March 2008 Archives
Ovum predicts the number of HSDPA connections will reach 16.5 million by the end of 2008 in Western Europe, thanks in part to the simplicity of plugging in a USB HSDPA modem and it just working rather than the complex configurations and reboots of a data card; as well as the simplicity and attractiveness of the pricing plans at just 15 GBP per month. Mobile operators are now working on providing value added services on top of this mobile broadband access. One such service is secure remote access (SRA), i.e. enabling secure access to the corporate LAN and protecting remote corporate devices (laptops and smart-phones). SRA can add $15-$30 per device per month in ARPU (Average Revenue Per User).
What would appear at first blush to be just a matter of using IPsec (IP Security) or SSL (Secure Sockets Layer), has spawned a whole industry comprising the following groups:
So which supplier will dominate? Based on a recent enterprise survey I ran in the UK, Germany and the US it very much depends upon what the enterprise is buying. If it's a security solution, then it will be from an IT security vendor or a managed solution from an operator or IT system integrator. If it's remote access, then the operator (fixed and/or mobile) is the likely choice. For secure remote access, the choice is a little more complex, and will depend more upon the type of enterprise and its situation. For example, a large financial services enterprise, with a large IT department will have a tendency to build a solution from an IT security vendor. Though with that said we are seeing departments within large enterprise select an operator's SRA for their team. For a SME, which has a LAN security solution, but not the remote access component, a solution from an operator will likely be their choice.
This situation puts the operator in an interesting position, it can choose to be:
What would appear at first blush to be just a matter of using IPsec (IP Security) or SSL (Secure Sockets Layer), has spawned a whole industry comprising the following groups:
- Dedicated SRA providers such as iPass and Fiberlink providing a package of dial-up, Ethernet, WiFi and HSDPA access options bundled with a security package for the global traveler;
- Mobile operators' offers range from HSDPA and a simple connection manager, e.g. O2's Mobile Connection Manager; to complete packages of managed security and remote access, e.g. Vodafone's Secure Remote Access;
- Fixed and Mobile network operators offers similarly range from access centric to a complete managed solution across the corporate LAN as well as remote access, e.g. Orange Business Services (which is in part a resell of iPass) and BT MobileXpress;
- IT security vendors such as Symantec and Checkpoint with the unified threat management systems (both LAN, remote access and remote offices);
- Both local and global IT system integrators that package together solutions from the above providers; and
- The enterprise's IT department.
So which supplier will dominate? Based on a recent enterprise survey I ran in the UK, Germany and the US it very much depends upon what the enterprise is buying. If it's a security solution, then it will be from an IT security vendor or a managed solution from an operator or IT system integrator. If it's remote access, then the operator (fixed and/or mobile) is the likely choice. For secure remote access, the choice is a little more complex, and will depend more upon the type of enterprise and its situation. For example, a large financial services enterprise, with a large IT department will have a tendency to build a solution from an IT security vendor. Though with that said we are seeing departments within large enterprise select an operator's SRA for their team. For a SME, which has a LAN security solution, but not the remote access component, a solution from an operator will likely be their choice.
This situation puts the operator in an interesting position, it can choose to be:
- Just an access provider, which sets it on the path of being a utility;
- Find a mix of security and access that meets a segment of the enterprise, which is difficult as enterprise IT providers already bundle remote access security solutions into their unified security solutions; or
- Deliver a complete managed access and security solution, which given Verizon Business bought CyberTrust and Vodafone bought Aspective shows this is a growing focus for those operators strong in the enterprise segment.
Overall Summary / Opinion
An important first step in meeting the competitive disadvantage VZW faces compared to the GSM operators. A device centric ODIS (Open Device Interface Specification) defines what a device must do to interface to the VZ RAN (between the device radio hardware and the access network), and the support structure to help partners (device manufacturers, MVNOs, M2M service providers or other service providers) through the process. Commercial models range from retail through to wholesale. The retail model is a little perplexing; difficult to see what beyond niche business focused applications could work. Why would Nintendo build a VZW specific DS given the small addressable market? However, for enterprise M2M with its higher margins there could be a case for a limited run of devices. Wholesale is an important step beyond what VZW does today in potentially removing or softening the application test requirements. However, in between the retail and wholesale models, the "custom" model, there could be a rich seam of commercial models and opportunities for monetize assets such as billing, customer support and distribution.
The issues of exposing capabilities such as location, presence, messaging, content, FiOS, etc. were not covered in this conference. They are in the plan, John Stratton is leading that across all Verizon, I saw him walking about at lunch. This will become part of the open development process.
Summary of Sessions
Opening by Tony Lewis, VP Open Development. An extrovert, unusual for VZ :)
Opening Remarks, Ivan Seidenberg CEO. VZW messaging of the most reliable network. LTE trial end of this year focused on speed and global compatibility - finally I'll be able to roam with Verizon.
Open Development Overview, Tony Lewis, VP Open Development. Focus of the initiative is on new, non-traditional M2M devices. All the device must do is meet VZW's minimum technical standard (see later) and the customer will have online support (billing, device ping). The plan is to have a network only service option available in the second half of this year, likely by the end of the year. Breaking out of the brew model, any application on the device, spec will only cover interface to the RAN, middleware, OS and applications are up to the Partner. No equipment contracts or early termination fees. Supported by a partnership management office that is focused upon helping partners they their devices through the process and working on the commercial arrangements.
Commercial Models, Mike Lanman CMO. Three models, retail, wholesale and custom.
Activation and Self Service, Ajay Waghray, CIO. Partner provides ESNs (Electronic Serial Number) of certified devices to VZW. As VZW has certified the device they know the capabilities and how to activate, from simply turning the device on for the first time to possibly keyboard actions by the user.
Device Specification and Certification, Tony Melone, CTO & team (Ro Garavaglia + David McCarley).
Spec covering CDMA2000, EVDO and in time LTE. Voice only, data only, voice and data specifications.
ODIS (Open Device Interface Specification) Voice spec covers 3GPP2 emergency services, CDG90, 3GPP2 MEID, VZW OTA, and some VZW specific requirements. Data spec covers 3GPP2 MEID, CDG 148, CDG 143, RFC 2486, VZW OTA and some specific VZW requirements. Specs will be updated on a 6 monthly cycle, Q1 and Q3.
Network platforms (location, messaging, voicemail, content, etc.) - to be defined. VZW will expose location outside the brew model, but no schedule or interface spec exists today - though we'll likely see something before the end of the year.
3 phase certification process (will have both VZW cert centre - not a profit centre) and 3rd part certification.
Opinion: Likely takes a 9-18 month process down to 3 months.
Also in attendance Lowel and John Stratton who I saw walking around at lunch. So full executive support at this event. VZW consider this initiative core to their future success, equal to their focus on building their network and building their brand.
Findings over lunch conversations. The ODI will be integrated with a similar initiative from the fixed side (FiOS) and across their application developer program. Billing models are not yet defined, very much open to discussion with partners. There is an opportunity for a device vendor to create an open platform (device and OS) and let other providers put their services on top deliver their branded phones, e.g. Skype Phone, Global Crossing Phone, BT Phone, etc. Where depending upon the deal they cut with VZW they could target segments, such as international roamers.
An important first step in meeting the competitive disadvantage VZW faces compared to the GSM operators. A device centric ODIS (Open Device Interface Specification) defines what a device must do to interface to the VZ RAN (between the device radio hardware and the access network), and the support structure to help partners (device manufacturers, MVNOs, M2M service providers or other service providers) through the process. Commercial models range from retail through to wholesale. The retail model is a little perplexing; difficult to see what beyond niche business focused applications could work. Why would Nintendo build a VZW specific DS given the small addressable market? However, for enterprise M2M with its higher margins there could be a case for a limited run of devices. Wholesale is an important step beyond what VZW does today in potentially removing or softening the application test requirements. However, in between the retail and wholesale models, the "custom" model, there could be a rich seam of commercial models and opportunities for monetize assets such as billing, customer support and distribution.
The issues of exposing capabilities such as location, presence, messaging, content, FiOS, etc. were not covered in this conference. They are in the plan, John Stratton is leading that across all Verizon, I saw him walking about at lunch. This will become part of the open development process.
Summary of Sessions
Opening by Tony Lewis, VP Open Development. An extrovert, unusual for VZ :)
Opening Remarks, Ivan Seidenberg CEO. VZW messaging of the most reliable network. LTE trial end of this year focused on speed and global compatibility - finally I'll be able to roam with Verizon.
Open Development Overview, Tony Lewis, VP Open Development. Focus of the initiative is on new, non-traditional M2M devices. All the device must do is meet VZW's minimum technical standard (see later) and the customer will have online support (billing, device ping). The plan is to have a network only service option available in the second half of this year, likely by the end of the year. Breaking out of the brew model, any application on the device, spec will only cover interface to the RAN, middleware, OS and applications are up to the Partner. No equipment contracts or early termination fees. Supported by a partnership management office that is focused upon helping partners they their devices through the process and working on the commercial arrangements.
Commercial Models, Mike Lanman CMO. Three models, retail, wholesale and custom.
- Retail model is where the partner (device supplier) makes money on the device and Verizon bills for the service the customer selects. Device provider is responsible for marketing and distribution. Customer service and billing will be all online. Voice and data package options are likely to be similar to existing retail packages, though 'unlimited' 5GB package not likely, more likely a top package of 2GB with overage charges. Will include have nationwide plans, data bundles, data only packages, and pay as you go. Pricing is still in development and is likely to done initially on a case-by-case basis until VZW finds its feet. Can leverage VZW's roaming relationships.
- Opinion: In essence a customer buys a device that is tied to VZW, selects a VZW package, and received a service less than buying direct from VZW. Retail model is likely to be used for niche applications, where device manufacturer is prepared to build for a VZW only market, likely enterprise M2M, I can not see Nintendo building a VZW specific version of its DS for a potential market of 2 million. Also customers will need education as they're paying VZW for a service but not getting the VZW experience.
- Wholesale is more interesting as the requirements on application testing that exist today are lessened, maybe even removed. Also enables innovative pricing models of bundling data connectivity into the fixed upfront price for the device, or annual fees, or advertising supported, or absorbed into some other customer charge.
Activation and Self Service, Ajay Waghray, CIO. Partner provides ESNs (Electronic Serial Number) of certified devices to VZW. As VZW has certified the device they know the capabilities and how to activate, from simply turning the device on for the first time to possibly keyboard actions by the user.
Device Specification and Certification, Tony Melone, CTO & team (Ro Garavaglia + David McCarley).
Spec covering CDMA2000, EVDO and in time LTE. Voice only, data only, voice and data specifications.
ODIS (Open Device Interface Specification) Voice spec covers 3GPP2 emergency services, CDG90, 3GPP2 MEID, VZW OTA, and some VZW specific requirements. Data spec covers 3GPP2 MEID, CDG 148, CDG 143, RFC 2486, VZW OTA and some specific VZW requirements. Specs will be updated on a 6 monthly cycle, Q1 and Q3.
Network platforms (location, messaging, voicemail, content, etc.) - to be defined. VZW will expose location outside the brew model, but no schedule or interface spec exists today - though we'll likely see something before the end of the year.
3 phase certification process (will have both VZW cert centre - not a profit centre) and 3rd part certification.
- Pre-submission - paperwork, NDAs, etc.
- Certification - 4 weeks (target) covering RF parameter testing (1 week), signaling conformance and features (2 weeks), ODI certification (1 week). All radio interfaces will be turned on. Certification will be good for 36 months.
- Post-certification - vendor interop (CDG57), field testing (CDG64)
Opinion: Likely takes a 9-18 month process down to 3 months.
Also in attendance Lowel and John Stratton who I saw walking around at lunch. So full executive support at this event. VZW consider this initiative core to their future success, equal to their focus on building their network and building their brand.
Findings over lunch conversations. The ODI will be integrated with a similar initiative from the fixed side (FiOS) and across their application developer program. Billing models are not yet defined, very much open to discussion with partners. There is an opportunity for a device vendor to create an open platform (device and OS) and let other providers put their services on top deliver their branded phones, e.g. Skype Phone, Global Crossing Phone, BT Phone, etc. Where depending upon the deal they cut with VZW they could target segments, such as international roamers.
I thought it would be timely to share a little more on my perspective of the Telco API, given my attendance at some upcoming conferences around Web/Telco 2.0 where this will be topic of discussion:
The Telco API (aka ANI (Application Network Interface) or 3rd Party API) is often viewed as just a method for operators to expose capabilities from their networks to third party applications. But as these slides show, Telco API.pdf, the Telco API is much more than that. Using the classic demand curve, we can break its impact into three main segments:
Examining these categories in a little more detail:
Examining the benefits for the operator:
So the Telco API has the potential to raise ARPU by between 12-36% depending upon the operators' situation. Which given global voice ARPU continues its 5% annual decline, this uplift can not come quick enough.
- TeleStrategies Telco + Web 2.0 Service Creation conference were I'm running a pre-conference workshop on "Successful Strategies for SDP Deployment" and presenting at the conference in the "Telco + Web 2.0 Service Creation: Making the Business Case" session with Tal Givoly, Chief Scientist, Amdocs.
- Spring VON in San Jose next week where I'm moderating the "2.0 This! Rethinking the Service Creation Model" session.
- SofNet 2008 where I'm on the panel session Pragmatic Approach to Developing IMS Services.
The Telco API (aka ANI (Application Network Interface) or 3rd Party API) is often viewed as just a method for operators to expose capabilities from their networks to third party applications. But as these slides show, Telco API.pdf, the Telco API is much more than that. Using the classic demand curve, we can break its impact into three main segments:
- Operator Branded Services. Here the impact can be in enabling 3rd party features to be mashed up with an existing operator branded service, or as a standard within the operator to enable capabilities to be efficiently reused across operator branded services.
- Co-branded Services. Any emerging category of services, exemplified by 3 with their X-Series, that co-brands services, e.g. Skype powered by 3.
- Long-Tail Services. There are three important categories within the long tail. Enabled Applications that do not necessarily have an operator brand association (e.g. 1800 services). Endorsed application with a preferred search position and endorsement of the operator. And the wild wild west of Internet Applications.
Examining these categories in a little more detail:
- Operator Branded Service. An operator's existing voicemail service could be enhanced using say SpinVox's speech to text capabilities. The business model could be per transaction, a fixed fee or ad-sponsored. The customer will likely decide their preference.
- Co-branded Services. An operator's Facebook widget, so friends can gift ringtones or minutes or share location. The business model could be a simple 50:50 revenue share.
- Long-Tail Services. For Enabled Applications it could be a field-force automation tool that a local SI integrates into small and medium businesses. For Endorsed Applications it could be a vetted and tested application that provides home security, the business model could be a simple 50:50 revenue share. And finally Internet Applications where the model could be based on a published schedule or ad-sponsored.
Examining the benefits for the operator:
- Operator Branded Services: Cooler features to extract great value from segments within the customer base, as well as lower cost of provision for such features to make targeting segments economic. As mentioned in previous posts in this weblog, the operators situation has a significant impact on service success, modeling to date shows a potential of 4-10% ARPU uplift.
- Co-Branded Services: Enabling the operator's customers to access cool communities or brands with a compelling user experience. Modeling to date shows the potential for a 3-8% ARPU uplift.
- Long-Tail Services: Enabling operators to economically reach SMB (Small Medium Business); extending an operator's ability to test out the 80% of its service roadmap it never has the resources to implement; and finally co-opting Google's success to the Telco API. Modeling to date shows a potential of 5-18% ARPU uplift.
So the Telco API has the potential to raise ARPU by between 12-36% depending upon the operators' situation. Which given global voice ARPU continues its 5% annual decline, this uplift can not come quick enough.
