing network assets, e.g. Parlay gateways or IMS (IP Multimedia Subsystem) or other SIP / NGIN platforms, to expose a rich and flexible set of real-time communication APIs to meet the diverse and rapidly evolving needs of real-world communication service developers.  While enabling operators to quickly define and deploy custom services to meet their customers' specific needs. Voxeo Labs offers their solution in a range of configurations from software-as-a-service so operators can get going in under one month, to operator owned and managed. 

Operator API initiatives that have focused on technology, that is the API, and embarrassing attempts at trying to create a developer community have failed.  An API is just a piece of technology to deliver a service which solves a business problem.  Voxeo Labs provides the community / ecosystem, the API-enabled services, and the web-centric real-time communication APIs to deliver immediate solutions to the business problems of an operator's customers.  As well as enabling innovation both internally and externally to the operator, as we've seen with BlueVia's use of Voxeo Labs in ConnFu.

Between 1995 and 2010, mobile's share of the global telecom revenue pie increased from 14% to 63%. In 1995 mobile revenues from emerging markets represented 2% of global telecom revenues, by 2010 it was 28%.  In 1995, only 15% of the world's mobile subscribers were in developing markets. By the end of 2010, 79% of the world's subscribers were in emerging markets. Emerging countries have been, and will continue to be the engine of growth in the global telecom market, and growth drives innovation.  Some of the examples of innovation from emerging markets include:

• In 2000, SMART was one of the world's first operators to introduce a remittance (SMART Padala) and micro-payment (SMART Money) service aimed at the low income market.  The service nearly doubled the addressable customers base, created higher ARPU (Average Revenue per User) by 20% and reduced airtime recharge commission costs by >50%.  Since then we've seen many players jump on this $1T opportunity, including developed markets.
• In 2004 Bharti announced with IBM a 10 year $3B contract to outsource its network, going further than any operator had done in the past.  And as we've seen network and operations outsourcing has become an unstoppable trend
• In 2004 Econet Wireless, Zimbabwe's dominant mobile operator representing over 70% of the mobile market, used customer behavior to drive network roll-out achieving savings of over 80% compared to more traditional deployment planning methods.
• In 2006, Tigo in Tanzania introduced freelance sales people, that is street smart agents to sell prepaid recharge, trebling sales to the targeted segments.
• Recognized in 2008 by AfricaCom as the "Most Innovative new service of the Year" MTN's dynamic discount using cell broadcast to make offers for call when the network is lightly loaded, increasing revenue in targeted segments by over 30%.

On the supply-side Huawei and ZTE are now making more patent applications than the rest of the network equipment suppliers combined.  The developed markets need to "pull their socks up", stop complaining about how hard business is, and start innovating like the developing market!  Else be left behind.

Sycamore Networks has an interesting back-haul compression solution called IQStream.  Earlier this year they published some interesting stats in their weblog on the increasing concentration of video traffic, see below.  The reason behind this concentration is partially mass-market adoption drives concentration as people tend to 'follow the herd' so viral videos have a much bigger hit.  As well as popular websites adding more video capabilities with "most popular" lists. 

As an example of one use case driving concentration.  My 22 month old son has been an avid YouTube user since he was 12 months.  Give him any Apple device (and now and Kindle Fire to that list) and he's good to go.  His favorites are Sesame Street, The Wiggles, and Laurie Berkner; which he watches over, and over, and over again.  He got hold of my iPhone once and bust the data plan feeding his YouTube habit.  I'm sure there are many other parents out there doing the same thing of using videos to keep their kids occupied while they get the chores done.  This is just one of the many thousands of use cases that are driving concentration of video traffic.

2009: 10% of video objects were responsible for 40% of video traffic
2010: 10% of video objects were responsible for 65% of video traffic

2009: 1% of website domains were responsible for 60% of video traffic
2010: 1% of website domains were responsible for 90% of video traffic

Another factor to consider beyond concentration is video abandonment, that is we start watching a video, it stalls or the quality drops, or the content is just boring and we give up watching.  Sycamore's analysis shows an average video session wastes almost 1 MB because of poor matching between the encoding rate and the transport rate and early abandonment of the session. This significant inefficiency leads to higher levels of congestion and a degraded user experience. There are many options to better match encoding rate to available transport rate, two notable approaches are:

• Video Pacing - This involves the use of various techniques to better match transport rates to the encoding rates of streaming videos. By more closely managing the user buffer depth, less instantaneous transport bandwidth is required and fewer bytes are wasted if a user abandons the video. Video pacing techniques include buffering and rate-shaping in the network, split-session video servers, and TCP session optimization to rate shape the streams. These techniques require specific knowledge of the video meta-data, client and server capabilities, and network conditions in order to prevent negative user impact (for instance, choppy or stalled video resulting from buffers not deep enough to accommodate network variability).
• Adaptive Streaming - This is separate and distinct from video pacing in that it attempts to provide the best user experience (highest video quality with lowest stalling/stopping of videos) by adaptively changing the encoding rate based on the available transport rate to the client. This approach is being actively pursued by the dominant video player vendors (Microsoft Silverlight, Adobe Flash, and Apple QuickTime) and standards bodies (HTML5). Major Internet video sources such as Netflix.com and Hulu.com already support adaptive streaming. In its most basic form, the adaptive streaming video client monitors its buffers to determine if the available network bandwidth (transport rate) is sufficient to support the video stream encoding rate. If the transport rate is low (i.e., the buffer is draining too quickly), the client requests a lower quality stream from the server to better match the rates. Correspondingly, if the transport rate is high (buffer filling too quickly), the client requests a higher quality stream.

In some respects, these two schemes are in conflict. Video pacing takes the network perspective and attempts to optimize the network resources needed to deliver a video stream whereas adaptive streaming takes the user perspective and attempts to deliver the highest bit-rate quality for a given network condition. Nevertheless, the two techniques can be used together to provide the best overall user experience for a collection of users (not just a single user) in the face of constrained network bandwidth. Video pacing and adaptive streaming represent just a couple of the many tools and techniques operators can use to better manage the unpredictable data behavior in their networks. Without content and flow optimization at critical points in the network, congestion and its resulting user impact will occur more frequently and lead to expensive over-building of the network and costly subscriber churn.

Content delivery networks to some extent mitigate this problem, but the operators' networks remain in some cases a closed where rates vary widely based on radio access conditions and network congestion.  At present there's a dichotomy in the industry, where the content owners and content consumers have both paid for internet access and content delivery and expect the content to just work, while the operator is trying to change the game and claim ensuring it works requires that content owners and customers to pay.  Individually operators have no chance at making this work, their best chance would be to strike deals with the main content delivery networks, or buy them as Level 3 did. 

Other options like Turbo button has been tried in the cable industry for many years thanks to PCMM (Packet Cable MultiMedia), and customers do not like it because they paid for internet access, just like they paid for voice service, and do not expect to be 'nickel and dimed' for what should just work.  Another option is to tier internet access plans like Verizon FiOS, and if the customer is buying the top tier the service just works, while if they're buying a lower rate, then the service may not work and its up to the customer to buy the premium package.  The key to success in mass market adoption is simplicity, Turbo buttons, per content charges, QoS APIs are complex from either a business or user experience perspective and apply to niche markets not the mass market.

We've discussed previously the missed opportunity of operators' websites in educating customers on all the services they offer.  Normally there's a service name, a terse incomprehensible description, and a monthly price.  Its designed to fail in today's environment when use cases (videos, cartoons, simple text and graphic descriptions), freemium and trial-to-buy business models are essential.

I'm seeing more and more innovation in telecoms come from markets outside the usual suspects of developed markets.  Mentor TIM is a service offered exclusively by TIM Brazil, which helps corporate clients understand and use the functionality of their smartphones, thereby facilitating the access to TIM's value-added services. The service consists of individual or group training (available in Rio de Janeiro, Niterói, São Paulo, Curitiba and Belo Horizonte) provided on-site or remotely by highly qualified professionals.

TIM launched 'Liberty Web Empresa', which offers 6 months of free internet access through the cell phone. This allowed companies to acquire full voice and data solutions through smartphones. Currently, a important part of sales for the corporate segment comes out with an active internet service over the smartphone. All customers who purchases this solution receive free of charge 'Mentor TIM', a one-to-one training in person or by telephone that guides the customer to use all the resources of his new smartphone and data solutions. In late 2010, 'Mentor TIM' completed, more than 100 thousand trained TIM users.

For TIM Brazil revenues originating from VAS services accounted for 13% of gross service revenue, with a growth of 20% in the year.  Helping customers understand and use services makes business sense.  I see many operators bemoan the OTT (Over The Top) threat, and not do anything about it except moan, TIM Brasil shows there is something that can be done, it works, and its making them money.

We all experience it, dropped calls, inability to connect to the network, garbled voice, painfully slow internet access, etc.  Why is the core service still less than completely reliable when its been around for 20 years?  The problem in-part is how operators test their network to capture these issues is based on standards created at the dawn of digital mobile telephony over 20 years ago, that is Probing (using probes in the core of the network) and Drive Test (driving around in a van) for measuring service quality.

I pay my operator for voice, messaging and internet; the rest is over the top, so you'd think keeping me using voice, messaging and internet would be the most important thing they do.  Service quality (after price) is the most important network-related factor.  As an industry we must not take our eye of the ball, service quality is critical. But is there a better way of measuring service quality than the 20 year old options of probing and drive test?

Consider this scenario: a customer calls their operator to complain about the fact that they get no signal either at home or work-place during the day.  The CSR (Customer Service Representative) accesses the operator's coverage reporting tool and it states that there is plenty of coverage in those locations.  Customer says no, operators says yes.  Who is correct?  Of course the operator assumes they are, implying the customer is a scallywag on a subsidized handset tariff that just wants a new phone.  The phone's inability to connect to the network (remember, the operators said there is plenty of coverage) is the excuse used to get a replacement phone.  But the limitations of the operator's coverage reporting tool could mean the customer is correct and there is little or no coverage. The alleged scallywag would not get a new phone based on the 'evidence' available to the operator, instead the operator would be able to make better investment decisions regarding network roll-out, customers would have a service that just keeps getting better, and the alleged scallywag wouldn't be making the call in the first place.

Service monitoring inside the customers' mobile phones, that is the SIM, is a massive untapped opportunity.  This direct feed of information into the network tells the operator exactly how well or poorly they are performing.  Given the fact that handsets know what they are, where they are, what the time is and the network tells them what's going on, why not get handsets to reflect all that valuable information.  The test and measurement problem becomes a crowd sourcing of customer experience problems.  Rather than driving a vehicle at particular time along a predefined route, you just let the customers do it.  Rather than capture masses of signal data from core of the network (the haystack) and look for problems (the needles), why not have the handset provide a clear and simple statement such as "At this time, this location, on this handset, my user experienced a dropped call because they were disconnected from the network".  Aggregate all these reported events and you build a picture of network performance, device performance and how it impacts user's experience of service quality and by watching the changes in both, maybe proactive remedy problems.

We reviewed Wadaro back in 2008.  They're still around, and building an impressive business using the SIM to monitor the network.  The statistics they produce are impressive, revealing and shocking.  I don't understand why every operator is not using this type of monitoring today.  Well I do, its not in the standards!  Don't get me wrong, air interface standards are fundamental to the existence of the industry, but standardization is a tool that must be applied pragmatically: avoid the "man with a hammer so everything is a nail" syndrome.  We've got to break free of stifling innovation because its not in the standards, and start focusing on what does this do for the customer's experience.  Monitoring in the device enables you to spend more wisely by almost a factor of 10; and most importantly improve the core services so customers keep paying for voice, messaging and internet access.

To those attending the Telecommunication Conference 2011; The Convergence of Telecom, TV and Entertainment on Friday 11 November 2011 at Hilton Park Hotel in Nicosia: I'm afraid the organizers required I spend a weekend away from my family to meet their budget needs.  I'm a strong supporter of small businesses, as that's where disruptive innovations come from, so I was happy to support this conference, but not to the point of taking yet another weekend away from my family to meet their budget needs for the want of a few hundred Euro.

I was going to cover:

The Good, The Bad and the Ugly of Over The Top Services: Quantifying the Threats and Opportunities

"The internet's gone video!" is the cry from the Bay Area, as customers increasingly view video services from providers and devices other than their broadcaster and PayTV provider. Over 30% of US population is now using Netflix; in the UK BBC iPlayer is approaching a similar market penetration. Video dominates the traffic transported over the internet and operators' networks; it's over 50% of traffic on some networks. Unfortunately for most operators this traffic is viewed as a cost not as revenue. And that's not the worst of it; video traffic is expected to grow 7 fold globally by 2015.

Network operators are taking a number of approaches to this problem, launching their own over the top services such as Telecom Italia's CuboVision; offering multi-screen TV or TV Everywhere; introducing rate and data caps; arguing with the regulators over what net neutrality means, trying to get the OTT service providers to pay for delivering their content, etc. But we're missing an important actor in this drama, the hand of the content owners that enable Netflix and Hulu to disrupt the market with favorable content distribution rights.

I was in the UK last week and caught up with the CEO of HTK, Marlon Bowser.  HTK Horizon™ is a hosted service ("Software-as-a-Service") that helps organizations or any size to "sell more and serve better, at lower cost" through highly personalized ('micro-targeted') inbound and outbound communication using email, SMS text messaging and interactive voice calls, plus new social-media channels such as Twitter and Facebook.

As a small company they can only be focused on solving immediate problems for businesses that are prepared to pay.  There's no academic arguments on segmentation, propositions and go-to-market; its quite simply find a seam of gold, mine it, and keep an eye on where the current seam can be jumped to an adjacent seam to mine.

Their existing customers include:
• The Scottish Environment Protection Agency (the national 'Floodline Direct' warning system)
• Telefonica O2 (high volume marketing and customer service IVR for pay-and-go customers)
• Metropolitan Police ('Neighborhood Link' community messaging)
• Birmingham City Council ('Birmingham Community Alert' community messaging)
• Centrica (automated appointment reminders by telephone for British Gas customers)
• Specsavers (IVR for nearest store location)

In the open letter to operators on improving their customer service, I shared the awful experience I was put through just to report a fault.  Imagine if operators used HTK's service, they would have recognized I'd reported faults in their network before (customer insight), and could have identified I've used social media to highlight poor service provider performance, so would be respectful of my time.  And after the fault was repaired, instead of pretending it never happened, would make a relevant offer (based on customer insight) to compensate for the hour of my time they wasted.  

This is not difficult, two of my local restaurants (small businesses), Delicious Heights and Goodmans, recognize me by name, know what my family like to eat, are quick, and whenever there's a mistake make us feel more than cared for.  All Operators need to do is copy my local restaurants, these small businesses get it right.  Operators must use services like HTK's to emulate the experience I get with my local restaurants.  Market surveys have shown the top quartile of businesses by customer experience compared to the bottom quartile companies have 14.4% more sales, 15.8% less churn and 16.6% great advocacy. The math is simple, its simply the incompetence tolerated in large organizations in low competition markets that perpetuates this situation.

Email open-rates around 1 to 5%, while SMS open rates are at 97%!  Mobile is an important component of marketing.  And in the list of HTK's customers you can see how messaging, location, call control, device status and even user profile could all be used to enhance their services to enterprises.  They're an ideal partner of operator APIs.  The challenge is operators must get their act together.  As Foursquare's VP of mobile and international, Holger Luedorf, said "For a company of 80 people, it's almost impossible to implement these on a carrier-by-carrier basis."

Urban Airship came to my attention recently, thanks to Sean O'Sullivan, in the rapidly emerging category of push notification aggregation.  Push notifications allow developers to send messages directly to customers who have installed their app, even when the app is closed on their device. Its yet another lost opportunity for SMS as operators remain stuck in their silo and are not responding to market innovations.

Push notifications can deliver information including sports scores, breaking news, stock movements, game challenges and even individual messages.  Yep that means it can substitute some, but not all, peer-to-peer SMS use cases across iOS, Android and Blackberry.  And I'm sure in time Windows and every other smartphone platform.

On Android it does require a Android Cloud to Device Messaging (C2DM) enabled device.  C2DM is a service that helps developers send data from servers to their applications on Android devices. The service provides a simple, lightweight mechanism that servers can use to tell mobile applications to contact the server directly, to fetch updated application or user data. The C2DM service handles all aspects of queuing of messages and delivery to the target application running on the target device.

Urban Airship makes it easy to implement push notifications by providing a single API across all platforms as well as managing exceptions such as non C2DM-enabled devices. The coding and infrastructure of push messaging, scheduling, and reporting is provided by Urban Airship under a freemium model (operators take note on how to make your APIs work). Bottom-line mobile push messaging is by over a factor of 10 more cost effective than SMS messaging and is free for the unfortunate North American customers that pay for incoming SMS.

As promised in the Day 1 BBWF article, here is a sample of the excellent presentation given by Matthias Linder, CTO Magyar Telekom providing an open and frank discussion on their experiences around convergence (many suppliers/consultants call it business transformation to make it sound more expensive.)

The key to success in convergence isn't about technology, its primarily about people (organizations) and process.  The objective of convergence isn't fancy services (that's a by-product) its operational cost savings.  The critical thing Magyar did was to consolidate the organizations and processes first, before they focused on technology.

In the slides shown below Matthias sets out the steps in their convergence project, a great template for any operator looking at their failed business transformation project and a $10m+ hole in their pocket.

Dear Operator,

When I have a problem with your network, I really do not want to call you.  I fault-find my home network, I reset the router, I check the ONT (Optical Network Terminal), I reset the PC, I reset the router with the PC off and then turn on the PC.  I do everything humanly possible before calling you, because I know the experience will be awful.  I have a heavy feeling in my stomach in anticipation of the terrible experience you're going to put me through as I call your fault report line.

When I call you keep me waiting on the line listening to muzak, after a series of failed voice recognition attempts.  There are services like Fonolo that remove this frustration and also improve termination of calls to your agents.  As a communications company you really should be using the latest communications technology. 

When you finally get around to answering the phone you haven't even bothered to check if the problem is with your network first, you just assume the fault is with me.  Today, I reported a fault on the phone line and internet line, both are running very slow, so the fault must be on the BPON (Broadband Passive Optical Network) or MSAN (Multi Service Access Node).  Instead of acknowledging that I know what I'm talking about you make me jump through one hours' worth of pointless exercises until you finally get around to testing your network, and then issue the trouble ticket, which of course you will not issue until you've wasted one hour of my time.  

To add insult to injury, I'm told "It's not our network it's the home unit (he means the ONT) so we need to send a technician out."   Which by the way isn't for 2 days and we will not give you a time of day for the appointment.  This is a lie, the ONT is in your network.  In the end it was a problem with your network configuration and it was sorted later that morning.

Your customer service is the worst customer service I experience of any business I buy services from.  I'm spending $2k a year with you and it is truly anti-customer service.  I really do not want to call you because you waste my time, frustrate me, and demonstrate a lack of customer service.  Next time I call, check your network first, it's the least you can do.  In fact recognize me as a person and know that all the times I've called you its been for problems with your network / systems, never my home network as I check that first.

Yours disappointed yet again with your anti-customer service,

Alan Quayle

In this article I highlight just a few of the many interesting presentations made at the SDP Global Summit, the slides are shown below.

Jose Valles, BlueVia, gave a presentation on the best of the current API recipes:

• Operators are not attractive to developers because of the sins of the past (e.g. Orange Partner), arrogance and self-interest in their out-reach, and being out of touch with internet technologies and business models.
• SDP is a swear box, its sold as a panacea, when it is not.
• The money is not in the long tail, its in the mid tail, telcos should focus there.
• It takes time, even for the web-centric companies like Netflix to build momentum around their APIs.
• Telco APIs are not cool, do not call them cool, its all about the business enabled through them, focus there.  Its critical telcos 'know themselves' and act accordingly. A forty-year-old acting like a twenty-year-old is just plain embarrassing.
• Partnerships are key, telcos can not do this alone.
• Copy APIs that are working, do not follow standards.

The full presentation is available here.

Michel Burger, Vodafone, gave an insightful presentation on a web services oriented model for the SDP, this is an important step beyond SOA.  He shared a good diagram showing the  breadth of API use across the ecosystem.  The only gap is code-samples matter as much as the SDK, most operators keep missing this point, the best developers are 'cut and paste' developers.  He then showed a core services layer architecture adopting a web services model rather than the classic SOA model.  Similar to the model adopted by Amazon and Google for their services layers.  Michel refers to it as the Internet Service Ecosystem, I use the term Services Layer.  This is prescient architecture, showing where operator IT systems will need to evolve.

Medhat Amer, CIO Mobily, gave sound advice on making an SDP project a success.  Madhat's advice, through obvious is rarely followed in most SDP projects.  CEO sponsorship is essential, else the project will fail.  Talk with other operators, not suppliers, on their experiences.  Have clear business objectives and metrics for each phase of the project.

Abdeljalil Boularab, STC, gave a presentation on the impact of an SDP across all services and they are generating 100M Euro per year in new revenue and savings.  A great proof-point on the success of SDPs.

Shira Levine, Infonetics showed the SDP market is all about the services with an estimated SDP market size of $5.2B in 2015 with 70% being services such as system integration, managed services and cloud services.

Andreas Boose, Telefonica, shared their leading multi-national, multi-layer SDP.  An approach of ESB (Enterprise Service Bus) integration is required rather than more abstract API definitions.  We will likely see this SOA versus web-services approach become a hot topic through 2012 in the SDP / Services Layer space.


And finally on a completely unrelated note, I thought this cartoon summed up the economy of free quite nicely, and reflects a theme I've been talking about for years on how customers pay in either cash, time or privacy.  And when its time and privacy the 'customer' is no more than a product on sale to advertisers whose message will be delivered no matter how inappropriate.  Hence why I gave up on Facebook and gained more time in my life.

 

The vendor keynotes on Day 2 of the Broadband World Forum were again rather dry and focused on why operators should buy more complex networks.  A common vendor claim was that a 10% increase in broadband connectivity results in some % increase in GDP (Gross Domestic Product).  I have a sneaking feeling that there is some confusion on cause and effect, that is "correlation does not equal causality".  The focus was again LTE, policy, QoS, SLAs, M2M, Cloud, 'smart this and intelligent that'.  Repeating the IMS brow beating of operators.

The second half of the keynotes were again much more interesting.  The CEO of Etihad (innovative airline) explained their use of 'broadband' which was really IT, this demonstrated how enterprise customers use 'broadband.'  It's not 'broadband' they use, its IT they use to solve business problems and deliver value to customers.  Hence the need for operators to get more focused on IT services if they want to be relevant in enterprise services beyond transport.  Olivier Baujard gave another good presentation that echoed Matthias Linder's presentation from Day 1 on the importance of convergence in saving costs.  90% of broadband use is at the home or work, where it can go over the fixed (WiFi) network instead of the mobile network.  Olivier shared how they'd influenced customer behavior through incentives to use WiFi when available.  In my experience the device always defaults to WiFi whenever its available as the performance is better and its cheaper.  Olivier was crystal clear, the focus is COST.  BT given its situation of no mobile arm, Openreach, limited TV opportunities focused on FTTC (VDSL), targeting 80% of broadband users with VDSL.  And claimed through the enhanced frequency plan, vectoring and bonding they will be able to squeeze 100 Mbps down and 20 Mbps in return out of VDSL (though the % coverage at that rate was not mentioned.)

In the afternoon cloud session Verizon Business (VZB) described its cloud offer focused on business problems NOT technology.  VZB clearly understands the market, technology is not the issue, it's about delivering business solutions in a heterogeneous environment.  Business SLAs (Service Level Agreement) are key, not transport SLAs.  Verizon Business is clearly head and shoulders above other national telcos who showed they continue to struggle in understanding the needs of the enterprise market.  Interestingly several operators talked about their cloud based IP centrex and unified communications and collaboration solutions, which were not based on IMS.

Sean O'Sullivan of Dial2do (last year's winner of the best new service at the InfoVision Awards) gave an excellent presentation on the evolution of their business as a cloud based voice VAS provider.  Their focus is simplicity for the customer and communication enabled business processes.

Xipeng Xiao of Huawei gave a good presentation that stirred up the CDN (Content Delivery Networks) session with a very accurate piece of work on the limited opportunities for making money in CDNs, e.g. Akamai's global business is only $1B, across the 71 countries they operate that's only $15M per country.  This caused the operators to get on the defensive and give examples of how they make money using CDNs to optimize traffic across their networks.  Which was exactly Xipeng Xiao's point, the money is in network efficiencies not charging people.

And finally some of the BBWF InfoVision Awards 2011 of note included:

• Best New Service award went to YTL Communications with Yes 4G.  YTL Communications' Yes 4G network provides access through a 'Yes ID' rather than a SIM card. Multiple devices are able to log on to the network using the same Yes ID, which has a Malaysian mobile number associated with it.  A simple service that meets customers' needs and should be much more widely deployed.
• Content, Entertainment, Applications and Services went to Huawei IPTV.  Huawei's MediaCloud On-Demand Platform optimizes multi-screen video delivery and smoothly integrates telecommunications, broadcasting and Internet services enabling telcos and MSOs to deliver new experiences and capture new revenues by providing their customers with interactive multi-screen services, delivered through a variety of channels.
• Broadband Home: Appliances, Devices, Home Networks & Services went to PCCW Media Limited - Stargazr.  The PCCW Media Stargazr IPTV user interface integrates program listings, on-demand videos, interactive services and personalization streamlining the TV experience with an easy-to-use remote control and onscreen interface.
• Broadband Access Network Technologies and Services (Fixed) went to ASSIA DSL Expresse.  ASSIA's DSL Expresse software optimizes the operating parameters for each DSL line and provides detailed line-level and network-level diagnostics for both the copper plant and DSL service.  As operators sweat their DSL assets, DSL performance will sweat, and this provides the tools to manage the problems many DSL operators will face to limit the amount of copper rehab required, one of the nasty hidden costs in VDSL deployments at scale.

The Broadband World Forum continues to grow with attendees from 120 countries, 280 speakers (most were operators), 150 sponsors and exhibitors, 400 service providers and over 7500 attendees.  Gavin Whitechurch and his team deserve much respect for transforming BBWF into the Broadband event of the year.  At the session I chaired on next generation broadband networks we were packed with hundreds of people, no standing room was left.  Most of the presentations were operator case studies.  It's the only place where the complex broadband ecosystem meets in one place: covering fixed, mobile, convergence, IPTV, access, metro, core, service platforms, home network, BOSS, and more.

The event kicked off with a series of keynotes.  The supplier keynotes highlighted the challenge facing our industry with the continued marketing mantra of 'believe don't think.'  Their message was its complex for the customer to get all their stuff working together, putting the network in the middle using identity management, policy management, subscriber management and content delivery makes it easier for the customer.  This of course ignores the fact that device and web service providers have already made it easy for customers, like Amazon, Apple, Netflix, etc.   They also never adequately explained now the network really solves the problems facing customers, never mind whether they'd pay.  The chants on M2M, LTE, QoS, SLAs, convergence, 'smart this and intelligent that' were repeated many times, as if we say them often enough it must be true.  The message from operators is simple, we need to reduce costs, I hope next year the supplier keynotes focus is on what operators are requesting.

However, the convergence chant is definitely worth operator attention and we'll come back to that when I review the NGN session where Matthias Linder from Magyar Telekom in Hungary gave one of the best case studies on the reality of convergence I've ever seen.

A technical point raised several times was 'we have better latency, which matters...' perhaps for some networked games, but that's a relatively niche market with no operator making money today.  Skype, web browsing, YouTube, Hulu, BBC iplayer, email, etc. all work well without the latency advantage of new technologies.  And most customers only care firstly about price, next peak rate, and after that everything is just lost in the noise.

The more entertaining second half of the morning keynotes covered Kevin Lo of Google Access, Malcolm Turnbull (Australian opposition MP) and Eric Klinker of Bit Torrent.  Google demonstrated they've slowly learned the real world is a lot more complex than the virtual, especially when you don't have a monopoly and can use free to engineer markets.  Malcolm gave a grandstanding political speech on the incompetence of the current Australian government's NBN plan.  We're seeing a variety of approaches being taken on national broadband plans, bottom line is as an industry we're experimenting, it's unclear who has the right answer if at all.  It will likely be more than a decade before we know if the Australian experiment is a success or failure.  Eric showed how their peer to peer clients enable the internet to be monitored and asked for the audience to send him ideas on how it can create value.  We need the supplier keynotes to inspire and entertain like Malcolm and Eric (as well as demonstrate they've listened to their customer), and not repeat the mistakes of the past in asking the industry to 'believe don't think.'

Over the afternoon (12:00-18:00) I chaired the NGN session, some of the highlights included:

• There's still much life in PON (Passive Optical Networks) with WDM, 40G, and long reach (100km+) PONs that have the potential to completely remove the metro part of most networks.
• FTTH (Fibre To the Home) is being deployed widely across the Nordics, Mexico, Armenia, Lithuania, Mauritius, Indonesia and many other countries.  The driver is simply enterprise needs and consumer triple play.
• FTTH is not an exclusive choice, it's generally a hybrid approach encompassing FTTH, FTTN (Fibre To The Node (VDSL)), and wireless (LTE) for rural.
• Some operators expressed a belief OTT (Over the Top) service providers will pay for QoS (Quality of Service).  Such belief appears at odds with the current market situation.  But in the limit its a commercial issue not a technical one, as if there's business advantage and a clear business case then OTT will pay for QoS, however, currently there is no such advantage or case.
• Total Pay (Mexico) gave a great presentation on squeezing out the cost in rolling out FTTH in Mexico, a great model for many developing markets.
  
• Countries such as Indonesia and Mauritius are also deploying FTTH, initially led by enterprise needs.
  
• Ucom in Armenia shared their FTTH deployment experience with about 10% penetration at the moment (across current coverage) with the aim to achieve 250k customers with a pay back period of about 8 years at that penetration.
  
• MBB (Mobile Broadband) is a substitute for FBB (Fixed Broadband) today for some customers and that trend will increase, its not a one size fits all, segmentation is critical and xDSL will get squeezed.
• Matthias Linder from Magyar Telekom gave an excellent presentation on the role of convergence, its all about saving costs.  Through their convergence project they've reduced the number of systems by 40%, and there's much more savings to be had.  I'll review Matthias's presentation in a later weblog article.
• We had a senior panel to discussion on universal broadband, and Edmundo Poggio, Telecom Argentina highlighted that universal access is not just about the pipe, the device is also an important component, there Telecom Argentina has focused on providing devices to students.
  

In the exhibition hall Adtran were demoing a great little customer powered unit for xDSL from the pole-top called Ultra Broadband Ethernet.  Its similar to what we created in BT, powering was a problem (we were looking at lamp post powering) now it can come from customer given the intervening 15 years.  My key take away is FTTH is here, its global, business needs and triple play are the drivers and it's got an evolution path to support dedicated multi Gbit/s per customer.  xDSL will not disappear anytime soon, rather be squeezed out between FTTH and MBB over time.  That time will vary depending on country, from within a decade to longer than a lifetime in the case of BT.

Day 2 of the SDP Global Summit kicked off as strong as the first day with an Analyst panel including Peter Mottishaw (Analysys Mason) and Shira Levine (Infonectics) the source of many of the market numbers on SDP.

Shira showed the SDP market was $2.7B in 2010 and is growing to $5.2B in 2015 with services making up about 70% of the revenue, covering integration, managed services, and cloud.  Finally SDP is moving into mainstream deployment across telcos, rather than a focused niche in messaging or call control, and repeating the theme of day 1 its a project not a product covering people, processes and IT technology.

There was an animated discussion on the role of standards in APIs during the panel session, there's a clear split between technologists and business people.  Telco technologists see standardization as a necessary precondition for APIs, while business people see it as a post-condition once an API starts to show promise and the main bugs have been worked out with the market to enable all telcos to benefit.  The reasoning for this is APIs can be copied in a day, and the business models behind APIs remain the main challenge for Telcos. 

The weight of the discussion was in support of standardization being a post-condition, though its clear there was much emotion from the standardization camp. In their defense the fragmentation in operator APIs is an issue, but the business model and T&Cs (Terms and Conditions) are much more of an issue.  The bottom-line is the operators who are in the market like BlueVia (the customers of the standards guys) clearly stated standardization is not necessary as they'll copy whatever works.  Telcos please listen to this direction.

I've discussed previously the problems with institutionalized standardization in telecom, there's too much of it, and in many cases its become detached from market needs.  Standards are important, e.g. the air interface, device management, and digital rights management; but standardization should only be wield when it makes business sense for Telcos and not as a universal tool.

The highlight of the conference was the BlueVia;s presentation.  Normally Jose Valles does not attend such telco focused events as they're detached from market reality, rather he attends developer events like Mobile Monday, Mobile 2.0, etc.  I'd asked Jose as a favor to attend because operators need to understand the reality of making APIs a successful business.

Some of the key points from Jose's presentation, shown below are:

• Operators are not attractive to developers because of the sins of the past (e.g. Orange Partner), arrogance and self-interest in their out-reach, and being out of touch with internet technologies and business models.
• SDP is a swear box, its sold as a panacea, when it is not.
• The money is not in the long tail, its in the mid tail, telcos should focus there.
• It takes time, even for the web-centric companies like Netflix to build momentum around their APIs.
  
• Telco APIs are not cool, do not call them cool, its all about the business enabled through them, focus there.  Its critical telcos 'know themselves' and act accordingly. A forty-year-old acting like a twenty-year-old is just plain embarrassing.
• Partnerships are key, telcos can not do this alone.
• Copy APIs that are working, do not follow standards.

The key point of the BlueVia:Twitter announcement is Twitter is using BlueVia's APIs rather than the highly specialized MM7 protocol that a rare few businesses can access.  BlueVia's APIs have reached a point of simplicity and ease of use that an organization the size of Twitter (by messaging volume) preferred to use them, and critically this is an interface any developer can access.  This is clear endorsement by the web-centric world that BlueVia has got it right - a seminal moment for Telco APIs and our industry.

Day 1 of the SDP Global Summit kicked off with an impressive line-up of operator case studies from Michel Burger of Vodafone, Medhat Amer of Mobily, Mohammed Aldhwaiyan of STC and Mario Domingo of Globe.  Common themes to their success include:

• SDP is not a product, it's a project covering people, processes and technology (an IT-centric architecture);
  
• Common theme of a services layer (also called an internet services ecosystem, service delivery framework.) Its the third leg of an operators business, see diagram below;
• Services layer is not a subset of BOSS (Business and Operational Support Systems), it's a distinct set of processes and systems in support of services and business model innovation;
• CEO support is essential to deal with the people issues in implementing a services layer;
  
• Analytics are a critical component of the services layer (we're finally moving towards Amazon's model of helping people find stuff they need), and enabling operators to react in near real-time to external events;
• Services layer project is driven by business requirements, technology's role is purely to fulfill the business requirements;
• Recognition that the web service providers are the competition and they've got the services architecture right, hence operators such as Vodafone are adopting their services layer model, using APIs to best harness the assets of Network and BOSS;
• Its an incremental project, not wholesale change.  Vodafone's WOA (Web services Oriented Architecture) approach almost enables a stealth based roll-out;
• Themes of micro-segmentation, recommendations, bundles to deliver more value to customers in near real-time, service innovation, business model innovation; and
  
• Implementation is quantified at every step with clear KPIs (Key Performance Index), specific savings, clearly addressed revenue leakage and stimulation, some operators sharing figures of 100M Euro in new revenues through their services layer.
  

In the afternoon I gave an independent review of the M2M market, the presentation shown below covered:

• M2M background examining its long 50 year history, the devices, well-established ecosystems, mobile M2M being a small piece of M2M, standardization, architecture and market size.
• DT, Gemalto and BMW case study
• Quick Operator Activity Round Up (AT&T, Deutsche Telekom, Telefonica, Telenor Connexion, Verizon, Vodafone)
• Battle Over Who Does What (IT Solution Providers versus the Telcos)
• Likely changes in the M2M Market
• Final Note on the Enterprise SDP

Examining where the market is going, two trends will emerge:

• Supply-chain consolidation and realignment.  Technology vendors and chip manufacturers will acquire the modem/module manufacturers.  IT Solution vendors will acquire platform vendors and ASPs (Application Service Provider) to complete their solutions with horizontal and vertical solutions. Creating solution sets with fleet management, utility management, distribution, asset management, education/government sector, etc.  Much like in the IT sector, communications companies like AT&T, Orange/FT, Vodafone and Verizon Wireless will be a channel to market and purely as a network provider.
• Channel empowerment.  IBM, HP and the NEPs (Network Equipment Providers) will copy what Cisco did in educating its channel in the "Cisco way" of networking. Using publications and courses to educate an entire generation of networking engineers, in essence making the Cisco way of networking the de facto way of networking.  Providing lots of free equipment, training and marketing $$$ to make their technology simply the one the channel knows and trusts best.

The Enterprise problem is different from the consumer problem as enterprises manage their own data and processes.  Enterprise middleware is the Enterprise SDP, e.g. Oracle Fusion (which is based on SOA).  Generally NEPs (Network Equipment Providers) / Telcos have little credibility in this IT domain with enterprises.  They lack IT consulting sales credibility, though NTT, BT and Verizon have aggressive M&A strategies in such IT skill sets.

Operators face a significant challenge to break outside of connectivity in M2M.  They need to focus on verticals and channel management, both skills in which few operators have achieved success.