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)

Four lessons in IT disaster recovery planning from an FAA outage

What can CIOs learn about IT disaster recovery planning from the U.S. Federal Aviation Administration's (FAA) recent computer problems, which caused flight delays and cancellations at airports across the country? Plenty, say disaster recovery experts.

"Here we have a system that is vital to the flow of air traffic in the United States. It is hard to imagine how many dollars are riding on people getting to their destinations on time," said Gene Ruth, who covers disaster recovery (DR) at Midvale, Utah-based Burton Group Inc. "You have a failure in the network and there is no ability to [set] up a disaster recovery site immediately? That is completely unacceptable."

The root cause of the FAA outage, which lasted nearly five hours, was reportedly the failure of a circuit board inside a router at the FAA Telecommunications Infrastructure (FTI) facility in Salt Lake City. Details on why the backup router did not engage are still unavailable. The failure brought down a flight management system, forcing air traffic controllers to rely on faxes and emails to communicate flight plans.

You have to know you can deliver the service at some minimal level to keep you limping along and hopefully not, as in this case, stop air traffic for a third of the country.

Gene Ruth, analyst, Burton Group Inc.

The FAA attributed the outage to a software configuration problem, suggesting the single-component failure was compounded by a configuration management failure.

But the details of the incident hardly matter, DR experts said, compared with the IT disaster recovery planning lessons it holds. As CIOs make their annual pitch for IT DR funding -- a hard sell in any economy -- Ruth and others advised they keep the following four points in mind:

1. Equipment failure is the No. 1 reason for disaster recovery declarations.

Most IT disasters have nothing to do with the type of disaster that wipes out a facility, which is what many organizations consider when doing their IT disaster recovery planning. "This is a message I drive home to clients, especially when they are trying to justify DR to senior management," said analyst John Morency, a certified information systems auditor and research director at Stamford, Conn.-based Gartner Inc.

A recently published study from DR provider SunGard Availability Services LP showed that of the 2,250 disaster events SunGard handled in 2008, hardware failure accounted for 500 of them. That was well ahead of the second- and third-leading causes, hurricane and weather events (275) and power outages (213).

2. Equipment malfunctions compounded by change or configuration management failures are a double whammy.

"When you look at equipment malfunction, it is more than just hardware failing. Sometimes you have misapplied a change," Morency said. "It may be entirely possible that although the circuit board in the primary router went down, the [protocol] backup may not have been configured correctly, so it never took over." This indeed seems to be the case in the FAA incident.

"There has to be a lot stiffer penalties for production changes, be it for configuration or data, that are not rigorously tested prior to being introduced into production," Morency said.

Any upgrade or alteration of an existing system needs to be accompanied by an impact statement on the business continuity or DR plan, Burton Group's Ruth agreed. "Perhaps this FAA incident will turn out to be somebody making a change they thought was innocent -- fiddling with a database -- that brought the system down. But the lesson here is you don't allow technicians to go and make changes without including project management-like people to make sure there is an assessment of an impact on the operations of the business."

3. Testing for capacity is critical in IT disaster recovery planning.

"It sounds like one of the problems [in the FAA outage] is that the site that was left standing did not have the capacity to run the application. And that is startling, if folks had not put the analysis into whether the remaining site could handle the load," Ruth said.

Testing capacity and performance is "basic block and tackling," Ruth said. "You have to know you can deliver the service at some minimal level to keep you limping along and hopefully not, as in this case, stop air traffic for a third of the country."

4. But foolproof testing is sometimes impossible.

"In organizations where you have [a] merger and acquisition, where you have new production apps going through turnover, the scope of what needs to be tested keeps getting bigger and bigger. All of a sudden, the resources one would need, in terms of facilities, of support staff and business unit staff to perform those tests, also gets bigger," Morency said.

Even if the organization follows testing best practice, the amount of change in the data center can put it at risk, according to Morency. "The configuration that needs to be recovered may only require minor changes. But there could major differences," he said, "which is why a lot more organizations are asking the failover question versus the manual recovery question."

Let us know what you think about the story; email: Linda Tucci, Senior News Writer.

Alcatel-Lucent intros TPSDA 2.0, targeted ad solution

By Traci Patterson
CedMagazine.com - September 29, 2008

Alcatel-Lucent has announced enhancements to its Triple-Play Services Delivery Architecture (TPSDA) and has introduced a new advertising delivery solution for IPTV networks at the Broadband World Forum 2008 in Brussels.

The enhancements, according to Alcatel-Lucent, offer a more cost-effective and flexible platform for high-bandwidth services such as high-definition television (HDTV), offer an improved IPTV user experience with immediate channel changing, and help facilitate targeted advertising insertion.

The enhanced platform ― dubbed TPSDA 2.0 ― is powered by enhancements to the Alcatel-Lucent broadband access and IP/MPLS portfolios that will be available starting in early 2009. The enhancements add application-layer intelligence to the TPSDA network elements, enabling them to cache, store, stream and splice video content, as well as to characterize application layer content, the company said.

“With the move to digital, high-definition content, combined with a boom in video consumption and increased demand for personalization and interactivity, service providers are evaluating their service delivery architecture and business models with an eye toward the delivery of premium digital content,” said Michel Rahier, president of Alcatel-Lucent’s carrier business activities. “Alcatel-Lucent’s TPSDA 2.0 provides IPTV operators with a proven, cost-optimized foundation for the delivery of a next-generation, interactive HDTV television experience – giving those operators a genuine opportunity to eclipse the quality of experience enabled by traditional broadcast technologies. It also helps lay the groundwork for the introduction of targeted advertising, which ultimately will help add a new dimension to the TV business model.”

The enhancements in TPSDA 2.0 also help to support Alcatel-Lucent’s newly introduced Targeted and Interactive IPTV Advertising solution, which is designed to increase IPTV revenue by making it easier for advertisers to reach customers with ads that are more timely and relevant. The solution also offers interactivity features that enable consumers to view additional information about products that interest them.

The solution gives IPTV operators the ability to insert ads into TV programs that are aimed at particular communities of interest, and even specific households, Alcatel-Lucent said. The ads are delivered using anonymous subscriber profiles based on service usage and demographic data authorized via an “opt-in” process, the company said, and they are retained in a secure, privacy-protected repository by the service provider.

The solution incorporates subscriber data analysis and management capabilities – to support ad targeting – and audience measurement features to analyze the effectiveness and return on investment (ROI) from particular campaigns.

"Alcatel-Lucent . . . has assembled an end-to-end IPTV advertising proposition that brings the best characteristics of the lucrative online advertising model into triple-play networks," said Jeff Heynen, directing analyst for IPTV and next-generation OSS/BSS at Infonetics. "By building ad targeting and interactive capabilities into their triple-play network architecture, service providers gain the advantages of exceptional scale, flexibility and cost-effectiveness, as well as a platform for targeted advertising across multiple screens."

More Broadband Direct:

• Sprint launches Xohm WiMAX in Baltimore

• AT&T to go exclusively with DirecTV

• Cisco, Adobe team up to deliver Web TV to Telecom Italia

• Nero, TiVo hook up to bring DVR look to PCs

• JDSU intros NetComplete Home PM

• House Reps. Eshoo, Deal urge FCC to establish 'quiet period'

• RCN's 'Analog Crush' rolls into Washington, D.C., area

• Alcatel-Lucent intros TPSDA 2.0, targeted ad solution

• T-Mobile: M2Z unqualified to judge AWS interference

• Prime Wave Media starts program to keep track of subs' moves

• Broadband Briefs for 9/29/08

Zynga ups game with local mobile app firm

Zynga Inc., a pre-eminent social games presence on Facebook, is buying Toronto mobile applications developer Five Mobile Inc. to expand from desktop and laptop computers to mobile devices.

“The Five Mobile acquisition fits with Zynga’s strategy for world domination,” London-based analyst Carmi Levy said.

One of Five Mobile’s latest products is an application for the BlackBerry PlayBook that gives sports fans real-time scores, news, live blogs and original video.

It has also developed products for Walt Disney Co., Sony Pictures Entertainment and MapQuest.

Five Mobile was formed in 2008 by five employees of another app developer that went under during the Wall Street financial crisis.

It has about three dozen employees, who are expected to be retained following the takeover.

Five Mobile officials wouldn’t talk Friday, referring all questions to Zynga — which also remained tight-lipped. Financial terms of the deal haven’t been disclosed.

Zynga, founded in 2007, has 2,000 employees and filed an initial public offering earlier this month. The offering seeks to raise anywhere from $1 billion to $2 billion.

It has grown meteorically, from $19.4 million in revenue in 2008 to $597.5 million in 2010.

It has developed games like FarmVille, in which participants cultivate a virtual farm and invite Facebook friends to help out with the chores, or co-operate to grow crops and raise livestock.

Zynga has been on an acquisition tear: Five Mobile is its 15th acquisition in 13 months.

While relatively small, Five Mobile can help boost Zynga in two ways, Levy said.

Zynga’s strategy to date has been to hook users using Facebook on their laptop or desktop computers.

Instead of simply visiting Facebook a few times a day to check up on their friends, the games keep users on the site for hours at a time.

That’s a great thing for attracting advertisers, says Levy.

“Facebook doesn’t just get more users, it gets more engaged users which it can sell to advertisers and charge more for.”

But the laptop market is mature, so future growth is likely to come from mobile devices, where Five Mobile operates.

Five Mobile also gives Zynga some cachet, says Levy.

Games like Zynga’s FarmVille don’t give the players high status, he said.

It’s something of a guilty pleasure, like watching soap operas — lots of people do it, but they don’t necessarily admit to it.

While small in size, Five Mobile has done “some really impressive work with some really impressive clients,” Levy said.

205m Indian workers will go mobile by 2015

Enterprise Innovation Editors | June 30, 2011

Enterprise Innovation

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India’s mobile workforce is slated to grow by an overwhelming 53% in the next four years, despite the fact that enterprise adoption of mobility strategies is still at an infantile stage.

A Springboard Research report states that “With today’s consumers becoming increasingly mobile and well informed, enterprises must follow suit. A mobile enterprise can experience a range of business benefits including operational efficiency and enhanced customer interaction and engagement. The resulting upside in productivity, revenue and market share cannot be ignored by Indian CXOs.”

“We are in the post-PC era where the most important apps are being developed on mobile platforms first. Sales, customer service, marketing, finance, HR – teams need access to real time information to meet the demands of today’s business environment,” said Steve McWhirter, SVP of enterprise sales at Salesforce Asia Pacific.

The new report titled, ‘Moving Towards a Mobile Enterprise – Journey of India Inc.’ suggests a four-phased roadmap for companies embarking on a mobile enterprise strategy.

1. Conventional Mobility: basic apps such as e-mail, messaging, contacts, and calendar.

2. Automated Workforce: critical apps like ERP, CRM and salesforce automation. This allows mobile workers to minimize paperwork, reduce back-to-office visits, improve productivity, and achieve higher sales closing ratio.

3. Always Connected: apps that extend real-time communication and collaboration capabilities to employees anytime, anywhere, and on any device.

4. Pervasive Mobility: apps that integrate function-specific applications to enhance brand image and bring efficiencies in internal operations such as finance and human resources.

“Today's new environment is characterized by social media, smart devices and instant conversations. This changed backdrop demands that we have access to real time data to seize business opportunities on-the-go,” said Essae Technologies managing director Narasimha Subrahmanian.

205M Indian workers will be going mobile by 2015

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Enterprise Innovation

Enterprise Innovation Editors

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205M Indian workers will be going mobile by 2015

Facebook, Skype, Microsoft Draw Closer Through Video Chat Feature

Facebook made some significant announcements July 6, all important to the company and to the online social networking market. First, Facebook announced that it has surpassed the 750 million-member mark, with a cool 1 billion clearly within reach. The last time Facebook talked about its membership last October, it had just passed 500 million.

Secondly, Facebook started up its group chat feature, one that had been requested by users for a long while. Along with that, Facebook made a few site design changes that will make it easier to use the chat and group-chat functions. Finally, the company revealed a new partnership with Skype, the world's largest peer-to-peer video service which is on track to become the property of Microsoft. Finally,

Facebook launched its long-anticipated video chat service—powered, of course, by Skype. The Facebook, Skype and Microsoft (Skype's future owner) dynamic will be interesting to watch in the coming months and years, since the world's largest software company will have substantial investments in both companies.

(Chris Preimesberger on 2011-07-07)