I'm always fascinated by how group-think works. Ideas get bandied around for years without gaining much traction. Then when you least expect it, the level of interest crosses some invisible, critical-mass line, and suddenly everyone is a believer. It's an avalanche reaction, that takes even the experienced industry-watchers by surprise.
Advertising-funded services is one such group-think example. Nine months ago when I would mention it to anyone in the telecoms industry, it would illicit a tolerant, patronizing assurance that “in the future, anything is possible”. But we are only nine month on, and it has now become an unassailable truth. Everyone believes it is inevitable and we only have to work out the annoying details of the business model, the regulations, and the linkages between our industry and the industry that buys the advertising spots. Fascinating!!
Last week in Nice at Management World, the TM Forum did its bit, by announcing that Ogilvy (the worlds largest advertising agency) was joining the TM Forum, and that it's Chairman, Rory Sutherland would be joining the TM Forum Advisory Board. We also had the CTO of Paramount Pictures, Alan Bell, speaking at the event and participating in a range of executive meetings during the week. Judging by the enthusiasm I witnessed we truly are on the way to a world where advertising funded communications services will become a reality.
But lets not under-estimate the challenges of the regulations that will inevitably govern what will, and will not, be allowed. The technology to insert complex advertising into communications & entertainment services already exists, and many different business models have a fair chance of working. But regulation about the use of personal data for targeted advertising is a big open question. That’s the one that we all have to keep our eyes on, because that's going to be the whole ball-game!!
I was at our Management World Middle East event last week, held in Dubai on 3rd – 5th March . It proved to be an interesting and vibrant show in one of the most vibrant economies I have ever seen. Everywhere you look in the region you see construction. Literally hundreds of skyscrapers are under construction, including the new 'biggest building in the world', which no doubt will be superceded within 12 months of it being completed by some other mind-blowing structure!!
We had an attendance of around 150 people at our Middle East event and about 50% of these came from all the major Service Providers in the region. There was also a strong presence at the event from the regulatory authorities of the region, with attendees from both UAE and Kuwait regulators.
It is interesting, but not surprising to see that the challenges facing this region are similar if not identical to the challenges facing the other major regions of the world. The presentations at the event covered similar topics to our equivalent events in Europe, USA or Asia. And the audience was equally knowledgeable and concerned over the diverse challenges of mobile configuration management, launching IPTV services, operations & business process reengineering and mobile advertising. In this industry it really is a small world!
We had an excellent Team Action Week in Cascais, Portugal last week. It's always a pleasure to be able to spend a week immersing oneself in the business and technical challenges of the industry, in the company of the best minds in the industry. Over 200 of our TM Forum members turned up to debate, discuss and network with each other in over 40 different business & technical meetings, that covered all of the hot industry topics that absorb us today. We had meetings discussing the traditional areas of competence of the TM Forum such as Information modelling and Business Process modelling. But we also had meetings on topics such as device management and managing content within the broader communications environment.
As ever, I never leave Team Action Week without an epiphany of some sort, and last week was no exception. Just when I think I understand our rapidly changing industry, I get thrown a curve ball. For example last week Microsoft were at TM Forum Team Action Week in strength, and when I casually asked what they were hoping to get out of the event they told me that they were hoping to learn how Microsoft as a Service Provider could make use of the TM Forum work. I suppose I shouldn't be surprised that the industry value chain has changed to such an extent that Microsoft can in one breath be a mammoth software company and in the next breath be a service provider.
This is simply a graphic illustration of the fact that the days of the static value chain are over and we are well and truely in the era of the dynamic value network. This is a world where the players in the value chain engage in a complicated two-step, continually assessing and reassessing who their suppliers and customers should be in any given service context. Serious companies have to adjust to the fact that they will occupy six different positions in the value chain before breakfast.
And of course in order to survive in such a dynamic world you need flexible, well understood management systems. Management systems that can be reconfigured rapidly (or even automatically against clearly defined policies), and which don't come loaded with presumptions about how the industry operates and where your company sits in the value network. The only thing I'm sure about at this stage about our industry, is that there are many more surprises waiting for us.
Over the long holiday break, and with four young children, I found myself becoming a heavy-weight consumer of telecoms and on-line services. First mobile phones for children, on-line purchases of music for MP3 players & on-line gaming subscriptions. If my spending trends are typical of the rest of the developed world, I reckon 50% of my Christmas spending was carried out on-line, with a non-trivial amount of my budget being spent with telecoms and content companies. Of course this is what this new industry is betting on. Not just the migration of purchasing from the high-street to purchasing on-line, but the diversion of other types of spend towards the coffers of the communications, internet and entertainment companies.
But I suspect that we are hitting a glass ceiling on the amount of spend that can be diverted to the communications companies with the current technology approaches. The promise of a tightly integrated communications, internet & entertainment industry is still some ways off, and requires the emergence of standard service delivery platforms that allow the dizzying array of potential content providers to get their content to the mass market via the existing communications delivery and charging infrastructure.
But of course once that happens I will probably just end up spending even more money over the holiday season - so perhaps I had better rethink my industry vision!
If you can't measure it, you can't manage it. This business school mantra has been repeated numerous times by grizzled management veterans in the hundreds of management schools across the developed world over the past 30 years.
The logic is simple. If you don't know how well you are doing at present, then how can you know if you are getting better or worse? Shocking as it may sound, the telecom industry has managed toturn a blind eye to this 'home truth' for much of its long and distinguished history. Without serious competition to trouble it, the incumbent operators had no need to know how well they were deliveringtheir service - or even how profitable they were on a service by service basis.
But of course all that has changed. Now competition and churn are rife, and holding on to customers depends on how well your customer rates your service versus your competitors. And of course, whether you continue to offer a particular service at all is dependant on individual service profitability. So effective, efficient measurement of all aspects of your performance has become a critical success factor. And benchmarking that performance against the performance of others is the only objective way to know if you are doing well enough to survive and thrive in the long term. With this in mind, I spent the first part of this week at TM Forum's Business Process Benchmarking Summit in London and was pleasantly surprised to see the growth in importance of benchmarking within the major European Operators. All the operators there had dedicated teams looking at the whole area of benchmarking - and not just as a defensive measure, but as a mechanism for driving transformation of their businesses - from 'Old World Telco' to 'New World ICE Service Provider’.
Last week, Management World Americas in Dallas was dominated by the changes that are underway in the industry. Content Management, Device Management and Convergence all got top billing in the sessions and in the discussions over coffee. Of course some people are thoroughly frustrated with the convergence word. We hear it from investors and shareholders every day of the week, and while nobody knows what it means, it has become the Holy Grail of all telcos to somehow win the convergence war. But this underlines the fundamental problem: key players and investors from the Telecom industry are increasingly confused as to where to invest their time, effort and money. But it is telling that, while people are frustrated and confused, nobody is seriously dismissing convergence as a fundamental sea change in our industry.
The players who make up our emerging converged industry are many and diverse, and the one name that seems to come up more often than any other is Google. In Telecom circles, the Boogey-man has been replaced with the Google-man. This week we had telecom executives unable to sleep at night frightened by stories of the Google-man coming to snatch their businesses away. And while the Boogey-man is only a story made up to frighten children, the Google-man is quite real.
Last week Google announced the roll out of its long awaited and much-speculated wireless plans. Called Android, it delivers open-source, advanced software and services that would allow handset makers to bring Google-powered phones to market by the middle of next year. Now this is a smart move! The concept of Google developing a dedicated handset –as many people predicted was going to happen - would have been as insane as a Google PC!! But being on every handset in the world opens the opportunity for a serious migration from billing-centric communications to advertising-centric communications.
But it won’t stop there. Google is reported to be building the largest meshed-computing platform on the planet. According to Scott McNealy, around 15% of all the computer servers sold in the world last year were bought by Google, which is busy building massively powerful processing and storage facilities at key nodes worldwide. And it is this initiative that could create the defacto industry Service Delivery Platform…………. by stealth!!
So by all means, continue to look after business as usual, but keep a weather eye open for the impacts of content management, device management……and the Google-man!
I’ve come to the realization – a bit late in life you may think – that the killer application doesn’t exist. For many years, the Telco industry was obsessed with identifying the killer application that would justify the huge investments they were making in core and access bandwidth. Some thought it was video-conferencing, others thought video-on-demand, and there are some present-day advocates of IPTV. The thinking has always been that if only they could identify the killer application, then they could invest heavily in it and generate extraordinary profits.
But this sort of linear thinking is simply too slow-paced for the market we find ourselves in. The reality is that there probably is no killer application, no silver bullet that the Telcos can latch onto to carry them into a 21st century that gives them similar levels of return to the 20th century bonanza. Instead, there are probably hundreds - perhaps thousands - of niche applications, each of which will deliver a nice level of return. And the only way to find which of these work for you is to try out lots of them, ramp up the ones that work, and discontinue the ones that fail.
All of which brings me back to one of my favorite topics – Service Delivery Platforms. This is the vision that underpins the investment in SDPs. Create a platform that gives Service Providers the flexibility to launch thousands of applications at low cost and the scalability to ramp up the five or 10 that generate some real return.
Typically, there are two sides to this equation, and a great SDP is only half of it. The other half is all about fine-tuning the rest of the Service Provider’s performance so that they can maximize customer satisfaction and profitability. In order to do this, Service Providers need to understand how good or bad their existing performance is. TM Forum has a Business Benchmarking program that enables Service Providers to benchmark their performance across a wide range of industry-agreed metrics. This allows them to see where they are doing well and where they need to invest to improve. In a couple of weeks, we will be releasing a free industry report on some of the industry benchmarks to date based on input from a wide range of Service Providers, so definitely watch this space!
Of course in the meantime if you know what the real Killer Application is then send your ideas on a postcard to Martin Creaner……..
I spent last week attending TeleEvo, the TM Forum sponsored summit in Moscow. The traffic in Moscow is perhaps the worst I’ve seen in any major city – with last Tuesday being officially the worst traffic day ever experienced by Moscow since measurements began. Let’s face it; a city has to have pretty bad traffic problems in the first place to even have official measures!!
But in contrast, it was fascinating to see how fast that market is moving. We had over 300 attendees at the event from multiple Russian and CIS service providers, and the over-arching impression I had was of a region that has the energy and the means to be perhaps the fastest growth region in the world over the coming years.
The technical sophistication and ambitions of the companies and the solutions they are deploying compares well with anything I have seen in the more developed markets. In particular, a lot of the discussion was around the need for Service Delivery Platforms and how they will impact the future market dynamics. We had several sessions on this topic, and I shared the view that SDPs are essentially a Service Provider’s defensive play. Without SDPs, Operators are in danger of being relegated to simple, low value add, bit carriers. But add in the value of a sophisticated SDP, and Operators suddenly position themselves directly in the creation & delivery firing line for all new generation services.
And make no mistake, this market gets it. Even though the Russian market has yet to roll out 3G, it is thinking like a next generation market. It is taken as a given that nobody can plan their future on POTS or basic voice services. The future for each of the operators lies in growing ARPU (which is pitifully low compared to the relatively high GNP of Russia), and this growth will come from video, music, games, location services, etc.
Of course the SDP market is a hopelessly confusing mix of similar sounding but entirely different offerings from some of the world’s leading companies. Because of this, TM Forum has been working with these same companies to agree on some basics – such as a common Service Delivery Framework and vocabulary that all companies can use to structure their products. This wasn’t as difficult as it sounds, and we have released version 1 of this framework and are now expanding it to get down to the real detail – such as bringing TM Forum’s information models and business process models up to date for this new world.
Without a doubt the speed of movement of this industry in every part of the globe I visit continues to amaze me. At some stage, I’m sure this pace of change will calm down…but not today or tomorrow!
Welcome to my blog, which shares some of my thoughts and impressions on how the telecom world that we know and love is changing faster than almost anyone can keep up with. I don’t seem to be able to find the time to chat with all the people who might help me understand this, so I’m blogging my thoughts and hoping that some people out there will chat back. No one person can ever hope to understand the depth and breadth of this industry in its entirety, so we all need to learn from each other.
So what is this new industry? It certainly can’t be called Telecom anymore. In fact I don’t think this new industry has a name yet – perhaps we can create one that sticks. It involves the companies that are presently called telecom companies and cable companies – and all their usual suppliers. That much is easy to grasp. But it also involves the companies that are providing content to fuel the new services that the telecom and cable companies want to offer. And the Internet-based companies such as Google, Skype and Yahoo are definitely in the mix somewhere, as are the hundreds of device players. So we are probably talking about some industry that delivers New Information, Communication and Entertainment services. The NICE industry.
The TM Forum is trying hard to stay one step ahead of the NICE industry by defining standards and guidebooks on how to manage the myriad new aspects that need to be managed. These range from end-to-end quality, to apportioning revenue across all the players in the value chain, to ensuring that security is at the heart of all transactions. Over the coming weeks, I’ll share the latest advances that are being made and let you know my thoughts on what’s hot and what’s simply ‘hot-air’ in this rapidly changing landscape. I hope that you will also keep me up-to-date on the industry dynamics that catch your eye. Fundamentally this industry is at its most exciting phase in decades – perhaps ever – and I count us fortunate to be right in the middle of this excitement.