Reporting live from Day Two of STL Partner’s first Telco 2.0 event here in Orlando. Read yesterday’s report here.
We’ll follow the conversation throughout the day as it bounces from topic to topic. Up first: mobile data trends and voice 2.0 opportunities.
Leading off was Telco 2.0 analyst and “disruptive wireless” blogger Dean Bubley, who boiled down the issues and priorities around mobile broadband data very nicely:
On the revenue side:
- Increasing consumer focus for operators, including prosumers as consumer-like customers
- Increasingly fine-grained but realistic rates and bundles
- Emerging new devices/device categories
- Two-sided B2B and wholesale models
- ‘Comes with data” market, ie, Amazon’s Kindle with whispernet wireless
On the cost side:
- Reduced costs of customer acquisition and retention
- Outsourcing to further reduce costs
- Better cheaper devices
- More efficient radio - LTE, AWS
- Flatter-simpler networks
- Lower opex in RAN and core thanks to IP
- Offload from mobile to fixed - wifi and femtocells
For mobile operators, there’s a great balance between delivering raw bandwidth and combining that bandwidth with services, apps and content. The prejorative idea of a “dump pipe,” said Bubley, “has caused people in the industry to dismiss out of hand business models that could be quite profitable.”
Bubley compared the U.S. and European markets, the key difference being the dominance of flat-rate pricing in the states and prepaid and bundled dongle/usage offers in the U.K. and elsewhere.
By focusing only on consumer or business subscriptions, U.S. operators are missing an opportunity, he said. “What operators think of as subscribers as mobile broadband is only part of the addressable market,” Bubley said. In particular, operators should look closely at allowing subscribers make non-subscription-based access to the network using smartphones and netbooks, he contended.
That approach remains a challenge in the U.S., mainly because consumers here want simple mobile data plans, said Maurice Thompson, director of open development at Verizon Wireless. “Most consumers are not attuned to pay for content [by the byte]; they don’t want to know how many megs does this and does I have to tap up [a prepaid balance,” he said. In addition, “many service providers don’t want their customers to have to worry about that [either],” he said, noting however that Verizon does have device and content partners in its open development program that will come forward soon with more pay-per-use consumption models.
Voice and Messaging 2.0
Voice seems like an unlikely topic for an event looking at the future of telecom, but voice remains a necessary mode of communication, especially when combined with the user interfaces of the Web and the ability to route voice via flexibly coded business rules.
Voice mashup specialiast Thomas Howe led off the session, urging service providers not to let startups — such as fellow panelist ifByPhone — be the only players innovating in the area of business process-enabling voice communications. Those startups “will eventually be limited because they do not hold the the [customer] that service providers do.”
ifByPhone CEO Irv Shapiro argued that he much preferred to be in his company’s business — which he called “apptel,” or combing apps and communications — than competing in a world where the value of raw voice calls is getting closer and closer to zero. “Because we deliver applications, we don’t have to compete with the race for voice calls to the bottom,” Shapiro said, adding that ifByPhone assembled its cloud-based voice 2.0 service by wiring together 750,000 lines of proprietary code with open source products like Linux, Asterisk and open call routing technology.
His advice for incumbent service providers:
- Think applications
- Make all telephone numbers SIP addressable and charge for access to them. These incoming SIP phone calls, driven by business process-communications, can be charged for.
- Embrace voice developers and entrepreneurs
Representing the carrier perspective was Russ McGuire, vice president of corporate strategy at Sprint. “The way I think about moving from Voice 1.0 to Voice 2.0 is an evolution. Startups have the opportunity to start from scartch, but telcos have to move from where we are today.”
To ready for change, carriers must focus on:
- Operating solid, robust networks — underlying everything telcos do is the networks they operate
- Break traditional “Big Bell dogma,” or the idea that the carrier runs it all and the proprietary models of how things work — and customers just have to live with it. “That’s a mindset that permeates the industry, not only on the carrier side but the equipment side.”
- How do you support applications on top of that network, and what role do carriers play?
The very timely topic of opening up telco networks via open APIs closed out the event’s two-day run. Notable discussions included:
- Telcos have too many potential API business models. “It’s not always obvious when you put a telco and developer in a room together who is buying and who is selling,” said Sanjay Jhawar, partner, Ideas and Plans, strategy consulting firm. Which way does the money flow. Who hosts the apps? How is branding handled? Is the carrier just trying to sell wholesale minutes? This idea was illustrated by an on-stage “one-act play” illustrating a discussion between a developer and a telco, rather comically demonstrating their very different needs (telco: certainty, cost assurance, revenue upside; developer: agility, rapid time to market; upfront funding). Needless to say, this “telco 1.5″ exchange was less than successful.
Jhawar also presented a very interesting chart on telco assets, including which formerly valuable assets have eroded and no longer unique, and which still are valuable carrier capabilites — though, he said, even these “have maybe a three-year lifespan before they go stale too.”
Location outdoors — superseded by GPS and cell tower info
Network address book - superseded by Web, Facebook and device contact lists
Call control and voice mail — beginning to be superseded by things like Google Voice and similar services
Still Golden For Now
Subscriber intelligence and profile
Billing and rating
Call control-inbound triggers
Video optimization for device and dynamic network conditions
Access to network QOS
Carrier class voice
Three screen linkages and content bundles
- Also heading back to the stage were Verizon’s Maurice Thompson and Sprint’s Russ McGuire to talk specifically about APIs.
Said Verizon’s Thompson: Even on traditional handset side, beginning to open up some APIs to allow third party developers to develop apps for feature phones. At Verizon, this whole open thing is still something we’re working on and realize we still have a ways to go down that path,” Thompson said.
Sprint’s McGuire, agreed, pointing out that “it’s not all one world we are all operating in. There’s smartphones and feature phones.” Ways in which carriers can enhanced the smartphone environment is actually fairly limited. The feature phone environment is different, he said. It’s more difficult to develop for that more closed and limited environment. “In the feature phone world there is a strong role for carriers to play. And that’s the larger opportunity, it’s important to remember. There are more feature phones in use today than smart phones.” The difference between these two worlds is “where do carriers get involved, and where do we just get out of the way,” he said.
A couple of examples: one, Sprint has released location enablers that let developers easily add those capabilities into their apps; and two, Sprint is in the process of outsourcing the management of the application deck on its feature phones, again ceding control of even those devices to more open, fast-moving processes.