The Future Value of Voice and Messaging

Background – ‘Voice and Messaging 2.0’

This is the latest report in our analysis of developments and strategies in the field of voice and messaging services over the past seven years. In 2007/8 we predicted the current decline in telco provided services in Voice & Messaging 2.0 “What to learn from – and how to compete with – Internet Communications Services”, further articulated strategic options in Dealing with the ‘Disruptors’: Google, Apple, Facebook, Microsoft/Skype and Amazon in 2011, and more recently published initial forecasts in European Mobile: The Future’s not Bright, it’s Brutal. We have also looked in depth at enterprise communications opportunities, for example in Enterprise Voice 2.0: Ecosystem, Species and Strategies, and trends in consumer behaviour, for example in The Digital Generation: Introducing the Participation Imperative Framework.  For more on these reports and all of our other research on this subject please see here.

The New Report

This report provides an independent and holistic view of voice and messaging market, looking in detail at trends, drivers and detailed forecasts, the latest developments, and the opportunities for all players involved. The analysis will save valuable time, effort and money by providing more realistic forecasts of future potential, and a fast-track to developing and / or benchmarking a leading-edge strategy and approach in digital communications. It contains

  • Our independent, external market-level forecasts of voice and messaging in 9 selected markets (US, Canada, France, Germany, Spain, UK, Italy, Singapore, Taiwan).
  • Best practice and leading-edge strategies in the design and delivery of new voice and messaging services (leading to higher customer satisfaction and lower churn).
  • The factors that will drive best and worst case performance.
  • The intentions, strategies, strengths and weaknesses of formerly adjacent players now taking an active role in the V&M market (e.g. Microsoft)
  • Case studies of Enterprise Voice applications including Twilio and Unified Communications solutions such as Microsoft Office 365
  • Case studies of Telco OTT Consumer Voice and Messaging services such as like Telefonica’s TuGo
  • Lessons from case studies of leading-edge new voice and messaging applications globally such as Whatsapp, KakaoTalk and other so-called ‘Over The Top’ (OTT) Players

It comprises a 18 page executive summary, 260 pages and 163 figures – full details below. Prices on application – please email or call +44 (0) 207 247 5003.

Benefits of the Report to Telcos, Technology Companies and Partners, and Investors

For a telco, this strategy report:

  • Describes and analyses the strategies that can make the difference between best and worst case performance, worth $80bn (or +/-20% revenues) in the 9 markets we analysed.
  • Externally benchmarks internal revenue forecasts for voice and messaging, leading to more realistic assumptions, targets, decisions, and better alignment of internal (e.g. board) and external (e.g. shareholder) expectations, and thereby potentially saving money and improving contributions.
  • Can help improve decisions on voice and messaging services investments, and provides valuable insight into the design of effective and attractive new services.
  • Enables more informed decisions on partner vs competitor status of non-traditional players in the V&M space with new business models, and thereby produce better / more sustainable future strategies.
  • Evaluates the attractiveness of developing and/or providing partner Unified Communication services in the Enterprise market, and ‘Telco OTT’ services for consumers.
  • Shows how to create a valuable and realistic new role for Voice and Messaging services in its portfolio, and thereby optimise its returns on assets and capabilities

For other players including technology and Internet companies, and telco technology vendors

  • The report provides independent market insight on how telcos and other players will be seeking to optimise $ multi-billion revenues from voice and messaging, including new revenue streams in some areas.
  • As a potential partner, the report will provide a fast-track to guide product and business development decisions to meet the needs of telcos (and others).
  • As a potential competitor, the report will save time and improve the quality of competitor insight by giving strategic insights into the objectives and strategies that telcos will be pursuing.

For investors, it will:

  • Improve investment decisions and strategies returning shareholder value by improving the quality of insight on forecasts and the outlook for telcos and other technology players active in voice and messaging.
  • Save vital time and effort by accelerating decision making and investment decisions.
  • Help them better understand and evaluate the needs, goals and key strategies of key telcos and their partners / competitors

The Future Value of Voice: Report Content Summary

  • Executive Summary. (18 pages outlining the opportunity and key strategic options)
  • Introduction. Disruption and transformation, voice vs. telephony, and scope.
  • The Transition in User Behaviour. Global psychological, social, pricing and segment drivers, and the changing needs of consumer and enterprise markets.
  • What now makes a winning Value Proposition? The fall of telephony, the value of time vs telephony, presence, Online Service Provider (OSP) competition, operators’ responses, free telco offerings, re-imaging customer service, voice developers, the changing telephony business model.
  • Market Trends and other Forecast Drivers. Model and forecast methodology and assumptions, general observations and drivers, ‘Peak Telephony/SMS’, fragmentation, macro-economic issues, competitive and regulatory pressures, handset subsidies.
  • Country-by-Country Analysis. Overview of national markets. Forecast and analysis of: UK, Germany, France, Italy, Spain, Taiwan, Singapore, Canada, US, other markets, summary and conclusions.
  • Technology: Products and Vendors’ Approaches. Unified Comminications. Microsoft Office 365, Skype, Cisco, Google, WebRTC, Rich Communications Service (RCS), Broadsoft, Twilio, Tropo, Voxeo, Hypervoice, Calltrunk, Operator voice and messaging services, summary and conclusions.
  • Telco Case Studies. Vodafone 360, One Net and RED, Telefonica Digital, Tu Me, Tu Go, Bluvia and AT&T.
  • Summary and Conclusions. Consumer, enterprise, technology and Telco OTT.

Cloud 2.0: Telco Strategies in the Cloud

Will Telcos be left behind?


Cloud services are emerging as a key strategic imperative for Telcos as revenues from traditional services such as voice, messaging and data come under attack from Over The Top Players, regulators and other Telcos. A majority of these new products are delivered from the Cloud on a “pay for consumption” basis and many business customers are increasingly looking to migrate from traditional in house IT systems to Cloud-based or virtualized services to reduce costs, increase agility and decrease deployment times. Gartner recently estimated that the Cloud services market would be worth over $200 billion by 2016, roughly double the value of 2012 and with a CAGR of around 17% whereas traditional IT products and services will see just 3% growth.

It is clear that some Telcos have gained a greater understanding of the Cloud market, and are acting on that understanding, offering increasingly rich Cloud-based products and services, paving the way for Cloud 2.0. But for most Telcos, Cloud services remain secondary to their core business of voice and data delivery. Telcos are wrestling with issues of reduced margin on Cloud and how to stay relevant to their business customers.

This report looks at the development of the Cloud market providing clarity around the different types of cloud products and the impact that they have on business users. Cloud value propositions are examined along with criticisms of cloud products and services. We show that the current risks for Cloud customers represent an opportunity for Telcos and Cloud vendors because….

The report also looks at the development of Cloud 2.0 – a second generation or a more ‘intelligent’ evolution of Cloud products and services. Cloud 2.0 offers key additional benefits/capabilities to consumers, vendors, businesses and Telco/Service providers. These can be typified by cost reductions in the delivery and consumption of cloud services through working with scale players to provide basic compute services, ease of acquisition and most importantly the ability to deliver “mash-up” products and services by using API’s to provide integration between cloud services and products and Telco/service provider products such as Bandwidth, Voice, Management, Support and Billing. Cloud 2.0 is gaining rapid momentum and we show how there is still time for Telcos to play a key role in Cloud 2.0.

Who should read this report?

The report is a ‘must-have’ for all strategy decision makers, Cloud specialists and influencers across the TMT (Telecoms, Media and Technology) sector; in particular, CxOs, strategists, technologists, marketers, product managers, and legal and regulatory leaders in telecoms operators, vendors, consultants, and analyst companies. It will also be invaluable to those managing or considering medium to long-term investment specifically in Telco Cloud services, but also more broadly those involved within telecoms and adjacent industries, and to regulators and legislators.


Executive Summary


  • What is Cloud?
  • What is the Cloud Value Proposition?
  • Types of Cloud
  • Key criticisms of the Cloud
  • What is ‘Cloud 2.0’ and why does it matter?
    • Enterprise vs Consumer cloud, Fit with Telco 2.0 strategies

Market Structure & Opportunity

  • What is the shape and size of the market (revenues and profit)?
    • Total size, definitions of SaaS, PaaS, IaaS, VPC + forecasts
    • Advantages and limitations of XaaS definitions
  • What are the key customer segments and their needs?
    • SMBs vs Enterprise
    • Early adopters vs mass adopters
  • What is the opportunity for Telcos (market size and revenues)?
    • Share forecasts / ranges for Telcos
  • What are the most relevant cloud services for Telcos?
  • What are the key barriers?
    • Overall and by segment
  • Future Scenarios
  • What is the competitive landscape and who are the key players in Cloud Services?
    • Detailed competitor analysis, groupings by type and strategy Strategy review: Analysis of 6-10 key players, covering
      • Objectives, strategy, areas addressed, target customers, proposition strategy, routes to market, operational approach, buy / build partner approach
    • Key strategies of other players
    • Role of the network / operators to Vendor/partner strategies

Telco Strategies

  • Which strategies are Telcos adopting and what else could they do
    • Review of Telco attitudes and approaches based on following analysis
    • Grouping of Telcos by approach (if valid)
  • Which are the leading Telcos and what are they doing?
    • Case studies on 6-10 leading Telcos, covering:
      • Objectives, strategy, areas addressed, target customers, proposition strategy, routes to market, operational approach, buy / build partner approach
  • Outlines of 10 additional Telco strategies
  • What relationships should Telcos establish with other ecosystem players?

Conclusions and recommendations


Full Article – Is Ribbit worth $105m to BT yet?

Summary: How is the strategic rationale for BT’s acquisition of Ribbit as their ‘Voice 2.0’ platform working out? We spoke with Crick Waters, Ribbit’s co-founder and EVP.

NB You can download a PDF copy of this Analyst Note here.


The main deployment of Ribbit in BT Business was all of two weeks old when we spoke to Crick Waters co-founder and EVP, Strategy and Business Development of Ribbit, so it is a little early to be definitive about the question of whether Ribbit has yet proved worth its $105 million cost to BT.

However, in addition to aiming to use Ribbit widely to provide ‘Voice 2.0′ applications for corporate customers and SMBs, and starting to use it in its core network, BT is following a key Telco 2.0 principle and using Ribbit applications internally to improve productivity and flexibility.

In this article, Crick says ‘Voice 2.0′ applications are critical for operators to remain relevant as providers of real-time communications in a multi-screen, multi-device environment, and argues that Ribbit’s core skills are “engagement, metrics, and monetisation”. We also highlight the learning that the benefits of business model innovation are not always just improved revenue growth, and in many cases include broader benefits to the overall business ecosystem.

Ribbit – Background

We’ve been following Ribbit and their efforts to create a platform for rapid development of voice & messaging applications for two-and-a-half years. The reasons why we were interested are articulated in this quote:

Further in the future, though, highly reconfigurable telephony is likely to lead to radically different product and business models for telcos. For example, civil engineers stamp out custom bridges off well-tested models based on span, load, and topography. Your telco consulting services arm will be building custom communications experiences, with the software equivalent of a flexible manufacturing system. Custom back-ends, process flows and user interfaces will be generated from tools and models. Each is created appropriate to the application and user context. Most devices will have a completely “soft” and re-configurable user interface.

When BT acquired Ribbit in the summer of 2008, Thomas Howe pointed out in a guest post that CEBP (Communications Enabled Business Processes) projects typically result in productivity gains of around 20%, and 20% uplift in productivity across the whole economy is a lot of money by anyone’s standards. We had a look at some different CEBP/Voice 2.0 business models in this analysts’ note, and discussed the technology strategy aspects here.

So, how’s the business coming on?

Many people felt BT had hugely overpaid for the company in laying out $105 million for “100 developers working on”, as one Oracle executive described it. As we pointed out here, though, it had within it the potential for a transformation of BT’s business – a strategy that would integrate developer APIs, open CRM systems, call centres, and broadband connectivity, across BT Retail, Wholesale, and Global Services.

That was the theory, but BT’s politics and economics didn’t quite work out like that. Ben Verwaayen’s departure from BT seemed, at least temporarily, to rob the initiative of top level support. The recession revealed the downside of BT Global Services’ (BT GS) rapid expansion, as the division turned out to be sitting on an impressive pile of bad contracts. The doomed NHS National Programme IT contracts were almost enough to add up to a major crisis in themselves, and the plummeting stock market caused BT’s pension fund to need a huge cash injection. BT shed some 35,000 jobs, and J. P. Rangaswami was transferred from BT Centre to take over Ribbit personally.

Despite all the drama at the corporate level, though, Ribbit has been quietly achieving. The launch of Ribbit Mobile, its first consumer (well, prosumer) product, got a lot of attention and favourable comparisons to Google Voice, like this CNET review, or this story on TechCrunch:

“Ribbit Mobile’s iPhone app is fine as far as it goes, but I kind of just want it to take over the entire phone function of the iPhone, which is the part of my iPhone I use the least anyway.”

Let’s repeat that: “I kind of just want it to take over the entire phone function of the iPhone…which is the part of my iPhone I use the least anyway“. One sentence sums up the potential of better voice and messaging, and the threat to the 66% of Vodafone’s revenues that consist of voice or SMS. Here’s an example: Caller ID 2.0, a feature for Ribbit Mobile that links your phone number, your address book, and LinkedIn’s API:

“Today, when a call comes in or when you make a call, Ribbit Mobile reaches into the social web and finds the recent LinkedIn updates, Facebook updates, Tweets, and Flickr photos of the person calling you. If more than one match is found, Ribbit Mobile will ask you to select the right person.”

Figure 1 – Ribbit Mobile Screenshot

ribbit-mobile-homepage.jpgText and Image Source:

Ribbit’s recent developer challenge shows some fascinating examples of the creativity open telephony enables – Sena Gbeckor-Kove integrated the open-source CRM system Sugar, the winner integrated telephony into an Augmented Reality application.

That’s all very well, but it’s admittedly a little shiny and tech-newsy. That said, it’s absolutely essential for a business like Ribbit that it gets attention – a developer platform without developers is fairly pointless, and Ribbit has so far signed up 22,000 developer accounts. The previous time we checked in (about a year ago) the count stood at 600.

What about the strategy? Is BT still aiming to fix Global Services with open-source software and developer APIs, as J. P. Rangaswami said when Telco 2.0 visited BT’s open-source development shop? We had a chat with Crick Waters, co-founder and EVP, Strategy and Business Development of Ribbit to find out. Here are some of the key points.

[NB. As background on BT’s organisation, BT Global Services deals in key accounts and giant contracts – multinationals, global carrier services operations, and government contracts. By contrast, BT’s small and medium-sized business products sit within BT Retail, in a division called BT Business, parallel to the traditional residential operation in Consumer.]

Ribbit’s biggest current customer is BT

It is useful to understand Ribbit in the context of BT’s strategic objectives. At their 2010 investor day, BT executives said that the key strategic priorities at BT were as follows:

  • executing on FTTX deployment;
  • re-launching BT Vision IPTV;
  • aggressively promoting networked IT products to SMBs;
  • providing integrated IT solutions for Global Services’ customers among multinational companies and government.

The last two of these are very much what Ribbit is aimed at – BT wants to defend its market share by introducing advanced features that rival operators don’t have, and to replace declining voice margins and volume by up-selling its existing small business voice and IP customers to richer networked-IT/cloud computing services. Ribbit is crucial to this strategy as its fundamentally network-resident nature means that BT can deliver better voice and messaging services to any business that takes its service. (NB. To illustrate the importance of bolstering voice revenues, Amdocs forecast an average 3% annual decline in voice revenues globally at their June 2010 InTouch event,)

BT Global Services is already making heavy use of the platform to build applications for its clients, which allows Ribbit to leverage the BT sales force and customer base, while the BT GS consultants and developers get another powerful tool to work in parallel with, Sugar CRM, Avaya, Microsoft OCS, Asterisk, and friends. The very simplest demonstration of this is on the main BT website for business customers in the UK – ask them for and they’ll offer you the Ribbit plug-in and Ribbit Mobile.

Providing CEBP for businesses ranging from sole traders to FTSE250 enterprises (BT’s definition of SMBs) is a significant operational challenge. There are obvious costs to delivering on-premises or even traditionally hosted Asterisk or similar products to hundreds of thousands of SMBs. If BT can provide a platform with comparable features as a cloud service, it can provision Ribbit accounts in the same way as it currently provisions telephony, ISP, or wholesale carrier-services products. This avoids the need to build a huge network of systems administrators and minimises the additional truck-rolls required. They may even be able to use their existing online provisioning workflow and CRM systems.

Rather as Telenor Objects does for Machine-to-Machine applications, Ribbit is a platform that provides horizontal CEBP and unified communications for Person-to-Organisation applications and delivers them from the cloud. As this slide from Marie Austenaa, Telenor’s VP in charge of Objects, shows, Telenor is trying to integrate an open platform business model and technology architecture with the traditional telco strengths of managed service delivery, distribution channels, and universally recognised brands.

Figure 2 – Telenor Objects Provides a Horizontal M2M Platform

Source: Telenor presentation to 9th Telco 2.0 Brainstorm, April 2010

Last but not least, BT also uses Ribbit in its own internal voicemail systems to transcribe voicemails into emails and forward them to their intended recipients, speeding the process of message delivery and thereby ‘eating its own Ribbit food’.

Ribbit’s External Target Market

In terms of the space in the enterprise market that Ribbit is targeted at, we recently identified a gap between companies that are either large enough to pay for custom development and infrastructure, or tech-focused enough to have the skills in-house, and those ultra-simple businesses whose IT needs are met by Google Calendar and SMS. We think that Telcos’ ability to aggregate many small customers from their large customer bases, and to provide services in the cloud, may well fit them to compete in this zone of opportunity. The darker band on the chart below illustrates this opportunity zone.

Figure 3 – The Market Space for Voice 2.0 Applications Developers

Source: Telco 2.0

The concept of “barely repeatable processes” versus “easily repeatable processes” as introduced by Sigurd Rinde, CEO of Thingamy, is also relevant here, Easily repeatable processes are the roughly 30% of GDP that consists of industrialised processes, subject to automation and kaizen. Barely repeatable processes are the rest.

Customers in the gap usually have significant scale in one or more business processes that are currently “barely repeatable processes” with their level of technology. These processes typically rely on e-mail, telephone calls, and unstructured note taking or paper systems for workflow. The distinction between “barely repeatable processes” and “easily repeatable processes”, however, is defined by the available technology. If a service like Ribbit can make the kind of CEBP traditionally reserved for much bigger (or more tech-intensive) companies available to these smaller businesses, it can allow them to move more of their operations into the ERP sector and reap the productivity gains.

Since we spoke to Ribbit, BT has announced the full integration of Ribbit into its SMB VoIP product, One Voice – essentially, Ribbit is now BT’s premier offering to business in its home market. We also expect more announcements soon in this field. Arguably, transforming the supply of IT services to SMBs is the strategic goal for BT in acquiring and integrating Ribbit.

Staying Relevant: Injecting Innovation into the Core Network

It’s worth remembering that Ribbit’s assets weren’t limited to the code that implements the Flash API – it has a whole Class 5 softswitch underlying it all. Fascinatingly, BT is increasingly making use of Ribbit technology in its core network, as it begins to grapple with the question of what will replace the PSTN. According to Crick Waters, it’s a question of how operators remain relevant as providers of real-time communications in a multi-screen, multi-device environment, where “everything is a computer” and dial-tone is no longer enough.

For example, the increasing collective computing power of the devices at the edge of the network is rendering the network core less important. The recently announced edition of Skype for the iPhone, notably, is in fact a full Skype P2P node like the ones on PCs that make up the Skype cloud.

Apple’s attempted re-launch of video calling in iPhone 4 marks its own transition from being a device and software manufacturer to a provider of telecommunications services – powerful devices tend to bypass the network core, and Apple video calls will pass over Wi-Fi and directly between iPhones, not through the 3G video call channel.

He named convergence, multiple identities, single sign on, and switching between asychronous and synchronous modes of communication (for example, from e-mail or a ticketing application, to instant messaging, to voice, to video, collaborative editing, or telepresence, and back to update and file the ticket) as critical fields, where operators might be able to provide key enabling capabilities others could not

Ribbit co-founder Ted Griggs has been given the newly recreated title of CTO Voice in BT itself – readers with long memories may recall that BT once had a post of Head, Global Voice Technology, which was then abolished. Ribbit developers are working on BT-wide applications, and Griggs is apparently spending significant amounts of time on 21CN business – this would seem to show that there is again real commitment to better voice and messaging at BT

Click-to-Call, Better Signalling, Voice to Text

The biggest external Ribbit customers by sector are currently digital advertising agencies, heavy users of the click-to-call API, which lets them integrate real-time business processes with their ad campaigns and collect richer information about the potential customer and their interaction with the ad before the call begins, and then financial services companies. Financial Services firms are especially interested because of the Sarbanes-Oxley Act compliance requirements (which require accurate records of customer interactions to be kept), and also for productivity reasons – typically, in many parts of finance, much business is done on the phone in unstructured format.

Ribbit applications are useful in this context because they are used to capture calls, convert the voice stream to text, and archive it – this provides Sarbanes-Oxley compliance, and also a source of structured data about the business’s interactions with its customers. The key point here is that if you’ve got the metadata and you’ve got the conversation converted to text, not only can you pass more data about a call to the call taker, or the call originator, when it originates from a Web application, but you can also pass data about the call to an application for automated processing. Ribbit expects an arms race in voice-to-text applications.

Rolling Out with More Carriers

Ribbit is planning to expand rapidly by signing up more telcos to offer the service. Evidently, the signalling/control side of Ribbit is global – it’s a Web API. The voice side, however, isn’t. The answer is for new operator partners to hook up their networks to Ribbit’s through SIP peering – Ribbit calls this a “bring your own network” model. One advantage of the SIP interconnection model is that it permits very quick deployment.

They are also interested in integrating other Telco 2.0 capabilities such as location-based services and internal CDNs, so that developers working with Ribbit can get them through the Ribbit API. Location-based services has long since become a low value, “table stakes” business, but there is convenience value in being able to get all the dependencies for an application from the same API, without adding more potential points of failure and managing other passwords, keys, and the like.

More interestingly, operators may have a strategic advantage in their extensive property footprints, all of which are of course well networked. As applications become more video- and data-intensive, and more of them have real-time features highly sensitive to latency, the importance of CDNs and also what might be called “ADNs” for Applications Delivery Networks will only grow. Deploying applications to hosting close to users saves bandwidth, reduces latency, and also provides geographical distribution and therefore resilience; Amazon Web Services will let you choose where in the world your code runs, but only to within continental scale.

BT, for example, could provide a similar service but with city-level granularity and it could do so through the Ribbit API.

Crick Waters argues that Ribbit’s core skills are “engagement, metrics, and monetisation”, and that they are working with a number of operators on their API strategy. Smaller operators are the focus of their deployment push – these are unlikely to create their own voice applications platform, and stand to benefit from joining an alliance with global reach. There is an analogy with the roaming hubs and alliances that helped to achieve universal GSM roaming and interconnection in the 1990s and 2000s.

Some Further Thoughts on Ribbit and BT’s Innovation

It’s notable that, as well as cross-selling Ribbit into the UK business customer base, BT is also cross-selling BT Global Services products into the Ribbit customer base – for example, the Ribbit Web site is currently advertising hosted contact centre services, a key BTGS line of business. Overall, BT’s strategy will tend to spread the profits from better voice and messaging and their integration with Web applications across BTGS’s activities with contact centres, multinational companies, and government, and also across the BT Business element of the BT Retail division – Ribbit’s relationship with BT is in this context that of an internalised supplier of technology.

Successful execution of this strategy will be very important for BT in the future and for Voice 2.0 in general. BT is thinking about the future again, after the organisation went through a wave of introspection and loss of confidence; one sign of this is that they are considering what kind of customer premises equipment might be the future gateway for operators into the home. At the 2010 investor day, they demonstrated an iPad-like tablet device as a potential replacement for the fixed phone. Others might think a femtocell, a Google TV, or a media-server device providing content and home-automation interfaces to mobile devices around it a more plausible future. What matters is that BT is experimenting, rather than retreating into denial or getting stuck in option paralysis.

Long before that, they are clearly aiming to use Ribbit’s technology and developer community model to become the primary supplier of IT services for UK small businesses.

Conclusion – BT eats its own Ribbit food

The main deployment of Ribbit in BT Business was all of two weeks old when we spoke to Crick Waters, so it is a little early to be definitive about the question of whether Ribbit has yet proved worth its $105 million cost to BT.

However, in addition to aiming to use Ribbit widely to provide ‘Voice 2.0′ applications for corporate customers and SMBs, and starting to use it in its core network, BT is following a key Telco 2.0 principle and using Ribbit applications internally to improve productivity and flexibility. There are a lot of telephone calls going on within a company the size of BT, so a productivity tool based on voice and messaging has obvious relevance for their internal business processes.

In our view, an essential part of the ‘Roadmap’ to new Telco 2.0 style business models is to ensure that synergies with existing business models are maximised. These synergies may not simply be additional revenues from the new line of business, but also beneficial effects on any of the five components of the existing business model as illustrated below.

Figure 4 – Five Components of a Business Model

Source: Telco 2.0

While Ribbit is intended primarily to differentiate BT from its competitors in the SMB market, and to a lesser extent in its consumer and contact centre businesses, it also gives BT some new technical capabilities and opportunities to recruit new partners into its value network.

We think that BT’s approach to Ribbit embodies an important lesson in the development of the business case for new telco business models, which is that the cases will often be based on a combination of expected direct revenues from the new line of business, and incremental improvements to the existing lines of business. These can include:

  • direct revenue enhancements, such as driving minutes of use through the core BT voice network and up-selling existing SMB customers for voice and Internet service to richer networked IT products;
  • indirect but equally valid top-line benefits such as improved competitiveness, customer loyalty, and reduced churn, for example, by buttressing customer retention with eye-catching new features;cost and productivity improvements, such as better personal productivity tools and contact centre systems within BT internally;
  • and more difficult-to-quantify enhancements to capabilities and technologies which potentially enable further opportunities, such as future developments of Ribbit and the BT technology platform, and upgrades to the capability BT Global Services can offer its enterprise customers.

Voice & Messaging 2.0: New API Use Cases

Summary: ‘Communications-Enabled Business Processes’ (CEBP) are a key application for voice and messaging APIs. This Briefing Report illustrates three new real world examples of integrating communications into end-user business applications using web services to access telco APIs. (February 2010, Foundation 2.0, Executive Briefing Service)


‘Communications-Enabled Business Processes’ (CEBP) is an optimisation technique used by business process designers that involves integrating real time communications such as voice messaging, online chat and SMS with existing software frameworks. It is a developer / end-customer application of telco APIs in Telco 2.0 business models.

The Maturity Path of Voice APIs

In general, enterprise CEBP projects do not create new business processes or areas of business. Instead, they extend existing legacy applications making them more efficient and faster, and very often with higher overall quality.  As a powerful addition, CEBP projects provide business metrics allowing managers to optimise processes in real time. From a technology perspective, CEBP is a blend between two normally disparate worlds: the real-time, arcane and difficult technology of the telephone and the thorny, legacy filled and customised enterprise software.

Three New ‘Use Cases’

This report describes three distinct CEBP implementations and opportunities:

  • an in-store feedback service
  • a decision support application
  • a resource tracking opportunity

The in-store feedback service uses phones and text messaging to collect comments and complaints from retail customers using any cell phone.  The decision support application provides mobile and remote decision makers the information they require to make critical business decisions without having to be at their desk. The resource tracking opportunity shows how phones can be used to monitor and manage the use of enterprise resources quickly, easily and at scale.

Telco 2.0 ‘Take-Out’

  • The field of ‘Communications-Enabled Business Processes’ (CEBP) represents an important near-term market opportunity for telcos building business models that develop core voice and messaging APIs.
  • Building a successful Developer Programme is critical to the successful application of CEBP because of the wide variety of enterprise customers and processes to which it is applied.
  • The three detailed ‘Use Cases’ described in this report illustrate some of the many opportunities for Telecoms Operators and others to create new value in the enterprise market by building the appropriate ecosystem of APIs, Developer Programme (technical and commercial support), and Developer Community.


The term Communications Enabled Business Process (CEBP) is relatively new, but the need is as old as business itself. CEBP is an optimisation technique used by business process designers that involves integrating real-time communications such as voice messaging, online chat and SMS with existing software frameworks.

In general, enterprise CEBP projects do not create new business processes or areas of business. Instead, they extend existing legacy applications making them more efficient and faster, and very often with higher overall quality. In addition, CEBP techniques allow managers to measure business processes in real time, providing visibility into key business metrics that would be otherwise unavailable. From a technology perspective, CEBP is a blend between two normally disparate worlds: the real-time, arcane and difficult technology of the telephone and the thorny, legacy-filled and usually customised enterprise software.

Using CEBP techniques, system integrators and enterprise developers can realise productivity gains typically unavailable using other technology approaches, providing strong motivation for them to invest in such projects. Of course, dynamic connections between businesses and customers using phones are not new; the existing contact centre market is huge and mature.

CEBP is the next natural step in the development of this market, driven by advances in Internet and integration technologies, and can be viewed as roughly equivalent to the movement away from computer punch cards towards tape drives and hard disks: instead of requiring human beings to be present for every interaction, some business to human communications can be automated.

To read the full Executive Briefing report, covering…

  • The Evolution of Enterprise Business Processes
  • Voice: the Universal User Interface
  • CEBP 1.0 – and its Limits
  • The Rise of CEBP 2.0
  • Corn and the food-chain: a Metaphor for Voice
  • In-Store Feedback – ‘Use your Mobile Now’
  • How CEBP addresses current retail store limitations
  • Key Benefits of the service to consumers and retailers
  • Implementing the In-store Feedback Solution
  • Building the In-Store Feedback business case
  • Immediate Decision Support
  • How CEBP addresses current system limitations
  • Key Benefits to Managers and Business Analysts
  • Implementing the Service
  • Building the Business Case
  • Resource Tracking
  • Problems Solved and Business Case Drivers
  • How it Works
  • Real World Implementations
  • Telco 2.0 Conclusions & Recommendations

Members of the Telco 2.0 Executive Briefing Subscription Service can download the full Executive Briefing report here. Non-Members, please  email or call +44 (0) 207 247 5003.

Full Article: Voice 2.0: Beyond ‘Unified Communications’

4 Enterprise Voice 2.0 Platform Business Models

Many, many different companies are pushing into the key Telco 2.0 field of communications-enabled business processes, or CEBP, which unites both the Voice & Messaging 2.0 and Enterprise VAS elements of our thinking. It’s one of the undemarcated frontiers, or creative tension zones, where most of the value is going to be created. In this note, we’re going to examine four leading CEBP platforms, all of which have been featured on the Telco 2.0 blog before, and try to identify some key trends and commonalities that explain something about how to succeed with CEBP and Voice 2.0.

No-one is quite sure where the roles of telcos, Web2.0 players, ISVs, and systems integrators begin or end, or what distinguishes the VAS and voice & messaging elements. But it’s precisely this combination of complexity and openness that gives the scope for differentiation through business model innovation.

Fundamentally, this field is attractive to telcos and others because of the extreme disjuncture between the volume of bits involved – which drives cost – and the social and economic value attached to them, which drives the potential revenue from them. This makes it possible to achieve SMS-like “fascinating margins” and to actively substitute for the falling price of the core consumer voice and SMS products. You might remember that ten years ago, it would be worth employing someone to save an hour of phone calls, and that we calculated that a few text messages at the right place and time could save the UK transport industry £218 million a year.

No wonder operators we surveyed for the Voice & Messaging 2.0 report were so keen on APIs and commerce, although we still think they are worryingly unengaged with voice… The following chart represents the relative priorities a sample of operators assigned to different issues in the survey.

Source: STL

Four examples from the CEBP world

The products and companies we’re going to look at are Ribbit, IfByPhone, Intelepeer, and VoiceSage. (NB We’ve written about all four in the past; on Ribbit, we’ve done Ribbit: the amphibian of telco platforms, why Ribbit is worth $105 million to BT, Ribbit and BT’s evolving platform strategy, and trying to fix BT Global Services with open source. We interviewed IfByPhone CEO Irv Shapiro, and the CEO of Intelepeer, and VoiceSage have been to every Telco 2.0 event we can remember.) We’ve also done a Q&A with Thomas Howe, CEO of their rival, Jaduka.

In case those are too many links for one paragraph, let’s recap exactly what these four companies do.

Ribbit is a platform for voice and messaging-based applications, usually CEBP but not necessarily, which provides a software toolkit for the user-interface front end and a hosted softswitch with extensive APIs for the back end. Being part of BT, it has access to BT’s global network, peering/interconnection, and datacentre resources. It is marketed to developers, and its monetisation model is that the developers who use it pay for their use of network resources and adjacent products like hosting and bulk voice service, whereas the software-development kit is given away free to encourage user recruitment. This is a telco version of the now-classic IT model introduced by Microsoft at the end of the 1980s.

IfByPhone provides a Web-based interface for setting up voice – and messaging-enabled CRM applications, which run on a hosted cluster of Asterisk servers. It’s marketed to small and medium businesses, and also to small US telcos who peer with their SIP network. Users pay for service.

Intelepeer is a full-service virtual telco, which provides a hosted switching system with an extensive API (AppWorx), a private ENUM registry for mapping e164 telephone numbers and URIs, and widespread VoIP peering. Users – essentially developers, niche service providers, or enterprises – pay to host their voice applications on their systems.

VoiceSage is a Web-based environment for creating basic CEBP applications. It’s a single box solution from the end user’s point of view, providing relatively few options compared to one of the all-purpose developer platforms, but it offers quick deployment with a minimal technical overhead.

More specialisation = less technical investment

Looking at these, there’s clearly a spectrum of specialisation here; VoiceSage does just a few things – sending messages during business processes. IfByPhone is considerably broader; Ribbit is a general purpose developer platform for voice & messaging, and Intelepeer is a whole telco with hosting and APIs. On the other hand, as you move along that, the minimum buy-in in terms of technical investment also changes; the more you have to configure and engineer yourself, obviously, the more commitment you need to make.

If you’re building something using Intelepeer or Ribbit’s platforms, you’ll need to undertake non-trivial software development; IfByPhone has a graphical user interface, but still offers quite extensive scope for customisation and development. VoiceSage requires the least engineering investment to get something up and running.

…but fewer possibilities

Of course, the cost of having a “noddy” user interface is that it restricts the possibilities of further development and customisation, at least if you don’t have access to the underlying systems it abstracts. This, of course, has consequences for the business model; creating a user interface involves a vision of the user, and therefore also of the customer. If you’re building a highly specialised and supposedly user-friendly GUI, your product is going to be end-user focused. The more general-purpose the product, and the greater the technical buy-in required, the more likely you are to be offering it to developers and enterprises with their own development capability rather than to end users, whether organisations or individuals.

And this is what we see: Ribbit and Intelepeer are targeted at developers, IfByPhone is targeted at technical corporate users (and service providers as a white-label), and VoiceSage at non-technical users.

Understanding the retail/wholesale divide

In our post on BT Osmosoft (and Ribbit, come to think of it), we quoted J. P. Rangaswami as saying that the dividing line between open-source and proprietary software depends on how generalised or specific the application is; as your product becomes applicable to more things, it becomes more appropriate to go open source, because otherwise it just gets too difficult to keep track of all the things that need maintaining. However, it’s rare that anyone will have solved a highly specific business process problem unless they expect to make money from it, so the more specific and specialised you get, the more likely you are to be proprietary.

This can be applied here as well. If your product has relevance to a very wide range of applications – like Asterisk, or perhaps like the Telco 2.0 VAS platform – or if it’s a commodity, like traditional voice, it’s most likely that the appropriate business model will be driven by wholesale, and success will hinge on finding the best possible partners to get it into their own specific markets. If it’s software or content, you should seriously consider making it open-source and perhaps free.


This chart shows these ideas as a 2×2 matrix; towards the top right, we’ve got hyper-specialised and still highly technical tools for very specific jobs, and towards the bottom left, commodities. The interesting bits are in the zone of value, shown in gold (of course), which incorporates both retail-ready, specialised, ready to use products, at the bottom right, and also the highly technical general purpose platforms that make them possible, up at the top left.

Conclusions and recommendations

Essentially, the crucial markers are whether the product has a very large range of possible applications, whether it can be incorporated into another product, and whether an upstream customer is needed to market it to the end user. Of course, the ultimate possible range of applications is being useful across the whole economy; another reason to forget “content”.

Value is not just migrating to the network edge; it’s migrating to the edge of your business, where it makes contact with others.

So, it’s crucial to identify and develop the right partnerships to bring your valuable general-purpose platform capabilities to the people whose highly specific business process problems need them. And it’s important to be aware of what opportunities to profit from a specific niche product there might be. But given the highly generic nature of many telco platform capabilities, wholesale is going to dominate. The aim of Telco 2.0 is to facilitate getting from highly generic data transport and big IT capabilities to specific user value. That’s how you get into the zone of value.

Full Article: Enterprise Services 2.0: Mastering communications-enabled business processes; Executive Briefing Special


NB A PDF version of this Executive Briefing can be downloaded here.

This special Executive Briefing report summarises the brainstorming output from the Enterprise Services 2.0 section of the 6th Telco 2.0 Executive Brainstorm, held on 6-7 May in Nice, France, with over 200 senior participants from across the Telecoms, Media and Technology sectors. See:

It forms part of our effort to stimulate a structured, ongoing debate within the context of our ‘Telco 2.0’ business model framework (see

Each section of the Executive Brainstorm involved short stimulus presentations from leading figures in the industry, group brainstorming using our ‘Mindshare’ interactive technology and method, a panel discussion, and a vote on the best industry strategy for moving forward.

There are 5 other reports in this post-event series, covering the other sections of the event: Devices 2.0, Content Distribution 2.0, Retail Services 2.0, Piloting 2.0, Technical Architecture 2.0, and APIs 2.0. In addition there is an overall ‘Executive Summary’ report highlighting the overall messages from the event.

Each report contains:

  • Our independent summary of some of the key points from the stimulus presentations
  • An analysis of the brainstorming output, including a large selection of verbatim comments
  • The ‘next steps’ vote by the participants
  • Our conclusions of the key lessons learnt and our suggestions for industry next steps.

The brainstorm method generated many questions in real-time. Some were covered at the event itself and others we have responded to in each report. In addition we have asked the presenters and other experts to respond to some more specific points. Over the next few weeks we will produce additional ‘Analyst Notes’ with some of these more detailed responses.

NOTE: The presentations referred to in this and other reports, some videos of the presentations themselves, and whole series of post-event reports are available at the event download site.

Access is for event participants only or for subscribers to our Executive Briefing service. If you would like more details on the latter please contact:


Background to this report

Enterprises are rapidly extending their use of the internet and mobile to promote, sell, deliver and support their products and services and manage their customer and supplier relationships. However, companies involved in the ‘digital economy’ still face substantial challenges in doing business effectively and efficiently. Telcos have a unique mix of assets (user data, voice and messaging, data and connectivity capabilities) that can be re-configured into platform-based services to help reduce the friction in everyday enterprise business processes: Identity, Authentication and Security , Marketing and Advertising , Digital Content Distribution , Offline Logistics, Transactions (billing and payments), Customer Care.

Research from the Telco 2.0™ team has identified significant potential market demand for these services which could generate new profitable growth opportunities and increase the value of the telecoms industry to investors and government.

Brainstorm Topics

  • What assets should operators be leveraging to help enterprises?
  • What would a platform to support improved customer relationships for enterprises look like?
  • What ecosystem is needed to deliver telco platform services to enterprises?
  • Best practice use cases and case studies
  • Cutting-edge developments in voice-Web integration

Stimulus Presenters and Panelists

  • Joe Hogan, CTO and Founder, Openet
  • Laurence Galligo, VP Communications, Oracle
  • Glenda Akers, SVP, Telecommunications, SAP
  • J.P. Rangaswami, MD, BT Design
  • Werner Vogels, CTO, Amazon
  • Thomas Howe, CEO, Jaduka



  • Simon Torrance, CEO, Telco 2.0 Initiative


  • Chris Barraclough, Managing Director, Telco 2.0 Initiative
  • Dean Bubley, Senior Associate, Telco 2.0 Initiative
  • Alex Harrowell, Analyst, Telco 2.0 Initiative


Stimulus presentation summaries

How to create profitable QoS, bandwidth, and network usage services

Joe Hogan, CTO, Openet said that things happen slowly at telcos, but they also have short memories. Looking back at the beginning of AOL, they provided modems, services, proprietary browsers, and content in their walled garden. Eventually, though, they had a disastrous experience with over-the-top (OTT) players; people started independent ISPs, and you could use your own e-mail and Mosaic or later, Netscape, which was actually better.

The lesson is that, if you try to own the entire value chain, you will be disaggregated. For telcos and ISPs today, the equivalent is the dumb pipe phenomenon. We’re now seeing RFPs from operators for serious intelligent pipe projects. We expect them to start coming from cable, and from mobile operators who are seeing their dongles used as broadband access.

I think not having a policy management system will be unusual in 24-36 months time; we need throttling, subscriber management, and deep packet inspection.

The second part of our strategy, he said, is to work with the OTT players. We need to impose controls on users who are essentially abusing the service, but only in a back to back relationship with the OTTers, so as to open up the network even if significant controls are imposed. For example, if someone uses all their bandwidth in the first three days in the month but goes to Hulu, and Hulu has a relationship with the network, they can still see the video anyway. As a result, we need a highly dynamic infrastructure.

So we’ve formed a new relationship with Cisco – making sure that the infrastructure does stay smart. If you’re a bandwidth hog, you will get shaped; unless you’re on a web site with a relationship.

Policy management, then, is a strategic piece of infrastructure for vertical revenue sharing and competition. In IMS parlance, it’s the PCRF that is responsible; this means that it must be able to process a significant volume of real-time decisions. We’re looking at 3,000-5,000 transactions a second.

J.P. Rangaswami, MD, BT Design: ”The old model worked and we were good at it, but the only way we could learn about the new model was by experimenting”

Looking ahead, the cable industry’s Canoe is the VISA for advertising – a standard for the technical aspects of ad insertion, for the business model, and for the accounting, reporting and management information system. It requires the infrastructure to provider subscriber- and context-aware charging rules, integrated, context-aware policy management (so it can improve QoS in appropriate contexts), multi-dimensional rating & charging, multiple balances for subscribers (general balance, service-specific balance, points balance), notifications/advice of charge, re-direction, and comprehensive auditing and reporting to support customer service. It needs to provide high performance and be essentially invisible to the subscriber.


Exploring the e-citizen opportunity

Laurence Galligo, VP, Communications, Oracle, presented results from a survey which suggested there was strong support for Telco 2.0 among Oracle customers. Who, she asked, has had a bad experience interacting with the public sector recently? Oracle has put a lot of focus into this recently under Smart City, their project to support improved citizen experience with government services.

For example, there is the SNEN – Single Non Emergency Number. A single point of contact for a whole range of government services outside the emergency-response sector. Value estimated at $1.2bn in five years.

We implemented this as 311 for New York City – the single point of contact led into an integrated ”citizen service centre”. This requires a lot of the underlying Telco 2.0 capabilities – to make it work, we need to authenticate the citizen, to federate their data, to carry out e-commerce transactions, to provide location-based services, and to route voice and messaging intelligently.

The result was an unified government platform – including networking, location-based services and GIS, voice and CTI, CRM, reporting, and transaction-processing systems. Working with a system integrator or software company, the Telco could become a leading partner for government in delivering better citizen services.


Enabling the Transition to Customer Self-Care

Glenda Akers, SVP, Telecommunications, SAP said that the mobile phone had become the preferred route for individuals to interact with organisations. But call centres were horribly inefficient – there is a need to balance quantity – the rate at which calls are processed – and quality – the outcome of the calls, and many fail at this. CTI systems are frequently very poorly integrated – hence there are lots of mistakes and much routing of calls between multiple call centres.


According to an Accenture study, 40% of agents’ time was spent dealing with calls that had gone to the wrong call centre.

And 60-70% of call centre costs are accounted for by labour; anything that can reduce the number of calls is therefore a good deal. Human agents are far too valuable to spend their time just looking up information from the database, so query-only calls must go. So – there is a clear business need to make self-care much better.

High priority sectors are those which have high volumes of traffic, complex queries, distributed resources, and which need to handle contact through multiple channels. Specifically, telecoms/IT itself, finance, retail, media, health, transport, government, unions.

BusinessObjects Mobile is the widgetry interface for SAP’s enterprise workflow systems. Some use cases are bank accounts, bills, energy usage statistics. Mostly, they are query-only, or they have a few one-click controls. The iPhone showed the way, now we want to spread it to many other devices. Web-based, so only a minimal degree of configuration required.

Telcos could provide this as a hosted service, using their identity, billing, voice switching, and device management capabilities, and perhaps also their call centres.


The Front Line of Communications-Enabled Business Processes

Thomas Howe, CEO, Jaduka said that Jaduka, his new company, differs from the Thomas Howe Co. in that it does more voice mashups for more people. Communications-enabled business processes – it’s about making processes faster and more efficient by including real-time communications, which may be voice but may not. There is a traditional heavy approach, using dialers, IVRs and call centres. This involves either heavy CAPEX, or else heavy OPEX on long term systems integration or outsourcing contracts.

The alternative is to do it on the Web. Think of it as long-tail delivery – many small applications, dealing with highly specific tasks. But the needs involved are more like the short head – because many, many enterprises have the same or similar problems.  An important, but underestimated market for CEBP is within the enterprise. Many companies lock out suppliers, customers, other stakeholders and even employees in the field from their systems. CEBP breaches this –  it extends the enterprise IT system outside the firewall.

Traditionally, there have been about 10 voice apps and about 10,000 nonvoice apps. The difference is that group 1 wouldn’t exist without voice but group 2 would. That doesn’t mean, though, that group 2 wouldn’t benefit from voice.

There are 4 fundamental CEBP services, out of which the others are constructed – Notifications, Diary, Click to Call, and Conferencing.

Consider the Ribbit/Salesforce app that lets salesmen leave voice messages into the CRM system an example of the Diary. Click-to-Call allows you to add metadata to the raw voice file. For narrowcast messaging: this means leaving a particular message for a particular person. It’s better than snailmail, and has a similar role to e-mail in e-commerce. But everyone has a phone number, and you can find them. E-mail isn’t the same.

Werner Vogels, CTO, ”You can’t keep the whole value chain in your own hands – you’ve got to be part of the chain and take your one cent!”

Unique telco contributions here are: intelligent routing, determination between mobile and fixed numbers, information about which number is best, ability to switch between text and voice.

Voicesage did a solution for a furniture delivery service. Using notifications, confirmations, and post-delivery checks, they achieved a 10-fold reduction in missed deliveries. This reduced truck rolls, but also reduced inventory and accounts receivable. And they also made the customers happy. The solution is software-as-a-service, so there is no capex upfront. And it creates lots of interesting metrics.

Assume an average delivery cost of $70 for furniture in the US; 40,000 deliveries, of which 4% fail. There is an opportunity for a $120,000 saving at a cost of 50 cents a trip. This means additional carrier revenue of $20,000 at over 90% margin. There are appliance sales of $20bn a year in the US, 50 million deliveries per day.


But there are thousands of segments, thousands of distributors, and thousands of applications. In reality, serving these will require about a 50/50 split between ready-made solutions and custom development.  Value creation requires vertical expertise being applied to horizontal capabilities. One example would be using voice messaging to monitor congestive heart failure patients. .

Software as a Service is great for customers, but not so good for systems integrators. Their business model is getting more complicated. We, the developers, want to share revenue with the integrators – but they struggle with the idea. But do they want to be cut out entirely?

We’ve stopped using the term “price per minute”  – instead, we refer to value based pricing. This is the natural way for Telcos to monetise things like location, billing, and voice and to reintroduce variable (value-based pricing) into their business models.


Participant Feedback


Undoubtedly, some of the more ‘glamorous’ Telco 2.0 propositions revolve around advertising, content and entertainment. New business models from operators and Internet players in the consumer space garner much of the attention of Telco executives and media commentators. Blyk, YouTube, iPlayer, music downloads and P2P video distribution sit at the top of the agenda in terms of driving new revenue opportunities and evolving cost models. Approaches like “sender pays” data are primarily aimed at those sending large chunks of “content”.

Yet historically it has been the corporate marketplace which has driven much of operators’ traffic and profits, through large voice volumes, national and international data networks, and value-added services like system integration and hosted applications. Much of the current hype around Cloud Computing and software-as-a-service is solidly enterprise-driven, while two-sided business models involve deriving extra revenues from large ‘upstream’ organisations rather than consumers. Even the mass-market mobile operators will need to learn to engage with (and sell to) corporate technology representatives.

Although it is possible to see the long-term roadmap of “exposed” network and device capabilities taking friction out of business processes, it seems that the initial group of service options are rather more prosaic. It should be relatively easy to build on existing communications platforms like call centres and customer-service platforms, extending B2C interactions in more intelligent ways.

Feedback (Verbatim comments): The money is in the enterprises

The feedback from the event highlighted some general agreement that the enterprise market offers significant opportunities.

  • Great service examples, how do we show the value based on actual cases and savings, also need to consider the green angle [#22]
  • Great explorations of the dual sided biz models. [#27]
  • This is a good case that shows how Telco assets can be put to use. Helping customers and businesses to interact better is also a good way to diffuse new services to consumers B2B2C. [#10]

Feedback: Where do telcos fit?

But significant doubts remain as to the precise value that the Telcos can contribute, or their fit in the enterprise technology value chain. This is not surprising, especially in mobile, where many operators have shown limited interest in integrating with corporate IT and business processes, often just focusing on bulk sales of phones and minutes.

  • Is this not just supporting opening the networks to monetisation of long tail applications utilising Open APIs?. [#6]
  • In all the cases we heard the value was in the application not the Telco services, and no obvious reason why the Telco should capture the application. Where is the Telco 2.0 value in all this? [#7]
  • rgd. 7: the question: what is Telco service in the future? The Telco service will include traditional services as well as applications and process support. [#11]
  • <How are those examples being translated into service provider revenue and business, maybe in the cloud? [#12]
  • In a flat cost / head count world, what do you stop as an operator to free up people to develop these services with enterprises; governments etc who are often slow in decision making? [#19]
  • Ref 19: this is where vendor expertise matters. Don’t reinvent the wheel. [#36]
  • Telco’s own self care offerings are not mature or sophisticated so although they could help enable this their ability to market/offer this seems like a stretch. [#25]
  • Re: 7 agree, at a high level, is business process outsourcing a function for a Telco to enable/extract value. [#26]
  • USP of Telco’s unclear. Could all be done by an ASP using Telco wholesale products? [#23]
  • How does this all integrate across the value chain? [#38]
  • Customer service platforms used internally by Telcos should be generic-ised, extended and then exposed to third parties, a bit like the Amazon web services strategy. [#40]
  • CIOs at large Telcos are, now more than ever, in need of cojones (balls). They need to take risk or the Telco 2.0 will not be realised. They have the old school PTT mentality. this make take a generation to achieve. [#54]
  • <What is the value added Telco2.0 services that these applications need? Examples didn’t focus on this core question [#32]
  • How will a Telco in these situations deal with enterprise customers who use a different access provider? E.g. if you’re the Telco supporting e-citizens for local govt, do you have to wear lots of interconnect costs to communicate with those citizens using competing cell phone providers? [#49]
  • re 49, good point. we need to coordinate activity or the costs became prohibitive. banks solved this for credit cards and ATMs so it is possible [#51]

Feedback: Jaduka & Communications-enabled Business Processes

A regular speaker at Telco 2.0 events, “Mr Voice Mashup” Thomas Howe received a lot of attention at his new gig as Jaduka CEO

  • >At first I was bored the Jaduka presentation, but after thinking about it, it was the best example of real world Telco 2.0. [#35]
  • What is Jaduka’s business model, how do they make money, it was not clear in the presentation? [#9]
  • What is Jaduka’s view on reselling, sharing customer data with partners is this beginning to happen? [#28]
  • Where does Jaduka see the money coming from, voice apps, data apps, SMS apps, what are the sweet spots?
  • [#15]One wonders whether we are missing some opportunities to span from Jaduka type capabilities with Bondi type standards to ensure that there is a logical hand-shake with the end customer.
  • [#37]Does Jaduka create a database of user identities mapped to phone numbers that works across carriers? This would be a powerful resource to enable anonymous communications and business processes. [#42]
  • What are Jaduka’s requirements to Telcos in terms of API and other interfaces in order to enable Telcos to build appropriate wholesale offering? [#43]
  • What can Telcos offer a company like Jaduka for them to make new services? What should Telcos standardize of new APIs to allow a company like Jaduka to reach as many users as possible? [#18]

Feedback: Customer care opportunities beyond call centres

But although there is interest in Voice 2.0 and mashups, it remains unclear what services are there beyond next generation contact centre-type applications

  • Machine to machine is an amazing opportunity but business process engineering is more difficult than expected. [#24]
    •     re:24 BPR is only part of the problem, legacy infrastructure and proprietary black box end-to-end are holding us back. There needs to be an internal conversation within the Enterprise to rethink the application of technology against new business models. [#47]
  • Some good stuff but maybe too much is just call centre + a bit more. Interesting but hardly revolutionary. [#46]
  • Not enough focus on more advanced assets like GPS in phones, pushing widgets to devices etc. There’s a lot more than just advanced call centres. [#44]
  • What is a little disappointing is the low level of Telco 2.0 insight and vision amongst these enterprise protagonists compared to the entertainment and content people. Is this because there is less Telco 2.0 opportunity here, or because they’ve thought less about it? [#56
    • re 56 – I think it’s because in the enterprise there’s an issue that most Telcos, especially mobile, don’t really understand the detailed business processes at their corporate customers, so it’s difficult to come up with solutions that exploit Telco assets. Also there’s a big mass of SI’s and VARs/ISVs and outsourcers who sit much closer to the customer than the big apps providers. [#58]


Feedback: Telco 2.0 for Government 2.0?

Taken as a whole, it is exceptionally difficult to target the whole enterprise marketplace. The IT industry tends to sell its offerings through offering industry-specific teams, which take general software or service components and tune them for the requirements of particular verticals. Telcos will need to fit their “two-sided” offers (or just basic single-sided hosted options) into a similar structure, except for the most “vanilla” horizontal service elements. The event threw up some doubts that new upstream customers could be reached easily. One approach that seemed to resonate was Oracle’s pitch around a central contact point for all local government services, or a “311” number in US parlance.

  • These apps need detailed use cases and expertise for the verticals. Where would a Telco get this knowledge or would they partner with these type of companies, we heard from today? [#16]
  • I love the 311 idea. This is like a special 0800 number to the local government call centre. [#34]
  • I don’t think the SAP proposition works well for consumers – who wants to download a customer service app for their gas/electricity company to their mobile phone? [#41]
  • At what size does this make sense as a municipal opportunity for a Telco? 3 million residents? More? [#45]
  • In my discussions with the Telcos they do not believe that the local services are coordinated enough to see the value proposition, we need to widen our industry engagement to include these local service companies. [#17]
  • Does this signal the death of the traditional Telco and the emergence of the local communications provider attached to the local municipality? [#33]
  • Not sure the Telco can cooperate enough with the local government. to provide an integrated 311. e.g. provide location service to find nearest service. [#39]


Feedback: Marketing Telco 2.0 to the enterprise

The engagement model between operators and enterprises remains opaque. Is it about partnering or new channels & marketing techniques? Telco 2.0 believes that many operators need to be realistic – they cannot “own” the enterprise value chain simply via provision of a few APIs, when incumbent integrators and software vendors are already tightly bound to business processes.

  • Can a Telco actually logistically work with hundreds of SIs to make this feasible [#30]
  • As a Telco how do you stop partners taking the majority of the value chain with enterprises and governments? [#31]
  • How does a Telco manage to sell the idea of these services to millions of small businesses? the cost of sale is too high to service a dentist who might spend $100 a year on phone/SMS reminders for appointments. [#48]
  • Re 48, in the same way Google and Amazon can do it: by driving down the cost of bringing companies on to the platform. it doesn’t work if it needs an SI involved – the whole point is that this works if it is plug and play. [#50]
  • If the likely evolution of many Telcos is that network assets are spun off into a few shared netco’s and the remaining service operations are left competing for customers (with Google, Nokia etc), who exploits the 2 sided business model – the netco with open API’s or the service leveraging the end customer relationship? [#60]

Feedback: Competing with Big Technology Solutions

Software vendors like SAP and Oracle could be the bridges between enterprise and Telco IT domains. These companies already have strong footholds in almost all vertical markets – and are also ramping up the reach of their applications for telecoms operators. That said, their incumbency also represents a challenge to the Telco 2.0 model, particularly where the more innovative web- and SaaS-based models conflict with large-scale “owned” in-house application architectures.

  • It was not clear in the SAP presentation how it really fits into the Telco2.0 initiative – it may have been better received if it addressed the commercial model the technology allows. [#20]
  • I don’t understand the Oracle or SAP examples. they have a vested interest in complex, heavy apps which are attractive to SIs with very high total cost of ownership. [#52]
  • Web services, cloud computing and virtualization are absolute disruptive advances which will allow operators to save money thus to be more apt to take risks on new biz models. [#21]
  • Is oracle/sap interested to provide apps to Telcos on a pure revenue sharing basis? [#59]
  • Do oracle and sap really interested in working with carriers? Why? For sharing revenues? [#61]
  • To Openet: have you ever met someone from a Telco with the job title of ‘policy manager’? who manages all this stuff, given you need to understand access, apps, legal issues, behaviour, core networks, issues around false positives/negatives etc? [#55]


Participants’ “Next steps” Vote

Participants were asked which of the following statements best described their view on communications-enabled business processes for the enterprise?

  1. Individual operators should focus their efforts very carefully on specific capabilities (e.g. billing and payments or customer care) and verticals (e.g. government, healthcare) and compete with point providers (such as Paypal) in these markets.
  2. Individual operators should focus their efforts on building a broad set of horizontal capabilities (covering identity, authentication, security, marketing and advertising, content distribution, off-line logistics support, billing and payments and customer care) to a broad range of vertical markets as this will enable a unique value proposition and develop scale.
  3. Telcos should avoid Telco enabled business processes – the market is a red herring.

Lessons learnt & next steps

In theory, the enterprise segment ought to be at the heart of operators’ Telco 2.0 strategies. Irrespective of single-sided corporate retail propositions, in a two-sided world “upstream” providers are generally businesses or governments. But many of the comments during the session identified just how difficult it is to extract the value in a Telco’s inherent assets and capabilities, and apply this to corporate IT and business problems.

The Telco 2.0 Initiative believes that one of the major issues around exploiting the enterprise opportunity is that Telcos need to learn how to develop, sell and support services which are customised, as well as mass-market “basic” applications and APIs. Ideally, the technical platform will be made of underlying components (e.g. the API interface “machinery” and the associated back-office support systems) designed to cope with both “off the shelf” and “bespoke” go-to-market models for new services.

Especially in the two-sided model, there are very few opportunities to gain millions – or even tens of thousands – of B2B customers buying the same basic “product”. Google has managed it for advertising, while Amazon has large numbers of hosting and “cloud computing” customers – but these are the exceptions. Even in the software industry, only a few players have really huge scale for basic APIs (Microsoft, Oracle, Sun, etc.) across millions of developers.

Werner Vogels, CTO, ”Amazon cloud services took off with the creative people and start-ups, but the enterprises came aboard because they could get agility here they couldn’t get anywhere else.”

Operators may indeed have some easily-replicable “upstream” services that could be sold through an online platform in bulk (perhaps authentication or billing, or basic APIs like location), but these often also face competition in terms of alternative technological routes to their provision. They may also need to be “federated” across multiple operators to be truly useful. Perhaps the most easy and universal horizontals will be enhancements to voice and messaging capabilities – after all, these are the ubiquitous cross-sectoral services today, so it seems likely that any enhancements will follow.

To really exploit unique assets and “take friction out of business processes”, there will also be a need to understand specific companies’ (or at least sectors’) processes in detail – and offer customised or integrated solutions. Although this does not scale up quite as compellingly, the aggregated value involved may be even higher. Even Microsoft and Oracle have dedicated solutions for healthcare or manufacturing, as well as their baseline horizontal products.

J. P. Rangaswami, MD, BT Design: ”Our measure of success should be how easy it is for customers to use the network. Margins will be like a retail business –  a razor thin layer of value spread across a huge area of the economy.”

Another interesting example is that of the BlackBerry. Although today we think of mobile email as a generic capability used across the whole of the economy, the original roots of the company (pagers) were highly financial-oriented. The banking sector very much catalysed the subsequent growth in other knowledge industries (e.g. legal / consulting) and then the more general adoption among businesses of all types. This reflected not just the need for (and high value of) real-time messaging, but also other issues that a pure horizontal approach may have neglected. A specialist salesforce, an early focus on enterprise network security integration – and a large target audience of Microsoft Exchange users were all important. Even the “gadget envy” of a well-paid and dense concentration of users (Wall Street) may have helped the device’s early viral adoption.

As yet, this need for customisation and integration has not been fully recognised. The results of the vote at the end of the session were stark – perhaps surprisingly so. The vast majority of survey responses suggested that operators should attempt to build up exposed capabilities across a set of horizontals, rather than focus on the needs of specific markets.

This seems to reflect the hope for more Google/Amazon-style cross-sector offerings. But as discussed above, this may not be easy, nor will it be the whole story. It is also unlikely to work for every operator. Telco 2.0 thinks that the horizontal approach certainly makes sense in terms of the core abilities of the technical platform, but in terms of developing solutions and partnering with particular integrators or influencers, some measure of vertical specialism is often necessary.

That said, the telecom industry has not often been good at “picking winners” from an enterprise stance,

In the short term, Telco 2.0 would recommend the following:

  • Look for “low hanging fruit” around next-generation contact centres and voice mashups. These are prime targets for horizontal exploitation. Where appropriate, partner with one or more start-ups if existing internal skillsets are weak. ‘Eat your own dog food’ – sort out your own call centres first and develop skills and processes that can be applied to other industries
  • Continue with plans to monetise certain other assets for enterprise utility – especially security, payments, messaging and features that can add value to logistics processes. However, work in parallel on broad commercial platforms (e.g. web-based APIs) and more customised routes to market.
  • Conduct research to identify any particularly attractive near-term addressable target verticals. This can reflect existing skills/services (e.g. within an internal integration business unit), national-specific trends (e.g. major healthcare or environmental projects), local legislation (e.g. banking rules) or wider industry collaboration (e.g. GSMA projects in areas like mobile payments).
  • Build a database of possible acquisition targets (for example, corporate web/telco specialists), especially those with funding vulnerabilities that may make them available at low prices in the recession.
  • Start thinking about the implications of network outsourcing or managed service contracts on the ease of offering exposed service capabilities to upstream enterprise customers.

Longer term, other considerations come into play:

  • Develop separate strategies for high-volume/low-value enterprise services (e.g. servicing thousands of customers via web service platforms for generic “building blocks” like authentication), and low-volume/high-value corporate projects. [Note: volume here means # of customers, not # of transactions or events: imagine a one-off deal with a government, for national health ID & patient records]. Ultimately these may use the same underlying capabilities, but the engagement model is totally different – for example, participation in a Government-led scheme to extend smart metering for utilities, or a one-off deal with a broadcaster for a new advertising and content-delivery partnership.
  • Aim to work closely with one or more top-tier enterprise IT vendors to help add value to their hardware/software solutions. IBM, Microsoft, Oracle, SAP, Cisco, HP, Sun and others have large bases of extremely loyal customers.
  • Look to exploit new device and network capabilities, such as sensors, cameras, enhanced browsers and widgets on phones, or femtocells in B2C customers’ homes. In particular, there are various government/public-sector applications that could benefit from closer integration with citizens’ technology. Examples could include authentication for local services (or even voting), or assorted types of monitoring for environmental, healthcare or public safety reasons.Do a full analysis of applications that can be hosted in the cloud – but beware the integration and “touch points” with corporates’ in-house infrastructure.

Full Article: Voice telephony, death or glory?

At our November Telco 2.0 brainstorm, the second session concentrated on the business opportunity in the core voice and messaging business. Here we review the key messages, and explore some of the future business model scenarios.

Telcos have consistently abandoned their core product, and are ignoring new business models, whilst pursuing fools’ gold in media content. The timing of this discussion is rather apposite. Despite our belief in Vodafone’s long-term strength, they have just announced that their core voice business has stagnated:

The performance of the company’s European operations suffered from the tough economic climate with margins decreasing from 38.2% to 36.2% on revenues that were down 1.1% on an organic basis. The company blamed ongoing price pressure on core voice and messaging services.

As we said before, if you don’t improve your core product at all since launching digital networks, and assume two-sided Internet business models won’t have any effect on you, you get all you deserve. Please see our Voice & Messaging 2.0 report?]

Re-thinking dialling, voicemail and freephone for 2-sided markets

The lead-in to the session was by Chief Analyst of STL Partners, Martin Geddes. His thesis is a simple one: telcos have consistently abandoned their core product, and are ignoring new business models, whilst pursuing fools’ gold in media content. The old model — charging users for software services that have no marginal cost or barriers to entry — is dying. That doesn’t stop initiatives like Rich Communications Suite (RCS) from trying.

Martin Geddes, Chief Analyst, STL Partners

To illustrate future business models he gave three examples of how money could be made in future. Each of these focused on different aspects of the consumer to call centre interaction. As you may remember, customer care is one of the key B2B2C value-added services in a Telco 2.0 platform. [For full details, see our report The 2-Sided Telecoms Market Opportunity.]

The first of these was from a Canadian start-up we’ve profiled before, called Fonolo. It exquisitely demonstrates that the value is in integration of telephony and the Web, as well as moving from the call itself to the set-up of the interaction. We asked their CEO, Shai Berger, to tell us more in this video clip:

Shai Berger, CEO, Fonolo

Note that their current business model is a mixture of advertising and end-user premium fees. This is being positioned as a traditional consumer VAS, with a sprinkling of two-sided markets via advertising. The question, however, is who benefits more: the consumer, or the call centre? We think that it’s the latter, and the consumer is the price-sensitive side. The call centre wants the maximum rate of self-care, high customer satisfaction, and the web site offers the ability to do all kinds of enhanced multi-modal interactions that a 0-9*# keypad can’t do well. Even basic things like showing where you are in the queue, and a picture of the person you’re talking to, would make for a far better user experience.

Therefore in our two-sided market world, we’d get telcos to distribute and promote this tool (on their fixed, mobile and on-device portals). They would then sell these enhanced capabilities to call centres.

The second example Martin gave was around outbound calling from call centres. Today the typical experience is something like the following. The call centre operator has to wait for the phone to ring, finds it goes to voicemail (up to 80% of calls to business users go to voicemail), and then leaves a message asking the user to call back to complete the business process. By the time the user gets the message, the call centre may be closed. Or the user simply never responds. So you’re burning labour on leaving these messages, in a process that is both ineffective and inefficient. According to Oracle, customer service representatives making outbound calls typically spend 20-30 minutes per hour talking to customers. The rest is wasted.

A better experience would be simply to deposit a VoiceXML document directly into the user’s voicemail system. “The product you have requested is now in stock. Press one to have it shipped immediately, two to reschedule your delivery, three to cancel.��? The business process completes right their inside your voicemail system. And the telco collects and order of magnitude more revenue than they would get from a few cents of termination fee.

The third and final example was more futuristic, looking at how Paypal-like services could be brought from the Internet to telephony, taking out the errors, cost and fraud on today’s information and transactional exchanges to call centres.

These were just a few examples on how to re-imaging telephony to service the needs of call centres. There are many more such examples, and many more business processes to integrate. Telephony could easily become a growth engine again for telecoms, if only telcos would wake up to the new two-sided business model.

BT: From phone company to business communications platform

The next speaker was JP Rangaswami from BT. Excluding the (important) access line revenue, BT only makes a small fraction of its revenue from telephony. Nonetheless, it has embarked on a multi-billion pound programme to create the ultimate voice and communications platform with its 21CN network initiative. Under JP’s guidance, BT has also recently bought Ribbit, a platform that extends telephony integration to Web developers. Clearly BT understands there’s life in being a “phone company��? yet (as long as you’ve a two-sided business model, naturally).

JP Rangaswami, Managing Director, BT Design

What JP proposed is that voice is a very much a feature, not the product. Using a Dali image to emphasise the strangeness and difference of the world we find ourselves in, he told his story through the history of two other media: the printed word, and photography.

In both of these cases, we’ve seen a mass democratisation and de-centralisation of the technology. Printing presses were centralised, and printing became an industry unto itself. It was a tool of control. For a while, there was a central printing shop in every company to do reprographics. Now, we see a “Print this page��? icon on your screen, and the printing press under your desk can smudge some ink on paper fibre for you in a moment, at a cost low enough you don’t even think about it. “Print��?, therefore, has simply been embedded into every other application. Likewise, imaging has gone from an industry into a feature. You don’t need to go twice to the photo shop, once to drop off your films, and again to pick up your prints. “Upload image��? is a standard feature of many web applications. It’s two clicks to share one from your photostream.

The message is that the model is undergoing fundamental change, and voice is following the same trajectory. Calls will increasingly be launched from within Web applications. Whoever can capture that context, enrich those interactions, and (particularly) ensure business processes complete will make the money. Carrying the data from A to B and counting minutes is not the model.

BT therefore clearly understands the nature of future business models, even if they are keeping their cards close to their chest in terms of execution. If their CEO can explain this to investors in a way they can grasp, and they can demonstrate some real revenues, then BT is seriously onto something.

Voice as a spice, not the meal

Our third presenter, Thomas Howe, is an independent consultant and blogger, and brings a hands-on perspective to using telco voice and messaging APIs to build a business.

Thomas Howe. (Apparently Barack wears a Thomas Howe tie.)

Thomas spoke about the new business model he sees for telcos. He sees the value is increasingly in knowing things about the customer, not doing things like moving bits around. Doing has become cheap and easy due to continued exponential improvements in technology. It’s hard-to-replicate data that provides business advantage, and telcos have that by the bucket load. In particular, telcos can combine the data with the network to offer new capabilities. It’s not particularly useful to know someone’s latitude and longitude. It is very useful to know if someone is at home, for example to take a delivery. That means understanding “someone��?, “at��? and “home��? — i.e. who are you, where are you, and what is “home��?? (This reflects our analysis on the seven questions any telco platform must answer.)

Going to market

In the attendee feedback, there were three clear messages:

  • People like the ideas, and see the value in these new capabilities that telcos can offer businesses who want to take friction out of interacting with their customers.
  • Everyone wants to know pricing, volume and revenue models.
  • There are concerns over privacy, brand positioning, and ability of telcos to execute co-operatively.

For readers interested in getting answers to these questions, and how to execute these ideas, we’ll be diving into these issues in our research in the run-up to the next Telco 2.0 brainstorm in the spring.

To summarise, existing voice platform initiatives like Parlay/OSA are network-centric, and what is needed is a business process centric approach. There are a few global commerce platform emerging, and none of them are from telcos. Yet there are already great telco successes in two-sided markets, such as SMS short codes and premium SMS. Telcos have to continue to build on these to service a wider range of business processes and upstream customers.

Meanwhile, astute attendees will have picked up the protestations of earlier keynote speaker Werner Vogels, CTO of Amazon. “And finally — our telecoms platform. Don’t worry, this is no threat to you.��? But he would say that, wouldn’t he?

Full Article: Vodafone, too much data and not enough vo and fone?

As there’s a change in leadership occurring at Vodafone, it’s a good time to reflect on the direction of the large convoy of opcos and investments being led by the good ship Newbury. Arun Sarin has stepped out of his asbestos business suit, albeit scorched by the flames of investors and board members, safe in the knowledge that his mission to vanquish more timid enemies is won. Although they don’t say it aloud, The Economist notes that the core of this success was clinging on to markets where vertical integration is turning a profit (USA, emerging markets), and exiting those where is isn’t doing so well (Japan), whilst cost-cutting elsewhere the inevitable detritus of a decade of hyper-growth.

However, as the more acerbic tongues at The Register point out, rather choppy waters lie ahead. The business is rapidly maturing, cost cutting reaches its limits, and new revenue streams (entertainment content, advertising, data) are either slow to ramp up or come with significant supplier costs that dilute margins.

According to their corporate history website, the name Vodafone is derived from ‘voice and data phone’. True or not, the conundrum of whether ‘voice is just data’ persists to this day. So as Vittorio Colao becomes fleet admiral, our burning question is: what to do about the stagnating core product? Along with its peers, Vodafone has conspicuously failed to significantly enhance its voice telephony offer, beyond offering better coverage. We don’t think that’s going to be a long-term winning position as access becomes hyper-abundant, and people’s time does not. Rather than ask how data services can replace lost voice revenue, ask how data can be used to rejuvenate that voice business. And as the biggest player in the international scene, Vodafone is very well placed to do something about it.

Telephony is built on false assumptions

The chart below (from our recently published Consumer Voice & Messaging 2.0 Report) compares the cost of telephony and labour. We show the per minute cost in the USA of using a telephone (fixed or mobile), along with hiring someone (high school or college graduate). What it tells us is that the ‘scarcity’ used to be in the telephone network, and now it is in our time and attention.

Only a decade ago, it was worth paying a graduate for an hour if it would have saved you from making an hour’s worth of mobile phone call.

Today, we barely factor in the cost of calling into our lives. Yet we are buried in voice messages, missed calls, emails and texts. Delivering ever more data to the user is not the same as creating ever more value. The value comes from brokering the right relationships, helping interactions occur at the right time and medium, eliminating unwanted intrusions, automating flows of information, and making users productive.

“Ask not how data can replace lost voice revenue, but how data can rejuvenate the personal communications experience.��? Satisfying people’s need to collaborate, chatter, and communicate should be central to every operator strategy. Here’s why…

Not a new problem

Mobile telephony is built off the same product template as fixed telephony, with the same assumptions and problems baked in from the 19th century. From the very beginning, problems have been evident. When Bell called Watson in that first call, the result wasn’t “oh, ****, he’s gone out for an afternoon in the pub��?. No, Bell had pre-arranged for Watson’s to be there ready at the other end. It was a bit of a fraud, to hide the absence of presence, availability or scheduling features.

We see these problems still today. You call me, but I just fail to answer in time, so you go to my voicemail. I see a missed call, and call you, not knowing your talking to my voicemail. As you’re already in a call, speaking to my voicemail, I get your voicemail. Why on earth doesn’t the phone network just connect us together?

This particular instance is an example of a failed rendezvous, and we examined the context and unfilled user needs in more depth in this previous post. Many of today’s short phone calls are manual transfers of presence, location and availability data that should ideally be eliminated. Why can’t I request a call from you, rather than only interrupt you? Why can’t I tell you’re calling me back about the message I left a week ago? Sadly, operators are too well rewarded for terminating calls of zero or negative value.

Voice: one product, many business models

As with all telcos, there are three inter-linked business models that Vodafone needs to support. These require very different features.

The first is its retail offer. This takes hardware from the network equipment providers, plus software from various innovators, and packages it up as the core bundle offer or as an add-on value-added service. This supply chain is slow, costly and inflexible today, and their Betavine effort is only a small step towards what’s really needed.

There’s still plenty of mileage though in selling conveniently packaged communications. We’re not yet at the point where “if it’s software, it must be given away for free��?. The users see the benefit to themselves, and are willing to pay for it. A good example at the moment is SpinVox, who offer a voicemail to text transcription service. Note how their own marketing copy says: “SpinVox has saved me at least two hours a week [our emphasis] of listening to often irrelevant voicemail.��? (And contrast this with the primary purpose of most mobile media content products, which is to fill dead time.) We’ll dive into the challenges and opportunities for retail products a little more below.

Next up are the wholesale products of the operator. We feel there is a massive hole here in most operators’ strategic approach, with a few honourable exceptions. Voice is already becoming just one facet of many applications and products, and operators aren’t making it easy to embed it in. Wholesale products need to be broader in scope (e.g. to include voicemail, push to talk, and 3rd party network integration), as well as deeper in integration (e.g. simple 3rd party trouble ticketing, provisioning of offers sold through non-operator channels).

Finally, there are the two-sided markets, which we’ve written about here. The telephone remains a wonderful way of consumers and enterprises interacting — think of it as ‘v-commerce’ — but there is a huge amount of friction and inefficiency involved. Whilst so much effort is being expended on entering mobile advertising, hardly any is being lavished on building new revenues on top of freephone numbers, call centres and interactive messaging.

Voice as a platform, not a product

We promised to come back to that retail proposition. Ten years ago, mobile phone penetration was in the low single digits. Today, more than half of humanity has one. A decade hence, the experience will also be transformed again. For example, your address book or contact list will be dynamic: ordered by who you ought to be talking to, giving real-time presence and availability data, and probably infused with messages from companies with whom you have ongoing commercial relationships. Mobile will be the ‘to go’ portion of the PC experience, not some separate world.

However, there is unlikely to be a one-size-fits-all evolution of the public telephone service. Instead, we move from an era of mass production to one of mass customisation. There are too many innovative applications, too many niches and customer needs, for any one company to address them all. Instead, operators need to take a leaf out of the Telco 2.0 book and focus on two things: providing distribution for these services (and integration with the core offer), as well as enabling a bunch of high-margin value-added services that the upstream partners pay for, not the downstream end users. If someone is a Facebook fanatic, help that partner get their experience into the user’s hands.

This requires synchronising a lot of moving parts of the puzzle: handsets, network, operational support, etc. The need for putting together a complete experience, rather than just piece parts, is becoming received wisdom, with the Apple iPod, iTunes PC client and music store trio being the canonical example. It’s hard to do, and it’s still early days. Apple have barely moved the needle with the iPhone — the only concession to the voice service is visual voicemail. (And they’ve made a mess of the SMS client.) It does nothing to address the underlying issues of why people are sending those messages, and how to either eliminate them, or make them more effective. Nokia’s Ovi is resolutely focused on the content side of the business, not communications.

As the biggest player, Vodafone has more leverage over handset suppliers and software platform vendors. Pick up the phone to Qualcomm. Whatever magic they’ve done for 3, ask for a bit to be sprinkled over the Vodafone handset range. We’d also expect an operator like Vodafone to produce handset and service offerings much more tightly coupled with the online services that users increasingly route their conversations through. On the corporate side, IBM, Microsoft and Avaya are obvious targets for closer integration.

One good sign is Vodafone’s acquisition of Danish social media start-up Zyb. This is completely the right direction, and we’d like to see the gas pedal pressed hard to roll this kind of “address book 2.0��? capability burned into as many handsets as possible.

This is also the time to make the most out of close relations with Verizon Wireless. Platforms need scale, new voice service features need scale, so why not become the de facto leader? Don’t wait for the standards bodies, make it a fait accompli.

Immediate action required: group communication

Whilst these long-term changes unfold, there a re short-term problems with the voice and messaging products, most notably in the pricing of services that compete against Internet offerings. Vodafone UK have cleverly priced ‘informational’ chatter differently from ‘social’ chatter with the ‘stop the clock’ promotion. After 3 minutes, you don’t rack up any more charges. This aligns value with pricing, and we like it.

The problem is that the online tools encourage users to communicate in groups, and to form conversations and communities. Voice and SMS pricing don’t align well with this. Why should a three-way call cost more? The users don’t see it that way. Why does sending an SMS to five people cost five times a much? Why does replying to a message cost the same an initiating the conversation? Why can’t I send Twitter status updates (with no termination charges) for free, to encourage more texts and calls?

There are many ways in which the traditional pricing assumptions of telephony and messaging don’t fit into our current communications landscape. Because Vodafone has shied away from being the price leader, it has more slack to play with here. You can afford to lose some money on termination fees to other operators if those charges have become illogical in the users’ minds. Or take a leaf from GupShup and use adverts to make group communications have no extra charges.

Be proud to be the phone company

Sometimes it feels like being a phone company is like an embarrassing medical condition nobody wants to admit to having. Voice communication will remain central to the human condition for as long as we’re around. Satisfying the need for people to collaborate, chatter, and communicate should be central to every operator strategy. Sadly, it too often ends up being delegated to the network equipment providers or handsets vendors, who tend to lack the skills or incentives to build complete services. If we had a shiny new R&D group, we’d be making the personal, social, human communications experience the top priority.

There are some carriers already making tentative moves towards a better telephony future. We like products like the H3G SkypePhone, but feel that there ought to be a lot more such examples. Embarq is making some useful moves with its eGo landline phone service. Verizon has made a good effort with iobi, but is utterly closed to outside innovation. Telekom Austria has some interesting softphone experiments on the go. Qwest has Q.Home on the launchpad. BT remains a bit of a dark horse here too.

Our own research found nearly 70 start-ups working on new voice and messaging services. (These are all documented in the report.) We’re sure there are more. None are really integrated with the telco platform. The opportunity to exceed the users’ expectations is there, and the business model — retail, wholesale and 2-sided platform — will bring in the cash to anyone who cares to execute on it.