IDC Predicts 2012 Surge for Mobile, Cloud, $1.8 Trillion IT Spending in 2012

Most of the 10 top expectations for the coming year carried over from trends IDC anticipated for 2011. But its predictions report, “Competing for 2020,” brought along a wide-angle view for 2012 and going forward through the next decade. Predictions were winnowed from contributions by about 1,000 IDC analysts in a range of fields covering IT, information management and mobile communications, and were reduced to 10 based on growth opportunity, industry-wide impact and structural disruption.

Topping IDC’s predictions once again was the vast increase in worldwide IT spending, anticipated to go up 6.9 percent to $1.8 trillion in 2012. However, IDC warned of financial and disaster disruptions to this growth, like the worst-case-scenario of the total unraveling of the Euro that IDC stated could push the increase in IT spending down to 2 percent or less in 2012. Growth in emerging markets was the second-place choice driving overall IT changes, and IDC pegged emerging market spending to more than triple current levels to reach 53 percent of all worldwide IT spending in 2012.

Mobile communications ranked twice on the list: in third place, mobile growth will stem from an increase in devices, lowered price points due to emerging markets, and an explosion of apps for home and business; and sixth, with the expectations of mobile network growth and access worldwide. As part of mobile’s expected dominance in 2012, IDC stated that it will be a “make-or-break” year for mobile products from Microsoft, HP and RIM.

Also continuing to make a big splash through 2012 is cloud computing. IDC foresees cloud spending to top $36 billion next year, which is four-times the overall IT industry rate of growth. It ranked expanding cloud adoption fourth in its 2012 list, bringing along expectations of a slew of cloud and as-a-service acquisitions and the development of many more cloud applications. Increased cloud services enablement came in at number five, with 2012 turning into a watershed year for shifting away from self-built systems, and cloud systems management software to increase by 62 percent next year, IDC stated.

During a Web seminar on the predictions, IDC chief analyst and senior vice president Frank Gens said his research and advisory firm made the connection between predictions for 2012 and the outlook for eight years from now based on a generational shift in tech platform adoption and innovation underway. With that in mind, Gens said it is reasonable to think IT spending could hit $5 trillion worldwide by 2020, led by investment and innovation from mobile tech and the cloud.

“It’s easy to see that these technologies will inevitably become the vast majority of all IT spending,” says Gens.

Rounding out the expectations for 2012 are emergence of big data analytics and mash-ups (7); increasingly sophisticated social business capabilities (8); an increase in “intelligent” communications devices tapped into networks (9); and the development of smarter industry solutions in such areas as financial security apps and green tech (10). Gone from IDC’s list of predictions for 2011 are added broadband dedications and delivery, and the growth of consumer Web television.

European Parliament pushes to maintain Open Internet and Net Neutralitry

Yesterday the European Parliament (EP) adopted a clear-cut position on net neutrality, giving the priority to maintaining an open Internet for all rather than increasing its use for commercial purposes.

A resolution passed by MEPs in Strasbourg calls on the European Commission to ensure that “Internet service providers do not block, discriminate against or impair the ability of any person to use or offer any service, content or application of their choice irrespective of source or target.”

As the Internet evolves into a crucial market for an ever-increasing number of services, many ISPs are stepping up their attempts to prioritize certain traffic in order to offer the best and quickest services to those who pay more.

Most controversial is the intentional slow-down of Internet connections – also referred as ‘throttling’ – for clients who do not pay the full price. Some are even inclined to block specific services such as Skype, to avoid competition with their traditional telephony services.

In their resolution, MEPs did recognize the need for a “reasonable” management of data traffic to ensure that the Internet continues to run smoothly. However, the parliament also clearly underlined that anti-competitive practices should not be allowed.

MEPs asked the Commission to “closely monitor the development of traffic management practices and interconnection agreements, in particular in relation to blocking and throttling of, or excessive pricing for, VoIP and file sharing, as well as anticompetitive behaviour and excessive degradation of quality”.

The text adopted reiterated privacy and data protection concerns raised by the European Data Protection Supervisor (EDPS) who issued an opinion last October warning of “serious implications” for the security of personal data due to an excessively intrusive interpretation of traffic management.

EU Digital Agenda Commissioner Neelie Kroes stands accused by many MEPs of keeping an “ambiguous” approach to net neutrality.

The commission indeed refrained from taking a definitive position on traffic management in its communication on net neutrality published last April. However, it did made clear that further monitoring of dubious practices was required and could lead to regulatory measures in the future.

This analysis is still ongoing, explained Kroes’ spokesperson Ryan Heath.

“The Commission is monitoring the development of traffic management. To this end it has tasked BEREC (the Body of national telecoms regulators) to carry out investigations on net neutrality and traffic management, including instances of blocking and throttling. This work is currently ongoing.”

It remains unclear at this stage whether the commission will come up with new “guidance” for the sector or with binding legislation.

In December the EU telecoms ministers will discuss net neutrality. By the end of this year or the beginning of 2012 the commission is expected to conclude the analysis of traffic management practices.

Read the full article (EurActiv).

Also noteworthy: Traffic jams, ISPs and net neutrality (GigaOm).

Source: EurActiv

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Related posts on intug.org:

1. EC Committed to Open Internet Principles
2. Europe’s NRAs Investigate Traffic Management Practices
3. EC Launches Consultation on Net Neutrality

ITU Releases Global ICT Pricing and Penetration Data

ITU’s latest report Measuring the Information Society 2011 (PDF) ranks the Republic of Korea as the world’s most advanced ICT economy, followed by Sweden, Iceland, Denmark and Finland. Broadband rates on average dropped 50 per cent between 2008 and 2010, while huge differences in speeds and quality remain between countries.

ITU’s ICT Development Index (IDI) ranks 152 countries according to their level of ICT access, use and skills, and compares 2008 and 2010 scores. Most countries at the top of the ranking are from Europe and Asia Pacific. The United Arab Emirates and Russia rank first within their respective regions and Uruguay ranks highest in South America.

Saudi Arabia, Morocco, Vietnam and Russia were some of the most dynamic countries between 2008 and 2010, with all of them making substantial improvements in their IDI ranks.

All countries included in the IDI improved their scores this year, underlining the increasing pervasiveness of ICTs in today’s global information society.

The report shows that while ICT usage and income levels are closely related, getting the right public policy mix can drive faster take-up and a number of countries, including Australia, Japan, New Zealand and the Republic of Korea have higher IDI levels than their income level would predict.

The spread of mobile networks in developing countries remains buoyant, with 20 per cent growth in mobile subscriptions over the past year and no signs of a slowdown.

In developed countries, on the other hand, mobile cellular penetration has reached saturation, with average penetration now over 100 per cent at end 2010, compared with 70 per cent in developing countries. With more than five billion subscriptions and global population coverage of over 90 per cent, mobile cellular is practically ubiquitous.

Mobile broadband (3G) services are also spreading quickly. By the end of 2010, over 150 economies worldwide had launched 3G networks. Wireless broadband Internet access remains the strongest growth sector in developing countries, with mobile broadband growing by 160 per cent between 2009 and 2010. Countries registering the highest gains in the IDI ‘ICT use’ sub-index are mostly those which have achieved a sizeable increase in mobile broadband subscriptions.

Globally, telecommunication and Internet services are becoming more affordable. According to the 2010 ICT Price Basket (IPB), which spans 165 economies and combines the average cost of fixed telephone, mobile cellular and fixed broadband Internet services, the price of ICT services dropped by 18 per cent globally between 2008 and 2010, with the biggest decrease in fixed broadband Internet services, where average prices have come down by more than 50 per cent.

All economies in the IPB top ten have high GNI per capita, and, with the exception of the United Arab Emirates, all are from Europe and Asia Pacific.

In developed countries, average prices for ICT services correspond to no more than 1.5 per cent of monthly per capita income, compared with 17 per cent in developing countries. But while broadband prices declined sharply worldwide, a high-speed Internet connection remains unaffordable in many low-income countries. For example, in Africa at end 2010, fixed broadband services cost on average the equivalent of 290 per cent of monthly income, down from 650 per cent in 2008.

In addition, the report notes that the actual speed experienced by both fixed and mobile broadband customers is often much lower than the advertised speed, and calls on ICT regulators to take steps to encourage operators to provide consumers with clearer information on coverage, speed and prices.

Download the report or read the full press release.

Source: ITU

UMTS-HSPA Reached 750 Million Subscriptions

BELLEVUE, Wash. – In 2Q 2011, Latin America saw remarkable uptake of mobile broadband with an annual growth rate of more than 90 percent, close to double the number of mobile broadband subscriptions, for UMTS-HSPA, reports 4G Americas, based on subscription data from Informa Telecoms & Media. Compared to a total base of 29.5 million UMTS-HSPA connections reported in the second quarter 2010, there were 56.1 million UMTS-HSPA connections reported at the second quarter of 2011.

Americas
In the Americas region, 3GPP technologies (GSM-UMTS-HSPA-LTE) grew by 19.26 million new subscriptions, of the total (net) 19.4 million mobile subscriptions added in the second quarter 2011 and represent 99.26 percent of the total new connections added in North, Central and South America. The explosion of 3GPP mobile broadband (UMTS-HSPA-LTE) subscriptions, as service providers continue to upgrade their networks to HSPA and HSPA+ and now LTE mobile broadband, demonstrates the increasing demands of mobile users in advanced wireless technology services and applications, and the growing proliferation of smartphones. A huge shift from 2G technologies is evident in the Americas region, with 3GPP mobile broadband subscriptions rising from 92 million at the end of second quarter 2010 up to 145 million as of June 2011.

3GPP technologies held a market share of 76 percent at June 30 in North, Central and South America, In the second quarter 2011 alone, GSM added almost 5 million new connections, while UMTS-HSPA added more than 13 million new connections and LTE added 1.23 million, for a total of 19.26 million new connections.

Total 3GPP subscriptions in the Americas reached 717 million as of June 2011, an increase of nearly 83 million new subscriptions in the region from June 2010 to June 2011.

“The 3GPP wireless technologies continue to lead the way in the Americas as one of the most prolific technology inventions for society,” stated Chris Pearson, President of 4G Americas. “HSPA and HSPA+ have provided a ubiquitous foundation for fast mobile broadband in North, Central and South America and LTE momentum is beginning to pick up in North America and the rest of the world.”

Latin America & Caribbean
The market share for 3GPP technologies continued to increase in the Latin America and Caribbean region, rising above 94 percent at the end of the second quarter 2011. Total 3GPP subscriptions (GSM-HSPA) equaled 564 million, supported by the addition of 69.6 million new 3GPP technology connections in the one year ending June 2011, of which 26.6 million were UMTS-HSPA mobile broadband connections. As noted, 3GPP mobile broadband subscriptions were close to double the number of subscriptions for the 12 months ending June 2011.

“HSPA and HSPA+ are providing Latin Americans with easy and efficient ways to connect to mobile broadband for work and play,” said Erasmo Rojas, Director of Latin America and the Caribbean at 4G Americas. “With the exciting momentum of HSPA+ deployments throughout the region, subscribers are simultaneously experiencing fast broadband connections for all types of business, enterprise and consumer value-added applications. The success of the HSPA evolution is paving the way for LTE trials and expected launches in many Latin countries during 2012.”

The Latin America and the Caribbean region now offers a large coverage footprint of HSPA+ on 21 networks in 13 countries. This number is due significantly to America Movil launching nine new commercial HSPA+ networks under the Telcel, Comcel and Claro brands in Brazil, Chile, Colombia, Dominican Republic, Ecuador, Mexico, Panama, Peru and Puerto Rico. Additional HSPA+ networks throughout Latin America and the Caribbean include Cellular One and Digicel in Bermuda; Digicel in Dominican Republic; LIME in Jamaica; Cable & Wireless in Panama; AT&T and T-Mobile in Puerto Rico; Movil de Entel in Bolivia; Movistar in Ecuador; and Iusacell in Mexico. In Chile, both Entel and Movistar offer HSPA+ dual carrier at peak theoretical downlink throughput at 42 Mbps.

U.S. and Canada
In the U.S. and Canada, 3GPP technologies added a net 3.1 million new subscribers of the net total 4.7 new subscriptions in the second quarter of 2011. Included in this quarterly number were 6.6 million new mobile broadband (UMTS-HSPA) connections and 1.2 million LTE connections reflecting the customer shift from the second generation GSM and CDMA subscriber base to the next-generation technologies. UMTS-HSPA subscriptions totaled nearly 89 million at the end of second quarter 2011, up 41 percent from one year earlier when UMTS-HSPA subscriptions totaled nearly 63 million.

Today, there are 16 commercially deployed HSPA networks in the U.S. and Canada, including 5 HSPA+ networks, an increase of 5 commercial networks since June 2010.

There are 3 LTE networks in the U.S. and Canada with 8 additional commercial launches expected by the end of 2011. LTE subscriptions achieved almost 2 million worldwide with North American subscriptions representing 93 percent of the global LTE subscriber base.

“With the large North American CDMA operators shifting towards LTE for their next generation networks, we will see an even larger portion of net additions coming from 3GPP technologies, most notably LTE and HSPA, as we move forward,” stated Kristin Paulin, Research Analyst- North America & Caribbean, Informa Telecoms & Media.

Global
Worldwide, there are 412 commercial networks in 157 countries that offer HSPA, including 163 HSPA+ commercial networks in 80 countries. These HSPA+ networks are at varying levels of technical enhancements: 112 networks at peak theoretical download throughput rates of 21 Mbps; 10 networks at peak theoretical download throughput rates of 28 Mbps; and 41 networks at peak theoretical download throughput rates of 42 Mbps.

The 3GPP technology roadmap continues to progress with its evolution to LTE. There are currently 28 commercial networks in 20 countries with a total of 50 commercial LTE deployments expected by the end of 2011. LTE will be the next-generation OFDMA-based global technology standard for GSM, CDMA, Greenfield and even WiMAX operators with commitments regarding future deployments by more than 250 operators worldwide.

Statistical Charts

For more information and to view a variety of statistical charts on the 3GPP family of technologies, visit www.4gamericas.org

About 4G Americas: Unifying the Americas through Mobile Broadband Technology

4G Americas is an industry trade organization composed of leading telecommunications service providers and manufacturers. The organization's mission is to promote, facilitate and advocate for the deployment and adoption of the 3GPP family of technologies throughout the Americas. 4G Americas contributes to the successful commercial rollout of 3GPP mobile broadband technologies across the Americas and their place as the No. 1 technology family in the region. The organization aims to develop the expansive wireless ecosystem of networks, devices, and applications enabled by GSM and its evolution to LTE. 4G Americas is headquartered in Bellevue, Wash., with an office for Latin America and the Caribbean in Dallas. More information is available at www.4gamericas.org.

Telework in 10 Years from Now

Chris Knotts is vice president of technology and innovation at Force 3, an IT services provider for government agencies.

I have good news for government agencies wrestling with how to implement and maintain effective telework policies and procedures: In 10 years, the word “telework” will feel as outdated as a rotary phone.

Knowledge workers won’t telework. They’ll simply work in whatever location makes the most sense. As I look out at the evolving technology landscape, I have 10 predictions for what the future holds.

1. Wireless carriers will increase to wired speed. The next evolution of mobile technology will bring the speed of wireless carriers in line with wired networks. Along the way, a security breakthrough will occur that will change the way we access information and ease hacking concerns dramatically.

2. We’ll be online all the time. The idea of “getting online” will seem antiquated. There will be no more hot spots or network connections. The network will simply be there — and we’ll be on it.

3. Tablets will replace desktop and laptop PCs. Desktop and laptop PCs will be supplanted by tablet PCs that are micro-thin and foldable. Picture a foldable smart phone that expands to a 20-, 30- or 50-inch screen. The new devices will have an on/off button but no more fans or moving parts. Because we’ll be accessing more information and applications in the cloud, the need to store data on the devices will decrease dramatically.

4. Everything will move to the cloud. Every application that we access will be in the cloud, and people will no longer store anything locally. In other words, you will have a hard drive, but it won’t be part of your computer.

5. There will be no more boxed software. What got the big software vendors to 2011 will not get them to 2021. I believe all software will transition to a service-based approach.

6. Text messaging is here to stay. Text messaging fits the way we work and live incredibly well. Therefore, even as networks and devices evolve, the practice of sending short text messages will endure.

7. 3-D video will become the norm. 3-D technology is mainly seen as a novelty now, but in 10 years, most teleconferences will be conducted with 3-D video. Imagine working from a home office and taking part in a 3-D video conference with colleagues and partners from around the globe. Workers are going to have to shower and dress for that one!

8. There will be no more Bluetooth. The image of someone walking around with a Bluetooth device sticking out of his or her ear will feel outdated by 2021. Those gadgets will be replaced by embedded audio in or on our ears (or somewhere else on our body).

9. Holdouts will proliferate. Not everyone will want to be on the grid all the time. I believe we’ll see a growing subculture of people who reject technology and form niche communities or companies.

10. The generation gap will get bigger. Previous generations will struggle more than younger generations as the workplace of the future evolves. The next generation of employees will not see the workplace as a focal point of social interaction. Being able to work will suffice, and they won’t feel that they need to be in the same place as their co-workers.

Right now, what’s holding many agencies back from telework are issues of control and trust in their employees. But as technology and human expectations evolve, telework will simply become “work,” with a greater responsibility placed on the individual to manage the balance between personal and professional time.

Symphonet secures RM1.359bil guarantor

KUALA LUMPUR: Although it has yet to secure financiers, Symphonet Sdn Bhd announced that it has a guarantor for US$453mil (RM1.359bil) to fund its three large projects.

Chief executive officer Datuk Baharum Salleh said the three projects an e-commerce trading platform, and two submarine fibre optic cable systems, namely the Johor-Jakarta Cable System (JJCS) and Terengganu-Vietnam Cable System (TVNCS) were financially backed by Indonesia's PT Saras TLP Investment (Saras Group).

“Saras Group will be the guarantor for all those projects. We're still negotiating to secure financing. We've not decided yet... whichever bank that can give you a good deal,” Baharum said at a briefing after a signing ceremony between Symphonet and Saras Group, PT Interkoneksi Internet Indonesia (3i) and Vietnam Hi Technology Development and Investment Joint Stock Company (VITEDI).

Baharum declined to disclose which bank would provide the financing. “We hope to secure the funds as soon as possible subject to the discussion taking place,” he added.

On the cost of the projects, he said about US$300mil would be required for the e-commerce platform, US$100mil for JJCS and US$60mil for TVNCS.

The JJCS will link Iskandar Malaysia in Johor to Jakarta, while the TVNCS is from Kertih, Terengganu, to Vung Tau in Vietnam. The e-commerce project belongs to the Saras Group and would be carried out by Symphonet.

The Indonesian group will also fund the e-commerce project, which will cover at least 480 sites in Indonesia. Baharum said the details of the investment and ownership structure of the underseas cable projects were, however, still being discussed.

Symphonet had earlier announced its joint venture (JV) with 3i on the 1,300km JJCS. Yesterday's event formalised the setting up of the JV company, Malindo Cable Network Pte Ltd. At the same time, Symphonet signed a consortium agreement with VITEDI for the 800km TVNCS.

The TVNCS is meant to serve as the Eastern international gateway into the Indochina markets, while the JJCS was positioned as the Southern gateway that would extend its customers to India, the Middle East, Europe and the United States through strategic partnerships.

When asked on the expected revenue from the projects, Baharum said all three would have recurring income, with the JJCS expected to generate the most.

Without disclosing details, he added that Symphonet and the Saras Group would be announcing four more projects in the near future, including two in Malaysia.

Source: the Star Online 24 August 2011

Symponet bags US$300m deal to set up e-commerce in Indonesia

KUALA LUMPUR: Little known company Symponet Sdn Bhd has bagged a US$300 million deal from
Indonesia's PT Saras TLP Investment Group to establish an e-commerce platform in Indonesia.
Symponet, established only three years ago, has been given the job to integrate 480 outlets across islands of
Indonesia.
Symponet managing director Datuk Baharum Salleh said that the e-commerce platform will also have two
data centres and network operations centres - one each in Jakarta and Kuala Lumpur. It will also have a data
recovery centre in Malaysia.
Baharum was speaking to reporters following the signing of three documents, one of which was an
memorandum of understanding for the e-commerce platform.
The Saras Group, which is described as providing international financial services, is also acting as guarantor
for two other submarine cable projects - a 1,300km cable from Iskandar Johor Bahru to Jakarta with an
estimated cost of US$100 million and a 800km from Kerteh in Terengganu to Vung Tau in Vietnam worth
US$60 million.
Symponet is yet to secure any funding for these projects, but Baharum said it is in talks with several
institutions to see who can offer the best deal.
However, initial work on the Johor-Jakarta Cable (JJC) has commenced with the likely date for completion set
for end-2012, at the latest.
Symponet also formalised the joint venture with PT Interkoneksi Internet Indonesia called Malindo Cable
Network Pte Ltd for the JJC yesterday.
Another agreement was for the setting up of a consortium with Vietnamese broadband service provider
Vietnam Hi Technology Development and Investment Joint Stock Company (Vitedi).
The equity structure of both cable projects are yet to be determined. Baharum said that there could be as many
as four partners in each project.
The Saras Group financing instrument arrangement is to the tune of US$453 million encompassing a total of
seven projects, two of which are yet to be announced.
The group was represented by its executive chairman Arya Widjaya.
Source: Business Times 2011/08/24

England Riots: Hackers hit BlackBerry Site over Police Help

A hacker group has attacked Blackberry's website after the company said it would assist police investigating riots in the UK.

Team Poison defaced the official Blackberry blog, posting a message that threatened the firm with retaliation if it handed user data to authorities.

Blackberry's instant messaging service is believed to have been used by some looters to plan their movements.

The firm has promised to co-operate with police and the Home Office.

In its statement, Team Poison said that it did not condone innocent people or small businesses being attacked in the riots.

However, it added: "We are all for the rioters that are engaging in attacks on the police and government."

The group argued that if Blackberry gave subscriber information to police, it could lead to the wrong people being targeted.

"Innocent members of the public who were at the wrong place at the wrong time and owned a Blackberry will get charged for no reason at all," said Team Poison's statement.

It threatened to release employee information, including names, addresses and phone numbers of Blackberry staff.

UK laws mean police can request data from individuals' mobile phones when that information relates to criminal activity.

The procedure is governed by the Regulation of Investigatory Powers Act.

Partner or Perish

By Joseph Waring, Telecom Asia

"What do my customers want?" While it may seem like a simple question, it is shocking how many operators really don't have a clear picture. Traditional telcos are still focused on the technology - bringing down the cost per bit and delivering the fastest speeds. The marketing guys are mostly left out of the equation.

That's the "old" school. A roundtable of telco and media executives moderated by group editor Joseph Waring recently discussed how operators have to open up, give up some control and accept they are now the servant of the user.

The days of pushing ahead alone in segments that aren't their core competencies, such as music and entertainment, are over. The new model is partnerships, in various forms, and increasingly dealerships.

Softbank senior executive VP Ted Matsumoto said that in the past business executives were motivated by egos - they wanted to control the market by having others use their technology or products. "But today no one can do everything so it's a mixture of many people putting together components. In this new world, once you accept that the customer is the top priority, your life becomes easier. To be successful we have to get user support - no one will argue with that."

But he notes there is always the tendency for a company to want to "be the guy who sells to the users, but actually it has to be a mixture," citing the example of the winning package of iPhone hardware, Apple App Store and the operator's network and services.

When you realize you are the servant of the user, Matsumoto said it breaks down any reluctance to tie up with others. He said Softbank's exclusivity for the iPhone has given it differentiation and is the secret to its success.

Blyk co-founder Antti Ohrling pointed out the distinction between partnerships and dealerships, which need to be exclusive to have value. He said he's sure there are big players out there that will never give exclusivity because they don't need to.

"But on the other hand, operators sit on that gold dust of knowing their customers better than anybody else. By combining that intelligence from the network with Blyk's intelligence about what people say they like and don't like, it's a staggering picture you start to develop."
He said that is a level of intelligence that is not available from the over-the-top players, noting it gives operators a chance in a specific geographical area.

But having access to customer data and using it are two very different things. Nucleus Connect CEO David Storrie expressed surprise at how little some telcos know about what their users want.

"As a wholesaler, our whole business is based on partnering with the service providers. When we sit down with potential service providers, the first thing I do is ask them what they are trying to deliver to end-users, and you'd be amazed at how many blank faces there are on the other side of the table," he said.

Loo Yew Ming, Universal Music's VP for digital & business development, noted that the issue is that telcos try to work in a space that's not their core competencies. "Take music for example - a lot of operators try to sell music when the guys running those divisions know nothing about music. That's where they can definitely benefit from a partnership. Music marketing is our core competency and you guys run the network and know the customers best."

Dialogic CEO Nick Jensen said, “You’re spot on. A traditional telco is a technologist's playground - the marketers are the minority. With an MVNO the marketers are the majority because they don't care about the network infrastructure."

But partnerships come in many forms and benefit telcos differently. Ohrling explained that operators need social networks like Facebook more than they need operators. "If that is the case, they aren't paying you, you are paying them - because if you don't have them you're not as good in the marketplace as your competitor. The consumer wants that more and they don't care where they get it.

"There's this dynamic happening as well, it's not just a matter of being a partner or a dealer, but someone paying a 'market tax' which is eating up the playing field, like in the cable TV industry."

CSL CMO Mark Liversidge said it's a question of helping the end-user use Android and Apple devices for all the things they want and have a good experience on the social networks of their choice. "Our focus is how do we provide this in a packaged way that makes it easy for them to access."

CSL recently launched a social media program called Tribes, which builds social comment on Apple and Android.

The market reality, Jensen said, is that "if you have Apple, the other guy has Apple. If you have over-the-top play, the other guy has it. Everyone has Facebook and everyone will have LTE."

He said carriers are saying they don't just want to be the pass-through guy or the middleman who doesn't add value on the content side. "They want to own content because they have to compete with the guy around the corner that has the same devices, the same spectrum and the same network equipment. I can't differentiate there, so I have to differentiate on being hip and providing content the others can't."

He asks operators: "What do you want to do? Because you can't all do the same thing. If you all do the same thing, there is no differentiation and it becomes a commodity."

Jensen, explaining the benefits of blasting an announcement of say a Lady Gaga concert that is available to your video subscribers, said such a promotion drives sales of high-end handsets and generates transaction-based revenue from users who watch the concert on their handsets.

"Over time you build profiles and then you can add advertisements. That's how you make money so you don't have give it to Apple or give it to Google because you control it. You become hip because it happens on your network."

Ohrling said, from Blyk's experience, any information you gather is negative unless the subject knows you're doing it. "It's about transparency. People are willing to share an incredible amount of information if you tell them why. When you become a master of your subscribers' information, then the question of partnership or dealership becomes less important because you are the best channel to any individual in that market."

He said he found the Universal Music approach of working with mobile operators on a revenue sharing basis refreshing. "With the type of exclusive partnerships you can get much more intimate. You can build IPR that your partners can have and use."

Loo from Universal Music said that is the key driver of its partnership with SingTel. "The only way to go to a promoted concert for free is to sign up with SingTel and buy a device."

Nucleus Connect's Storrie pointed out that some offers to customers, such as LBS in-store promotions, are powerful only when they reach the majority of the market.

He gave an example of a retail chain in Singapore sending special offers to customers by SMS. "It didn't take off because they really needed to have all the operators working together so everybody in the store got the message, not just the StarHub customers."

Jensen said the challenges of the carriers are very different from market to market because of huge variations in monthly spend, the amount of fiber available and the bandwidth available.

Carriers have a choice – they can be an enabler of bandwidth and let people pass through and collect payment. "It's a great business model and will work for some markets if you're good at taking the costs down. But operators in developing markets like India and Bangladesh with low ARPU don't have that luxury - they don't even have customers that can afford to by an iPhone. Activity is transaction based."

He said the users still want a smartphone, so the operators have to think differently. Because content is king, he encourages them to have exclusive access to content, like Airtel, which owns the rights to Premier League Cricket and Manchester United content.

The operator's model is for users to make per-game or per-minute downloads and time shift to make a purchase of say a ManU jersey on the Airtel site and go back to the game.
Softbank's Matsumoto raised the point that many times business people are too impatient and try to make money very quick. "I think it's a mistake. If you sell devices capable of supporting certain services, users shouldn't have to always calculate how much they'll have to pay in total. But if they buy an expensive device and all the services are free, they will make a decision. To start with it should be free."

CSL's Liversidge said the industry needs to throw out the old model of looking at the number of connections. “It's the out old-fashioned way of looking at things. We need to shift our thinking to the context of 'we have a network, it's a sunken cost, how do I fill it?' I have to think like an airline now. If that jumbo flies half full, I can't take seats off and put them on the next one; it's wasted inventory."

He said CSL is shifting its focus to the end-user and moving away from the standard operator model of a single user, with a single device on a single plan. "This is why we've got into position where we're obsessed with the big device vendors that have been in control."
Because more consumers are carrying multiple devices, CSL has to cater to that change. "It's more important for us to build service support and delivery of content and apps to devices, which is were we see our value and where we'll take our profitability from."

He said CSL is getting out of the game of giving away devices with massive subsidies.

Extreme Trust: A Difficult Future for Telecom Companies

By Don Peppers and Martha Rogers, Ph.D. - telecomasia.net

Most telecom operators today consider themselves to be trustable, and by yesterday’s standards they are. They post their prices honestly, they try their best to maintain the quality and reliability of their service, and they generally do what they promise.

The e-social revolution has brought an unprecedented level of transparency into all aspects of our lives, from personal friendships to business dealings, driving everyone’s expectations higher.

As a result, many common business practices today are becoming ‘worst practices’. And even though they don’t actually lie or steal, the fact is that telecom companies still generate substantial profits simply by fooling customers, or by taking advantage of their lack of knowledge, or by capitalizing on their mistakes.

In tomorrow’s hyperconnected, hyper-transparent world, however, companies will be expected to beextremely trustable. They will be expected to proactively work to protect a customer’s own interests. It has always been the case that making a profit from a customer’s error might (if the customer eventually found out) jeopardize a firm’s relationship with that individual customer.

Tomorrow’s untrustable behavior will be much more widely publicized, arousing the righteous indignation of customers who aren’t involved, but who will take satisfaction in ‘punishing’ a firm by spreading the news of their bad deeds and withholding their own patronage. As a result, simple trustability will soon become one of the most important basic ingredients of acceptable customer service in every business category, including telecom.

In the e-social future, a company will only be able to succeed, competitively, if it enjoys the extreme trust of each customer in the same way a friend enjoys the extreme trust of another friend.

Unfortunately, telecom companies are in danger of becoming case studies in untrustable behavior. If telecom companies don’t begin changing their policies soon, in fact, they are destined to become the ‘used car salesmen’ of the future, infamous for their sneaky ways and untrustable behaviors and parodied by the next generation of entertainers and comedians.

Due to pricing complexity, rapid technological change, and the increasing diversity of services offered, today’s telecom companies are ideally positioned to make money through consumer error or lack of information, and many of them gleefully do so.

In the U.S., for instance, the New York Times recently exposed an operator for coaching its call center reps on how to avoid giving legitimate refunds to customers.

When people called in to complain about unanticipated charges for data access, reps were instructed not to inform customers about how to block these types of accidental calls unless a customer specifically asked how to do so.

It may be an extreme case, but this sort of policy epitomizes the dilemma that most telecom companies face: Proactively protecting customers from their own errors costs money, requiring a firm to be willing to sacrifice some current profits.

The sheer complexity of telecom offerings today virtually ensures that consumers will in fact make many such mistakes.

So what will a genuinely trustable telecom company really look like? What will it do differently?

For one thing, a genuinely trustable operator will automatically assign customers to the most economic calling plans based on their calling, texting and data usage. A ‘best practice’ will
be to retroactively assign the most economic calling plan for each customer, crediting the customer with a rebate where appropriate.

Very few operators today do this, of course, and those that do often use it as an excuse to extend a postpaid contract.

If a customer is about to subscribe to a mobile or landline service from a home or business address that is prone to poor network coverage or slow broadband connectivity, a genuinely trustable telecom company will advise them in advance of this weakness in their offering, perhaps providing a discount or other benefit until such time as service in their home area is improved.

A genuinely trustable telecom operator will almost certainly have an unconditional money-back guarantee available to cover any and all customer complaints. In the same way today’s best online merchants offer unconditional refunds, tomorrow’s operators will use such a
policy to ensure that customers always receive the service they expect.

Trustable behavior like this is very difficult for any company to embrace, because it flies directly in the face of most firms’ deepest instincts to ‘keep the cash’ and maximize their short-term profits.

Acting in the customer’s interest requires a firm to be willing to forego immediate profits in return for earning the longer-term respect and confidence of its customers.

As telecom companies must become more trustable, because the rising power of customers exposes untrustable behavior, the question of a company’s trustability will go to the heart of its value proposition. Trustability will become an essential element of any company’s customer service in the future in much the same way that having a website has become an essential element of customer service.

To survive in this new, hyper-transparent world in which extreme trust is a prerequisite for business success, a telecom operator must pursue four basic courses of action:

Reciprocity. Having empathy for customers, and treating each one the way you yourself would want to be treated if you were that customer, is the single most important element of trustability. To be trustable, you have to adopt a customer-centric philosophy, and then re-engineer your value proposition and customer experience from the standpoint of the customer.

This will have consequences for your operating policies, of course, but the eventual implications for your firm’s culture will be even more profound. The reason the operator’s underhanded antirefund policies were exposed in the New York Times in the first place is that an employee contacted a reporter. In the end, your telecom employees are customers, too, and if your own workers don’t believe you are a trustable company, then your customers won’t either.

Giving up some control. To make your command-andcontrol, hierarchical firm more trustable you will have to give more authority to individual employees. You need resilience, but well-controlled hierarchies can be rigid and brittle. Think about how to decentralize.

Empower employees to ‘sense and respond’, in real time, to customer issues. This is yet another reason to pay close attention to the culture at your firm, and the unwritten rules that govern how employees really get things done.

While you’re at it, you should also recognize that things will never be perfect, so be prepared in advance for the mistakes. Even if your policies are extremely trustable you’re still going to get ambushed occasionally by rogue customer comments.

Don’t be too afraid to allow your workers to show your company’s human side, including its vulnerability. Brand statements and press releases are perfect, but vulnerability will encourage customers to be empathetic to you, and empathy generates trust.

Community. One of the secrets behind the e-social revolution is that people have an irresistible urge to share with others. They make their opinions known, they contribute ideas, they collaborate on things such as Wikipedia and open source software, and many companies even find that customers provide the best kind of customer service for other customers.

If you want to become more trustable you have to tap this sharing instinct, first by sharing your own honest counsel with customers. Talk to them not just in terms of how they can get more value from their service, but how they can better connect with friends, how they can find things out faster, manage their connections more efficiently, and live their own lives more fully.

It’s ironic that telecom play such a vital role in connecting people and releasing their sharing impulses, but service providers themselves don’t have much to say on the subject.

Competence. There are two requirements for being trustable. Not only must your intent be to act in the customer’s interest (reciprocity), but you have to have the competence to act on that intent, as well. On a basic level this means paying close attention to the quality of your product and service. But just as important, you should upgrade your data, analytics, and systems.

Quantifying the financial benefits of long-term customer trust and confidence requires good analytics. Customer lifetime values are not easy to compute, but in the communications industry, more than in most other categories, the statistical data is clearly available and there is no shortage of analytical tools to make these calculations. If you want your telecom company to become more trustable, you’ll have to begin paying attention to the data and pushing the envelope on analysis.

What kinds of events tend to move customer lifetime values higher or lower? What customer interactions, or ‘moments of truth’, are more likely to drive perceptions of trustability? And which of your customers are more trustable (and valuable) themselves?

The bottom line: in a world of extreme trust you always have to take a step back from whatever business policy you’re considering, whatever new idea you’re thinking about, and ask yourself: “If this became public, would it be an embarrassment to us? Would we be proud of it? Would some of our customers hold it against us?” There’s a very good chance that whatever you do will become public. If you want your telecoms company to be genuinely trustable, then you have to have clean hands, not just a good alibi.

Shaping the Future of Telecom

It’s no secret that telcos can’t go about doing business as usual anymore. It’s been over 25 years since AT&T was broken up and competition came onto the scene, but today the traditional telcos are still having a rough time of it.

The future may be challenging for operators, but we offer some solutions. In an article from our flagship publication, Perspectives, Don Peppers and Martha Rogers point to four basic courses of action for telecom operators: reciprocity, giving up some control, community and competence. And in a roundtable discussion with industry executives, Telecom Asia editor Joseph Waring finds out that operators need to open up, give up some control and move toward a new business model of partnerships in order to survive.

The Hidden Value of Social-Networking Data

More and more businesses are using social networking to keep in contact with their customers and to track how their products are performing. Yet social networking can offer much more (in the form of analytics) to businesses that know what to look for.

Posts and conversations on social-networking sites are turning into the latest form of big data, with large amounts of data being stored and available for analysis. That allows businesses to apply the same tools used for big data analytics to social networking.

Social-networking sites are ripe targets for companies to gain new business intelligence.

Many vendors are coming on the scene to offer analytical technology for this market. The idea behind these technologies is to identify customer sentiment toward a particular brand or product, which a business can then translate into marketing fodder.

A good example of this comes in the form of what Wall Street is attempting to do with social media and social-networking services. In a quest to gain a competitive edge, Wall Street traders and brokers are using socially aware big data analytics tools to monitor conversations, tweets and posts to social-networking sites, such as Facebook, LinkedIn and Twitter.

Analytical tools that sort through this massive amount of data are using complex algorithms to monitor and decode the words, opinions, rants, and even keyboard-generated smiley faces posted on social-media sites. Wall Street is regaining insights into the mindset of consumers and the general feelings toward the market, the economy and the political environment. What’s more, that analysis can determine the communal mindset of consumers and their general feelings toward the market—the biggest element being consumer confidence.

Tomorrow, we’ll discuss some of the new solutions that are available to perform the needed analytics on social-networking sites.

(Source: Frank Ohlhorst - smartertechnology.com July 25, 2011)

Five Reasons IaaS Will Top $4 Billion by 2015

• Infrastructure as a service is one of the fastest growing paradigms in the portfolio of cloud-based services. Here are the five reasons why IaaS is set to grow to become a $4 billion market by 2015.

• Just as software as a service shifted software from being an enterprise asset that is licensed to being a service that is provided, and platform as a service shifted software development and hosting capabilities for specific computer architectures from being an asset purchased en masse to being a service provided on demand, infrastructure as a service allows all enterprise hardware architectures to be virtualized, including processors, storage, firewalls and other network resources.

  Besides the savings in capital expenditures associated with building large data centers, IaaS reduces the labor costs of maintaining 24/7 network administrators, and greatly reduces the energy power budget for an enterprise. IaaS is delivered by platform virtualization where servers, software, data center space, and network equipment are outsourced to cloud service providers.

  According to In-Stat, IaaS is destined to grow quickly over the next four years, culminating in a $4 billion market by 2015, with the top five markets being hospitality, food, health care, social services and retail.

  Here are the five reasons that IaaS is destined to skyrocket:

  Cloud-bursting: Without IaaS, enterprises must invest in servers that run at 10 percent of capacity 90 percent of the time, just so they can handle the bursts in activity that occur only 10 percent of the time. By off-loading these bursts to cloud-based services, substantial savings in capital expenditures can be reaped by an enterprise.

  Virtualization: Virtualization is the process of running low-level code beneath operating systems, rather than using separate load balancers as would otherwise be needed. Virtualization manages failover, redundancy, monitoring, clustering and other infrastructure management tasks.

  Hypervisor Convenience: IaaS combines hardware and software resources by virtue of low-level code, called a hypervisor, that runs independent any chosen operating system. The convenience of the hypervisor involves its taking inventory of hardware resources and allocating them based on demand.

  Resource Pooling: IaaS software works by running virtualization code--the hypervisor--to allocate hardware resources on-demand, thereby enabling resource pooling among departments of an enterprise.

  Multi-tenant Computing: Because of the resource pooling made possible by virtualization of resources, organizations with similar interests in regard to security requirements and compliance can share resources, called multi-tenant computing.

  These five areas will be the drivers that bring IaaS to new levels in the next few years.

  (Source smartertechnology.com July 25, 2011)

Net Neutrality: To Be, or Not to Be?

I grew up in Latin America, so I think I know what bad regulations can do to technology investments, innovation, consumer interests and progress in general. It scares me to see that the issue of net neutrality may end up being regulated in the wrong way. Those who defend net neutrality, maintain that "the Internet fosters innovation and investment in new business opportunities because it's an open platform, and the network operators who build on-ramps to the Internet thrive when they maximize the returns on their invested capital" ("Why Network Neutrality Is Good for Business," Kevin Werbach, August 18, 2010, Harvard Business Review). "We regulate the financial system, health care, electricity and every other essential infrastructure for a modern economy… The success of those regimes is a big reason for America's global economic strength," says Werbach. So why not regulate the Internet as well? Apparently, if we 'kill' net neutrality, content companies would suffer, as the Internet won't be open anymore. "In other words, on mobile phones or on special access lanes, carriers like Verizon and AT&T could charge content companies a toll for faster access to customers or, some analysts worry, block certain services from reaching customers altogether… Content companies, the theory goes, would have to pay for favored access to a carrier's customers, so some Web sites or video services could load faster than others," ("Web Plan Is Dividing Companies," Claire Cain Miller and Brian Stelter, August 11, 2010, The New York Times). Net neutrality is supposed to be good for consumers too. It prevents discrimination between subscribers that can afford to pay against those who can't pay for a premium service. Also, apparently, freedom of information would be at risk. Some people have this notion that if you are in favor of something that big corporations defend, then you are not defending consumer rights. Is this the case with net neutrality? Believe me, I grew up during a military dictatorship, and I'm a former journalist, so I value and defend freedom of information more than anyone else, because I know what it's like not to have it. So let me tell you why I think we should be careful with the issue of net neutrality. "Non-discrimination under the FCC's net neutrality proposal means that ISPs cannot offer enhanced services beyond the plain-vanilla access service to content providers at any price" ("Why Business Should Oppose Net Neutrality," Robert E. Litan and Hal J. Singer, August 13, 2010, Harvard Business Review). Litan and Singer are right on the money when they say that "up until now, the debate over net neutrality has largely focused on how broadband consumers would be affected by net neutrality. But with price regulations, consumers lose." If Communications Service Providers (CSPs) that invest billions of dollars to build their infrastructures are not able to charge an initial premium to early adopters and get a return on their investment, then what's their incentive to invest in next-generation technology in the first place? And look at what happened with the flat monthly unlimited plans initially implemented by Verizon and AT&T. Did it work? No. (See my TM Forum blog: "The War of the Roses 2010: The AT&T-Verizon Saga," published last July.) My argument (just like Litan and Singer also suggest) is that regulation on net neutrality would actually imply price regulation, and price regulation obstructs innovation. In fact, as a particular technology gets adopted, prices will go down anyway, so let it follow its course. Litan and Singer argue that "it is well established that price regulation often truncates the returns on an investment in a regulated industry, and thereby decreases investment." Anything that would imply price regulations means that operators would have to charge everyone for their investment in new technology (not just the few that are willing to pay a premium fee for something new). Some folks that defend net neutrality as free expression and free access to information are forgetting that the Internet may not be so "open" right now. There were 234 million websites as of December 2009 on the Internet (47 million websites were added last year). How much of that data do we get to access? It depends on algorithms and search rules created by the Googles, Yahoos and Microsofts of the world. How much information shows up on our screen because someone actually paid advertisement fees for it? Dan Frommer recently wrote for Business Insider, "If Verizon sells Google priority access to its pipes, my Internet connection is going to be bad. "No, that's not going to happen. ISPs like Comcast and Verizon are in business to sell Internet access to as many people as possible. They would not do anything that would jeopardize their subscriber retention. If even the slightest disruption occurred, the companies would retreat. They are not in business to lose customers." But things can get more expensive if net neutrality is imposed and badly regulated. "If ISPs don't get alternative revenue opportunities, they will have even more incentive to force subscribers over to metered Internet plans, capping monthly bandwidth allotments and charging for overages, like AT&T recently did for its new wireless data subscribers." Let's say for fun that Verizon and Google reach their agreement, and we end up getting differentiated access to the Internet. Then AT&T would do the same and so on… Right now, they are differentiating basically on what smartphone and monthly plans they offer, but nothing else. They still need to lock you for a 2-year contract so that you don't run away from them! With this new business model, they would start to differentiate and compete based on more variables, making competition a lot more sophisticated. With deregulation and more competition, prices have been going down in the communications industry, so why will things be different now? Another viewpoint that I've seen going around is that companies like Google and Apple can afford priority fees for bandwidth access, but it would disrupt innovation, as smaller content developers will be at a disadvantage. How would start-up companies compete with the big fish? What will happen with innovation? Frommer states that "bandwidth and infrastructure costs for startups have been getting cheaper… And the ones who do will figure it into their costs of doing business, the same way they do with rent, staff, health insurance, etc. If startups need to raise more money from venture capitalists, then they need to raise more money from venture capitalists. Or they can be creative and evolve and figure out other advantages." Let's be clear. It's not that companies like Verizon or Google are the bad guys for trying to establish some sort of tiered access to the Internet, and those that defend net neutrality are the good guys that defend freedom of information and consumer rights. They defend net neutrality, because they built their businesses on an "open access to Internet model." So both sides are defending their own business interests. Nothing wrong with that, but let's set the record straight, it goes both ways. Everyone in the Internet business is there to make money. So the question is whether or not net neutrality will make more business sense in the long run. Deregulation is what has transformed the communications industry for the past decade, enabled mobile access for over 5 billion subscribers worldwide and affected the lives of millions of poor people worldwide, including Africa. There's even a proven correlation between economic development and mobile growth (see my previous columns on the TM Forum leadership blog for more information on this subject). So the question actually is what model will ultimately encourage more innovation, benefit a lot more consumers and create more winners than losers? I've pretty much made up my mind. What about you? (Source: Monica Zlotogorski, Vice Chair, TM Forum's Latin American Advisory Board, and Editor, Inside Latin America)

Playing Musical Chairs in Communications

Verizon Wireless confirmed last week that it will dump its unlimited smart phone data plans. New smart phone customers will be able to choose from one of three options: $30 for 2GB, $50 for 5GB or $80 for 10GB, with an overage charge of $10 per GB of data. The mobile service provider will also charge $10 for 75MB per month for feature phone users. Verizon is the latest mobile service provider to switch from unlimited data pricing to a tiered price model for smart phones. AT&T started the trend last year and T-Mobile followed. Sprint Nextel is the only Tier 1 mobile service provider in the U.S. that has not made a move toward usage-based smart phone data price plans.

Yes, we all know why this would eventually happen. It’s a much-needed move due to the huge growth in traffic, which will only increase in the near future. I welcome this move. I happen to agree with Forbes blogger, Adam Thierer that most average consumers will do better under the new scenario. “With the average smart phone user using less than 500MB, they’ll easily qualify for the 2GB entry tier that most carriers offer for $20-$30/month…95 percent of current Verizon Wireless customers use less than 2GB a month.”

Let me be straight here. I’m quite happy that the era of ‘all-you-can-eat’ is over for two main reasons. First, I want to only pay for what I actually ‘eat’. Second, I’m also quite happy that, at last, everyone will begin to pay for what everyone is actually ‘eating’. In other words, once my current two-year contract expires next year, I’ll begin to pay for what I actually want and use. Nothing less, but also nothing more.

See, at the end of the day, Verizon, AT&T and T-Mobile are not doing anything different than any other utility company (yes, I’m aware I called them ‘utility’). In my building, we don’t subsidize what other residents consume in terms of water, electricity or gas by paying an unlimited high price for those services. We pay for what we use. So if my neighbor upstairs loves to take long bubble baths, good for her! But I’m not paying for her water. If my neighbor downstairs wants to have his air conditioner on all day long, so be it, but I’m not paying for it.

Why people think that communication services should fall under a special category just because we are so high-tech is beyond me. But I know that many of you reading this column will probably have a different view and, as always, I welcome your comments, but isn’t it time that we view the communications business like any other business?

This leads me to another point. An additional change soon to be announced in my opinion is something that has been cooking in Europe for a while. Some service providers are looking to charge content providers for delivering high-quality video content to end users, and others want to charge according to how much content is being pushed over their networks. Apparently, that’s a problem for many, and it’s linked to all this discussion going around on net neutrality.

I have expressed my opinion on the topic of net neutrality in an article published by TM Forum last year. I’m still sticking to what I said back then. It's not that companies like Verizon are the bad guys for trying to establish some sort of tiered access to the Internet, and those that defend net neutrality are the good guys that defend freedom of information and consumer rights. Those that defend net neutrality built their businesses on an open access to Internet model. Both sides are defending their own business interests. Nothing wrong with that, but let's set the record straight, it goes both ways. Everyone in the Internet business is there to make money.

Yes, we all have not so nice things to say about our mobile service or pay-TV provider at times (or most of the time), we all love to talk about the Netflix phenomenon, and some of you (not me) are in love with the Apples of the world. But let’s be fair, and here’s a reality very few are actually talking about. We have been living in an era of covered subsidies for way too long, where some have clearly benefited.

Mobile service providers have been subsidizing companies such as Apple for their smart phone business, or Google and Facebook for their content, some mobile consumers have been subsidizing other consumers for their network resource consumption (via the unlimited mania), pay-TV operators are subsidizing their OTT competitors via their contracts with the content providers and, we, the subscribers are subsidizing the content providers through our subscription fees, content that is then sold to the likes of Netflix at a lower price, which then the happy Netflix subscribers can consume on the backs of the pay-TV operators at a much lower price.

In other words, there’s an added pressure and cost being transferred to CSPs from the OTT business that would eventually need to be openly addressed. “With five out of every six people on the planet having a phone, subscriber growth is slowing – while competition is rising and new services are going ‘over the top,’ delivering cost, not revenue," said Keith Willetts, Chairman, TM Forum, in a blog he recently wrote for Forbes.

The other pressure is coming from a brand perspective. “Increasingly, the consumer is seeing Android or Apple as their telecom brand. Buy a Kindle and the network is bundled – you see Amazon, not AT&T,” said Willetts.

I also agree with Roman Friedrich, Michael Peterson and Alex Koster (and I have said the same myself in the past) that “customers are shifting their consumption patterns, and their loyalties, away from the traditional telecom operators and toward application and service providers such as Google, Apple and Facebook, as well as any number of smaller players”.

That’s true. Moreover, we’ve all been saying that communications service providers have been focusing on safeguarding their existing sources of revenue for too long, rather than working on generating new, innovative sources of revenue. We’ve all been calling for organizational changes and business models. And we’ve all been saying that communications services providers should understand their customers more and offer more tailored, personalized offerings.

All of it is true. Change for communications service providers is necessary and it’s urgent, and a lot of what’s going on has been part of the CSP business myopia and OTTs have only taken, wisely, business advantage of it.

But, isn’t it also time to look at the OTT business and start asking them, when are you going to stand on your own feet, without the benefits of the subsidies that both operators and their customers have been giving you, so that once and for all we can all stop playing the musical chairs game in the communications industry and begin to play a more fair game –for everybody?

The future is not about CSPs or OTTs; it's not a zero-sum game. It's about healthy coopetition, where both parties sit at the table to figure out how they coexist. So let’s put all the cards on the table and begin a new game.
(Source: Monica Zlotogorski, Vice Chair Latin American Advisory Board, and Editor Inside Latin America, TM Forum)

How Telcos Can Contend with Cloud-based Computing

“We’re going to move the center of our digital life to the cloud,” Apple CEO Steve Jobs said recently when launching iCloud and joining the mushroom of cloud services driving the next big step in the growth of the digital economy.

It’s become clear that cloud services will have a profound impact on every business. All of the ingredients for rapid take-off are now in place as smart phones and tablets rapidly proliferate, networks expand and services go virtual. You’d think that would make telecom operators smile – but actually, many are crying in their beer over the investment needed to cope with the massive growth of information coming just when their traditional high-margin voice and messaging services are declining. With five out of every six people on the planet having a phone, subscriber growth is slowing – while competition is rising and new services are going ‘over the top,’ delivering cost, not revenue.

Communications services are now following Moore’s Law, which originally described the doubling of computer power and halving of its price every two years. But just as Intel made a fortune out of that law through innovation and economies of scale, so can communications companies if they get smart.

There are more than 1,000 telecom operators worldwide, each with their own geographic footprint. After years of regulators pushing network competition, basic economics is now making market consolidation inevitable. As we’ve seen in the U.S., telcos everywhere are merging, sharing infrastructure and joining forces to leverage buyer power. Those who don’t get it will be left in the digital slow lane.

But network economics aren’t the only issue for operators. While telcos have billions of customers and strong brands, those strengths are offset by the growth of smart phones, tablets and digital services. Making calls and sending texts are just a small part of the growing digital mix. Increasingly, the consumer is seeing Android or Apple as their telecom brand. Buy a Kindle and the network is bundled – you see Amazon, not AT&T.

So where does that leave the telcos? Margins squeezed, costs rising rapidly, brands dumbed down and stock prices unexciting. But this $1.5 trillion industry still generates cash faster than a printing press. And while it’s easy to be gloomy, there’s plenty of life in the digital dog yet. But the dog needs to wake up fast and start barking.

To succeed, telcos have to move in two simultaneous directions. They have to look inward, rapidly exploiting economies of scale and making major shifts in operational efficiency. And if they want to avoid purely becoming a wholesale ‘behind the scenes’ player, they also have to simultaneously look outward to the market and strengthen their brands, their customers and their products.

The digital economy works by simply and cheaply exploiting a truly global marketplace – not just billions of people but trillions of devices. Cost and reach will drive this consolidation with a few, bold operators becoming very large, multi-geography carriers providing the 'central nervous system' of that economy with ubiquitous, fast, reliable communications backed by security, authentication and services like payment handling, billing and customer care. Despite the best efforts of net neutrality dreamers, we will see the emergence of different levels of service at different prices for those people who are prepared to pay for it.

But what is the role for communications players in developing digital services to ride across that infrastructure and leverage their customer bases and brands? Outrunning Amazon, Facebook and Google is not an easy task, so what position should they take?

The answer is fairly simple. Phone companies enable billions of conversations every day, but they don’t do the talking. The digital economy is going to be about trillions of commercial transactions every day from downloading your newspaper to your car telling the repair shop that it needs more oil. The role of the digital telco should be the same enabling role; not trying to invent all the services but providing an easy-to-use, go-to-market platform for huge numbers of digital service partners.

To do that, telcos need to see digital service providers as their partners, not the enemy. They have to learn how to bundle those services into appealing packages and see both the end user and the digital service provider as customers. Above all they have to think globally and figure out how to provide cloud-based services anywhere, anytime.

Operators cooperate every day in the phone business – calls reach billions of customers seamlessly and everyone gets paid because internationally agreed standards allow many piece parts to be federated into one seamless end-to-end service. A global digital marketplace requires the same standards, openness and transparency or it just won’t work. Remember pre-Internet email systems or SMS where you could only send a message to someone on the same system? Only the nerds used them.

Defining those standards is pretty straightforward, provided there is willingness to do it, but right now too many players have their heads down and think that being different gives them an advantage. They differentiate on the wrong thing: open up a digital marketplace and everyone makes money; make it closed and only a few platform players like Google and Apple will play.

Nobody owes the telcos a living, but with a vibrant, forward-looking industry, the economic and human benefits of communications – now reaching almost everyone on the planet – will seem to be just the first baby step in the development of the global digital marketplace. But it must be open, it must be innovative, and it must get a move on.
(Source: Keith Willetts, Chairman, TM Forum )

Innovation: The Trillion Dollar Question

At a very diverse and animated T8 debate among more than 30 top communications industry executives held at Management World 2011 in Dublin this past May, there was general agreement that change is necessary and urgent and that innovation is the key.

This was underlined in a report published by Juniper Research the week after the Dublin event. It stated that revenues billed by operators will be more than $1 trillion annually by 2016, but that mobile network operators’ costs will exceed revenues within four years unless they take action.

Against this backdrop of soaring costs, we are moving into an era where “users will want any type of information at any time on any device they choose, sometimes while doing 140 km [almost 90 miles] an hour on the autobahn or freeway – it’s our jobs as engineers and technologists to be ingenious and figure out how we are going to enable this,” was how the CTO of one of the world’s largest telecom groups put it. No doubt the speaker’s CFO is equally exercised about how they are going to make a sustainable profit from doing it too.

This report seeks to look at barriers that are preventing progress, present some different approaches to this trillion dollar question, suggested by some of the industry’s most eminent executives and other sources, and some general principles of innovation.

One key topic is the barriers to innovation within operators. They largely seem to come down to corporate culture, which particularly with the financial crisis that started in 2008, appears to have exaggerated the conservative, inward-looking corporate culture, to have even more emphasis on the work ethic of ‘keep your head down’ rather than do anything to draw unwanted attention to oneself by putting forward ideas that run contrary to day-to-day operations or corporate trends.

Grand corporate plans and the boardroom are rarely the birthplaces of innovation, but if properly run, they should, one way or another, provide an environment in which innovation is possible and nurtured. Ideas that are massively successful are often incidental or accidental or just plain lucky, and timing is all.

The point is not to worry that you don’t know exactly what you’re looking for, just to have the wits to recognize the possibilities of a good idea when you see one and have the courage to try it out. In particular, realize that putting out ‘work in progress’ is a great idea (Google+ being a great example), if it is described as such – you’ll never get a bigger lab than the outside world or better feedback than from the general public. It might not be polite or what you were expecting, but that doesn’t matter.

A great example of user feedback spawning a massively successful business is how one of the world’s largest payments-handling companies grew out of a single-currency, premature, e-commerce initiative after it became clear from early-adopter, overseas users (who were not even the intended audience) that there was huge demand for a cross-currency processing facility. As one financial services industry veteran observed wryly, any of the banks “could have set up such a service on a single PC” at that time in the mid-1990s, “but they didn’t because they were institutionally unable to grasp the opportunity – and promptly lost out on a multi-billion dollar market.”

The ideas of failure being good, if handled in the right way (that is fail small, fail quickly and learn well) and not to worry about knowing exactly what you are looking for are supported by two powerful books published in the last year by heavy-hitting economists John Kay and Tim Harwood. After all, SMS and prepay are great examples of hugely successful services that got massive, if unexpected, support from customers that operators were savvy enough to adopt and adapt to underpin the more than $1.4 trillion business that is telecom today.

There are different possible approaches to succeeding in the next phase of the industry, from running a ‘dumb pipe’ business, which is far from a ‘dumb’ or simple undertaking – it will require massive scale, great operational agility and innovation to keep costs down low enough to make a profit, at least in the short term – to what network operators have to offer as enablers, in terms of scale, experience and services they can provide to over-the-top providers (who the industry needs to stop seeing as the enemy, and embrace as creators of traffic it’s possible to make money from) from billing, to identification and authentication services.

As one attendee pointed out, “As most of our economy moves to a digital base over the next five to 10 years, all those capabilities, not just moving bits, but all those transactions, all those customer relationships, all those identification and authentication pieces, if you only took a fraction of a penny for each of them, you’d be a very rich company, hoping and praying for more Googles to come along, because they would create more traffic for you."

Also critical is the successful use of incubators, protecting those with ideas from the potentially stifling parental culture, and at very successful uses of social media-type internal communications that are paying dividends, in one instance to the tune of $50 million in the first year, in part from simply listening to employees and disseminating information, fast, across the entire organization which spans 17 countries and territories.

Another interesting area considers general principles regarding innovation, starting with the old joke, “How many psychiatrists does it take to change a light bulb?” The answer is “None, it has to want to change itself”. And so it is with service providers; innovation will only come if they create the conditions to allow it. The recurring theme throughout is that service providers have many fantastic options open to them, but they will only translate into success if they are prepared to embrace innovation.

(Source: Annie Turner, Managing Editor, TM Forum Research & Publications)